Executive Summary: Key Legal and Evidentiary Issues

• A special levy used to fund the purchase of shares in a private Alberta corporation was challenged as ultra vires the Condominium Property Act (CPA).

• The Applications Judge ruled the share purchase lawful, finding it did not constitute a prohibited investment under the CPA or its Regulation.

• On appeal, the Court found the share purchase was ultra vires the CPA because it created an indirect ownership structure not contemplated by statute.

• The condominium corporation’s method of acquiring essential resort infrastructure through a corporate intermediary violated the CPA’s requirements for direct ownership.

• Legal chargebacks imposed on the Kuhns for requesting information were deemed improper as the request was lawful and the corporation’s response unreasonable.

• Both courts confirmed the Kuhns’ standing as “interested parties” under section 67 of the CPA, allowing them to bring the application despite no longer owning the affected unit.

Background and unit owner conflict

Darren Kuhn and Joanne Kuhn commenced legal proceedings against Condominium Corporation No. 0627537 (operating as Glennifer Lake Resort Phase 7) by Originating Application on April 14, 2021. The Kuhns previously owned a unit within Phase 7 of the Glennifer Lake Resort, which they sold in March 2021. They continued to own a unit in Phase 3 of the same Resort. The application sought to invalidate charges on their owner’s ledger, including a July 19, 2019 special assessment (the “Special Levy”) and legal costs billed to them as chargebacks.

Corporate share acquisition and policy terms

The Corporation imposed the Special Levy to finance the acquisition of shares in Resort Development Funding Corporation (RDFC), a private Alberta corporation that owned critical assets and permits for the operation of the Resort, including a golf course, marina, pools, restaurant, water treatment, and sewer systems. The plan was developed by an Acquisition Committee, implemented through a subsidiary corporation (“Sub Co.”), and approved by special resolution. Each condominium corporation within the Resort would hold shares in Sub Co., which in turn held shares in RDFC, ensuring proportionate ownership across 751 units in all Resort phases.

The Kuhns challenged the legality of this structure, asserting it was ultra vires and a prohibited investment under the CPA and the Condominium Property Regulation, Alta Reg 168/2000. They also disputed $6,347.78 in legal fees charged to them following a September 2020 request for a legal opinion related to proposed bylaw amendments.

Initial decision (2024 ABKB 199)

Applications Judge M.R. Park found the Special Levy and the RDFC Share Purchase were not “investments” under the CPA and therefore not prohibited. He concluded the purpose was not profit but to secure control over infrastructure vital to the Resort. As such, the transaction did not breach the investment restrictions in section 43 of the CPA or Schedule 2 of the Regulation.

However, Judge Park ruled the legal fees improperly charged. He determined that the Kuhns’ request for information was lawful under the CPA and did not justify legal costs. The Corporation's refusal to respond and demand for a legal declaration before releasing the information was found to be “wholly improper” conduct. The Judge awarded the Kuhns $6,509.42, which included the Legal Chargebacks and interest, under section 67 of the CPA.

Appeal decision (2025 ABKB 298)

Justice G.D.B. Kendell heard the appeal and reversed the finding on the lawfulness of the RDFC Share Purchase. The Court held the transaction was ultra vires the CPA because it created a corporate ownership structure inconsistent with the statutory model of direct real property ownership by unit owners. The CPA does not permit ownership of condominium assets through shares in a corporate entity. Instead, it mandates collective direct ownership of land and assets by the unit owners themselves.

The Court also found that using a corporate intermediary improperly shielded owners from liability and accountability, contravening section 25 of the CPA. It concluded that the RDFC Share Purchase and the related Special Levy were void and of no force or effect. The Court awarded the Kuhns $6,060.41, representing the full balance of the Special Levy paid by them, plus interest pursuant to the Judgment Interest Act.

Final conclusion

The courts affirmed the Kuhns’ status as “interested parties” under section 67(1)(b) of the CPA. The first decision denied the challenge to the share purchase but found improper conduct regarding the Legal Chargebacks. The appeal court overruled the earlier ruling on the share purchase, finding it ultra vires and invalid. Both decisions underscore the statutory limitations on condominium corporations’ powers and the improper imposition of legal costs on owners for lawful inquiries.