Court of Appeal Majority Rejects Oppression Claim Against Condominium Corporation’s Leasing of Parking Spaces

Gilbertson Davis LLPCommercial, Commercial Leasing, Condo Litigation, Oppression Remedies, Real Estate Litigation, Retail Disputes, Retail Litigation0 Comments

In Cheung v. York Region Condominium, the appellant owned several units which were leased to tenants who operated a 230-seat restaurant out of those units. After complaints by other unit owners that restaurant customers were taking up most or all of the 162 shared common element parking spaces, the condominium corporation enacted a by-law to allow the corporation to lease four parking spots per unit owner “from time to time”, reducing the potential number of spaces available to restaurant guests by 80%. The applicant sought a declaration that the by-law was invalid since the leases could be perpetual and thereby essentially create exclusive use common elements, which can only be created by specific declaration, not through by-law. The applicant further argued that the by-law was oppressive and unfairly prejudicial to the applicant’s interests.

The majority held that, since the by-law only approved the ability to enter into leases, which could be on whatever terms as considered appropriate, the by-law was not equivalent to designating certain common elements as exclusive use. Justice Weiler, in his dissent, held that the by-law nonetheless authorized the corporation to enter into permanent leases for an indeterminate period, and the factual matrix suggested such leases would be permanent and indefinite. Since a lease cannot have an indefinite period, such leases would be invalid, and therefore the by-law authorizing such leases is equally invalid.

However, the court was unanimous in agreeing that the actions by the corporation were not oppressive or unfairly prejudicial to the applicant, since the expectations of the applicant (that the restaurant customers should have unrestricted access to every parking space, regardless of the interests of the other tenants and owners) was unreasonable. In order to succeed in a condominium oppression claim, an applicant must show that the actions of the condominium corporation violate the “reasonable expectations” of the applicant. In finding that the applicant’s expectation was unreasonable, that claim must fail.

For unit owners, this decision serves as a reminder that, unless exclusive use is granted by lease or declaration, the use of any common elements must be subject to reasonable expectations, and a condominium corporation has the authority to modify the use of such common elements to ensure reasonable access to all unit owners. For condominium corporations, this decision also serves as a reminder that there are different mechanisms available to control the access and use of common elements, and condominium board’s should take care to ensure all procedural requirements have been followed.

If you are involved in a condominium dispute or oppression dispute, contact us for an initial consultation.

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