In a recent Ottawa decision, the court confirmed again that condominium corporations must be careful to properly balance the interests of all owners – even the sole commercial owner. This case opposed the interests of a parking operator who wished to operate a parking business permitted in the condo’s declaration and the residential owners who felt such a business would impact their security. The court concluded that imposing costly restrictions on the parking operator was oppressive and prejudicial.  But the story is not over yet…

Facts of the case

CCC 375 is a mixed-use condominium complex, containing both commercial and residential units. This complex is located in the heart of the ByWard market in Ottawa.  Since the inception of the corporation, one of the four levels of the underground parking consists of a commercial parking. The condo’s declaration not only provided for the operation of such commercial parking business but it actually imposed on the owner of these parkings the obligation to rent at least 30 of them on an hourly basis.  Over time, the owner of the commercial parking converted all of them to monthly parking.  A new owner acquired the parking unit in 2000 and wished to return it to an hourly based parking.  To do so, required some changes to the common elements, such as the installation of a garage loop detector, the installation of a “pay-and-display” meter, the replacement of the hardware on an exterior pedestrian door to allow free access to the commercial parking and the installation of appropriate signage inside and outside the building. The parking operator proposed to pay for these changes.

When advised of the owner’s intention to convert the commercial parking to a pay-and-display operation, the board refused to consent to the proposed changes. The board cited security concerns. Not only did the board refuse to approve the changes required to the common elements but decided to treat them as “substantial changes” under s. 97 of the Condominium Act, thereby requiring the approval of at least 2/3 of the registered owners for the changes to pass.

In response to the security concerns, the parking operator offered to install:

  • A new fenced door in the stairwell to prevent unauthorized access to lower residential level;
  • A security camera in the stairwell;
  • Additional lighting;
  • An emergency call-box;
  • A door to replace the glass door entrance at the entrance of the stairwell;
  • The operator also proposed to hire hourly security patrols.

Eventually, the board advised that it would approve the changes to the common elements (presumably without a vote of the owners) but only if the parking operator was to pay for a full-time parking attendant and an extra security officer.  The cost of what the corporation demanded exceeded the revenue expected to be generated by the operation of the commercial parking.

The parking operator brought a court application seeking an oppression remedy under section 135 of the Condominium Act.  Basically, the parking operator took the position that the corporation’s conduct was unfairly prejudicial and that it unfairly disregarded its interest.

Decision of the Court

Relying on another Ottawa case (Grigoriu v. OCSCC 706), the court reiterated that oppressive conduct is conduct which undermines the reasonable expectations of a party and which is coercive, abusive or which unfairly disregards the interest of a party.  The court concluded that the corporation’s conduct was in fact oppressive in that it unfairly disregarded the legitimate interests of the parking operator.   The judge concluded that not only did the declaration permit this kind of operation, it actually imposed on the parking operator the obligation to operate a minimum number of parking spots on an hourly basis. While the corporation’s safety concerns may have been reasonable, the corporation was also required to be reasonable on the security precautions they sought to impose on the parking operator. In the court’s view, it was not reasonable for the corporation to insist on having a full-time security guard. While the risk of intruders existed, the corporation was in no worse of a position since intruders could already sneak into the garage.  Moreover, there was no objective evidence of such intrusions being a problem in other public parkings in the area.

By insisting that a prohibitively expensive full-time dedicated security guard be hired as a prerequisite to approving the changes to the common elements, the Board disregarded the legitimate interests of the parking operator.

The court concluded that the operator’s proposed solutions to provide hourly security guards, add lights, a camera and doors/gates to block access to lower level were sufficient and reasonable.

Conundrum

Interestingly, while the court concluded that imposing a full-time security guard was oppressive on the part of the corporation, the court appeared to be uncertain as to what to do with the decision of the corporation to treat the required changes as “substantial changes” necessitating the approval of 2/3 of the owners.  The parking operator will be in no better position if the owners vote down the changes which are required for him to operate the parking.

It is true that, by operation of the Condominium Act, neither an owner nor a corporation can make a substantialaddition, alteration, or improvement to the common elements unless 2/3 of the owners approve it.  However, from my reading of the reasons, it appears that it was the board who decided to treat the required changes as “substantial” (and not the cost of the change, since these would be paid by the parking operator). In my view, the board’s decision to treat as substantial a change which may not otherwise have been one also amounts to oppressive conduct.  By submitting these changes to the “dictature of democracy”, the plans of the parking operator are near certain to be quashed by the owners.

Section 135 of the Condominium Act  grants judges very wide powers when faced with oppressive conduct, including the power to make any order which is deemed proper. Based on such powers, the judge in Grigoriu ordered a condo corporation to amend its declaration, despite the fact that owners had not supported such a change. One of the solutions to this conundrum would be to order that the required changes be allowed – subject to a determination of who will pay for them.