Tuesday, November 6, 2012

Application of Limitation Periods to Breaches of Bylaws

My experience with enforcing against some breaches of bylaws on behalf of condominium corporations is that the Court may consider a breach of a bylaw to be a recurring breach.  As such the Court does not prohibit the enforcement as a consequence of the passage of time in excess of that provided for by the Limitations Act (Alberta).  That is, until the breach is rectified it is considered to be a fresh breach daily.  A recent case out of the Supreme Court of Ontario Waterloo North Condominium Corp v. Silacshi, 2012 ONSC 5403 has recently affirmed this principal.  The Honourable Justice D.A. Broad stated:

"[16] As pointed out by Quigley, J. in Toronto Common Element Condominium Corporation No. 1508 v. Stasyna, 2012 ONSC 1504 at para. 40, the proposition that questions of enforcement and compliance under the Condominium Act may be subject to the application of a limitation period is well recognized in the case law. However, as further pointed out by Quigley, J. in Stasyna at para. 41, the cases that support that proposition do not relate to actions commenced to enforce compliance with the Act itself, but rather with internal governance documents. Where there is a breach of the statute itself, such as here, the Limitation Act, 2002 can have no application."
This rationale places some legal colour to the rationalization of recurrence of the breach.

Monday, October 29, 2012

Government of Alberta introduces Bill for mandatory warranty protection for new home buyers

The Conservative Government of the Province of Alberta has introduced a new bill to strengthen the insurance required by builders of new houses and condominiums in Alberta.  The Communications department of Alberta Municipal Affairs made the following news release:

"News Release - October 25, 2012
Government introduces mandatory warranty protection for new home buyers

All Albertans who buy a new home will have warranty coverage for their purchase under new legislation proposed by the Alberta government.

Bill 5, the New Home Buyer Protection Act, introduced in the legislature today, requires builders to provide home warranty coverage for all new homes built in the province starting in fall 2013.
“While most homes in Alberta are built to stand the test of time, if things do go wrong, homeowners will have stronger protection to get their homes repaired,” said Minister of Municipal Affairs, Doug Griffiths. "Albertans should be reassured that the single largest purchase their family makes will be protected by one of the strongest warranty programs in the country."
Under the proposed legislation, all new homes (detached homes and condominiums) would at minimum, include a warranty for:
  • one year labour and materials;
  • two years for defects in labour and materials related to delivery and distribution systems;
  • five years building envelope protection, with a requirement for the warranty provider to offer the consumer the option to purchase additional years of coverage; and,
  • 10 years coverage for major structural components.
It is expected that the new home warranty would cost about $1,700 to $2,000 for an average home, or less than one per cent of the cost of the average house.
Owner-builders will be exempt from the requirement to carry a new home warranty unless the property is sold within the warranty period. If the home is sold within the warranty period, the owner-builder must provide the buyer with warranty coverage for the remaining portion of the warranty period.
Insurance companies and their agents (including home warranty providers), are governed by the Insurance Act. A new dispute resolution process came into effect on July 1, 2012, under the Act that provides consumers with greater clarity and information about the process and their rights when submitting a claim for a home warranty insurance contract.
The program balances affordable consumer protection and builder accountability."

The Government has also posted information on their website.  This is a step forward in motivating builders to built a good product.  It will be interesting to see if the Bill is passed into law and also if changes to the Condominium Property Act (Alberta) will be forthcoming.

Tuesday, October 16, 2012

Some Humour in Condominium Litigation

The following is quoted from Supreme Advocacy LLP (E. Meehan) and is quoted here because it is rare to find such good condominium humour.
The Respondent Economical sued the Applicant Crane and claimed $105,195.68 in damages as compensation for damage sustained by its insured in 1994 due to the cracking of a toilet tank manufactured by Crane in 1984 (no word on whether Readers Digest or National Geographic were being read at the time of the crack). Economical argued the crack resulted from a manufacturing defect related to the degree of porosity of the ceramic used to manufacture the tank. In defence, Crane argued Economical was full of it, and that the crack resulted from the improper use or installation of the tank and the tank met the standards in effect in the industry at the time it was manufactured. The Superior Court wiped Crane’s defence, and allowed Economical’s action. Bottom line: it found that the position taken by Economical’s experts should be preferred: it was the variation in the water absorption rate among the various tank walls that had generated the internal stresses that produced the crack, and there was no movement from their position. The variation was [translation] “the result of an inherent weakness in the vitreous china attributable to a defect in the manufacturing of the tank” (para. 91). When the C.A. sat on the matter, they flushed the appeal away on the ground that Crane had not been able to show that the trial judge had made an error of law or fact warranting its intervention.  Crane Canada Inc. v. Economical Insurance Company(Que. C.A., Feb. 13, 2012) (34665)“The application for leave to appeal… is dismissed with costs.”  Link to C.A. decision

