The Syndicate of co-owners is claiming from eighteen defendant co-owners the payment of a special assessment to complete important maintenance and repair work begun in April 2008 on common portions, in order to correct a major water infiltration problem.
The Syndicate is also claiming the payment of a special contribution for the year 2008 that only three co-owners failed to pay.
Separate from these three defendants, the fifteen other defendants presented a common defence and argued that:
• The notices of assessment at issue were not approved , nor the budget adopted by the general meeting of the co-owners as required by the Declaration of co-ownership and the Civil code of Quebec.
• In the absence of such approvals, the notices of assessment issued by the Board of Directors are invalid, and cannot serve as the basis for the Syndicate legal action.
• Art. 1072 C.c.Q. constitutes a rule of public order regarding to the obligation to consult the co- owners.
• The notices of assessment issued by the Board of Directors, deviated from the prevailing practice within the co-ownership.
• It is inconceivable in law that the Declaration of co-ownership, which was consistently respected as much before as during the more than thirteen years since the adoption of the new Civil code, can be unilaterally set aside by the Board of Directors.
• The defendants argue that the grounds for dismissal raised by the syndicate under the terms of article 1103 C.c.Q. Do not apply because the general meeting of the co-owners made no decision, and hence the defendants are not asking the Court to annul a decision which was not made in the first instance.
According to the Syndicate:
The Declaration of co-ownership does not grant the general meeting of co-owners the power to approve the work to preserve and maintain the common portions. It gives the directors the power to repair the common portions at the co-owners' expense.
• The vote held on this subject at the time of the annual general meeting, was not required to approve the Board of Directors acting within it power to order work for the preservation and maintenance of the common portions of the building.
• Even if the vote could have been presented as being consultative, it made it possible to the co-owners to express themselves formally on the questions submitted. In spite of the use of the expression “consultative vote” at the general meeting in fact, a formal vote was held for each decision taken.
• The defendants are foreclosed from asking for the cancellation of the decisions taken by the general meeting. Their right to do so was forfeited upon the expiry of the sixty day delay to do so allowed under article 1103 C.c.Q.
• The defendants did not show that they have suffered any measurable harm, besides the one of having to pay their share work attributed to their fraction.
The Law
Articles 1053, 1072, 1077 and 1103 C.c.Q are at the centre of the analysis of the questions raised in this case.
This litigation raises the following questions:
Do the provisions of article 1072 C.c.Q. which empowers the Board of Directors of the Syndicate, take precedence over the decision power of the assembly of the co-owners established in the Declaration of co-ownership?
At the time of the annual general assembly of November 20, 2008, did the Syndicate have the obligation to have the budget for finishing the works and their financing adopted by the general meeting, or was it only required to consult the co-owners on these questions?
Are the grounds for dismissal raised by the Syndicate regarding the forfeiture by the defendants of the right to contest the decision under article 1103 C.c.Q. founded? If not, is there a valid reason to cancel the special assessments, and declaring that they don't apply to the defendants?
ANALYSIS AND REASONS FOR JUDGEMENT
In the light of the doctrine of legal experts on the subject, within the framework of the application of article 1072 C.c.Q., as it concerns work to preserve and maintain of the building and how it is financed the Court recognizes that under the terms of the law, the final decision power is given to the Board of Directors of the Syndicate. This is the principle article 1072 C.c.Q. which is an imperative rule of public order.
Article 1072 C.c.Q., as written, impose the formal requirement of holding of a vote when the general meeting of the co-owners is consulted, but there is no prohibition from doing so.
However, if a vote is held in the assembly of the co-owners within the context of the consultation on the budget for major works (maintenance, repairs, preservation) and their financing, there can only be question of a preliminary or advisory vote and not of a binding vote, which would otherwise over-step the power conferred to the Board of Directors by article 1072 C.c.Q.
In the case in point, the Court is of the view that one cannot put aside the clear provisions contained in the Declaration of co-ownership which specify that for the adoption of the budget, the decision power is that of the general meeting of the co-owners that the Syndicate has always applied and respected from 1987 until 2007.
