Condominium Corporation No 022, 5899 v 499430

Court of Queen’s Bench of Alberta Citation: Condominium Corporation No 022 5899 v 499430 Alberta Ltd, 2019 ABQB 905 Date: 20191128 Docket: 1203 01955 and 1503 07994 Registry: Edmonton Between: Condominium Corporation No. 022 5899 Plaintiff/Applicant - and - 499430 Alberta Ltd., 1293508 Alberta Ltd., and 981338 Alberta Ltd. Defendants/Respondents And Between: Condominium Corporation No. 022 5899 Plaintiff/Applicant - and - 499430 Alberta Ltd., 1293508 Alberta Ltd., 981338 Alberta Ltd., Edith Ann Bullis and Rick Lane Liebrecht Defendants/Respondents

_______________________________________________________ Judgment of the Honourable Mr. Justice M. J. Lema _______________________________________________________ A. Introduction [ 1 ] The corporate developer of a commercial condominium, a corporate unit-holder and the individual behind both corporations appeal a consent order granted by a master dismissing unpaid-contributions actions brought by the condominium corporation against other unit-holders. [ 2 ] The other unit-holders contend that the first group lacks standing to appeal. [ 3 ] I agree with those unit-holders, for the reasons outlined below. B.

Background [ 4 ] The first group, which installed the developer as the corporation’s first (and initially sole) director, claims that the other unit- holders were long ago tagged with contribution assessments, that the assessments were not paid, that those defaulting unit-holders were not eligible to vote in 2013 and 2014 proceedings to appoint themselves as temporary directors, to change the corporation’s bylaw and to later hold elections under which they were ostensibly re-elected as directors. [ 5 ] In 2012, (i.e. before the claimed coup d’état), the condominium corporation had started an action against the other unit- holders for the unpaid contributions.

In 2015, with each side contending it held the throne, the corporation commenced another action against the same (plus other) unit-holders for further unpaid contributions. [ 6 ] In 2018, with the “usurpers” apparently holding the upper hand, the condominium corporation brought an application to discontinue both actions. As the first group sees it, this was off-side self-dealing, with the ostensible new board deciding to release the corporation’s claims against themselves or parties associated with them.

The new board contends that the long-ago assessments were not properly substantiated or otherwise warranted, that the two actions were bound to fail, and that clearing the slate via dismissals was in the corporation’s best interests. [ 7 ] Through much of the first half of 2019, the two factions were in discussions about what should be done about various condominium matters, including the two actions.

In the end (in late May 2019), the “new” board, ostensibly in charge of the condominium corporation, decided to proceed with the dismissal applications, with the consent of the ostensibly contribution-owing unit-holders. [ 8 ] The application came before Master Schulz, who the first group asked for an adjournment.

She declined to grant an adjournment, finding that they would not suffer any prejudice by dismissal of the actions. (In part, she relied on the existence of yet other litigation between the two sides, started in 2016, in which (among other tug-of-wars) the first group seeks to invalidate the 2013 and 2014 elections and bylaw changes and to recover “oppression-like” damages from the new board.) She then approved the consent order dismissing both actions. [ 9 ] The new group appealed that order. The appeal application came before me in morning chambers in July.

After hearing the basics, I directed the parties to provide written submissions, which all of them provided. C. Standing [ 10 ] The threshold question is whether the first group had the standing to appeal the Master’s order. It is common ground that they were not parties to either action.

On one side of each action was the condominium corporation (seeking ostensibly unpaid contributions); on the other were certain unit-holders not including any member of the first group. [ 11 ] The first-group participants are Emilio Giovannoni and two corporations owned and controlled by him – 383319 Alberta Ltd (“383”) and 1203472 Alberta Ltd (“120”) (collectively the “EG Entities” or “EGE”). (I discuss 383’s current status below.) [ 12 ] When the condominium corporation (No. 022 5899 or “022”) was created under the Condominium Property Act (“ CPA ”), the driving forces were 383 (the project developer) and Mr.

Giovannoni (its principal). The first customized bylaws (displacing the default bylaws under the CPA ) provided that the condominium board of directors would consist of one member, namely, 383, with Mr. Giovannoni presumably serving as its proxy. [1] [ 13 ] As noted earlier, EGE contends that 383 tagged the other unit-holders (499430 Alberta Ltd, 1293508 Alberta Ltd, 981338

Alberta Ltd (all three defendants in the 2012 action), later joined by Edith Bullis and Rick Liebrecht (all five defendants in the 2015 action)) with unpaid contributions, eventually suing them for same. [ 14 ] As also noted earlier, it was in the gap between the two actions that the other unit-holders (collectively the “Units”) apparently took control of 022. The pivotal time was late 2013, when (as it happened) 383 had been struck from the Corporate Registry (effective October 2, 2013). [ 15 ] EGE declined to recognize the new regime, at least initially. In March 2014, it arranged for the revival of 383.

