Owner Responsible for Corporation’s Deductible

In the case of Abeygunasekara v. PCC 392, the Ontario Superior Court held the owner responsible for loss falling within the deductible under the condominium corporation’s insurance policy.

In the PCC 392 case, water overflowed from the toilet in Unit 718, resulting in damage to several other units and to the common elements.  According to the Court’s decision, the superintendent “checked the toilet and determined that the toilet’s flapper was ajar, and that the toilet had been clogged.” The damage from the water escape was worsened because the shut-off valve at the toilet was broken, and it took some time for the condominium corporation to shut off water flow to the entire unit.

The Court determined that the water damage was the result of acts or omissions of the owner and tenant of Unit 718, and that the owner was accordingly responsible – under a by-law of the corporation – for resulting damage (totalling $42,233.47) falling within the corporation’s deductible.

Among other things, the owner asserted that the corporation’s deductible ($50,000) was unreasonable and oppressive.

The Court held that the corporation’s deductible was reasonable and that there was no oppression. The Court said:

Decisions about how to comply with the condominium’s by-laws and the Act, including purchasing insurance protection, are made by the condominium’s board. The respondent is required to carry insurance. The policy it chooses is based on a decision made by the condominium through its board. Those decisions are entitled to deference – based on the so-called business judgment rule – because boards are in a better position to make such decisions than courts.

There is nothing to suggest that this principle of giving deference to the board should not apply in this case.  There is simply no evidence that the respondent has acted oppressively.

The Court also concluded that the corporation’s lien (to secure recovery of the deductible loss) was validly registered within the three-month lien period (following the owner’s default). [The Court also confirmed that even if the amount of a lien is incorrect, the lien can nevertheless be valid (but of course only for the correct amount).  However, in this case the amount of the lien was also correct.]

This is another helpful (and in my view entirely correct) decision about the rights of a condominium corporation to recover deductible losses (under the corporation’s insurance policy) in appropriate circumstances.

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