Legal Issues: Nice try, condo board

REM – Real Estate Magazine
October 6, 2011 8:00 AM
by Jim Adair

Legal Issues: Nice try, condo board

A purchaser of a commercial condo unit required a “clean” status certificate, which was signed by the president of the condo corporation and the purchase closed.

The president had not inspected the purchaser’s unit and only later was it discovered that the doorway had been widened 10 feet, without approval of the condo corporation (in breach of the corporation’s declarations). Investigation showed that the doorway was widened many years before the purchase in question.

Notwithstanding, the corporation sued the purchaser for an order to restore the doorway to the original width.

The court held that the corporation had provided a faulty and incomplete status certificate. The cost to restore was to be allocated among all the other unit owners.

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My client, a real estate broker, drew an Agreement of Purchase and Sale but a developer backed out of the deal because of a drop in the real estate market. The plaintiff, a widow, sued both the broker and the developer for damages.

For many reasons, including a sympathetic plaintiff, an at-fault developer and a term in the purchase/sale agreement that may have been vague, I settled with the plaintiff’s solicitor for a sum that permitted the widow to proceed against the co-defendant developer and obtain a “very substantial judgment”. The settlement by the plaintiff and broker was sealed in an envelope and handed up to the trial judge and the trial commenced. My client and I withdrew from the courtroom.

Some years later, a Master of the Court has held that where a plaintiff has settled with one defendant, the plaintiff must disclose to the remaining defendant the terms of the settlement so the remaining defendant will know the alleged real damages the plaintiff is claiming. The Master went on to say that the settling defendant may even be required to give evidence so the court can assess the proportion of fault of the non-settling defendant.

It will be interesting to see if this case is appealed. In our prior litigation, it was clear the judge would proceed with the one defendant left in the action, determine fault (1% = 100%) and assess damages. Only then would the judge open the envelope to subtract the amount already recovered by the widow. Certainly, the judge appreciated that knowledgeable counsel could settle, giving the widow the wherewithal to continue the David/Goliath battle.

* * * * *

In a recent Ontario case, the vendor moved to rectify a provision in the Agreement of Purchase and Sale between it and the purchaser.

The agreement was prepared by the vendor’s solicitor and provided a payment according to a certain schedule. Unfortunately, the solicitor used an old schedule and not a new one that would be of a substantially higher benefit to the vendor.

On an application to rectify the terms of the Agreement of Purchase and Sale, unfortunately for the vendor, the purchaser declared that it always intended the older standard or schedule would apply. Under these circumstances, there was no “mutual mistake”. Rectification by a reason of a unilateral error is not available.

Donald Lapowich, Q.C. is a partner at the law firm of Koskie, Minsky in Toronto, where he practices civil litigation, with a particular emphasis on real estate litigation and mediation, acting for builders, real estate agents and lawyers.

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