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Condo liens, oppression, insurance deductible and other firefighting lessons

Sadly, this case started with eggs being inadvertently forgotten on a stove and ended with an owner losing his home when he refused to pay the deductible amount being charged back to his unit. In this blog, we discuss the validity of condo liens and the deference that will be granted to condo corporations who are exercising their duties.

Facts

It all started when an owner left his cooking unattended after having left the unit with the stove on. Another owner smelled the odour of smoke in the staircase many floors above and heard the in-suite fire alarm. The building superintendent eventually attended the unit and entered with the master key. He located the burning pot, turned the stove off and opened windows to air out the unit.

With smoke and burning odour present in the building’s hallways and staircases, the corporation retained a remediation company, which resulted in a cost of approximately $8,600. With a deductible of $5,000, the corporation made the business decision not to make an insurance claim. They charge the deductible amount to the owner (pursuant to their insurance deductible by-law) and paid the difference.

The owner refused to pay the deductible and even refused to submit the claim to his home insurance (which would have paid the deductible amount and only required him to pay $1,000). When he did not pay the corporation’s deductible, the owner was served with a notice of lien. He refused to pay. A lien was registered. He continued to refuse to pay. The following year, when his mortgage came up for renewal, the mortgagor required proof that the lien had been discharged. The owner held firm and refused to pay to discharge the lien. Refinancing was therefore denied. As the owner was unable to pay the mortgage, the mortgage lender brought a power of sale proceeding and the unit was eventually sold.

The lawsuit

The owner sued the corporation, its manager and the superintendent claiming to have been oppressed when the corporation registered a lien for the unpaid deductible (amongst many other allegations of oppression).  The crux of the owner’s argument was that since none of the remediation steps were necessary (according to him) the registration of a lien was oppressive.

The Corporation brought a motion for summary judgment seeking to have the claim dismissed without a trial on the basis that the claim raised no reasonable cause of action.

Result

The Corporation was successful and the entire case was dismissed.  The judge wrote:

This is a very unfortunate case where stubbornness prevailed over pragmatism and common sense.

To be clear, a situation that could have been resolved with [the owner] paying $1,000 ended with him losing his home. Before me, over a three-day summary judgment motion, [the owner] maintained that he should not have been asked to pay a penny towards the remediation costs, and that everything flowing from his burning eggs was the Corporation’s fault.

There was smoke. There was odour. It needed to be cleaned. I find that the remediation steps were reasonable as was the cost.  There is absolutely no evidence of fraud or gauging.

Condo law takeaways

While the case raises many interesting procedural and legal points (Condo Geeks will want to read the entire case), we will focus the takeaways on those relevant to CondoLand.

No oppression when a condo fulfills its duties

When determining whether a condo corporation’s conduct is oppressive, the court will look at whether the corporation acted within its powers under the Condo Act and its governing documents.  In this case, the condo’s declaration expressly granted the corporation the right to enter the unit in case of emergency.  The condo was also found to have an obligation to all unit owners to remediate the common elements. It acted within these parametres.

Standard of care expected of the Super

The owner argued that the superintendent did not follow the Ottawa Fire Department’s Tactical Ventilation Protocol when he entered the unit. He claims that the order in which he opened the windows overrode the building’s positive pressure ventilation system, pushing the odour in the hallway.

The court concluded that the standard of care expected of the superintendent during a crisis is not that of a trained firefighter.  Courts don’t expect the superintended to consider the atmospheric wind speed and direction before opening the unit door when the fire alarm is ringing.  They entered the unit to ensure no one was trapped inside in need of assistance. They turned the stove off and opened windows to air the unit out. That, the court said, was completely reasonable.

Liens are not oppressive

If an owner is in arrears of a valid common expense, it is entirely reasonable (and not oppressive) for the Corporation to register a lien.  The judge wrote: “a reasonable owner would expect the Corporation to take the steps necessary to recover common expenses that are properly charged but remain unpaid”.

Not all events justify an insurance claim

Implicitly, the court recognized the corporation’s authority to not make an insurance claim when the business case does not justify it. In such case, the corporation should pay what the insurance would have covered and should charge to the owner what the owner would have been on the hook for in any event.

What to do when faced with a lien?

Perhaps the most important lesson: When an owner is faced with a notice of lien: consult a lawyer ASAP.  When in doubt, pay first (even if under protest) and ask questions later. The consequences of ignoring a lien can be dire.

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