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Sometimes In Litigation - Nobody Wins 2011/09/02 11:40  
Bob Aaron - Special To The Star

A Superior Court decision released last month underscores the importance of reviewing condominium floor plans before completing the purchase of a unit.

The trial of the action took 42 court days and involved nine lawyers representing the parties. I was one of the many expert witnesses called to testify about some of the legal issues in the dispute.

Back in September 1997, Kelly Jean Rainville signed an agreement of purchase and sale to buy one of 39 condominium townhouses in the Grand Harbour complex on Lake Shore Blvd. W. in Toronto.

Richard Weldon was one of the developers of the project. He bought one of the townhouse units for $402,366.09 from the court-appointed official receiver when the development ran into financial difficulties. Weldon’s unit was finished as a two-storey unit, with common element attic space above the second floor and a basement below the main floor.

The following spring, Weldon began construction to expand the unit into the attic. The added third-floor area consisted of a new set of stairs, new windows and skylights, a bathroom, sitting area and bedroom, totalling 862.2 square feet.

When the condominium corporation was registered in 1993, the surveyor’s floor plans filed in the Land Registry Office did not account for the finished attic space. The plans showed that the upper boundary of the townhouse was the second floor ceiling. No steps were ever taken to amend the condominium declaration, and plans to legalize the third-floor attic build-out, which would have converted it from common elements to a part of the unit below.

Four years after moving in, Weldon sold the unit to Rainville for $975,000. The certificate she obtained from the property managers as part of the purchase stated that there were no continuing violations of the condominium declaration, bylaws or rules.

In January, 1998, Rainville went to her lawyer’s office and met with a law clerk to review and sign the closing documents. Although she was under the impression that she owned from the ceiling of the third floor right down to the basement, she was not shown any condominium plans.

Before moving in, Rainville began a $700,000 renovation to the townhouse. During construction, it was discovered that there was mould in the third floor due to water leaking through the roof. The condominium board and property managers became involved to resolve the water issues, and it was soon revealed that the third floor of the townhouse had been built into the attic space without permission of the condominium corporation.

In 2001, Rainville sued her lawyer, the condominium corporation, the property manager and two of its employees, as well as a number of individuals who were condominium board members at various times.

In her claim, Rainville asked for the attic to be legalized as part of her unit, approval of the work she had done, and extensive damages for the cost of renovating and repairing the unit.

The trial took place before Madam Justice Darla A. Wilson in late 2009 and early 2010. I was one of the expert witnesses called to testify as to whether Rainville’s lawyer was negligent in failing to show her the horizontal and vertical plans, which would have revealed that the third floor was not part of the townhouse.

It was my opinion that Rainville’s lawyer’s clerk was negligent in failing to show the purchaser both the horizontal and vertical floor plans on the townhouse. In a detailed 69-page decision, Wilson agreed with my opinion and ruled that the law firm had indeed been negligent.

The judge, however, dismissed Rainville’s claim to have the third floor legalized. She was ordered to close up the third floor and restore it to attic space.

The law firm was ordered to pay Rainville almost $300,000 in damages, plus close-up costs and renovation costs to the third floor.

Sadly, the legal costs of having nine lawyers involved in a 42-day trial far exceeded the damages awarded. My guess is that the combined legal bills were several million dollars.

Sometimes in litigation, nobody wins.
Richard Forster
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masel ()
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Re:Sometimes In Litigation - Nobody Wins 2011/09/02 13:48  
While the above posting is right, most of the time, we must remember that some people may have other objectives in mind than just money, when chosing litigation. It is probably not applicable to the case above, but some people litigate only to cause trouble to others. Some litigate only to be noticed. For some people going unnoticed is death. A negative attention is better for them than no attention.
Just came across somebody lately, who could not stop doing litigations, one after the other, being convinced that nobody else could interpret the law right. I mean, nobody, including lawyers. And that person was very surprised when told at court that the allegation had to be proven by the Plaintiff, not the innocence by the Defendant.
By that time a lot of money spent. But what can one do about it?
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Try Staying Out Of Trouble - Then They Won't Find It! 2011/09/02 14:24  
What board would risk putting their corporation into such a liability? That is breach of fiduciary duty, good faith and reason.

