The Condominium Act's oppression remedy has been in effect for more than 10 years, but there is relatively little Ontario case law on it. A recent Superior Court case has tackled the subject head-on, and provides some useful guidance as to what will and will not be considered, oppressive conduct.
Unit owners FH and JK purchased their unit at 18 Mondeo Drive from the developer in 2005. The purchase included a parking unit, and from 2005 to 2008 FH and JK parked their van in the garage without incident.
In February 2008, the van had an encounter with the garage door. This led to the Board of Directors issuing a notice to them advising that the Declaration restricted the height of vehicles in the garage to 1.9 meters. They were directed to cease parking the van in the garage.
FH and JK asked for an exemption from this restriction, presumably on the basis of non-enforcement. They also denied that their vehicle was responsible for the damage. The Board met with them in March 2008, declined their request for an exemption, but gave them until June 2008 to move their vehicle.
In April, a notice went out to all residents setting out the height restriction on vehicles in the garage. The notice advised that over-height vehicles might damage the sprinkler system. It further advised that as an accommodation, owners of over-height vehicles could apply for a permit to use outdoor visitor parking for up to 30 days. The case is not clear as to whether such permission could be granted more than once.
JK decided he wanted to run for the Board, and so advised the Board. In the run-up to the AGM, the Board served JK with notice submitting the height restriction issue to mediation. At the AGM, he was told that he did not qualify as a candidate for the board, as he had "pending litigation" with the corporation in accordance with the by-laws of the corporation.
In June, the Board had a steel beam installed at the garage entrance. This prevented oversized vehicles from getting through the garage door. This was later removed, as FH and JK established that it contravened municipal regulations. In the meantime, JK asked for a permit to park in the visitor parking spaces. This was originally denied by the Board, and then agreed to. At this point JK decided there was no place to park his vehicle in the corporation and he moved out.
The corporation served notice to arbitrate the dispute in August 2008. In the arbitration, FH and JK were self-represented, and took the position that they should be grandfathered, as they had parked their vehicle in the garage between 2005 and 2008 without incident. The parties met in March 2009. The Board agreed to exempt FH and JK from the height restriction, provided FH and JK agreed to pay for any damage their van did to the garage. The Board also offered to issue monthly permits to JK to use the visitor parking until the matter was finally resolved.
Because of changes on the Board, the parties could not follow up on the March 2009 meeting until July 2009. At this meeting FH and JK suggested they wanted monetary compensation. This crystallized into a demand in August 2009, that not only should their vehicle be grandfathered, but they should also receive $150,000 in compensation.
The Board rejected this proposal and indicated the arbitration would proceed. In December 2009, the corporation counter offered by withdrawing their grandfathering proposal, and demanding that FH and JK sell their unit by June 30, 2010. Until then, they could park in visitor's parking, but after that date, they could not park the van anywhere on condominium property.
FH and JK rejected the proposal and stated that they would move from the condominium voluntarily. In their subsequent oppression application, FH and JK stated that this letter was "entirely sardonic and not sincere". But the Board took them at their word, and revoked the visitor parking permit effective January 31, 2010, rather than wait until June 30, 2010.
JK and his vehicle moved away again, but returned in June, allegedly to help his family move, and to that end, altered a parking permit so that he could park in visitor parking. FH and JK suffered several other indignities, in their view. They were advised that the wrong keys were issued to them originally, and required to pay for replacement keys. They refused. The corporation repinned their locks to correct the problem, and charged them back $2,373.00 for the repinning. When JK and FH refused to pay this charge, the corporation sued them in small claims court to recover the cost. The small claims judge dismissed the case on grounds that FH and JK were not at fault.
Even after they left the condominium, FH and JK felt they were being mistreated by the condominium, alleging that their tenant was being harassed, as she received continual complaints about her barking dog. She eventually moved out.
