Consideration of Bill 12, An Act to provide choice and flexibility to Northern Residents in the establishment of service delivery mechanisms that recognize the unique circumstances of Northern Ontario and to allow increased efficiency and accountability in Area-wide Service Delivery / Projet de Loi 12, loi visant à offrir aux résidents du Nord plus de choix et de souplesse dans la mise en place de mécanismes de prestation des services qui tiennent compte de la situation unique du Nord de l'Ontario et à permettre l'accroissement de l'efficience et de la responsabilité en ce qui concerne la prestation des services à l'échelle régionale.
The Chair (Mr John O'Toole): Welcome, members. First, we're trying to conclude on Bill 12, the northern services legislation. We had left off with an agreement to have some time this morning to resolve a very important issue. The Chair would like to recognize Mr Bisson and ask if he'd like to make a comment.
M. Gilles Bisson (Cochrane-Sud) : La semaine passée, quand le comité a fini, on avait fait la décision comme comité de traiter touts les amendements du projet de loi 12, sauf l'amendement que j'avais proposé qui aurait garanti les services linguistiques pour les francophones dans les régions désignées dans la loi.
Au comité c'est devenu évident, point que l'assistant parlementaire, M. Spina, avait énoncé, que le gouvernement était pour adopter non pas une obligation dans la loi mais une politique provinciale, qui dirait, «Quand on transfère des services à travers la Loi 12, ces services, s'ils sont dans des régions désignées, une fois transférés aux régies locales sous la Loi 12, le gouvernement va s'assurer que les services en français vont être respectés.
On avait demandé à ce temps-là de mettre de côté mon amendement jusqu'au moment qu'on aura la chance d'avoir une lettre du ministre, M. Hodgson, qui répète l'énoncé de M. Spina. Comme on avait dit dans le temps, M. Spina est un bon homme, il est honorable, mais en tant qu'assistant parlementaire il ne peut pas parler directement sur les politiques du gouvernement. C'est pour cette raison que j'avais demandé la précision du ministre en écrit.
Pour finir, on avait demandé la question à la Chambre cette semaine, et suite à cette question le ministre m'a donné une lettre que j'aimerais mettre dans le record. Je ne vais pas lire la lettre au total, mais la dernière partie dit : «D'une façon semblable, j'ai l'intention de maintenir les services bilingues lorsque les circonstances l'imposent au moyen de l'arrêté de l'établissement régional des services publics. L'arrêté du ministre couvrira les services en français au fur et à mesure qu'on évalue chaque programme conformément avec la politique provinciale.» Je vais expliquer cette partie dans une minute. «Évidemment, une considération particulière serait de mise dans le milieu où la population recevait déjà des services en français en vertu de la Loi sur les services en français», et c'est important :«Nous nous assurerons, au moyen de l'arrêté du ministre, que les services fournis à la collectivité francophone avant la formation d'une régie régionale continuent.»
Ce que le ministre nous écrit dans cette lettre est qu'il ne va pas nous donner une garantie législative, mais qu'ils vont adopter une politique qui dit à travers la Loi 12, quand on transfère un service dans une régie où les services en français étaient déjà établis sous la Loi 8, ces services vont rester en place. C'est ce que le ministre nous rapporte dans la lettre.
C'est une manière de victoire. Je dis directement à M. Spina et au comité et au gouvernement que ma préférence a toujours été d'avoir une obligation dans la loi. Des obligations dans la loi, comme on le sait, ça veut dire que n'importe qui est le ministre, n'importe qui est le gouvernement, on n'a pas de choix. La loi est la loi, comme on dit. Mais le gouvernement ne veut pas mettre ça dans la loi, pour des raisons auxquelles eux-mêmes doivent répondre avant la prochaine élection. On va encore avoir ce débat-là, j'en suis sûr.
Du moins, c'est la première fois en trois ans que le gouvernement provincial nous dit par écrit qu'ils vont respecter la Loi 8 une fois que les services auront été transférés à travers la Loi 12. Il faut dire qu'on vous félicite. Quand quelqu'un fait quelque chose de bien, il faut le dire. Avec ça, monsieur le Président, je veux dire que c'est une bonne nouvelle pour les francophones du nord et on regarde avec intérêt à ce qu'il va arriver une fois que les services seront transférés pour nous assurer que cette entente qu'on a aujourd'hui va être suivie.
Le dernier point que je vais faire sur ce dossier est qu'il faut réaliser que ceci s'applique seulement dans le nord de la province. On va continuer à oeuvrer pour avoir du moins une lettre de la même manière des autres ministres qui disent que, quand ils transfèrent des services dans d'autres parties de la province, ils vont faire la même chose.
Mr Joseph Spina (Brampton North): With respect to the rest of the province, Mr Bisson, I think that Bill 12 is what we're really here to address. That's the focus. Our objective is to ensure that the services are to be continued as we've described and agreed upon for Bill 12 and for northern Ontario. With respect to the rest of the province, that's beyond the scope of this bill at this point and certainly beyond the scope of this committee at this stage.
M. Bisson : Je comprends que cette loi est seulement pour le nord. Mais je pense que vous réalisez qu'il y a des francophones ailleurs que dans le nord de l'Ontario, à travers la province. On est très nombreux. Notre caucus NPD va travailler avec le gouvernement pour essayer d'avoir une lettre peut-être semblable quand ça vient au transfert des services dans les autres municipalités à travers la province où la Loi 8 s'applique.
Chair, if I can raise one other issue very quickly, I will not take up any more of the committee's time. I want to raise a separate issue that we actually have dealt with, but it will only take about three minutes and I'll be done: the creation of the area services boards. I just want, for the record, to tell the parliamentary assistant in this committee that we've done a lot of good work on Bill 12. We've amended this legislation quite properly; we've made this legislation a lot more user-friendly for municipalities. It's a demonstration of what happens when you have a good committee process where a government drafts a bill, puts the bill out to the public for consultation, such as what happened this summer in northern Ontario, and then the committee comes back and does work in trying to amend the bill according to what we've heard.
This bill has been changed. I believe it is a much stronger bill now because of the committee process. I want to thank publicly the presenters across northern Ontario who came and presented. Now we have an opportunity possibly to make this bill work for some situations in northern Ontario. We have a saying in French: «On prêche pour sa paroisse. We preach for our parish,» in translation.
Mr Parliamentary Assistant, you know that I gave a letter to Minister Hodgson yesterday in regard to the creation of an area services board in the Cochrane district. I want to say for the record what that letter is and hopefully the parliamentary assistant will support that. The letter says that the district services board process in the Cochrane district has fallen apart, that municipalities have walked away from both sides of the table. We think that the area services board legislation could be a route that would assist the creation of an area services board to deliver some of the downloaded services. What we've asked for in the letter is that the minister allow the Highway 11 corridor municipalities to work on a proposal that would exclude the city of Timmins in makeup as far as the creation of an ASB, and then the ASB, which would be the Highway 11 corridor and the city of Timmins, would come to arrangements on a service-by-service basis of what they do or don't want to share when it comes to administrative services.
Because the legislation under the DSB allows the minister to impose a solution, we're saying, "Do not impose a solution until you've given the municipalities an opportunity at least to look at the creation of an area services board within a reasonable amount of time, and that they not have a DSB imposed while they're working on an ASB proposal." I wonder if I could get a comment on that from the parliamentary assistant.
I think the minister will try to look at it on a reasonable basis, and if the proposal is as timely as we both would anticipate, perhaps they could take that into account. I can't speak for either our minister or certainly the Minister of Community and Social Services, but time is of the essence, and if there appears to be an amicable solution that is acceptable to all parties, including the ministers, it might be taken into consideration. I think it's a reasonable request.
The Chair: Mr Bisson, I think it's been a very fruitful discussion, and respectfully to Mr Bisson, I think you've done an admirable job of representing the north on an important issue and helping each of us understand how important it is to you. Out of respect for that, we have before us an amendment which was moved by yourself --
We've now completed, and I thank the members of the committee for their patience and deliberations on this very important piece of legislation. I thank the parliamentary assistant and all parties for their assistance.
"2. That each party will submit a list of potential witnesses to the clerk by Monday October 19, 1998, at 1:15 pm. These party lists, together with any names the clerk has received, will be distributed to the subcommittee members approximately 15 minutes later in the House. The subcommittee members will meet with the Chair of the committee between 1:30 pm and 3 pm to develop a priority list of proposed deputants. The Chair will provide this priority list to the clerk at 3 pm.
"3. That witnesses will begin presenting before the committee at 10:30 am on Thursday, October 22, 1998. Each witness will have 20 minutes in which to make their presentation and to answer questions from the committee members.
"4. That October 22, 1998, at 5 pm will be the cut-off time for people to contact the committee clerk to request an opportunity to appear before the committee. Written submissions must be received by the last day of public hearings.
"10. That each party will ask their House leader for permission to meet for two additional days outside of the committee's regular scheduled meeting times. The first day is to be used for public hearings and the second day would be used for clause-by-clause consideration of the bill.
The Chair: I would ask if there were any errors, omissions or comments with respect to the report that's been filed. There being none, I move that -- well, I believe Mrs Munro has already moved it. I'll call the vote on the subcommittee report. All those in support? That's carried.
Consideration of Bill 38, An Act to revise the law relating to condominium corporations, to amend the Ontario New Home Warranties Plan Act and to make other related amendments / Projet de loi 38, Loi révisant des lois en ce qui concerne les associations condominiales, modifiant la Loi sur le régime de garanties des logements neufs de l'Ontario et apportant d'autres modifications connexes.
Mr Mario Sergio (Yorkview): Mr Chair, I just want to make sure that there is no difference between the French and English versions of Bill 38, because we have Bill 38 in English and Bill 3 in French. There's no change, I assume, in the French version. It's the same one?
The Chair: We're right on time. The committee will call its first deputation this morning, the Greater Toronto Home Builders' Association. I ask the deputation to come forward and introduce themselves for the Hansard record.
As I said, I'm with the Greater Toronto Home Builders' Association. To give you a little background on our association, the GTHBA is the voice of the residential construction industry in the greater Toronto area, and we've been representing the industry since 1921. We represent residential home builders, whether they build single detached homes, semis, townhouses, apartments, lofts, conversions or any other type of residential construction. We also represent infill and custom home builders, as well as professional renovation contractors.
Our membership also includes the suppliers to the industry: the brick manufacturers, window and door manufacturers etc. We also represent subcontractors, whether it's bricklayers, carpentry, trim, drywall. As well, we represent many service and professional firms, as well as financial institutions associated with the industry. All told, our organization has about 940 member companies, maintaining businesses, residences and operations throughout the greater Toronto area.
Last year our members sold close to 27,000 new homes in the GTA, representing about 75,000 person-years of employment. The residential construction industry is a $7-billion-a-year industry in the GTA alone, making it one of the largest industries in Ontario. Of the 27,000 sales I noted, about 9,253 last year were condominiums, so you can see that the condominium market represents a substantial portion of the residential construction market here in Toronto.
I am here today not only as a representative of the GTHBA, but also as a member of a joint committee we formed with the Metro Toronto Apartment Builders Association, the Ontario Home Builders' Association and the Urban Development Institute of Ontario. Together, our organizations recruited a committee of legal, engineering, insurance, building and developer experts to conduct a thorough review of this legislation. Altogether, our volunteer committee members have contributed countless hours in reviewing the proposed legislation. We discovered a number of very important issues and have provided a variety of suggestions for improving the legislation.
I have brought copies of our joint committee report today, which I've given to the clerk; it should be available to you. The people involved in the review are listed in the report, so you can see it there. You may find that a number of individuals who come forward will reference this report, so you may want to keep it handy for reference purposes.
Given the shortness of time, what I'd like to do is highlight some of the issues we have identified in our review of the bill. They are, of course, much more thoroughly addressed in the report itself, and I'd urge you to look at that for the details.
The first issue I want to talk about is the concept of "significant change." The proposed legislation introduces this new requirement to disclose significant changes which are over and above a long-standing requirement to disclose material changes. These are the type of changes which are material to a purchaser's decision. The new concept in the legislation is undefined, and we are concerned that this is going to create litigation and uncertainty for purchasers and developers. It was only fairly recently that a lot of uncertainty in the condominium market was resolved in the courts, and I think it would be a shame to introduce a new concept and once again introduce uncertainty and litigation.
In addition, in the legislation there are a number of new disclosure requirements. I want to just touch on a few of them. I've identified them in my presentation. Given the time, I may not refer to every one you see in my presentation; I may gloss over a few. I'm going to skip down to the one at the bottom of page 2 of the presentation.
Clauses 73(3)(l) and (m) of the new legislation contain a requirement for a declarant to list "all other agreements that apply to the property" and to provide a brief description of all significant features of all agreements that would pertain to the properties. Together, these two requirements require not only that all agreements be attached, but also that a summary of each one be provided in the declaration.
That creates two problems. We are, of course, quite concerned that there are a number of agreements that apply to the property that should not have to be disclosed to purchasers and never have been disclosed in the past. There are private financial arrangements that the developer would have made, construction contracts, agreements with the Ontario new home warranty program etc. You could think of millions of them. But as we see the wording in the legislation, it requires the disclosure of all agreements -- and a summary of them, which could create another problem. You'd have to do both, and if the summary somehow, for whatever reason, can be found to be different from the agreement itself, you could have litigation because the summary doesn't capture one particular element out of the other.
We have a couple of suggestions. We don't really think this was the government's intention. What you should do is require the disclosure of agreements that affect the ongoing operation of the condominium, and where an agreement can be attached you're not required to summarize it. Where an agreement is not available to be attached, then you would provide a brief summary, but you would not have to do both. That's an example of a particular area in which, although on the surface it appears like a relatively minor wording issue, the choice of the word "all" can have a rather devastating impact on the industry if it proceeds as it's outlined.
I'll move along to clause 73(3)(r) of the legislation, which requires that the disclosure statement contain a statement setting out the fees, charges and benefits that the corporation confers on another party. "Benefits" is a new term introduced in this legislation. It was not in the previous legislation. It's undefined, and of course we don't know what it means. We're concerned, again, that there will be litigation to figure out what "benefits" means.
I'm going to skip to another wording problem under section 113 of the legislation. Again, it's a simple wording issue, but the way we read section 113 it may be possible for a condominium corporation to terminate a reciprocal agreement. We certainly do not believe this was the government's intention, and we believe with a simple wording change you could correct this problem, that these agreements would remain enforceable. Of course, this is quite critical.
Transition: We are also concerned that the transition provisions as provided in the legislation are not, as currently drafted, broad enough. This could lead to problems where units are sold under the existing legislation and, in some manner or another, new requirements are placed through the new legislation on the declarant which could be interpreted as material changes and which would make the agreements reached under the current legislation, when sales are made now -- it could nullify those agreements. That would be particularly devastating to anyone who did it. We're not sure how it may occur, but because the transition provisions aren't broad enough, this may yet happen.
I'm going to move now to section 44 of the legislation. There's a new requirement here for something called a performance audit. This is something that our industry had not seen any previous drafting of. We are familiar with the government's intention to require a performance audit, which would be like an engineering study to review the building for new home warranty program purposes, to see that it was constructed to a certain standard. What we're concerned about is that, as it is put in the legislation, there is an enormous amount of detail regarding the performance audit. This is in the legislation. Given that this is all new, we're quite concerned that such an amount of detail is in the legislation.
As far as we're concerned, if you want to do it you should probably have a general requirement for a performance audit. In fact, we'd prefer you call it a technical audit, because that's the industry standard; that's what we call these things now when we do them. We would like to see a lot of the detail removed from the legislation, because if problems develop, and as the technologies change and the testing environment changes, you may find that what's in the legislation is outdated or it may be problematic, and it's very difficult to change what's in the legislation. What you may do instead, which would solve this problem, is just put all the details into regulations and then you can adjust them if there are problems, while keeping the general requirement in the legislation.
