Condominium Corporation No 022, 2023 ABKB 125

Court of King’s Bench of Alberta Citation: Condominium Corporation No 022 6956 v Mercier, 2023 ABKB 125 Date: 20230303 Docket: 1603 03652 Registry: Edmonton Between: Condominium Corporation No. 022 6956 Applicant - and - Ronald W. Mercier and Edmonton Salvage Disposal Ltd Respondents _______________________________________________________ Memorandum of Decision of the Honourable Applications Judge B.W. Summers _______________________________________________________ I. Introduction . 3 II. Facts . 3 A. Lease of the 11 th floor and Condominiumization of the Liberty Building . 3 B. Previous Legal Actions . 5 1.

The 2006 Action to amend the Bylaws and Unit Factors . 5 2. The 2007 Foreclosure Action to collect Condominium Fee Arrears . 5 C. The Current Action . 6 D. Mercier Bankruptcy . 6

E. Second Condo Caveat 6 III. Relief Sought by the Parties to the Current Action . 6 A. Condo Corp Application . 6 B. ESD Application . 8 IV. Discussion of Issues in the Current Action . 8 A. Use of Evidence from the 2006 Action and the 2007 Foreclosure Action in the Current Action 8 B. Res Judicata , Issue Estoppel, Cause of Action Estoppel and Abuse of Process . 9 1. Abuse of Process with respect to the Issue regarding 2001 Lease being a nullity . 9 2. Abuse of Process with respect to the Issue regarding the charge under First Condo Caveat 10 C.

Effect of the Stay under the BIA upon the Bankruptcy of Mercier 13 D. Is the relief claimed by Condo Corp limitation barred? . 13 1. In personam debt claim for condominium contributions . 13 a. As against ESD .. 13 b. As against Mercier 14 2. Condo Corp’s assertion that its claims are declaratory and not subject to the Limitations Act 14 a. The Declaratory Claims made by Condo Corp . 14 b. Declaratory Claims versus Remedial Orders . 15 c. Declaration sought that the Lease is an illegal subdivision . 16 d.

Declaration sought that the 2001 Lease is void and unenforceable as being ultra vires the CPA and is in substance an illegal transfer 17 e. Declaration sought that Mercier and ESD have engaged in improper conduct under the CPA and the Bylaws . 17 f. Declaration sought that all costs incurred by Condo Corp in remedying the improper conduct of ESD and Mercier may be added to and become part of the monthly assessment against the Leased Lands . 18 g. Declaration sought that ESD is an “owner” . 19 3. Conclusions on Declaratory Relief sought and application of the Limitations Act 19 E.

Does Mercier have in personam liability for condominium contributions accruing due on or after July 15, 2019? . 19 F. Is ESD an “owner” and consequently has in personam liability for condominium contributions accruing due after December 6, 2016? . 20 G. Have ESD and Mercier engaged in improper conduct with respect to use and occupation of the ESD-Common Property? . 20 H. Adverse Possession . 24 I. Remedy for Improper Conduct 26 V. Conclusions . 26 I.

Introduction [ 1 ] This case concerns whether the lessee under a long-term lease (99 years), which lease was entered into prior to the building becoming a condominium, must pay contributions under the Condominium Property Act (“CPA”). The lessor granting the lease and owner of the fee simple interest declared bankruptcy and has not paid those contributions. II. Facts A. Lease of the 11 th floor and Condominiumization of the Liberty Building

[ 2 ] The Respondent Edmonton Salvage Disposal Ltd (“ESD”) leased approximately 3500 square feet of the 11 th floor of the Liberty Building from the owner 729113 Alberta Ltd. in December of 1999. The lease was for a term of 99 years and was a gross lease under which ESD paid up front the sum of $100,000 to cover all future responsibility for rent, expenses and taxes (“1999 Lease”). At the time the 1999 Lease was entered into the Liberty Building was an office building.

ESD registered notification of the 1999 Lease against title to the Liberty Building by way of caveat. [ 3 ] On or about November 1, 2001 ESD entered into an offer to lease the entire 11 th floor of the Liberty Building (comprising approximately 6500 square feet) and two parking stalls from Petra Corp and Dan Corn who were in the process of acquiring the Liberty Building (“Offer to Lease”).

The Offer to Lease was a gross lease under which ESD’s prior payment of $100,000 was recognized and ESD was further required to transfer a Ferrari automobile as consideration for the additional square footage leased under this Offer to Lease. ESD filed a caveat with respect to the Offer to Lease. [ 4 ] Petra Corp and Dan Corn did not proceed with their purchase of the Liberty Building, but a company owned by the Respondent Ronald W.

Mercier (“Mercier”) called Jimron Holdings Ltd (“Jimron”) did close on an agreement to purchase the Liberty Building and agreed to lease the 11 th floor to ESD on essentially the same terms as the Offer to Lease entered into with Petra Corp and Dan Corn. [ 5 ] Jimron transferred title to the Liberty Building to another company owned by Mercier called Pinehurst Developments Inc (“Pinehurst”). [ 6 ] By a lease agreement dated November 1, 2001, Pinehurst leased the entire 11 th floor of the Liberty Building and two parking stalls to ESD (“Leased Lands”).

Again, it was a gross lease for 99 years under which ESD prepaid rent, taxes, utilities and maintenance costs (“2001 Lease”). The 2001 Lease recited that ESD had paid its consideration up front, in full.

On April 6, 2002 ESD filed a further caveat against title to the Liberty Building to notify of its leasehold interest under the 2001 Lease (“Lease Caveat”). [ 7 ] The 2001 Lease specifically contemplated that Pinehurst may register a condominium plan with respect to the Liberty Building in the future and it set out terms to be included in the prospective condominium plan (and which were also included in the 2001 Lease). Relevant terms included the following: (

a) Pinehurst had leased the entire 11th floor and two stalls to a third-party tenant on a gross rental basis for a period of 99 years; (

b) All rent and other charges had been prepaid to the Developer (ie Pinehurst); (

c) At the time of the Bylaws ESD was the tenant; (

d) For the term of the Lease both the owner of the Leased Units (a term that will be defined later in this Memorandum of Decision) and ESD would: (

i) be exempt from payment of any and all condominium fees, assessments or like charges; and (ii) not be required to pay for any upkeep or maintenance of the common property; (this item (

d) shall hereinafter be called “Leased Units Exemption”) (iii) would not be deprived of use and full enjoyment of any common services or facilities available to other units; and (

e) ESD would not be restricted as to its use and enjoyment to any extent whatsoever. [ 8 ] On or about November 8, 2002 Pinehurst registered the condominium plan and bylaws for the Liberty Building (“Plan” and “Bylaws” respectively). The Leased Units Exemption was included in the Bylaws. [ 9 ] Upon registration of the Plan the majority of the Leased Lands (on the 11 th floor) became unit 44. The parking stalls became units 55 and 56 (units 44, 55 and 56 will collectively be referred to as “Leased Units”).

The balance of 11 th floor leased to ESD fell under the common property of the condominium corporation (“Condo Corp”). [ 10 ] The Lease Caveat which had been registered against all condominium units upon registration of the Plan, was discharged from all units, except the Leased Units. [ 11 ] Title to the Leased Units was transferred from Pinehurst to another corporation controlled by Mercier called Fullcorp Holdings Inc (“Fullcorp”) on or about March 16, 2004. Fullcorp transferred title to the Leased Units to Mercier on November 10, 2007.

Mercier has been the fee simple owner of the Leased Units since that period of time. [ 12 ] ESD has been in continuous and exclusive possession of the Leased Units and part of the common property around the elevators on the 11 th floor at least since November 2001. [ 13 ] ESD has made improvements to the Leased Lands to convert the space from an office to a personal residence costing approximately $300,000 to $400,000 and a further $50,000 renovating the bathrooms on either side of the elevator on the 11 th floor, consisting of 443 square feet of the common property (“ESD-Common Property”).

These renovations were completed before the Liberty Building was converted to a condominium. [ 14 ] After the Liberty Building was converted to a condominium, units were sold to purchasers and the Condo Corp began assessing fees against owners, but not against Mercier and ESD pursuant to the Leased Units Exemption.