In 2015, it directed its then and current counsel, who acted for 022 until at least the board change-over, to start the second action against the recalcitrant Units. [ 16 ] All the while, EGE was, strictly speaking, on the sidelines of both actions: neither a plaintiff (022 alone held that role) nor a defendant (the Units). [ 17 ] Hence the standing question: do any of Mr. Giovannoni, 383 or 120 have standing to appeal the Master’s order, when none of them was a party to the actions which that order dismissed? [ 18 ] The answer is no, as explained below.

Test for appeal by non-party [ 19 ] In two Alberta Court of Appeal chambers decisions, Wakeling J.A. gathered the law on this point. In Peavine Métis Settlement v Whitehead [2] , he outlined his synopsis of the law: [14] An appeal is a statutory right. A person cannot appeal or seek leave to appeal without statutory authorization. [15]

Part 7, Division 6 of the Metis Settlements Act – entitled “Appeals to the Court of Appeal” – expressly states that an appeal lies to the Court of Appeal if the Court first grants permission to appeal. But it does not state who may seek permission to appeal. [16] The Alberta Rules of Court apply but they do not expressly stipulate who may file an appeal. [17] Rule 14.12(2)(

a) of the Alberta Rules of Court supports the proposition that persons who are parties to the proceedings that led to the issuance of the decision the subject of the appeal are entitled to appeal. [18] Left unanswered is whether only parties may file a notice of appeal. [19] Provisions of the Judicature Act grant this Court jurisdiction “to hear and determine ... all questions or issues of law”.

Whether a nonparty may file a notice of appeal is a question of law. [20] The case law provides guidance as to when this Court should grant a nonparty permission to appeal or to seek leave to appeal. [21] A statute that confers a right of appeal on a nonparty displaces the general rule that only a party may appeal against a decision.

In addition , this Court may grant permission to appeal to a nonparty if the decision sought to be appealed orders the person to do or refrain from doing something – submit to questioning, for example; directly affects important interests of the nonparty – the nonparty has a legal interest in property the court ordered the defendant to transfer to the plaintiff; or the nonparty could have been a party in the proceedings below. [emphasis added] [ 20 ] In Aubin v Quantiam Technologies Inc [3] , Wakeling J.A. returned to this topic: [5] The questions before me are these.

Is Quantiam, a nonparty to the Matrimonial Property Act proceeding, entitled to appeal the order of the trial judge? If it is entitled to appeal, are Quantiam and Mr. Petrone sufficiently allied that this Court should direct them to file joint materials and make joint submissions as co-appellants? [6] As a general rule, “a nonparty cannot appeal.” [7] However, there are exceptions to this general rule. One exception arises where the decision sought to be appealed orders the person to do or refrain from doing something.

Another exception arises where the decision directly affects important interests of the nonparty. [8] In this case, the trial judge declared that Ms. Aubin’s money judgment against Mr. Petrone “is protected by a security interest in Mr. Petrone’s shares in Quantiam and a security interest in [a] Building ” that is owned by Quantiam. [9] The order Quantiam seeks permission to challenge affects important interests of Quantiam. It adversely affects Quantiam’s ability to use its property as it sees fit and has an equitable dimension. It is entitled to appeal the decision.

It meets the test this Court applies in a permission-to-appeal application by a nonparty. [footnotes omitted] Application of the test here Master’s order did not oblige EGE entities to do or not do anything [ 21 ] It is plain that the Master’s order dismissing 022’s actions against the Units did not require any of the EGE entities to do, or refrain from doing, anything.

[22] The question becomes whether the order affected any of their interests within the meaning of the “non-party appealing” caselaw, exemplified by the decisions above. [23] At this stage, I will assume that the Units were indebted to 022 in the form of overdue contribution assessments. [24] I will also focus, initially, on the potential impact of the “contributions” litigation on EGE’s economic interests. (I willconsider the impact on their “governance” interests later.) Order did not impact EGE entities’ economic interests [25] Did the order, in effectively writing off such assumed receivables of the condominium corporation, affect EGE’s economicinterests (or possible economic interests) as unit-holders or otherwise as (at least partial) owners of condominium property? [26] The answer is no.

