Justice Brown of the Ontario Superior Court of Justice recently dismissed an action against Toronto’s Trump International Hotel & Tower (“Trump Hotel”) in Kim v Trump, the latest twist in a story that has made the headlines over the past year.
Trump Hotel provides luxury condo-hotel units that owners can rent out under a reservation program (the “Reservation Program”) in return for profits generated by the condo-hotel units. The program is managed by Trump Toronto Hotel Management Corp. (“TTHMC”).
The plaintiffs had entered into agreements with the developer, Talon, to purchase condo-hotel units and also entered into agreements with TTHMC to participate in the Reservation Program. The plaintiffs alleged that the rental rates were lower than expected and the costs of occupancy and common expenses were higher than anticipated. As a result, the plaintiffs refused to close on their purchase agreements and brought an action against TTHMC, the Trump Hotel Condominium Corporation and the developers of Trump Hotel.
The plaintiffs sought an order to appoint an inspector to investigate the Reservation Program at Trump Hotel. In the alternative, the plaintiffs asked for production of financial documents and information related to the Reservation Program. The court dismissed the plaintiffs’ motion and refused their request for production of financial documents.
The plaintiffs argued that the condominium corporation had acted in a manner that was oppressive, unfairly prejudicial to, or unfairly disregarding the interests of the plaintiffs pursuant to section 135 of the Condominium Act, 1998 (the “Act”). Section 135(1) of the Act provides an opportunity for owners, among others, to make an application to the court for an order prohibiting the oppressive behavior or for financial compensation under this section. The court found that the plaintiffs were not owners under the Act. As the plaintiffs lacked standing to proceed under the section 135 oppression remedy, the court found that the plaintiffs were not permitted to appoint an investigator.
Similarly, the court held that plaintiffs lacked standing under section 55 of the Act to request the disclosure of documents. The plaintiffs were not “owners” and were also no longer “purchasers”, as they had terminated their agreements of purchase and sale.
This case illustrates the need for purchasers to conduct appropriate due diligence prior to investing in a condominium unit. Purchasers cannot simply rely on assertions made in marketing materials to guide their investment decisions.