A Court Ordered Limit to Bareland Condominiums and the Regime of Managed Property

Post script:  The Alberta Government amended the Condominium Property Act in 2013 ameliorating most of the difficulties which the Maciejko decision solidified:

Reserve fund
38(1)  A corporation shall, subject to the regulations, establish and maintain a capital replacement reserve fund to be used to provide sufficient funds that can reasonably be expected to provide for major repairs and replacement of
                                 (a)    any real and personal property owned by the corporation,
                                 (b)    the common property, and
                                 (c)    any property of an owner in respect of a bare land unit that the corporation is required by bylaw to repair and replace,
where the repair or replacement is of a nature that does not normally occur annually.
(1.1)  If, before the coming into force of subsection (1)(c), a corporation was required by bylaw to repair and replace property of an owner of a bare land unit, the collection and expenditure of funds to repair and replace that property are valid if
                                 (a)    the collection and expenditure occurred on or after the date the bylaw took effect under this Act, and

                                 (b)    the collection and expenditure would have been in compliance with subsection (1) if subsection (1)(c) had been in force at the time the collection and expenditure occurred.

The consequence of this intervention is that the onus is now clearly on all bareland condominiums to ensure that their bylaws clearly identify the obligation of the condominium corporation with respect to what is ususaly defined as and referred to as Managed Property.

There is a dearth of case law dealing with the limits imposed upon owners in a bareland condominium.  The Honourable Mr. Justice A.W. Germain in Maciejko v. Condominium Plan No. 9821495, 2012 ABQB 607 has chipped away at this by providing an interesting overview of the history of bareland condominiums and coming to a surprising conclusion to a dispute between owners at "The Shores" condominium.  Justice Germain states: 
It is now decided clearly that "managed property agreements" are enforceable and like bylaws are legally binding on owners.  However, they cannot be used to allow owners to "precollect" funds for payment of expenses which are not related to common property.  That is, reserve funds are limited to common property and cannot form part of an agreement of owners in a managed property agreement.  Justice Germain stated in this regard:

and as follows:

I have always thought that the "bait and switch" from a bareland condominium to a more ordinary condominim structure would be problematic.  Justice Germain has now concluded that it is.  Let the condominium buyer beware.

Friday, August 31, 2012

Imposing Fines Against Owners in a Condominium

A more illustrative case of how NOT to impose fines may not be found.  In the case
Condominium Corporation No. 042 5636 v. Chevillard, 2012 ABQB 131 Master Smart denied a condominium corporation the right to collect fines imposed and legal fees incurred in respect of fines imposed based on an owner's not cleaning up after the owner's dog.  Amng other things, Master Smart took issue with the failure of the condominium corporation to follow its bylaws.  Particularly, Master Smart stated that the Board of the condominium corporation was required to and failed to:
  1. Pass a resolution declaring the owner in default of the bylaws based on the owner's failure to clean up after the owner's dog;
  2. Provide written notice to the owner to rectify the breach of the bylaws; and
  3. Check to see if the dog had been removed prior to filing its Application in the Court of Queen's Bench.
As a result of these three failures Master Smart dimissed the application and did not award costs to the condominium corporation for the legal fees incurred by the condomnium corporation.  Hence, how does a condominium corporation properly impose and collect fines?  The following list is suggested as good practice:
  1. Make sure the condominium bylaws comply with section 35(2) of the Condominium Property Act (Alberta); 35(2)  A bylaw under which sanctions are imposed must (a) set out the sanctions that may be imposed, and (b) in the case of monetary sanctions, set out the amount of the monetary sanctions   or the range of monetary sanctions that may be imposed.
  2. Look to both the Condominium Property Act  and the bylaws of the condominium corporation for guidance.
  3. The Board of Directors should gather the evidence that an owner has breached the bylaws; this should be done in writing and it is not sufficient, in this blogger's opinion, to rely on verbal/spoken evidence.
  4. The Board of Directors should meet to discuss the allegation of breach and review the evidence which has been gathered; the Board of Directors should then make a decision whether the bylaw has been breached and evidence this by way of resolution in the Minutes of the Board of Directors (the resolution should reflect a summary of the nature of the complaint and the conclusion of the Board.
  5. The Board of Directors should be guided by the requirements of the bylaws; many bylaws require that the condominium corporation give the offending owner notice of the breach and an opportunity to rectify the breach before proceeding with fining an owner.  The bylaws may be even more detailed in respect of steps which need to be taken prior to collecting the fines (this blogger suggests that condominium corporations obtain independent legal advice on the requirements of their specific bylaws to avoid a result such as occurred in the Chevillard case).
  6. The Board of Directors should be sure to inspect the unit or common property prior to proceding to Court and the Board of Directors should utilize the services of a lawyer familiar with the area of condominium law.

