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CONDOMINIUMS - Developers - Common elements - Obligations of

Monday, July 20, 2020 @ 9:41 AM  


Lexis Advance® Quicklaw®
Appeal by the developer from a decision of an application judge transferring ownership of the parking area in a condominium building from the developer to the Condominium Corporation. Upon the creation of the Condominium Corporation, the developer retained ownership of the parking area as a unit and, while still in control of the Condominium Corporation, leased the parking unit to the Condominium Corporation. The application judge found that the developer failed to disclose to purchasers of units of the Condominium Corporation the status of the parking area as a unit and the developer’s ownership of that unit. He determined that the developer caused the unit owners to reasonably believe that the parking area was a common element of the Condominium Corporation.  He therefore concluded that the developer breached a fiduciary duty owed to the unit owners. The mortgages registered against the title to the parking unit were not addressed by counsel or the application judge. The developer argued that it marketed the project as a zero-commute building and that the condominium units were marketed to people who did not own cars.

HELD: Appeal dismissed. The application judge, in deciding to proceed by application, did not misdirect himself, nor was his discretionary decision so wrong as to amount to an injustice. The application judge did not err in his statement of the law about the fiduciary duty owed by a condominium developer to unit owners of the condominium corporation. There was no basis for intervention by the court with respect to the application judge’s determination that a reasonable unit owner would have been led to believe that the parking unit was a common element of the Condominium Corporation. The application judge was entitled to interpret and weigh the evidence to decide the facts, and then to determine whether those facts met a legal standard, all reviewable on the deferential standard of palpable and overriding error. No such error was demonstrated. The two mortgages that were registered after the Plan and the Declaration should not remain on the title to the parking unit and were ordered removed. Once the parking unit became a common element of the Condominium Corporation by representations made by the developer in the Declaration and the Plan, the developer could not mortgage it. Whether it was just and equitable for the mortgage registered prior to the Plan and the Declaration should be removed was referred back to the application judge to determine.

Winnipeg Condominium Corp. 479 v. 520 Portage Avenue Ltd., [2020] M.J. No. 145, Manitoba Court of Appeal, M.M. Monnin, J.L. Lemaistre and K.I. Simonsen JJ.A., June 22, 2020. Digest No. TLD-July202020002