Part 46 published on 01/05/14
Condominium manager entitled to compensation for breach of contract
The condominium corporation terminated the Plaintiff’s management contract with two months’ notice, effective July 31, 2011. The manager claimed that the termination was not in accordance with the terms of the management contract. The management contract allowed for termination of the contract on 60 days’ notice, only at the end of any annual term of the contract (namely, May 31). The manager therefore claimed for ten months of lost management fees, for the period from August 1, 2011 through May 31, 2012.
The condominium corporation asserted that:
a) The corporation had the right to terminate the contract for cause (and therefore without notice) due to the manager’s poor performance;
b) The corporation had the right to terminate the contract at any time on 60 days’ notice under s. 17 of the Condominium Property Act.
The Court ruled in favour of the manager. The Court said:
a) There had been no cause for termination;
b) Section 17 of the Act did not apply because the management contract was not a “developer’s management agreement”. At the time the management contract had been signed, all of the units had been sold by the original developer to an arm’s length purchaser for valuable consideration. That purchaser therefore did not meet the definition of “developer”.
c) The manager, however, was not entitled to recover the full amount of the lost management fees for the ten-month period. The Court said:
Here, the Plaintiff would have received the amount of $18,637.50 for the balance of this contractual term. However, the Plaintiff would have incurred expenses in performing the Management Agreement and there was very little, if any, evidence presented on this topic, nor was there any significant cross-examination on the point. Furthermore, while the Defendant pled a failure to mitigate its damages on the part of Progressive, there was no evidence, cross examination or argument on the point presented by the Corporation.
I am satisfied that the proper measure of damages suffered by Progressive in this matter is equal to the total contract price, less the direct costs associated with performing this contract.
The Court estimated the manager’s costs at 25% of the total management fee, and awarded judgment in the amount of the lost net profit over the ten-month period (being $13,978.12).