I examine each of the EGE participants in turn. 383 – currently struck – no recognizable ownership stake [27] According to the available evidence (Earl Klapstein affidavit sworn April 5, 2019, para 5), “[a] Corporate Search obtainedNovember 29, 2018 … reveals 383’s present status as ‘struck’.” EGE did not offer any counter-evidence on 383’s current status. (In hisJune 28, 2019 affidavit, Mr.

Giovannoni deposed (at para 32) that 383 was revived, after its striking in October 2, 2013, on March 27,2014, but that search result is only current to February 24, 2016.) Accordingly, with no evidence of 383 having been revived again, theunit(

s) owned by it would have vested in the provincial Crown by virtue of the Unclaimed Personal Property and Vested PropertyAct[4]. In other words, in its present (struck) state, 383 has no ownership interest to assert on its own behalf. Mr. Giovannoni – no ownership stake [28] He is not a unit holder and otherwise presented no evidence of a personal ownership stake in the condominium. 120 – ownership stake but no discernible interest impacted [29] This is a corporation owned by Mr. Giovannoni that owns a number of units in the condominium.

Does 120’s status as a unitholder give it the kind of “interest” required by the cases in the assumed outstanding contributions of the Units? [30] The answer is no, for the reasons below. No direct interest in assets held in trust for condominium purposes [31] Unit-holders have no direct stake in such assets. This point was explored in Carleton Condominium Corporation No. 396 vBurdet:[5] OWNERSHIP OF CCC 396 ASSETS [232] The Majority [group of unit-holders] submits … that: (

a) The [contribution] arrears of the Minority were and are reliable debts of CCC 396 [the condominium corporation] becausethey have been reported in the unqualified audited financial statements prepared by M-L; (

b) The Majority has “ownership rights over 42.779% of these CCC 396 assets” including these account receivables owed toCCC 396 by the Minority; and (

c) CCC 396 was required to collect the arrears from the Minority or else it must assign the arrears of the Minority to a third-party lender and use the consideration received from that assignment to pay the Majority’s share of what otherwise would be a specialassessment against the Majority. [233] Based on the above logic, L. A.

Burdet credits the Majority accounts for “their share”, or ownership interest in the accountsreceivable on the books of CCC 396, thus suggesting incorrectly, “payments” by the Majority including their “payment” of their share ofthe 2007 and 2009 special assessments. [234] The Majority rely upon Mazzon v. Wentworth Condominium Corporation No. 102, 2012 ONCA 447 , para. 9, tosupport their argument that they as unit owners have proportionate “ownership rights” to the account receivables owed the corporation. [235] The Majority are not alone in this

interpretation. [236] Condominium Act – User’s Guide, A. Loeb, p. 111, states: “Note that a condominium does not legally own property, as allassets are owned by all of the unit owners in the same proportions as their common interests appear in the declaration.” This broadwording by this author, on its face, supports the Majority’s position. [237] The issue in Mazzon, supra, involved money received by a condominium corporation and then disbursed by it.

A former unitowner and others presented grounds to claim the money from the corporation, the Directors and others. [238] The court held that the plaintiffs’ claims failed because the funds belonged to the condominium corporation. The court heldthat the plaintiffs have no direct interest in the funds. (para.11 and 13) The decision in Mazzon is contrary to this argument of the

Majority. [239] Any ownership confusion likely arises due to the wording of s. 18(2) of the Act , which states: 18(2) The owners share the assets of the corporation in the same proportions as the proportions of their common interests in accordance with this Act , the declaration and the by-laws. [240] The Legislature could have, but did not in s. 18 (2), use more direct language, such as: “The owners own the assets of the corporation in the same proportion …” [241] The Legislature used the term “ownership” and a type of real property ownership in ss. 11 (1) and (2) of the Act . [242] As to ownership of units and common elements, ss. 11(1) and (2) indicate those are assets owned by the unit owners. [243] There are several instances where the Act provides when unit owners are entitled to receive a share of assets realized. [244] Condominium corporations may be terminated under

Part VIII of the Act whereupon the provisions of the Act cease to apply, namely: (

a) Where the owners consent to termination of the condominium under s. 122; (

b) In the case of substantial damage under s. 123; (

c) Upon sale of all of the property under s. 124; (

d) Upon expropriation under s. 126; and (

e) Upon termination of the condominium by court order pursuant to s 128. [245] Sections 124 and 126 each state that proceeds from sale and expropriation are to be paid to unit owners. [246] Unlike s. 124 and 126 of the Act , sections 122, 123 and 128 are silent as to the owners’ entitlement upon such events occurring.