I have a couple of other examples of where there are drafting problems in the legislation but where they could be potentially devastating for the industry. The new act contains a new concept of a vacant land condominium, which is a good idea and some people are interested in it. But as it's currently drafted there is a requirement that before each and every sale, the declarant must make a separate request of the municipality to provide a statement of what services are going to be provided by the municipality. It doesn't have to do it once; the legislation says you have to do this before each and every sale. That requirement may render that section useless. I'm not sure how municipalities would feel about being inundated by letters and having to respond before each and every sale of a condominium in their municipality. That is something that could be pretty easily resolved, but nonetheless could make that whole section, the new concept being introduced, unusable.
Another example is in the leasehold condominiums section of the legislation, yet another new concept which a number of people in the industry are very interested in. Again, as it's worded now, this section only requires a corporation to remit the contributions collected from the owners on account of rent. The choice of wording may mean that the condominium corporation could say, "We weren't able to collect any rent," and the developer would simply not be able to collect rent. If that was the case, nobody would develop one of these things. If that is simply cleared up, that would make this section usable. Again, it would not be usable if the wording goes through as it is.
As you can see, most of the example issues I've identified here largely stem from simple wording choices in the legislation rather than being major policy issues. However, each of these could be potentially devastating to the industry if left unchanged. I therefore strongly urge a very careful review of the legislation. Resolution of the issues identified by us here is critical prior to the passing of this legislation.
We recognize that the committee and the government have not had a lot of time to review what was in our report and the suggestions therein, but we look forward to working with you all to make sure that the legislation works properly for all parties involved.
Mr Sergio: I don't need all that time, Mr Chairman. Just for clarification, Mr Brescia, some of your comments here may apply either prior to a registration of the condominium or once the corporation is in place. For example, just on the last one here, because we have skimmed over most of your points here, usually, if there are no fees paid, you go after the owner for collection of rent, if you will. You call it the leasehold here; I would call it maintenance fees in a corporation and so forth. Why would the corporation be involved when it's the owner responsible for payment of a portion of the maintenance fees?
Mr Brescia: I believe that's a function of the creation of this new leasehold condominium concept, where the developer's arrangement is with the condominium corporation, which in turn collects the rent from the individual members.
Mr Sergio: And still under that you will have the option to put a lien on the particular unit; if that is not the case, the corporation would have that option, if you don't collect the dues, let's say?
Mr Mike Colle (Oakwood): The one question I have deals with disclosure. I guess in the act as it is now presented there's an intention for more complete disclosure to the purchasers. You're saying you would prefer to have the disclosure limited. I'm just summarizing. I think you're saying that if you leave it as it is in the proposed act, it is too wide and too open to interpretation; it might lead to some litigation because there might be too much disclosure of unrelated matters dealing with property, mortgages on the property or financing?
Mr Brescia: Yes, that's correct. Never, as far as I'm aware, in any other jurisdiction and never in the past in Ontario has anyone been required to disclose their private financial arrangements and things like that. Simply by the choice of the wording, the legislation appears to require every and all agreements pertaining to the property. These are not things that I believe are in the purchaser's interests to know or something the purchaser needs to know. Clearly, we're saying we are happy to and believe purchasers should be disclosed all information pertinent to their decision to make a purchase, but not stemming into private financial arrangements the developer may have etc, things that are really not necessary for the purchaser to see.
Mr Colle: The purchaser is essentially buying into the present status of the building, plus he or she is now a part-owner, you might say, of the whole financial entity. In any business undertaking, which the purchase of a condominium is, wouldn't more disclosure be a benefit to the purchaser? I would think the more information they have, the better it is. Are you afraid there might be too much -- I don't see where the litigation potential comes into play.
Mr Colle: No. I'm more into the financing and the financial mechanisms dealing with the property they're going to be living in and being part-owner of. I'm not interested in their personal rate of loans etc, but as a condominium owner I would like to know the financial arrangements of the deal on the property. That's what I'm saying.
Mr Brescia: I guess what we're saying is if it's something that's clearly material and important that a purchaser know, we have no issue with it being disclosed. But there should not be a disclosure of private financial arrangements and things of that nature. That would be completely unprecedented.
Mr Tony Martin (Sault Ste Marie): It would be basically on the same issue, this business of disclosure and people needing to know as much as they can about that which they're buying, which may in some instances be the biggest investment of their lives. You want to know everything you can about it that might affect you somewhere down the line. Certainly, a red flag goes up when people begin to get into the personal financial arrangements of corporations, between them and their bankers. I would think things like construction contracts, however, might be pertinent. You want to know what agreements were made between the developer and the people building the facility so that you know that everything is sound and done properly. Wouldn't that be --
Mr Brescia: I agree. The sentiment I think you're expressing is that you really want to make sure that purchaser's protected and that the building is built. There are a number of things in this legislation to ensure that the consumer has protection, that the building is constructed to a certain standard. There are a number of checks. There's the new home warranty program to provide protection to purchasers.
Mr Brescia: There are a bunch of things that are necessary to disclose to the warranty program. We agree that those involve ensuring the building is constructed to a standard are necessary to disclose. The private financial arrangements made with the warranty program -- again, it's similar to those made with banks, which are not appropriate for disclosure. The legislation has a whole separate section dealing with ensuring that the building is constructed to a certain standard.
The construction contract itself and the financial arrangements made between a developer and a contractor do not seem to me to be things that are appropriate for disclosure. Again, it would be totally unprecedented to introduce that here in Ontario.
Mr Martin: I'm just trying to imagine under what circumstance it would become necessary for the owners of units to know that kind of information. I guess I'm thinking of the debacle that happened in British Columbia, where whole units began to fall apart, began to leak and all that. Wouldn't you think that in trying to be prepared for some catastrophic development 10 or 20 years down the road, you would want to make sure that the developer, who perhaps didn't do something properly, was in a position to come good for problems that they themselves created because they were negligent or whatever?
Mr Brescia: I hear what you're saying. Given our new home warranty program here in Ontario, which they did not have anything like in BC -- consumers here have excellent protection from major structural defects. Something like what happened in British Columbia is not something you're going to see here in Ontario. We have excellent protection for consumers here -- that's what the warranty program is all about -- and very detailed reporting requirements of condominium developers who now go throughout the process, and the new performance audit requirement will check it once again at the end of the process. Altogether, you're going to have outstanding consumer protection.
Mr Steve Gilchrist (Scarborough East): Thank you, Mr Brescia. It's good to see you again. We're most grateful for the detail you've put into this. I know this has been a very consensus-driven bill. One might argue, with the level of consultation and the number of times it has gone out to the various stakeholders, that it's perhaps the most consensus-driven bill that's come forward in this Legislature in many years.
I must say, in looking through some of your comments, that they certainly bear further scrutiny. I would suggest to you, though, that in a number of these cases it would appear to be a question of interpretation. For example, let me take you to your suggestion about vacant land condominium disclosure. There is a requirement to have an up-to-date certificate that you would be able to include as part of the presentation, so it would seem to me that unless the municipality ever changes its service, that is the up-to-date certificate once you've made the one request. So while I certainly am not suggesting we wouldn't look at the wording again, I think it stands a logical test that once you've got that information, you could continue to tell every subsequent purchaser that that is the most current certificate.
Mr Brescia: That would be the perfect circumstance, as far as we're concerned. It's just that from our read of it and what our lawyers tell me in reading this legislation, it appears to require it before each and every sale. It's the choice of wording. If it was as you suggested, that would be perfect and we would not have an issue.
Mr Gilchrist: Let me just close by saying that I appreciate the attention you've given to this, and we certainly will give every one of these suggestions and your more detailed one thorough examination before the amendments are put forward.
The Chair: At this point we'll ask for the next delegation, which is Cassels Brock and Blackwell. Would you approach the bench and introduce yourself for the Hansard record. You have 20 minutes to either use as you wish or allow members to pose questions.
Mr Roger Gillott: Good morning, ladies and gentlemen. My name is Roger Gillott, and I'm a construction lawyer at Cassels Brock and Blackwell in Toronto. I'm here to speak to you about a very specific aspect of the Condominium Act which relates to protecting the interests of small contractors who perform work on the common elements of a condominium.
I'm just going to give you a bit of background about a lien and how it works. Basically, if a contractor performs work on a condominium or any other building, like installing the concrete in the parking garage or something like that, and they don't get paid, they can register an instrument called a lien on the title to the property. A lien is similar to a mortgage. It means that the contractor actually has an interest in the property equal to the value of the services the contractor has provided and not been paid for.
We have a problem with the current Condominium Act because under the old system of liening there was a paper system in the registry office which involved a paper binder with four sections in it. One of these sections was the common elements and general index. A practice grew up of registering liens for work that was performed on the common elements in this section of the loose-leaf binder.
The Chair: According to the clerk, all letters were sent to their offices directly, but if you're making a specific reference, I think we should have it before the committee members. Are you addressing that correspondence specifically?
Mr Gillott: On the third page of my article, I talk about the old system of registration. I list the four different sections in the old loose-leaf manual. Essentially what has happened is that the system of land holding in Ontario has become computerized, so there's no longer a specific place to register a lien on the common elements of a condominium. The result of that is that if a small contractor performs work on the common elements and he wants to register a lien to protect his interest, to make sure he gets paid, in other words, instead of being able to register the lien in the loose-leaf book, he has to get his lawyer to search every one of the 500 units in the condominium. I mean, there might be 300; there might be 500. It costs $5 for every search in the registry office, so if you have 300 units in a condominium, there's going to be a $1,500 cost. Of course, there are going to be legal costs on top of that. It's going to cost a small contractor probably $1,500, $2,000, $2,500 just to register a lien. This is a legal procedure which normally can be done for $200 or $300.
The reason for this problem is that when you perform work on the common elements of a condominium, you're doing work on a piece of property which does not have a specific place in the new computerized registration system. In the computer, there is a file for every single unit in the condominium, but there's no file for the common elements. Under the old system, there was this section in the loose-leaf book for the common elements, and that's where people's liens would be registered. Under the new system, there's no place to put a lien on the common elements. So the act at the present time, in sections 7(7) and 7(8), provides that you can lien all of the units, and by liening all of them you encompass the common elements.
The problem is that in your claim-for-lien document, you have to name the owners of every single unit. That means conducting the 300 searches I was just telling you about. What I'm proposing is that we add a section to the act -- and I've put that in my letter -- section 7(9). For the purposes of registering a lien on the common elements, this section would allow the condominium corporation to be named as notional owner of the common elements. In other words, although the unit owners own the common elements, for the purposes of registering a lien you would just put the name of the condominium corporation.
I should back up a little bit here. If you're registering a lien, it's a two-stage process. The first stage is to register a lien, and the second stage is to start a legal action to get your money back. The Condominium Act already provides that when you start the action to get your money back, you can sue the condominium corporation. You don't have to sue all the individual owners. But strangely, the act did not provide that you can name the condominium corporation as owner as well. So in a sense, the amendment I'm recommending is just mirroring something that's already in the act.
For the first stage, at the moment, you have to do a search on 300 units, get the names of the 300 people and put all of them in your claim for lien. But when you go to do the second stage, you're allowed to sue the condominium corporation. What I'm recommending is that we put in a clause saying that you can name the condominium corporation as notional owner.
This has already been done in Saskatchewan, as I point out in my paper. Page 255 of the Advocates' Quarterly explains that in Saskatchewan under the Builders Lien Act a similar thing has already been done. If you want to just read a very small part of my paper, pages 254 and 255 basically explain the problem and the costs that are incurred by small contractors who perform work on the common elements.
On pages 250 and 251, I explain that the corporation has been used as the notional representative of the unit holders in other capacities. For example, in the case of occupier's liability, the corporation is considered to be the owner. If you go into a condominium, something happens and somebody brings a suit for occupier's liability, the Occupiers' Liability Act allows the corporation to serve in the role of owner even though it doesn't technically own anything. In fact, the unit owners own their own units, as well as the common elements. So the amendment I'm recommending mirrors measures that have been taken in the Condominium Act and also in other pieces of legislation.
Mr Gillott: The common elements are defined in the declaration of a condominium. It depends on each individual condominium, but typically, they are the parking garage, recreational facilities, if there's a pool, the hallways, and they're also the structural elements of the building, the piping and the wiring. There are also things called exclusive use common elements, like balconies. In a lot of condominiums the balconies are actually common elements, which means that they're owned collectively by the condominium rather than by the individual unit owners.
Mr Gillott: Yes, that's right. If you look on the second page of that, at the bottom of page 246, it says, "Residential units," "Non-residential units," "Common elements enjoyed by all owners," and "Exclusive-use common elements."
Mr Gillott: Let's say the parking garage started to deteriorate, and so the condominium corporation got someone to come in and repair it, and then for some reason they didn't pay. The contractor who had done that work could register a lien on the common element, the parking garage. If he sued the corporation because they didn't pay him and if he got a judgment, then each individual owner could pay their pro rata share of that judgment and get a release. Let's say there were 100 units, so each unit owner owned 1% of the common elements, and then let's say the guy got a judgment for $100. A unit owner could pay $1 and be released from that judgment.
I certainly accept that the way you've drafted your suggestion would deal with the issue by making the corporation notional owner. I'm curious. In your own presentation you note that the corporation, as the representative of the unitholders, may be sued. Why not something -- it would seem to me as a layman -- far simpler? Simply add an identical section saying you may lien the condo corporation as representative for the unit-holders for any matters arising for the works done on the common areas?
Mr Gilchrist: It's just that you go further. Is it necessary to deem them to be the notional owner, or continuing the concept of their agent -- I guess I'm looking at it more for the purpose of being no different than I could file a suit with your lawyer, I don't have to serve you directly, in certain circumstances. Is it possible, without giving rise to any concern for the unitholders that somehow this gives extra property rights to the condo corporation and its board of directors, to simply say acting as its agent it is just as appropriate to serve them with any kind of lien or register a lien against the corporation?
Mr Gillott: Yes, and I'm sure we could reword it that way. I was actually following the wording in section 7(12), which says, "For the purpose of determining liability resulting from breach of the duties of an occupier of land, the corporation shall be deemed to be the occupier of the common elements and the owners shall be deemed not to be occupiers of the common elements."
That's what I was following, but I can understand your concern. Yes, I could probably reword it to get the word "owners" out of there. I can understand what you're saying, that somebody might try to impute some sort or ownership on the part of the corporation.
Mr Douglas B. Ford (Etobicoke-Humber): I'm just following up on that issue too, because I would say that a lot of condominium owners are simple, ordinary, everyday people, like myself, and I've seen them get involved in some of these contracts. Then the corporation or the construction company goes bankrupt and everybody climbs on board to sue the people who have already put down their money.
My basic concern, following through, is that the people who have put down their money need some kind of insurance for liability, because I know for a fact they'll take the condominium corporation and the owners of these units and sue them collectively, while some poor guy gets in there, or man and wife just put down their money, and all of a sudden they're in court being sued. Now it costs them more money to get legal advice or through the condominium ownership association, and it goes on and on. Still, they have their hand in their pocket down to their ankle trying to pay for all these things. This is what my deep concern is constantly with these.
We were talking to the previous chap looking into the financial structure. I understand where he's coming from, because you just can't reveal everything, but there has to be some insurance or legal system that protects the guy. When he puts his money up here, he expects to get this package here. Instead he puts his money up here and they give him a piece of the package and say, "You owe for the rest." This is what I'm concerned with constantly in all these deals. It's not that these people are flim-flam artists. It's just that they sometimes get a little too close to the edge of the bridge or whatever you want to call it, or the ledge, and fall off. This is what I'm concerned with, the people who are left who pay for their irresponsibility.
