27/09/2019 – Jurisdiction Ontario
68 published on 01/12/2019
Court finds oppression in relation to contracting for services to the units
Perth SCC 39 is a retirement residence. Under the terms of the corporation’s declaration and by-laws, owners are obligated to enter into services operation agreements with a particular services manager, on terms set out in the by-laws.
The condominium corporation (the Board) was controlled by one of the owners (who owned a majority of the units). That owner entered into services operation agreements which in some cases were not on the same terms as required of other owners. One of the other owners claimed that this was oppressive. The Court agreed. The Court said:
In the case at hand the condominium declaration requires that every owner enter into a services operation agreement with the services manager. The declaration requires that if an owner rents their unit, the occupants must enter into the then current form of services operation agreement with the services manager. Condominium bylaw number 2 sets out the content of the required services agreement. The condominium bylaw number 2 requires that an owner of a residential unit who grants a right of occupancy must ensure that the tenant enters into the then current form of services operation agreement with the services manager. The declaration and bylaw together make it clear that all occupants of McCarthy Place are to be treated equally. All occupants of McCarthy Place are required to have the same services agreement with the services manager. All occupants of McCarthy Place are to pay the same amount for required services.
In my view, the plaintiffs reasonably expected that all occupants of McCarthy Place would be treated equally and charged the same amount for services. The defendants have not complied with the declaration and bylaw. They have not ensured that all occupants be treated equally. They have not ensured that all occupants be charged the same amount for services. In doing so, the defendants have received an unfair advantage in renting their units, in that they have been able to offer incentives not available to the plaintiffs.
In my view, the defendants’ conduct, described above, is unfairly prejudicial to the plaintiffs and unfairly disregards the interests of the plaintiffs. Given that, it falls within conduct defined by the Condominium Act, 1998, s. 135. The section refers to conduct that is “oppressive or unfairly prejudicial to the applicant or unfairly disregards the interests of the applicant”. Conduct need not be oppressive to engage the remedy – it need only be unfairly prejudicial or unfairly disregard an owner’s interests. On my reading of the section, a finding of bad faith is not necessary.
The finding of oppression was made against both the majority owner and the condominium corporation.
The Court declined to make any order to change the composition or control of the condominium Board. Instead, the Court ordered that the Defendants enforce the declaration and by-laws equally against all owners “by requiring that all occupants enter into the same services agreement with the services manager, separate and apart from the rent for a unit”.