Executive Summary: Key Legal and Evidentiary Issues

• Interpretation of By-Law 47, particularly the term “occupied,” led to a finding that certain bare land units rented to Cochrane Rentals and developed parking stall units counted as “occupied,” so that more than 90% of the 31 units in the condominium plan were sold or occupied and the developer’s fee exemption ended.

• Once that 90% threshold was met, the appellants, as developers and owners of units, were held liable for condominium common expenses and/or a special levy under By-Law 47(b), and the exception in By-Law 47(i)(iii) no longer applied.

• The Court of Appeal confirmed that the chambers justice did not rely on inadmissible lay opinion evidence when interpreting the By-Laws or assessing whether the May 19, 2023 board vote on the special levy would have been affected by Mr. Ferchoff’s intended “no” vote.

• A contextual and purposive reading of the By-Laws and the Condominium Property Act supported a flexible understanding of “occupied,” under which factors such as rental to Cochrane Rentals, use for storage or parking, and use of a mechanical room were relevant to whether a unit was occupied.

• The estoppel argument was rejected because By-Law 47(k) and By-Law 48 were interpreted to mean that omissions to fix assessments did not release owners from their obligations, and that the appellants became liable for condo fees and/or a special levy from the time they first received a budget and notice of assessment in accordance with By-Law 47(b).

• In a subsequent costs decision, the Court of Appeal awarded the successful respondents their costs of the appeal under Column 1 of Schedule C, finding that although the Statement of Claim sought $350,000 in damages, the appeal itself concerned the interpretation of the By-Laws and approximately $75,000 in condominium fees, and declined to award double costs based on an August 2, 2024 offer.

Background and development of the condominium project

Condominium Corporation No. 1412788 was established in 2014 as a multi-phase project involving five phases or units. The appellants, Budget Investments and Research Ltd. and Ge’o Builders Group Inc., are owners of the original five units. Some of those units have had buildings constructed upon them and some have not. Unit 1 is bare land owned by Ge’o and rented to an unrelated business, Cochrane Rentals, on which machinery is parked and stored. Unit 2 is owned by Budget and was redivided in 2014 into units 16-23 within a constructed building, all occupied except unit 23, which is a mechanical room and a common property unit. Unit 2 also includes 10 parking stalls, listed as units 6-15; seven of these parking units are paved and have power outlets, and the parking stalls appear to be available to rent or purchase but are not rented or are used by people at the condominium complex. Unit 3 was originally owned by Budget but was sold and subdivided into units 24-31, which are not in issue. Unit 4 is bare land owned by Budget that has been rented to Cochrane Rentals and used as a storage yard. Unit 5 is bare land owned by Budget and has not been leased or rented. The appellants have never paid condominium fees with respect to units 1, 4 and 5 or the parking stalls in units 6-15.

Dispute over condominium fees, special levy, and By-Law 47

In 2022, the appellants were negotiating to sell some of their units and requested that the Condominium Corporation issue an estoppel certificate to allow for the sale. The Corporation refused, stating that the appellants owed $97,923.14 in condominium fees retroactive to 2020, although the parties accepted that the amount might be less and the exact amount was not in issue on the appeal. The appellants denied owing any condo fees and argued that the request for such fees was in contravention of By-Law 47 and that retroactive fees could not be assessed. On May 19, 2023, the board recharacterized the retroactive condo fees as a special levy, but the appellants maintained that the special levy was also contrary to By-Law 47. On June 6, 2023, the Corporation emailed the appellants the approved budget for April 1, 2023 to March 31, 2024, which included condo fees for the disputed units and parking stalls and a Special Levy for April 1, 2022 to March 31, 2023 in the amount of approximately $22,000. The central legal question before the chambers justice was how to interpret By-Law 47, in particular whether the condo fees and/or special levy were contrary to that By-Law, and when the appellants, as developers and unit owners, could be charged common expenses.

