Aug 7, 2018

Saskatchewan Court of Appeal Rules on its First Condominium Oppression Case

Goertz v The Owners Condominium Plan No. 98SA12401, 2018 SKCA 41 (CanLII)

In a recent decision, Goertz v The Owners Condominium Plan No 98SA12401 (Goertz), the Saskatchewan Court of Appeal (Court) confirmed the test to be applied on “oppression remedy” applications under section 99.2 of The Condominium Property Act, 1993 (the CPA).

BACKGROUND ON THE OPPRESSION REMEDY

The oppression remedy allows a person who believes they have been treated unfairly to apply for a court order addressing the unfair treatment. The oppression remedy was originally available only in the context of business corporations, but more recently has been extended to condominiums. The oppression remedy became available in the condominium context in Saskatchewan in 2014, when section 99.2 was added to the CPA. Section 99.2 of the CPA targets conduct that “is or threatens to be oppressive or unfairly prejudicial to the applicant or unfairly disregards the interests of the applicant.” Any one of the following types of people can apply for an oppression remedy or be the subject of an oppression remedy application under section 99.2:

  • A condominium corporation
  • An owner, tenant, or mortgagee of a condominium unit
  • A developer of a condominium

If a judge finds that the conduct in question was oppressive, the judge can make any order they see fit, including an order prohibiting the oppressive conduct or requiring that the applicant be compensated for their losses.

There are relatively few reported decisions on the oppression remedy in Saskatchewan, and Goertz is the first one from the Court. In provinces with equivalent legislation, the oppression remedy has been used to resolve disputes about rental of units, allocation of parking stalls, pet ownership, use of common property, reserve funds, and more.

THE TEST FOR OPPRESSION REMEDY APPLICATIONS

The Court adopted the two-part oppression remedy test used in other Canadian provinces with comparable legislation:

  1. The applicant’s reasonable expectations must have been breached by the conduct; and
  2. The conduct must have been: (a) oppressive (meaning “coercive, harsh, harmful, or an abuse of power”), (b) unfairly prejudicial (meaning it “adversely affect[ed] the [applicant] and treat[ed] him or her unfairly or inequitably from others similarly situated”), or (c) such that it unfairly disregarded the applicant’s interests (meaning that the conduct “ignore[d] or treat[ed] the interests of the [applicant] as being of no importance”).

The Court also noted that the “business judgment rule” applies to the boards of condominium corporations. This means that boards are not expected to make perfect decisions. Courts must defer to the board’s decision if it is within a range of reasonable decisions the board could have made in the circumstances, taking into account the best interests of the condominium corporation and the often conflicting interests of the various stakeholders.

RESULT IN THIS CASE

The applicant, Mr. Goertz, owns 11 units in a condominium complex. He lives in one unit and rents the rest. The board of the condominium corporation asked that Mr. Goertz pay deposits for each of his rented units to cover damage his tenants might cause to the common property in the future, and invoiced him for past damage caused by his tenants. Mr. Goertz did not pay, so the board barred him from voting at the annual general meeting. Mr. Goertz made an oppression application, arguing that the board not require him to pay the deposits or invoices, and that he should not have been barred from voting at the annual general meeting.

The Court found that the board had the authority under the condominium corporation’s bylaws and section 77 of the CPA to require the owners of rented units to pay deposits to cover the cost of damage their tenants cause to the common property.

The Court also found that the board was right to bar Mr. Goertz from voting at the annual general meeting because the bylaws provided that owners with “contributions” outstanding for more than 30 days could not vote. Section 41(5) of the CPA permits condominium corporations to pass bylaws of that nature. The Court did not accept Mr. Goertz’s argument that only contributions to common expenses and reserve funds are “contributions” within the meaning of the bylaws and section 41(5) of the CPA—rental deposits can be contributions. However, the Court noted that if a unit owner disputes an invoice for damage to common property, it is not a contribution unless or until the condominium corporation gets a judgment against the owner in respect of that invoice.

Mr. Goertz also claimed that members of the board acted oppressively by violating the bylaws personally—parking their vehicles in visitor parking, failing to pick up after their animals, and so forth. The Court agreed that the first step of the oppression test was met, as Mr. Goertz could reasonably expect that board members would follow the bylaws. The second step was not met, however, as the board members’ violations of the bylaws did not “rise to the level of prejudicial conduct that adversely affects Mr. Goertz, treats him unfairly, inequitably or ignores his interests as being of no importance.” Accordingly, the Court found that this was not oppressive conduct.

IN SUMMARY

  • The oppression remedy is a broad, flexible way of addressing conduct that threatens the interests of condominium corporations, developers of condominiums, and owners, tenants, or mortgagees of condominium units.
  • The court will only grant an order under the oppression remedy if the conduct violates the applicant’s reasonable expectations and is oppressive, unfairly prejudicial, or unfairly disregard the applicant’s interests.
  • Courts generally will not second-guess decisions made by the boards of condominium corporations if the board has the authority to make the decision in question, and if the decision is reasonable.