Condo rule in place since 1983 is too ‘harsh,’ outdated and must be overturned, says court

After more than 35 years, a panel of judges in the Court of Appeal for Ontario has overturned a long-standing interpretation of condominium law, citing the law’s unnecessarily harsh effects. 

The Jan. 31 decision, York Region Standard Condominium Corporation No. 1206 v. 520 Steeles Developments Inc., 2020 ONCA 63, means that a condo corporation that doesn’t comply with notice provisions may not always have their action quashed by the court. Instead, the panel of judges said, the court has the discretion to “fashion appropriate remedies” depending on the gravity of the procedural defect.

“Condominium board members have a statutory obligation to act reasonably and prudent, in the best interest of the condominium corporation. Just because they're taking an action . . . . that they believe to be in the best interest of the condominium corporation, other owners who are not on the board might disagree,” says Joseph Salmon of Lash Condo Law, whose client is a defendant in the action, but was not involved in this motion and did not take a position on it.

“The whole idea behind providing notice — which is still the law, you're still required to provide notice — is just that for something as important as a lawsuit, which goes on a condominium status certificate and will cost a lot of money, is that it’s something important for owners to know about.”

But one reason for the shift away from making the action null without notice, the judges said, is that the Condominium Act is meant to protect consumers. Under the old application, the only recourse for condo unit owners who were not informed of their condo board’s lawsuit was to void the whole lawsuit — even if the goal of the lawsuit was to benefit those very owners.

“You're dealing with imminent limitation period issues. Other times, the party that you're suing is actually an owner in the building,” says Salmon. “It could just be that there's a miscommunication. The lawyers thought property management's going to send out notice, and property management thought the lawyer was going to send it out.” 

The decision was written by Justice Alison Harvison Young, representing a panel of five concurring judges, also including: Justices James MacPherson, Paul Rouleau, Lois Roberts and Ian Nordheimer. Harvison Young’s ruling also overturns York Condominium Corp. No. 46 v. Medhurst, Hogg & Associates Ltd. et al. (1983), finding that Medhurst is no longer in line with “modern statutory interpretation,” and has been “attenuated by subsequent Supreme Court of Canada jurisprudence.” 

“Medhurst is not simply a case which, with the benefit of the subsequent jurisprudence, would likely have been decided differently by this court, but is a decision which has the potential to cause injustice,” wrote Harvison Young, dismissing both the appeal and cross appeal, but with different reasoning than the lower court. “On balance, I find this is one of the rare circumstances in which the advantages of not following an earlier decision rendered by this court outweigh the disadvantages. For that reason, I would overrule Medhurst.” 

Says Salmon: “The court did not say notice is not required — because the legislature, the provision in the Condominium Act, is clear that you need to provide notice in writing before the action is commenced. That is still the law. The question is really, if this is not complied with, what happens? 

The shift now is that the judge has a significant amount of leeway to determine what is the appropriate remedy under the circumstances, but she or he would not have to automatically deem the claim a nullity.” 

Adam Wygodny was one of the lawyers who acted counsel on the motion, but not as lawyers of record on the underlying proceeding. Wygodny says the ruling reflects the changing circumstances between the 1983 Medhurst case and today. 

For one, says Wygodny, condos are much more common now than they were in 1983, when fewer consumers would ever come across a condominium corporation dispute. Many of the laws applying to condos have been completely overhauled in the years since, says Wygodny, a lawyer at Berkow Youd Lev-Farrell Das LLP in Toronto. 

Wygodny, who acted alongside colleague R. Leigh Youd, says that legal interpretation was much more technical and formalistic in 1983 than it is today. 

“The issue with the earlier application is that judges and parties were looking at that old decision and just blindly applying it to the current statute,” says Wygodny.

“What this decision stands for is a warning: We should be on guard against doing that.”

In the decision, the judges noted that nothing in the text of the Condominium Act that dictates a breach of notice requirements means the action should be null. Further, since the Medhurst decision, “subsequent jurisprudence that has emphasized the role of legislative purpose in the interpretation of statutes,” said the court of appeal. 

“Nullity leads to this perverse result by allowing third parties to raise the procedural defect for their own benefit. It is perverse to allow the provision to be used to the prejudice of the condominium owners it was meant to protect,” wrote Harvison Young.

Tim Gleason, one of the lawyers who acted for York Region Standard Condominium Corporation No. 1206, says the Court of Appeal’s new decision reflects the law’s general move away from nullity. 

“This decision could be important for interpretation of other statutes, and wherever nullity has been applied in the past. I think the law is increasingly skeptical of nullity,” says Gleason, a partner at Dewart Gleason LLP in Toronto.

“Nullity is really an archaic and not very useful concept, and doesn't really have a place anymore in modern civil litigation law.”