Friday, August 3, 2012

Smoking in common areas and units of a condominium

The issue of prohibiting smoking in condominiums is gaining momentum.  At the date of this blog entry neither the Alberta Courts nor the Alberta Human Rights Commission has issued a decision on the topic of smoking in a condominium.  However there have been a few salient decisions from outside of Alberta.

In a Yukon case referred to as Sider v. Yukon Housing Corporation, 2012, YKTC 18 (the "Sider Case") a landlord enforced a non-smoking policy which the landlord had created in respect of the rented premises upon a tenant.  Though this case does not involve a condominium corporation, it is relevant in the circumstance as the Honourable Judge Faulkner considered the interpretation of the Canadian Charter of Rights and Freedoms (the "Charter") and whether or not smoking is a right which is protected by the Charter.  Judge Faulker ruled in favour of the landlord and dismissed the tenant's claim that the landlord's non-smoking policy was unenforceable finding, among other things, that smoking was not protected by the Charter.

In  a British Columbia case referredto as Chorney v. The Owners, Strata Plan ViS770, 2011 BCSC 1811 (the "Chorney Case") the petitioners alleged that the cigarette smoke emanating from the Respondents unit was affecting the health of the petitioners and the enjoyment of their units.  The Honourable Mr. Justice Schultes examined the facts and the subject bylaws and noted that the subject bylaws provided the corporation with the power to impose fines for bylaw violations.  As a consequence, Justice Schultes directed that the proper course of action would be to follow the process set out in the bylaws which included providing written notice of the breach, allowing a period for rectification, and imposing a fine 
if the breach continues.  This case is authority that condominium corporations can and should have rules and policy in respect of smoking in the common areas and that they can and should, if their bylaws allow, impose fines where conduct of one owner by smoking impacts another owner.

This positive duty is also reflected in the British Colimbia Human Rights Commission decision in McDaniel v. Strata Plan LMS 1657, 2012 BCHRT 167 (the "McDaniel Case").  In the McDaniel Case the complainants alleged that smoke was entering their unit primarily through open windows.  The complainants both suffered from health conditions that made them sensitive to smoke. The B.C. Human Rights Commission ruled that the Condominium Corporation failed to enforce an existing by-law that prohibited residents from causing "a nuisance or hazard to another person" and granted a judgment against the Condominium Corporation in the sum of $8,018.88.  This decision demonstrates that condominium Boards may have a positive duty to control smoking.

I anticipate that it will not be long before somebody challenges smoking before the Alberta Courts or the Alberta Human Rights Commission.  In the meantime it behooves condominium Boards to review their bylaws and policy on smoking and develop a consistent approach to dealing with smoking.  Though I have limited my comments to the common area I also anticipate either a direct or collateral attack on the right, or lack thereof, of an owner to smoke in the owner's unit.  This issue may well be resolved on the whether the unit is in a multi-unit building (versus town house or bareland condominiums) and in this context the strength of the HVAC system in the condominium building.  If the condominium building does not have adequate ventilation the Courts and the Commission may well conclude that smoking can be prohibited in units.  This will be an interesting issue to follow.

Saturday, May 19, 2012

Purchasing Condominium Units from Developers: A Critical Analysis of Purchaser Vulnerability in the Unregulated Market and British Columbia's Legislative Response by Frank Caputo

This year is the 20th anniversary of my graduation from the Faculty of Law at the University of Alberta. Curiously this year is also the 100th anniversary of the faculty. As a graduate I receive the magazine "Without Prejudice".

In the Spring 2012 issue reference was made to a recent LL.M. Graduate, Frank Caputo. What caught my eye was the topic of his thesis:

"Purchasing Condominium Units from Developers: A Critical Analysis of Purchaser Vulnerability in the Unregulated Market and British Columbia's Legislative Response"

I would think his thesis will be insightful in respect of possible future changes to the Condominium Property Act (Alberta). The title of his thesis is awfully revealing of some of the core issue which should be addressed by the Alberta Legislature; that is, the vulnerability of purchasers to developers.  Unfortuneately, I have been unable to contact Mr. Caputo so cannot share with you any further insights in respect of his thesis.  This is a link to his information on the UofA Law Faculty website: 

If someone can obtain a copy of his thesis please share a copy with me; thanks.