Mr Gillott: Actually, this concern of yours is addressed in the latter parts of the Condominium Act where it says that if you get a judgment against the condominium corporation, each individual owner is only responsible for 0.3% or 0.1%, or whatever, of that judgment, so each unit owner is only responsible for their pro rata share of the judgment. In this amendment that I'm proposing the unit owners would still be protected in the same way as per the existing judgments of any lien claimant.
Mr Sergio: Perhaps you could give us an example of some difficulties encountered by a trade. I always thought that you would go to the corporation to do whatever, initial contact for repairs or what have you. Usually if it's a contractor who is doing work on the common elements, that contractor would be dealing directly with the corporation itself and not with an individual owner. If there is a contract between the corporation and the carpet people, let's say, there is no contract between the contractor and each individual owner. The contract exists solely with the corporation and that specific contractor. Why, then -- this is my problem, because I'm not too familiar with every section of the act -- would you have to go and register a lien naming every single owner when you have a contract solely with the corporation?
Mr Gillott: The act as it now stands says that if you want to register a lien against the common elements, you have to register it against all the owners. That's what the present act says. You still sue the condominium corporation. When you say that a contractor would have a contract with the condominium corporation, you're quite right. When it comes to register its lien, it has to lien every single unit because the theory of ownership under the Condominium Act is that each person owns their own unit plus a pro rata share --
Mr Sergio: If a particular owner owns a percentage of the common elements, would he have recourse to say: "I didn't sign anything. I was not part of this condominium corporation agreement with the contractor"?
Mr Gillott: I guess there are two issues there. The basic issue is that if the contractor got a judgment against the condominium corporation, I don't think the owner would be able to say that, because under the act it says that they would be liable for their pro rata share. But within the condominium corporation, you'd have to talk to a condominium lawyer about whether an individual can try to opt out of a decision made by the corporation. I'm not actually familiar with that.
The Chair: I believe the committee would be prepared to deal with suggestions. The government and the members do present the amendments as we go through this process, so you can deal with the government or whatever caucus you wish to. The last day of presentations is the cut-off time for amendments, and written briefs as well.
The Chair: Next we're calling on the firms Harris Sheaffer and McMillan Binch. I'd ask you to come forward and introduce yourselves for the Hansard record. You have 20 minutes. You can allocate your time as you wish.
Mr Mark Freedman: My name is Mark Freedman. I'm a solicitor at the law firm of Harris Sheaffer, and Mr David Slan is with me today from McMillan Binch. I'm a lawyer practising exclusively in the field of condominium law since 1981. I act for developers, condominium corporations and financiers. I've registered in excess of 200 condominiums in this province and have drafted many disclosure statements, as Mr Martin was speaking about to the previous individuals. I've drafted in excess of 200 of those disclosure statements.
The material that we are going to refer to today is the material that Mr Brescia provided to you this morning at 10:30. Mr Slan and I both sat on that committee with the GTHBA. We are also members of the Canadian Bar Association of Ontario committee with respect to their submissions.
At the outset, we would like to say that, in general, we think Bill 38 is a good bill. It contains many well-intentioned initiatives, and some of them work very well. For example, the removal of the phantom mortgage, which was a legal fiction created, and the introduction of priority for commercial condominium liens are excellent initiatives and have been drafted in a terrific fashion. We applaud the government and this committee for those initiatives.
However, many of the innovative concepts, no matter how well intentioned, are flawed, and the flaws are simply in the drafting. We're trained as lawyers and we look at these initiatives on the basis of what will happen down the road. We're very concerned about some of them.
I would like to take a moment to address the disclosure statement that Mr Brescia talked about earlier today and the questions that were raised. The problem with the disclosure statement and the wording is that it states that all documents relating to the property must be disclosed. What that will result in is non-disclosure disclosure, because the disclosure book, which now can exceed 75 to 100 pages, could well exceed 200, 300 or 400 pages, because now what the government is asking to be done is to disclose every single document relating to the property. If you're doing a condominium down on the waterfront there are federal agreements that are hundreds of pages long.
The intent, as I understand the legislation -- I've been involved in the changes to this act since 1986 when it was first started with previous governments -- was to disclose those items that would influence an individual with respect to their purchase. Would I purchase or would I not purchase, based on the information that I was given? It's that information that should be presented as part of a disclosure statement. The only change that we're requesting with respect to that is the wording changes, wordsmithing, if you will, that is in the brief we presented to you with respect to a disclosure statement.
What we want on behalf of GTHBA as lawyers, as Canadian Bar Association of Ontario members acting for developers, purchasers, vendors, financiers, is certainty. We have had and received certainty over the last 15 years based on case law. In fact, this government has introduced some of that certainty into the legislation with respect to material change by adopting Mr Justice Robins's decision and the wording he stated as to what constitutes material change. We think that is a great step forward.
We are looking then with respect to the disclosure statement to make the small changes we've requested so that the disclosure to the individuals will be true disclosure; that they will get the information a purchaser needs in order to make an informed decision with respect to buying a condominium. That does not involve information relating to a developer's contractual requirements with all their trades and subtrades. You wouldn't do that in a single family freehold home. There's no need to do it in a condominium. You wouldn't do it in a freehold townhouse project. If the project becomes a condominium there's no need to give it there. I strongly recommend you look at that.
The other issue I wish to talk about is significant change. My concern is that the government has introduced this new concept of significant change and there's no definition to it. We don't know what it is; we don't know what problem it's supposed to solve; we don't even know why it was introduced. Rather than correcting a problem, significant change creates a significant problem and our recommendation is that significant change be deleted from the bill. If the concept of significant change in subsections 75(3) and (4) is not deleted from the bill, I don't think we should call this bill the Condominium Act; I think we should call it the unemployed litigation lawyers' relief act because by introducing significant change it is effectively going to create uncertainty, set us back significantly and create untold litigation.
Mr David Slan: Good morning. My name is David Slan. I'm a lawyer with the law firm of McMillan Binch and I practise exclusively in the area of real estate law with a significant emphasis on land development. As Mr Freedman mentioned, I am also a member of the GTHBA/UDI committee which examined Bill 38. I also sit on the executive committee of the real property section for the Canadian Bar Association of Ontario.
As you know, there are various sections included in Bill 38 which deal with transition, and in the area of condominium law transition is extremely important. We feel that the drafters have included some very good provisions regarding transition and taken us part of the way to where we need to go. But it is clear that transition was not given a priority, as the provisions are lacking. We could talk for hours about the transition rules and give you much detail on these issues, but we've set that out in the brief that Mr Brescia provided to you earlier. When you have an opportunity to look at that brief, the transition provisions are at pages 36 and 37, section 181 of the bill.
Generally, a problem will arise where a condominium unit is sold prior to Bill 38 coming into force but the condominium itself is not registered until after the bill has been proclaimed. The problem we think is twofold. First, consumers could potentially be harmed by unscrupulous developers who take advantage of any gaps or missed issues between the existing legislation and the proposed bill. Second, developers could find themselves in situations where they've complied with the existing legislation at the time they went to market, but on proclamation the documentation they've provided to their buyers and the disclosure they've provided may not be in compliance with the new legislation.
If there were a downturn in the market as there was in the late 1980s and early 1990s, purchasers could use this lack of transitional rules to avoid agreements entered into in good faith by both parties in compliance with existing legislation even where, as I say, the agreements were entered into based on the legislation in force at the time the agreement was entered into. The new legislation could cause a problem there if the transition rules aren't altered.
The condominium is a significant part of the real estate market and we feel that as the population ages it's going to become an even more significant part of the market. By creating uncertainty, developers and lenders are going to be reluctant to build condominium projects as readily. We feel this is a significant issue.
We hope we've provided you with a useful overview of these two issues: significant change and transition. There is obviously much more detail in the report, which we encourage you to review, and we'll be happy to answer any questions you have.
Mrs Ross: Thank you very much for your presentation. I want to say that we have heard from many people on the issue of significant change and it is definitely an area that we're looking very seriously at changing.
I want to ask you, though, about the disclosure. You talked about non-disclosure as disclosure. Do you feel that there are areas where people buying condominiums could and should have better disclosure than they've had in the past?
Mr Freedman: The problem you have at the current time with respect to disclosure is that solicitors who draft these documents and understand the Condominium Act provide full disclosure. It's those solicitors who dabble in condominium who don't, and that is a problem. It's a problem for our profession and it's a problem for condominium. Condominium is very complex, as you all know. I can tell from some of the questions here that the concepts are not that easy.
We think that some of the things you've done in the bill with respect to disclosure are fine. We've had discussions with the ministry and advised them that there are certain things we think you've omitted. We think you've put in some things that shouldn't be there and left out things that should have been. We've made those submissions to the government and we hope they will be acted upon.
The problem you have sometimes is that you go to the lowest common denominator in trying to make changes to legislation. I look at it in terms of a glass table with a fly and you take a sledgehammer to kill that fly and you miss the fly and break the table. In my humble opinion, that has happened in some of the cases with respect to this legislation. Especially based on the consultation process that has gone on, I think it's terrific that all parties have been listening to all the stakeholders. Unfortunately, however, you have to look at the broader picture and we can't be all things to all people.
With respect to disclosure we hope you will look at the initiatives. If you look at what has happened over the last 20 years with what we've had, there really has not been a problem. The largest amount of litigation occurred with the downturn in the market where people tried to get out of their transactions because the values of the units dropped significantly, not because they didn't obtain proper disclosure. In fact, litigation took place, and Mr Justice Robins's decision in the Court of Appeal case was that these people did get proper disclosure and that these disclosure statements were proper.
We really haven't had a problem in that respect. The fact that you've codified some of the things that we've asked for, we agree with. But right now it's too broad and effectively what's going to happen is that in order to protect our clients, we're going to have to put in everything including the kitchen sink. By doing that it's going to be meaningless to somebody because they're not going to understand it at all.
Mr Slan: I recall when I was in school that professors used to say to us: "I'm only giving you 50 pages to read rather than 250 pages because I want you to read them and read them well." If we focus the disclosure and make the disclosure statement a readable, usable document rather than a construction contract -- I don't see a typical purchaser reading through a construction contract and he would be scared off by reading the document at all.
Mr Sergio: Thank you. I certainly don't want to have the impression that you're trying to make it more difficult for a purchaser to understand the bunch of documents, bylaws, declarations, whatever he gets upon signing. Can you, Mr Slan, clarify the transition between the old and the new, how it would affect a prospective purchaser of a condominium unit?
Mr Slan: I think the idea is that were a disclosure statement issued under the existing legislation and two months later the act was proclaimed and the act caused changes in the condominium, that could result in a change to the disclosure statement, which, if solely as a result of legislative change, would afford that purchaser a right of rescission at that point, solely based on the new legislation, notwithstanding that the parties agreed it was a condominium to be constructed pursuant to the prior act. I think that will cause a problem for purchasers and builders alike.
Mr Martin: Just going back to the issue of disclosure and the picture that's being painted, that maybe it's too much paper, when you end up in front of the courts, you want everything you can get your hands on if that should happen. It has not happened. I guess we've had a pretty good track record in Ontario up to now. The problem, though, is when you look at other jurisdictions and some of the catastrophic unfoldings, and then the cost to individual owners of units and all of that, and when you listen to the person who came before you, talking about the liens that can be put on individual owners, common elements etc and how complicated that all gets -- I guess in the initial purchase you just want to get it over with. Nobody wants to think that they'll need all this information, but who knows whether that may not happen down the line.
I'm reminded by somebody that apparently there was a condominium in Richmond Hill that fell apart that created some difficulties. I think those people would probably want as much information as they could get their hands on in order to either protect themselves or get what they rightfully are due.
Mr Freedman: I agree with you to a certain extent, but to a certain extent I disagree with you. First of all, you are mixing up a few things with respect to the previous speaker and construction liens. That's a very specific technical issue that deals with nothing to do with disclosure, nothing to do with pre-condominium. It has to do with a condominium corporation contracting to have work done to the common elements and then refusing to pay that contractor. That's all it relates to. If the condominium corporation contracts with somebody to do work and pays them, it'll never happen. It's a very specific situation. It has nothing to do with disclosure of a condominium.
With respect to the catastrophic issues that have happened outside of this province, that's correct, they have happened. They haven't happened in this province, and I think they haven't happened in this province because the legislation we have with respect to the Ontario New Home Warranties Plan Act and the Condominium Act has served us very well. The legislation they have in those provinces has not served them very well.
The previous governments, your government, this government and even the NDP government, have done various things with respect to legislation and have caused owners of condominiums in this province to be, I think, the most protected. I practise in the States as well. You would be surprised how well -- and people look to Ontario, with respect to our legislation and with respect to what we do. With all due respect, I don't believe we have the same problems.
What I think we are doing, though, is creating problems that don't exist. My understanding of the purpose of the legislation is to solve problems, not to create new ones. I hope that by looking at some of these changes that we've put forward, which are wordsmithing, in our opinion, they will go a long way to making this bill a much better bill than it is today.
I had very short notice for this meeting, so I went through 25 years of notes that I've been writing and talking about with Queen's Park regarding condominiums. I'm not as well organized as I would have liked to be; however, the letters that I have sent through I think contain the information very correctly.
The distress and financial hardship that has been, and is being, imposed on responsible families with well-behaved pets by needless pet evictions cannot be justified. Yet this abuse of power has continued year after year because it was easier to allow than prevent. Twenty-five years ago in Etobicoke a senior couple with a dog sold their home and moved to a condominium with the promise they could keep their pet. Three weeks after moving in, they received notice to get rid of the dog. This was our first experience with condominium pet problems.
Later, a woman bought a condominium on Grandravine with a promise she could keep her small dog, Kika. But even with majority support in the building and an affidavit from the Supreme Court of Ontario that showed that keeping Kika was a verbal part of the purchase agreement, her small dog was evicted.
A man in a wheelchair, a senior with Chien, his small poodle dog, purchased a condominium while it was under construction so he could have grab bars installed in the washrooms, as well as wider doors and carpets for wheelchair use. This senior couple had a letter from their doctor stating that the dog was a medical need and a promise from the sales agent that keeping their dog would not be a problem. However, after moving in they were taken to court and given 90 days to remove their dog from the building. In addition to the terrible suffering imposed, they lost thousands of dollars.
A Scottish terrier called Mactavish was one of the lucky few. When the Dixon Road Condominium Corp took legal action to evict the small dog, Judge Howland ruled they could pass laws against troublesome pets but they had no right to indiscriminately outlaw all pets.
The hardship imposed on such families, only because the Condominium Act allows it to happen, is morally wrong. It makes no sense and it cannot be justified. Yet it continues while those in government responsible for the Condominium Act have been looking the other way. The Condominium Act must be amended to protect responsible families with well-behaved pets, for many reasons. The health and social benefits of pets are indisputable. Dr Levinson found that pets, particularly dogs, can prevent children from becoming delinquents. Dr Corson's study on pets showed that they help to lower stress. Dr Freidman's study on pets showed that heart patients with pets have a greater survival rate. Pets benefit people of all ages.
Many studies show the benefits of pets, while our experience shows that keeping a pet is generally not very difficult. Number one, the population of dog owners in high-rise condominiums is very small. We believe it probably represents no more than 5%, and in some cases less, and many of them are small dogs.
Allergies have been one of the main anti-pet arguments, but most allergens in a home are not pet-related. Cleaning fluids, plants, perfume, carpets and insulation can be a problem. Airborne allergens will not be easily transmitted from one unit to another. A dog in one unit is not likely a problem for a neighbour, simply because the design of air conditioning and ventilation systems provide air to individual units where it is either returned to the system or exhausted through bathroom or kitchen exhausts.
