In a recent judgement¹, the Court of Quebec, Small Claims Division, had to decide whether the Syndicate of co-ownership could require that a co-owner signs a form of pre-authorized debits, without their amount being stated.
The scenario in short:
The Syndicate of the co-ownership claims from a co-owner shared expenses, administrative costs and interest. The co-owner refuses to pay his contribution to the common expenses, and he challenges the Syndicate’s request to pay them with one check or pre-authorized debits. The Syndicate would want him to sign a form of pre-authorized debits without specifying the amount that can be withdrawn. The co-owner argues that this amounts to no less than to sign a blank check, which he refuses.
The co-owner had offered and deposited each month since the filing of his challenge which was the equivalent of the amount of the contributions he had to pay monthly.
The facts according to the Court:
The co-owner has owned the unit since 1986, and he paid his contributions to the common expenses by a series of twelve postdated checks.
In 2010 the general assembly of co-owners adopted, by majority vote, a resolution amending the regulations of the building to the effect that henceforth, if the co-owners wanted to pay their contribution by postdated check, they had to do so in a lump sum with a postdated check from February 1st of each year. They would therefore no longer have the option of paying by twelve monthly postdated checks as before. However, the co-owners could adhere to the use of monthly pre-authorized debits (PAD).
The Syndicate sent a notice of assessment to the co-owner covering the period from 1 October 2010 to 30 September 2011 to the amount of $2,314.24. He was offered to pay by monthly PAD, or one check post-dated February 1, 2011 and the authorization form provided that the amount of the debits would vary each month and that the co-owner would be notified of the amount ten days before the deadline.
Despite this, the co-owner still emitted and transmitted twelve postdated checks to the Syndicate which cashed them on the due dates.
The following year, the contribution of the co-owner was set at $2,301.32 and he sent twelve postdated checks to the Syndicate which refused to cash them because they went against the amended house regulations adopted in 2010. The Syndicate returned the checks to the co-owner and the situation remained unchanged until September 2012.
The Syndicate filed a claim in the Court of Quebec, Small Claims Division, claiming from him unpaid charges, administration fees and interest.
The co-owner filed his opposition to this within the time required and he offered and submitted to the Court the sum of $1,151.70 corresponding to the contributions to the common expenses due up to then. Since then, every month, he submitted the equivalent of the amount corresponding to the pre-authorized debits requested by the Syndicate. At the date of the hearing, the co-owner had therefore offered and deposited the sum of $3,690.86.
Analysis and motivation of the Court:
The Court first observes that the co-owner disputed the fact that he no longer had the option since the changing of the house regulations in 2010. However, the Court states that the Small Claims Division of the Court of Quebec has no jurisdiction to hear a claim for annulment of a decision of the general assembly of co-owners under Section 1103 of the C.c.Q.
The Court indicates that it must be assumed that the regulatory amendment is valid, and that therefore the co-owner must comply with the Regulations, and he cannot pay his contribution to the common expenses anymore by a series of postdated checks. The Syndicate has the right to refuse and return them to him according to the Court.
However, the Court is of the opinion that the Syndicate’s claim that adherence to bank withdrawals must be made to a variable amount, without the co-owner being allowed to write the amount of his payment on the form, appears, not only to be contrary to the Rules that provide the option of the PAD, but equally so to Section 1072 of the C.c.Q. The Court tells the parties that this section requires the Syndicate to inform the co-owner about the annual amount of his contributions as well as the date they are due.
The co-owner, moreover, criticized the Syndicate for asking him a “blank check.” According to the Court, his complaint is well-founded because there is no amount specified.
Therefore, the Court finds that the Syndicate may not require that the co-owner leaves a blank debit amount on the form of pre-authorized payments, thereby allowing the amount to be variable. This requirement of the Syndicate is contrary to the Civil Code of Quebec as well as to the Regulations. The co-owner could therefore validly refuse to adhere to this method of payment.
The co-owner has always expressed his intention to pay the common expenses. He has therefore offered and transmitted each month the equivalent of the amount corresponding to the pre-authorized payments requested by the Syndicate. According to the Court, the co-owner has not therefore failed to fulfill his obligations.
The Syndicate’s claim, based on the house rules, that the co-owner pays it an administrative fee of $30 because of its breach of the rules is rejected by the Tribunal. The latter is of the opinion that the co-owner did not breach his obligation to pay the contributions to the common expenses given that the Syndicate’s claim was not in conformity with the Regulations.
Similarly, the Tribunal is of the opinion that the Syndicate was not entitled to interest of 2% per month claimed in its statement. Section 4 of the Interest Act² prohibits the granting of interest on a monthly basis. In addition, the co-owner offered and submitted monthly the amount of his contribution to the common expenses as set out in the notice of assessment of the Syndicate. In doing so, he has demonstrated his willingness to pay his contribution to the common expenses. His offerings and consignments are valid and set him free from payment of interest.³
The Court finds that the amounts offered and deposited by the co-owner are valid, and the Syndicate must bear the costs of it.
The Court accepts the Syndicate’s claim. It allows the Syndicate to withdraw the sum of $3,690.86, but sentences it to bear the costs of the deposit totaling $140.32.
For any questions in real-estate law, do not hesitate to contact the legal team of the APQ.
¹. Syndicat de la copropriété Place Jean-Talon v. Gagnon 2013 QCCQ 15674
². L.R.C. 1985, c. I-15
³. Civil Code of Quebec, Sect. 1586
Pre-authorized debits: the Syndicate must specify their amount according to the Court
