Condominium Corporations’ Duty to be Honest with Owners

In the case of Gonzales v. York Condominium Corporation No. 242, the owners of one of the units claimed that they should be able to avoid certain special assessments that had been levied by the condominium corporation. They also claimed that they had not been properly advised (at the time of their purchase) of certain changes that the Corporation intended to make to the property (namely, removal of their solarium). The owners relied upon the status certificate that had been issued to them by the Corporation at the time of their purchase.

The Court dismissed the owners’ claims, because the Court felt that the status certificate “was complete and accurate”.

However, the Court also held that – during the course of the various discussions between the Corporation and the owners (surrounding the status certificate issues) – the Corporation had misled the owners. The Court held that this misleading conduct constituted oppression, and ordered the Corporation to pay $75,000 in damages to the owners.

The key passages from the decision are as follows:

In the absence of any evidence to the contrary, I conclude that the condominium corporation and its agents at MRCM deliberately altered and falsified the 2023 version of the status certificate. The corporation is responsible for the acts of its agents. They knowingly caused additional text to be added to the authentic status certificate to support the hard-line position they were taking with the applicants. I conclude that if the applicants had not found a true copy of the original status certificate, the corporation and its agents would have continued to lie to the applicants and insist that the corporation’s position had been disclosed on the status certificate prior to purchase.

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Inaccurate disclosure to condominium purchasers can result in a finding of oppression.

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In my view, the corporation engaged in oppressive conduct. Knowingly falsifying a status certificate, attempting to rely on that falsified certificate to compel a unit owner to accept the cost of demolishing the solarium, and then continuing to lie and mislead the owner is a paradigmatic example of acting in bad faith. I declare that the corporation’s conduct is oppressive, contrary to s. 135 of the Act.

In my view, this case confirms the overriding duty of a condominium corporation to avoid misleading the owners in the condominium. In my view, this is a duty that arguably goes beyond the normal obligations between parties to a dispute, because condominium owners look to the condominium corporation for honesty and forthright disclosure in relation to the affairs of the condominium (to the extent that such disclosure is permitted by Section 55 (4) of the Condominium Act).

Otherwise, the Corporation’s misleading conduct might qualify as oppression.

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