B. Previous Legal Actions 1. The 2006 Action to amend the Bylaws and Unit Factors [ 15 ] In 2006 Condo Corp filed an application to amend the Bylaws to remove the Leased Units Exemption and to increase the unit factors for the Leased Units (“2006 Action”). ESD was not named as a Respondent to that application nor given any notice of any court proceeding, despite its request.

Mercier, Pinehurst, Fullcorp and one other named Respondent consented to an order removing the Leased Units Exemption from the Bylaws and increasing the unit factors for the Leased Units (“Consent Order”). [ 16 ] ESD subsequently applied to have the Consent Order set aside, but that application was dismissed. 2.

The 2007 Foreclosure Action to collect Condominium Fee Arrears [ 17 ] On October 17, 2007 Condo Corp registered a caveat for unpaid condominium fees against title to the Leased Units (“First Condo Caveat”). [ 18 ] Condo Corp commenced an action to recover unpaid condominium fees, utility charges and special assessments with respect to the Leased Units in the amount of $111,969.09 plus interest and any subsequent fees and assessments under the First Condo Caveat and in default, sale or foreclosure of the Leased Units (“2007 Foreclosure Action”).

ESD was not named as a party to the 2007 Foreclosure Action. [ 19 ] An order nisi was granted in the 2007 Foreclosure Action on June 4, 2008 which declared the amount due and owing under the First Condo Caveat to be $112,462.39 and this amount “...shall be realized by the sale of the lands in default of which foreclosure may be ordered” (“Order Nisi”).

The Order Nisi also provided that Condo Corp was required to discharge the First Condo Caveat upon payment of the amount declared owing plus subsequent condominium fees. [ 20 ] On October 22, 2009 Condo Corp applied for and was granted a court order allowing a judicial listing of the Leased Units, but subject to ESD’s prior registered lease, for a period of sixty days. At that time, Condo Corp’s final affidavit of default claimed $138,797.78 for unpaid fees, utility charges and special assessments.

The Affidavit of Value filed in support of Condo Corp’s application opined a fair market value of the fee simple interest, subject to the 2001 Lease, to be $225,000 (based upon the fee simple owner’s reversionary interest, which included a right of first refusal if ESD wanted to sell or if ESD’s principal Cameron Hall died, at and for the price of $550,000). [ 21 ] On January 19, 2010 Condo Corp brought a further court application in the 2007 Foreclosure Action. Counsel for ESD, who attended that application, states that the application was to sell the Leased Units free and clear of the 2001 Lease.

However, neither the Application document nor the transcript of the proceeding was put into evidence. The order granted by Master Smart, as he then was, dismissed Condo Corp’s application but allowed Condo Corp to reapply (“Smart Order”). The recitals to the Smart Order do not reflect that the application was to sell the Leased Units free and clear of the 2001 Lease. [ 22 ] Apparently, no further steps have been taken in the 2007 Foreclosure Action. C.

The Current Action [ 23 ] Condominium fees, charges and assessments with respect to the Leased Units continued to go unpaid. [ 24 ] This action was commenced by Originating Application filed on February 29, 2016 (“Current Action”). It sought judgment for condominium fee arrears, foreclosure of the Leased Units and an order nullifying the 2001 Lease. Initially, Mercier was the sole Respondent to this Current Action. [ 25 ] In 2016 ESD requested that Condo Corp agree to add ESD as a party to Current Action.

It was not until 2018 that Condo Corp agreed to add ESD to the Current Action, but at the same time sought to add further claims under the Originating Application. [ 26 ] On June 20, 2018 the Court granted an order adding ESD to the action and granted leave for Condo Corp to amend its Originating Application, but the order was without prejudice to ESD’s right to plead the Limitations Act. [ 27 ] The Originating Application was amended on December 6, 2018 (“Condo Corp Application”). [ 28 ] ESD filed a cross application in the Current Action on November 20, 2020 (“ESD Application”). D.

Mercier Bankruptcy [ 29 ] Mercier made a voluntary assignment into bankruptcy on July 15, 2019 and he was discharged on July 16, 2021. [ 30 ] Neither Mercier nor the Licensed Insolvency Trustee of Mercier’s estate has taken any

part in the Current Action. [ 31 ] No evidence was provided as to whether the Licensed Insolvency Trustee of Mercier’s estate has been discharged. E. Second Condo Caveat [ 32 ] On the second day of the Special Chambers application, counsel for Condo Corp advised that he had obtained a current copy of title to the Leased Units and that it shows Condo Corp registered a second caveat for unpaid fees on June 7, 2021 (“Second Condo

Caveat”). He was unaware that his client had made this registration but indicated that his client relies upon it. [ 33 ] The Second Condo Caveat was not put into evidence. III. Relief Sought by the Parties to the Current Action A. Condo Corp Application [ 34 ] The Amended Originating Application filed on behalf of Condo Corp seeks the following: (

a) declaring that Mercier has engaged in improper conduct as defined in the CPA, by conducting the affairs of Pinehurst (the Developer) in a manner that is oppressive and unfairly prejudicial or that unfairly disregards the interests of Condo Corp; (

b) declaring the invalidation and nullification of the 2001 Lease as being an illegal subdivision; (

c) directing the Registrar of Land Titles to cancel the Lease Caveat and the certificates of title with respect to the Leased Lands and issue new certificates of title either in the name of ESD or Condo Corp; (hereinafter “Section 1 of Amended Originating Application”) 2. An Order: (

a) declaring Mercier and ESD have engaged in improper conduct by failing to comply with the CPA and Bylaws; (

b) directing an immediate injunction prohibiting Mercier and ESD from engaging in the improper conduct of unilateral appropriation and exclusive use of the common property adjacent to the Leased Lands (ie the ESD-Common Property); (

c) directing that if Mercier and ESD continued appropriation and exclusive use of common property, Condo Corp may construct a dividing wall; or alternatively, an order directing Mercier and ESD to enter into a lease with Condo Corp of the appropriated part of the common property. 3. An Order: (

a) granting judgment to Condo Corp in the amount of $460,832.26 (as at December, 2015), representing unpaid condominium fees, plus additional fees levied and unpaid to the date of judgment, plus interest; (

b) foreclosure of the Leased Lands free and clear of the 2001 Lease and all encumbrances related to the Respondents; (

c) possession and preservation of the Leased Lands; and (

d) shortening the period of redemption to less than six months. 4. An Order: (

a) abridging the time for service; (

b) allowing Condo Corp to enter the appropriated common property to carry out duties of Condo Corp; (

c) awarding full indemnity costs; (

d) declaring all costs incurred by Condo Corp in remedying the Respondents’ improper conduct be added to the Respondents’ monthly assessment; and (

e) giving any other directions or orders this Honourable Court thinks appropriate. [ 35 ] In its filed briefs, items of relief sought by Condo Corp were added to those in the Amended Originating Application, although no further amendments had been sought to that document. They will be discussed further in this Memorandum of Decision. B. ESD Application [ 36 ] Counsel for ESD states that he filed a cross application so that the Court and Condo Corp were aware of ESD’s position and the remedies it seeks. Those remedies being sought by ESD are: (

a) a declaration that the Current Action is an abuse of process; (

b) an order that Condo Corp’s claims against Mercier are stayed under the Bankruptcy and Insolvency Act (“ BIA ”); (

c) an order declaring the Current Action or portions of the claims are statute barred; (

d) an order dismissing the Current Action, in whole or in part, pursuant to the doctrine of res judicata or issue estoppel; (

e) a declaration that ESD has a valid and enforceable lease of common property surrounding the elevators, pursuant to the

Lease or pursuant to the doctrine of adverse possession; (

f) an order directing the Registrar of Land Titles to register the 2001 Lease against the Plan sheet and to discharge the First Condo Caveat against the Leased Units; (

g) a declaration that Condo Corp has or will be unjustly enriched and directing a trial to determine the amount; (

h) an order granting ESD leave to use evidence in the 2006 Action and the 2007 Foreclosure Action; (

i) costs on a solicitor and own client basis; (

j) further and other relief as this Honourable Court deems just. IV. Discussion of Issues in the Current Action [ 37 ] To say the least, the Condo Corp Application (and additional remedies sought) and the ESD Application raise a myriad of legal issues. For the most part, the issues are purely legal and there is very little controversy with respect to the facts of the case. [ 38 ] I will consider the issues in what I consider to be the most logical fashion. A.