Monday, April 30, 2012

What makes a good lawyer? Howard Levitt knows.

I am a regular reader of the online version of the Financial Post.  I recently came across an article entitled "What makes a good lawyer?"  written by Howard Levitt who is a senior partner at Levitt LLP a law firm in Toronto, Ontario.  I thought Mr. Levitt's comments were interesting and I am sharing an abridged version of the article (the reason I am doing this as well as providing the link is that one day the link may not work).

"What makes a good lawyer:

  • Knowing the law: The better you know the law, the more defences you can construct, which slip undetected by those less knowledgeable.
  • Understanding the "hidden persuaders: " This combines an instinct for the jugular with a knowledge of legal regulations and corporate practices.
  • Most cases settle. The amount of that settlement may have more to do with the company's need to settle than with the case's intrinsic merit. 
  • Analytic skills: Ultimately, employment litigation (or any litigation) is about placing the "facts" within an impregnable theory of the case. To do so, you have to command a mastery of the weaknesses of your side as well as its strengths and synthesize the entire case into a three-dimensional picture, which is impenetrable to opposing theories. To accomplish this, you have to anticipate all lines of attack and ensure your theory of the case, and your witnesses, can withstand them.
  • Understanding psychology: This not only assists in probing the other side's weaknesses, but provides insight into how to "tell your story" in the manner most likely to be believed. It also instructs what to emphasize and when to settle.
  • Understanding negotiations: There is a propitious time to settle and there are times to do nothing. If, for example, you are about to go to mediation or a pretrial, any offer made will simply be used as the basis for yet further increases. A lawyer's job is to assuage the clients' anxieties and conceal their vulnerabilities;
  • Sales skills: Ultimately, lawyers are salespeople. You have to sell yourself to the other side, the mediator and the judge and convince them that your case is overwhelming. If you lack those skills, your prospects of success are limited.
  • Client control: A lawyer's advantage is detachment from the client's anxieties and personal views of their case. Ultimately, you must do as the client instructs. However, your job is to strongly influence that. (Some litigants) are desperate to settle as quickly as possible, often at the expense of their case. (A lawyer's) job is to influence their subjective views with informed ones. At the end of the day, that is much of the reason why they are not representing themselves - and shouldn't be.
  • Witness-preparation skills: How a client performs has everything to do with preparation. Counsel must have suffi-cient trial experience to accurately predict what is coming and assist in coaching their witnesses as to how to answer. I try to anticipate questions in cross-examination and prepare answers that will explode on opposing counsel when that question is asked.
  • Trial experience: Shockingly, only a handful of members of the employment bar, even senior ones, have conducted trials or, at least, any major ones. Few have done appeals. This impacts on how they are perceived by opposing counsel and how strong their actual bargaining power is in settling cases.
  • Proportionality: However brilliant their victory, no client is happy when their legal fees are disproportionate to the result. Not every case can be treated with the rigour of one involving tens of millions of dollars, or of an appearance before the Supreme Court of Canada. Clients think in terms of paying for the developments in a case, not for how many hours the lawyer spent on it. I also urge my juniors to ensure they spend their energy accordingly. Clients never appreciate handholding when they receive the bill for it.
  • Digging deeper: Some cases have come to me over the years that appear, on their face, to be almost hopeless. Few turn out to be. Good lawyers keep digging into the facts and are alert to the opportunities when they arise."
         (My emphasis)

Obligations of Boards of Directors and Property Managers

It has been some time since I lasted posted to my blog.  My not regularly blogging is unfortuneately illustrative that "the road to hell is paved with good intentions".  On a go forward I will try to be more diligent.

I am proud to say that I am still not too old a dog to learn new tricks and recently learned how to set up RSS feeds.  From this the Morris v. Condominium Corporation No. 074 0215, 2012 ABQB 265 decision was delivered to me via my reader Feeddler.
This case is noteworthy because Master Smart appointed an inspector pursuant to section 67 of the Condominium Property Act (Alberta) (the "CPA").  The case now clearly establishes the principle that if condominium corporations fail to honor the obligations imposed by the CPA that the Court will intervene by appointing an inspector.  This is a serious remedy which Boards and Property Managers should avoid.
There is curious language in the Morris case indicating that property managers should not stand by and allow the obligations under the CPA to be ignored.  Though no relief was granted against the property manager the case may be relied on to establish the standard of care which a property manager owes to owners in condominium corporations.  I would encourage property managers to review the case and be careful to advise their condominium corporations accordingly.