Condo conundrums: are rules and policies as binding on owners as bylaws? Does a board engage in improper conduct when it enforces a rule or policy? The courts recently said no and yes to these questions.

The law is constantly evolving for condominium corporations, owners, and those who assist them. This article canvasses some of the recent Alberta cases on six topics and concludes with an outline of four current hot topics that condominium owners and boards should be aware of.

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Disputes are Costly

What happens when a dispute between a condominium board and an owner gets out of hand? In 2005, the Millers built a deck that did not meet the conditions approved by the condominium board. The Millers and the board negotiated about the required alterations, but the Millers did not make the required changes. Eventually, the board had the deck demolished and charged the Millers for the $2,500 demolition costs and another $5,000 for its collection and enforcement costs. The dispute then escalated to the point where the board was trying to recover about $18,000 from the Millers. Justice Macklin in Condominium Plan No. 922 1425 v. Miller (2007) said the condominium corporation, board, and its lawyer had to be reasonable in the costs they tried to recover under the bylaws and only allowed the corporation to collect the demolition costs and its original collection costs.

What can happen when directors do not get along or agree on steps to take? In Owners: Condominium Corporation No. 0111505 v. Anders (2005), the president disagreed with the other directors and wanted to call an owners' meeting under the bylaws. The other directors did not want this meeting called so they sued the president. The Judge in this case referred to the appendix bylaws and suggested that an internal matter for a condominium corporation should not be sent to court. The better approach would be to call a meeting of the owners to sort it out under the bylaws.

Rules May Not Be Enforceable

Are rules and policies as binding on owners as bylaws? Does a board engage in improper conduct when it enforces a rule or policy? The courts recently said no and yes to these questions. Rules and policies approved by the condominium board or owners at an annual general meeting are not bylaws and cannot be enforced like bylaws. In Maverick Equities Inc. v. Owners: Condominium Plan No. 942 2336 (2007), Maverick was trying to alter the interior of a unit and was complying with the municipal requirements. The condominium corporation passed a rule at its annual general meeting that created further requirements. When Maverick did not comply, the dispute went to court. Justice Belzil said the Condominium Property Act allows owners and potential owners to have certainty about their rights and obligations arising from ownership. Bylaws, because they are available through the land titles office, are certain, but rules are not. So if a rule or policy is not approved by the owners like a bylaw, the rule or policy is not enforceable. To make the point even more strongly, the Court said the condominium corporation engaged in improper conduct under section 67(1) of the Condominium Property Act when it pushed the rules. The Judge directed the board to consent to Maverick's alterations and said the Court would also deal with financial compensation and legal fees in a future hearing. In another case, Graham v. Shannon Estates Villas Condominium Corporation No. 001 2442 (2007), Justice Chrumka said a condominium corporation could not attempt to enforce a policy retroactively--that is, in regard to events that occurred before the policy was passed.

Protecting the Consumer

How does the Condominium Property Act protect the consumer or condominium buyer? Recently, Justice Lee in Burgener v. Code Mortgage Investment Corporation (2007) said that an internal dispute in a developer company could seriously jeopardize three things: the ability of the developer to properly turn over the affairs to the first owners' board of the condominium as required by the Act; the ability of owners to get title and possession of their purchased units; and the ability to properly manage the condominium complex, thus creating additional risks that may or may not be covered by insurance. The Judge directed how the developer would resolve its dispute to get matters back on the right path for all.

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Preventing Injury to Owners on Common Property

What responsibility does the condominium corporation have when an owner fails on the common property? The Alberta Court of Appeal in Murkute v. Owners Condominium Plan 8210034 (2006) agreed that a Calgary condominium corporation had done what it was required to do under the Occupier's Liability Act and did not have to pay any money to the owner who fell. In this case, the condominium corporation hired a professional manager who contracted with a snow removal company and supervised its work. The snow removal company checked for ice daily and applied ice melt as required. The Judge said the corporation met its standard of care owed to the owner to ensure she was safe when she used the common property. The condominium corporation could not guarantee her safety, but could take reasonable action to prevent her injury.

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A Developer's Right to Rent Parking Stalls

Can a developer keep title to the outdoor parking stalls and rent them to owners for 100 years and keep the rents? The developer in Condominium Plan No. 992 5205 v. Carrington Developments Ltd. (2004) had each owner pre-pay the 100 year rent like a sale price. The Alberta Court of Appeal said the developer could not do this because it was unfair to require the condominium corporation (and the owners) to pay the maintenance costs of the parking stalls for 100 years while the developer kept all the rent money for the parking stalls.

A Board's Dealings with Personal Information

How far does the condominium corporation have to go to provide an owner with access to personal information? What can the corporation do to protect the personal information of another owner? In Alberta Office of The Information and Privacy Commissioner ORDER P2005-005 December 6, 2006 THE OWNERS." CONDOMINIUM PLAN No. 7710418 (Case File Number P0072, www.oipc.ab.ca), one owner (A) filed a complaint with the condominium board against another owner (B) within the condominium complex. The complaint concerned the positioning of a flag on B's condominium balcony. The condominium corporation asked the owner to remove the flag because erecting the flag was contrary to the condominium bylaws. Owner B applied under the Personal Information Protection Act for a copy of the complaint letter. The board refused to disclose the letter in part because it would identify owner A. The Commissioner found that the Personal Information Protection Act applied to the condominium corporation. He also said that the Act required the board to refuse to disclose the complaint letter to owner B.

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After this decision, the Commissioner's office also published a question and answer sheet for condominium owners and corporations about how the privacy legislation applies to condominiums (www.psp.gov. ab.calindex.cfm?page=faqslCondoFAQs.htrnl). One excerpt from this Q & A sheet deals with the oftenasked question about personal information contained in the minutes of meetings provided under section 44 of the Condominium Property Act to owners, prospective owners, and their lawyers. As a result of this information from the Privacy Commissioner, condominium corporations now better understand how to protect the rights of all owners when dealing with personal information and the corporation's obligation to disclose information to owners and prospective owners and lawyers.

Hot Topics for Condominium Boards and Owners

Some of the hot topics which condominium boards and owners will want to prepare for are:

* A new reserve fund study--condominium corporations which existed in September 2000 and new corporations since then had two years to complete a mandatory reserve fund study, adopt a plan to create and fund a capital replacement reserve fund, and share the report/plan with the owners. Under the Condominium Property Act, corporations must do a new study every five years. 2007 would be the year for many condominium corporations to get a new study. With renovation and construction costs rising, owners need to prepare for increased funding calls for the reserve fund.

* Insurance appraisals--most bylaws require a condominium corporation to get an insurance appraisal (often annually) to tell the board how much insurance to purchase. Rising construction costs will increase the value of most properties significantly and boards need to be sure they have the proper value of replacement insurance so owners do not suffer if a fire or other major loss occurs.

* Privacy policies--privacy legislation (federal and provincial) applies to condominium corporations. The law requires corporations to adopt a privacy policy and appoint a privacy officer separate from anything done by its management company. Condominium corporations which do not comply may face a financial penalty.

* Human rights--as the diversity of condominium communities increases, boards will need to become more comfortable in dealing with a wider range of human rights topics and how and when to accommodate owners and residents. For a window into this topic, see the Canadian Condominium Institute's Symposium papers on "Human Rights are Everyone's Responsibility" (www.cci.ca/Events/index.html).

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Deborah M. Howes, FCCI, CArb., C.Med. is President of High Clouds Incorporated, which provides seminars and dispute resolution services. She is also a past national President of the Canadian Condominium Institute.