Use of Evidence from the 2006 Action and the 2007 Foreclosure Action in the Current Action [ 39 ] I deal with this issue first as the other legal issues should not be considered until the Court has determined what evidence is properly before it. [ 40 ] ESD relies upon rules 3.14(1)(

f) and 6.11(1)(f), as follows: Originating application evidence (other than judicial review) 3.14(1) When making a decision about an originating application, other than an originating application for judicial review, the Court may consider the following evidence only: ... (

f) evidence taken in any other action, but only if the party proposing to submit the evidence gives each of the other parties 5 days’ or more notice of that party’s intention and obtains the Court’s permission to submit the evidence; Evidence at application hearings 6.11(1) When making a decision about an application the Court may consider only the following evidence: ... (

f) evidence taken in any other action, but only if the party proposing to submit the evidence gives every other party written notice of that party’s intention 5 days or more before the application is scheduled to be heard or considered and obtains the Court’s permission to submit the evidence. [ 41 ] ESD says that as the relief sought in the ESD Application includes the request to use evidence from these two prior actions this constitutes notice well in advance of the required 5 days.

It further submits that as Condo Corp was involved in these prior actions and in fact refers to documents from those two actions (attached to an Affidavit filed on behalf of Condo Corp in the Current Action), there is no prejudice to Condo Corp. [ 42 ] Counsel for Condo Corp complained that ESD’s position is “a bit of an ambush” because Condo Corp did not know specifically what evidence from the prior two actions that ESD wanted to use and accordingly an order should not be granted now which authorized use of evidence from the prior actions.

Condo Corp suggests that ESD should have brought a separate application, before this Special Chambers application, for an order authorizing the use of evidence from those prior actions. [ 43 ] In my view, there is no valid reason for me to not consider evidence and pleadings from the prior two actions in this the Current Action. Condo Corp was fully involved in those actions and knows intimately well the evidence and pleadings in those actions and their relevance to the issues in the Current Action. Condo Corp cannot claim surprise.

ESD provided notice of its intent to rely upon the pleadings and evidence in these prior actions. I think it common for such applications to use evidence from previous actions to be considered at the main application before the Court. [ 44 ] I grant an order that evidence and pleadings from the 2006 Action and the 2007 Foreclosure Action may be referenced and considered in the Current Action. B. Res Judicata , Issue Estoppel, Cause of Action Estoppel and Abuse of Process 1. Abuse of Process with respect to the Issue regarding 2001 Lease being a nullity

[ 45 ] Counsel for ESD argues that the legal doctrines of res judicata , issue estoppel, cause of action estoppel and abuse of process have application to Condo Corp’s Application (collectively “Abuse of Process Doctrines”). There is considerable overlap in these legal doctrines.

Central to all of the Abuse of Process Doctrines is the principle that the court should not consider a current application because what is in issue, or to be considered or decided, was in fact considered or decided or should have been brought forward, in a previous legal proceeding. [ 46 ] In this case, counsel for ESD asserts that the Abuse of Process Doctrines apply to Condo Corp’s application in the Current Action to nullify the 2001 Lease as that issue was included, or ought to have been included, in the application before Master Smart in 2010 to list the Leased Units for sale free and clear of the 2001 Lease (which application was dismissed). [ 47 ] I am unable to consider this issue further, as it relates to the 2001 Lease being a nullity, as the record before me is inadequate to do so.

The application filed by Condo Corp before Master Smart and the transcript of the proceeding in 2010 are not before me. Counsel for ESD states that he has firsthand knowledge of what transpired at that application, but candidly admits that he cannot and should not be giving evidence on that. The recitals to the Smart Order do not disclose information as to the nature of the application that was dismissed.

Consequently, I am unable to consider whether Condo Corp’s application in this the Current Action to nullify the 2001 Lease was in issue before Master Smart in 2010, or was considered or decided, or ought to have been decided, in that prior proceeding. 2.

Abuse of Process with respect to the Issue regarding the charge under First Condo Caveat [ 48 ] ESD argues that Condo Corp’s application in the Current Action to enforce the charge under the First Condo Caveat is an abuse of process and collateral attack as there is a multiplicity of proceedings to determine the same matter – the amount of the charge under the First Condo Caveat.

ESD says that the amount of the charge under the First Condo Caveat was determined in the Order Nisi (in 2008) and consequently this issue is res judicata. [ 49 ] The First Condo Caveat was registered against title to the Leased Units pursuant to subsection 39.2(6) of the CPA. That subsection, and related subsections that follow, state:

(6) A corporation may file a caveat against the certificate of title to an owner’s unit for the amount of a contribution levied on the owner and interest payable but unpaid by the owner.

(7) On the filing of the caveat under subsection (6), the corporation has a charge against the unit equal to the unpaid contributions and any interest owing.

(8) On and from the date of filing of the caveat, a charge under subsection (7) has the same priority as a mortgage under the Land Titles Act and may be enforced in the same manner as a mortgage.

(9) The Dower Act and

Part 10 of the Civil Enforcement Act do not apply to proceedings under subsection (8).

(10) If a corporation has filed a caveat under this section, the corporation shall withdraw the caveat on the payment to it of the amount of the charge.

(11) Notwithstanding subsection (8), if (

a) a corporation has filed a caveat under this section, (

b) subsequent to the caveat’s being filed another person gains title to the unit pursuant to (

i) a foreclosure action, (ii) an action for specific performance, or (iii) a tax recovery proceeding under the Municipal Government Act, and (

c) an amount remains owing to the corporation with respect to the contribution and interest for which the caveat was filed, the caveat remains registered against the certificate of title of the unit until the amount owing is paid to the corporation. [ 50 ] The First Condo Caveat stated that Condo Corp claimed “...a lien arising out of unpaid condominium fees to date and accelerated to the end of the Condominium Corporation’s fiscal year in the amount of $76,970.05”. [ 51 ] What are commonly called “condominium fees” are called “contributions” under the CPA .

In this case before me, nothing turns on the interchangeable use of these terms by Condo Corp. [ 52 ] Condo Corp states that the enforcement of the charge under the First Condo Caveat is not res judicata as condominium contributions sought in the Current Action are different than the condominium contributions declared owing under the Order Nisi. In the Current Action, the condominium contributions sought are from August 1, 2012 forward (four years after the granting of the Order Nisi).

Therefore, there is no overlap or repetition, in so far as Condo Corp’s claim for unpaid contributions is an in personam claim. [ 53 ] What about the in rem claim? Can different amounts, for different periods of time, be declared due and owing under the same caveat? [ 54 ] Counsel for Condo Corp referred me to the case of Toronto Dominion Bank v Bachand, 2021 ABQB 271 (“ Bachand ”) . In

that case Master Birkett, as she then was, had to consider, among other things, whether a condominium corporation’s caveat secures future contributions. She stated in part (at paragraphs 84 and 85): [84] ... I conclude that the subsections in s 39.2 of the CPA are clear when read in the entire context of the CPA , in their grammatical and ordinary sense, harmoniously with the scheme of the statute, its object, and the intention of the Legislature. Once registered, the caveat acts as security until any and all amounts claimed pursuant to s 39 of the CPA for unpaid contributions are paid.

This would include the specific amount set out in the caveat at the time of registration and future contributions. The caveat also provides security for the interest accruing on those contributions, pursuant to s 40 CPA plus all reasonable costs and expenses pursuant to s 42 CPA . We know that caveat did not specifically claim for future contributions so levied. [85] Furthermore, the Court of Appeal has determined that caveats are not invalid if they do not refer to the exact amount of the indebtedness secured.

See Condominium Corp No 311443 v Goertz , 2016 ABCA 362 at paragraph 36 : … Nothing in the CPA or the Land Titles Act , RSA 2000, c L-4 requires that a specific amount be identified in the caveat or that any such amount be accurate as of the date the caveat is filed. This is because the purpose of a caveat is not to create a right of recovery in a certain amount but rather it is to give third parties notice of a claim to some entitlement, the value of which is to be separately determined. Further, s 39(8) of the CPA does not say that any caveat filed must disclose the exact amount of arrears owed.

