In the case of Harvey v. Elgin Condominium Corporation No. 3 an unhappy condo owner sued the condominium corporation, claiming that the corporation undertook work that constituted a substantial change without proper authorization from the owners. As the work that was done was funded by special assessment, the unit owner requested reversal of the special assessment. He also requested that the Court order the directors to take training, and appoint an administrator, and claimed punitive damages.
After several of the townhouse units experienced leaks, water damage and mould, the corporation hired a professional contractor and an engineer to investigate. The professionals concluded that the leaks resulted from construction design and implementation flaws of wooden decks constructed over the unit garages. The board concluded that corrective action was necessary to prevent harm to persons and further damage to property. Based on advice received from the contractor and engineer, there were two options available to fix the problem – replace the existing wooden decks with new wooden decks or, alternatively, replace them with vinyl decks. After having made its decision that corrective work would be undertaken, the board scheduled a meeting of owners to discuss and choose a style of the replacement decks. Votes were cast by 24 of 51 unit owners, and 20 of the owners voted in favour of the vinyl decks.
Initially (in 2006), it was intended that two decks would be replaced per year, with priority given to those units most in need of imminent repairs, based on advice from the professional advisors. However, in 2008, due to escalating complaints, the board determined that the two-unit-per-year schedule was not tenable and that the progress of the remedial work needed to be escalated.
As a result of this accelerated work schedule, the reserve fund was not sufficient and the corporation levied a special assessment. After the special assessment, the unit owner who instituted the court action claimed that the work being done constituted a substantial change under Section 97(4) of the Condominium Act, which required the approval of the owners of two-thirds of all the 51 units. On this basis, he refused to pay the special assessment and the corporation subsequently registered a lien on his unit. He subsequently paid the special assessment in order not to affect his credit rating with his mortgagee.
At the end of a three-day trial, the Judge dismissed the owner’s claims completely. The Court concluded that:
(1) While there was a disagreement between the corporation and the unit owner, the corporation did not unfairly disregard the owner’s rights and did not engage in unfairly prejudicial conduct towards this owner;
(2) There was nothing in the corporation’s conduct that was harsh, vindictive, reprehensible or malicious;
(3) The work undertaken by the corporation was not a substantial change, but was remedial work required to maintain the corporation’s common elements and thus fell within the ambit of Section 97(1), in which case no notice to, or approval from, the owners was required;
(4) Although the vinyl decks differed from the original construction, they were considered to be appropriate in light of current construction standards.
While the unit owner was self-represented in the litigation, the condo corporation incurred legal fees in excess of $60,000 related to this litigation. In a future blog, we will review how the judge allocated responsibility for those legal fees.