The declaration section should not be used for lifestyle regulations. Changing the vote from 100% to 80% will not solve the problem. The declaration section is more for something that's rigid. You've got property lines. You've got the size of units. You've got the number of units. For something like this, the declaration is fine, but when it comes to whether you can have a pet or can't have a pet or whatever, it's simply too rigid. It's no good.
Miscellaneous items such as condo pet rules must be clear and well defined. Legalese opens everything to several interpretations. Everybody gets in. We hear a lot about the "framework concept." I don't know what a framework concept is, I don't know how many people would know what a framework concept is, yet letters I receive from Queen's Park regarding condominiums do refer to a framework concept.
Then we hear about "buyers, beware." That's a good one. What it does is it shifts responsibility from the lawmakers to the first-time buyers. That's no good. That's pretty easy, but it's not good. Condominium rules must make condominiums less like an institution and more like a home. They'll be a lot more popular if this happens. I'll tell you right now, there are a lot of first-time buyers who wouldn't be a second-time buyer.
Pets are not a disease problem. A call to any board of health or any major hospital with a simple question, "How many people are getting sick or dying from pets?" and you will find that they are one of the safest things on earth. There are some problems that we hear about in the news media, and in some cases it's not the pet's fault at all. But in any case, even considering them, if you take the percentages, they're very, very small.
Another thing is that the bond between people and animals is growing. This is something that's not going down, it's not diminishing, it's growing. You can go into any school today and talk to young people and see how many of these young people don't like pets, are against pets, are anti-pets. They're not. Very few will be. This is the change. Ten years has made a big change. It's happening all over. You take as an example the Fido ad. As soon as I saw the Fido ad, I could see success. This is a great idea.
The existing act allows corporations to make any kind of rules they wish. Anything goes. We hear about dogs not over 25 pounds. I had a dachshund. When I got him first, he weighed about 20, and by the time he died at 13 or so, he was about 40 pounds. He simply put on weight. What do you do while he's putting on all this weight? How do you get rid of him? The next thing is, you get pets on first floors only. There was one condominium, I think it was on Grandravine Drive, "Pets on first floor only."
I got a call from a real estate person recently. A couple were moving, I believe, from the west coast to Toronto and they had a dog. They arranged with a real estate to arrange for a condominium. The real estate person was quite happy to do this and made the arrangements. But before they got here, they had put through this famous grandfather clause saying, "All the pets here are fine; no new ones." So this man who was coming into Toronto with his dog couldn't live there. No new dogs. It seems so ridiculous.
Housing pet rules must be harmonized. This is totally, totally important. The Condominium Act must be revised so that pet laws and regulations will be harmonized and compatible with all types of multiple housing, so owners and renters will be equal and fully protected under Ontario laws. It is very important that Ontario pet owners can move from city to city, from a rented apartment to a rented condominium, in search of employment or for whatever reason, without killing or disposing of their beloved pet companion.
This I think is so utterly ridiculous. Today, with employment scattered, you may have to go to Barrie or Kitchener or God knows where, and when you get there and start looking for a place, what do you do with Fido? Nobody wants Fido. He's a good dog, he's not causing any problems, but the rule says no.
I've read literature that came in from the States -- I actually get newsletters from many places -- and I was reading about one apartment building where they really went out and advertised "Pets are welcome" right from the start. What happened was they simply filled the apartment building with very responsible people, excellent people, and the pets were no problem whatsoever.
Before Bill 225 was passed on June 28, 1990, making pets legal in apartments, we heard all kinds of rumours that terrible things would happen: "You'll have wall to wall dogs if this goes through." Now we've had eight years of Bill 225 and the only thing that has happened is that people have greater security than they ever had before and it brought harmony to the community. So this is what happens.
I think developers and condo corporations probably started wrong, because in the beginning the designs were for empty nesters. It was supposed to be almost a place where you'd hang your coat and head off to Florida. That has changed. Number one, a lot of condominiums today are rented.
Right here there's an example. I know your time is tight. We talked about Kika on Grandravine. Here's a picture of him in the Toronto Sun, and a nice little item that goes with that. We talked about the man in the wheelchair. That's in the Toronto Star. There's the man in the wheelchair. We talked about Judge Howland. This is Judge Howland. This is a Toronto Star item, "1,400 Dogs Died Before Pet Reprieve," and down here it says, "But he said the corporation had no right to pass a bylaw indiscriminately outlawing all pets." This is dated April 14, 1975. Here's Pimpek who was written up in the letter I sent you people. Here's a picture of Pimpek with his young family. He was evicted for no reason. Here are the details. It cost them $18,707.79 to try to keep Pimpek. The dog was no problem. You can see he was a pal of the children -- no problem.
Can anybody tell me or justify why the Condominium Act has allowed, for years and years and years, under several governments, to simply take well-behaved pets from responsible families, where there have been no complaints, where people were hurt, and hurt badly, financially and otherwise. I will challenge anybody right now to justify, before the public, taking well-behaved pets from their responsible families if there are no complaints.
The Chair: Thank you very much, Mr MacDonald, for your very impassioned presentation and the information you provided for committee members. There's no time left for questions but the committee is certainly in receipt of your information. Thank you very much for your time.
The Chair: I'm calling on the particular group now which has been allocated 10 minutes, the Richmond Hill Association of Residential Condominium Owners. Would they come forward, please. Would you state your name and whatever else for the Hansard record, please.
With regard to Bill 38, during 1966 I sat on the government-appointed committee as a stakeholder representing the Richmond Hill and Markham condominium associations to rework the existing Condominium Act. I'm sure you are aware that this committee had representation of all parties on it, often with conflicting interests. Included were representatives from condominium owners, developers, management companies, the bar etc.
Bill 38 as you have it today is a result of what the NDP government started about 10 years ago, put into final form by our current government. Having been involved in this bill's formulation and having borne witness to the discus-sions in committee, I must commend the minister, the Honourable Jim Flaherty, who chaired the meetings and was able to meld the sometimes conflicting views of the different stakeholders into a unified consensus acceptable to all. I would also like to mention Peter Ross and Charles Finley of the ministry who offered their considerable knowledge and did the legwork in drafting this bill, and, of course, the Honourable David Tsubouchi, who was given the task of tying the loose ends, which he did admirably, and finally bringing it to the Legislature.
There is no doubt that Bill 38 is not a perfect bill -- it isn't -- but it is a vast improvement compared to what we currently have. Of course, we can continue working at it until it becomes perfect, but what would that really accomplish? Nothing, except to keep on relying on an existing act with serious imperfections, which for the most part have been corrected by Bill 38. Much of what is new in Bill 38 has existed since the Rae government. Can we wait another 10 or 20 years in order to more closely reach perfection? Absolutely not.
We have reached consensus among the stakeholders. We must accept the bill. We cannot delay further. Currently, over 30% of condominiums have almost nothing in their reserve funds and are unable to perform needed major repairs. Another 30% to 40% have shortages of various degrees in their reserve funds. Bill 38 goes a long way to correct this major problem. We cannot wait even a year or six months to have this act proclaimed into law.
We recognize that there are a number of special interest groups each wanting changes that mollify their self-interest but who recognize that accepting their requests now just might destroy the balance and consensus among all parties which the Condominium Act committee achieved.
Any piece of enacted legislation is a living thing. Its existence does not mean it can't be changed as time progresses, and as time progresses, changes and amendments will surely be made to further improve the legislation. We cannot hold back on what we have now. Let's get on with it, adopt it and, in the time ahead, work on amendments where necessary to improve it.
The Chair: I'm at the pleasure of the committee. I know we had slated 10 minutes and, according to my watch, we have a couple of minutes left, so if there are any particular points or questions, keep them very brief. We have two minutes left.
Mr Sergio: Very quickly, you say it's not a perfect act. What would you like to see to improve the bill? You wish to accept it the way it has been presented now. You say this is not perfect. What would you like to see included there?
Mr Gamus: There are a number of small technical changes that I'm sure can be made to the existing bill that will not cause any friction between the parties or cause any dislocation of the will of the parties.
Remember, this was a consensus of all parties when we had the committee meetings. A lot of things were hammered out, with various conflicting views when the process started. No bill is ever perfect, nothing is ever perfect, but sometimes we have to say, "It is good enough, far better than what we have," be able to proceed and make amendments as time goes on.
Mr Gamus: On disclosure, many people will not understand what's given to them. They will rely on experts in the field to be able to give them advice on any particular subject. My feeling is that disclosure, if it is there, must be complete. If the purchaser cannot understand what is in those documents, he should be able, and has the right, to seek expert advice. Once you start in any field saying, "We do not need this document or this document," then this becomes open to interpretation. Various people will interpret it in a different way and, before you know it, the necessary documents required for a person to make a proper decision will not be available.
The Chair: The Chair makes apologies for any delay. We'll start off as quickly as possible with the Association of Condominium Managers of Ontario. Would you declare your name for the Hansard record, please.
Mr Bob Gardiner: My name is Bob Gardiner. I'm a managing partner of Gardiner, Blumberg, and I'm here today to speak on behalf of the Association of Condominium Managers of Ontario. During the past 22 years, I've acted for over 200 condominium corporations, and I'm the chair of several legislative committees. I'm here today as a member of the ACMO legislative committee.
Joining me today is Mr John Oakes, the executive vice-president of Brookfield Residential Management Services. They represent about 25,000 condominium units. He's the chair of ACMO's legislative committee and is ACMO's past president.
Also present is Mr Andy Wallace, president of Wallace, McBain and Associates Ltd, a property management firm. They manage over 60 condominium corporations. He's the past past president of ACMO, a member of its legislative committee, and he has written a book on condominium law and administration and teaches condominium property managers at Humber College.
ACMO is the only association in Ontario that deals with condominium managers. It has over 500 members, and they manage a majority of the condominium units in Ontario. It has a rigorous college accreditation program, granting a registered condominium manager degree, and has an excellent educational magazine called Condominium Manager. They've always been involved, in the past, in any Condominium Act amendments.
Managers are at the front line. They're there every day when a lot of different kinds of problems arise. We have governance problems, management, administration, staff problems, various kinds of real estate problems, a huge number of political issues that go on and many other issues dealing with reserve funds, maintenance and building deficiencies, for example. They manage budgets of up to $4 million a year. It would be typical to have a budget in the range of $700,000 to $1 million.
Condominiums are mini-municipalities and, like small businesses, they have crucial issues that have a very wide range. We have a lot of strife in our condominium communities. It's not uncommon to go into a meeting where there's a lot of bickering, shouting, libel, slander and all that sort of thing. It's happening right in our own home, so as politics, it's very close to things. If we do a special assessment because some developer did poor construction, which is often the case, and we're telling people they have to pay $5,000 to $15,000 out of their own pockets, we get a lot of strife happening at our meetings. I've had a gun pulled on me, for example. It's important that we get these governance provisions right.
The Association of Condominium Managers has combined with the Canadian Condominium Institute to do a joint set of recommendations. We've given you our brief. We know it's a long one, and we know it's difficult to read the whole brief. We've done an executive summary as well. Our executive summary has a lot of points in it, but it's important to recognize in that summary that was fought out with about 12 to 15 lawyers and managers who are the leading experts in the industry. They're all well-acknowledged people who lecture from 30 to 100 times and that many articles, and they're usually presidents of various organizations.
We wrote it in terms of the legislative drafting that we think is proper to deal with the problems that are there. There's a lot of accumulated wisdom and experience and a very rigorous process of an ACMO rep and a CCI rep, each beating up each section and coming to the main group, beating it up as a group and then beating it up again for the final draft. We really did it in a way that has wide industry acceptance for the people who are actually involved in the governance of condominiums on a daily basis.
In our executive summary, we have listed the various issues with (a), (b) or (c) at the end, or it might say "technical" at the end of each subsection. That was an extremely rough way of rating things. You're going to see that there are some issues there that are going to be crucial to us and yet they're marked "technical." That's because there are a bunch of technical things that we can't believe you won't fix up. They're just glitches or wording changes. There are many issues that obviously have to be fixed up. The (a), (b) and (c) items are the types of items that we'd like to see fixed. Even if you see a (b) item, it's probably an (a). We're concerned about those.
In view of all the complexities, then, we thought it was important that all the leading organizations in the province that do this on a daily basis should get together and try to focus on a common point.
Because there are such a massive number of changes in Bill 38 -- and there are a lot of great improvements, we really appreciate them, and we certainly want the act to be passed. We just would not like to get into more trouble with some of the glitches. We hope you'll accept our collective wisdom on that.
I think we'll get into some specific points. I'm going to start off. In a way, I'm referring to the executive summary. I'm going to skip through it, and just to show you what great guys we are, we'll go to the bottom of the first page, 4(2), "Rights of tenants." We're in favour of rights of tenants. We just don't want tenants to act contrary to the declaration bylaws and rules because, if that happens, an amazing amount of havoc can happen in a building, a great degree of conflict. Tenants should have all their rights protected, but the way the section is drafted indicates that they can act contrary to the declaration bylaws and rules. That would be a big problem.
Jumping down to 7(2)(h), that has to do with providing facilities. A declarant shouldn't be able to charge the condominium corporation for its own common facilities, such as visitor parking, that are required by law. We're trying to make a point about that.
Another big item is in section 9(5), which deals with conversions. If you're converting from, let's say, an apartment building to a condominium, huge problems can arise, causing hundreds of thousands of dollars worth of building deficiencies. It's a great way to take an old building and turn it into a condo and dump all the problems on purchasers who could never, ever figure out what the problems were until three years down the line when they're dipping into their pockets and coming up with $5,000 or $15,000.
The approval authorities need to be required to do a technical audit engineering study and to do a reserve fund study. The declarant who is switching over must rectify the building deficiencies and must fund the reserve fund or else he's going to be ripping a huge profit out and dumping it on poor, unsuspecting people who could never figure out what those problems were.
In section 12(1), we're talking about service easements and where an easement goes through the common elements and the unit owner wants to benefit from a service easement. It should be subject to the approval of the board of directors, which shouldn't be unreasonably withheld. That will avoid a lot of abuses to other neighbours.
In section 15(5), there should be a tax exemption for common facilities, which, if you think of it, are the same as common elements. You have units in condominium corporations which are shared, such as the recreational unit, the gatehouse or mechanical units. They're actually units, and they're often set up that way, but like all the other common elements they should be exempt from paying tax, because all of the unit owners are already paying tax through their units. That was just a little glitch that should have been fixed.
In section 19, "Right of entry," there should be the ability for corporations to not have to give notice to owners when they want to enter the common elements to, say, cut the grass on the exclusive use common element. The way it is right now, the corporation would have to give notice just to go in and cut the grass that they have an obligation to cut. That's silly.
There are a number of provisions on telecommunications services in section 22 where there could be rectification. For time purposes, I'll defer this to when Rudy Fliegl and John Deacon speak about that.
In section 22(14), a major issue would be to make sure that there is a provision in the act that allows for billing to be on an individual basis for TV and other communications services. They should not be common expenses in every case, because people take much higher services in some cases than the general norm, which is bulk-billed. People who have extra services should be entitled to have them but they should pay their own share, not on a common expense basis.
In section 23, there are problems about the types of actions a corporation can bring. They should be able to bring other types of actions and proceedings, many proceedings that we would get involved in. They're not covered there. They should also be able to have any other kind of release as well as damages, and the types of causes of action should be increased.
When notices of the action are given to owners, in section 23(2), there should be some restrictions that you don't have to involve them in every little action that's going on. It's really intended for the serious actions, not for Small Claims Court issues or when some of the other sections of the act are being enforced.