Rather, the filing of a caveat creates a charge against the unit in question equal to the amount of arrears, whatever they may be. [ 55 ] ESD says that Bachand is distinguishable, since in this case before me, there is a judgment, in a different action (the 2007 Foreclosure Action), that set the amount of the charge owing under the First Condo Caveat. [ 56 ] Although not specifically argued before me, I believe that the doctrine of merger applies as the charge under the First Condo Caveat merged into the in rem remedy granted under the Order Nisi. [ 57 ] The concept of merger was discussed in some detail by our Court of Appeal in the case of Sherwood Steel Ltd v Odyssey Construction Inc , 2014 ABCA 320 .

Merger is described as being closely related to cause of action estoppel (which was argued before me). At paragraph 16 the Court stated: [16] The point is that the doctrine of merger prevents a claimant from re-litigating a cause of action that has already been adjudicated.

Although the nomenclature “merger” captures the notion of the claim having been merged into the original judgment, a more apt description of the effect of the doctrine is “exhaustion”; that is, upon adjudication, the cause of action is exhausted such that it ceases to exist and cannot support re-litigation. [ 58 ] The Order Nisi granted in the 2007 Foreclosure Action is a judgment. That judgment has both an in personam aspect and an in rem aspect. The in personam aspect is the declaration of the amount owing under the First Condo Caveat and the requirement that the defendants pay that amount.

The in rem aspect of the Order Nisi is the enforcement of the charge under the First Condo Caveat, ie the right to sell the lands to recover the money owing. Both aspects are spent or exhausted. The statutory charge under the CPA arising from registration of the First Condo Caveat merged into the judgment which authorized sale of the Leased Units. [ 59 ] The in rem relief granted under the Order Nisi might still have been available to Condo Corp if it had sued on the judgment within the ten year limitation period under the Limitations Act .

As it has not, the relief granted under the Order Nisi is lost. [ 60 ] With each month that condominium contributions went unpaid after the Order Nisi was granted, Condo Corp had a further in personam claim against the owner of the Leased Units. However, if Condo Corp also wanted an in rem charge, a further caveat needed to be registered. [ 61 ] As indicated above, on the second day of argument I was advised that Condo Corp had registered the Second Condo Caveat against the Leased Units on June 7, 2021 (I gather a surprise to both counsel).

I am not prepared to consider the Second Condo Caveat and what charge may arise from it, as it was not in evidence before me. [ 62 ] All aspects of relief sought by Condo Corp that require Condo Corp to have in rem rights, are refused. This includes the applications for foreclosure of the Leased Units free of the 2001 Lease (or otherwise), preservation and possession of the Leased Units and setting a redemption period (as requested in subparagraphs 3(b)-(

e) of the Amended Originating Application). C. Effect of the Stay under the BIA upon the Bankruptcy of Mercier [ 63 ] Subsection 69.3(1) of the BIA does provide that upon the bankruptcy of a debtor, no creditor has any remedy against the debtor or the debtor’s property, or shall continue any action, execution or other proceeding, for the recovery of a claim provable in bankruptcy. [ 64 ] At the hearing, I asked both counsel if Mercier’s trustee had been discharged, as the stay ceases to apply once that happens.

Neither counsel knew the answer to that question and there was no evidence that addresses that question. In the absence of evidence that Mercier’s trustee has been discharged, I must assume that the trustee has not been discharged. Therefore, the evidence is such that Condo Corp was required to seek an order under s 69.4 of the BIA that the statutory stay of proceedings in place no longer applied to the claims against Mercier in the Current Action. [ 65 ] Condo Corp argues that it is a secured creditor and consequently it does not require leave to carry on this action.

However, I have determined that Condo Corp is not a secured creditor as the charge arising upon the filing of the First Condo Caveat was merged into the Order Nisi. In any event, Condo Corp should have sought leave to pursue the in personam remedies against Mercier (if they were still available after Mercier’s discharge). Since ESD filed its cross application over two years ago noting that the stay under the BIA was still in place, it is surprising that Condo Corp has never sought to lift the stay.

[ 66 ] Given the existence of the statutory stay under the BIA , and the fact Condo Corp has never applied to lift that stay, I will not grant any relief against Mercier with respect to what would be claims provable in his bankruptcy. Since Mercier’s date of bankruptcy was July 15, 2019, condominium contributions due at that date would be claims provable in bankruptcy and would be subject to the stay of proceedings under the BIA . Condominium contributions due after the date of bankruptcy of Mercier are not claims provable in his bankruptcy and would not be caught by the statutory stay.

Consequently, I will only consider applications for relief against Mercier with respect to claims arising after July 15, 2019. D. Is the relief claimed by Condo Corp limitation barred? [ 67 ] ESD argues that most of the relief that Condo Corp seeks in the Current Action is limitation barred. 1. In personam debt claim for condominium contributions a.

As against ESD [ 68 ] There is no disagreement between the parties that Condo Corp’s in personam claims for condominium contributions that became due and owing within the applicable limitation period, are not limitation barred. [ 69 ] The Originating Application was filed February 29, 2016, but ESD was not named as a Respondent until the filing of the Amended Originating Application on December 6, 2018.

As Condo Corp did not seek a remedial order against ESD until that latter date, claims for condominium contributions against ESD that became due and owing within two years prior to that date (ie from and after December 6, 2016 forward) are not limitation barred. [ 70 ] The parties are not in disagreement that Condo Corp’s in personam claims for condominium contributions accruing due more than two years before commencement of the Current Action, as against ESD, are limitation barred. [1] [ 71 ] In its first brief, Condo Corp asserts (at paragraph 19) that the amount due and owing for condominium contributions with respect to the Leased Units, from July 1, 2012 to June 1, 2022, is $1,153,428.10.

However, there is no evidence with respect to this calculation and consequently, I cannot determine the amount of condominium contributions that are not limitation barred. The only evidence on outstanding condominium contributions with respect to the Leased Units is Exhibit “N” to the Affidavit of Condo Corp’s representative Raymond Royer. That Exhibit shows that the outstanding balance at December 1, 2015 was $460,832.26 (going back to August 1, 2012). No evidence as to condominium contributions in the last seven years has been put forward on behalf of Condo Corp.

Counsel for Condo Corp stated that he anticipated a further hearing on amount, since it is a moving target on a monthly basis. [ 72 ] Consequently, although I will consider further in this Memorandum of Decision Condo Corp’s application for judgment against ESD for contributions accruing due from and after December 6, 2016, I will not be able to set an amount for this claim. b.

As against Mercier [ 73 ] As indicated earlier, claims for condominium contributions against Mercier due and owing at his date of bankruptcy (July 15, 2019) are subject to the statutory stay under the BIA (and may in fact be discharged as a result of Mercier’s discharge from bankruptcy). Claims for contributions after that date are not.

Since Condo Corp commenced this action well before Mercier’s bankruptcy (the Current Action against Mercier was commenced on February 29, 2016), the Limitations Act does not bar Condo Corp’s in personam claims against Mercier after his date of bankruptcy, being July 15, 2019. [ 74 ] Although I cannot set amounts for the in personam claims against ESD and Mercier, I will consider the merits of such claims on a principled basis (as set out below). 2. Condo Corp’s assertion that its claims are declaratory and not subject to the Limitations Act a.