Section 129 specifically addresses that question and proves for distribution of net assets proportionately among the owners. [247] Notwithstanding the articulation of owners’ entitlement under sections 124 and 126, the Legislature nonetheless in s. 129, repeats the blanket provision that when the Act ceases to apply, the remaining assets belong to the unit owners. [248] Section 84(2) by comparison, prohibits the distribution of a common surplus to unit owners. [249] To interpret the phrase “The owners share the assets of the corporation” in s. 18(2), as “the owners own the assets of the corporation”, opens a flood gate to claims to ownership, entitlement and possession of assets owned by the corporation, for which the Act provides little protection.

If s. 18(2) creates ownership interest in all assets of the corporation, what prevents an owner demanding their share of condominium bank account balances or account receivables owed the corporation? [250] The Act repeatedly refers to a condominium corporation’s ownership of assets, as in sections 17(1) and (2), 18(1), 93(2) and 97(1), (2), (3) and (4). Such corporate assets must be other than condominium units or common elements.

Bank accounts and account receivables of the corporation are among such additional assets. [251] Section 1(1) of the Act defines a corporation created under the Act to be a corporation. [252]

Section 5 of the Act again confirms it is a corporation and without share capital. The non-application of the Corporations Act does not diminish the status of a corporation created under the Act . [253] Section 92(1) of the Legislation Act, 2006 , S.O. 2006, c. 21,

Schedule F , states that a provision of an Act in Ontario that creates a corporation: … gives it power to have perpetual succession, to sue and be sued and to contract by its corporate name, …, and to acquire, hold and dispose of personal property for the purposes for which the corporation is incorporated; … [254] Bank accounts established by a condominium corporation and accounts receivables owed to that corporation are assets owned by the condominium corporation and are not owned and accessible by individual unit owners.

It is incorrect to interpret s. 18(2) otherwise. [emphasis added] [ 32 ] I find that the same analysis applies under Alberta’s CPA , in light of its provisions demonstrating the same distinction between the direct ownership interests of condominium unit-holders in their respective units and in the common property, on the one hand, and their (at most) indirect interest in the condominium corporation’s assets, on the other. Those provisions include: • “corporation” means a body incorporated by

section 25 (para 1(1)(h)); • “managed property” means any unit or part of a unit that a corporation is required by bylaw to maintain, repair or replace, other than the real and personal property of the corporation and the common property (para 1(1)(m.1)); • ownership of common property – the common property comprised in a registered condominium plan is held by the owners of all the units as tenants in common in shares proportional to the unit factors for their respective units [i.e. as distinct the corporation’s own property] (ss. 6(2));

• return of corporation property (s. 17.2 recognizes corporation’s ownership of various species of property); • composition of a condominium corporation – a corporation consists of all those persons (

a) who are owners of units in the parcel to which the condominium plan applies, or (

b) who are entitled to the parcel when the condominium arrangement is terminated pursuant to

section 60 or 61 (ss 25(2)); • non-application of the Business Corporations Act and Companies Act (ss 25(5)); • control and management – a corporation is responsible for the enforcement of its bylaws and the control, management and administration of its real and personal property, the common property and managed property (s. 37); • capital replacement reserve fund – the money in the capital replacement reserve fund of the corporation is an asset of the corporation and no part of that money shall be refunded or distributed to any owner of a unit except where the owners and the property ceased to be governed by this Act . (ss 38(3)); • administrative expenses – [corporation may establish fund for administrative expenses, funded out of contributions levied against unit-holders] (s. 39); • ownership of monies paid to or for benefit of corporation – where the corporation or any person is in receipt of money paid to or for the benefit of the corporation, that money and all the proceeds arising from that money are (

a) legally and beneficially owned by the corporation, and (

b) deemed to be held in trust for the performance of the duties and obligations in respect of which the payment was made. [emphasis added] (s. 43.1)); • use of such trust monies – the corporation shall … keep all trust money intact and not withdraw, convert, direct, borrow or commingle that trust money, other than pursuant to a written resolution of the condominium board (para 43.1(2)(b)); • estoppel certificate – owners, purchasers and mortgagees able to obtain binding certificates of amounts of contributions payable by the owner, frequency of contributions payable, contribution arrears, and amount of interest owing [i.e. nothing about a particular owner’s “interest” in the corporation’s assets] (s. 43.2); • information on request – as noted above, various information is available to owners, purchasers and mortgagees, including the global amount of the capital replacement reserve fund [but nothing about a particular owner’s “interest” in that or any other fund held by the corporation] (s. 44); • termination of a condominium – when a declaration has been made pursuant to subsection (2) [terminating a building’s or parcel’s condominium status], the Court may by order impose any conditions and give any directions, including directions for the payment of money , that it thinks fit for the purpose of adjusting as between the corporation and the owners and as among the owners themselves the effect of the declaration. [emphasis added] (s 61); and • effect of termination – on the filing of a notice of termination with the Registrar, (

