April 2015
Orr v. Metropolitan Toronto Condominium Corporation No. 1056 [2014 ONCA 855]
This case involved an unauthorized change to a common element attic space within a unit. The Condominium’s Description depicted this particular unit as a two-storey condominium unit. However, a previous owner (Weldon) had altered the common element attic space and converted it into a third floor living area. This alteration was never approved by the Condominium’s Board of Directors, was not reflected in the Condominium’s Description, or disclosed in the Condominium’s status certificate. A subsequent purchaser of the unit, Ms. Rainville (formerly Orr) did not become aware of the unauthorized change to the third floor common element area until after she purchased the unit. As a result, Ms. Rainville sued her lawyer, the Condominium, and the Condominium’s property management company.
Trial Court
Ms. Rainville sought several orders from the court, including but not limited to, (a) an order amending the declaration and description; and, (b) an order reimbursing her for expenses related to renovations and repairs completed within the unit. The Condominium cross-claimed against Ms. Rainville, seeking orders that would (a) prohibit Ms. Rainville from conducting any further renovations within the unit; (b) oblige Ms. Rainville to restore the third floor to attic space; and, (c) compensate the condominium corporation for the use of the common element attic space. The Trial judge ordered Ms. Rainville to restore the attic space to its original condition. Further, Ms. Rainville and Mr. Weldon (the previous owner) were ordered to compensate the Condominium for use of the third floor common element attic area. Liability was also attributed to Ms. Rainville’s lawyer. No liability was attributed to the Condominium or the Condominium’s property manager. Ms. Rainville appealed the trial decision to the Court of Appeal.
Court of Appeal
The Court of Appeal found the Condominium Corporation and Ms. Rainville’s lawyer liable for damages to Ms. Rainville. Specifically, the Condominium was found to be negligent in completing the status certificate. The Court noted that a condominium owes prospective purchasers a duty of care in preparing status certificates; namely, the information contained within a status certificate should be accurate and not misleading. The Court indicated that Ms. Rainville could not be held responsible for reinstating the third floor to its original condition or compensating the Condominium for use of the third floor. Further, the Condominium and Ms. Rainville’s lawyer were held to be jointly liable for negligence and negligent misstatement so that each party was liable to compensate Ms. Rainville for loss of value in the unit (i.e. difference in value between a two-storey and three-storey unit). Further, the Condominium Corporation was ordered to reimburse Ms. Rainville for the expenses incurred as a result of repairing any common element deficiencies, which were the responsibility of the Condominium to rectify. Lastly, the Property Management Company was held liable for indemnifying the Condominium for monies expended to reimburse Ms. Rainville in relation to the lost value in the unit.
Bottom Line: This case serves as an important reminder to condominiums issuing status certificates to potential purchasers. Specifically, condominiums and agents of a condominium (including property managers) must take reasonable steps to verify the accuracy of statements being inserted into a status certificate. However, it is likely that the particular steps required to be taken by a condominium prior to issuing a status certificate will vary and depend on the particular circumstances of each case. Each condominium should also obtain and be familiar with the condominium’s description. A description may be obtained by a condominium’s solicitor, often same day.
Written by Erica Gerstheimer, edited by Robert Mullin.
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