In a recent judgement of the Court of Québec, Small Claims Division 1, the Court dismissed the claim for damages of a co-owner against the syndicate of co-owners, and condemns the co-owner to pay all legal costs incurred by the syndicate.
The claims of the parties
In his legal action, the co-owner seeks to obtain a settlement of $11,036.60 from his syndicate of co-ownership. This claim consists of: $4,038.60 as a “refund” of the purchase price of the common portions of the co-ownership; $5,000 for trouble and inconvenience including bank charges, legal fees, lost time, etc.; $1,038 for expungement proceedings to legal mortgages he considers to have been made illegally; $960.00 for co-ownership fees he had to pay.
In turn, the syndicate denies any fault on its part, and denies owing any amount whatsoever to the co-owner. As for the part of the claim for the “reimbursement” of the purchase price of the common portions, the syndicate denies owing any amount whatsoever to the co-owner considering that the syndicate has sold nothing to him.
In addition to this defence the syndicate claims from the co-owner in a counterclaim reimbursement of the costs and expenses incurred to recover common expenses owed to it for a total of $4,546.62.
The facts found by the Court
The deed of co-ownership, drafted by the real-estate developer, established a divided co-ownership including thirty-eight privative residential units.
The common portions of the building are composed mainly of driving lanes for vehicles, a common ground, and a garage. The privative parts are squares of land on which are already based the mobile homes of the co-owners.
Once the deed of co-ownership was published, the co-owner signed a deed of purchase with the real-estate developer and he became co-owner. The Court notes that under this act, he claims to have received a copy of the deed of co-ownership, and commits himself to contribute to the common expenses and emergency funds. He also commits himself to respect the deed of co-ownership, and to comply with rules adopted by the assembly of co-owners.
He gave the syndicate a series of ten postdated checks addressed to the syndicate to pay his contribution to the common expenses for the next ten months.
Despite these obligations he assumed from the outset, the co-owner refused to comply with the regulations.
He contacted the syndicate to obtain an access key to the garage, but he was shocked when the syndicate’s board of directors informed him that the parking spaces in the garage offer no free access to co-owners, and that they must rent them for a monthly fee.
Instead, he demanded that the syndicate remitted his postdated cheques that had not been cashed yet, and he canceled payment on the one for the then current month.
The members of the board of directors met with the co-owner in order to make him understand that he had to pay his contribution to the charges, but the co-owner refused to cooperate. The board members reminded him that, according to the deed of co-ownership, the refusal to pay his contribution to the common expenditures might result in loss of the privilege of paying the common charges in monthly installments, and that all expenses for the year would become due immediately.
The administrators also reminded the co-owner that the deed of co-ownership provides for an interest at 2% per month in the event of failure to pay, in addition to the costs incurred by the syndicate because of this defect, notably professional fees.
The directors also invoked that a penalty clause applies to co-owners who contravene the provisions of the deed of co-ownership. This clause provides for monetary penalties depending on the number of offences.
Despite a formal notice, the co-owner has still refused to pay the amounts due and the costs claimed.
According to the testimony of the directors of the syndicate, they had no other choice but to publish a legal hypothec against the fraction of the co-owner to protect the debt of the syndicate. A notice of exercise of a right of mortgage was issued shortly after.
Aware of the situation, the mortgage creditor of the co-owner has given him notice to pay the arrears of the common expenses and to obtain the cancellation of the legal mortgage and the notice of exercise.
Faced with this pressure from his mortgage lender, the co-owner pays a portion of the amount due, and obtains the cancellation of the legal mortgage and the notice of exercise.
However, he refused to reimburse the syndicate for costs incurred for the publication of the legal mortgage and the notice of exercise, and there are still the penalties and interest that the co-owner refuses to pay in spite of a formal notice from the syndicate.
Instead, the co-owner takes legal action against the syndicate for the amount of $12,000, and he refuses to pay his contribution to the costs for the year 2016, citing that he is not responsible for any common expenditures.
By its counterclaim against the co-owner, the syndicate claims the sum of the following amounts: bank charges following the refusal to pay $21.00, $37.95 for 3 registered mails, $3112.67 for notary fees for the legal mortgage and lawyers’ fees, $500.00 for time spent by the members of the board of directors, plus $875.00 in penalties under the penalty clause of the declaration of co-ownership.
Analysis by the Court
The Court recalled that the co-owner must establish that it is more likely than not that the syndicate was at fault.