a) the corporation ceases to exist, and (

b) subject to any declaration of the Court made under

section 61, any funds of the corporation that are left after the payment of the corporation’s dets and liabilities shall be distributed to the owners of the units in the plan in shares proportional to the unit factors of the owners’ respective units . [emphasis added] (s. 62); [ 33 ] These provisions confirm that, even if unit-holders should be regarded, in the abstract, as having some kind of interest in the corporation’s property or assets held by it in trust for condominium purposes (such as the claimed-to-be-outstanding contributions here), it is indirect at most.

Consider again the (assumed-to-be-outstanding) contributions here: • they are, or were, owing to the corporation, not any particular unit-holder or even the unit-holders as a group; • if paid, the contributions would have been held by the corporation in trust for condominium purposes; • such holding would not have been for any particular unit-holder; • such funds can only be used for condominium-related purposes and only with board approval i.e. are not accessible by individual unit-holders for their particular purposes; • nothing in the CPA reflects any kind of “unit-holder-particularized” stake in such funds; • condominium corporations do not pay dividends or anything analogous to unit-holders; and • only on such a corporation’s termination would a unit-holder be entitled to a particular “stake” in any left-over funds. [ 34 ] In a nutshell, these were the corporation’s receivables, with unit-holders having only an abstract, and indirect, stake in them. [ 35 ] By way of contrast, that interest is materially different than the interest qualifying its holder as appeal-worthy in Aubin v Petrone (cited above).

In that case, the ordered charge and contemplated security agreement were to attach directly to the corporation’s

directly-owned asset i.e. there was nothing abstract or indirect about the corporation’s interest or the court order’s affect on it.

No evidence of prejudice to 120 in any case [ 36 ] In any case, even recognizing 120 as having an interest of some kind, 120 did not provide any evidence that non-collection of the outstanding receivables would actually affect it. [ 37 ] 120 argued that, if the asserted outstanding contributions (owed by the Units) go unpaid, 022 will be prejudiced, and same for any unit-holders not benefiting from the claimed sweetheart arrangement reflected in the consent dismissals. [ 38 ] However, EGE presented no evidence of 022’s overall financial picture e.g. an inability to manage condominium expenses without the claimed contributions.

It may be that 022 is swimming in funds, with the waved-off contributions having no impact on its overall solvency or ability to meet its present and anticipated expenses. In other words, non-collection of the asserted overdue collections may have no spillover effect on 120 or other unit-holders, in the sense of exposing them to higher-than-otherwise-anticipated contribution levies or other calls for funds.

The asserted spillover effect is entirely speculative. [ 39 ] That absence of evidence is particularly telling given that 120 could have obtained a financial x-ray of 022 via its “information” rights under s. 44 CPA. [6] It could have obtained a wide-open window onto 022’s finances and at least tried to demonstrate that the foregone contributions would, or could, have a ripple effect on itself and other unit-holders. 120 as creditor [ 40 ] 120 also asserts it loaned money to 022 and that 022’s effective write-off (via the consent dismissals) of the Units’ outstanding contributions will prejudice 120 in repaying that money. [ 41 ] However, as noted above, 120 presented no “causation” evidence here i.e. evidence that non-collection of those contributions will have any impact on 022’s ability to repay 120.

EGE entities would not have been added as parties [ 42 ] The third branch of the Peavine Métis Settlement test is “could have been added as a party.” [ 43 ] None of the EGE entities applied to become a party to either of the “contributions” actions before they were struck. [ 44 ] Master Schulz asked their counsel at the dismissal application if they were asking to be added as a party i.e. in addition to their bid for an adjournment. The answer was no. [7] [ 45 ] Rule 3.74 deals with adding parties (among other things).

Addressing the relevant factors identified in the Alberta Civil Procedure Handbook [8] annotation to that rule: • for the reasons outlined above on 120’s indirect (at most) interest, I do not see it as having the requisite interest to be added (no standing, and no recognizable need for it to be bound by any decision on the merits); • if the actions had proceeded on the merits, the relevant questions in the “contributions” actions could have been answered “without the presence” of the EGE entities.

