Winfair Holdings (Lagoon City) Limited v. Simcoe Condominium Corporation No. 46

Winfair Holdings (Lagoon City) Limited v. Simcoe Condominium Corporation No. 46 Collection Decisions of the Court of Appeal Date 1998-12-01 Docket numbers C28050 Judges Catzman, Marvin Adrian; Laskin, John Ivan; Feldman, Kathryn N. Subject Civil Decision Content Date: 1998121 Docket: C28050 COURT OF APPEAL FOR ONTARIO RE: WINFAIR HOLDINGS (LAGOON CITY) LIMITED (Applicant (Appellant)) and SIMCOE CONDOMINIUM CORPORATION NO. 46, ROYAL TRUST CORPORATION OF CANADA, TRUSTEE FOR THE STANDARD LIFE ASSURANCE COMPANY, AND WINFAIR INVESTMENTS LIMITED (Respondents (Respondents)) AND BETWEEN: SIMCOE CONDOMINIUM CORPORATION NO. 46 (Applicant by Counter Application (Respondent)) and WINFAIR HOLDINGS (LAGOON CITY) LIMITED (Respondent by Counter Application (Appellant)) BEFORE: CATZMAN, LASKIN AND FELDMAN JJ.A. COUNSEL: Benjamin Salsberg for the appellant Allan D.J. Dick for the respondent HEARD: November 18 and 19, 1998 ENDORSEMENT [1] The appellant Winfair appeals the order of Kitely J. dated July 29, 1997, in which, on an application under r. 14.05(3)(e) of the Rules of Civil Procedure, she declared that the licence agreement between Inducon and the respondent Simcoe was valid and in effect. This appeal raises three issues: (1) Did the motion judge err in finding that the Board ratified the licence agreement, as required by s.39(2) of the Condominium Act? (2) Did the motion judge err in holding that the Board did not repudiate or otherwise terminate the agreement in September 1995? (3) If the Board did repudiate the agreement, was the repudiation effective in the light of s.38(1) of the Condominium Act? 1. The Ratification Issue [2] In this court the appellant did not seriously contest the motion judge's finding that the Board had ratified the agreement by its conduct. Section 39(2) of the Act does not prescribe any form of ratification. Although the Board did not ratify the licence agreement by a formal resolution, we agree with the motion judge that the Board did ratify the agreement by its conduct, that is by paying the amount due under the agreement during the first 12 months of the agreement's existence. Indeed, the Board paid the amounts owing under the agreement until 1995 when it sought to renegotiate the payment terms. It is now too late for Winfair to complain about the lack of formal ratification. 2. The Repudiation Issue [3] In September 1995, Simcoe's Board, both through its solicitor and through its property manager, sought to renegotiate what it considered were now onerous terms of the licence agreement. In correspondence, the Board indicated to Winfair that it no longer considered itself bound by the original agreement. Winfair, in turn, accepted what it considered to be either the Board's repudiation of the licence agreement or the Board's assertion that it would no longer be bound by the 1984 terms. Winfair submits that having taken this position, the Board and therefore Simcoe itself, can no longer resile from it. Winfair makes this submission although it did not change its own position because of the Board's correspondence, and although it knew full well that the Board's professed termination of the licence agreement was strongly opposed by many unit owners. [4] The motion judge concluded that the Board's correspondence did not amount to a repudiation of the licence agreement. In her view, "It is clear that Simcoe intended to maintain the relationship. Simcoe simply sought to change the terms of the licence agreement to reduce its outlay of expenses for the use of the Facility." The appellant has not persuaded us that the motion judge's conclusion was unreasonable. We think that her conclusion is supportable, not only because of the correspondence itself, but because of the surrounding circumstances, which included Winfair's knowledge and the absence of any prejudice suffered by it. [5] However, even if the motion judge was wrong on the repudiation issue, the appellant must still contend with s.38 of the Condominium Act, to which we now turn. 3. Section 38 of the Condominium Act [6] The motion judge did not deal with s.38. But we agree with the respondent that s.38 is fatal to Winfair's case, even if the Simcoe Board intended to repudiate the licence agreement. Section 38(1) provides: 38.(1) The corporation may by a vote of owners who own 80 per cent of the units make any substantial addition, alteration or improvement to or renovation of other common elements or may make any substantial change in the assets of the corporation, and the corporation may by a vote of the owners make any other addition, alteration or improvement to or renovation of the common elements or may make any other change in the assets of the corporation. [7] The appellant concedes that the licence agreement is an asset of Simcoe and that the termination of the agreement would be a "substantial change in the assets of the corporation" under s.38(1) of the Act. Thus, terminating the licence agreement required an affirmative vote by owners owning 80% of the units. Although a vote was apparently held, the 80% majority was not achieved. Absent an 80% vote, any repudiation of the agreement by the Board was ineffective. [8] Winfair cannot avoid the application of s.38 by invoking the "indoor management rule", and by relying on the Board's apparent authority. As this court's judgment in Carleton Condominium Corporation No.279 v. Rochon (1987), 44 R.P.R. 228 demonstrates, the indoor management rule, applicable to ordinary corporations, has no application to a condominium corporation. Because the requirements of s.38 were not met, Winfair could not succeed on its application. [9] The appeal is therefore dismissed with costs.