That is where the Act falls short and owners are the victims.

Owners risk the hurdles thrown at them by the insurance lawyers and the issues are never before a judge.

Trouble is not caused Masel, that seems to be a theme of yours, that has yet to be proven in a court of law. Courts recognize those, those cases are dismissed and costs awarded to punish those "trouble-makers".

Courts can "stay" a proceding when the allegations to be proven exceed one courts jurisdiction and should move up the ladder. The court is satisfied that there is one claim, if not more!

Stay out of trouble - what could be simpler! Why is that so difficult in condoland?? One reason is the boards are "saved harmless" by the talent they hire to cover it all. Find a judge that has ever owned a condo and it would be a much different ending.
Richard Forster
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masel ()
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Re:Try Staying Out Of Trouble - Then They Won't Find It! 2011/09/02 14:57  
Did I write about Condos in my above posting Richard? Did I write about owners and Directors? Or, did I write about litigations in general?
It is not just in "Condo Land", but everywhere, when people base things on unproven assumptions, particularly when the assumptions are baseless, there is not much merit in them.
Oh! BTW: In our Condo a real estate lawyer, a commercial lawyer, and the famous class action king lawyer, all owned a unit. The real estate lawyer was our lawyer for a while, because our regular lawyer had to take a leave.Her father was very sick. But some seemed to know the real estate law better than he did! Not a lawyer!
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wotan ()
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Re:Sometimes In Litigation - Nobody Wins 2011/09/02 15:05  
This is why I prefer a Tribunal for condominiums. It is faster, more efficient, and has condo minded people running it. The costs can somewhat be picked up through a per unit fee placed on all units - say $5 to $10 per year. Not much money and can be paid by the condominium on behalf of the owners.

If some people complain to the Tribunal a lot and never win, their cases can be refused (they could appeal to the courts, but at least the Tribunal would not be backlogged) and if a condominium Board keeps losing, then an Administrator could be appointed by the Tribunal if changes are not made.
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Re: The law firm and the buyer lost 2011/09/02 15:15  
"It was my opinion that Rainville’s lawyer’s clerk was negligent in failing to show the purchaser both the horizontal and vertical floor plans on the townhouse. In a detailed 69-page decision, Wilson agreed with my opinion and ruled that the law firm had indeed been negligent."

So we have a case where a real estate law firm was found to be negligent when representing a condo buyer. That is a start.

The seller pulled a fast one too.

The owner had money, lots of it. Buying a townhouse for almost $1M and then spending $700K in renovations proves that. The purchaser was able to pay the hefty lawyer fees.
M. Kutuzov
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masel ()
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Re: The law firm and the buyer lost 2011/09/02 15:41  
Wotan, is the Tribunal you are taalking about real, or you just recommend it?
It is a fantastic idea, and, if exists, tell us how to find it.
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Civil servants and litigators get paid while litigating parties sort out degree of loss 2011/09/02 16:24  
Until the most recent judgment hits canlii or LexisNexis, most of us will have to wait to read the rest of the latest juicy details (except tidbits from from an obscure sidebar judgment below) * .

Presuming the ( ? unlucky number 113) unit in "Grand Harbour" is what I dimly remember at Parklawn/Lakeshore Blvd West, how ironic that the rest of Lower Etobicoke - when I lived there - was struggling with illegal basement suites. Meanwhile the declarant simply built his attic upwards and OUTSIDE the FUTURE and eventually registered/”described” limits of unit - effectively an illegal 3rd storey !

