In a prior blog post we reported that a commercial condo unit owner successfully sued the condominium corporation after the corporation registered a lien against his unit for repair costs related to clearing a blockage in the plumbing system. However, an appeal by the corporation resulted in the Superior Court of Justice Divisional Court setting aside the trial court decision and ordering a new trial.
The condominium corporation had taken the position that a plumbing blockage which affected the owner’s unit as well as several other units, was caused by grease emanating from the owner’s unit. The trial judge ruled in favour of the unit owner on the basis that the corporation did not prove “in an unambiguous and straight-forward fashion” that the source of the blockage was the owner’s unit. The Divisional Court found that this was an error on the part of the trial judge as the corporation was not obliged to prove that the blockage came from the owner’s unit – rather it was the unit owner’s obligation “to establish that it was more likely than not that he was not the source of the plumbing blockage.”
Furthermore, the trial judge did not mention in his decision some audio tapes of the plumber snaking and cleaning the pipes, which the Divisional Court determined was troublesome, as these audio tapes seemed to be very relevant evidence.
In addition, the Divisional Court determined that the trial judge had erroneously rejected or discounted evidence given by the corporation’s board of directors regarding their reasons for concluding that the source of the blockage was the owner’s unit because the language used by the board members in their discussions was “laden with expletives.” In rejecting their evidence, the trial judge failed to give deference to the board’s decision. A landmark decision from the Ontario Court of Appeal recognized that the business judgment rule applies to condominiums. As long as the board of directors has acted honestly and in good faith and exercised the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances, the courts will give deference to board decisions. (Click here to read our prior blog post on this case.)
For the above reasons, the original decision was set aside and a new trial was ordered so that a proper analysis of the evidence could be undertaken.
