Condo Litigation – Section 67 of the Condominium Property Act

By Madyson Dietrich, Student-at-Law and Peter Major, Q.C.

As condo development increases across Canada, especially in urban centers, we can expect an influx of litigation over the interpretation and application of condo legislation and their bylaws. One common trend in Alberta is the reliance on section 67 of Alberta’s Condominium Property Act, (“CPA”) in the litigation process to enforce reasonable behavior.

Section 67 allows the Court, on application by an “interested party”, to impose certain remedies if improper conduct has taken place. Interested parties include condo owners, condo corporations, members of the condo board, or any other persons with a registered interest in a condo unit. Sometimes referred to as the ‘oppression section’, section 67 seeks to restrain unfair conduct. Oppression remedies are also available under the Alberta Business Corporations Act, but the degree of conduct required under section 67 of the CPA may be less onerous than its counterpart, at least for the moment.

Remedies under section 67 include:

·         Directing an investigator to be appointed to review the improper conduct and report to the Court;

·         Directing improper conduct to cease;

·         Giving directions on how matters are to be carried out to avoid recurring issues;

·         Awarding compensation in respect of any losses resulting from improper conduct;

·         Awarding costs; or

·         Providing any other directions that the Court considers appropriate.

Improper Conduct Warranting a Section 67 Remedy

Improper conduct can mean a number of things including non-compliance with the CPA, its regulations or the condo’s bylaws, as well as conducting business affairs of a condo corporation or exercising condo board powers in an oppressive or unfair manner.

In The Owners Condominium Corporation No. 0211096 v Clayton, 2019 ABQB 877, the Court granted a section 67 remedy to a condo corporation who claimed that an owner was not complying with the bylaws. The owners had a dog and the condo corporation subsequently enacted a bylaw prohibiting dogs, which was to be grandfathered in. Despite the enactment of the new bylaw prohibiting dogs, the owners decided to get another dog.

While the Court was sympathetic to the owner’s situation, it held that permitting the owners to keep the dog in these circumstances would be unfair to other residents who follow the bylaws and policies and are entitled and expect the condominium corporation to enforce the bylaws as required under the CPA. Finding otherwise may impair or limit a condo corporation’s ability to enforce their rules in the future. The Court made an order under section 67 for an order to relocate the dog.

In Condominium Corporation No. 0613837 v Tien Ngoc Ho, 2019 ABQB 967, a condo corporation applied for declaratory relief under section 67 that they were absolved from all responsibility and liability with respect to the repairs of a unit. The owner’s unit was damaged as a result of a leak in another owner’s unit. The condo corporation maintained proper insurance but hired a contractor themselves to complete the repairs because the deductible exceeded the cost of repairs. The owners disputed the repairs claiming that their unit was unlawfully entered and the repairs were poor quality.

While the Court held that a trial was necessary to determine the issues (namely the quality of workmanship), it did not dismiss the application suggesting that this situation may properly warrant a section 67 remedy. However, the Court interestingly noted that section 67 is often used as a catch-all to enforce reasonable behavior, which is not its intended purpose.

Improper Use of Section 67

While section 67 is available to ensure enforcement of bylaws and proper exercise of powers by a condo corporation and board, the Court has notably dismissed a number of applications that improperly rely on section 67. For instance, in The Owners Condominium Corporation No. 1710419 v Condominium Corporation No. 1710627, 2019 ABQB 655, a residential condo corporation sought relief against a commercial condo corporation under section 67 after a dispute over shared expenses and nuisances in a mixed development.  

The two condo corporations had entered into a prior agreement, and the Court therefore questioned whether section 67 was an appropriate vehicle for resolution. It appeared that this dispute was contractual and section 67 would not apply. The Court noted that section 67 was designed to deal with issues arising within the administration of a condominium corporation and its relationship with owners.

In Owners: Condominium Plan No 7921815 (Pepperwood Village) v MacMillan, 2019 ABQB 642, a condominium corporation attempted to use section 67 to order an owner to cease and desist from making harassing statements to and about the condo corporation, managers, and legal service providers unless she was on the Board of Directors or had written authorization.

The Court refused to grant a remedy under section 67 since the owner’s communications were not in any sense a “use of her unit in the condominium development” and did not amount to improper conduct under the CPA.

Conclusion

Section 67 remains a useful tool as it is designed to govern the behavior between condo corporations and owners, as well as condo corporations and third parties. Condo corporations may rely on section 67 to ensure enforcement of bylaws, payment of condo fees, and compliance with special assessments. Similarly, unit owners may rely on section 67 to ensure that the condo corporation and board members are adhering to bylaws and ensure that bylaws accord with the CPA.

While section 67 is an important provision in the CPA, there appears to be increased reliance on the provision to enforce any reasonable behavior. Parties should not rely on section 67 as a “catch-all” section for any dispute and should still seek to resolve disputes by applying ordinary principles of contract and tort law where possible.

In instances involving true improper conduct in the context of the CPA, parties should seek to ensure that the evidentiary record allows a court to award the remedy sought under section 67 by way of Originating Application. Complicated findings of fact may require a full trial and further pleadings to be filed.  

With a strong reputation in commercial litigation, McLennan Ross LLP is well-positioned to provide you with exceptional advice and representation. If you have any questions or concerns with respect to the Condominium Property Act, or any other litigation matter, please do not hesitate to contact Madyson Dietrich or Peter Major, Q.C., or any member of our Commercial Litigation Team.

What’s It Worth? A Look at the Types of Damages in Tort Law

by Anna Fitz, Student-at Law & Peter Major, Q.C.

Before you go to court, you should know what relief you want the court to give you. Courts can award a wide variety of damages, or financial remedies, to a party that suffered a wrong. The damages a court will award vary depending on the applicable area of law. This article will focus on the damages a party might receive in a tort dispute. For the types of damages you can receive in contract law, please refer to our earlier blog post here.

