Executive Summary: Key Legal and Evidentiary Issues

• Mortgagee banks challenged a court order allowing the condominium corporation's unsecured debts to be paid in priority to their secured interests

• Interpretation of s 61(3) of Alberta's Condominium Property Act regarding the Court's discretion to order certain payments upon condominium termination was central to the dispute

• Appeals became moot when the underlying sale fell through, requiring the Court to determine whether to exercise discretion to hear the moot appeals

• The Borowski factors—adversarial context, judicial economy, and the court's proper law-making function—guided the mootness analysis

• Duplication of issues between the moot appeals and an ongoing appeal (Insurance Order) weighed heavily against hearing the moot appeals

• Preservation of scarce judicial resources favored dismissal since the same legal question would be addressed in a live controversy

The fire and its aftermath

In March 2023, Castledowns Pointe, a residential condominium building, was damaged by fire. In assessing the extent of the fire damage, engineers discovered numerous pre-existing structural issues. As a result, in September 2023, the City of Edmonton directed that the building be vacated. The building has never been repaired.

The condominium corporation's application for termination

In March 2024, the Castledowns Pointe condominium corporation filed an originating application seeking to approve the sale of the condominium building and lands, the distribution of those sale proceeds, and the ultimate dissolution or termination of the condominium corporation. Sometime later, the condominium corporation filed an application seeking an order approving and accepting an offer to purchase the lands.

The mortgagee banks' opposition

The respondents—Bank of Nova Scotia and Scotia Mortgage Corporation, Toronto-Dominion Bank, Bank of Montreal, and Royal Bank of Canada—are mortgagees who are secured lenders on a total of 29 condominium units in Castledowns Pointe. The respondents did not contest termination of the condominium corporation or acceptance of the offer to purchase; however, they were opposed to two provisions of the ensuing order made October 9, 2024 (the 2024 Order). First, they opposed the direction that $230,286.04 of the sale proceeds would go towards the condominium corporation's legal fees. Second, they challenged a $100,000 hold back from the sales proceeds to allow the condominium corporation to make payments owing to any other vendor or incurring of expense, which is properly owed or incurred by the condominium corporation for the benefit of the condominium corporation or for the purpose of preserving the lands.

The core legal dispute

The respondents appealed the 2024 Order arguing that the chambers judge had misinterpreted the Court's discretion to order certain payments on termination of a condominium pursuant to s 61(3) of the Condominium Property Act, RSA 2000, c C-22, and that the impugned provisions of the 2024 Order improperly allowed the unsecured debts of the condominium corporation to be paid in priority to the secured interests of the mortgagees.

The appeals become moot

The sale contemplated by the 2024 Order did not proceed and the appeals of the 2024 Order (Appeals No. 2403-0246AC and 2403-0248AC) were accordingly rendered moot. A subsequent order made January 17, 2025 (the Insurance Order), relisted the lands for sale and contained provisions mirroring the impugned provisions of the 2024 Order. Those provisions similarly direct payment out of the condominium corporation's insurance proceeds for the condominium corporation's legal fees and other holdbacks. The Insurance Order is the subject of ongoing Appeal No. 2503-0034AC and is not subject to this dismissal application. The appeals of the 2024 Order and the Insurance Order are currently scheduled to be heard by the same panel of the Court, on the same day, and involve the same parties. Ultimately, another sale was approved by the Court in March 2025 (the 2025 Order). The 2025 Order did not include the direction to pay the condominium corporation's legal fees or the holdback.

The mootness analysis

The parties agree that the tangible and concrete dispute over the 2024 Order disappeared when the underlying offer to purchase fell through and the appeals are therefore moot. The question for the panel was whether the Court should exercise its discretion to send those appeals to hearing despite their mootness, considering three factors: the presence of an adversarial context, the concern for judicial economy, and the court's proper law-making function. With respect to the first factor, the respondents countered that the parties have already filed their facta for the appeals of both the 2024 Order and the Insurance Order and allowing the moot appeals to proceed will contribute to the Court making a fully informed decision on the merits. The respondents further submitted that litigation over priority issues with the condominium corporation is ongoing in the Court below. The Court agreed with the respondents and was satisfied that in the circumstances of this case an adversarial context remains. Regarding concerns about judicial economy, the respondents suggested that resolving the issues raised in their appeals would be of some value to the parties and the public because issues of priority in the condominium corporation termination context are of ongoing concern, particularly with respect to payment of legal fees. The respondents further argued these issues commonly arise but are often moot before they can be addressed by a court. The applicant countered that proceeding with the appeals of the 2024 Order would be an unnecessary duplication of effort because the respondents raise precisely the same issue in both appeals. The respondents argued that the appeals are different from one another because the source of the money being drawn upon is different: the 2024 Order purports to draw these funds from the land sale proceeds while the Insurance Order purports to draw them from the insurance proceeds. The Court agreed with the applicant and found this to be a distinction without a difference in terms of the potential precedential value of a decision from the Court dealing with the proper interpretation of s 61(3) of the Act and its impact on established priorities principles. This factor weighed heavily against the hearing of these moot appeals and in favour of preserving scarce judicial resources. Concerning the third factor, the respondents argued that s 61 of the Act has received little published judicial consideration to date and determining the priority issue does not intrude into the legislative role. The Court agreed that interpreting s 61 falls squarely within the role of the court as an adjudicator. But this conclusion did not weigh in the respondents' favour; clarity and predictability with respect to interpretation of s 61(3) and its impact on priority payments will be achieved through the hearing of the Insurance Order appeal.

Ruling and outcome

Considered as a whole, the above factors weighed in favour of the dismissal application. The respondents had not illustrated that there are sufficient special circumstances to justify exercising the Court's discretion to hear these moot appeals. The application to dismiss Appeals No. 2403-0246AC and 2403-0248AC was granted, and the appeals were dismissed. The condominium corporation (Castledowns Pointe), as the applicant, was successful in this application. No specific monetary amount was awarded in this decision, as the ruling concerned the procedural dismissal of moot appeals rather than the substantive priority dispute, which remains to be addressed in the ongoing Insurance Order appeal.