Key policy terms: By-Law 47 and its developer exemption

By-Law 47(b) requires the Corporation to deliver or mail to each owner, at least fifteen days prior to the end of each fiscal year, a copy of the budget for the ensuing fiscal year and a notice of assessment for the owner’s contribution toward the common expenses. Those assessments are generally based on unit factors, with specific exceptions allowing certain expenses to be charged on a per-unit basis or solely to units that directly benefit from particular maintenance or other work. By-Law 47(i) provides that, notwithstanding anything to the contrary, during the initial stages of development and before 90% of the units have been “occupied or sold” by the developer, three provisions apply: preparation of an interim statement of anticipated common expenses or occupancy fees, payment of estimated monthly assessments or occupancy fees by owners or occupiers of units, and, most importantly for this case, an exemption in By-Law 47(i)(iii). Under By-Law 47(i)(iii), no assessment of common expenses is to be levied against the developer as owner of a unit until construction of the building in which the unit is located is complete and the unit is used and occupied for its intended purpose by the developer as owner or by a tenant of the developer owner. The chambers justice held, and the Court of Appeal agreed, that this provision created an exemption for the developer from paying condo fees unless there was an occupied building on the unit, but that the exemption ends once 90% of the units in the project have been sold or occupied. After that point, By-Law 47(b) applies and common expenses can be levied against the developer as owner of units.

The May 19, 2023 board meeting, voting rules, and affidavit evidence

At the May 19, 2023 board meeting, a vote was held regarding the passing of the special levy resolution. One of the board members, appellant Gord Ferchoff, advised the board that he would not attend but that his vote would be “no.” The other five board members voted in favour. The chambers justice concluded that his no vote would not have changed the result. On appeal, the appellants argued that the chambers justice improperly relied on the affidavit of board member Tom Ftichar, which contained legal conclusions about how the By-Laws should be interpreted, and that they had the right to request a “poll vote” under By-Laws 32 and 33. They pointed to evidence that they held 6558.57 of the 10,000 unit factors, and argued that a poll vote based on unit factors would have changed the result. The chambers justice, however, stated that it was improper for a lay witness to testify as to the meaning of legislation or contracts and that she would accord no weight to such evidence, and there was no indication that she relied on any opinion in the Ftichar affidavit apart from the exhibited copy of the By-Laws themselves. The Court of Appeal accepted that statement and reviewed the By-Laws directly. It held that By-Law 33, which allows for a poll vote, applies only to a general meeting of unit owners where the corporation votes as a whole on ordinary or special resolutions, while a board meeting involves only board members and is governed by By-Law 16, which provides that votes are by a simple majority. Applying those provisions and section 39(1) of the Condominium Property Act, the Court concluded that the board could, by board resolution, determine issues of the operating account and reserve fund and the need to levy contributions on owners, and that Gord Ferchoff’s intended no vote would not have changed the outcome of the special levy resolution. This ground of appeal was dismissed.

Interpretation of “occupied” and application to bare land and parking stall units

The word “occupied” is not defined in the By-Laws. The appellants argued that “occupied” had to be interpreted in the condominium development context to mean that a building had to have been constructed on the unit and be in use. They said that the chambers justice failed to interpret By-Laws 47(i) and 47(i)(iii) harmoniously by recognizing this building-based meaning. The chambers justice, however, referred to numerous provisions in the By-Laws and to sections of the Condominium Property Act, including the definition of bare land units in section 1(1)(b) and (y)(ii) and a statutory reference to an “occupier” of common property that includes bare land units. She reasoned that the By-Laws were intended to relieve a developer from paying condo fees while it was spending resources and money to construct buildings and receiving no monetary return from land under development, but that where there were no plans for further development or “initial stages of development” and the developer was receiving or able to receive rent from property it was no longer developing, the developer should pay expenses relating to that property. She therefore concluded that “occupied” in By-Law 47(i) meant something less than a unit having a building that was occupied. The Court of Appeal agreed that By-Law 47(i) refers to units that are “occupied” rather than to units “with a building,” and that one can occupy a unit of a condominium plan without there being a building on the unit, especially in a commercial development where units are used as storage or parking. The chambers justice found that there were 31 units on the registered condominium and redivision plans and rejected the appellants’ claim of 45 units based on future units attributable to units 4 and 5. She found that only unit 5 was not occupied. In particular, she found that units 1 and 4, both bare land rented to Cochrane Rentals as storage yards for over five years for a fee, were occupied. She found that the parking stalls (units 6-15) were occupied because they had been developed for a particular use, had been offered to the public and were being utilized for their purpose even if they had not yet been rented, and that the mechanical room, unit 23, was also occupied. By contrast, unit 5, while it had a vehicle parked on it, was not occupied because there was no indication of anyone specific using the property and no rent being paid. The Court of Appeal held that these conclusions involved applying the word “occupied” to the facts by considering three significant factors: whether the unit was being rented and a fee was being collected, whether the unit was being used for its intended purpose, and whether it was being used by anyone specific. It accepted that not all three factors needed to be present in every case, and that only unit 5 had none of these factors. It rejected the argument that the chambers justice used an overly expansive or inconsistent definition between bare lots and parking stalls, and it declined to consider a new argument raised for the first time on appeal about the paving of certain parking stalls. This ground of appeal was also dismissed.