Damages in Tort

In tort law, damages are meant to return an injured party to the position it was in before the defendant’s wrong. Two types of damages that frequently appear in tort cases are compensatory and non-compensatory damages.

In order to obtain damages, however, the plaintiff will still have to prove that their injuries were not too remote, were caused by the defendant’s behaviour, and should not be reduced due to a failure to mitigate.

Compensatory Damages

Courts award plaintiffs compensatory damages as recompense for harm the plaintiff suffered. Compensatory damages often fall into two sub-categories: general and special damages.

• General Damages:
  
  General damages compensate a plaintiff for non-monetary aspects of their loss, such as pain and suffering. For example, if John is rear-ended and suffers injuries, he is entitled to damages as a result. Courts will calculate his damages by referencing previous, similar case law. If other plaintiffs received $50,000 for injuries like John’s, then John will likely also receive $50,000.
  
• Special Damages:
  
  Special damages compensate a plaintiff for financial aspects of their loss. The simplest way to understand these damages is to think of out of pocket expenses that are incurred as a direct result of the tort. For example, let’s say John has to the pay the expenses up front out of his own pocket for painkillers or massage therapy or perhaps the rental of a car. John is also entitled to recover these financial losses he incurred due to the accident.

Non-Compensatory Damages

Courts might also award non-compensatory damages such as punitive, aggravated, and nominal damages.

• Punitive Damages:
  
  Courts award punitive damages when a party has committed egregious behaviour which the court wishes to punish and deter. For example, in one case an insurance company tried to avoid covering a family’s home which burned down by claiming the family committed arson. In that case, the Supreme Court of Canada held that a high punitive damages award was justified.
  
  Courts will only award punitive damages in extreme circumstances when the defendant’s behaviour was particularly shocking. If compensatory damages will deter the defendant’s wrongful behaviour, then punitive damages are not appropriate.
  
• Aggravated Damages:
  Courts award aggravated damages where the defendant’s conduct has caused the plaintiff particular distress, grief, or humiliation. Aggravated damages are therefore easily confused with punitive damages, but the two serve different purposes. Punitive damages punish a wrongdoer, whereas aggravated damages compensate a plaintiff. In some cases, a defendant’s high-handed and unkind behaviour may justify aggravated damages yet fall short of punitive damages.
  
• Nominal Damages:
  Courts will award a small, “nominal” damages award when the defendant only slightly infringed the plaintiff’s rights, the plaintiff failed to prove a meaningful loss, or the plaintiff failed to mitigate.
  
  For example, if Carrie punched Alice, then Carrie would have committed the tort of battery (and the criminal offence of assault). Alice could sue Carrie in tort and seek damages. But if Alice did not suffer a serious injury, she might only receive nominal damages.
  
  Similarly, let’s say Nick spread rumours about his business competitor Olivia, and she sued him for defamation. Even though Nick defamed her, if Olivia fails to prove that the rumour caused her a loss, she might only receive nominal damages.

When might courts deny an injured plaintiff’s damages? 

Even if a plaintiff suffered an injury, the court may deny damages that prove too remote, were not caused by the defendant’s conduct, or which the plaintiff took no steps to mitigate.

• Remoteness:
  Sometimes the connection between a plaintiff’s injury and the defendant’s conduct is too far removed. In these situations, ordering the defendant to pay the plaintiff damages would not be fair because the plaintiff’s injury was not reasonably foreseeable.
  
  For example, in one case a man found a dead fly in a water bottle and developed major depressive disorder as a result. He sued the water supplier in tort. The Supreme Court of Canada found that although the supplier was negligent, the plaintiff’s damages were too remote, as it was not reasonably foreseeable that someone who saw a dead fly in his water bottle would suffer such a severe reaction. The court therefore refused to grant the plaintiff damages.
  
• Causation:
  Even if a plaintiff suffered damages, they still need to prove that the defendant caused those damages. Courts generally apply the “but-for” test: but for the defendant’s conduct, would the plaintiff have suffered the injury? The plaintiff must prove on the balances of probabilities (51% certainty or more) that the defendant caused the loss.
  
  For example, let’s say Mike hired a contractor to renovate his house. During the construction process, the roof caved in. When he sues the contractor, Mike needs to prove that but for the contractor’s actions, his roof would not have caved in. On the other hand, the contractor could show the roof wasn’t strong enough to withstand the average winter snow load. This evidence could convince the court that the snow load, and not the contractor, caused the roof to cave in.
  
  In this case, the court would refuse to hold the contractor responsible and deny Mike damages.
  
• Mitigation:
  Even if the court determines a plaintiff was in the right, and the defendant owes them damages, the plaintiff must mitigate their damages. This means the plaintiff must keep their losses as minimal as possible.
  
  For example, if Rose is a doctor who bungles Liam’s surgery, and Liam endures pain and suffering as a result, he can sue Rose for the tort of medical malpractice. However, let’s say Liam could have reduced his pain if he regularly attended massage and physiotherapy. The court might reduce Liam’s damages because he failed to mitigate. If treatments could have alleviated his pain entirely, the court might only award Liam nominal damages. Therefore, to protect his interests and his right to full recovery, Liam must properly mitigate what he suffered.

Conclusion

If you have suffered an injury, you can seek a wide variety of damages and other remedies from the court. Consider speaking to a lawyer about your duty to mitigate and how you can recover the full amount of damages to which you are entitled.

McLennan Ross has a broad based commercial litigation practice involving all aspects of tort disputes and damages claims. If you require assistance or wish to know more about any of the concepts referenced above please contact Anna Fitz or Peter Major, Q.C. or any other member of the firm’s commercial litigation group.