Condo Litigation – Section 67 of the Condominium Property Act
As condo development increases across Canada, especially in urban centers, we can expect an influx of litigation over the interpretation and application of condo legislation and their bylaws. One common trend in Alberta is the reliance on section 67 of Alberta’s Condominium Property Act, (“CPA”) in the litigation process to enforce reasonable behavior.
Section 67 allows the Court, on application by an “interested party”, to impose certain remedies if improper conduct has taken place. Interested parties include condo owners, condo corporations, members of the condo board, or any other persons with a registered interest in a condo unit. Sometimes referred to as the ‘oppression section’, section 67 seeks to restrain unfair conduct. Oppression remedies are also available under the Alberta Business Corporations Act, but the degree of conduct required under section 67 of the CPA may be less onerous than its counterpart, at least for the moment.
Remedies under section 67 include:
· Directing an investigator to be appointed to review the improper conduct and report to the Court;
· Directing improper conduct to cease;
· Giving directions on how matters are to be carried out to avoid recurring issues;
· Awarding compensation in respect of any losses resulting from improper conduct;
· Awarding costs; or
· Providing any other directions that the Court considers appropriate.
Improper Conduct Warranting a Section 67 Remedy
Improper conduct can mean a number of things including non-compliance with the CPA, its regulations or the condo’s bylaws, as well as conducting business affairs of a condo corporation or exercising condo board powers in an oppressive or unfair manner.
In The Owners Condominium Corporation No. 0211096 v Clayton, 2019 ABQB 877, the Court granted a section 67 remedy to a condo corporation who claimed that an owner was not complying with the bylaws. The owners had a dog and the condo corporation subsequently enacted a bylaw prohibiting dogs, which was to be grandfathered in. Despite the enactment of the new bylaw prohibiting dogs, the owners decided to get another dog.
While the Court was sympathetic to the owner’s situation, it held that permitting the owners to keep the dog in these circumstances would be unfair to other residents who follow the bylaws and policies and are entitled and expect the condominium corporation to enforce the bylaws as required under the CPA. Finding otherwise may impair or limit a condo corporation’s ability to enforce their rules in the future. The Court made an order under section 67 for an order to relocate the dog.
In Condominium Corporation No. 0613837 v Tien Ngoc Ho, 2019 ABQB 967, a condo corporation applied for declaratory relief under section 67 that they were absolved from all responsibility and liability with respect to the repairs of a unit. The owner’s unit was damaged as a result of a leak in another owner’s unit. The condo corporation maintained proper insurance but hired a contractor themselves to complete the repairs because the deductible exceeded the cost of repairs. The owners disputed the repairs claiming that their unit was unlawfully entered and the repairs were poor quality.
While the Court held that a trial was necessary to determine the issues (namely the quality of workmanship), it did not dismiss the application suggesting that this situation may properly warrant a section 67 remedy. However, the Court interestingly noted that section 67 is often used as a catch-all to enforce reasonable behavior, which is not its intended purpose.
Improper Use of Section 67
While section 67 is available to ensure enforcement of bylaws and proper exercise of powers by a condo corporation and board, the Court has notably dismissed a number of applications that improperly rely on section 67. For instance, in The Owners Condominium Corporation No. 1710419 v Condominium Corporation No. 1710627, 2019 ABQB 655, a residential condo corporation sought relief against a commercial condo corporation under section 67 after a dispute over shared expenses and nuisances in a mixed development.
The two condo corporations had entered into a prior agreement, and the Court therefore questioned whether section 67 was an appropriate vehicle for resolution. It appeared that this dispute was contractual and section 67 would not apply. The Court noted that section 67 was designed to deal with issues arising within the administration of a condominium corporation and its relationship with owners.
In Owners: Condominium Plan No 7921815 (Pepperwood Village) v MacMillan, 2019 ABQB 642, a condominium corporation attempted to use section 67 to order an owner to cease and desist from making harassing statements to and about the condo corporation, managers, and legal service providers unless she was on the Board of Directors or had written authorization.
The Court refused to grant a remedy under section 67 since the owner’s communications were not in any sense a “use of her unit in the condominium development” and did not amount to improper conduct under the CPA.
Section 67 remains a useful tool as it is designed to govern the behavior between condo corporations and owners, as well as condo corporations and third parties. Condo corporations may rely on section 67 to ensure enforcement of bylaws, payment of condo fees, and compliance with special assessments. Similarly, unit owners may rely on section 67 to ensure that the condo corporation and board members are adhering to bylaws and ensure that bylaws accord with the CPA.
While section 67 is an important provision in the CPA, there appears to be increased reliance on the provision to enforce any reasonable behavior. Parties should not rely on section 67 as a “catch-all” section for any dispute and should still seek to resolve disputes by applying ordinary principles of contract and tort law where possible.
In instances involving true improper conduct in the context of the CPA, parties should seek to ensure that the evidentiary record allows a court to award the remedy sought under section 67 by way of Originating Application. Complicated findings of fact may require a full trial and further pleadings to be filed.
With a strong reputation in commercial litigation, McLennan Ross LLP is well-positioned to provide you with exceptional advice and representation. If you have any questions or concerns with respect to the Condominium Property Act, or any other litigation matter, please do not hesitate to contact Madyson Dietrich or Peter Major, Q.C., or any member of our Commercial Litigation Team.