The dispute was between 022 and certain other unit-holders. 120’s involvement was not necessary, legally or practically, for that dispute to be determined on the merits (if it had proceeded that way); • in terms of “harm avoidance”, for the same reasons as above, EGE did not present evidence of harm flowing to any of its entities, regardless of how the actions were concluded; and • no need exists to avoid “fragmented litigation, and no inconsistent results (i.e. as between different actions) are possible here (both as discussed further below). [ 46 ] There was no compelling, or any, basis to add any of the EGE entities, even if they had applied to become parties.

Everybody necessary to tackle the contributions issue was on board; EGE were true bystanders. Service as a basis for standing [ 47 ] EGE also asserted standing on the basis of having been served. However, serving someone does not necessarily acknowledge that the person, if not already a party, merits party status, has an interest, or is otherwise entitled to participate, in the action. [9] [ 48 ] I note that, in her October 17, 2018 letter to EGE’s counsel, Ms. Archer (for the condominium corporation) advised that the parties in both “contributions” actions had agreed to discontinuances.

She then stated that: [a]lthough, in our opinion, it is not necessary for your client to agree to the Discontinuances, in the spirt of openness and transparency, and to avoid further litigation on these actions, we ask that they do so. [ 49 ] In other words, while the involvement of EGE might have been useful in some sense, it was, strictly speaking, not required. Accordingly, I regard service of the corporation’s discontinuance (or alternatively dismissal) applications on EGE as “courtesy service” only and accordingly as having no bearing on EGE’s standing to appeal. Self-description as respondents

[ 50 ] I note that EGE’s notice of appeal of the Master’s order describes the EGE entities as the “Appellants (Respondents to the Application).” That inaccurate self-description (since they were not respondents or otherwise parties) adds nothing to EGE’s position. Conclusion on “economic interest” standing [ 51 ] For all these reasons, I find that the EGE entities did not have, and if they had applied in advance would not have been recognized as having, “economic interests” standing to appeal the Master’s order. “Governance interests” [ 52 ] EGE, or at least Mr.

Giovannoni, also claimed “standing”, or at least a right to participate in the “contributions” litigation, on the basis of his (asserted) position as the sole legitimate director of the condominium corporation. Effectively, he viewed the new board’s decision to shut down the “contributions” litigation as invalid and, more fundamentally, the board itself as illegitimate, for reasons stemming back to 2013 and 2014 (as noted earlier). [ 53 ] It is not so much that he sought to have himself added as a party or, as a non-party, to be given a role in the litigation (i.e. to appeal the Master’s decision).

Instead, he effectively sought the “captain’s seat” i.e. to be recognized as the person in charge of 022 (itself clearly a party) and to “reverse engines” on the decision to write off the contribution receivables, via a de novo hearing of the matter on appeal before a Queen’s Bench justice. [ 54 ] In other words, he was pursuing, or hoping to initiate, a kind of derivative action, to benefit 022. [ 55 ] This approach is reflected in some of EGE’s submissions before the Master on May 30 (summarized here): MR. FRASER [FOR EGE] … our client [Mr.

Giovannoni] takes the position that he is – he was a rightful director of the Condominium Corporation, and was wrongly removed. That’s a matter in dispute in the action. [transcript, p 2] MASTER SCHULZ: Okay. So what’s your -- if you’re not a named party, what’s your status to be here today, to be asking for an adjournment? MR. FRASER: Well, the status would be the true representative of the Condominium Corporation as – as he was wrongly removed. That – that would be the position. … MR.

FRASER: … There is a matter, in our submission as to who is the properly constituted board, the Condo Corporation, and who has the instructions to hire counsel. You know, who – who is instructing here. And given that the action relates to money owed to the Condo Corporation, … it’s an important question to sort out. MASTER SCHULZ: Are those not issues in the other two existing lawsuits? … MR.

FRASER: … our position [is] that there’s not a complete overlap between the actions. [10] [ 56 ] The short answer is that EGE is putting the cart before the horse: it raised the noted “governance” arguments with the Master, and it made various arguments in its appeal brief in support of “board invalidity” and how Mr. Giovannoni is at, or should be at, the helm of 022.

But, to the extent it appealed the Master’s order as the “rescuer” of 022, it did so without any decision on those positions in the other proceedings (mentioned above and discussed below) or otherwise seeking vindication of those positions before appealing that order. [ 57 ] EGE has sued 022 and the Units in other proceedings (launched in 2016) for wide-ranging relief including “restoring the throne” to Mr. Giovannoni.

Paragraph 10 of the statement of claim (February 25, 2016) asserts that the Units improperly changed the 022’s bylaws and had themselves (if individuals) or their principals (if corporations) improperly appointed to the board. The claimed remedies include “a declaration as to the applicable Board of Directors for [022] …” i.e. who is in charge of 022 as between EGE and the Units. [ 58 ] That action has barely progressed. The Units filed statements of defence between mid-May and mid-July 2016, and nothing else (procedure-card-step-wise) had happened through to the May 30, 2019 application.

