





CITATION:
Metropolitan Toronto Condominium Corporation No.
          1272 v. Beach Development (Phase II) Corporation, 2011 ONCA
          667



DATE: 20111024



DOCKET: C53082



COURT OF APPEAL FOR ONTARIO



MacPherson, LaForme and Epstein JJ.A.



BETWEEN



Metropolitan
          Toronto Condominium Corporation No. 1272

Metropolitan
          Toronto Condominium Corporation No. 1342 and

Metropolitan
          Toronto Condominium Corporation No. 1500



Applicants (Appellants)



and



Beach Development (Phase II) Corporation, Beach
          Development (Phase III) Corporation, Beach Development (Phase IV)
          Corporation, and EMM Financial Corporation



Respondents (Respondents in Appeal)



Michael Spears, for the appellants



Richard Macklin, for the respondents



Heard and released orally:
October 21, 2011



On appeal from the judgment of
          Justice M.A. Penny of the Superior Court of Justice, dated November 16, 2010.



ENDORSEMENT




[1]

The appellants are
three
    condominium corporations linked by two things.  First, the ground floor of each
    building that houses the condominium units is freehold space occupied by
    commercial and retail establishments.  Second, each corporation finds itself in
    the position where, as matters now stand, there is no agreement requiring the
    occupants of the ground floor to share the costs of the facilities and services
    they share with the appellants.  As a result, say the appellants, each time
    money must be spent on a shared facility or service, they must either persuade
    the respondent EMM Financial Corporation (EMM), the entity that owns the
    freehold, to pay its fair share or litigate the matter.  The appellants submit
    that this is expensive and otherwise completely unworkable.

[2]

As a result of reaching an impasse
    in attempting to negotiate cost-sharing agreements, known as reciprocal
    agreements, the appellants commenced this application against the respondent
    corporations, each of which was involved with the development of the project. 
    The three Beach Development respondents are the declarants of each of the three
    condominium developments.  EMM was the initial developer that, in the course of
    advancing the project, conveyed the land to the declarants and subsequently
    bought it back in order to proceed with the retail/commercial element of the
    venture on the ground floor.

[3]

The appellants applied for relief
    under s. 135 of the
Condominium Act
,
1998
, S.O. 1998, c. 19,
    seeking (1) a declaration that the respondents acted oppressively in not
    providing for a cost-sharing agreement, and (2) an order that EMM pay them its
    share of the operating costs of all shared facilities, from the date of
    registration of the appellants, forward.

[4]

The application judge dismissed
    the application primarily on the basis of his conclusion that the appellants
    failed to satisfy the test for oppression.

[5]

Section 135 of the
Condominium
    Act
,

is similar to the oppression provisions under the
Canada
    Business Corporations Act
, R.S.C. 1985, c. C-44, and the
Ontario
    Business Corporations Act
, R.S.O. 1990, c. B.16
.
It provides as
    follows:

135.   (1)       An owner, a corporation, a
    declarant or a mortgagee of a unit may make an application to the Superior
    Court of Justice for an Order under this section.

(2)       On an application, if the court
    determines that the conduct of an owner, a corporation, a declarant or a
    mortgagee of a unit is or threatens to be oppressive or unfairly prejudicial to
    the applicant or unfairly disregards the interests of the applicant, it may
    make an order to rectify the matter.

(3)       On an application, the judge may make any
    order the judge deems proper including,

(a) an order prohibiting the conduct referred
    to in the application; and

(b) an order requiring the payment of
    compensation.

[6]

As established in
BCE
    Inc. v. 1976 Debentureholders
, 2008 SCC 69, [2008] 3 S.C.R. 560
,
t
he
    test for oppression has two parts.  The claimant must demonstrate that there
    has been a breach of its reasonable expectations and that, considered in the
    commercial context, the conduct complained of amounts to
    "oppression", "unfair prejudice" or "unfair
    disregard".

Reasonable Expectations

[7]

The application judge rejected the appellants argument that their
    reasonable expectations were not met primarily on the basis of the
    representations and agreements that accompanied the condominium unit purchase
    and sale transactions.

[8]

We find no fault with his analysis or his conclusions.

[9]

The statutorily mandated proposed condominiums governing documents,
    which are designed to detail what condominium purchasers should reasonably
    expect, make no reference to any cost-sharing agreement between the appellants
    and the declarants.  While these documents specifically refer to the sharing of
    facilities and services, this reference alone does not support a finding that
    those who ultimately decided to purchase a condominium unit could reasonably
    expect that there would be a cost-sharing agreement when none was mentioned.

[10]

As well, in our view, the application judge properly rejected the
    appellants contention that commercial practice was such that buyers of
    condominium units would reasonably expect that there would be a reciprocal
    agreement.  In addition to other difficulties this argument may have, it is
    clear that the existence of such a commercial practice was not supported by the
    evidence.

[11]

The appellants argument based on breach of fiduciary duty must also
    fail.  The failure to include a cost-sharing agreement  a decision involving
    the operation of the overall development  was made between EMM and the
    declarants.  No fiduciary relationship between the parties could be said to
    exist and we do not accept the suggestion that the declarants had an obligation
    to revisit that situation once they were in the position to start selling
    units.

Oppressive Conduct

[12]

In addition to our view that the application judge correctly held that
    the appellants had not established that it was reasonable, in these
    circumstances to expect that there would be a cost-sharing agreement, we also
    concur with the application judges finding that there was no oppressive
    conduct.  The evidence supports the finding that the decision that cost-sharing
    agreements would not be included in the mixed-use development was a considered
    business decision of the respondents and was fully disclosed in circumstances
    where the unit purchasers of the appellants were represented by counsel.

[13]

Appellants counsel forcefully argued that to leave the appellants at
    the mercy of the respondents and future costly litigation is, in itself
    oppressive.  While we understand the appellants concern about the choices
    available to them in terms of managing disputes over the costs associated with
    the shared facilities and services, we are of the view that the oppression
    remedy is simply not available as one of those choices.  This is not a case of
    an oppressor utilizing a superior bargaining position to coerce unfavourable
    terms from a weaker party or acting behind the weaker parties' back.  Rather,
    it is a case in which the appellants voluntarily purchased their condominium
    units in the full knowledge and disclosure of the rights and obligations
    associated with their transaction.

Disposition

[14]

For these reasons the appeal is dismissed.

[15]

The respondents are entitled to their costs in the amount of $10,000
    inclusive of disbursements and all applicable taxes.

J.C.
    MacPherson J.A.


H.S. LaForme J.A.

G.J.
    Epstein J.A.