Before I turn to Andy Wallace, I will just mention also section 26, about occupier's liability. Owners who occupy some exclusive use common elements should be required to comply with an occupier's liabilities; they shouldn't be foisted upon the condominium corporation. They should be responsible for payment of any amounts that arose as a result of their occupier's liability. It shouldn't be foisted upon the other condominium owners. It should be something that the corporation can put a common expense lien on for as well.
Mr Andy Wallace: Good afternoon. I'd like to look at section 28(2), notice of candidates. We recommend the deletion of this section, since non-directors will not usually be aware when the annual meeting is being called and this gives the existing directors a better chance at re-election.
Notice of owner-occupant position: Delete section 28(3) and section 51(6) in order to remove the concept of election of one director to the board by the owners of owner-occupied units. This protection is unnecessary since resident owners will almost always elect a resident owner to the board and this provision will cause burdensome administration and further disputes at meetings.
One of the top issues is this one related to re-election. We'd like to see this provision deleted, requiring a director to step down if he or she has held office for six consecutive years immediately preceding the re-election year. This provision is very unpopular and will cause a loss of the best and most experienced directors in most cases.
As Bob indicated earlier, we've looked at condominium corporations in many a municipality, and I really don't think that restriction is on municipalities or any forms of government. Quite sincerely, I have two corporations at the moment that are unable to obtain a full slate of directors. This could end up with my having no directors in some corporations.
Removal of directors: Clarify the wording by referring to "affirmative votes by the owners of more than 50% of all the units of the corporation cast in favour of removal of such director." This will clean up the problems we've had in the past of whether it's a majority of the owners or a majority of the owners at a meeting.
Liability of directors: Officers should avoid liability for breach of a duty on the same basis as directors and should therefore be referred to in subsection 37(3). We have a couple of boards where the officers are not members of the board; they have been appointed by the board to act on their behalf.
Indemnification: Representatives appointed by the board to a committee may not be directors or officers but they should also be indemnified. Remove reference to "executors, administrators" and instead refer to "estate trustees." This is technical.
Section 40(9), non-compliance re disclosure: Subsection 40(8) says that disclosure compliance is OK. We need a provision that says that non-compliance with disclosure requirements makes the director or officer accountable for damages suffered by the corporation and any profit from the transaction or contract. Moreover, the contract or transaction should be voidable at the judge's discretion.
Mr Gardiner: OK. I'm going to hit two provisions. Section 43(1) is about turnover meetings. Theoretically, people think the owners are running the corporation, but that's not what happens a lot of the time. The best declarants will make sure that the owners take over control of the board of directors. The declarants we have most trouble with are the ones who make sure they maintain control and don't let the owners take over control at the turnover meeting. In section 43(1), the important point to avoid rip-offs is to let a majority of the owners be the directors on the board at the time of the turnover meeting.
Another important section is section 44, on performance audits. That's the engineering study that's done in a new building. It has been severely limited from the current practice, and it's going to cause millions and millions of dollars worth of costs for owners, because these performance audits don't cover the negligence aspects; they only cover those very limited aspects on warranties, which we have little respect for in the industry. There is so much that has to be done. Under 44(c) of our brief, we hope you'll look at covering negligence claims, which have much better recoveries.
Section 44(5)(a) limits the scope of performance audits. We say they should do the usual, which is to inspect all the components, not just that little list. There are a lot of other things that are problems.
The Chair: Thank you very much for your very comprehensive presentation. I'm sure members and staff will have a look at this and address your issues in the amendments that will be brought before the committee.
Mr George Barycky: Permit me to introduce myself. I am George Barycky. I'm here representing the Canadian Condominium Institute, which is commonly referred to as CCI. My background is that I'm a condominium owner, have been since the mid-1980s. I am the president and a director of my own condominium corporation, which is a high-rise in Mississauga. I've held that enviable position since the mid-1980s. To boot, in my spare time, I practise law and have been doing so since 1973. I have been involved in the condominium industry since that time through former partners of mine, one of whom wrote one of the very first definitive texts on condominium law.
I'm speaking today on behalf of the Canadian Condominium Institute. CCI has been very active in the Condominium Act. Members of this committee will know that much of the wording in the amendments that came to the act and the history of this current bill has been -- and I don't want to be terribly presumptuous -- drafted to an extent by submissions from CCI.
In submissions on this bill, we have joined forces with the Association of Condominium Managers of Ontario, ACMO, which you heard from just before me, and we've done a joint submission to you. Numerous hours and efforts have been expended on this preparation, all on a voluntary basis. CCI's input has come by way of its chapters in Ontario. It has chapters in Ottawa, the Golden Horseshoe, London and the greater Toronto area, and collectively it represents over 55,000 unit owners. So we speak with authority and knowledge on these issues.
CCI itself has conducted a definitive survey of its members and presented that to the former parliamentary assistant, Jim Flaherty, now Minister of Labour, which gave CCI the authority to speak on the amendments and address the issues in the bill which you see before you in the recommendations. We have credibility when it comes to the suggestions that are going to be made to you.
CCI, I think everybody is aware, is the definitive leader in the condominium industry as far as the education of directors is concerned. There's rarely a condominium where you won't find a director who has not attended a CCI director's course. It's a seven-week certificate course intended to permit directors to fulfil their duties and functions in condominiums and unit owners to realize what their obligations are.
I'm going to delve right into the recommendations and continue on where Mr Gardiner left off at section 46, which you might want to follow on page 31 of the combined recommendations. Section 46 deals with owners non-compliance and it deals with requisitioning of meetings. Our recommendation in this section is that the existing wording doesn't limit the period of a requisition. It says that if the unit owner is dissatisfied, he can call a requisition within a certain amount of days. We suggest that there be a cut-off period saying that if there is a dissatisfied unit owner, you've got 45 days to call the meeting; after that the issue is dead.
Section 47: We suggest there be no requirement that materials be copied and provided to unit owners that are not going to be voted on at a meeting. The way the current section reads is that if there's a notice of meeting, you've got to provide copies of everything that's going to be discussed. Not everything that is discussed is going to be voted on, so you're creating massive amounts of paperwork.
Payment of arrears in section 49: We suggest an amendment. Currently, if you haven't paid your condominium fees or are in arrears, you don't get to vote. Some unit owners come, present a cheque, and the cheque bounces the next day. We are saying that the wording should reflect that payment should be received by the condo corporation before a unit owner is entitled to attend and vote.
Owner-occupied units: We're asking that subsections 51(5) to (9) be deleted in their entirety. This whole section 51 dealt with the voting rights and how many unit owners should be represented on a board as opposed to a declarant representative and such. The wording that's currently contained in the bill I think is confusing and will cause a great deal of paperwork and misunderstanding between boards and directors and unit owners. We merely suggest that that whole section 51, subsections (5) to (9), be dropped. There's ample protection and it's rare that you don't find a unit owner sitting on a board.
Section 55 of the bill deals with records. Currently there is no great difficulty in unit owners obtaining records. If a condominium corporation or a property manager doesn't provide records that are requested, the unit owner on two days' notice can make an application to a court and the condominium is ordered to produce the relevant documents. Section 55 creates a problem in that you might have a disgruntled unit owner or an unscrupulous unit owner who comes to the office and says, "I want to see Barycky's file." Now, Barycky's file might have information about my spouse; it will have information about my banking; it will have copies of my cheques; it will have copies of my employment; it will have my car insurance; it will have my unit insurance information -- it might have information that's nobody's business and I think there should be a limit to what's disclosed. We've suggested wording which you'll find, which merely says that confidential matters, the disclosure of which would prejudice the corporation employees, owners or residents, should not have to be disclosed.
Section 55 continues on under subsection (8) dealing with penalty. This is going to be a property manager's, unit owner's, director's nightmare. All you need is one disgruntled unit owner to come and say, "I want information." The unit owner says: "Hey, what you're giving me, I don't like. I want $500." That's what the section says. That penalizes me as a unit owner for an indiscretion that wasn't mine. If you do that enough times in a day, 10 demands means $5,000. It's inappropriate. The section is punitive, it hurts innocent unit owners, it hurts directors and we suggest it be deleted. There is ample provision to make an immediate court application and the court can order costs. The court can also determine what should be disclosed and what should not be disclosed.
Section 57 is a very touchy issue. This deals with the whole aspect of human rights. The suggestion has been made that certain condominiums are over-populated. People move in and, aside from the father and the mother, you have extended family and others, and all of a sudden something that was meant to house three or four people is now housing four or five families. There is a tremendous draw of resources: electricity, heating, wear and tear, water, use of amenities and the like.
This section attempts to control that by saying the board can determine if there's overusage and charge an additional fee for the overusage of those resources, which is perfectly proper. However, this section probably doesn't have a leg to stand on if you don't expand and say that it's notwithstanding subsection 2(1) and section 11 of the Human Rights Code. The commission, under the Ontario Human Rights Code, has very aggressively and vigorously taken the position that anything that even smacks of discrimination relating to family status is going to be knocked out, and this section smacks of discrimination based on family status because: "Why can't I have my extended family in there and why are you charging my extended family more money to use water and electricity? You are discriminating." The Ontario Human Rights Commission will invariably say, "Yes, that's correct, the section is unenforceable." So we urge you, if you're going to have that section in, put in that wording to permit its enforcement.
We then move on to the other one which is adults only. This has been kicking around for many years. Ontario does permit discrimination based on age. You do have adult-only condominiums; they are not illegal. The province permitted this, the province created it, notwithstanding the Human Rights Code. However, a human rights tribunal in a Divisional Court has stated that there may have been discrimination based on age, but there definitely was discrimination based on family status, and on that basis all these provisions that deal with adults only are thrown out.
In the survey CCI did of its members, it was an overwhelmingly supportive response that adult-only buildings be permitted by the province. They were permitted. They are allowed as far as age discrimination is concerned. However, the difficulty is that the Human Rights Commission, when this comes before them, says: "No, you can discriminate on age, but we're going to get you on family status," and that's where it stands now.
In today's lifestyle, choosing a condominium and a home is a lifestyle choice. With an aging population, that population should have the benefit of choice to say: "I want to live in a building where I do not have to expend resources for playground, for supervision, for lifeguards, for the extra wear and tear that youngsters typically bring to a building. I don't want to pay for playgrounds. I have grandchildren and I love them very much -- on weekends". This has been put to us over and over again. The response has always been: "Well, the powers that be will never allow it," but we do urge you to reconsider that, and to assist you, on page 37 of the brief we've drafted the appropriate wording.
Moving on to subsection 58(1), this deals with rules. The way the section is drafted now the board can amend or appeal rules dealing with common elements, but we suggest that it be extended to deal with the assets, facilities and services. It doesn't make sense to deal with the common elements, the hallways. You must be able to deal with the couches, the gym equipment and the like. We urge you to extend the wording as we suggested.
Section 72 is under part V, sale and lease of units. Section 72 deals with the disclosure requirements. We suggested that there be certain amendments and additions to section 72. The first one is that all units should be required to have an information statement. Not only residential; commercial units too should be entitled to the information as provided by the declarant.
We suggest in a new subsection 72(13) that purchasers should know at least up front when they or their visitors will have to pay a hidden amount to purchase or lease a superintendent's suite or guest suite or visitors' parking. Currently some developers, more on the unscrupulous side, will put up a development and not include a superintendent's suite in a 300-unit building. Then, when the turnover is made, they say, "You can purchase the superintendent's suite for $225,000". Or they don't provide enough parking spaces or visitors' spaces, and at turnover they come back and say: "You can buy these spots. They're only $7,500 each, and by the way you need 15 of them." We suggest that this be addressed and we've provided the appropriate wording for you in subsection 72(13).
On the content of a disclosure statement, this is something you heard much about this morning from the declarants and the developers. I'm not going to take a lot of time to deal with it, but I think you will find the rationale in our presentation makes sound sense from a consumer protection perspective. After all, this is a consumer product and that's where the protection should be headed. There's no big deal in complying with the request we've made as fair disclosure to everybody.
Mr Jeff Kratky: Mr. Chairman, members of the standing committee, my learned colleagues, ladies and gentleman, my name is Jeff Kratky and I am the director of policy for the Urban Development Institute/Ontario. With me today is Mr. David George, vice-president of Monarch Development Corp, and Mr Shoel Silver, chief executive officer of the Metrontario Group.
Both Monarch and Metrontario are land development and construction companies that are active throughout Ontario and contribute a great deal to the stock of condominiums in this province. Also they are members of the Urban Development Institute/Ontario or UDI.
UDI has acted as the voice of the real estate development, building and property industry in Ontario for over 40 years. The institute is a non-profit organization supported by its members that include firms and individuals who own sizeable holdings of raw land, apartment units, and both industrial and commercial buildings. Our membership is engaged in all aspects of the planning and development of communities and the construction of residential, industrial, commercial and retail projects. UDI serves as a forum for knowledge, experience and research on land use development and planning.
Today, UDI's members include land developers, builders, land use and environmental planners, investors, financial institutions, engineers, lawyers, surveyors, economists, landscape architects, marketing and research firms, and architects. Together they constitute the collective forces guiding the creation and improvement of Ontario's built environment.
The land development industry and construction industry is a very important part of Ontario's economy, contributing more than one tenth of its total economic output. The condominium sector is a very important part of that contribution.
Mr Shoel Silver: Good afternoon. My name is Shoel Silver. I am chief executive officer of the Metrontario Group. Our company has carried on business in the Toronto area for over 50 years. In addition to other facets of our business, we've built over 1,200 condominium units in the last 18 years. At present, we are actively marketing and building two condominium communities containing a total of 360 units. The value of these two projects is approximately $65 million.
Our company is only a part of a large condominium industry which has made and continues to make a significant contribution to Ontario's economy and society. We provide construction jobs for many thousands, and housing for thousands more. The many townhouse condominium projects in particular allow young families across the province an affordable entry into home ownership.
UDI represents many of these developers, and our condominium committee, on which I have served for almost 10 years, has worked closely with various Ontario governments over the years to ensure that the legislation regulating our industry does not inadvertently handcuff it.
The current Condominium Act has been interpreted by the courts on numerous occasions, and condominium developers are used to the way it works. We therefore did not advocate a wholesale revision. But ever since the issuance by the ministry of the first working documents which have evolved into Bill 38, UDI has sought to give the drafters the insight of our members' experience. Recently our efforts have been combined with those of the Ontario and greater Toronto home builders' associations and the Metropolitan Toronto Apartment Builders' Association. The result has been a joint submission detailing many of our concerns with the current form of Bill 38. I understand that this report was submitted to you this morning by the Greater Toronto Home Builders' Association. That report reflects the positions of UDI as well, and we adopt it in its entirety.
Mr David George: Good afternoon. My name is David George. I am vice president and general counsel of Monarch Development Corp where I have worked for over 12 years. Monarch is the oldest and one of the largest publicly traded real estate development companies in Canada. Monarch was founded in Toronto in 1917. In 1997, the company had revenues of approximately $325 million, pre-tax earnings of $42.5 million and, following payment of over $14.7 million in corporate income taxes, after-tax earnings of $27.782 million. Monarch has been listed on the Toronto Stock Exchange since 1949 and we are proud that our shareholders include several major public service pension funds.
Monarch's business is focused mainly in the residential sector. In 1997, we closed 1,319 homes and building lots. In Ontario, we operate over 35 separate housing developments stretching from London, St. Catharines, Burlington, Toronto, Markham, Whitby to Ottawa. Monarch is also a major home builder in Florida, Houston, California and Georgia in the United States.
As the recipient of the Ontario New Home Warranty Program's Ernest Assaly Award in 1997, Monarch is presently Ontario's top-rated home builder for quality of construction and after-sales service. Monarch has been an excellent-rated builder in the Ontario New Home Warranty Program's large builder category every year since the designation was established.