Worth reading about the following too :

1- Prior to the 1998 Act there was NO equivalency to current s 98. ( one 1994 precedent for treating the unauthorized 3rd storey to be nevertheless illegal - is cited in A. Loeb's first book )

2- The Form 18 "Certificate" ( widely but unoficially called "Estoppel" )issued to Ms Orr now Rainville for the Sep 1997 sale would have been subject to ? which cronies of the attic builder-developer ? see below *

* The sidebar case : Boland v. Allianz Insurance Company of Canada, 2006 CanLII 16539 issued May 19 2006

"[50] There is no duty to defend Mr. Boland in the MTCC 1056 action. Mr. Boland’s application is dismissed."
... [22] Mr. Weldon and Mr. Boland were officers and directors of Grand Harbour, the developer and declarant of MTCC 1056. They were also owners of Rylar, oneof Grand Harbour’s parent companies.
[23] Grand Harbour developed financial difficulties. Prior to July 5, 1993, the declaration date for MTCC 1056, Messrs. Boland and Weldon negotiated financial arrangements with the lenders of Grand Harbour that eliminated liability on the part of Messrs. Weldon and Boland, and Rylar for all losses on the project and allowed Messrs. Boland and Weldon to each purchase a townhouse unit in the project. Mr. Weldon purchased unit 113.
[24] Mr. Boland knew that the boundary of unit 113 stopped at the ceiling ofthe second floor, that the attic space above it was a common element which could not be incorporated into the unit, that the available zoning was at its maximum, and that the size of the unit could not be expanded without consent ofthe Committee of Adjustment.
[25] Mr. Boland knew that the lenders were anxious to obtain an early declaration date, that the lenders would not accept any delay caused by steps taken to legally redefine the unit boundary for unit 113, and that Grand Harbour could not delay the declaration date. Mr. Boland also knew that any attempt to delay the declaration date would jeopardize his deal to acquire a unit.
[26] Prior to the declaration date, Mr. Weldon caused Grand Harbour to construct his unit to incorporate the common element space of the attic. On the declaration date, July 5, 1993, MTCC 1056 was registered with the boundary for Unit 113 ending at the ceiling of the second floor. This was done with the knowledge of Messrs. Boland and Weldon. Construction of the third floor in unit 113 continued after the declaration date.
[27] Mr. Boland spoke to Mr. Weldon about the attic space above unit 113 and reminded Mr. Weldon that the space was part of the common elements and not zoned for residential use. Mr. Boland told Mr. Weldon to “take care of legalizing this problem.”
[28] Mr. Boland took no other steps during his first term as a director (July 1993 to June 1994) to determine what Mr. Weldon did to remedy the statusof the third floor or to alert other members of the board of directors or the property manager that the third floor of Mr. Weldon’s unit contravened the declaration.
[29] In January 1998, Mr. Weldon sold unit 113 to Kelly-Jean Marie Orr. This sale occurred during Mr. Boland’s second term on the board of directors. Mr.Boland took no steps before this sale to determine what, if anything, Mr. Weldon had done to legalize the status of the third floor and never told the other directors of his prior knowledge or his conversation with Mr. Weldon concerning the illegal use of the attic space.
[30] On April 1 1998, the solicitors for MTCC 1056 informed the Board of Directorsof MTCC 1056, that the third floor of unit 113 contravened the Declaration. Mr.Boland never told the other Board members about his prior knowledge or his conversation with Mr. Weldon concerning the attic space.
[31] In March 2001, Ms. Orr sued MTCC 1056, Mr. Boland and others as a consequence of the illegal status of the third floor of unit 113. . . . Mr. Boland did not disclose his knowledge about the attic space until he was examined for discovery in the Orr litigation in January 2005. . . . "

Richard should have fun reading this sidebar . . .
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Mickey ()
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Re: Burning the rich condo owners 2011/09/02 16:52  
It is not just the little guy who is getting burnt.
M. Kutuzov
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Idiots With A Lakeside View 2011/09/02 17:24  
Idiots will try anything!

Sometimes they get caught!
Richard Forster
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Wait For The HGTV Show... 2011/09/04 10:45  
Aaron is trying to spin this as a reason to make sure the lawyer reviews the boundaries of the unit.

If you were a buyer and only one of the dozens of units available has this unique feature, what would you think??

Let's pretend that really happened!

"Mr. Buyer the attic that you fell in love with does not exist. The declaration and floor plans do not include an attic space", explains Mr. Diligent Lawyer from the firm, of Sneaky, Shady and Illrupte.

What do you think the buyer would do?

