Bank of Montreal v. Rajakaruna (Alberta Court of Queen"s Bench)

The defendants owned a condominium unit.  The plaintiff was their mortgagee.  The condominium corporation claimed that the owners were obligated to pay a fine (due to excessive noise caused by the owners’ tenants) and a witness fee (for the condominium manager’s teleconference attendance at the related hearing of the Residential Tenancy Dispute Officer). 

The mortgagee had paid the amounts claimed by the condominium corporation and then ultimately started a foreclosure action against the owners.  The mortgagee applied for summary judgment (hoping to avoid a trial).  The Court refused the application and ordered that the matter proceed to trial.  The Court’s reasons were as follows: 

• “It is my conclusion that there is insufficient evidence that the witness fee was an amount paid by the Condominium Corporation or the property management company which could be an expense chargeable pursuant to the by-laws…”
• “… there is insufficient evidence for me to conclude that the Condominium Corporation was entitled to levy a noise violation fine.  Where the bank claims that a condominium expense, charge or fine is valid, it has the onus to prove it.  It may be enough that the Condominium Board has assessed the fine at a properly convened meeting where notice was given to the defendants.  A certified copy of Board minutes evidencing the result of the meeting might suffice.”
• “If the Corporation had a right to levy the fine, it is a contractual claim only which would support a caveat against title as an encumbrance subject to a prior registered mortgage.”
• “If the Condominium Corporation had a right to charge witness fees under (the by-laws), they could maintain a statutory charge in priority to a registered mortgage.  However, I have concluded earlier that the witness fees are not maintainable due to a lack of evidence.”

The mortgagee nevertheless had the right, under the terms of the mortgage, to pay the amounts in question (and add them to the mortgage debt) if they were indeed owed by the owners to the condominium corporation.

• “Therefore it is necessary for the claim to proceed to trial, where the plaintiff may call evidence to better support its allegation that the Condominium Corporation was entitled to charge the noise fine and witness fees.”