Executive Summary: Key Legal and Evidentiary Issues

• The Court of Appeal for Ontario considered whether an application judge failed to adjudicate oppression claims brought under section 135 of the Condominium Act, 1998.
   
• Findings of fact made below established that Leslie Benson and Judith Deschamps breached the condominium's Declaration and continued construction despite an active halt work order.
   
• Evidence showed the condominium corporation's Board did not promptly enforce the Declaration and settled with Benson and Deschamps while its president had an undisclosed conflict of interest.
   
• Questions arose over whether any remedy beyond the compliance order and damages already granted was warranted for the oppressive conduct.
   
• Procedural fairness was at issue because the application judge fixed costs without receiving bills of costs or submissions from the parties.
   
• Ultimately, the appeal turned on whether declaratory relief and a further order against the Corporation, rather than additional monetary compensation, would adequately address the oppression.
   

Facts of the case

Dianne Pettit Baig owns lot 3 and co-owns lots 2 and 4 in a 29-lot vacant land condominium development on the shores of Lake Superior in the Township of Shuniah, operated by Thunder Bay Vacant Land Condominium Corporation No. 39. The condominium's Declaration imposes conditions on construction intended to preserve the natural environment, including Board approval of house and landscape plans, setback requirements, and restrictions on vegetation removal and grading. In February 2024, Leslie Benson and Judith Deschamps purchased lot 5, adjoining Ms. Baig's lot 4, intending to build a home. The Board reviewed but did not approve their May 2024 site plan. Benson and Deschamps nonetheless cleared vegetation from lot 5 in July 2024, mistakenly removing vegetation from lots 4 and 6 as well. Ms. Baig asked the Board to halt the work; the Board declined to do so immediately. By late August, Benson and Deschamps had imported an eight-foot mound of fill, changing the lot's grade. On August 30, 2024, Board president Anthony Gazzola resigned after it emerged he had been hired by Benson and Deschamps to install their septic system; the Board issued a halt work order the same day. Benson and Deschamps, through counsel, called the order unenforceable and continued construction, filling a drainage pond and preparing a foundation pad by mid-November. Ms. Baig sought an emergency injunction in November 2024, which was adjourned and later dismissed for non-compliance with the Rules of Civil Procedure. Around the same time, the Board and Benson and Deschamps reached a Commitment Agreement, dated November 18, 2024, under which Benson and Deschamps agreed to submit an updated landscape plan, restore vegetation removed from lots 4 and 6, and terrace their patio to lower it by approximately four feet. The halt work order was then lifted, though the Corporation did not give Ms. Baig and the lot 6 owners the promised opportunity to review the plan first. Ms. Baig subsequently brought an application under sections 134 and 135 of the Condominium Act seeking declarations, compliance orders, damages, and injunctive relief, and obtained an interlocutory injunction from Rasaiah J. in January 2025 pending the hearing.

Policy and legislative provisions at issue

The case centres on the Declaration's construction conditions and on sections 134 and 135 of the Condominium Act, 1998. The Declaration required Board approval of house and landscape plans before submission to the township, permitted Board inspections during construction, and set minimum setbacks of 22 metres from the lakefront, 10 metres from the street, and 5 metres between side yards, while also allowing the Board to grant a "reasonable variance or adjustment" by a two-thirds majority vote to address practical difficulties or pre-existing conditions. Section 134 allows an owner to apply for an order enforcing compliance with the Act or the Declaration, including damages and costs. Section 135 allows an owner to seek an order where a corporation's or owner's conduct is or threatens to be oppressive, unfairly prejudicial, or unfairly disregards the applicant's interests, and empowers the court to make any order it considers proper to rectify the matter, including compensation. As the Court of Appeal noted, drawing on Noguera v. Muskoka Condominium Corporation No. 22, section 135 is engaged where there has been a breach of the claimant's objectively reasonable expectations and the conduct amounts to oppression, unfair prejudice, or unfair disregard; and, per Naneff v. Con-Crete Holdings Ltd. and Wilson v. Alharayeri, oppression remedies are corrective rather than punitive and should go no further than necessary to correct the unfairness between the parties.

Reasoning and analysis

The application judge had found that Benson and Deschamps "undoubtedly breached the approval process" and had "no business defying" the halt work order, and that the Board's delay in stopping work violated the Declaration. He rejected Ms. Baig's grading complaint, finding the Board had reasonably interpreted the Declaration's leeway provisions and acted with the required two-thirds majority, and he found the vegetation removal breached the Declaration only as it affected lot 4. He ordered Benson and Deschamps to follow the Board's directions and stop work when ordered, to pay Ms. Baig $5,000 in damages, and to pay her $10,000 in costs, while making no order against or in favour of the Corporation. On appeal, van Rensburg J.A., writing for a unanimous panel, agreed that the application judge never actually adjudicated the oppression claims against either Benson and Deschamps or the Corporation, despite factual findings that supported them. As against Benson and Deschamps, the panel held the test for oppression was met, since Ms. Baig reasonably expected compliance with the Declaration and the halt work order, and their conduct unfairly disregarded her interests; a declaration was warranted, but no further remedy, since the compliance order and damages already granted addressed the harm, and the grading relief Ms. Baig sought had already been properly considered and rejected below. As against the Corporation, the panel found the oppression test was also met, pointing to the Board's failure to meet its statutory duty under section 17(3) of the Act to promptly enforce the Declaration, its condoning of a clear breach, Mr. Gazzola's conflict of interest, and the broken promise to let Ms. Baig review the landscape plan before approval. On costs, the panel agreed the application judge erred by fixing costs without receiving bills of costs or submissions, relying on Afolabi v. Law Society of Ontario for the principle that parties are entitled to be heard, even in writing, before costs are determined.

Ruling and overall outcome

The Court of Appeal allowed the appeal in part and otherwise dismissed it. Ms. Baig succeeded in establishing that the application judge had failed to adjudicate her oppression claims and in showing a procedural fairness error in the costs award, but she did not obtain the additional substantive remedies she sought, such as an order requiring Benson and Deschamps to restore the grading of lot 5. The court granted declarations that both Benson and Deschamps and the Corporation had acted oppressively toward Ms. Baig, and ordered the Corporation to give due and proper regard to her interests in any further review or approval of the development of lot 5, but declined to order further damages or to disturb the $5,000 in damages already awarded to Ms. Baig against Benson and Deschamps at first instance. The costs appeal was allowed, with the panel directing that, absent an agreement between the parties, they provide bills of costs and written submissions within 20 days so the court could fix the costs of the application below and address Ms. Baig's request to be exempted from the Corporation's legal expenses; no specific further monetary amount was fixed by the Court of Appeal itself. Because of this divided success, no costs were awarded on the appeal.