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BUSINESS JUDGEMENT trumps Declaration & Oppression remedy: resuming PAY PARKING Carleton CC #375 2016/01/04 23:45  
( This Topic has been retitled from lower court's 'Oppression held' to the above due to Ct of Appeal decision Aug 30 2016 . See also Sep 2 2016 comment below )

(January 4 2016 : ) Another section 135 CONDO OPPRESSION finding arrives amidst Ottawa downtown parking unit wars. There is interesting judicial yard-sticking & site-specific contextuals.

A Declaration-contained right here has to be fought to resume - not unusual in mixed use condo communities. But now a Mexican stand-off is possible after a court judgment . . . . .

( NO RIGHT TO VOTE : Relevant to security or parking wars, the obscure subsection 49(3) in the Condo Act 1998 strips the vote from ownership of parking/storage/system units unless ALL units in the corporation are used for such purposes.

In 1998 it actually liberalized the prior Act's TOTAL vote-deprivation of parking units regardless of details. Imagine a condo corporation where no owner could ever vote, if one such had been dared registered !

Elsewhere see some parallels to the 2014 Oppression finding for vote-less parking unit owners in Grigoriu v OCSCC # 706 2014 ONSC 2885 About a mile away from CCC #375 an 80% Declaration AMENDMENT VOTE outrageously purports to trump the victim sole parking unit owners' property rights to sell to buyer of choice/ purported right of oppressive majority to introduce bar on sale to other than sited owners. Is this Canada or North Korea ?

At least a conventional unit arrives with a vote. In the absence of voting power, security and/or coveting of scarce downtown parking, may trigger attacks on Declaration guaranteed rights. )

FACTUALS : Amidst area reduction in monthly parking enjoyed by owners & Board members, a group owning parking units in 2012 decided to resume short term pay parking as guaranteed within the Declaration.

Central core, short term (dispensered ? ) Pay Parking becomes more profitable in a city with City by-laws for sharing ticket revenues with private ticketers backed by license withholding. Downtown condo approvals now boom without any off-street parking at all. Parking lots get sucked up by new condo & university construction. . . .


But the Board blockaded the plan by purporting to introduce a profit-killing condition here ruled oppressive.


The Board also attempted to obstacle the plaintiffs’ plans by declaring as ‘substantial’ ( ie 2/3rd Owner vote-triggering ) certain common element physical changes to viably resume the pay parking.

Unhappily for the plaintiff parking unit owners the judge confirms the Board’s rights to so designate 'substantiality'.

The judge also invites counsel comments about leaving the next step to Owner 2/3rd approval votes. A Mexican stand- off ?

An opening given to ease oppression victims back into an uneasy truce or co-existence with the oppressive majority ?

A not unfamiliar issue where victims of bullying or family violence have to return to an environment where the bullies retain a majority & legitimate governance powers . . . Is this a pragmatic judicial attempt to restore degrees of tolerated co-existence ?

Not a condo authority but the Biblical Solomon ordered a deadly but clever non-democratic solution to rival maternal claims in 1 Kings 3:16-28.

What happens now if voting OWNERS next refuse the "deemed substantial" common element changes ? Note the legislated vote deprivation above. Getting Owner quorum can be tough. Imagine how tough for a 2/3rds vote where the corporation has substantially lost round #1 and been held already in oppression ?

But without a 2/3rd approval voted by eligible owners / including by those facing loss of monthly parking or fearing security problems, isn't it likely back to the land of oppressive outcomes . . . and ADR or more litigation just to get the investors' Declaration rights ?

and then there is another possible zinger . . . .

3716724 Canada Inc. v Carleton C.C. ( # 375) 2015 ONSC 6626 issued Dec 8/15

Dec 29/15 D Lash LLB “ Condo Corporation Unfairly Disregards Unit Owner- “Pay and Display” Parking” src=" wink.png" alt="" style="vertical-align: middle;border:0px;" /> disregards-unit-owner-pay-and-display-parking/
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"Voting a solution onside " Is this a zinger ? ( A judicial CO-EXISTENCE remedy attempted ?) 2016/01/07 11:04  
A zinger ?

