Law Times

LaW TIMeS • NOVeMBeR 2, 2015 Page 9 www.lawtimesnews.com Condo boards empowered by ruling on repairs versus improvements BY YAMRI TADDESE Law Times hen it comes to c o n d o m i n i u m r e n o v a t i o n s , what exactly con- stitutes a repair or maintenance versus an alteration, improve- ment or addition? It's a question that has signifi- cance for condominium boards as they can make unilateral deci- sions when renovations fall into the former category but require a vote from unit owners when they fall under the latter heading. A recent decision significantly expanded what counts as a repair or maintenance and put, "for bet- ter or for worse," more power into the hands of boards, says lawyer Jeremy Sacks, who represented the respondents in Mazzilli v. Middlesex. In that case, the applicants ar- gued the board should have put a vote to the unit owners before embarking on a $5-million reno- vation. The applicants said the changes constituted an alteration, improvement or addition. In general, the Condominium Act considers a certain change a repair or maintenance if it in- volves replacing or repairing ma- terial with something similar. In Mazzilli, the board, among other things, wanted to replace the roof of the condo. Engineers had presented two options to it: Replace the asphalt shingles with the same material or replace them with a metal roof. The engi- neers suggested the metal roofing would be more durable. To the applicants, that consti- tuted a change beyond repair and maintenance. In their view, the material change meant the reno- vation was an alteration, improve- ment or addition. In what Sacks calls a significant finding, the court disagreed. "The judge ultimately decided, 'No it's not, it's repair and maintenance, and we're just keeping in line with changing technology,'" says Sacks. In its decision, the court also noted the metal shingles would bring cost savings in the future. "With respect to the roof, given its age of being close to the end of its useful life, and given its slope/ angle, the board's decision to re- place it with a product that will provide a better structural fea- ture to avoid any further issues into the future must be viewed as repair and maintenance," wrote Superior Court Justice Johanne Morissette. "Correcting a structural defect must be considered maintenance. The fact that the metal shingles are less costly to the owners in the long run must also be considered as maintenance." Morissette held a similar view when it came to replacing an existing veneer of brick and vinyl with a cladding technol- ogy that didn't exist at the time of the building's construction 25 years ago. "Given the areas of defects identified above, the board made the decision to replace the 'old' with 'new' material and design," she wrote. "As indicated earlier, the fact that the final 'look' will be more aesthetically pleasing with an effect of increasing property values does not mean that the board made the decision to sim- ply alter or improve, but rather what was foreseen as a future problem," she added. The decision "puts more power in the hands of the board of direc- tors to make decisions and puts more power in the board's hands to make decisions that are reason- ably informed," says Sacks. "Board of directors can sleep more easily knowing that their decisions aren't going to be ques- tioned and they're not going to be sued for the decisions they make." Laura McKeen, counsel for the applicants, says she was "very sur- prised" at the court's decision. "Some of the elements [of the change] on the face of it appeared to be improvement instead of sim- ply repair and maintenance, but Justice Morissette was very clear in her determination those things were not in fact improvements," says McKeen. "This [ruling] kind of opens the door for corporations to test the limits more, so I think, on using newer materials, different materials than maybe would have been considered before this deci- sion," she adds. McKeen also says the litigation in Mazzilli came after the board went ahead with the substantial changes despite holding a vote and failing to get the required two-thirds in favour of the plan. Harry Herskowitz, a real es- tate lawyer at DelZotto Zorzi LLP, says the court was sympa- thetic to the fact that the building was old and needed repairs. If the repair "in fact changed the look or upgrad- ed the sort of esthetic appear- ance of the project, that was a necessary byproduct of so many things having to be re- paired in a substantial way," says Herskowitz. "The court really gave a lot of leeway to the board because I think every item that was questioned, they felt it was ei- ther a maintenance issue or a repair issue. And once it was [a repair or maintenance], it didn't really matter whether the effect would be that it would change the look or ap- pearance," he adds. When unit owners chal- lenge repair and maintenance plans and "frustrate" boards, the building further crumbles in the process, causing more damage and higher future costs, according to Herskowitz. Sacks says another positive aspect of the ruling is the greater freedom for condo boards when they need to make decisions but unit owners don't attend meet- ings to vote. "What if the board has these engineers' reports and they know they need to make these decisions — these are the best decisions for the condo — and they can't pass it through because none of the owners show up?" he asks. "Then they're handcuffed." So with this decision, what kind of work would be an altera- tion, improvement or addition that would require a vote by the unit owners? "It's a good question, and [this decision] severely limits that category of work," says Sacks. "It's tough to say now what would be an alteration or an improvement or an addition because it seems like what the court has said is if something is rundown and you get an engi- neer's report that says this is the best remedy for this problem, you can essentially do it with- out an owners' vote." The kind of change that would require a vote by the owners would have to be something as obvious as, say, installing a basketball court in a condominium base- ment, says Sacks. He cautions, however, that condominium boards must make well-in- formed decisions. "If they didn't have all these reports of engineers, the court probably wouldn't have decided in their favour. But they had all the support, which suggested they were making informed deci- sions," he says. There are no plans to appeal the ruling. 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Untitled-4.indd 1 2015-10-28 8:01 AM The case arose after the board went ahead with the changes despite holding a vote and failing to get the required two-thirds in favour, says Laura McKeen. Promote your law firm by ordering reprints of articles from the voice of the profession — Law Times! Reprints are great for: Been in Law Times Been in Law Times Want a record of it • Firm promotional material • Use on your web site • Training and education • Suitable for framing $200–$250/reprint We provide a colour PDF and unlimited reproduction rights. For more information or to order reprints, please e-mail Gail Cohen at: gail.cohen@thomsonreuters.com

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