Regarding the claim by the co-owner of the sum of $4,038.60 in respect of “repayment” of the price paid to the real-estate developer for the common portion, according to the Court, the syndicate is by no means liable. The syndicate has not sold anything to the co-owner, and received no money in relation to the common portions of the building. The Court notes that if the co-owner believes he has suffered harm by signing the purchase deed, he must address the one from whom he bought, i.e. the real-estate developer.
With respect to problems, drawbacks, legal fees, loss of time, the Court considers that the co-owner has not established any wrongdoing whatsoever on the part of the syndicate.
According to the Court, the evidence of the syndicate with regard to the co-owner had the totally opposite effect.
According to the Court, the evidence of the syndicate demonstrates that the co-owner refuses to comply with the most basic rules of the deed of co-ownership, i.e. the one to pay his contribution to the common expenses. The Court observes that this obligation stems directly from the fact that the co-owner has chosen to buy a portion of the co-ownership.
According to the Court, the co-owner’s misunderstanding contributes to his stubbornness, and causes significant costs for himself and the syndicate.
The Court reminds the parties that the fact of living in a co-ownership requires concessions, and forces us to understand the rights of others. The Court finds that the co-owner is not willing to make any concession to the assembly of the co-owners, or to comply with the deed of co-ownership.
The co-owner refuses to contribute to the common expenses like all other co-owners, and he claims to be entitled to an unlimited use of the garage at no cost, which is not supported in any way by the deed of co-ownership and the regulations adopted by the assembly of the co-owners. On the contrary, the assembly of co-owners decided that the use of the garage would be allowed to co-owners, but only according to established rules and the payment of a fee.
The Court notes that the co-owner, like any other, has the obligation to contribute his share of the expenses, for the maintenance and upkeep of all the common portions of the building, including the garage, the vacant lot, the vehicle driveways, and all infrastructures. This obligation stems from the fact that he bought a co-ownership that is part of a building.
The Court confirms that the syndicate has the obligation to maintain the building and preserve the common portions of it. It has all the powers necessary to fix common expenses, collect them, and take the necessary measures, including the publication of a legal mortgage, when a co-owner refuses or fails to pay his contribution to the expenses.
According to the Court, the legal mortgage measures taken by the syndicate against the co-owner were soundly based at all levels regarding the stubbornness of the latter and his refusal to meet his obligations. Such obligations will devolve upon him as long as he remains co-owner.
Consequently, the Court found that the claim of the co-owner against the syndicate has no basis whatsoever and should be rejected in full, and that the co-owner must be ordered to pay the syndicate’s Court costs of $240.00.
Concerning the syndicate’s counterclaim against the co-owner, the Court emphasized that the deed of co-ownership clearly states the syndicate’s right to demand repayment by the co-owner of the fees and expenses of its legal counsel when his services are required following the co-owner’s fault to comply with the deed of co-ownership, including the fact to pay his contribution to the costs. Consequently, the syndicate is well founded in its request to the co-owner for reimbursement of costs incurred with its legal advisors for the legal mortgage ($3,112.67) and for bank charges ($21.00) and registered letters ($37.95).
Regarding penalties claimed by the syndicate, the deed of co-ownership provides that the arrears of any payments due by a co-owner bear interest at 2% per month from the date they are due. This is in accordance with Section 1617 of the Québec Civil Code which provides that “damages which result from delay in the performance of an obligation to pay a sum of money consist of interest at the agreed rate...”
According to the Court, the penalty clause contained in the deed of co-ownership does not aim at delayed payments, but rather at cases of violation of any provisions of the deed of co-ownership regarding the use of common portions or of the privative portions.
According to the Court, the syndicate is not entitled to the amount of $875 claimed as penalty. According to the Court, the interest clause applies to expenses incurred by the syndicate, and that the co-owner refused to pay.
As for the amount claimed for time spent by the administrators on this case, the Court was of the view that no amount should be awarded in damages. The time spent by the administrators is part of their mandate, even if the work required was out of the ordinary. In this matter the Court recalled that the co- owner, as the opposing party, cannot be held responsible for the choice of the directors concerning the energy and the number of hours they spent on the case.
For all these reasons, the Court sentenced the co-owner to pay the syndicate the amount of $3,171.62 with interest at the agreed rate of 26.82% per annum from the date of filing of the counterclaim, plus the judicial costs of $89.
As the request of the co-owner against the syndicate has also been rejected, the co-owner was ordered to pay the syndicate the court costs of $240.
For any questions about co-ownerships or real-estate law in general, do not hesitate to contact our team of lawyers specializing in the field.
1. 450-32-017917-154, 2016 QCCQ 4000