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CONDOMINIUMS - Condominium Corporation

Friday, October 23, 2020 @ 1:05 PM  

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Appeal by the strata corporation for the owners of Strata Plan LMS 3905 (Strata Co) from a decision of the British Columbia Court of Appeal that found it had entered a post-incorporation contract with the respondent, Crystal Square Parking Corporation (CSPC). Stata Co’s property was situated on an air space parcel within the Crystal development. CSPC owned and operated a parking facility situated on another air space parcel within the same development. An air space parcel agreement (ASP Agreement) obliged the owner of the parking facility to provide the owners of other air space parcels with parking rights in exchange for an annual fee. The ASP Agreement was entered into and registered on title by the Developer before Strata Co was incorporated. In 2002, the Developer sold the parking facility to CSPC and assigned the ASP Agreement to it. Until 2012, Strata Co’s members parked in the parking facility and paid the fees contemplated in the ASP Agreement. In that year, a dispute arose between the parties. Strata Co ceased paying the parking fees and CSPC responded by revoking the parking privileges of Strata Co’s members. Strata Co sought a declaration that the relevant provision of the ASP Agreement was null and void, or that it was unenforceable, or that it be rectified to state that the capital costs had been fully recovered, and also sought damages or disgorgement for breach of contract. CSPC counterclaimed for the amount of unpaid fees it alleged were owed by Strata Co pursuant to the ASP Agreement. The trial decision holding that Strata Co was not bound by the ASP was reversed by the Court of Appeal.

HELD: Appeal dismissed. Privity of contract had always served as a means by which landowners may bypass the operation of the general rule that positive covenants do not run with the land. An otherwise valid and effective post-incorporation contract was not unenforceable simply because its terms affected interests in land. Although a corporation was incapable of ratifying or adopting a pre-incorporation contract that it was not in a condition to be bound by at the time it was made, it could enter into a post-incorporation contract on the same terms as the pre-incorporation contract. Strata Co entered into a post-incorporation contract with CSPC on the terms set out in the ASP Agreement. Strata Co manifested an intention, by way of objective conduct, to be bound by a post-incorporation contract with CSPC. CSPC objectively manifested an intention to offer Strata Co a contract on the terms of the ASP Agreement by making valid parking passes available to its members. Strata Co objectively manifested an intention to accept the offer by paying the fees contemplated in the ASP Agreement and exercising the rights corresponding to those payments by parking in the facility. A reasonable person in CSPC’s position would have considered that Strata Co’s course of conduct constituted assent to the terms of the ASP Agreement. The contract was not unenforceable simply because its terms affected interests in land. Finding the contract was binding on Strata Co on the basis of its objective conduct was not inconsistent with the Strata Property Act’s governance model for strata corporations. Dissenting reasons were provided.

Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp., [2020] S.C.J. No. 29, Supreme Court of Canada, R. Wagner C.J. and R.S. Abella, M.J. Moldaver, A. Karakatsanis, S. Côté, R. Brown, M. Rowe, S.L. Martin and N. Kasirer JJ., October 23, 2020. Digest No. TLD-October192020011-SCC