Where shared spaces and communal decisions shape the everyday experiences of residents, conflicts can often arise when it comes to condominiums and construction projects, particularly when condominium owners and their respective boards clash over renovation projects. At the heart of these disputes lies a fundamental tension between individual property rights and the collective interests of the condominium community. The catalyst for these conflicts often stems from renovation projects that are perceived as excessive, unnecessary, or inadequately communicated to residents. Moreover, disagreements over funding mechanisms, project timelines, and the selection of contractors further exacerbate tensions between owners and boards. As frustrations mount, condominium owners may turn to the legal system to assert their rights and challenge the decisions made by their governing bodies.

Recently the Court of Appeal of Alberta was asked to review an order resulting from a dispute between the owner of a condominium unit and the Condominium Corporation over construction related to renovations of the property’s roof. This unique case came down to the interpretation of a limitation of liability clause often found in a Condominium Corporation’s Bylaws.

Condominium Corporation Hires Contractor to Repair Roof

The recent decision of Dunn v Condominium Corporation No. 042 0105 came before the Court of Appeal of Alberta regarding a dispute over construction-related renovations on the property’s roof. The respondent and unit owner (“TD”) was the owner of a penthouse condominium unit and prior to 2014, rented his suite to a tenant for $5,500 per month. In 2014, the appellant Condominium Corporation’s Board of Directors decided to replace the property’s roof due to water ingress threatening the structural integrity of the building. The Condominium Corporation hired a contractor and construction began in October 2014 and finished in November 2015.

After construction started, the tenant in TD’s unit complained to TD about construction-related noise, windows being boarded up, the inability to access his balcony, heat issues, and other matters. Accordingly, TD agreed to temporarily reduce the amount of rent the tenant owed during the construction period.

Unit Owner Issues Nuisance Claim Against Multiple Defendants

TD subsequently filed a claim in nuisance against the Condominium Corporation, the contractor and the property manager, Celtic Management Services Inc., seeking damages for lost rent lost during the construction period. The claim against the contractor was settled by way of a Pierringer Agreement, which allows a defendant in a multiparty legal proceeding to settle with the plaintiff and withdraw from the ongoing litigation.

The Condominium Corporation, on the other hand, argued that TD had not satisfied the legal test to receive compensation under the legal principle of “nuisance.” Therefore, it argued that the Condominium Corporation was protected by law, as well as a liability release under its bylaws, as TD did not take proper steps to mitigate his losses, among other arguments.

Two-Part Test to Establish Nuisance

When the matter came before the trial judge, the Court examined the principles of nuisance and referenced the two-part test that a claimant must satisfy in order to prove nuisance successfully. First, the claimant must establish that the interference with their property is both substantial and unreasonable. Second, the claimant “must prove that the non-trivial interference is unreasonable in all the circumstances.”

Unsurprisingly, TD argued that the construction was unreasonable and resulted in daily noise issues, problems with the unit’s heat, boarded up windows, and the inability to access the balcony. By contrast, the Condo argued that the issues with the property were not serious enough to constitute significant interference, and even then, any issues that were caused by the construction were reasonable in the context of providing valuable improvements for the benefit of all members of the organization.

Construction-Related Inconveniences Were Not Inevitable

Based on a review of the facts, the Court found that the interference was “more than a slight annoyance” with boarded up windows blocking natural light, loud noises starting early in the morning, and workers peering in through windows. The Court also accepted that the roof replacement was necessary, but that the year-long project and prevention of enjoyment of the property were so serious that it would be unreasonable to expect TD to bear the consequences without compensation.

The Court did not accept the Condominium Corporation’s arguments that they were legally bound to keep the property in a state of good repair as justification for the construction. Instead, the Court held that avoiding the nuisance was not practically impossible. The evidence also showed that the job should have taken four months to complete, which could have occurred during the warmer months to avoid issues with heat loss inside the unit. As such, the inconveniences were not inevitable.

Court Orders Condominium Corporation to Pay Compensation

The Court also determined that a limitation of liability clause in the Condo Corporation’s bylaws could not save the Condominium Corporation from paying compensation to TD.

As such, the Condo was ordered to pay damages, however, some of the losses were not recoverable due to limitation period restrictions. Nevertheless, the Court awarded damages of $25,250, less settlement funds received from the contractor under the Pierringer Agreement, to be paid to TD.

Condominium Corporation Appeals Order

The Condominium Corporation appealed this decision, highlighting arguments focused on the application of the Condominium’s bylaws. The Court of Appeal examined the law related to Condominium bylaws, both as provided for in the Condominium Property Act, as well as the common law. This review confirmed that the standard of review in this case should be correctness, which means that the Court of Appeal must assess whether the relevant Condominium bylaw should have applied in this case, in the context of the purpose of the bylaws and their ordinary sense.

The bylaw in question (“Bylaw 4.11.1”) reads:

4.11.1 Neither the Corporation nor its Board Members, shall be responsible to any Owner, Tenant or occupier of a Unit, for any damage or loss whatsoever caused […] to the person or property of any Owner, Tenant or occupier of a Unit.

Court Allows Appeal; Bylaw Bars Unit Owner’s Claim

Relying on provisions from the Condominium Property Act, the Court of Appeal affirmed that the purpose of condominium corporation bylaws is to establish and manage the responsibility for shared property. In this context, the meaning of Bylaw 4.11.1 was “clearly a measure intended to arrange the affairs of the condominium corporation and its relationship with owners, tenants, and occupiers of units, specifically by allocating risk.” In this case, the roof-related construction was intended to repair part of the common property. However, even the Condominium Board conceded that Bylaw 4.11.1 could not shield them from “improper conduct” as defined at section 67 of the Condominium Property Act.

Upon review of the claim, the Court of Appeal determined that TD was not arguing that the Condominium Corporation’s Board of Directors was negligent, but rather, it was the manner in which they went about fulfilling their responsibilities that was not reasonable. In this case, TD’s losses from the rental qualified as damages that could be compensated under the legal principle of “nuisance”. However, the Court of Appeal held that Bylaw 4.11.1 accounted for and protected the Condominium Corporation against precisely this kind of claim.

As such, the Court of Appeal accepted the appeal and held that Bylaw 4.11.1 barred TD’s claim against the Condominium Corporation for rental loss. The Court of Appeal further acknowledged that the language contained within Bylaw 4.11.1 was commonly appeared in condominium bylaws and the appeal raised a novel issue of importance to the public.

Contact DBB Law in Calgary for Advice on Construction Solutions and Property Disputes

The experienced litigation lawyers at DBB Law regularly help clients navigate the myriad of technical and legal considerations involved in construction projects and ensuing property-related disputes. Our team works to protect your interests at every stage of the dispute resolution process and ensure that you have the knowledge needed to make informed decisions every step of the way. Based in downtown Calgary, DBB Law offers a broad range of legal services to clients across Alberta. To learn more about how we can assist you, contact us online or by phone at 403-265-7777 to speak with a member of our legal team.