In other words, after launching proceedings to vindicate their control over 022, EGE let that action languish for almost three years (measured from May 30, 2019). (I note that, in 2018, the Units brought their own action against EGE for various relief, which sparked a cross-claim for yet other relief by EGE. That action has lain dormant since the initial pleadings were exchanged.) [ 59 ] EGE wants to turn its appeal of the Master’s order into broader platform for resolving these “governance” issues.

In its notice of appeal (under “record of proceedings”), it refers first to two affidavits filed on the May 30 application and then to: [s]uch further and other evidence as the case may be and more particulars to be provided by the parties at the appeal hearing or prior thereto in written briefs including a further affidavit of Emilio Giovannoni for the Appellants and cross applications which will include dealing with being added as a party, proceeding with action akin to a derivative action, dealing with improper or oppressive conduct, and consolidating or having various actions tried together or consecutively. [emphasis added] [ 60 ] The problem, for EGE, is that its (2016) regain-the-throne action is still pending i.e. has not put Mr.

Giovannoni back in

charge or declared that he has been in charge all along. [ 61 ] I note here that much of the relief sought by EGE in its 2016 action seems to be anchored in s. 67 CPA i.e. its ABCA - oppression-remedy-like provision. That provision states (in ss. 67(3)): The Court may grant interim relief under subsection (2) pending the final determination of the matter by the Court. [ 62 ] However, I see no sign that EGE obtained, or even applied for, any interim relief (e.g. addressing Mr. Giovannoni’s back-in- charge bid) in that action.

And he did not seek such relief as part of his appearance before the Master. [ 63 ] Accordingly, Mr. Giovannoni (effectively) arrived at the May 30 th application before the Master with a claim to be in charge of 022 which had not yet been vindicated, and the action asserting that claim had lain dormant for almost three years. [ 64 ] On the other side, the Master was faced with counsel for 022 (Ms.

Archer), representing the board that has been in place, actually or at least ostensibly, since late 2013 i.e. for over five years, and with that board (or earlier incarnations) having registered its membership from time to time with the Land Titles Office (per CPA requirements) i.e. presenting to the world as the true board of 022. Per Justice Lee in Obi Agbarakwe Prof Corp v Condominium Corporation No. 0726502 [11] , such registration is significant: Technically the Directors of the Condominium Corporation are those registered as required under the Condominium Property Act with the Land Titles Office.

Without registration, any person or persons claiming to be the Board would lack the full legal authority to act on behalf of the Condominium Corporation. [ 65 ] Subsection 28(9) CPA also plays a role here.

It states: All acts done in good faith by a board are, notwithstanding that it is afterwards discovered that there was some defect in the election or appointment or continuance in office of any member of the board, as valid as if the member had been properly elected or appointed or had properly continued in office. [emphasis added] [ 66 ] As noted, EGE contends that the new board (or an earlier incarnation) was void on account of unauthorized voting (“contributions owing, no voting allowed, voted-on changes to the bylaws expanding the size of the board beyond the initial single director (383) invalid as a result”). [ 67 ] The Units contend that the long-ago contribution levies were unsubstantiated and otherwise improper. [ 68 ] I cannot tell at this stage who will prevail on that point.

Even if it turns out that the initial contribution tagging was valid, and that the long-ago voting and bylaw amendments were consequently invalid, and if that somehow added up to present-day invalidity of the current board, the board member’s actions may nonetheless have been pursued in good faith i.e. with the “defect” contemplated in ss. 28(9) being “afterwards discovered” i.e. by a down-the-road ruling on the contributions issue. [ 69 ] As well, Mr.

Giovannoni’s evidence included his understanding that he is or at least was 022’s director, and he pointed to various excerpts in Units’ affidavits describing him as such, but these are all misunderstandings . As noted, the first customized bylaws named 383 as 022’s first director, not Mr. Giovannoni personally. (I note that one of the initial post-changeover notices of directors listed him as a director, but he has not been listed in any subsequent notices, and he did not present any evidence that he was elected a director at any point.) [ 70 ] Summarizing here: • Mr.

Giovannoni was not the initial director (383 was); • when the initial “new board” was elected (December 19, 2013), 383 did not exist, having been struck in October 2013 (and not revived until March 27, 2014); • even if the “new board” and its successors were or have been improperly constituted or continued, it may be that they have been acting in good faith throughout (for the purpose of ss 28(9)); • based on the application record, 383 is presently struck i.e. does not exist and did not exist at the time of the application before the Master or when the appeal was filed; • EGE’s position before the Master was that Mr.