Monarch has been building condominiums in the Toronto area since 1972. Most of those projects were townhouse condominium developments of between 10 and 40 units. It has only been since 1994 that Monarch has entered into the high-rise condominium sector of the industry.
Within that time the company has grown to become the third-largest high-rise condominium developer in the city of Toronto, and presently we have seven projects either on the market or under construction comprising 1,287 suites in total and representing an investment, by early 1999, of over $120 million.
Our projects include the 276-unit Queen's Harbour project, presently under construction on Toronto's waterfront. Also under construction is the first phase of Kensington at Old Mill which is a 60-unit building adjacent to the Old Mill subway station. The second phase, a 65-unit building, is due to begin in early 1999. We have a 19-storey, 226-suite building under construction at Finch Avenue and McCowan Road in Scarborough and have finished working drawings in respect of a 323-unit, 23-storey building in the Yonge and Sheppard area in North York.
Condominium construction is costly and complex and each of these projects employs a substantial number of tradespeople and utilize large volumes of construction materials manufactured mainly in Ontario.
As members of the committee may know, the process in high-rise condominium development is to pre-sell approximately 60% of the units in a building before financing for its construction can be obtained. This involves a significant upfront cost in securing the land, preparing legal documents, establishing a sales centre and marketing the units to consumers, whose deposits, by the way, are ultimately fully insured by the builder. We then proceed to construct the building which may cost upwards of $40 million on the back of $6 million to $8 million in total deposits. Obviously the company, our shareholders and our lenders are relying on the strict enforceability of contracts in making such a large investment and long-term commitment.
Condominium sales involve an immense amount of disclosure to buyers who enjoy the protection of a 10-day cooling-off period when they buy a unit, and the benefit of extensive information concerning the operation of the building and a guarantee in respect of its first-year budget. I am holding up a copy of a disclosure book from one of our developments, and as you can see, this is printed on both sides, it involves compiling a great deal of information to assist buyers with their decision to buy.
Monarch is a strong supporter of the joint industry position paper on Bill 38 submitted to this committee earlier today. Monarch has concerns with respect to subsections 75(3) and (4) of the draft act relating to "significant change." Unlike "material change", the term "significant change" is not defined. The implications with respect to disclosure or non-disclosure of significant change are not clear, at least in my view. Monarch's concern is that this sort of provision will open up an entirely new area of litigation among buyers and introduce a new level of uncertainty for no discernible benefit. This sort of uncertainty will make it difficult to commit the type of resources required to build a high-rise condominium development. It will also make obtaining financing a difficult proposition. So we support the position that sub-sections 75(3) and (4) be deleted.
As the joint position paper also sets out, there are a number of provisions relating to additional disclosure which raise concerns through their drafting. For instance, Bill 38 requires disclosure to a purchaser of whether or not their common interest expenses differ from another unit of the same type. There are a number of legitimate reasons for a difference in common expenses among units of the same type, as they can differ in size or design, or there could be balconies or other amenities. We believe the appropriate step is to amend this provision by clarifying that this requirement is necessary for units of the same type, size and design.
There are also requirements at various sections of the draft act to list all other agreements that apply to the property and provide a significant description of all significant features of all agreements or proposed agreements. We believe these requirements are excessively broad and onerous. There are many agreements that apply to condominium development that do not need to be disclosed to purchasers since they do not relate at all to the purchase decision.
For instance, private financial agreements like mortgage commitments, agreements of purchase and sale in respect of the land, construction contracts, licensing agreements and agreements with the Ontario New Home Warranty Program are not really relevant to a buyer purchasing a condominium. Moreover, there are often old agreements registered on title at the time the purchaser may enter into an agreement that may apply to the property but will be removed by the developer long before there is ever a conveyance of the unit to the purchaser.
In this regard, I know that our Queen's Harbour site on Toronto's waterfront is subject to a marketing agreement entered into by Harbourfront, Molson Breweries and Ford of Canada. The agreement ultimately does not apply to the project and will be deleted from title well before closing. Under Bill 38, Monarch could conceivably be required to list that agreement and summarize its contents for the purchaser. That serves no purpose and will only add to the expense in marketing and development.
We have a similar situation in the Kensington at Old Mill. The Kingsway community where it's located was developed many, many years ago. There are numerous agreements on title which go back to the early 1900s. As we move along with the project, we are having the agreements deleted from title one by one, but under the proposed regime of Bill 38, we could be required to disclose and summarize each one although they have no bearing whatsoever on the ultimate development of the project.
There are also areas in the draft legislation where changes may take place in a project which are beyond the declarant's or developer's control. For example, under subsection 98(4) the corporation can make changes to the common elements with a 66% vote in favour. As such, a developer could be marketing units in a building that is completed and registered but where not all the units have been sold. If such a change took place, it could give rise to rescission rights among buyers. We believe a new section should be added in the disclosure section which clarifies that such changes do not constitute a material change.
Another area of concern is in respect of the new requirement of a performance audit. We recognize that the key objective is to ensure that all of a condominium corporation's potential warranty claims on the Ontario new home warranty plan are maintained. The proposed performance audit regime unduly complicates this objective and duplicates reviews already conducted under the Ontario new home warranty plan's bulletin 19 requirements and the technical audits commissioned by a condominium's board of directors.
We submit that this requirement should be replaced by a general binding legislative requirement that condominium boards take all necessary steps to maintain warranty coverage under the Ontario New Home Warranty Program. If the government feels there is a need for detailed requirements, these are better left to the Ontario New Home Warranty Program through its policies and regulations or in the regulations under this act when it ultimately becomes law.
First, there's the question of transition and how you deal with projects that are already being marketed but will not be completed until the new act is in place. Bill 38 would exempt condominium corporations that are created as a result of these projects and protect condominium management etc, but it doesn't seem to deal with the situation of the relationship between developer and buyer. Are we subject to the new disclosure rules or the old disclosure rules, the ones that were in place when we began marketing or the ones that were implemented afterwards? That kind of uncertainty can be changed, and we've proposed changes in our written report that would cover that.
The Condominium Act, as proposed, introduces new forms of condominiums: phased, common element, vacant land and leasehold condominiums. We think these are good opportunities for the industry to be responsive to market needs, but, as drafted, there are problems with each of these.
Phased condominiums in particular burden the developer at the start of a phased condominium with huge disclosure requirements on future phases, where the market will determine what he builds but up front he has no final idea. He wants to be sensitive to the market as it evolves. There are serious penalties for the developer if he guesses wrong in his early disclosure. These things, again, can be changed in drafting, and we've made submissions in our written report that would cover these things. The other new forms of condominiums similarly have drafting problems which we think can be dealt with.
On behalf of Jeff and David, I'll conclude by saying that the development industry has become used to the Condominium Act. We believe in regulation. We believe in workable regulation. We urge the spirit of a balance of regulation and opportunity which serves all of Ontario to be carried forward when the bill reaches its final form.
Mr Rudy Fliegl: Seated on my right is Mr John Deacon of the condominium law firm of Deacon, Spears, Fedson and Montizambert. John has been involved over his career in litigating telecommunications disputes between suppliers and condominiums. Next to John is Mr George Sauvé, president of YCC 226 in Thornhill -- Thornhill Summit, I guess you're called. George is also the president of MARCO, the Markham Association of Residential Condominium Owners, which is on the agenda later today. Seated on my left is Mr David Dunn of the Greater Toronto Area Condominium Association. David and his wife are also involved in their own condominium in Etobicoke. Next to David is Bob Querengesser from Thornhill. Bob is a member of his board at YRCC 601 and he also is part of the Richmond Hill Association of Residential Condominium Owners.
My name is Rudy Fliegl. For the past 15 years I have chaired the Condominium Cable Communications Committee, sometimes known as the C3 committee and, in brevity, C3. I am also president of my own condominium, YCC 274.
I have introduced the team that is with me. I'm sorry, I missed one individual, Mr Francis McGlynn, who is a past president of Canada's largest condominium, Crescent Town, which has 1,450 units. Our other members could not attend today.
The C3 committee was established in 1984 by concerned Toronto area condominium homeowners and evolved out of earlier individual efforts by our members. We are admittedly a single-issue condominium group dedicated solely to seeking fairness in the delivery of telecommunications services to residential condominiums across Canada. While our usual contact is with the CRTC, the Canadian Radio-television and Telecommunications Commission, over the past eight years we have been involved in the telecommunications provisions in various drafts of Ontario condominium acts by the three parties. In this case, our specific interest is section 22.
We believe Bill 38 should not be delayed any longer. However, we ask you to read and reflect upon the appended background on telecommunications sweetheart deals that we offer and refer to as "The Sins of the Past." We would encourage you to read these. It'll give you a good fix on what's been going on over the last three decades. Once you see and have reviewed this background material, we believe you will see that our recommended minor changes and additions are both fair and reasonable.
We examined section 22, we tested it and we found the following: Condominium developers can still make self-serving telecommunications sweetheart arrangements that will be zero risk for them. Where else in business do you find such a thing? Section 22 also allows developers to now act alone -- they no longer need their cable partners -- to invite the highest bid for installations in parts of restricted-use common elements for third-party communications control unit use or otherwise and they can then execute a telecommunications arrangement that will also be zero risk.
Bill 38 has few provisions to significantly change the many past sins caused by yesterday's sweetheart deals in the existing condos in this province. Although Bill 38 is a marked improvement over other versions of proposed Ontario condominium acts, it will not lessen the impact of the sins of the past. Furthermore, in newly constructed condominiums there is nothing to stop the developer/
A CCU, communications control unit, intrudes into parts of a condominium's restricted-use common elements and can include conduit risers and hall equipment cabinets. Most commonly, it has included rooftop antenna space. In a predicted bidding war, the developer can then accept the bid which provides the greatest profit, regardless of the interests of future condo owners. A telecommunication sweetheart deal is created and all that remains is the appropriate wording in the declaration, which is also prepared by that developer.
These events are possible because Bill 38's section 22(l) definition for "telecommunications agreements" defines these as "grant or transfer of an easement, lease or licence." Then, under section 113(4), "other agreements," it prohibits an easement from being terminated by resolution of an elected board within the 12 months following a condo turnover meeting, unlike the right to terminate other developer sweetheart deals. Moreover, a telecommunications agreement for cable TV services, say, only becomes non-exclusive and subject to termination 10 years later. Thus, under section 22, the awful events of the past can be repeated.
The builders of condominiums believe telecommunications infrastructure expenses are too high for them to shoulder alone and would argue telecommunications sweetheart deals create lower condo unit costs. They do not say that they see CCUs as an added revenue stream. On the other hand, the providers of services, the other sweetheart deal partner, the local cable TV licensee, would argue they should have the right to recover their costs invested in infrastructure through long-term telecommunications service agreements. But in most cases, licensee infrastructure costs are very quickly paid down and installations are largely built into prevailing cable rates. There are also, in addition, the CCAs, the capital cost allowances. The rest for them is absolute gravy. Naturally, neither sweetheart deal partner will admit telecommunications agreements in multiple unit residential condo dwellings are very, very lucrative for them.
C3 believes such specious arguments are pure nonsense. We would argue that telecommunications is no different than any other system whose infrastructure must be built into a condo unit's cost. As examples, we suggest hydro, water, gas, elevator or any other service. None of these allow entrenchment in the condominium by the service provider as telecommunications does. A licensed cable TV provider, a licensed telephone service, another telecommunications provider or a third party that bids the highest benefits the most under Bill 38's section 22, but elected condominium boards and the owners get shafted again.
Consumers of condos will again be uninformed, and it is business as usual under an environment permitted by section 22 unless some changes are made. Bill 38 does very little for existing condominiums that have been abused over the years by licensed cable TV operators. Since many of these deals were registered on title, the condo would incur legal costs to have them removed. In the case of deals registered on title and made in perpetuity, and Bob Querengesser's condo is an example of this, C3 believes significant legal costs will be a certainty. That said, over the years the cable TV giants have denied many condos delivery of bulk-supplied services, and we note cable is now encouraging this same thing.
Bill 38 does not ban sweetheart agreements, and we strongly believe telecommunication sweetheart agreements cannot continue to be a risk-free ride for condominium developers who make such deals. If there is the threat of cancellation in the first year after turnover of a newly built condominium, there will be a strong incentive to treat elected turnover boards fairly. Then, telecommunication sweetheart agreements that benefit developers and third parties only can be mitigated. In addition, there is nothing in section 22 that rectifies the sins of sweetheart deals in existing condominiums. Accordingly, C3 recommends a number of minor changes and additions to Bill 38. These are shown on the next page, and we have underlined them for emphasis.
Let me go down to the bottom of page 5, section 113(4). We're suggesting to you that under this section a telecommunications agreement can be an easement and the turnover board cannot veto that easement in the first year of operation. If you change that ever so slightly by saying "excluding telecommunications agreements under section 22" and then adding the rest of that section, we believe that would be a strong incentive for fairer deals that benefit all of the parties, if we're going to have these doggone things.
Moving up to section 73, we believe there should be a complete disclosure of the nature of any telecommunications agreement and the likely impact of it on any new condo created after this act comes into force.
Then at the top, we've suggested that the definition of "telecommunications" should be expanded ever so slightly to include the fact that it could be either broadcasting or interactivity, and that would make it complete.
With respect to 22, we believe a new section should be added, 22(d). Sections 22(c) and (d) will allow for situations where a condominium is either moving to a bulk service agreement which has previously been denied by a service provider or the condominium has suddenly recognized that it is providing a lot of discretionary service that it ought not do because there's nothing in the act that allows this and they want to provide basic only service. Incidentally, the cable industry now provides basic only service to condominiums, something it has denied over the years. They have just simply loaded us up with extra channels and it only takes one owner to stand up at an annual general meeting and say: "Why is the board paying for this? I don't want you to pay for Arts and Entertainment. I don't want you to pay for the food channel or the golf channel or something. You're using my common element fees in a way not permitted by the act." Then the board has a terrible problem. So what we're suggesting is that by some manipulations between 22(c) and (d), it will meet both requirements and it will allow boards some flexibility.
Mr John Deacon: We've heard several times about what is disclosure. For example, a CCU, a communications control unit, has to be referred to in the declaration which has to be disclosed to purchasers. But if a purchaser who doesn't understand all the ins and outs of easements and registered restrictions and parts on a reference plan which are referred to in it and a conduit and certain rights that go along with it, the disclosure is literally meaningless. They don't understand that they're essentially giving up their right of choice of a communications system, and they're giving the developer the gatekeeper role in making the best deal possible with whatever supplier is there, whether it's the cable or perhaps Direct TV, and making the profit themselves. So, yes, it's disclosed, but the impact of the disclosure is not really understood, other than by a very small and specialized minority. Frankly, purchasers' lawyers would be unaware and unable to explain in most cases to purchasers what is actually disclosed.
We're coming at this backwards unfortunately. It's a situation where purchasers' rights should be to take over their entire condominium property. Well, it's eaten away by sweetheart deals which the condominium board inherits and it's eaten away now by property rights being retained by the developer. They're all disclosed, but still, the rights of the owners inheriting their own condominium that they're buying are slowly being eroded, and we're trying to slowly put them back or put restrictions on these erosions. Disclosure is only one small part of it. The other part is actually preventing this kind of erosion of purchasers' and condominium owners' rights.
The Vice-Chair: I'd like to call upon the Greater Toronto Area Condominium Association, Christine Dunn and Dave Dunn. Good afternoon and welcome to the standing committee on general government. For the purposes of Hansard I'd ask that each of you introduce yourselves. Please begin.
Mr David Dunn: Good afternoon, ladies and gentlemen, and thank you very much for the opportunity to make this deputation to this committee. Accompanying me from the Greater Toronto Area Condominium Association are Christine Dunn, Mr Geoff Pacey and Ms Rosette Kertesz. We also have Marilyn Bird and others who were unfortunately unable to get off work today to join us.