Ask for the deposit back?
Close but don't tell anyone?
Close and fool the board to approve it?
Close and sue anybody breathing?
Make it a star in a realty show on HGTV?
Richard Forster
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... but for ..... 2011/09/04 11:25  
"BUT FOR" some detection of the buckshee 3rd storey during buyers diligence stage, would she have risked 10 years of litigation even to get an unusual unit apparently with the only skylight ( ! ? )

Other than the vendor, probably non-RECO registrants selling onsite (?), agents if any ?, and the purchaser herself, who else would have physically seen the unit despite its unusual skylight ? ( Sorry : I forgot the crony intermittently on the BoD approving the estopppel certificate ).

Presumably the judgment found she was not at all (or not properly) asked to compare the "description" with the as-built physicals as she herself viewed.

And if she had beforehand read this website, she might not have even dared to buy any condo.
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What You See Is Not What You Get! 2011/09/04 13:11  
In resale when does that happen?

Floor plans are rarely available. Some condos have the line at the rafters, some have the line at the drywall. The original buyer bought it as a builders clearout -- he worked for them. So he may have grasped the concept of those invisible lines.

Skylights are just another option. Some are in - most are out as a common element. Many were an upgrade, not a standard feature. So why would everyone pay for the leaks that come with them?

I have not seen an estoppel certificate for so long, I forget the words and promises. With the new Act, restoring unapproved "changes" was always a threat. Since boards never bothered doing at any time, it had the potential of a huge problem. What you see - may not be what you get. Like in the example at the waterfront. Was there permission to do that?

Alfonso's unapproved laundry falls into that class. It is not there and is worthless, if the buyer wanted to chop at price. Maytag would normally add value.
Richard Forster
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....and the details begin to emerge .... 2011/09/04 22:01  
... like the dark green at the end of the septic field or the troubling colour of your John Deere's exhaust when trouble is approaching...
Orr v MTCC 1056 ONSC 2011 4876
... Weldon and Boland lost development control to the mortgagees due to the post- boom meltdown but still worked the site and the BoD for court appointed receiver “Pelican” .
Intermittent Director Boland advised buddy Weldon to beforehand seek Committee of Adjustment approval to legalize the 3rd floor buckshee trespass and to get a building permit, as did the actual constructor.

But in the judgment : “ Weldon admitted he never obtained a building permit because he did not feel it was his responsibility as (first) purchaser (from the new project controllers). He recalled that Boland told him he was “nuts to go ahead without these documents” Boland claims to have been promised by Weldon to legalize the buckshee 3rd floor.

The judgment : “Weldon took no steps to amend the Declaration prior to registration or indeed at any time, despite the fact that he was president of the condominium from 1994-1997”. Coincidentally Estoppel Certificate (exhibited) is quoted to NOT disclose the buckshee status of the trespass !

During Weldon’s subsequent resale to Orr, realtors apparently were NOT on-siters / developer employees but independent professionals linked to the parties. Weldon’s agent’s listing agreement ( judgment exhibit) describes the unit as three storey !

For her first ever condo purchase – for $975,000 - Orr did NOT bother with building inspection NOR even to obtain prior legal review of the P&S before signing it !

NOT by a lawyer nor paralegal nor legal clerk - NOT by realtors nor property management - first to notice and raise alert about the illegality of the 3rd floor trespass ( with Weldon and insiders silent) was an engineer working for the Condo corp’s engineering firm.

Renovation mould issues immediately made S**T hit the fan, but nothing like THREE MONTHS after closing when MTCC’s lawyers themselves notified Orr that the 3rd floor build-out was illegal, incredibly 9 days BEFORE Orr’s own lawyer mailed her reporting letter that “good and marketable title had been received “ ! ! # Oh , happy days ! . . . .
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...and the details slowly emerge .... 2011/09/05 10:52  
Decision interestingly discusses and rejects purchaser ORR(Rainville)’s claim for Oppression or Amendment remedies. Treated that her unilateral conduct and unreasonableness progressively contrast to the sincere efforts of the post-Weldon BoD to “do the right thing”.The evidenced "shaking off" of Weldon influence is treated as helping reduce the prior tainting of prior BoD.

