Executive Summary: Key Legal and Evidentiary Issues

• The dispute concerns whether a commercial condominium corporation may compel a unit owner to remove a long-standing sign from common property.
   
• Ownership of the exterior sign traces back to a handwritten "Additional Terms" notation in the 2005 purchase contract between the developer and the Respondent.
   
• Sections 49 and 50 of the Condominium Property Act set out the only lawful mechanisms for transferring or granting exclusive use of common property.
   
• Alberta case law establishes that exclusive-use agreements failing to meet these statutory requirements are ultra vires the condominium corporation.
   
• Limitation and equitable defences, including laches and estoppel, were raised by the Respondent to resist the removal order.
   
• Classification of the sign as a chattel rather than a fixture became relevant to whether the claim involved recovery of real property.
   

Facts of the case

Condominium Corporation No. 0426972 operates the Strathcona Square commercial condominium in south Edmonton and was registered on December 17, 2004. 1124209 Alberta Ltd purchased a unit in the condominium from the developer in 2005, though title was not registered in its name until February 2006; the unit has been occupied continuously since November 2005 by Bhalla Law, a related tenant entity. The purchase contract contained a handwritten notation under "Additional Terms" giving the Respondent full ownership of an exterior sign fronting 34 Avenue, along with responsibility for its repair and upkeep and a bar on the condominium board imposing any related fees. The condominium corporation issued an Estoppel Certificate to the Respondent at the time of purchase. In 2020 the Applicant elected a new board, which hired Group Three Property Management Inc.; a records review by Group Three revealed that the sign sat on common property. Counsel for the Applicant demanded removal of the sign on July 14, 2022, which the Respondent refused, asserting that its purchase included a lease granting exclusive use of the sign location. The Applicant offered an alternative sign placement on the Strathcona Square pylon at no cost, and the Respondent countered with proposals for a 50/50 sharing arrangement or grandfathered authorization until sale of the unit; neither side accepted the other's proposal. The Applicant commenced an Originating Application on May 31, 2024, alleging improper conduct under section 67 of the Condominium Property Act and seeking removal of the sign. After the Respondent disclosed the purchase contract notation by affidavit, the Applicant amended its application to argue that the sign agreement did not comply with the Act, seeking a declaration of improper conduct, removal of the sign, transfer of the sign's ownership to the Applicant, and an order setting aside the agreement. The developer was not named as a party, having been struck as a corporation in 2009. The Respondent filed a Statement of Defense and a cross-application to dismiss on limitation, laches, and estoppel grounds.

Policy and legislative provisions at issue

Section 49 of the Condominium Property Act permits a corporation to transfer or lease common property only by special resolution, with registration formalities that were not shown to have been met here. Section 50 allows a corporation to grant exclusive possession of common property by bylaw, lease, licence, or other instrument, but section 8(1)(i) requires the condominium plan to delineate the boundaries of any area subject to such a grant. The condominium plan for Strathcona Square did not delineate any area for the sign. Section 67 of the Act defines improper conduct to include an owner's non-compliance with the Act. Section 43.2 of the Act, governing conclusive estoppel certificates, did not come into force until 2014 and so did not govern the 2005 Estoppel Certificate; the applicable predecessor, section 44 of the Act as it stood between 2005 and 2006, required disclosure of specified financial and administrative particulars but did not require any representation about sign compliance. Section 3.2 of the Limitations Act removes any limitation period for claims involving recovery of possession of real property.

Reasoning and analysis

Justice Summers found no evidence that the special resolution and registration requirements of section 49 had been satisfied. Turning to section 50, the purchase contract notation could have functioned as an instrument granting exclusive possession, but the absence of any delineated area on the condominium plan, as required by section 8(1)(i), meant the agreement could not meet that section's requirements either. Drawing on Condominium Plan No 992 5205 v Carrington Developments Ltd, 2004 ABCA 243, and Lightner v Owners: Condominium Plan No. 772 3097, 2009 ABQB 3, the Court reiterated that condominium corporations are creatures of statute with no authority beyond what the Act confers, and that exclusive-use agreements failing to meet sections 49 or 50 are ultra vires. The Respondent's argument that the Applicant improperly raised a new theory of ultra vires conduct was dismissed, since the amendment followed directly from the Respondent's own disclosure of the purchase contract notation and the Respondent had not been denied an opportunity to respond with further evidence. On limitation, the Court held that an ultra vires act cannot be rendered lawful by the mere passage of time, and that the sign's continued unauthorized presence on common property constituted ongoing improper conduct under section 67 rather than a single historical event; because the action was filed within two years of the 2022 demand, it was not limitation barred. Although unnecessary to the outcome, the Court addressed, at counsel's request, whether the claim sought recovery of real property. Relying on the dissenting reasons in Diamond Neon (Manufacturing) Ltd v Toronto Dominion Realty Co, 1976 CarswellBC 198, which distinguished a permanent address plate from a tenant's transitory name plate, the Court found the sign to be a chattel rather than a fixture, meaning section 3.2 of the Limitations Act had no application. On laches, the Court noted the defence was not pursued at the hearing and, in any event, the Respondent showed neither reliance on the status quo nor acquiescence by the Applicant, while the underlying claim was legal rather than equitable. On estoppel, the 2005 Estoppel Certificate addressed only the contribution-related particulars required under the 2005 version of section 44 and made no representation about the sign's compliance, so the certificate could not found an estoppel; the Court added that even a successful estoppel argument could not convert an ultra vires act into a lawful one. The Court concluded that the Respondent's failure to remove the sign from common property amounted to non-compliance with the Act and therefore improper conduct under section 67.

Ruling and overall outcome

The Court ordered the Respondent, 1124209 Alberta Ltd, to remove the sign from the common property within thirty days of the decision. Having found the sign to be a chattel rather than a fixture, the Court left ownership of the sign with the Respondent rather than transferring it to the Applicant as the amended application had sought. No monetary damages were awarded; the decision leaves costs to be addressed by a further application before the same judge if the parties cannot agree on them within thirty days. The Applicant, Condominium Corporation No. 0426972, succeeded on its central claim that the sign's presence on common property was improper conduct requiring removal, though it did not obtain the additional relief of transferring the sign's ownership to itself.