Maple Ridge Community Management v. PCC 231 a Property Management contract was terminated with cause and without notice based on a clause in the agreement.
A good condominium property manager is worth his/her weight in gold. Condominium corporations rely on the property manager to assist the Board in running the affairs of the corporation. However, if the property manager is not performing the property manager’s duties to the satisfaction of the Board, then the Board will look at the management contract to determine if it can terminate the manager.
Many condominium management contracts provide that the contract can be terminated by either party upon a specified number of days’ notice, or payment in lieu of notice where the contract is being terminated by the condominium corporation. In addition, most contracts permit the condominium corporation to terminate “for cause” in certain specified circumstances.
In a recent case, Maple Ridge Community Management Ltd. v. PCC 231, the condominium corporation terminated its management contract, relying on a clause in the contract which allowed it to terminate if the manager was “insubordinate, reckless or grossly negligent in performing its duties.” The manager claimed that the condominium corporation did not have cause to terminate the contract and sued the condominium corporation for $8,303.24, being two months payment in lieu of notice. When the manager’s case was dismissed by the Small Claims Court, the manager appealed.
In his decision, the Small Claims Court Judge described a number of acts or omissions that could amount to insubordination, recklessness and/or gross negligence: issuing incorrect status certificates, delays in preparing banking documents for signature, late payments, failure to provide reports to the Board. However, on appeal, the Superior Court determined that the Small Claims Court Judge did not properly describe which acts or omissions of the manager actually amounted to insubordination, recklessness and/or gross negligence. For this reason the Superior Court set aside the Small Claims Court judgment and directed the parties to have a new trial before a different Small Claims Court judge. We do not know if the parties did this or decided to settle. The legal fees incurred by both parties for two trials and the appeal will be disproportionate to the amount of the claim. (The Manager was awarded costs of $10,000 for the appeal.)
Whenever a condominium corporation wants to terminate its contract with its manager, it should be contacting legal counsel before it instigates the termination or retains a new manager, particularly if the condominium corporation wants to terminate for cause
Home Management Condominium Management Agreement – The Sequel
Last December we reported on a case where the condominium corporation terminated a property management agreement for cause and without notice, relying on a clause in the agreement which allowed it to terminate if the manager was “insubordinate, reckless or grossly negligent in performing its duties.” The manager claimed that the condominium corporation did not have cause to terminate the contract and sued the corporation in Small Claims Court for $8,303.24, being two months of management fees.
After the manager’s case was dismissed, the manager appealed. The Divisional Court set aside the decision of the Small Claims Court judge on the basis that the trial judge did not adequately describe what conduct amounted to insubordination, recklessness and/or gross negligence and why he reached his conclusion, and for that reason, the Divisional Court was unable to conduct a meaningful review of the Small Claims Court decision. The Divisional Court ordered the parties to have a new trial before a different Small Claims Court judge.
Instead of going back to Small Claims Court, the condominium corporation appealed the Divisional Court decision. The Court of Appeal set aside the judgment of the Divisional Court and reinstated the decision of the Small Claims Court judge. The Court of Appeal concluded that the Small Claims Court judge had adequately considered the evidence and that the reasons for the decision were sufficiently clear. The Court of Appeal noted that the Small Claims Court judge had correctly considered the cumulative effect of the manager’s acts and omissions and “that multiple acts or omissions can rise to a level that one alone cannot reach”.
What makes this case interesting, is that the Court of Appeal‘s decision was influenced by the fact that the original decision was made in Small Claims Court. “Appellate consideration of Small Claims Court reasons must recognize the informal nature of the court, as well as the volume of cases it handles and its statutory mandate to deal with cases efficiently . . . . Just as oral reasons will not necessarily be as detailed as written reasons, reasons from the Small Claims Court will not always be as thorough as those in Superior Court decisions.” This recognition of the Small Claims Court context provides validation for Small Claims judgments that are somewhat informal and contain less detail than would be found in judgments from higher level courts.
The condominium corporation was awarded costs in the amount of $10,000 for the appeal to the Divisional Court and $7500 for the appeal to the Court of Appeal. This turned out to be a very expensive undertaking for the condominium manager: in addition to costs of $17,500 the manager had to pay its own legal costs. The total costs far exceeded the amount of the management fees that were at stake.