May I start off with a little interactivity and ask by a show of hands whether any of you live or have lived in a condominium. Just three. Well, the paucity of livers in condominiums demonstrates one of the problems that we have in getting across --
"Condominium ownership, whether it involves residential or industrial property, has a dual nature. A condominium owner holds negotiable title to his own unit and at the same time shares with fellow owners the title and cost of operation of the balance of the property constituting the condominium.
"The term 'condominium' does not refer in any way to the physical structure of the building or building complex. Residential condominiums, for example, can be high-rise or low-rise apartments, townhouses, detached houses, stacked townhouses, any configuration of housing you can imagine. What makes them condominiums is not their physical structure but the way in which owners have agreed to share the ownership of common property while retaining individual ownership of the property which constitutes their own unit.
"All condominium projects consist of two parts: the unit, which is individually owned, and the common elements, which are shared and jointly owned by all of the individual owners as condominium corporation members."
A little of our history: Our group began in one building of our complex and then grew to three buildings and then the corporation next door, some down the street and now from Scarborough to Oakville. We've helped groups in London, Hamilton and Burlington as well, and joined with Richmond Hill and Markham groups in presentations and consultations. I'm pleased to see George Sauvé and Malcolm Stanley are on for MARCO soon after us.
We own our own units and represent other such owners and boards of directors over a wide geographic area. Almost 20,000 condominium dwellers are looking to us to represent their heartfelt views. We have all waited patiently for over 20 years for amendments to the Condominium Act to improve our quality of life. We are now less patient and implore you all to achieve third reading and passage of Bill 38 into law now.
I should like to especially acknowledge Mr Doug Ford of Etobicoke-Humber, my MPP, who introduced us to Mr Jim Flaherty of Durham Centre, his then seatmate in the House before Jim was elevated. Jim graciously welcomed the GTACA, as representing the interests and concerns of many individual condominium owners, to the ministry table to join in discussions with other stakeholders in reviewing this existing act. We are also indebted to Mr Mike Colle of Oakwood riding and Mr Tony Martin of Sault Ste Marie for their much-appreciated co-operation in helping get the bill this far, and of course Minister David Tsubouchi of Markham. These individuals will all be long remembered by our membership for their contributions.
Mrs Christine Dunn: My name is Christine Dunn. We would like to make sure that you understand that what we hear most often from condominium owners in Ontario are their concerns regarding their rights, the protection of their rights and the absence of certain rights. Our concerns are about things such as the unresponsiveness of a board that has been elected, a board that could have been in place for 20 years and no longer feels it is accountable to the people who put them there.
We have an aging population who are not as culturally inclined to challenge authority. We have a lot of widows who are in the position of having to make decisions now that they weren't groomed for in their early years. For them to deal with a board and to ask for information and to be stalled off literally for 14 months before they receive information, that is where we had people raising issues about the power balance between the board and the owners. It's the owners who are the consumers, the owners who take on all the financial burdens as well as all the heartaches and headaches that go along with condominium ownership.
The fact is that it is simple in the eyes of those who are within the legal profession and it's easy for them to say, "All you need is a court order," but it is not a simple matter for the average consumer. The average consumer should not have to go to court to be allowed access to records that are legally entitled to be viewed by him. We have no qualms about restricting what those records are but we feel that that right needs to be upheld. We also want to protect the equity of our homes.
As has been mentioned by others, a condominium home is a lifestyle decision. Besides the obvious financial commitment, you also require a group of diverse individuals to agree to live together under a common set of rules. They share certain costs and they maintain a certain lifestyle. This concept works well when the unit owners are the unit occupants, because they are all equal stakeholders. They have the same vested interest in maintaining their property and upholding this agreement.
The concept of home ownership in a condominium, however, becomes derailed when there are too many units that are not occupied by owners. Home ownership then can become a nightmare. I just want to make that obvious to those who have never lived in a condominium by giving you a scenario.
If you have a home and you have acquired a mortgage to get it, you have all the attendant responsibilities of home ownership. You've been paying your mortgage for years, and perhaps you can remember that there was some belt-tightening that had to be done so that you could afford to buy your home. Imagine if one day you woke up and, without having moved, without being relieved of any of your responsibilities as a homeowner and without your consent, you were now living in rental accommodation. This is the situation that thousands of condominium homeowners face today and that many more will in the next few years, and those homeowners were not party to that decision. Please don't deny us the right to be a party to that decision.
We suggest to you that there are proven solutions to that problem that have been in effect for years in British Columbia. British Columbia is a model for homeowners having the right to limit the number of residential units that may be leased in their corporation. This cap on the number that are leased has been successful for many years. It's established in bylaw and it doesn't restrict the rights of owner-developers. We can address the specifics of that legislation in the question period.
Our legislation could contain safeguards to protect the interests of the declarants, current and future tenants, current non-resident owners and, finally, put into law the needed protection for the interest of the owner-occupant, the consumer who has bought so that they could live in this home. Those are the rights that need to be protected. Currently that part is unregulated.
We are not proposing that renters be excluded from condominiums, but we are proposing that there be management of that process. Currently we hear municipalities and individuals proposing that rental housing problems be solved by turning to condominiums. If that is an unmanaged process, then people will find that you have a building that has 200 units and there may be 50 landlords. If renters have problems with landlords today, what do you think will happen to the whole system when you have all these individual, amateur landlords operating in a building.
The reason we are bringing up a cap on rental is that it also addresses the issue of overcrowding, in that most overcrowding situations occur in conjunction with rental units. If a rental unit is overpriced, people are brought in to share that accommodation, to share those costs, and that leads to relationships and conditions that were not intended in that building. Buildings were designed and built to a certain occupancy standard. There are proposed rules that will allow occupancy standards to be set by the corporation, but they are cumbersome. We have spent months looking through the building code and the various laws that we thought would give us a clear definition. It doesn't exist. So we propose that you go with a very simple, straightforward proposition such as is used by government agencies right now that says, for instance, if you are providing subsidized housing and you have a group of four people, two of whom are adults and two of whom are children, and the children are above a certain age and of opposite sexes, we taxpayers will be committing ourselves to provide accommodation of X number of bedrooms. You have to have separate bedrooms for those children and you have to have separate bedrooms for those adults. It is a simple formula that is based on the number of bedrooms. It doesn't require an explanation of the relationship between people and doesn't go into any of those issues.
If we don't get relief in this area, what will happen is that people who currently live in condominiums as owners, who look to the condominium concept as the reason for buying in, will find it no longer suits, that they will be left out of that very process. They will be bailing out of condominiums because their interests are not protected. They carry the burden of all the costs and now they are losing control of the processes that create those costs. As a homeowner, why should I carry a mortgage and then be living in a rental building? The two do not coincide.
The other problem we are now facing is that you have the new home warranty program that gives you some protection up front, but what about buildings that have been there for a while? What about those original builder defects that don't show up until you start having to do repair work and you find that rebar is missing, that there are non-existent support beams, that the shelf beams are not where they should be: things you cannot see with the naked eye but which create very costly problems and that the current owners are going to face? These defects were created by the developer at the beginning and have not been addressed. That needs to be addressed.
Mr Geoff Pacey: Thank you, Christine. Our law firm is principally involved in acting for homeowner-controlled condominium corporations. We do not act for developers; we do not act for property managers. I'm disclosing our bias up front.
I think a bit of history is in order, to know where the Condominium Act has come from. If you go back to the 1960s the Condominium Act was originally derived from New York corporate law and New York condominium experience. That corporate law origin is more a business corporation law origin than a municipal corporation law situation where condominiums have evolved to today. Condominiums are essentially like a fourth or fifth level of government. They provide various services -- security services, water, electricity, various other services -- to the residents and in return they collect taxes called common expenses. In essence they are municipal corporations, although they are not called that. Yet in the early years, in the 1960s and 1970s, there was this legacy of a business corporation origin. I think that's at the heart of the problems we face today, at least the more significant ones.
As the corporations evolved there were amendments, back in 1974 and 1975, then lien priority in 1978 and then the major amendment back in 1979. There's been a steady evolution and progression toward a more municipal orientation, in my view, and a more consumer-oriented approach. In the current amendments there are a lot of excellent amendments that carry that further. However, there are some that in my view put us backwards.
I do not think that the two main underlying problems have been sufficiently addressed. I've identified those as the business corporate orientation, and I'll give you an example. I've alluded to the investor control situation in my comments in the submission. We have situations where investors acquire blocks of units in a condominium from a declarant. The condominium declarant is under all sorts of obligations that are of consumer protection origin: having to sell off the units without unreasonable delay, having to turn over the documentation and control to the board at the halfway point of a sale. There are a lot of positive sections in the act which investors buying blocks of units deny, ignore and, in one case I've alluded to in the material, they attempted to misappropriate the corporation's entire reserve fund when they took over the condominium. I know of several situations right now in the Toronto area where investors either dominate or control condominiums to the detriment of the residents who live in the building.
You may say: "They have their remedy. Why don't they hire a lawyer and go to court?" A number of these condominium residents are not particularly wealthy. The investors usually have lawyers and all sorts of financial resources at hand to drag out court cases. So even though the oppression remedy that's being introduced in the statute for the first time will be beneficial, it's a somewhat hollow remedy for people struggling along on a paycheque to get together to hire a lawyer to avail themselves of their rights to exercise the oppression remedy.
The other part of this is the overcrowding issue, and I won't go over the ground that Christine has covered. Overcrowding primarily relates to rental units. In some cases you have owners who are overcrowding the units where they live. But by and large it's tied in with the rental of condominium units. The amendments are good steps in the right direction. There are three amendments, and I've alluded to them in the submission.
The first amendment basically allows the condominium, by bylaw, to adopt the local municipal bylaw dealing with occupancy standards. That remedy is somewhat illusory since the condominiums in most of their general operating bylaws already allude to the municipal bylaws and regulations, and that they must be adhered to as if they were condominium bylaws. That more or less is already there. It's nice to have it in the act. However, the standards of the municipal bylaws themselves are rather lax, so that doesn't really provide much hope. Also, to find out if people are living in a unit to an excessive number, you have to get into the unit. There have been all sorts of real problems gaining access to condominium units. Tenants don't want it and, in certain situations, the absentee owners don't want it either.
The situation with the second part of it, the so-called concept of maximum designed occupancy: When that was introduced into the proposed bill a little while ago, a lot of effort was made, particularly by Rosette Kertesz here, to try to track down with the developers how we are going to define maximum designed occupancy. No one, even from the developers' side, has been able to come up with a satisfactory answer. So that's just thrown out as a remedy but with no backup definition, no real standard.
Mr Dunn: I do want to get across, though, that despite the imperfections, we do want the bill to become law. We just want to clean it up a little. We don't have the big bucks and support services that some of the other deputants today have. They represent developers, managers, lawyers, indeed banks, we heard. But we do represent many thousands of individual citizens who live in condominiums, and to us and to them these are our homes, and we will be there when everyone else goes home. When all the developers and managers and others leave, we will stay there and fight for our homes. Thank you very much for your kind attention.
Mr Chris Lloyd: My name is Chris Lloyd, principal of Chris Lloyd Development Management Inc. I am also chairman of the Greater Toronto Home builders' Association, Metropolitan Toronto Apartment Builders' Association, Ontario Home builders' Association and UDI joint committee on Bill 38.
Chris Lloyd Development Management is a consulting firm involved in the design and marketing of residential condominiums such as One Post Road, Windsor Arms, the Belvedere, townhouse projects in Mississauga and recreational properties in Muskoka. Before forming Chris Lloyd Development Management Inc, I was a development manager with Menkes and Bramalea.
I am here today to present my views on Bill 38 and to stress my support for the views expressed in the joint submission of the Greater Toronto Home builders' Association and various associations that you received earlier today.
Completion requirements, clause 8(1)(e): Bill 38 currently requires that an architect and an engineer certify that the building has been completed substantially in accordance with the architectural and structural plans. The current act only requires the surveyor to certify that the buildings have been constructed and defines "have been constructed" in the regulations.
My concern is with "substantially in accordance with the plans." This implies a greater degree of completion than is currently required. It could result in substantial performance requirements as defined the Construction Lien Act being implied. It could result in buildings not being registered as condominiums until all work shown in the drawings is 95% complete. Purchasers would have to pay interim occupancy fees, rent, considerably longer than current practice if this goes through. Increased duration of occupancy fees will be a major discouragement to future condominium purchasers. It'll be bad for the industry because it's going to increase the length of time that people will have to pay occupancy fees.
I feel that addressing this issue in regulation by defining the term "substantially in accordance with the plans," would be misleading to purchasers who read the act and are interested in it. My recommendation on this is that the section be changed to "a certificate of an architect that all buildings have been constructed and, if there are structural plans, a certificate of the engineer that all buildings have been constructed." The term, "have been constructed," should then be defined in the regulations as it is in the present act.
With respect to performance audits, Bill 38 will require condominium corporations with residential units to complete a performance audit prepared by an engineer or architect within ten months of registration in order to establish that there are deficiencies in the common elements which should be submitted as a claim under the Ontario New Home Warranty Program. The current act has no requirement for performance audits. The concern here is that this section should clearly indicate that it requires common element warranties under the Ontario New Home Warranty Program to be maintained by the board of directors of the condominium corporation. This act requires a performance audit even when residential condominiums are not covered by the Ontario New Home Warranty Program, such as conversions or commercial rental condominiums. This could result in false expectations by the public.
The detailed description of the auditor's duties and powers may exceed current practice. This, plus litigation of undefined terms, such as "expert," could greatly increase the cost of the audit, which would be paid for by the purchaser. Legislating the auditor's duties and procedures will make it extremely difficult to incorporate frequent technology changes. Unreasonable boards may use the performance audit as a basis for frivolous technical audit claims. This will conflict with the Ontario New Home Warranty Program's efforts through bulletin 19 to implement a program that is designed to reduce the number of deficiencies in a technical audit and to address the conflict that often occurs between the developer and the board over the technical audit results. Currently, high-rise projects complete a final audit report of all field inspections mandated by bulletin 19 of the Ontario New Home Warranty Program and a technical audit request by the board. This act introduces a third audit, which will ultimately be paid for by the purchaser.
My recommendation for this section is that the title of this section be revised to address the preservation of claims under the Ontario New Home Warranty Program, that there be a general, binding legislative requirement that boards undertake a technical audit within one year of registration in order to ensure that the warranty coverage is maintained and, should the term "technical audit" need to be defined or expanded, that it be done in the regulations, so that it can be changed should that prove problematic in the future.
What I've tried to do today is indicate two of the issues that our joint report has addressed. These were the two issues that concerned me the most. You have already heard one that is of serious concern to us, which is the performance audit. But there are also a number of other issues that are basically technical drafting issues, which I think also need to be addressed. If they are not, they will have an impact on the way the condominium industry works and could, I think, not advance the industry as it should be doing in the future. I thank you for your time.
Mr Blain K. Morin (Nickel Belt): Thank you for your presentation. In talking with my colleagues, our main area of concern is regarding disclosure issues and how we protect purchasers in defining disclosure issues and how we get them to provide more information for purchasers as well as clear requirements for developers. In looking at your submission on section 8, I may be reading something into it but I guess I'm just concerned when we start talking about purchasers and delaying occupancy of buildings, which might have an effect on disclosure. Are you getting at that you don't believe disclosure should be there or are you limiting disclosure? Maybe you can clear it up for me.
Mr Lloyd: The section 8 we are addressing deals with what's required in the declaration and description, and it really becomes more of a completion requirement because it requires the description to contain a certificate from an architect or an engineer that the building is complete. But in this case it requires that the building be substantially complete in accordance with the plans.