Decision discusses and rejects purchaser’s claim for Oppression or Declaration Amendment remedies. Her unilateral conduct and unreasonableness progressively contrast to the sincere efforts of the post-Weldon BoD to “do the right thing” including hiring Audrey Loeb and listening to her. The discussion about McKinstry precedent ( refused Oppression claim ) shows that shrieking with a non-negotiable demand list may not earn a section 135 Oppression remedy if not comparatively reasonable ....BoDs and shrieking high power Yuppie buyers should be reading this.

This will be a major tool for BoDs to understand that prior to the 1998 Act there was NO direct equivalency to current s 98 which is an authorization formula, not a magical dispensation for what was and is otherwise illegal. Without authority now formulized in s 98, what was done by (Weldon) the vendor/ employee or associate of the then-Receiver, was likeliest a substantial and Declaration-defying trespass wrongly undisclosed to purchaser Orr (Rainville).

I can't begin to understand how realtors can keep their sanity when forced to interact with this shrieking ilk.
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All Changes Have Been Approved by the Corporation 2011/09/05 11:52  
Bob - now you get it. It is just like at a board table. Sneaky directors find sneaky players to work with.

Buyers and sellers want us to believe just about anything.
Finding a registrant that has never listed or sold a condo in their lives, and paying a big commission to find a buyer just adds to the possibilities.

We won't get into the "all changes have been approved" clause a buyers agent would want, or scratching it like any agent should always do. Unless you are the only owner of the unit, ever - you can never make such a representation.

If this was a RECO era deal, there could be and errors and ommissions and possibly a title insurance claim, in the interests of consumer protection, but with history, it does show people need protection from themselves in condoland.

The illegal basement apartments are the freehold equivalent of the game. The City can come in and shut that down, but that is a whole other thread.
Richard Forster
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Re:Sometimes In Litigation - Nobody Wins 2011/09/05 12:27  
Most people are not going to know that the completed attic is not legit or to ask if it were or not. They would purchase the unit under the assumption that they were getting a "better" unit in the condominium. People need to be educated before they purchase a unit, not after.
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Objects Seen May Not Really Exist! 2011/09/05 13:08  
You can see why the SPIS was created.

Proving who knew what and when, and how important it was in the whole story is an adventure all by itself.

Since boards in the past 30 years rarely will process a request for change, the potential for reversing to the origninal configuration is huge. But that too is another thread.

Very few people read the book that is part of the status certificate package, where unit descriptions are recorded. It arrives a month later in the lawyers reporting package. They don't open it again till a lawyers letter arrives.

When I ask for it at a listing, you can tell it has never left the envelope.
Richard Forster
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purchaser FAR from blameless 2011/09/05 14:08  
Will Madam Justice Wilson's analysis become a "Gone With The Wind" blockbuster in condo law, if for no more reason than its dissecting the motives of the condo players ?

Ignorant of the law or not, in 1997 this buyer or competent realtor/paralegal could have done three things upfront, undeniably to avoid the whole mess of "S**T" for her or any buyer :

1- buy a $35 (Estoppel) Certificate (before even making a $975K offer ! ) that would show the described boundary.

2- note the 3 roof skylights on her own but not 18 of the other townhouses.

3 read the (1977-79) 1990 Act.

However merely for the stated reasons Madam Wilson refuses Orr (Rainville) a Declaration amendment to keep the buckshee 3rd floor. These include wording of the Act ( grounds for pure judical correction ), Orr's conduct, attempts "to do the right thing" by the BoD, concern at unfair denials to the other townhouse owners, and shared facility cost-sharing implications for other partner condo corporations.

Orr (Rainville) in 2001 actually dropped claim against the originator of the mess Weldon, to the bewilderment of Mme Justice Wilson. Weldon however is a non-Defendant "Third Party" whose credibility is treated harshly.
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Re:purchaser FAR from blameless 2011/09/05 15:16  
Do you think the inspector or the bank appraiser would have questioned the added square footage?

Everybody all along the way player blind or stupid till they got caught.

There would be an estoppel certificate, most lawyers always requested them. Status as a condition came later. When buyers were finding out the corporations had stuff to hide.
Richard Forster
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