The Owners: Condominium Plan No., 2022 ABKB 826

Court of King’s Bench of Alberta Citation: The Owners: Condominium Plan No. 9311533 v Shui Ming Tong Foundation, 2022 ABKB 826 Date: 20221209 Docket: 2201 04270 Registry: Calgary Between: The Owners: Condominium Plan No. 9311533 Plaintiff - and - Shui Ming Tong Foundation Defendant _______________________________________________________ Reasons for Decision of Applications Judge J.T.

Prowse _______________________________________________________ [ 1 ] The first question to be determined is whether the plaintiff, a condominium corporation governed by the Condominium Property Act , RSA 2000, c C-22 (“ CPA ”), must bring foreclosure proceedings against owners of units to collect unpaid contributions within two years of the contribution becoming due and unpaid. [ 2 ] In other words, is a unit owner such as the defendant entitled, pursuant to the Limitations Act , RSA 2000, c L-12 , to immunity from liability for unpaid contributions which arose more than two years prior to the legal proceedings being commenced against them? [ 3 ] The second question I have been asked to determine is whether, if some of the contribution arrears are limitations barred, can they plaintiff condominium corporation still maintain the caveat regarding arrears which it filed pursuant to the CPA? [ 4 ] In other words, where

section 39.2(10) of the CPA says that caveats shall be withdrawn on the payment of the amount of the charge, does that implicitly mean payment of the amount of the charge which is not limitations barred ?

The analogy with mortgage foreclosure actions [ 5 ] If we look by analogy to claims by mortgage lenders against borrowers, we see that claims against borrowers are limitations barred if not commenced within 2 years of default. This was confirmed by the Alberta Court of Appeal in Daniels v.

Mitchell , 2005 ABCA 271 , 2005 CarswellAlta 1332. [ 6 ] In a mortgage foreclosure (on a corporate or hi-ratio mortgage where the Law of Property Act does not prohibit claims on the covenant to repay) the foreclosing lender seeks two things: firstly an in personam judgment against the borrower based on the covenant to repay, and secondly an in rem judgment to enforce security against the land subject to the mortgage. [ 7 ] In a mortgage, the in personam and in rem rights exist concurrently, from the time the mortgage loan is advanced. [ 8 ] The situation with respect to condominium fee foreclosures differs in one respect. [ 9 ] While the right of a condominium corporation to pursue the in personam claim exists as soon as the unit owner defaults in payment of a contribution (see

section 39.2(2) of the CPA) the right to seek an in rem remedy does not arise as soon as default is made in payment of the contribution. [ 10 ] The right to pursue the in rem claim against the unit (absent a charging provision located in the condominium bylaws) arises when the condominium corporation registers a caveat against title to the unit pursuant to

section 39.2(6) and (7) of the CPA, which 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. (emphasis added) [ 11 ] The relevant dates in this Action are as follows: • February 2017 – payments of contributions fell into arrears • March 2019 – the plaintiff condominium corporation filed its caveat • April 2022 – the plaintiff commenced this foreclosure action, seeking both in personam and in rem remedies. [ 12 ] As can be seen from the above dates, we are not faced with the question of whether a condominium can commence foreclosure proceedings for in rem relief (no matter the date when payments fell into arrears) provided the foreclosure proceedings are commenced within two years of the filing of the caveat under

section 39.2(6) of the CPA. [ 13 ] In this case, the plaintiff commenced foreclosure proceedings in April of 2022, more than two years after it filed its caveat. [ 14 ] The foreclosure proceedings seek a remedial order (both in personam and in rem ) which could have been sought earlier. [ 15 ] Is there any reason not to apply Daniels and provide the defendant with immunity from liability for unpaid contributions more than two years old? [ 16 ] The plaintiff argues that, as it is allowed to maintain its caveat for unpaid contributions more than two years old, to be consistent it should also be allowed to foreclose for unpaid contributions more than two years old.

