In a recent case, Seto v. PCC No. 492, several commercial condominium owners were unsuccessful in their application for an order that the condominium corporation had engaged in conduct that was oppressive or unfairly prejudicial to their interests.

There were several issues in dispute between the parties:

Food Court Area Common Expense Overcharges The applicants owned five of eight food court units in the condominium. All of the food court units had the joint exclusive use of a portion of the common elements for the food court seating area. The declaration provided that the owners of the food court units were responsible for all costs of “cleaning, furnishing, maintaining, policing and managing” the food court area. These costs were separately budgeted and charged exclusively to the owners of the food court units. The declaration further provided that all of the owners in the condominium were responsible for waste disposal charges from the common elements as part of their common expenses.

The corporation had included approximately 70% of the total common elements waste disposal charges in the costs that were billed separately to the owners of the food court areas, claiming that the food court area generated significantly more garbage than the other common elements in the condominium. The applicants claimed that this was contrary to the provisions in the declaration. After reviewing the declaration, the Court agreed with the applicants on the basis that the terms “maintaining, cleaning and managing” did not include waste removal and that the declaration clearly specified that waste disposal from the common elements was to be shared by all owners of the condominium. However, the applicants were not successful in their claim that the food court owners were improperly billed for pest control charges, as the Court held that these charges were rightfully included in “cleaning, maintaining and managing” the food court area.

In this case the Court used a strict interpretation of the declaration to come to its conclusion. This differs from the approach taken by the Court in the case of MTCC No. 659 v. Truman (which we blogged about in an earlier post), where the Judge went beyond the strict wording of the declaration to hold a unit owner responsible for his disproportionate use of water, relying instead, on the principles of equity and fairness.

Failure of the Corporation to Enforce the Declaration The applicants also alleged that the condominium corporation permitted or enabled breaches of the declaration, as patrons of other food service units in the condominium in close proximity to the food court used the exclusive food court seating area. The corporation had previously sent a notice to all of the unit owners advising that the food court area was for the exclusive use and enjoyment of the food court unit owners and had also allowed the food court unit owners to display their own signage to this effect in the food court area (even though they had not sought the approval of the corporation prior to the erection of such signs). For this reason, the Court held that the corporation had not enabled or permitted breaches of the declaration by allowing patrons of other food service businesses to use the food court area.  However, the Court did find that the corporation permitted a breach of the declaration by allowing another unit owner to sell dim sum items, in contravention of the declaration which provided one of the applicants’ units with a designated use of serving dim sum to the exclusion of all other units in the condominium. The Court ordered the corporation to send a notice to all of unit owners advising that one unit in the condominium had the exclusive right to serve dim sum and that all other owners were to cease selling any dim sum items. If any owner continued to sell dim sum in contravention of the declaration, the corporation was at liberty to apply to the Court for an enforcement order.

Claim for Oppression The Court found that there was no basis for the applicants’ claim that the corporation had acted in a manner that would be considered to be oppressive or unfairly prejudicial to the applicants’ interests. The Court noted that the inclusion of waste disposal charges in the food court area common expenses was not unreasonable, as the corporation‘s actions were based on poorly drafted provisions in the declaration. This case illustrates that not all breaches of the declaration by the corporation or failure of the corporation to enforce the declaration will constitute oppression.