Parking Lot Monopoly

A “Monopoly” is generally defined as the exclusive domination or possession of something by someone. However, the term rarely surfaces in condominium corporations, where the rights of owners are unavoidably intertwined such that each owner’s enjoyment of their property is made possible only by limits placed on their neighbours’ use of it. Condominium owners must be willing to surrender at least some degree of their right to self-interest in exchange for the advantages of common ownership; expectations to the contrary can be oppressive towards the interests of the other owners and can result in unnecessary litigation, with high cost to all involved.

In the recent case of Cheung v. York Region Condominium Corporation No. 759, the parties engaged in a round of condominium monopoly where the monopolized “asset” was YRCC 759’s shared common element parking lot. The “someone” was a popular restaurant which operated out of three condominium units owned by Ms. Cheung at YRCC 759, a commercial condominium corporation making up part of the York Corporate Center, a large mixed commercial-industrial park in Richmond Hill, Ontario.

With parking coming at a premium at YRCC 759, the monopolization of parking by the restaurant’s patrons/employees was a problem that saw no end until YRCC 759 enacted a by-law to lease each unit owner common element parking units for nominal consideration. This resulted in a dispute between Ms. Cheung and YRCC 759, with the unit owner taking the position that her tenant, the restaurant, should be able to monopolize “all” 162 of YRCC 759’s common element parking spaces; that in passing the by-law, YRCC 759’s actions were oppressive; and, that the by-law itself was unreasonable and accordingly, violated the Condominium Act, 1998 (the “Act”).

The Court disagreed that Ms. Cheung’s expectations were legitimate or reasonable, and concluded that there was nothing oppressive about YRCC 759’s actions or the by-law. To the contrary, the Court held that it was Ms. Cheung’s unreasonable expectation that lead to the parking problems at the centre of the litigation in the first place, and that is was, in fact, her conduct which had been oppressive towards the other unit owners at YRCC 759. The Court agreed with YRCC 759’s position that leasing an equal number of parking spaces for all unit owners had in actuality conferred a benefit to Ms. Cheung by allocating a larger number of parking spaces exclusively to her.

The Court also found that Section 21 of the Act permitted YRCC 759 to lease part of its common elements, as same was not specifically prohibited in its Declaration. Additionally, the Court recognized YRCC 759’s statutory obligation to manage its common elements, and confirmed that it also had the authority to enact a by-law leasing common element parking units to each unit owner.

Turning to the next issue, the Court went on to consider whether the actions of the Board were oppressive to Ms. Cheung. Generally, the oppression remedy is a powerful tool imported from business law, and is typically utilized by shareholders/unit owners to remedy corporate wrongs. The test for oppression is two pronged: applicants must establish both that the condominium corporation’s conduct breached their reasonable expectations and that the resulting situation is unfair.

The Court determined that Ms. Cheung’s real complaint was not that YRCC 759 treated her differently from other owners but rather, Ms. Cheung was upset because YRCC 759 did not treat her differently from the other owners by allowing her to monopolize all the parking.

The oppression remedy protects the legitimate expectations of owners and not individual wish lists. The Court must balance the interests of the one versus the interests of the community, which typically results in the interests of the condominium community as a whole prevailing over those of one owner. Thus, while Ms. Cheung had an expectation that her tenant would be able to use “all” of YRCC 759’s shared parking spots, that expectation was not reasonable.

The case is great reminder that condominium corporations have the ability to manage and control their common elements, including the authority to pass by-laws to permit the lease portions of those common elements where not expressly prohibited by the declaration.

Boards of directors have a responsibility to create rules which are reflective of and work to advance the interests of the condominium community as whole. However, it is important to keep in mind that as each community is different, what is reasonable or assists in the smooth operation of one condominium corporation may seem unreasonable or may not work effectively for another.

What is common in every condominium, and in fact, is an ideology that has been recognized by the Courts for some time, is that unless common elements are designated specifically for the exclusive use of a particular unit, one unit owner should not expect special treatment to permit the monopolizing of the common elements – which comes at the expense of the interests of other units owners and their tenants.

In this case, the unit owner will not pass go, and she will likely be paying more than $200 to the condominium.

Note:  Since this article was written, the case has been appealed.

All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.

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