THE OPPRESSION APPLICATION
FH and JK launched an application against the corporation, claiming damages for oppression. They represented themselves, and laid out what they regarded as a whole long history of oppression by the corporation, right from the initial demand that their vehicle be removed from the garage, through JK’s failed efforts to stand for a position on the Board, the protracted negotiations, the proffered and then retracted offer to grandfather their vehicle, the corporation's failed court action to have them pay for keys, and the alleged harassment of their tenant.
The Court dismissed their application and awarded the condominium corporation costs of $45,000 plus disbursements.
THE COURT'S REASONING
While any oppression remedy application depends heavily on its own facts, some parts of the Court's judgment are instructive. Several times, the Court states that the Board must balance private interests against communal interests. The judge states that some prejudice or disregard of the applicant's interests is acceptable, provided it is not unfair. The Court must recognize that there is a balancing act involved, and must look at the conduct of the Board overall. The purpose of the oppression remedy is to protect reasonable expectations only, having regard to this balancing. And the Court is entitled to look not only at the Board's conduct, but also at the Applicant's.
The Court was unimpressed by the Applicants' decision to bring all of the Board's interactions with them under scrutiny as unfair, without acknowledging that they, the Applicants, were in breach of the Rules, and were being asked to comply in the same manner as were all other owners. Similarly, the Applicants' argument that proceedings against them were protracted was rejected. The Court took a very different view. The corporation was trying to compromise, to accommodate certain of the Applicants; demands. Any delays were part of reasonable and good faith efforts to balance the requests and interests of the applicants with the interest of other residents.
The argument that the placement of the steel beam in the parking garage was oppressive was similarly dismissed. The steel beam did not target the applicants alone, and for an action to be oppressive, it must target a single owner. The court also noted that the beam was installed because of legitimate concerns for protection the common elements, and emphasized that the Board sought legal advice regarding the issue.
The importance of, and the protection afforded by, acting on legal advice also appears in the Court's brief discussion of the Board's decision to serve notice to mediate on the Applicants in the face of JK’s stated intention to run for the Board. The court emphasizes that legal counsel was sought, and that it was legal counsel who advised JK at the annual general meeting of the corporation that he was disqualified from running for the Board. The Court stated that, given the Applicants' adversarial approach, it was clear that litigation was inevitable, and declined to find any ulterior motive behind the action of the Board in serving notice to mediate.
The Court made it clear that invoking the oppression remedy invites the Court to look closely at the conduct of the Applicant. Here, the Court was clearly troubled by the applicants' demand for high monetary compensation, $150,000, when the corporation had offered to grandfather them. Similarly, the applicant's altering of a parking permit in July 2010 is sternly reproved, the court noting: that this incident of self help by the Applicants must be considered when the Applicants claim victimization, as it shows how far they are prepared to go in opposition to the corporation.
LESSONS TO BE LEARNED
Initially, it is surprising that the Court was not moved by the Applicant's argument that the vehicle height restriction must be grandfathered, as it was not enforced against anyone between 2005 and 2008. However, the hearing was held 3 years later, in 2011, and the evidence before the Court seems to have been that all owners were by that time complying with the restriction without objection, save and except the Applicants. The Court clarified that the oppression remedy does not require that the corporation act in the Applicants' best interests, but rather that the corporation balance fairly that interest against the communal interest.
Throughout the case report, it is evident that the Court took into account that the corporation was seeking and taking counsel's advice. This weighs heavily in the corporation's favour, as the Court stated that it could not find bad faith, or an ulterior motive, or (in the case of the failed small claims action) that the steps taken were unduly burdensome or acrimonious.
This case does not make any new law regarding oppression; indeed, it explicitly adopts the existing case law's statements regarding the kind of conduct which will be regarded as oppressive. However, looked at overall, it does appear to raise the bar on the kind of conduct which will result in a finding of oppression against the corporation. It also raises the stakes for any unit owner trying to make that case. The costs of being wrong, even if you self-represent, can be very high.