Part 35 published on 01/09/11
Condominium was “substantially complete” despite construction deficiencies. Proceeds of remaining sales not to be held in trust
Axxess (Grande Prairie) Developments Ltd. (“Axxess”) was insolvent and was in Companies’ Creditors Arrangement Act stay, by previous order. Axxess was the developer and builder of a 177-unit condominium in Grande Prairie Alberta. Seven units remained unsold and comprised all of the assets of Axxess. Those units were to be sold for the benefit of Axxess’ creditors. The condominium corporation, Corporation No. 0627724, claimed that there were serious deficiencies in the construction of the condominium. The corporation asserted that the units were not “substantially complete” and that the proceeds of sale of the remaining units had to be held in trust pursuant to s.14 of the Condominium Property Act – so that those funds could be used to complete the construction (by remedying the deficiencies). The Court refused the condominium corporation’s application. The Court said:
In my view, the claim by the condominium corporation here is nothing more than an attempt to leverage its position as a plaintiff in a breach of contract and tort action into that of a trust beneficiary entitling it to what amounts to a prejudgment attachment order. Deficiencies do not change a substantially completed project into one that is not substantially completed.
On the evidence before me, I am satisfied that s.14 of the Condominium Property Act does not apply as the Axxess development is substantially complete and has been since at least late March 2008 when the occupancy permits were issued by the City of Grande Prairie.
The Court ordered the condominium corporation to issue clear estoppel certificates in relation to the seven remaining units “once (the corporation) has been paid its ordinary fees and penalties on the sale of the remaining seven units”. [As such, the total special assessment levied by the condominium corporation (to raise the funds required to remedy the deficiencies) was to be shared by all owners and could not be applied only against the seven unsold units.]