Part published on 01/01/70
Breach of fiduciary duties by 100% owner
The condominium project was constructed in 1982. In 1988, the Defendant Danray acquired all of the units and operated them as a rental project. In 1994, Danray was approached by two Edmonton realtors who proposed that Danray sell the entire project to a numbered company and the realtors would in turn market the condominium units to individual purchasers. Danray and the realtors entered into the sale agreement in January 1994. The project was then marketed to individual purchasers, with the sale to the realtors closing in 1998.
The principal of Danray, Mr. Danny Taran, was appointed as a Director of the condominium corporation in 1994.
The new owners of the condominium (the individual purchasers) sued Danray and Taran for failure to properly maintain the project and for failure to establish an adequate contingency reserve fund (during the period prior to the individual transfers).
The Court said that Mr. Taran and Danray had fiduciary obligations to the new purchasers. The Court also said that Mr. Taran and Danray could be considered the “developer” for purposes of the Condominium Property Act, notwithstanding the intermediate sale to the numbered company. Accordingly, they were liable to the purchasers for any damages flowing from a breach of their fiduciary duties.