The Declaratory Claims made by Condo Corp [ 75 ] Condo Corp asserts that certain items of relief sought by it are declaratory only and consequently are not limitation barred. I note the following are declarations sought in the Amended Originating Application: (

a) a declaration that the 2001 Lease is an illegal subdivision; (

b) a declaration that Mercier and ESD have engaged in improper conduct under the CPA and the Bylaws; and (

c) a declaration that all costs incurred by Condo Corp in remedying the improper conduct of ESD and Mercier may be added to and become part of the monthly assessment against the Leased Units. [ 76 ] Although not requested within the Amended Originating Application, Condo Corp also seeks declarations that: (

a) the 2001 Lease is void and unenforceable as it is ultra vires the CPA and is in substance an illegal transfer of the Leased Units; and (

b) ESD is an owner within the meaning of that term in the CPA . b. Declaratory Claims versus Remedial Orders [ 77 ] Subparagraph 3(1) of the Limitations Act sets out the general limitation periods applicable to litigation in this province . That subsection states:

3(1) Subject to subsections (1.1) and (1.2) and sections 3.1 and 11, if a claimant does not seek a remedial order within (a) 2 years after the date on which the claimant first knew, or in the circumstances ought to have known, (

i) that the injury for which the claimant seeks a remedial order had occurred, (ii) that the injury was attributable to conduct of the defendant, and (iii) that the injury, assuming liability on the part of the defendant, warrants bringing a proceeding, or (b) 10 years after the claim arose, whichever period expires first, the defendant, on pleading this Act as a defence, is entitled to immunity from liability in respect of the claim. [ 78 ] “Remedial order” is defined in

section 1(

i) of the Limitations Act as “... a judgment or an order made by a court in a civil proceeding requiring a defendant to comply with a duty or to pay damages for the violation of a right, but excludes (

i) a declaration of rights and duties, legal relations or personal status, (ii) the enforcement of a remedial order, (iii) judicial review of the decision, act or omission of a person, board, commission, tribunal or other body in the exercise of a power conferred by statute or regulation, or (iv) a writ of habeas corpus”. (underlining added by me for emphasis) [ 79 ] Simply, if the relief sought by Condo Corp is truly declaratory, it is not subject to prescription under subsection 3(1) of the Limitations Act.

If the relief sought by Condo Corp is a remedial order, it is subject to prescription under subsection 3(1) of the Limitations Act . [ 80 ] The leading case in our jurisdiction on the distinction between a remedial order and declaratory relief is Yellowbird v Samson Cree Nation No. 444, 2008 ABCA 270 .

In that case, the Court of Appeal agreed with the following test enunciated by the trial judge (at paragraph 45): If the Court granted the declaration, and the defendant resisted the implementation of the declaration, could the plaintiff “leave the court in peace” and enjoy the benefits of the declaration “without further resort to the judicial process”? [ 81 ] I also note that in the case of Ginn v Feng, 2021 ABQB 292 the Court noted the importance of following the wording in the definition of “remedial order” in determining whether the relief sought requires the defendant “to comply with a duty or pay damages for violating a right” (at paragraph 20). [ 82 ] It is also important to note that the Court of Appeal stated in the case of Joarcam, LLC v Plains Midstream Canada ULC, 2013 ABCA 118 that (at paragraph 7 ): A claim for declaratory relief is an exception to the usual remedial order sought in litigation.

Indeed, the exception is as to “a declaration of rights and duties, legal relations or personal status,”: Act,

section 1(i)(i). It is construed narrowly so as to discourage litigants from claiming declaratory relief merely to avoid the limitation period. The task of the court is to characterize the remedy actually being sought. c. Declaration sought that the Lease is an illegal subdivision [ 83 ] ESD says that Condo Corp would not be able to leave the Court in peace and enjoy a declaration that the 2001 Lease is an illegal subdivision but would need further legal intervention. I agree with ESD.

Items of relief sought in the Amended Originating Application that follow this request for the declaration include “directing the Registrar of Land Titles to immediately cancel the (2001 Lease) Caveat improperly registered in respect of the

(2001) Lease...and directing the Registrar of Land Titles to cancel the certificates of title issued in respect of the Leased Lands, and to issue new certificates of title in the name of ESD or alternatively Condo Corp”. [ 84 ] ESD also said that Condo Corp would also need a remedial order to gain access to the Leased Units (if the declaration of illegality of the 2001 Lease were made). Condo Corp says “(t)his is only true if ESD intends to refuse to comply with its legal obligations”.

Condo Corp is missing the point made by the Court of Appeal, that one must assume that the defendant would resist the implementation of the declaration. Rather Condo Corp’s argument presumes that ESD would cooperate. [ 85 ] I find that Condo Corp’s application to declare that the 2001 Lease is an illegal subdivision is not merely declaratory but is in fact seeking a remedial order.

Consequently, the limitation period prescribed in subsection 3(1) of the Limitations Act for remedial orders , applies to the application for a declaration that the 2001 Lease is illegal. [ 86 ] Condo Corp’s argument that the relief that it seeks with respect to its illegal subdivision argument is declaratory, is a tacit admission that if it is in fact remedial, it would be limitation barred. In any event, I note that as the 2001 Lease was entered into in 2001 and the Liberty Building became a condominium in 2002, this part of Condo Corp’s application has been limitation barred for many

years. [ 87 ] Consequently, Condo Corp’s applications under subsections (

b) and (

c) of

Section 1 of the Amended Originating Application are refused. d. Declaration sought that the 2001 Lease is void and unenforceable as being ultra vires the CPA and is in substance an illegal transfer [ 88 ] In its brief, Condo Corp also asserts that the 2001 Lease is void and unenforceable as being ultra vires the CPA and is in substance a transfer of the Leased Units from Pinehurst to ESD.

Although the Amended Originating Application did not ask for this, I do want to state that I believe that an application seeking a declaration to this effect would suffer the same consequence as the declaration that the 2001 Lease is an illegal subdivision. That is, the declaration in and of itself would not be something with which Condo Corp could leave the Court in peace, without requiring a further remedy. Such relief if applied for, would also be limitation barred.

This relief is something that could have been requested by Condo Corp twenty years ago. [ 89 ] Condo Corp argues that a limitations defense cannot be raised to protect an illegal contract. Counsel for Condo Corp refers to Condominium Plan No. 8222909 v Francis, 2003 ABCA 234 (“Francis”) . In that case a condominium corporation passed a bylaw and gave a rebate to ten townhouse owners with respect to their condominium contributions (the other condominium owners were owners of high-rise units). When this was done, the CPA only allowed assessment of contributions based on unit factors.

The trial judge determined that the rebate scheme was not ultra vires the CPA and the condominium corporation appealed. The Court of Appeal allowed the appeal and concluded that the rebate bylaws and agreements were ultra vires the CPA . With respect to the argument that the doctrines of laches and estoppel applied, the Court said that these doctrines cannot legitimize an otherwise illegal act. [ 90 ] In Francis , no argument was made that a cause of action was limitation barred. In that case the townhouse owners were the proponents arguing that their claim for the condominium contribution rebate should succeed.

It was not the opponents to the remedial order that were arguing laches or estoppel, but rather the proponents. That is why the Limitations Act was never a consideration . [ 91 ] In this case, it is the party responding to the request for a remedial order that is arguing that the application is limitation barred.

I find that Francis is distinguishable. [ 92 ] Furthermore, in the case of Koziey Estate (re), 2019 ABCA 43 , the Court of Appeal noted (at paragraph 19 of that decision) that in the case of Reeder v Woodward, 2016 ABCA 91 the Court had concluded “If inactivity and acquiescence could stop the clock, the repose and immunity promised by the Limitations Act would disappear.” [ 93 ] Condo Corp’s application for a declaration that the 2001 Lease is void and unenforceable as being ultra vires the CPA is limitation barred. e.