The big change here is that at the moment, under the current legislation, the building needs to be complete only to the extent that it is dry-walled and the demising wall and surfaces are there. The reason for that is that what we're doing here is creating property, and the intent was to make sure that the structure was in place, that the boundaries were there so that if somebody went out to define the vertical boundaries of a high-rise condominium they could find them, that they were there in place, because you can't put a bar in mid-air. That was in the original act. It called for the structure to be there. That was broadened in the regulations to include architectural drawings and other drawings. But that was done through regulation. The act alone deals strictly with structure, and the main concern was that the structure was there so that monumentation could be maintained.
Once monumentation was there and the basic perimeter of the building was there, then the units were there and people could proceed to occupy. Developers generally move people in once the first 10 floors of a building are completed. If it's a 20-storey building, they have to wait until the 20th floor is sufficiently defined to be registered. They're paying interim occupancy until that point is complete. But if you take this reading, where it says the building has to be completed according to the plans, the concern I have is that that would probably mean that 95% of the building has to be completed. That means everything within the building to that level -- all the landscaping, all the other things -- and the concern would be that the occupancy time would be extended and you'd have to pay interim occupancy longer.
What we in the industry would like to do is reduce the interim occupancy time that people have to pay, allow them to start paying down their units, paying the principal and interest on their units earlier, not delay it any longer. We think it's more important for them to get in, especially once they've moved into the unit, to immediately start to pay down the principal and interest. If we could get to the point where, provided the physical requirements are there, we could register the unit, that's what we would absolutely prefer, so there's not the stigma between freehold and condominium with respect to occupancy. The ideal situation is that the purchaser moves in and starts paying down his principal and interest right off the bat. Does that help to clarify?
Mr Lloyd: The developer basically becomes neutral once the unit is occupied. The interim occupancy fees are paying his interest on the mortgage and what have you. He doesn't receive any profit at that point in time, but he is no longer paying interest on the construction loan as people take interim occupancy. He becomes neutral at the point of interim occupancy.
Mr Colle: The one question I have is about performance audits. The present act does not require performance audits and one of your concerns in part II is that "This act" -- I guess you're referring to the new act --"requires a performance audit even when residential condominiums are not covered by the Ontario New Home Warranty Program, such as conversions.... This could result in false expectations."
Mr Lloyd: The intent of this act, if you read further down, is to actually have it submitted to the Ontario New Home Warranty Program. There is nothing stopping a corporation from doing a technical audit at a later date or at any time. I think on commercial rental buildings you've got investors who are looking at it. They're paying the cost of this. This is a cost to them. Performance audits are being paid by the first-year budget, so we will budget the cost of the performance audit into the first-year budget. It will be paid through the interim occupancy fees or the first-year common expenses, so this is a cost to them at the time.
I think what you should expect is that a corporation at any time can still do a technical audit on the project. My concern is that there is a reference to the performance audit being done, and the main reason for a performance audit being done was to protect the common element warranties. That was the stated reason for performance audits. That's sort of supported by the fact that later on in that section it requires the performance audit to be given to Ontario new home warranty as a claim requirement, but in the case of rental condominiums and conversions, there is no warranty from Ontario New Home Warranty Program. The expectation of Ontario new home warranty that can be created by this is a concern.
Mr Malcolm Stanley: My name is Malcolm Stanley. I'm a past president of the Markham Association of Residential Condominium Owners. The gentleman to my left is the current president, George Sauvé. We are submitting this on behalf of three condominium associations, the Markham association, the Richmond Hill association and the Vaughan association, of residential condominium owners. These associations represent over 10,000 units inhabited by many thousands of owners and residents.
We're pleased that the ministry has seen fit to revise the Condominium Act and applaud the many improvements in the new version. We do have reservations, however, about the tendency of many sections to restrict condominium boards unnecessarily and unreasonably in the discharge of their duties. We draw your attention below to these sections and point out the very real possibility that, if they are enacted, the boards will be so emasculated that they will resign, and the ministry will be required to appoint administrators to run the province's condominiums.
To illustrate, clause 98(2)(c) would require most high-rise condominium boards to call meetings of owners six, eight or a dozen times a year at a cost of almost $1,000 each. To call a meeting in our case costs at least $800. The section says that any condominium that is going to spend $1,000 or more on altering the common elements must call a meeting of owners to get approval to do that. In effect, this would render the board useless and turn the operation of the corporation over to the owners. After the first few meetings required under this section, the owners wouldn't respond and the board would be forced to resign. Furthermore, subsection (3) of the same section would see the board sending out innumerable notices and generating a paper flurry that would overwhelm the owners and necessitate the hiring of extra secretarial staff.
Subsection (4) would render the whole exercise pointless because it's virtually impossible to get a 66% turnout at meetings, except perhaps at the annual general meeting in some corporations. This is because of the tendency of most owners, having elected their board and given them their confidence, to leave matters in their hands, and the fact that at any given time approximately 25% of the owners may be at the cottage in the summer or down south in the winter, and half of the remainder may be either unwell or in hospital -- there are many elderly people in condominiums -- or they may be of foreign extraction and normally reluctant to participate in the public affairs of the condominium or they may be unfamiliar with the language and/or they may be reclusive by nature, seeing condominium living as a haven where they may lead undisturbed, uninvolved lives.
Another reason we can't get 66% of the owners out is that some owners, many in some instances, are absentee landlords who show little interest in the affairs of the corporation, which is regrettable. In view of the makeup of our populations, therefore, it's understandable that the collection of proxies is very difficult and that getting people to stand for office is very difficult.
Accordingly, you will understand readily that we find clause 31(3)(b) to be offensive, unnecessary and unreasonable. This is the six-year clause, and we feel it's a gross interference with the democratic process and a denial of the right of owners to elect whomever they please. We know of many corporations within our own associations which would have been unable to elect a full board if this clause had been enforced. The question naturally presents itself: Would the legislators at Queen's Park impose the same restriction on themselves, to serve only six consecutive years? Why impose it on us?
We are extremely upset over some proposals regarding the reserve fund and would like to make the point that the act clearly sets out the appropriate conditions for operating this fund, namely, (a) the necessity of commissioning periodic reserve fund studies, (b) the necessity of developing a plan to implement the requirements of the study of moment, (c) the necessity of informing the owners of the details of the plan, and (d) the necessity of replenishing shortfalls in the reserve fund, as required, to implement the plan. This is entirely reasonable, and nothing further need be said. Hence, we see no need for the rest of that section or for regulations which would restrict boards further. Everything is there that is needed.
We fear that those responsible for executing reserve fund studies may be under the impression that it's necessary to ensure that there is enough money in the fund to pay for all foreseeable items, even for the next 30 years. However, as a practical matter, adjusting the amount set aside in a reserve fund is not an emergency problem. Any necessary change can be made once a year at the time the budget and monthly assessments are decided. That would cause less confusion for the owners and allow the owners to express their views on the changes at the annual general meeting.
With regard to levels of approval required for various kinds of decisions, we find that in a democracy a simple majority of those present and voting, if there is a quorum, is generally regarded as sufficient to decide an issue. In the Legislature this is true even in votes on major issues. Yet it appears that the declarations handed down by developers, sometimes with a crippling effect on future boards, are accorded the status of the Constitution of Canada and cannot be amended without the written consent of the declarant. This is outrageous, and the percentages demanded in clauses 108(2)(d) and (e) are totally unrealizable as indicated above. Here you're required to get a 90% approval or an 80% approval. This is impossible the way condominiums act. Therefore, there doesn't seem to be any need to establish different percentages of approval for different issues in the affairs of condominium corporations. If a majority of owners approve a measure, that should be sufficient. However, due to the difficulty many corporations have in getting more than half the owners to attend a meeting, there must be some means provided, such as special proxy forms or forms for approval in writing, so that all major issues can truly be approved by a majority of owners.
It is suggested that the quorum for all meetings of owners be at least 50% of owners in person or represented by proxies and that all major issues, such as rules, bylaws, budgets, spending or borrowing authority, changes to the declaration or description and substantial improvements, be approved by a majority of the owners either in person or at the meeting or in writing. That would make it easier for the owners to understand the process and therefore to actively participate in making the decisions.
The remainder of the items drawn to your attention are perhaps less important. The GTA has referred to occupancy standards, and we would suggest that perhaps the section needs to be aware that there may be cases where the municipality does not have a bylaw concerning occupancy standards and therefore, to cover that case, perhaps the subsection could be added as we suggest, 57(2).
With regard to notice to owners in subsection 23(2), the purpose here is not readily apparent, because a decision to commence a legal action is surely one of the normal responsibilities of a board and there's no suggestion in this section that any approval by the owners is necessary before commencing an action. Therefore, this subsection could be omitted. It should be sufficient to keep the owners informed by including information with other information sent to the owners, for example, in a monthly newsletter. The proposed subsection would add unnecessary delay and expense without benefiting anyone.
We see in the reserve funds studies section reference to "prescribed classes of persons," prescribed classes of everything. Surely the persons authorized to conduct reserve fund studies are competent -- in fact, they must be by virtue of proposed regulations -- to distinguish differences among different types of condominium corporations. We don't see a need to establish in law these differences. The reserve fund necessary for a townhouse condominium corporation will necessarily be different from that of a high-rise corporation, and the persons conducting the study will necessarily know this and take it into account. We feel that there's a tendency here to legislate things that are unnecessary.
Some clauses appear to us to require clarification to avoid confusion and error. I mentioned, for example, subsection 47(10). This seems to prohibit additions to the agenda of a meeting of the condominium corporation under new business. It says nothing may be discussed except what is in the agenda sent out in the notice of meeting. What has happened to the notion of new business and the freedom of people to raise for discussion matters which the board had not recognized as pertinent or important at the time of setting the agenda?
In subsection 95(8) the review required at the board level of reserve fund study seems to imply the right of the board to question items in the reserve fund study, and we would like that clarified and perhaps to challenge the authors of the study before developing the board's plan. Clause 9(a) seems to give the board the final say in matters of disagreement with the authors of the study, and I think it would be well if this were to be clarified.
In this section, "prescribed class," "prescribed times," "standards" and "prescribed class of persons" all lack definition and have ominous overtones. As said before, we fear that too much is being legislated and we are apprehensive about forthcoming regulations which may further interfere with the rights of boards to manage the affairs of their corporations.
In addition to the above, there are two general suggestions which we propose. One is the way in which the proposed act affects existing condominium corporations as distinct from new condominium corporations. Perhaps the arrangement and the grouping of the sections in the act could be altered to separate those sections that apply only to new condominium corporations from the sections that apply to other condominium corporations. That might make it easier for owners to understand the act and, as a result, take a more active interest in the affairs of the condominium.
We're delighted that the ministry has shown a willingness to listen to condominium owners, as the GTA emphasized. There are many, many people who appear to speak for condominium owners but the fact is that only owners speak for owners, not management companies or other institutions, though we applaud their efforts to improve the act. As you can see, there are some ways in which we disagree with what they have said. After all, it's the interests of the consumers, in this case condominium owners that should be of paramount importance. We recognize that the committee and the government has not had a lot of time to look at these suggestions, but we look forward to working with all of you to make sure that the legislation works properly for all parties involved.
Mrs Ross: Thank you very much for your presentation. I just want to point out, and I know you're aware, that the ministry has been working for a couple of years on this legislation, particularly with former parliamentary assistant Jim Flaherty through the consultation process. This piece of legislation is a consensus piece of legislation, trying to find a balance between owners, developers, managers and that sort of thing. I want to talk to a couple of points you raised in your paper. On page 2, you talked about the 66% turnout at meetings. My understanding with the previous act was that representation was at 80%. Is that correct? You were saying you thought 66% would be too hard to attain, that you'd never get 66%, yet previously it was at 80%.
Mr Stanley: No, 50% would be a realizable turnout. But I'm saying that the board should not be handcuffed when it comes to expenditures of $1,000 or more. I can cite for you that in our own condominium in the last year we have had six or eight unexpected expenditures well over $1,000 -- $2,000, $2,500, $10,000. New computers: You have to go to the owners to get approval for that? You'd be forever calling meetings, and no one would come.
Mrs Ross: I want to ask you about the term of directors. A couple of people have raised that in their presentation. You don't believe there should be a set period of time, as you stated, but other people look at it from the opposite point. I think you were here when someone made the presentation that in fact some of the people on the board had been there for 20 years and there was no new blood and they really felt it was important that they have some new people on the board. What's your reaction to that?
Mr Stanley: My reaction is that the electors should not elect them. If they're elected every time they stand for office, that's all the democratic process asks, whether it's in the Legislature or anywhere else.
Mr George Sauvé: Excuse me. With all due respect to the previous comments, they're not exactly lining up for this job, a non-paying job to sit on a board. When you can find qualified people who are prepared to put the time and effort in, believe me, you stay with them. We could cite a dozen instances in our own MARCO group where this applies.
Mr Wettlaufer: It's a clarification. Mr Stanley, regarding subsection 57(2) on page 4, you say that when the municipality does not have set occupancy standards, you want the board to make a bylaw to establish standards. Is the maximum occupancy to be not less than two persons per bedroom or not more than?
Mr Stanley: I can tell you. It's a sad story. The gentleman who was originally appointed to represent the Markham association and Richmond Hill association introduced this because he is at odds with him own condominium board and is suing them. He finds them incompetent and thinks they should not be allowed to stand for re-election. He did this without consulting our two associations, and we have since repudiated him when we found out about it. He no longer speaks for us. That is why he appeared this morning speaking for himself, ostensibly for Richmond Hill. But we assure you that Vaughan and Richmond Hill and MARCO have approved this document. We approve in large part what Mr Gamus said this morning, except that we feel the purpose of this hearing is to point out areas where owners and other groups feel the act could be improved. Mr Gamus seems to think that it should be passed holus-bolus now, and that would include the six-year clause.
Mr Colle: Basically, right now there are no term limits, there never have been, and all of a sudden the act is proposing a six-year term limit. Most of the board of directors are essentially people who are volunteering their time and services. How many hours would you say a week or a month would a director volunteer?
Mr Stanley: This would depend in large part on the function on the board of that director. Now, the president is the one who carries the load. In my case, I couldn't begin to count the hours. There are directors who don't occupy a specific function like secretary or treasurer, but all of those persons spend less time in the business of managing the corporation than the president.
Mr Stanley: We can point to many cases where, if it had been in effect, the board could not have been elected; there were not enough people standing for election, and you could not have constituted a board. The ministry would have had to appoint an administrator.
Mr Sauvé: Excuse me. Can I ask Mr Stanley to comment? Let me cite our own condominium as an example. Our building is 23 years old. We've spent in the neighbourhood of $2 million on major restorations in approximately the last six years. The time that is required is obviously much greater in an older building because you have all of these major restorations. We meet biweekly with the engineering firm and the contractor and our ad hoc committee to oversee these major jobs, and that has been going on for five years. So it would depend on the size and age of the building. As president, I reiterate what Mr Stanley said, that the president is much more involved. I couldn't count, as Mr Stanley mentioned, the number of hours I've spent.
Mr Blain Morin: Yes. I would like to commend you for your presentation as well as indicate that I really agree with what you're saying about re-election of members of the board of directors in condominiums and agree that it should not be restricted to a six-year term. That's democracy. I agree with you.
The Chair: I'm not surprised that M. Morin would say that, because he would have to consult with Mr Laughren, who was here for almost 25 years. With his recent victory in the by-election in Nickel Belt, he's expecting to be here longer than six years.
The Chair: Thank you very much for your presentation. At this point, the committee stands adjourned. I would ask the members of the committee to stay with me for a moment until we go over a few scheduling issues.