In a recent judgement of the Court of Québec, Small Claims Division i, the claim for damages by a former co-owner against the syndicate of co-owners for damages for hidden defects was rejected by the Court. This former co-owner claimed from her former syndicate of co-owners the amount for which she was sentenced to pay the buyers of her unit. The latter asked her for their share of a special contribution paid for upgrading non-compliant unit fireplaces.
The claims of the parties
The former co-owner claims from her former co-ownership syndicate with vertical effect, as well as from the syndicate with horizontal effect of which the vertical syndicate is part, the amount of $4,588.82, amount paid to the buyers of her unit following a legal action for hidden defects in the unit.
The former co-owner claims that the syndicates are responsible for this, because, according to her, the non-compliance of the fireplace is the result of a faulty construction or design of the common portions of the building. According to the former co-owner the syndicates should not have collected the sums required for the work through a special contribution required from the co-owners, but they should rather use the contingency fund of the building to which she said she had contributed during all the time she was a co-owner.
For their part, the syndicates argue that the former co-owner has no rights with respect to the use of the contingency fund. In addition, they argue that the buyers actually had the right to sue the former co-owning seller under the legal warranty. The vertical syndicate considers that the legal action by the former co-owner is frivolous and vexatious, and counterclaims against the former co-owner for the amount of $1,175.00
The facts found by the Court
The former co-owner applicant has owned the condo in question in a vertical co-ownership syndicate, which is part with eleven other vertical syndicates of a horizontal syndicate. The former co-owner sells her unit to the new co-owners, but two years later the purchasers take legal action against the former co-owner for the amount of $4,588.82, representing their share of a special contribution for the corrective work done to the fireplaces in the units, which, according to the facts, did not comply with municipal regulations. This amount represents their share of the cost of the work required to conform them to local regulations.
Following the hearing of this case, the judgement of the Court qualifies this lack of a hidden defect in construction for which the former co-owner is responsible because of the legal warranty of section 1726 of the C.c.Q. This article reads as follows:
“1726. The seller is bound to warrant the buyer that the property and its accessories are, at the time of the sale, free of latent defects which render it unfit for the use for which it was intended or which so diminish its usefulness that the buyer would not have bought it or paid so high a price if he had been aware of them. The seller is not bound, however, to warrant against any latent defect known to the buyer or any apparent defect; an apparent defect is a defect that can be perceived by a prudent and diligent buyer without the need to resort to an expert.”
The former co-owner pays to those to whom she sold the unit the amount of $4,588.82, but for her the syndicate should have used money from its contingency fund to pay for the work. She calculates that she had contributed about $10,500.00 to this fund during the years that she was co-owner of the unit. This is why she takes legal action against the vertical and horizontal syndicates to recover that amount.
Analysis and decision of the Court
The Court reminds the former co-owner that under section 1726 of the C.c.Q., and according to divided co-ownership jurisprudence, their action was appropriate, which she does not dispute. But can the co-owner, on her part, take legal action against the syndicates, as she does, to recover the amount she paid?
Applying the principles established by jurisprudence, according to the Court the former co-owner may not direct the responsibility for what she paid on the back of the co-ownership’s syndicates. Although section 1077 of the C.c.Q. states that the syndicate is liable for damages caused by design or construction flaws or poor maintenance of the common portions the syndicate is not responsible for the existence of this defect, but it must take the necessary means to correct it.
According to the evidence and the deed of co-ownership the fireplaces of the units are common portions for restricted use of the building of the vertical syndicate, and their maintenance, repair or replacement are the responsibility of the vertical syndicate, and not those of the horizontal syndicate. The Court therefore believes that the former co-owner may not seek to hold the horizontal syndicate liable and the claim against the latter and its contingency fund should be rejected. Through her monthly condo fees the former co-owner has contributed to both the contingency fund of the vertical syndicate and the contingency fund of the horizontal syndicate. But can she make any claim on this fund?
The Court reminds the parties that under section 1071 of the C.c.Q the contingency fund belongs to the syndicate. This section reads as follows:
“1071. The syndicate establishes, according to the estimated cost of major repairs and the cost of replacement of common portions, a contingency fund to be used exclusively for such repairs and replacement, which is liquid and available at short notice. The syndicate is the owner of the fund.”
The Court also notes that the deed of co-ownership provides the same effect, and confirms that it is the syndicate’s administrators, elected by the assembly of co-owners, who have the power and the responsibility to manage the co-ownership’s contingency fund.
The deed of co-ownership also contains provisions granting authority to the administrators to adopt a special budget and issue a special contribution should the budget for the current year not be sufficient during the year, or if it should be better not to use the contingency fund for a particular expense for major repair or replacement of the common portions or the public portions for restricted use of the building.
According to the Court, the administrators have exercised their powers under the law and the deed of co-ownership when they consulted the assembly of the co-owners on a supplementary budget proposal to raise the funds needed to pay for remediation of the fireplaces.
According to the Court nothing in the law or in the deed of co-ownership would allow the former co-owner to demand that the syndicate draws from its contingency fund, instead of issuing a special contribution as it did. The claim of the former co-owner was therefore rejected for these reasons.
As to the counterclaim by the vertical syndicate against the former co-owner on the grounds that her lawsuit is frivolous and vexatious the Court notes that the issues raised by the relationship between current or past co-owners and the syndicates of co-ownership are often complex.
After hearing the evidence and arguments of the parties the Court is rather of the view that the former co-owner has not taken legal action against the syndicate knowing that her reasons were unfounded and no evidence in the record shows that this claim was made in order to undermine the syndicate.
For these reasons, the Court rejected the claim of the former co-owner against the vertical and horizontal syndicate, and ordered it to pay the syndicates’ Court costs of $175.00 and it dismissed the counterclaim of the vertical syndicate without charge.
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1. 505-32-032534-142, 2015 QCCQ 7253