1716243 Ontario Inc. v. Muskoka Standard Condominium Corporation No. 54 [2014] O.J. No. 1359

Legal Update

The Applicant, 1716243 Ontario Inc., applied to court seeking confirmation that it did not have to pay common expenses for its two parking spaces, and an Order discharging the lien registered by the Condominium. In response, the Condominium applied to Court seeking an Order that the Applicant was in violation of the Condominium’s documents, and an Order requiring the Applicant to pay the full amount of the registered lien.

In February 2012, the Applicant purchased a residential unit and two parking units within the Condominium. During the purchase, the Applicant requested a status certificate. The status certificate correctly disclosed the total amount of common expenses associated with the residential unit, but failed to disclose the total amount of common expenses for the two parking units. It appears that the Applicant was paying the monthly amount contained in the status certificate, omitting any amounts due and payable for the parking units. Therefore, each month there was a shortfall, and the Condominium subsequently registered a lien.

Upon applying to Court, the Applicant relied on section 76(4) of the Condominium Act, 1998, which states:

“76(4)-If a status certificate that a corporation has given under subsection (1) omits material information that it is required to contain, it shall be deemed to include a statement that there is no such information.”

In considering section 76(4), the Applicant argued that it was entitled to rely on the status certificate, and therefore should only be obligated to pay the amount of common expenses as contained in the status certificate (and any increases since the purchase). The Applicant also argued that the Condominium was not entitled to register a lien against the residential unit, as it was not in arrears. On the other hand, the Condominium asserted that a purchaser cannot review a status certificate in isolation. Rather, a purchaser must review the status certificate in conjunction with the Condominium’s Declaration, By-laws and Rules. The Condominium also argued that the parking units and residential unit owned by the Applicant were considered to be one unit as per the definition of “unit” in the Declaration. Therefore, the Condominium was entitled to register the lien against the residential unit, even though it was the parking units that were in arrears.

Upon analysis, the Court ruled in favour of the Condominium, indicating that a unit owner’s obligation to pay for common expenses is contained in both the Condominium Act, 1998, and the Condominium’s by-laws and declaration. The Court also found that the parking units did indeed form part of the unit as a whole, and therefore the Applicant was required to pay common expenses for both the parking units and the residential unit, in accordance with its proportionate interest in the common expenses. However, the Court did rule that it would be unfair to award the Condominium its full costs and interest given the error in the status certificate. Therefore, the Applicant was required to pay the common expense arrears owing under the lien exclusive of interest, and costs in the amount of $750.00.

Bottom Line: This case reinforces section 84(3) of the Condominium Act, 1998, in that a unit owner cannot avoid the obligation to contribute to the common expenses of a condominium, regardless of an error or the commencement of litigation. Additionally, it appears to emphasize the importance of accurate disclosure within a status certificate. Specifically, condominiums may be wise to 1) identify/include any attending parking or storage units; 2) issue separate status certificates for such units; or 3) disclose that parking or storage units are not included in the status certificate.