In the Court of King's Bench of Alberta decision of Condominium Plan No 912 3701 (Liberton Village Condominium Corporation) v Herbert, 2024 ABKB 362 ("Liberton Village"), Applications Judge Summers confirmed that the repair costs associated with deliberate damage caused by an owner constitute "contributions" under the Condominium Property Act, RSA 2000, c C-22 (the "CPA") that can be caveated if the bylaws of the condominium corporation permit.
In Liberton Village, an owner and occupier of a condominium unit (referred to as "Andrew") cut a hole in a wall that adjoined a neighbouring unit (the "Incident"). The Incident occurred in the middle of the night and caused damage to both units. Importantly, although the unit was owned by AH together with his brother ("Chris"), and their mother ("Carol") ( Chris and Carol are collectively referred to as the "Herberts"), but it was only occupied by Andrew at the time that the Incident occurred.
Following the Incident, Applications Judge Smart granted an Order evicting AH from the unit, directing the Herberts to pay for the repairs required to fix the damage caused by the Incident, using only a contractor chosen by the Liberton Village Condominium Corporation, and granting costs against the Herberts on a solicitor-client basis (the "Eviction Order").
As a result of the Eviction Order, Condominium Corporation proceeded with registering a caveat (the "Caveat") against the certificate of title to the Herberts' unit, which included the costs associated with inspecting the damage caused as a result of the Incident, the cost to repair the damage, and the associated property management fees.
However, in response to the Caveat being registered, the Herberts filed an Application seeking an Order declaring that the Condominium Corporation engaged in improper conduct by registering the Caveat, directing that the Caveat be discharged, and directing that any outstanding charges be removed from the ledger for their unit. The Herberts' position was that the Caveat was registered improperly in order to prevent the sale of their unit from proceeding and that the amounts caveated did not constitute "contributions" under the CPA.
Under Section 39(1) of the CPA, condominium corporations are permitted to levy contributions on owners at regular intervals, either proportionate to the unit factors of their respective units, or on any other basis subject to the Condominium Property Regulation, Alta Reg 168/2000 and the condominium bylaws. Section 39(2)(a) of the CPA stipulates that a contribution shall not include any amount for the purpose of collecting a monetary sanction under a bylaw from an individual owner. Determining whether something constitutes a contribution is important because Section 39.2(6) of the CPA allows a condominium corporation to file a caveat against the certificate of title to an owner's unit with respect to the contribution levied and to recover this amount through a foreclosure proceeding.
In Liberton Village, Applications Judge Summers was therefore tasked with determining whether costs associated with damage deliberately caused by a unit owner constituted a contribution that could be caveatable and, if not, whether the Condominium Corporation's registration of the Caveat amounted to improper conduct.
In considering this, Applications Judge Summers reviewed submission by Bishop & McKenzie LLP, counsel for the Liberton Village Condominium Corporation, that the legislative history of the provisions of the CPA, including the changes proposed in the Condominium Property Amendment Act, 2014, SA 2014, c 10 (the "Amendment Act") were relevant. Specifically, the proposed Section 39(2)(b) from the Amendment Act provided that contributions would not include "costs incurred by the corporation as a result of damages caused by an act or omission of an owner, tenant or occupant". However, this proposed provision never proclaimed into force and was eventually repealed. Unlike most of the proposed amendments to the CPA as set out in the Amendment Act were approved and put into force, but the new proposed 39(2)(b) was notably not approved.
Bishop & McKenzie LLP, argued that, since the Alberta Legislature chose not to bring the amendments to Section 39(2)(b) into force, the government intended that costs relating to damages caused by an act or omission of an owner, tenant, or occupant were to remain within the term "contribution" set out in Section 39(1) of the CPA.
After considering the arguments, Applications Judge Summers agreed with the Liberton Village Condominium Corporation. Specifically, he stated that the Alberta Legislature did not intend to restrict condominium contributions to only those levies made "at regular intervals" and that any amount owing under a condominium's bylaws "on a basis other than in proportion to the unit factors" could be considered a contribution pursuant to Section 39(1)(a)(ii) of the CPA, including for deliberate damage caused by a unit owner.
As a result, given that the costs that were caveated by the Condominium Corporation in the Caveat were considered caveatable contributions, Applications Judge Summers held that the Condominium Corporation did not engage in improper conduct by registering the Caveat and dismissed the Application brought by the Herberts.
As a general take away from Liberton Village, under the current legislation, condominium contributions are not restricted to levies made at regular intervals, in proportion to unit factors or otherwise. Costs incurred by the corporation as a result of damages caused by an act or omission of an owner, tenant, or occupant can be classified as contributions to be levied and subsequently caveated. As such, it will not be considered improper conduct for a condominium corporation to levy a contribution against an owner for costs associated with an act or omission by such owner and to subsequently register a caveat in relation to that levy.
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