If the condo Board does not resolve to rescind its DEEMING, would a 2/3rd Owners vote even be mathematically possible ?

( Mr Justice N. Gregory Ellies upheld the condo corporation's 'DEEMING OF SUBSTANTIALITY' poison pill. With this 'deeming' left intact, a 2/3rd Owners vote is needed to accordingly approve the prudent logistical changes to resume the oppressively-obstacled pay parking. The plaintiff parking units are legislatively vote-deprived. )

BUT in neither Ontario's Condominium Act 1998 nor its prescribed Regs 48 & 49, can one find any exception made to DOWNWARD ADJUST a voting approval threshold, due to statutory vote deprivation of parking-only units.

The parking units appear to have to be counted, to inflate the 2/3rd threshold, but to bring NO actual votes to anyone.

So a zinger now arrives ? :

Are there mathematically enough vote-empowered units to even approve by 2/3rds owner votes or proxies ?

The judgment does not bother to indicate the number of vote-deprived parking units.

But it cites (in para 6 ) a total of 181 vote-empowered units ( 117 res & 64 'commercial') . 2/3rds of that would be 120 votes, including an undetermined number of votable commercial units - some owned by the victim plaintiffs .

It also cites (without numbers) 4 levels of underground parking units, 3 levels not being owned by the plaintiffs.

So a zinger ? :

Unless the Board merely resolves to 'UN-DEEM the substantiality', are there even enough vote-empowered units to at least mathematically reach the 2/3rds threshold ?
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OPPRESSION confirmed ; VOTE PROPOSAL KILLED : parking conversions Carleton CC # 375 2016/03/03 00:14  
1- Dual judgments confirm it was section 135 OPPRESSION for CCC#375 's Board to block RESUMPTION of the Declaration-contained commercial activity without a condition ruled profit-killing.

2- Further , to accommodate the RESUMPTION of the right, common element changes are ordered WITHOUT a section 97 Owner Vote nor notice, such Board attempted Owner Vote condition however being ruled short of s 135 oppression.

Thus a Mexican stand-off is over. Vote is nixed.

( The Board's obstructions had also included that RESUMPTION was subjected to - and could be trumped by - a section 97 owners approval process as to common element changes to isolate the public pay parkers.

But it is ruled not oppression 'per se' that CCC# 375 had imposed condition of a section 97 Owner approval vote for those common element physical changes to reduce security risks.

Thus the judge avoids - or is unaware ? - that under section 97 2 c such changes could have been done purely by Board resolution WITHOUT OWNER VOTE NOR EVEN NOTICE if the Board had decided to DEEM them for such purpose.

The judge links any Owner vote to likely scuppering the commercial plaintiff’s right to resume its Declaration-approved pay parking.

So he overrides the Owner Vote conditions despite them being non-oppressive and otherwise vote triggering unless “deemed” as above.

In summary, the common element works – despite the commercial plaintiff’s McMahon hot tub argument - are ruled changes that would have validly required an owner vote if they were not scuppering the right of the commercial plaintiff to resume its Declaration-approved pay parking. )

3716724 Canada Inc. v Carleton C.C. ( # 375) 2016 ONSC 1296 issued Feb 26/16 & a same date “correction” of prior 3716724 Canada Inc. v Carleton C.C. ( # 375) 2015 ONSC 6626
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ONCA overturns oppression ruling : The Business Judgement ruling 2016/09/03 02:31  
Aug 30/16 : A Court of Appeal panel led by Associate Chief Justice Alexandra Hoy has overturned the earlier oppression finding against the condo corporation.

It rules that the lower court used a correct 2 part test ( * see below * ) but had decided wrongly that the Board had imposed oppressive & unreasonable conditions : a full time security guard to be paid by the parking operators alone rather than by all owners as a common expense. ( The operators have claimed this 24/7 cost burden to exercise their Declaration right, would oppressively rule out its profitability.)

