Fight Fire with Fire: Seeking Court Orders to Amend the Declaration
[caption id="attachment_media-26" align="alignnone" width="1880"] Photo by rawpixel.com on Pexels.com[/caption] A condominium corporation recently brought an application to the court for an order amending its declaration. The application was brought under section 109 of the Condominium Act, 1998, which allows the court to amend the declaration for a condominium where it is "necessary or desirable to correct an error or inconsistency that appears in the declaration....or that arises out of the carrying out of the intent and purpose of the declaration." The case is most interesting because of the alleged errors or inconsistencies. The case is available on CanLii for those interested in reading it in its entirety. The condominium wanted amendments to its declaration because of a repair and maintenance issue in the building. The units on the top four floors had fireplaces. The units on the bottom sixteen floors did not. In 2013 it was determined that the fireplaces were unsafe and required significant repairs. A debate arose as to whether the costs to repair the fireplaces ought to form part of the common expenses shared by all owners or if only the owners with fireplaces ought to be responsible for the costs. Even within the owners with fireplaces there was debate about the best solution. Some wanted to restore the fireplaces while others were happy to decommission them. The condominium brought the application under section 109 of the Act and sought amendments to the declaration that would include the fireplace as an exclusive use common element in Schedule "F". In the alternative, the condominium sought an order amending the description to clarify that the chimney flues formed part of the units. A group of the owners with fireplaces filed their own application. They sought a declaration that the chimney flues form part of the common elements, an order that required the condominium to repair the chimney flues, and an oppression remedy requiring the condominium to repair the chimney flues. The court reviewed the declaration in its entirety and found that the nine references in the declaration and by-laws to exclusive use common elements showed a recognition that some of the common elements would be used permanently and exclusively by some owners. As a result, the court found that the failure to designate areas as exclusive use common elements in the declaration could be an error or inconsistency. The court adopted the broad definition of "error" as including an error in opinion, a mistake, a malformation, a flaw or miscarriage, in addition to something incorrectly done through ignorance or inadvertence. The court concluded that the failure to specify the chimney flues as exclusive use common elements was an error. The court found that it was necessary or desirable to amend the declaration to correct the error. Of note is that the court ignored the submission made by the respondents that the decision would have a profound impact on the broader condominium community as each condominium created under the 1980 Condominium Act without a Schedule F describing exclusive use common elements would now be required to review its declaration and implement a Schedule F where one does not currently exist. (Note: this might be a legitimate concern to many older condominiums or possibly some newer ones where the exclusive use common elements are not properly described in the declaration. You may want to seek legal advice about the options for correcting any issues). Interestingly, the court found that the declaration was clear when it came to the maintenance and repair obligations and the unit boundaries. The condominium sought amendments that would require the owners to maintain and repair the fireplaces. The condominium also sought amendments to clarify that parts of the fireplaces were contained within the unit boundaries. The court declined to do so as there was no error or inconsistency that would support these orders under section 109 of the Act. To summarize, the court ordered the declaration amended to make the fireplaces exclusive use common elements, but refused to make the other requested orders to require the owners to maintain and repair the fireplaces. As a result, the condominium will continue to be responsible for the repair of the fireplaces while the owners and condominium will continue to share the obligation for maintenance of the fireplaces. As an interesting side note (perhaps only to lawyers), the court ruled that three letters written by lawyers interpreting the documents were inadmissible. The letters were attached to affidavits of others and none of the lawyers were presented to the court to be qualified as experts to give evidence. The parties suggested the letters were part of the factual narrative, but the court found that they were not required for this purpose. As a result, the letters were not considered by the judge in the hearing. I wonder if the result would have been different if one or more of the lawyers were tendered as experts to provide an opinion. I find the decision intriguing. I wasn't involved in the case so I didn't hear arguments or read submissions made. That said, it seems to me that many of the clauses referred to by the judge as evidence of an intention to include exclusive use common elements in the declaration may themselves have been an error or inconsistency. Perhaps the clauses were included to cover possible future amendments to add exclusive use common elements. Adding exclusive use common elements later can require extensive amendments to the remainder of the declaration. Perhaps these clauses were left in the documents because the drafters were using a template from another condominium that had exclusive use common elements. I see this regularly when reviewing declarations, by-laws and rules. The lawyer copies from another condominium, often resulting in unintended results like in the present case. I remember a file where the builder used the same declaration for two condominiums. The problem was that they forgot to switch the proportions around for the second building (the buildings were mirror images). The result was the largest units had the smallest proportions while the smallest units had the largest. A court order was the only way to fix it as the owners of the largest units paying the smallest amount would not consent to the amendment. Mixed results to say the least. I suspect neither side anticipated this outcome, but would be interested to hear from those involved. At a minimum the case highlights one of the biggest risks with court: uncertainty. A good reminder of one of the benefits of alternative dispute resolution methods - more control over the process.