Canadian Underwriter

Courts examine how condo corporations recoup common-area repair costs

October 17, 2018   by Greg Meckbach

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A dispute between a condominium corporation and a unit owner – ultimately arising from frozen water pipes – has landed at the Supreme Court of Canada.

In 2015, the condominium board of the Erindale Village complex passed a resolution requiring each unit owner to pay a deposit of one months’ rent. In the past, the condo corporation had to pay a $4,000 insurance deductible on damage to common property resulting from cracked pipes, which froze after a tenant shut off water in a unit, Judge Ralph Ottenbreit of the Court of Appeal for Saskatchewan wrote in Goertz v The Owners Condominium Plan No. 98SA12401.

Robin Goertz owned several units in Erindale Village. He refused to pay the one-month’s-rent deposits on some of the units he owned. As a result, Goertz lost his right to vote at condo board meetings. Goertz and the condo corporation ended up in court.

The court of appeal ruling, released May 29, 2018, upheld a 2017 Court of Queen’s Bench ruling against Goertz. The Supreme Court of Canada announced Oct. 12, 2018 that Goertz is applying for leave to appeal. Applications for leave to appeal go before a three-judge panel, who decide whether or not the Supreme Court of Canada will hear the case.

Goetz’s main argument is that Saskatchewan law prohibits condo corporations in the province from imposing fees on unit owners unless those fees go into either a common expense fund or a reserve fund.

Judge Brian Scherman of the Court of Queen’s Bench disagreed.

Most of the cost of operating a condo corporation does come from from levies that go into a common expense fund or reserve fund, Scherman wrote in his 2017 ruling. But condo corporations also have the “right and power to impose obligations other than for condominium fees and the right to collect indebtedness howsoever arising,” Scherman added.

The cost of repairing damage caused by unit owners or tenants to common property, “should by any common sense approach to the matter” be the responsibility of the unit owner, Scherman wrote.

It would be “manifestly unfair” to the other unit owners for the condo corporation to use “common expense funds without looking to the responsible owner for indemnification,” he explained.

The Court of Appeal agreed, noting that the Saskatchewan Condominium Property Act lets condo corporations collect deposits and spend money from owners’ deposits to repair common property if the damage is caused by people living in those units.

In May of 2015, the condo corporation billed Goertz for $413 to repair a common-area lawn, which was allegedly damaged by a dog belonging to a tenant of one of the units owned by Goertz. The following April, the condo corporation invoiced Goertz $75 to remove dog feces from a lawn and another $80 to re-seed a lawn. Goertz refused to pay those invoices, which would have been paid out of deposits had Goertz paid deposits, Judge Scherman wrote.

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