These Board security conditions are presented as having been NOT oppressive but legitimate, defensible Business Judgment decisions entitled to deference. ( Said especially in ONCA's reference to high crime activity in the ByWard Market area adjacent to the Federal Parliament Buildings, National Defence Headquarters and what appears to be Ontario's sole Leasehold condo complex. )

Presumably the costs of dedicated full time parking security guard will now have to be sucked up by parking operators alone if they want to revert to short term pay parking ( or will have to appeal further ).

Aug 30/16 3716724 Canada Inc. v. Carleton C. C. #. 375, 2016 ONCA 650

( xcrpted :

. . . [49] . . . the Supreme Court of Canada explained that a court reviewing a board’s decision must show some deference, at paras. 40 and 111-112: The “business judgment rule” accords deference to a business decision, so long as it lies within a range of reasonable alternatives. It reflects the reality that directors, who are mandated under s. 102(1) of the CBCA to manage the corporation’s business and affairs, are often better suited to determine what is in the best interests of the corporation. This applies to decisions on stakeholders’ interests, as much as other directorial decisions.
. . .

[51] Moreover, the rationale underlying the business judgment rule in the corporate law context is also applicable to condominium corporations.

As representatives elected by the unit owners, the directors of these corporations are better placed to make judgments about their interests and to balance the competing interests engaged than are the courts.

For instance, in this case the security concerns arose in part as a result of the condominium’s location, and the Board members’ knowledge of that area is clearly an advantage that they enjoy over any court subsequently reviewing their decision. . . .

[53] Therefore, to summarize, the first question for a court reviewing a condominium board’s decision is whether the directors acted honestly and in good faith and exercised the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

If they did, then the board’s balancing of the interests of a complainant under s. 135 of the Act against competing concerns should be accorded deference.

The question in such circumstances is not whether a reviewing court would have reached the same decision as the board.

Rather, it is whether the board reached a decision that was within a range of reasonable choices. If it did, then it cannot be said to have unfairly disregarded the interests of a complainant. . . " )


* The Two Part Rule * endorsed in para 29 of 3716724 Canada Inc. v. Carleton C.C.#375, 2016 ONCA 650

oppression rejected in MTCC 1272 v Beach : The “Two Part Test’ of condo oppression ; upheld the lower court's rejection of Oppression claims BY 3 condo corporations against its developer’s sweetheart/commercial successors .
MTCC 1272 et al v Beach 2011 ONCA 667 issued Sep 21/11 .
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Reporting this Appeal Court decision, page 1 of the Ottawa Citizen's Sep 12 2016 Print edition is headlined : "A Win for Condo Rights"

But for whose rights ?

And should courts start deferring to a Board's "Business Judgement", particularly one that here appears to over-ride or obstruct the Declaration as extracted in the Feb 2016 lower court decision ?

If Ontario condo & HOA Boards get judicial deference to ransom rights guaranteed within a Declaration (or CCRs ) instead of trying to persuade a Declaration amendment, what good is the Declaration ? Or the condo law ?

What it might mean for Ontario condos :

Ontario's Court of Appeal has decided that a "Business Judgement" legal theory should be introduced to legitimize the Place St George Board's imposing - respectfully as a "ransom condition" - a significant expense it wants. Such is to be targetted ONLY at the commercial owner instead of following the common general expense formula within the Declaration.

( Clearly the Place St George Board welcomes neither resumed Pay Parking that would reduce owners' monthly parking, nor does it want to make it easier for 'neighbourhooders' to intrude. In the article the President singles out the Sally Ann clients & other longterm 'undesirable locals' who long precede the condo corporation at the site. )

To exercise its Declaration-guaranteed right to resume hourly pay parking for 30 spaces, the owner faced a Board strategy without legal authority. It appeared to be a 'quid pro quo' deliberate ransom to force the commercial owner to SOLELY suck up Board-insisted 24 hour live security expenses that the lower court & commercial owners held would render the 30 space rentals unprofitable.

