Common Expense Default

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Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Condo garden ottawa ontario.JPGCan owners withhold their common expenses if they are engaged in litigation with the Corporation? In a recent case, Carleton Condominium Corporation No. 396 v. Burdet, the Court of Appeal confirmed that common expenses are payable, even if there is on-going litigation relating to the validity of common expenses.

A group of owners and the Corporation had been engaged in a protracted dispute since 2000 relating to voting rights and financial matters. In 2009 the Corporation filed liens against the owners' units and subsequently commenced power of sale proceedings.

In response, the owners paid $104,185 to the solicitors for the Corporation, to be held in trust pending the resolution of issues in court proceedings. Thereafter the group of owners ceased paying common expenses altogether.

The trial judge had ordered that the amount held by the Corporation’s solicitors in trust be paid to the Corporation to be applied to common expense arrears and the group of owners was required to pay condo fees going forward. The owners appealed on the basis that as the Corporation owed money to the owners they had a right of set-off. The Court of Appeal rejected the owners’ position on the basis that section 84(3) of the Condominium Act was clear that common expenses must be paid regardless of any other claims between the parties. The Corporation was also awarded costs in the amount of $30,000.

Considering that litigation can be a very slow and long drawn-out process, condominium corporations will be relieved to know that common expenses are payable when due regardless of any set-off claims made by owners.

 

Published In: Business Organization Updates, Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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