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Removing A Harsh Penalty For Non-Compliance: YRSCC No.1206 v. 520 Steeles

By Taheratul Haque

The modern era of the Condominium Act has brought about numerous decisions from the Courts which emphasize the consumer protection nature of the Act. However, there remain certain older decisions which interpret the words of the Act strictly, leading to potentially harsh results to the consumer.

One such example is under Section 23(2) of the Act, which states as follows:

(2) Before commencing an action mentioned in subsection (1), the corporation shall give written notice of the general nature of the action to all persons whose names appear in the record of the corporation required by section 46.1 or are required by that section to appear in that record except if,

(a) the action is to enforce a lien of the corporation under section 85 or to fulfil its duty under subsection 17 (3); or

(b) the action is commenced in the Small Claims Court.

In 1983 the Court of Appeal interpreted this section in York Condominium Corp. No. 46 v. Medhurst, Hogg & Associates Ltd.[1], and ruled that any action by a condominium corporation which failed to provide notice pursuant to Section 23(2) of the Act was rendered a nullity. Medhurst has since been used in a number of cases to render an otherwise valid claim a nullity due to a lack of notice.

On January 31, 2020 the Ontario Court of Appeal has, in a rare display, completely overturned Medhurst with five member panel of Justices, in the decision of York Region Standard Condominium Corporation No. 1206 v 520 Steeles Developments Inc. et al.[2] In 520 Steeles, the Court of Appeal held that the decision of Medhurst caused unintended harsh consequences and potential injustice to condominium owners, while being contrary to the consumer protection intent of the Act.

The Court of Appeal found that since Medhurst was released, the Supreme Court of Canada has clarified the modern framework for statutory interpretation in the decision of Rizzo & Rizzo Shoes Ltd., Re,[3] which holds that the words of an Act are to be read in their entire context, and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. Therefore, the strict interpretation of the Act under Medhurst no longer applied.

More importantly, the Court of Appeal found that the result in Medhurst was contrary to the purpose of Section 23(2), which was to provide protection and notice to unit owners, that the condominium corporation was commencing an action. Instead, Medhurst was being used for the benefit of third-party defendants, by rendering an otherwise valid lawsuit against them a nullity, when the Section was never drafted with the intention to protect third parties.

520 Steeles, now changes the law, and holds that noncompliance with Section 23(2) should not render an action a nullity. Instead, failure to comply with Section 23(2) creates a procedural defect. The court will have the discretion to decide the effect of same, and will consider the extent of noncompliance and the extent of any prejudice suffered, if any, of such procedural defect.520 Steeles is a long overdue decision, as it needs to remove the potentially abusive effects of Medhurst, and is beneficial to Condominium Corporations throughout the province. We know that Condominiums do not operate in a perfect world, and mistakes and inadvertence can occur from time to time. The Court of Appeal has brought the case law back to the consumer protection intent of Section 23(2). This is good news for Boards of Condominium Corporations as it reduces the risks of an otherwise valid legal claim from being rendered void due to a procedural oversight.We should note that 520 Steeles does not change the notice requirement under Section 23(2), but only changes the penalty for non-compliance. Condominium Corporations must still be in compliance with Section 23(2) and failing to do so may be grounds for Unit Owners to claim that the Board has prejudiced them. Therefore, we recommend Condominium Corporations issue their notices as early in advance as practicable before commencing litigation, to avoid any potential prejudice to their Unit Owners. If an action is commenced and notice has not been provided under Section 23(2) due to inadvertence or a time constraint, said notice should be provided to all owners as soon as possible, after such procedural defect is discovered.

[1] York Condominium Corp. No. 46 v. Medhurst, Hogg & Associates Ltd., [1983] 147 DLR (3d) 768 (ONCA)

[2] York Region Standard Condominium Corporation No. 1206 v 520 Steeles Developments Inc. et al., 2020 ONCA 63

[3] Rizzo & Rizzo Shoes Ltd., Re, [1998] 1 SCR 27, para 21

All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.


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