Estoppel, retroactive fees, and the timing of liability for condo fees and special levy

The appellants further argued that the chambers justice ignored or improperly rejected their estoppel argument. They said the Condominium Corporation was estopped from issuing condo fees and/or a special levy on units 1, 4 and 5 prior to 2025, because the By-Laws did not allow for retroactive fees and By-Law 47(k) did not allow for retroactive fees to be labeled as “omissions.” They also argued that prior conduct was relevant to estoppel, including the Corporation’s own failure to pay fees, and that the Corporation could not demand that the appellants pay fees over a period when the Corporation itself did not pay fees. The chambers justice recognized that the By-Laws do not allow the imposition of retroactive fees or levies and noted that the Corporation may not have complied with By-Law 47(i) and (ii) when it proceeded under By-Law 47(b), but she held that this prior conduct did not affect the proper interpretation of the By-Laws. She relied on By-Law 47(k), which provides that an omission by the Corporation to fix the assessments for the next fiscal year or other period does not waive or modify the By-Laws or release owners from their obligation to pay assessments or special contributions, but that assessments fixed from time to time continue until new assessments are fixed. She interpreted this to mean that an updated budget and notice of assessment will not be considered retroactive if there is a previous budget and assessment in place. She also referred to By-Law 48, which allows for special assessments when they are tied to a previous annual assessment that is insufficient to meet common expenses, and concluded that if a unit owner was given a budget and notice of assessment for the ensuing year, there was leeway to assess fees on a more flexible basis as needs arose. She therefore found the appellants liable for condo fees and/or a special levy from the point when they first received a budget and notice of assessment in accordance with By-Law 47(b), that is, 15 days prior to the end of the fiscal year. The Court of Appeal held that the chambers justice did what the appellants were effectively requiring by insisting on the existence of a budget and notice of assessment for a specific unit and concluded that she made no error in finding that the appellants were liable for condo fees and/or a special levy from the time they first received a budget and notice of assessment in March 2023 and that any changes to that assessment were not retroactive fees. This ground of appeal was dismissed, and the appeal as a whole was dismissed.

Costs decision and final disposition of the appeal

After the appeal was dismissed in Ferchoff v Condominium Corporation No 1412788, 2025 ABCA 227, the parties were unable to agree on costs. In Ferchoff v Condominium Corporation No 1412788, 2026 ABCA 8, the Court of Appeal addressed costs of the appeal. The unsuccessful appellants did not dispute that the respondents were entitled to costs under the default rule in Rule 14.88 of the Alberta Rules of Court, but the parties disagreed on the appropriate scale. The respondents sought costs under Column 3 of Schedule C, relying on the fact that the Statement of Claim filed by the appellants sought, among other remedies, damages in the amount of $350,000. The appellants submitted that Column 1 was appropriate because the application leading to the order under appeal sought only declaratory and injunctive relief and did not address the claim for damages, and because the chambers judge had indicated that the application required her to interpret a condominium by-law rather than assess conflicting evidence and left the remaining issues in the action open. The Court noted that the substance of the appeal concerned whether the respondents could charge condo fees or a special levy on the appellants and that the amount of condo fees at issue was approximately $75,000. It concluded that the appropriate scale for the appeal was Column 1, since the claim for $350,000 in damages was not the subject of the appeal. The Court also held that the respondents were not entitled to double costs based on an August 2, 2024 offer, which included an offer that a third party would purchase units owned by the appellants in exchange for payment by the appellants of various amounts to the Condominium Corporation. As a result, the respondents, as successful parties in the appeal, were awarded costs under Column 1 of Schedule C, and the dismissal of the appeal was confirmed.There is no total monetary award, costs amount, or damages figure actually fixed or ordered.