Declaration sought that Mercier and ESD have engaged in improper conduct under the CPA and the Bylaws [ 94 ] Can Condo Corp leave this Court in peace with a declaration that Mercier and ESD have engaged in improper conduct by failing to comply with the CPA and the Bylaws? This is the relief sought in subsection (

a) of

Section 2 of the Amended Originating Application. [ 95 ] “Improper conduct”, as defined under clause (

a) of subsection 67(1) of the CPA, includes: (

i) non-compliance with the CPA, the regulations or the bylaws by an owner; ... (iii.1) the conduct of an owner that is oppressive or unfairly prejudicial to the corporation, a member of the board or another owner; ... [ 96 ] “Interested party” is defined in clause (

b) of the same subsection as an owner, a corporation, a member of the board, a registered mortgagee or any other person who has a registered interest in a unit. [ 97 ] Condo Corp asserts that the unilateral appropriation and exclusive use of the common property adjacent to the Leased Units (which I have previously defined as the ESD-Common Property) by ESD and Mercier is improper conduct. [ 98 ] The remedies sought in subsections (b), (

c) and (

d) of

Section 2 of the Amended Originating Application betray the fact that Condo Corp could not leave this Court in peace with a declaration of improper conduct alone but would need more than a mere declaration. Those subsections ask for (

b) an immediate injunction prohibiting Mercier and ESD from engaging in the improper conduct of unilateral appropriation and exclusive use of the common property; (

c) directing that should ESD and Mercier continue appropriation and exclusive use of the common property, Condo Corp may enter the Leased Lands to construct a dividing wall and charge the cost of doing so to ESD and Mercier; and (

d) in the alternative, an order directing ESD and Mercier to enter into a lease with Condo Corp. [ 99 ] As the relief sought by Condo Corp under

Section 2 of the Amended Originating Application is truly remedial and not just declaratory, the time limits set out in the Limitations Act apply. [ 100 ] The renovation of the ESD-Common Property was done by ESD before the Liberty Building became a condominium. As such, the renovation itself cannot be considered improper conduct and relief sought with respect to it would also be limitation barred. [ 101 ] ESD’s continued use and occupation of this area, allowed by Mercier, is something that has carried on and does continue to

carry on. Although Condo Corp would be limitation barred from seeking a remedial order (such as damages) for improper conduct that occurred more than two years before the Current Action was commenced, it would not be limitation barred in seeking a remedial order for improper conduct within the period after the two years prior to commencement of the Current Action. As against Mercier, that would be for alleged improper conduct after February 28, 2014 and as against ESD for alleged improper conduct after December 6, 2016. [ 102 ] Consequently, although the remedies sought under

Section 2 of the Amended Originating Application are subject to the limitation periods set out in subsection 3(1) of the Limitations Act , since the alleged improper conduct is ongoing, I will consider further in this Memorandum of Decision whether the claim for improper conduct is sustainable. f.

Declaration sought that all costs incurred by Condo Corp in remedying the improper conduct of ESD and Mercier may be added to and become part of the monthly assessment against the Leased Lands [ 103 ] This declaratory relief would also require a remedial order to enforce it and therefore would be subject to the limitations provisions under subsection 3(1) of the Limitations Act. However, a remedial order for costs incurred by Condo Corp in remedying improper conduct that is not limitation barred, would also need to be considered. g.

Declaration sought that ESD is an “owner” [ 104 ] Condo Corp cannot enjoy the benefits of a declaration that ESD is an owner, without more, but would also need a coercive order requiring ESD to fulfill the duties of an owner. Consequently, this claim by Condo Corp is for a remedial order that is subject to the limitation provisions found under subsection 3(1) of the Limitations Act . [ 105 ] The assertion that ESD is an owner is a claim that may have first been made many years ago and therefore could be limitation barred.

However, whether ESD is an owner is an ongoing question that needs to be answered with respect to claims that are made within the limitation period, including whether ESD is liable for condominium contributions and whether ESD has liability for improper conduct in the limitation period. 3. Conclusions on Declaratory Relief sought and application of the Limitations Act [ 106 ] Given the complexity of issues discussed with respect to declaratory relief, it would be useful for me to stop and summarize issues that have been determined and those that remain for consideration.

Conclusions to this point include the following: (

a) All applications by Condo Corp for declarations are truly applications for remedial orders and the Limitations Act applies; (

b) Condo Corp’s applications that the 2001 Lease is a nullity or is void are dismissed as being limitation barred. (I note parenthetically that with this conclusion ESD’s argument that the Abuse of Process Doctrines prevent Condo Corp from applying to have the 2001 Lease nullified has become moot); (

c) Claims by Condo Corp that are not completely limitation barred and must be considered further, include the following: (

i) Whether Mercier has in personam liability for condominium contributions accruing due after July 15, 2019 (his date of bankruptcy); (ii) Whether ESD is an “owner” and consequently has in personam liability for condominium contributions accruing due after December 6, 2016 (the date which is two years before commencement of the Current Action as against ESD); and (iii) Whether ESD (as an owner) and Mercier have engaged in improper conduct with respect to use and occupation of the ESD- Common Property and if so, is Condo Corp entitled to the remedies sought in

Section 2 of the Amended Originating Application. E. Does Mercier have in personam liability for condominium contributions accruing due on or after July 15, 2019? [ 107 ] Condominium contributions accruing due after Mercier became bankrupt are not claims provable under

section 121 of the BIA and consequently Mercier remains liable for those contributions. Evidence has not been provided to prove the amounts for which Mercier is liable. F. Is ESD an “owner” and consequently has in personam liability for condominium contributions accruing due after December 6, 2016? [ 108 ] The term “owner” is defined at s 1(

s) of the CPA as “...a person who is registered as the owner of (

i) the fee simple estate in a unit, or (ii) the leasehold estate in a unit when the parcel on which the unit is located is held under a lease and a certificate of title has been issued under section 5(1)(

b) in respect of that lease. Condo Corp says that “...(

a) leasehold estate in a unit is accordingly treated as legally and functionally equivalent to a fee simple estate, at least for the purposes of obligations of “ownership” of a unit in the collective property ownership structure that is condominiums.” (at paragraph 46 of its first brief). [ 109 ] Conversely, ESD provides two reasons why this

interpretation of the term “owner” is incorrect. [ 110 ] Firstly, ESD notes that the definition of “owner” refers to “the leasehold estate in a unit when the parcel on which the unit is located is held under a lease and a certificate of title has been issued... (emphasis added). “Parcel” is defined in the CPA as “...the land comprised in a condominium plan”. This contemplates the entire condominium plan being held as a leasehold estate, such as properties

held in the national parks at Banff and Jasper pursuant to federal legislation. Based upon the plain wording of the definition, the term “owner” is only intended to include the lessees of the entire condominium plan. [ 111 ] Secondly, s 39.2(4) of the CPA allows a condominium corporation to collect rent from a tenant of a unit to be applied against outstanding condominium corporations owed by the owner. This provision would be unnecessary and would be redundant if Condo Corp’s

interpretation of the term “owner” were correct. In fact, if Condo Corp were correct, every tenant leasing a condominium unit from an owner would also be an owner, which is clearly not the correct

interpretation of the legislation. [ 112 ] I also note that ESD argues further that the Bylaws do not grant Condo Corp the authority to levy condominium contributions against tenants and consequently any attempt by Condo Corp to do so against ESD is in breach of the Bylaws. [ 113 ] Finally, I want to note that ESD states that there is a certain irony in Condo Corp now trying to hold ESD liable as an owner, since for years of litigation, Condo Corp refused to include ESD as a respondent, because it was not an owner. [ 114 ] I conclude that ESD is not an “owner” within the meaning of the CPA and does not have liability for condominium contributions in respect of the Leased Units.

G. Have ESD and Mercier engaged in improper conduct with respect to use and occupation of the ESD-Common Property? [ 115 ] As ESD is not an owner, it is not capable of committing improper conduct. Pursuant to the definition of “improper conduct” found in subsection 67(1) of the CPA it is only the conduct of a developer, a condominium corporation, an employee of the condominium corporation, a member of the board or an owner that may be improper. [ 116 ] Mercier, as a unit owner in the condominium complex, may have engaged in improper conduct.

Conceivably, an owner allowing his tenant to use and exclusively occupy common property of the condominium corporation could constitute improper conduct. If Mercier has liability for improper conduct, the potential remedies available are found under subsection 67(2) of the CPA, which states:

(2) Where on an application by an interested party the Court is satisfied that improper conduct has taken place, the Court may do one or more of the following: (

a) direct that an investigator be appointed to review the improper conduct and report to the Court; (

b) direct that the person carrying on the improper conduct cease carrying on the improper conduct; (

c) give directions as to how matters are to be carried out so that the improper conduct will not reoccur or continue; (

d) if the applicant suffered loss due to the improper conduct, award compensation to the applicant in respect of that loss; (

e) award costs; (

f) give any other directions or make any other order that the Court considers appropriate in the circumstances. [ 117 ] Condo Corp seeks remedies regarding the ongoing use and occupation of the ESD-Common Property, including a prohibitory injunction against further use and occupation, an order authorizing Condo Corp to enter and construct a dividing wall (at the expense of Mercier and ESD), or an order requiring Mercier and ESD to enter into a lease with Condo Corp. [ 118 ] It seems to me that Condo Corp could potentially be entitled to a remedy that would affect ESD for improper conduct committed by Mercier, as ESD’s use and occupation of the ESD-Common Property is pursuant to the terms of the 2001 Lease granted by Mercier to ESD. [ 119 ] Although I have determined that Condo Corp’s application to nullify the 2001 Lease is limitation barred, I must consider whether ESD’s continued use and occupation of the ESD-Common Property pursuant to the 2001 Lease is improper conduct on the part of Mercier.

