“Life would be much neater if all disputes could be terminated unilaterally,” wrote Justice F. L. Myers in the recent Couture v. TSCC No. 2187 decision.
What started as a relatively simple dispute with respect to the lease of a common element parking space quickly escalated, with “name-calling, hyperbole, failure to listen, taking extreme positions, wasting time, money and effort, and causing [the parties] and each other distress.”
“What they did not do,” the court said, “was act like good neighbours.”
Litigation can be divisive and costly for a condominium, particularly when it involves members of the community. While litigation certainly proves necessary at times, parties should consider their options and do their best to prevent disputes from escalating to a point of no return.
A board is tasked with the responsibility of managing the property and assets of a condominium corporation, but it must act reasonably in carrying out its duties. Courts are taking note of aggressive or unreasonable positions adopted by boards of directors, as the Couture v. TSCC No. 2187 case showed.
Couture v. TSCC No. 2187
In Couture v. TSCC No. 2187 the court considered a dispute about a condo corporation that contained parking spaces which were to be leased by owners and allocated by the board on a priority basis. The declaration provided that the parking spaces could only be used to park licensed and insured motor vehicles in good repair, and that a lease would end once ownership of a unit ceased. The leases were not formalized in writing, which left most of their terms ambiguous.
The applicant, who had been leasing a parking space from the corporation, owned a vehicle which lacked valid license plates, was not insured, and had two flat tires. The corporation gave her 30 days to take steps to bring her car into compliance with the requirements of the declaration. Having not received a response from the applicant (she denied receiving the letter), the corporation sent another letter “in the spirit of goodwill.” The follow-up letter gave the applicant an extra month to comply.
So far so good, right? Unfortunately, things take a turn for the worse.
“In this case, like so many other involving neighbours, a discrete issue was allowed to escalate out of hand causing needless distress and expense,” found the court. “Like excellent tacticians, the parties let their counsel attack while they sat and watched for weaknesses.”
The condo corporation returned the applicant’s post-dated cheques for the following two months, since the cheques included amounts to cover the parking lease. Meanwhile, the applicant sent her car to the mechanic for repairs.
Before the end of its self-imposed deadline extension, the condo corporation advised the applicant that the board was withdrawing the applicant’s parking privileges, and that new post-dated cheques (without the parking amount) had to be submitted.
The court described the correspondence from the corporation as “disrespectful and dismissive” and “not consistent with an amicable, businesslike, or neighbourly tone among a community member and her elected representatives.”
The applicant and the condo corporation retained lawyers, and then sent them into battle. What followed was a plethora of unfortunate events, including two invalid liens, illegally charged administrative fees (the Condominium Act does not permit a condo corporation to levy fines against owners), refusal to mediate, and oppressive conduct.
The applicant refused to pay the common expense fees without the parking lease amount, and similarly, the condo corporation continued to refuse to accept the payments which included the parking amount. The applicant tried to turn to mediation, but the corporation refused to mediate what it referred to as a “meritless” dispute (in breach of its bylaws). The applicant’s unit fell into arrears, with the help of some additional charge backs for legal fees, and her property was later liened.
After the applicant paid off the lien under protest, the dispute continued. The condo corporation levied two administrative fines of $250 each, tacked on some additional legal fee charge backs, and liened the property again.
The applicant then commenced an application against the corporation, seeking a variety of orders, including a declaration that the liens were invalid and a declaration that the condo corporation acted oppressively, contravening section 135 of the Condominium Act. The court found that the liens were invalid and that condo corporation acted oppressively by disregarding the applicant’s interests and legitimate expectations, treating her in a harsh, burdensome manner.
While the court was clear that it did not condone the conduct of the condominium corporation, it did not view the applicant as an innocent victim either. Both parties played a significant role in escalating the dispute and neither side acted reasonably.
Despite the parking dispute being the root cause for the application, there was no evidence that the applicant’s car was fixed or insured, so it was not clear that the car would have ever been permitted to park in the parking space. The court found that the applicant “too failed to conduct herself or these proceedings on a reasonable basis.”
Nonetheless, the court cautioned the condo corporation, and boards of directors in general, against wielding a heavy sword over the heads of unit owners. The court said that in permitting a condo corporation to recover all of its reasonable legal costs in a successful application against a unit owner, section 134(5) incentivizes “recalcitrant, litigious behaviour.” This behaviour ought not be encouraged, particularly in a condominium context where expectations of neighbourliness should take priority.
Due to their very nature, condominium disputes are uniquely positioned to become immensely emotional. Parties dig in their heels, judgment becomes clouded, and tunnel vision sets in. Before long, there’s a complex web to untangle. The court in Couture v. TSCC No. 2187 does not hide its displeasure toward the conduct of the parties and it provides some key takeaways:
- Parties should attempt to de-escalate a situation and prevent litigious disputes;
- Condo corporations should give owners opportunities to comply before commencing formal enforcement steps;
- Progressively more formal dispute resolution tactics should be used only on an as-needed basis;
- If formal enforcement steps become necessary, come to court with clean hands and act reasonably – take a step back and question how the conduct would be perceived by a judge before moving forward;
- Remember that a condominium is a community and a failure to act neighbourly may poison the dispute and prevent a favourable judgment.
Josh Milgrom is an associate at Lash Condo Law, practicing exclusively condo law, and is a director at his condo corporation in downtown Toronto.