Giovannoni had been wrongfully ousted; • that is not so, given that he was not the director when the new board emerged in late 2013 and has not been a director since or at least since March 19, 2014 (when a Form 8 (notice of change of directors was filed not listing Mr.

Giovannoni)); • EGE’s bid to resolve “governance” is still pending (in its 2016 action); • it has sought no interim relief in that proceeding; • as of May 30, 2019, that action had lain dormant for close to three years; • EGE did not otherwise seek to obtain a ruling on the “governance” issue before seeking the adjournment from the Master or appealing the consent-judgment dismissal of the actions; • the “new board” (and successors) has been in place for almost six years (since at least December 2013); • EGE had ample time from December 2013 (or whenever it first learned of the new board), through to May 2019, to pursue

invalidation of the initial new board (and successors through the years) i.e. before the “new board” decided to resolve the “contributions” litigation via consent dismissals; • EGE had notice from October 17, 2018 (via Ms. Archer’s letter of that date to its counsel) that 022 and the Units had agreed to the shutdown of the “contributions” litigation. This was a full seven months before the May 30, 2019 application where that shutdown was formalized via the consent dismissal orders.

During that time, EGE did nothing in its “regain the throne” action or elsewhere to advance its “governance” position, other than the (inaccurate) complaining at the May 30, 2019 application of Mr.

Giovannoni’s “improper removal”; and • if 022’s agreement to the consent dismissals (at the direction of the “new board”) was somehow improper, and if that step caused damage to any of the EGE entities, they can presumably continue to pursue compensation via their 2016 action, which seeks that (among other) relief. [12] Conclusion on EGE’s “governance-based” claim [ 71 ] I find that, in all of these circumstances, Master Schulz was correct in regarding 022 as under the effective and legitimate control of the “new board.” The only evidence presented by EGE on May 30, 2019 bearing on the “governance” point was Mr.

Giovannoni’s statements (in his affidavit of that date) that the new board had attempted to improperly remove him as a director and that one of the new members had described him in a 2010 affidavit as 022’s sole director then. As discussed above, Mr. Giovannoni was not 022’s director at that stage and accordingly was not “removed” from anything, and misperceptions of his status do not change anything. [ 72 ] As for the expanded evidence presented before me at the July 2019 application (in the form of Mr. Giovannoni’s June 28, 2019 affidavit), it continued (in part) the same (unwarranted) theme of Mr.

Giovannoni having been ousted as a director. [ 73 ] I accordingly find, based on all of the above circumstances and on the application record, that EGE’s bid (effectively) to regain control of 022 or at least two of its receivables (i.e. the “contributions” actions) was premature, at best. As of May 30, 2019, EGE’s bid to vindicate its “governance” claim had gone nowhere for close to three years. It had over seven months’ notice of 022’s decision to shut down those actions.

Moreover, EGE has recourse, which it can still pursue, via its 2016 action, for whatever recoveries and remedies are warranted at law (if any) arising out of the dealings between these parties, including the new board’s decision to shut down the actions. [ 74 ] Accordingly, EGE’s bid to show an “interest” here on the basis of effective control over 022 also fails. [ 75 ] The net result is that, with EGE having failed to demonstrate any recognizable interest within the meaning of the “non-party appealing” case law, EGE’s appeal of the Master’s order was unwarranted. [ 76 ] I accordingly set it aside. D.

Costs [ 77 ] As the successful parties, the Units are awarded their costs of the application against the EGE parties. If the parties are unable to agree on the scale of the costs or any costs details, they can submit letters (via my assistant), maximum two pages, outlining their positions on costs and associated reasons, by December 6, 2019. Heard on the 19 th day of July, 2019. Dated at the City of Edmonton, Alberta this 28 th day of November, 2019. M. J. Lema J.C.Q.B.A. Appearances:

Daniel R. Peskett/Andrew Fraser Brownlee LLP for 383319 Alberta Ltd., 1203472 Alberta Ltd. and Emilio Giovannoni Victoria Archer Gledhill Laroque for the Respondent Condominium Corporation No. 022 5899 Michael Furman Glenora Law Office for the Respondents Edith Ann Bullis and Rick Lane Liebrecht Hugh Willis Willis Law for 499430 Alberta Ltd., 129430 Alberta Ltd., 1293508 Alberta Ltd. and 981338 Alberta Ltd. [5] 2014 ONSC 7411 affirmed 2016 ONCA 394 leave denied (SCC)