This leads to a clash between the rights granted to ESD under the 2001 Lease and the rights and obligations of Condo Corp with respect to common property, pursuant to the CPA. [ 120 ] With respect to this clash, both parties refer to the case of Calgary Jewish Academy v Condominium Plan 9110544, 2014 ABCA 279 (“CJA”) as supporting their respective arguments. [ 121 ] In CJA, Academy leased from the City of Calgary a parcel of land for parking and other purposes (the “Land”).

Academy filed a caveat with respect to its lease (“First Academy Caveat”). [ 122 ] The City sold the Land to a developer (“Calgary Developer”) who intended to build a condominium on the property purchased. [ 123 ] Academy entered into a new lease with Calgary Developer on essentially the same terms and filed a further caveat (“Second Academy Caveat”). [ 124 ] The condominium plan was registered and the First Academy Caveat was discharged. The Second Academy Caveat was registered against the certificates of title to all units in the condominium corporation.

[125] Calgary Developer wanted the Second Academy Caveat discharged from the certificates of title to the condominium units andasked Academy to enter into a new lease (“New Lease”). This New Lease was registered as an instrument against the CondominiumAdditional Plan Sheet Certification. A court order was required to make this registration as the Registrar of Land Titles refused toregister the New Lease on the basis that it could be a subdivision.

That court order was granted. [126] The condominium corporation challenged the validity of the New Lease on the basis that the granting of the New Lease was notdone in accordance with the requirements of the CPA (the requirement of a unanimous resolution from all interested persons was notmet) and therefore the granting of the New Lease was ultra vires the condominium corporation.

Evidence was also provided that twopurchasers (Smith and Francis) purchased their units before the plan registration and the existence of the Academy Lease was notdisclosed on the estoppel certificate (suggesting they could not have been aware of a lease in favour of Academy). [127] The majority of the Court found that the New Lease was valid as it was registered under and pursuant to the Land Titles Act andthat the certificate from the condominium corporation was “conclusive proof” of the proper passing of the requisite resolution. [128] Justice O’Ferrall wrote a concurring opinion, but he considered the issue in a somewhat different context.

He stated, in part: [47] While I concur completely with the reasons of the majority, I believe this dispute could also have been decided by applyingthe fundamental principle governing our Torrens system of land titles, namely that purchasers of real property subject to priordispositions validly made take title subject to those dispositions.

On this basis, I believe this appeal should be allowed and the CondoCorp Lease declared valid. [48] This Court has held that “nothing in the Condominium Property Act… in any way undermines the indefeasibility provisionsso clearly expressed in, and which underly, the Land Titles Act of Alberta” : Adler Furman & Associates Ltd. v. Condominium PlanCDE 13442, 1985 ABCA 1, [1985] AJ No 699. [49] This Court has also said that we “should be slow to accept any unnecessary disruption of the anchor principle of the Torrenssystem, indefeasibility.

A concomitant principle should command me to interpret strictly any statutory exception to indefeasibility unlessto do so would do violence to the evident object of the derogation”: Petro-Canada Inc v Shaganappi Village Shopping Centre Ltd(1991), 1990 ABCA 261 , 109 AR 237, 76 Alta LR (2d) 162. [50] Indefeasibility of title is an essential feature of the Land Titles Act: 62(1) Every certificate of title granted under this Act …, so long as it remains in force and uncancelled under this Act, is conclusive proofin all courts as against … all persons whomsoever that the person named in the certificate is entitled to the land included in the certificatefor the estate or interest specified in the certificate … except as against any person claiming under a prior certificate of title granted underthis Act or granted under any law heretofore in force relating to titles to real property in respect of the same land. ... [71] On the basis of the evidence adduced by Ms.

Smith and Ms. Francis, it was clear that purchasers of units in this condominium,by operation of the Land Titles Act, were alerted to the prior leasing of the common property, whether such lease was registered againstthe undivided property (i.e., the pre-condominium parcel), against each unit (post-condominium plan registration) or against the commonproperty (following the April 16 court order directing the Registrar to register it). The owners’ interest in land is therefore subject to theclaims of the lessee, the School. [72] The Torrens system assures indefeasibility of title.

Nothing in the Condominium Property Act undermines this principle, noteven an erroneous estoppel certificate. As this Court stated some two decades ago, disrupting this anchor principle is only permissible invery limited circumstances. [129] In my view, the case before me is distinguishable from CJA. The case before me does not challenge the anchor principle of theTorrens system, indefeasibility.

Although the 2001 Lease Caveat was initially registered against the titles to all units, it was discharged(except as against the Leased Units) and the 2001 Lease Caveat was never registered against the Additional Plan Sheet Certificate. [130] If the 2001 Lease was not registered (by caveat or otherwise) against the condominium unit certificates of title, or the AdditionalPlan Sheet Certificate, there is not a prior registration with respect to the 2001 Lease that can affect the ownership of the commonproperty by the other unit owners. There is no separate certificate of title for the common property.

Common property ownership isreflected in the notation on the certificate of title for each condominium unit as to a certain number of undivided interests in the commonproperty. If there were something in the Additional Plan Sheet Certificate, that would be noted on the certificates of title to the units. There is not (except for the Leased Units). [131] Consequently, ownership of the common property by the unit owners is not subject to the 2001 Lease (except with respect to theundivided units that Mercier owns with respect to the Leased Units).

In my view, the registration of the Lease Caveat against the LeasedUnits only, does not make all of the common property subject to the 2001 Lease. [132] ESD is occupying and exclusively using the ESD-Common Property pursuant to an unregistered leasehold interest, that doesnot have priority over the condominium unit owners, with respect to their ownership of the common property.

In my view, that isimproper conduct on the part of Mercier and I need to consider what remedy may be available in this circumstance. [133] However, before considering a remedy, I must consider an alternative argument made by ESD: that through the doctrine ofadverse possession ESD owns the ESD-Common Property that it renovated over twenty years ago and has been using ever since. H. Adverse Possession

[ 134 ] Both parties agree that the case of Lutz v Kawa, 1980 ABCA 112 (“Lutz”) is the leading case in this province on the subject of adverse possession. In that case the Court stated (at paragraph 19): The usual description of the type of possession necessary for adverse possession in Canada is that it is "an actual possession, an occupation exclusive, continuous, open or visible and notorious" for the requisite period, ( Sherren v. Pearson (1886) 1887 CanLII 39 (SCC), 14 S.C.R. 581 at 585). [ 135 ] Pursuant to the provisions of

section 3 of the Limitations Act, the requisite period of time is ten years. This means that the titled owner of the lands in dispute must have been dispossessed of their property for at least ten years. [ 136 ] A determination by the Court of adverse possession may be recognized by a registration made under

section 74 of the Land Titles Act . That

section states: Registration of judgment quieting title, etc. 74(1) Any person recovering against a registered owner of land a judgment declaring that the person recovering the judgment is entitled to the exclusive right to use the land or that the person recovering the judgment be quieted in the exclusive possession of the land, pursuant to the Limitation of Actions Act , RSA 1980 cL-15, or pursuant to an immunity from liability established under the Limitations Act , may file a certified copy of the judgment in the Land Titles Office.

(2) Subject to

section 191, the Registrar shall (

a) enter on the certificate of title a memorandum cancelling the certificate of title, in whole or in part, according to the terms of the judgment, and (

b) issue a new certificate of title to the person recovering the judgment. [ 137 ] In Law v Lau , 2015 ABQB 423 (“Lau”) , the Court stated: [58] Inherent in the term “adverse possession” is the absence of consent or permission.

