In a recent decision1 of the Court of Quebec, Small Claims Division, the Court felt that it was important to remind the directors of a co-ownership syndicate as well as a co-owner of the importance for everyone to be flexible in their relations.
The Court noted that quite often some people decide to contribute to the development of their co-ownership by being actively involved in the management of the building. The administrators, although they are regularly in good faith, must act with prudence, diligence, honesty and loyalty, and this in the interest of the syndicate.
However, in the case in question the Court finds that all the parties participating in this case contributed in making the situation explosive, and that this approach should be changed on all sides, and that the parties will have to learn to exercise their respective rights bearing in mind that good faith must govern their conduct.
The Parties' Arguments
The co-owner demanded $7,000 from the syndicate as a result of the publication of a legal mortgage on his condominium unit, including the repayment of the sum of $1,980.04 that he had to make to pay the cost of publication and removal of the legal mortgage. He contends that this mortgage should not have been published. However, he has never made a recourse in court to request the cancellation of the mortgage. He claims, however, $5,019.96 in damages. He argues that the publication of the legal mortgage infringed upon his reputation while causing him problems, stress and anxiety.
On its part, the syndicate argues that the publication of the legal mortgage complies with the law and the Declaration of Co-ownership. Also, according to the syndicate, the co-owner does not prove that his reputation was tainted by the actions of the syndicate.
The Facts
The syndicate sent a document to the co-owner stating that the unpaid amounts add up to $2,121.55. The document mentions several expenditures, some of which are mentioning that they are rejected by the co-owner in question. Shortly after, a legal mortgage is published on the condo of the co-owner.
Although the co-owner disagrees with the legitimacy of this legal mortgage, he resigns himself to pay
$1,980.04 to the syndicate for expenses incurred by him for the publication and the removal of the legal mortgage, because the removal was a condition for obtaining new financing for his condo (privative portion).
The co-owner testifies that there was no reason for the publication of the legal mortgage. According to him, some of the funds could not be subject to such a procedure, and others had been offered to the syndicate, but with the mention that he reserved his right to challenge this debt at a later time.
He argues that this case has caused him damage by undermining his reputation because the publication of a legal mortgage shows, he said, that he must be a lousy payer. He says that he has suffered a lot of stress and anxiety because of this whole saga with the syndicate.
ANALYSIS AND DECISION OF THE COURT
The co-owner must prove that the publication of the legal mortgage, by the syndicate, was justified in the circumstances, and he must demonstrate that he has suffered damages by the actions of the syndicate.
The amounts claimed for the maintenance and repair of the common areas (community garden) were legitimately adopted in the budget as expenses incurred in the common interest of the co-owners. However, under the Declaration of Co-ownership, they are not part of the common expenses or the contingency fund. As there can only be a legal mortgage for the common charges and the contingency fund, the legal mortgage was not justified on the basis of this claim.
However, the co-owner has informed the syndicate that the amount due in respect of the repair of the girders would be paid upon receipt of the report of the engineer who carried out the analysis of the situation of the girders. An offer of payment under protest was reiterated by the owner but remained unanswered by the syndicate.
Concerning the expenditure of the common expenses deemed legitimate by the Court, four cheques were sent to the syndicate, but were not cashed, and the letter accompanying the cheques shows that the intention of the co-owner was to pay these sums while reserving the right to challenge their legitimacy before the courts. The recovery of these amounts by the syndicate was justified, but the method used is disproportionate compared to the avowed intention of the co-owner to pay them.
As to the amounts claimed (about $35) by the syndicate for a reparation that the co-owner was obliged to do himself, although theoretically the recovery of this amount is secured by a legal mortgage, the method used in relation to the sum due and the relationship between the syndicate and the co-owner is, in the opinion of the Court, disproportionate.
Expenses for stationery, registered letters to the lawyer of the co-owner, photocopying, travel of the administrators, interest on each of the sums claimed, all of these flow from the conflict situation that has developed between the syndicate and the co-owner. While some of these funds may be secured by a legal mortgage, however, they are only accessories to the other sums claimed above and these costs would not have been incurred if the syndicate had cashed the cheques issued by the co-owner who reserved his right to contest the amounts due for a later time.
Conclusion
According to the Court, the co-owner has proven that “the use of a legal mortgage was not justified for some sums of money and was disproportionate for others.” The Court thinks that “the syndicate has breached its duty of a prudent, diligent, honest and fair manager and that the co-owner must be compensated.”
However, still according to the Court, “There is no evidence at all demonstrating a tarnishing of the reputation of the co-owner, but he had to repay the sum of $1,980.04 in order to obtain the cancellation of a legal mortgage which did not have its raison d’être and this amount must be refunded to him.”
As for the claim for trouble and inconvenience, according to the Court, “All of the evidence demonstrates that the whole situation has caused the co-owner a lot of stress and hassle.” The Court, on the evidence presented, grants a sum that it considers reasonable in the circumstances which is $500.
The co-owner’s request is therefore granted in part and the syndicate is ordered to pay $2,480.04 plus interest and legal costs.
A Spirit of Compromise and Flexibility: the Court sends a Reminder to Co-ownership Syndicates and Co- owners