The Syndicate must continue to abide by these provisions until such a time they are declared invalid by a Court, or the Declaration of co-ownership modified. That is the rule that flows from the Court of Appeal in the matter of Syndicate of the co-owners of Château Renaissance vs. Industries d'Orcini Ltd. which supports the defendants' position.
It follows from the evidence presented that the Board of Directors informed and consulted the general meeting of the co-owners on the nature of works, their cost, the budget and the loan financing required, and there is sufficient credible evidence to establish that the Board of Directors acted in all transparency and in good faith.
It is untrue that the Civil code of Quebec is silent on the question of who holds the decision power over works to maintenance and preserve the common portions. The Declaration of co-ownership in this case explicitly attributes this power to the general meeting of the co-owners to approve work for the maintenance and preservation of the common portions.
In the case in point, involving the general meeting of the co-owners in the decision process is required for the works in question because, according to the Declaration of co-ownership, the general meeting of the co-owners must adopt the budget. Its approval is required to authorize the required loan of more than one million dollars from a financial institution.
The evidence shows that the majority of the co-owners, representing more than 80% the voting rights of the co-ownership, decided at the general meeting in favour of finishing the work, its financing and adopted the budget which was presented.
The Court believes the credible testimony of the members of the Board of Directors that the votes of the co-owners at the time of the general assembly which preceded the resolution of the Board of Directors setting the special assessment which is contested, exceeded the threshold of a simple consultation.
The Court is of the view that article 1103 C.c.Q. would apply in this case because, on the one hand, there is reasonable evidence that the co-owners made a decision at the general meeting to approve the works, their financing, and the budget for which gave rise to the special assessments later determined by the Board of Directors.
Given that the defendants failed to institute proceedings to annul the decision made by the general meeting of the co-owners within sixty days of it being held, the means grounds for dismissal raised by the Syndicate is well-founded. The defendants are therefore foreclosed from contesting the decisions of the general meeting of the co-owners and the special assessments resulting from them.
Even if article 1103 of the Civil code of Quebec did not apply in this case, considering the evidence that the majority of the co-owners at the general meeting voted in favour of the budget to complete the works and the required financing, and considering that the alleged irregularity of the vote was not in contempt of the defendants rights, who also failed to show that they were harmed by the decision, there are no valid reasons which would justify the Court to intervene in this matter.
In the event that the Declaration of co-ownership is eventually modified, the inclusion of a mediation clause would be a useful and practical option to consider as a means of conflict resolution.
The Court shares the opinion as Me Gilles Simard, notary, who stresses that mediation is a flexible, private and confidential process, which takes less time and at a lower cost than arbitration or legal action before the courts. Mediation would make it possible to promote the maintenance of harmonious relations in a condominium.
For the reasons previously expressed, the grounds for dismissal raised are well-founded, and consequently the defence fails and the syndicate's action must be granted.
The Declaration of co-ownership makes it possible for the Syndicate to claim from the defendants th e costs incurred for the collection of the assessments claimed in this case, and which arise from the terms of the contractual obligations between the parties.
The Syndicate has proven that it has paid extra-judicial costs of 28 950,63 $ for the collection of the assessments for works to which the defendants are required to contribute.
The defendants raised raised no valid reason why the applicable provisions of the Declaration of co-ownership concerning the reimbursement of the extra-judicial costs incurred by the Syndicate to recover the special assessments should be set aside.
Applying the rule of proportionality, considering the unpaid amounts claimed from each defendant the Syndicate had no alternative than to take legal procedures to obtain a judgement against the defendants, the Court is of the view that there is good reason to award the amount of 2 412,55 $ claimed to each defendant as extra-judicial fees.
The defendants have failed to provide a valid argument to set aside the provisions of the Declaration of co-ownership for the interest claimed which are, and consequently, the interest amounts claimed must be awarded.
Source: Syndicat des copropriétaires du Château Corot vs. Tanaka and others 2011 QCCQ 2828