Many condo/HOA disputes in the US show that governance Boards can do a lot of whacky things under the mantle of "Business Judgement". Yes, many condo/HOA Boards do lots of good , lots of 'legally'. Then there's
Evans v Casey Davis & Happy Hide-A-way Civic Club Inc. Decision of 14th District Texas Court of Appeals # 14-12-01053-CV Nov 19/13 ts=1384858347 ( actually demolished a residence in 2011 under a mere grass-cutting & cleanup Rule, for which it billed the registered owners Evans + $ 80K ! )

Should such "Judgement" even be allowed to over-ride the Declarations or even law itself ? Does that mean its OK to impose a specific charge specifically on a particular buyer/owner to exercise a lawful right ?

Fear of transients or whatever the neighbourhooders are, is that "a win for condo rights" ?

A further appeal might answer that question.

The online article :

Sep 12/16 Citizen :“Court says ByWard Market condo board can block parking bid over security concerns” over-security-concerns
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BUSINESS JUDGEMENT trumps Declaration & Oppression remedy 2016/09/13 12:24  
Articles start to appear (below) :

Is it smart to allow Business Judgement to ransom a property right purchased within a Declaration ?

Many condo/HOA disputes in the U.S. show that governance Boards can do a lot of whacky things under the mantle of "Business Judgement".

Yes, many condo/HOA Boards really do lots of good.

Then there's the shockers like Evans v Casey Davis & Happy Hide-A-way Civic Club Inc. Decision of 14th District Texas Court of Appeals # 14-12-01053-CV Nov 19/13 ts=1384858347 ( It actually demolished an owner's residence in 2011 under a mere grass-cutting & cleanup Rule, for which it then billed the registered owners Evans more than $ 80 K ( US dollars ) . . . )

Or Phoenix $50 condo fines for triggering any media contact - Backstory at D Goonan's Independent American Communities for-removing-a-tree/ . If the U.S. constitition ain't safe, how safe can a Declaration be in some of these communities ? How far does Ontario dare let condo/HOA Boards follow this path ?


- Lawyers Weekly upcoming Sep 16/16 : ‘Business judgment’ rule to condo boards, appeal court says. Province’s top court says judges should defer to ‘reasonable’ decisions of owner panels" by Cristin Schmitz

- caption : “A recent unanimous ruling by the Ontario Court of Appeal is ‘hugely helpful to condominium lawyers, managers and directors’ throughout the province, says Christy Allen of Ottawa’s Nelligan O’Brien Payne, who successfully represented a condominium board on a property use issue” Sep 13/16 “Court of Appeal Confirms Boards are Entitled to Deference” by Carleton CC #375's counsel Christy Allen

- Sep 27 2016 Sep 27 2016 D Lash LLB ``Ontario Court of Appeal Recognizes that “Business Judgment Rule” Applies to Condominium Board Decisions`` to-condominium-board-decisions/

- undated but noted at Oct 5 2016 O all is bliss ! ! "Good News from the Ontario Court of Appeal: Condominium Directors, Your Decisions Will Be Respected"
by Megan Mackey & Baktash Waseil, Miller Thomson LLP Toronto the-ontario-court-of-appeal
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Cited by Saskatchewan Court of Appeal BUSINESS JUDGEMENT applies ( Goertz 2019 ) 2019/03/09 11:39  
1 - Saskatchewan's Court of Appeal cited this Ontario decision in applying Business Judgement Rule to its Province's condo corporations as "creatures of statute".

Discusses the application elsewhere including U.S. HOA/condo wars . . .

In Feb 2019 Canada's Supreme Court refused an S.R.L. oppression claimant 's appeal against that SASKATCHEWAN decision - Goertz v Owners Condo Plan # 98SA12401 ( 2019 ) 14406 (SCC) issued Feb 28/19 .

please SEE cafcor Out of Province forum topic :

“SECURITY DEPOSITS imposed by condo corp target RENTED UNITS only - Sask by-law upheld not oppressive”

2 - ( recent ONTARIO ) Business Judgment defence prevails against Ontario condo owner's complaint - See
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