Condominium Act Review - A Dispute Resolution Model for Ontario

Ontario’s existing condominium legislation took effect on May 5, 2001. At such time, the Condominium Act, 1998 (the “Act”) addressed many of the shortfalls of its predecessor. However, since the Act came into effect, Ontario’s condominium industry has evolved and expanded tremendously. It has been reported that today over one million Ontarians call a condominium community their home and condominiums account for over half of the new residential development in the province.

Accordingly, on June 8, 2012, after much lobbying, the Government of Ontario announced that it would be reviewing the province’s condominium legislation, embarking on a three phase process which sought direct input from various condominium stakeholders – developers, service providers, tenants, owners, residents, etcetera. One of the primary areas of focus identified in the course of the legislative review was dispute resolution.

The Association of Condominium Managers of Ontario (“ACMO”) and the Toronto & Area Chapter of the Canadian Condominium Institute (“CCI”) formed a Joint Government Relations Committee which has been working actively since 2005 to draw the attention of the provincial government to the shortfalls of the Act and the need for an update of Ontario’s condominium-focused legislation. Their efforts have included the submission of a Legislative Brief containing over 200 recommendations, the surveying of all candidates running in the last provincial election in respect of condominium issues and hosting an Advocacy Day at Queen’s Park. In early 2012, the committee formed a Dispute Resolution Sub-Committee (the “DR Sub-Committee”) to develop a dispute resolution model to better address condominium conflict in Ontario.

The DR Sub-Committee was led by Richard Elia, a condominium lawyer who holds a Masters of Laws which focused on ADR, and involved 28 condominium stakeholders in the province along with the contributions of Australian lawyer and university professor Dr. Rebecca Leshinsky, who has extensive experience in condominium dispute resolution. Those selected to make up the DR Sub-Committee included property managers, lawyers, mediators, arbitrators, directors, unit owners and condominium residents from various regions of the province. Self-managed, large, mid-sized, small, urban, mid-urban, rural, recreational, traditional and non-traditional condominium interests were considered in the course of the DR Sub-Committee’s examination of dispute resolution models both imagined and in place throughout the nation.

On November 29, 2012, the DR Sub-Committee revealed their Condominium Dispute Resolution Model for Ontario[1] which has since been presented to the Government of Ontario for consideration with the endorsement of ACMO, all Ontario chapters of CCI and the ADR Institute of Ontario. The DR Sub-Committee recognized the importance of a facilitator from outside the community being involved to alleviate bias concerns and the opportunity to address condominium conflict in the early stages to avoid the high costs, delayed resolutions and ill will which can intensify condominium disputes, particularly when parties in conflict remain in community with one another. The paper proposes and prefers a model (the “Model”) that involves every condominium community electing a Condominium Dispute Resolution Officer (“CDRO”) to assist in the guidance of community conflict at the earliest possible stages with the view of avoiding the escalation of conflict. The CDRO is elected by unit owners in a similar manner as a condominium auditor, serves to clarify and guide the process to be taken to address disputes and provide an early neutral evaluation (“ENE”) to parties in conflict.

The Model, as submitted by the DR Sub-Committee:

• Encourages mediation with possible cost implications if not attempted (exceptions: a condition or activity that poses a threat of danger, as per Section 117 of the Act)
• Establishes a structured and clearly defined mediation process, to overcome the failures of the Act to provide such guidance
• Requires that mediated resolutions must be found within the four corners of the Act
• Provides a voluntary arbitration process if mediation does not resolve the dispute, as an alternative to proceeding to court

The Model further recognizes that mediators and arbitrators facilitating condominium disputes require a certain degree of familiarity with the Act and appreciation as to how condominiums operate. Accordingly, the DR Sub-Committee recommended that a roster of mediators be established and maintained by the Government of Ontario and/or CCI to identify appropriately qualified mediators/arbitrators and develop an accreditation process.

Recognizing that effective conflict management embraces a conciliatory approach to dispute resolution and utilizes proactive measures to prevent the escalation of disputes, the DR Sub-Committee has also proposed:

• A balancing of BATNAs (best alternative to a negotiated agreement) such that any successful party – condominium corporation or unit owner, plaintiff or defendant, at court or through arbitration - can benefit from Section 134(5) of the Act in respect of cost recovery
• The regulation, licensing and accreditation of property managers
• An annual filing requirement of condominium corporations
• Mandatory education of condominium directors
• Establishing a minimum level of education/awareness for unit owners
• The ability of condominium corporations to levy fines in accordance with strict guidelines and restrictions

This winter, an action plan will be circulated by the Government of Ontario in the course of its third and final phase of the legislative review process. Public Action Forums will be hosted for all with interest to share their views before an Act reform proposal is completed in the Spring of 2014.

A flowchart of the Model at work:

[1] The full paper is available at www.condoconflictmanagement.com.

All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.

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