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CONDOMINIUMS - Unit holders - Liability of - For default on payment of common fees - Lien rights of condominium corporation

Monday, August 14, 2017 @ 12:27 PM  

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Appeal by York Condominium Corporation No. 385 (YCC) from a decision of an application judge finding that its statutory lien against a unit for unpaid common expenses had expired because it failed to register a lien certificate within the three-month period after default. The owner of the unit had granted the respondent, CIBC Mortgages Inc. (CIBC), a first mortgage on the unit. In February 2011, YCC obtained a compliance order and costs award against the owner. The owner failed to pay the costs order as required by March 2011. In accordance with s. 134(5) of the Condominium Act (Act), YCC added the outstanding costs to the common expenses owed. In September 2011, the owner failed to pay the common expenses as demanded by the appellant. In December 2011, YCC registered a certificate of lien against title to the unit for the common expenses. In 2013, the owners defaulted under their mortgage. The appellant argued that its statutory lien for the claimed common expenses had priority over the first mortgage. The application judge held that the owner defaulted for the purpose of s. 85(2) of the Act in March 2011 when the owner failed to comply with the costs order. This default triggered the three-month perfection period under s. 85(2) of the Act. As the three-month period had expired prior to the appellant’s registration of its lien certificate in December 2011, its lien lost its priority status over the first mortgage.

HELD: Appeal dismissed. The applications judge correctly interpreted ss. 85(2) and 134(5) of the Act and properly applied them to the facts of the case. It was the obligation created by the February 2011 costs order that anchored YCC’s lien claim under s. 85(1). When ss. 85(2) and 134(5) were read in their grammatical and ordinary sense, in the context of their legislative purposes and the scheme of the Act itself, there was no support for the appellant’s proposition that s. 134(5) was intended to permit a condominium corporation, in the exercise of its discretion under s. 134(5) to specify a time for payment of common expenses, to effectively enlarge the lien perfection period after a default in payment had already occurred. YCC failed to register its lien certificate within three months of the unit owner’s default in payment of the costs order, the default which gave rise to its lien claim. YCC therefore failed to perfect its lien security in accordance with s. 85(2) of the Act and its lien lost the priority over CIBC’s first mortgage that it otherwise would have possessed under s. 86(1) of the Act.
CIBC Mortgages Inc. v. York Condominium Corp. No. 385, [2017] O.J. No. 3373, Ontario Court of Appeal, G.R. Strathy C.J.O., E.A. Cronk and S.E. Pepall JJ.A., June 28, 2017. Digest No. TLD-August142017002