In a prior blog post we noted that in walkable neighbourhoods in the downtown core, many condo unit purchasers are opting not to purchase a parking unit, as a car is not a necessity in such neighbourhoods. In other condominiums, however, having a parking space is crucial in a purchaser’s decision to purchase a residential unit. In the case of Grigoriu v. OCSCC No. 706, when the applicants/owners purchased their residential unit from the developer, they also purchased from the developer a parking unit and storage unit in the adjacent building (which was a separate condominium corporation) as there were no such units available in the building in which their residential unit was located. The transfer of the parking and storage units was subject to restrictive covenants registered on title that restricted the owners’ access to the adjacent building only to access their parking and storage units.
Approximately five years after their purchase, the condominium corporation of the adjacent building amended its declaration to prohibit the use and ownership of parking units and storage units by non-owners of residential units. This amendment was brought about to address safety/security concerns. The applicant owners were the only owners of a parking unit and storage unit who were not also owners of a residential unit. As the condominium corporation was willing to grandfather the applicants for as long as they owned their residential unit, the amendment to the declaration was not enforced against the applicants. However, this meant that they could not sell their parking and storage units to any purchaser of their residential unit. The applicant owners and the corporation’s board of directors negotiated a further amendment to the declaration which would grant a specific exemption for their parking and storage units. However, the board was unable to obtain the requisite 80% written consent to such amendment from the condominium unit owners.The owners tried selling their residential unit, but were unable to do so. There were absolutely no offers to purchase their residential unit without a parking unit. The offers that they did receive included the parking unit and were conditional on having the declaration amended to allow the sale of the parking unit to the purchaser of the residential unit.
The owners brought an application under section 135 of the Condominium Act, claiming that the amendment to the declaration was oppressive or unfairly prejudicial to them and their interests. Section 135 gives the judge the power to make any order the judge deems proper, including an order prohibiting the conduct referred to in the application and an order requiring the payment of compensation. The corporation argued that if the court did find that the amendment to the declaration was oppressive, then the appropriate remedy was the payment of compensation equal to the value of the parking unit and the storage unit (estimated to be approximately $30,000).
There were three factors that supported the applicants’ position:
- The applicants were the only owners who were negatively affected by the amendment to declaration;
- The negative effect of the amendment to declaration was substantial, as it rendered the applicants’ residential unit unsaleable;
- The restrictive covenants registered on title addressed the corporation’s concerns about safety and security.
After determining that the owners would not have purchased their residential unit without the parking and storage units, (which they purchased in good faith and subject to the restrictive covenants), and without the ability to sell those units along with their residential unit, the judge concluded that the amendment to the declaration was oppressive:
“The conduct of the Board and the Corporation in amending the Declaration had the effect of undermining the reasonable expectations of the applicants and unfairly disregarded their interests.”
Accordingly, the court ordered that the declaration be amended in accordance with the wording to which the board and the owners had previously agreed.