A dispute about whether commercial parking units in a condominium could be operated on a “pay and display” hourly basis, led a unit owner in Ottawa to commence an application under section 135 of the Condominium Act (the “Act”) for a declaration that the condominium corporation had unfairly disregarded the unit owner’s interests.
The owner owned a number of commercial parking units on Level A of a mixed residential/commercial condominium, which had been previously rented on a monthly basis. As the monthly parking was no longer profitable, the owner wanted to convert its parking lot business to a“pay and display” hourly operation. The condominium declaration provided that the owner’s parking units could be used for “a commercial parking business for the leasing of individual parking spaces for such period of time as the Owner . . . may in its sole discretion determine provided not less than 30 such Parking Units are made available at all times for hourly or daily parking.” The declaration also permitted the installation of signage on the inside and outside of the building to promote the commercial parking lot.
In order to facilitate the “pay and display” parking operation, the unit owner requested consent from the condominium corporation to undertake a number of changes to the common elements, which included the installation of a “pay and display” meter. Citing security concerns, the Board not only refused to consent to the changes, but it treated them as “substantial” changes under section 97(6)(b) of the Act, which would require the approval of at least two-thirds of all of the unit owners. (Section 97(6) provides that an addition, alteration, improvement or change is substantial if the board elects to treat it as substantial.) In order to address the board’s security concerns, the owner proposed additional changes, which included the installation of additional lighting, an additional security camera and emergency call boxes. However, the board refused to consent to the changes unless the unit owner provided a parking booth with a full-time attendant or hired a full-time security guard to patrol the commercial parking area.
At the request of the board, the unit owner commissioned a security audit from an independent third-party. The audit report indicated:
“While physical surveillance such as uniformed Security Officers can be one of the best examples of deterrent that can be considered for any property, by no means is it the only option available to property management. Security concerns must be relative to existing budgets and sometimes simple physical changes as mentioned previously in this report can be equally effective tools for security and safety.”
In response to the owner’s claim that the board’s refusal to consent to the changes unfairly disregarded the owner’s interests, the condominium corporation took the position that the court should defer to the board’s decision as long as the board demonstrated that its concerns about safety were reasonable.
After reviewing the case-law, the judge concluded that:
• The changes proposed by the unit owner did in fact constitute additions, alterations and improvements to the common elements;
• The board’s decision to treat the proposed changes as substantial due to security concerns did not demonstrate any lack of good faith on the part of the board and did not constitute a breach of section 135 of the Act;
• While the board’s concerns about safety were reasonable, the board was not being reasonable in requiring a full-time security guard. This was not a viable option, as the cost of the security guard would exceed the projected revenue from the parking operations. Furthermore, the owner proposed various changes that would significantly lower the security risk, but the board did not “give the appropriate weight” to these alternative measures;
• The board’s refusal to consent to the changes unless the owner hired a full-time security guard unfairly disregarded the interests of the unit owner under section 135 of the Act.
The court issued a declaration that the owner’s interests had been unfairly disregarded by the condominium corporation, and an order that prohibited the corporation from requiring that the unit owner provide a security guard as a condition of the approval of the changes needed to operate a “pay and display” parking operation.
However, because the court had determined that the board was entitled to deem the proposed changes as substantial changes, the judged requested further submissions from the parties as to whether the unit owners should be compelled to approve the proposed changes or what other remedy may be appropriate.
This case is consistent with current case-law that requires condominium corporations to balance the objectively reasonable expectations of the unit owner against the interests of the corporation and all of the unit owners.