Thus, an “adverse possessor” is a claimant who is in possession of a property without the permission of the legal owner. [59] The burden of proof is on the person asserting adverse possession: see O’Brien v Fox , 2000 ABQB 1002 , 280 A.R 153, citing Handley v Archibald (1899), 1899 CanLII 79 (SCC), 30 SCR 130 at 137. [ 138 ] In this case before me, the burden is upon ESD to prove that it has been in exclusive, continuous, actual possession of the subject property, which has been open or visible and notorious, for at least ten years. [ 139 ] As stated in Lau , ESD’s possession must be “adverse”.

It cannot be possession with permission of the lawful owner, through some form of license or permission. [ 140 ] Condo Corp argues that the doctrine of adverse possession is incompatible where the issue is between tenants in common, because there is an implied permission between tenants in common to the others’ use and possession. Great reliance is placed upon the decision of Madam Justice Shelley in Verhulst Estate v Denesik, 2016 ABQB 668 .

In that case, after a scholarly review of the history of adverse possession in this province and considering whether decisions in other provinces have any bearing in our jurisdiction, Madam Justice Shelley stated (at paragraphs 50-53): [50] While there is little precedent in Alberta addressing this issue, I conclude that the unity of possession inherent in a tenancy in common will generally preclude an adverse possession claim.

Given the lack of a statutory provision explicitly authorizing adverse possession claims by one tenant in common against another, it is unlikely that a claim for adverse possession will succeed. The fact that two tenants in common are both registered on title and have the right to undivided possession of the whole suggests that, by the very nature of a tenancy in common, one co-owner would never be on the property without the “knowledge” and “permission” of the other co- owner.

As the Alberta Court of Appeal recently affirmed, adverse possession must be “adverse”, and consent of the registered owner will preclude a claim ( Reeder v Woodward ). [51] Though the law in other jurisdictions has developed in accordance with

section 12 of the 1833 Real Property Limitations Act , Alberta appears to be the exception to this rule. Other Canadian jurisdictions have allowed adverse possession claims by one tenant in common against another, though as seen in Blundon this may require “exceptional” circumstances. However, these jurisdictions have specific statutory provisions that provide for adverse possession claims as between joint tenants or tenants in common. Thus, the precedential value of these decisions is limited.

Based on Alberta’s statutory scheme and the evolution of the law since 1833, Alberta’s lack of explicit authorization for a claim between tenants in common may preclude such a claim. I conclude that it is extremely difficult, if not impossible, to establish such a claim in Alberta. [52] Even if an adverse possession claim is possible, for it to succeed, it is likely that the actions of one tenant in common would need to rise to the level of something akin to ouster.

As seen in Zigelstein , not wishing to make use of a property does not equate to an intention to abandon ownership, particularly in the context of tenants in common. [53] For the purposes of this appeal, it is not necessary for me to determine the broader issue of whether the law in Alberta precludes a successful adverse possession claim by a co-tenant in all cases. [ 141 ] In this case before me, all of the condominium unit owners are tenants in common with respect to the common property. Mercier is a tenant in common of the common property.

ESD is not but makes its claim through the 2001 Lease granted by Mercier. [ 142 ] Condo Corp also refers to the British Columbia case of Bond v The Owners, Strata Plan NW 2671, 2019 BCCRT 344

(“Bond”) . In that case the Civil Resolution Tribunal ruled that a claim for adverse possession is contrary to the principles of common ownership that govern any strata corporation. Condo Corp says that this statement from Bond is applicable in Alberta as well, with respect to common ownership of common property under the CPA . [ 143 ] I agree with Condo Corp that the doctrine of adverse possession has no place for operation with respect to common property in a condominium complex where the common property is owned by all of the unit owners as tenants in common.

Adverse possession of common property is antithetical to the concept of ownership of that property. [ 144 ] I conclude that ESD does not have a claim for adverse possession with respect to any of the ESD-Common Property in the Liberty Building. I. Remedy for Improper Conduct [ 145 ] Having found that Mercier has been guilty of improper conduct under the CPA by allowing its tenant ESD to exclusively use and occupy the ESD-Common Property of the Liberty Building from and after December 6, 2016, what is the appropriate remedy in this case? [ 146 ] In

section 2(

b) of the Amended Originating Application, Condo Corp seeks an immediate injunction prohibiting Mercier and ESD from engaging in the improper conduct of unilateral appropriation and exclusive use of the ESD-Common Property. Counsel for Condo Corp acknowledges that I do not have the jurisdiction to grant an injunction but suggests that given the very broad scope of subsection 67(2) of the CPA I may grant an order prohibiting the improper conduct. I agree that I could grant such a remedy. However, given the extensive changes made by ESD to the ESD-Common Property, I am prepared to grant an alternative remedy requested by Condo Corp. [ 147 ] In

section 2(

c) of the Amended Originating Application, Condo Corp asks for an order that if Mercier and ESD continue appropriation and exclusive use of the ESD-Common Property, Condo Corp may enter and construct a dividing wall and charge the cost of doing so to Mercier and ESD. Given the very broad spectrum of remedies set out in subsection 67(2) of the CPA, there is nothing restricting me from granting this remedy. The construction of a dividing wall makes good sense. However, as ESD is not an owner, the cost of this construction should not be borne by ESD.

I would think that it would be appropriate that the cost of constructing this wall to enclose the 443 square feet making up the ESD-Common Property should be split equally between Condo Corp and Mercier. [ 148 ] Although pled as an alternative remedy to 2(c), I think it would also be appropriate for ESD to enter into a lease with Condo Corp of the ESD-Common Property (requested under 2(

d) of the Amended Originating Application), at a market rate to be set by this Court, if the parties cannot agree on what is market rate. V. Conclusions [ 149 ] My conclusions with respect to the cross applications before me are as follows: (

a) The pleadings and evidence from the 2006 Action and the 2007 Foreclosure Action are properly before me and were considered by me as were relevant; (

b) ESD’s application to dismiss the Current Action as an abuse of process has not been decided with respect to Condo Corp’s application for a declaration that the 2001 Lease is a nullity, due to a lack of evidence. However, in light of my ruling regarding this application being subject to the Limitations Act, it is now moot; (

c) The statutory charge granted by the CPA with respect to the First Condo Caveat merged into the judgment granted under the Order Nisi. All aspects of relief sought by Condo Corp that require Condo Corp to have in rem rights, are refused. This includes the applications for foreclosure of the Leased Units free of the 2001 Lease (or otherwise), preservation and possession of the Leased Units and setting a redemption period (as requested in subparagraphs 3(b)-(

e) of the Amended Originating Application). (

d) Condo Corp’s application for remedies against Mercier are stayed with respect to all claims against him that may be claims provable in bankruptcy. Condo Corp’s claims against Mercier for claims arising after Mercier’s date of bankruptcy (July 15, 2019) are not stayed; (

e) All declaratory relief sought by Condo Corp is truly remedial and subject to limitation periods prescribed in subsection 3(1) of the Limitations Act; (

f) Condo Corp’s application for a declaration that the 2001 Lease is an illegal subdivision is limitation barred; (

g) Condo Corp’s application for a declaration that the 2001 Lease is an illegal transfer and void and is ultra vires the CPA is limitation barred; (

h) Mercier has in personam liability for condominium contributions accruing due after July 15, 2019; (

i) Condo Corp’s application for a declaration that ESD is an “owner” within the meaning of the CPA is dismissed. ESD does not have liability for condominium contributions; (

j) ESD’s claim for adverse possession with respect to the ESD-Common Property is denied; (

k) Mercier is guilty of improper conduct in purporting to lease the ESD-Common Property to ESD, where the 2001 Lease does not have priority. Condo Corp is authorized to construct a dividing wall to enclose the ESD-Common-Property, the cost of which is to be

split equally between Mercier and Condo Corp. (

l) Condo Corp shall lease the ESD-Common Property to ESD at a market rate which will be set by this Court if Condo Corp and ESD cannot agree on what is market rate; and (

m) Costs of this application may be spoken to in morning chambers, if necessary. Heard on the 7 th and 8 th days of December, 2022. Dated at the City of Edmonton, Alberta this 3 rd day of March , 2023. B.W. Summers A.J.C.K.B.A. Appearances: Roberto Noce KC and Michael Gibson Miller Thomson LLP for the Applicant Rod J. Wasylyshyn and Aaron M. Hymes Ogilvie LLP for the Respondent Edmonton Salvage Disposal Ltd