I disagree. [ 17 ] Whether or not the plaintiff can maintain its caveat is a separate issue, and does not answer the question of whether part of the plaintiff’s claim is limitations barred. [ 18 ] The plaintiff could have commenced these proceedings for a remedial order (judgment for the in personam claim and enforcement against the condominium unit for the in rem claim) within two years of the contribution arrears arising. It did not commence these proceedings in a timely manner notwithstanding that it knew more than two years earlier: (

i) that the ‘injury’ (non-payment of contributions) had occurred, (ii) that the ‘injury’ was attributable to the conduct of the defendant Shui Ming Tong Foundation, and, (iii) that proceedings were warranted. [ 19 ] Accordingly, pursuant to

section 3 of the Limitations Act , the defendant is entitled to immunity from liability for claims for arrears which accrued more than 2 years earlier. This approach, adopted in Daniels with respect to mortgage foreclosures, also governs the situation with respect to condominium arrears proceedings, whether or not the plaintiff’s caveat persists.

The right to maintain the caveat filed in March of 2019 [ 20 ] The parties seek a ruling on this question: if the defendant pays all arrears not limitations barred, is the defendant entitled to a discharge of the plaintiff’s caveat filed in March of 2019? [ 21 ] My answer to that question is ‘no’ for the reasons set out below. [ 22 ] If the only remedy available to the condominium corporation were to seek a remedial order (such as sue in debt or commence a foreclosure action), then if those remedies were limitation barred the debt would cease to exist, and the condominium corporation

would have to discharge its caveat. [23] However, the condominium corporation is also given a statutory assignment of rents under

section 39.2(4) and (5) of theCPA, which provides as follows:

(4) Where (

a) a person other than the owner is in possession of a unit and pays rent to the owner in respect of the unit, and (

b) contributions, including any interest owing in respect of that unit, are in arrears, the corporation may require the person in possession of the unit to pay the rent owing to the owner in respect of that unit to thecorporation so that that rent can be applied against the contributions, including any interest owing, that are in arrears.

(5) Where a person in possession of a unit other than the owner pays the rent to the corporation under subsection (4), that person isdeemed to have paid that rent to the owner. [24] There is no need for the condominium corporation to seek a ‘remedial order’ in order to notify a tenant to pay the rent to thecorporation. While the unpaid contributions over two years old cannot be claimed in court proceedings, in my view the corporation cannotify any present or future tenant to pay its rent to the corporation, where it can be applied in satisfaction of the unpaid contributions, nomatter the date they accrued due.

Hence the debt continues to exist. The overdue contributions are an ‘amount owing’. The corporationis not required to discharge its caveat as the unpaid contributions are still owing as contemplated by

section 39.2(11)(

c) of the CPA. [25] This conclusion is supported by the following passage from Hepburn, Re (1884), 14 Q.B.D. 394 (Eng. Q.B.), as follows atpage 399: It is said that the statute bars the remedy but not the right, and consequently that the executors still remain indebted to the joint creditorsalthough the latter cannot enforce their right by action. This, although not an uncommon, is in my judgment an incorrect way of statingthe effect of the Statute of Limitations. There is in law no right without a remedy; and if all remedies for enforcing a right are gone, theright has in point of law ceased to exist.

In the case of a debt the ordinary and universal remedy is by action against the debtor. Theremay, however, and sometimes does exist another remedy, not by action against the debtor, but arising out of the possession of property ofthe debtor which by law or contract may be detained by the creditor until the debt is paid. This latter remedy may exist, although theremedy by action is barred; and in that case the debt continues to exist so far as is necessary for the enforcement of this right of lien butnot for enforcing the remedy by action.

When the debt is barred by the statute and the creditor has no lien, the debt is gone for allpurposes. (emphasis added) [26] The above passage is cited with approval in Spearing v. Jackow, (SK CA), [1948] 2 W.W.R. 848, 1948CarswellSask 50 (Sask. C.A.), in Commercial Credit Corp. v. Pasco (1963), (SK KB), 44 W.W.R. 28, 1963CarswellSask 64 (Sask. Q.B.). and in David M. Gottlieb Professional Corp. v. Nahal, 2014 ABQB 271, 2014 CarswellAlta 723.

Conclusions [27] The plaintiff in this Action seeks a remedial order – judgment for the debt and enforcement of the charge against thecondominium unit – which can only be pursued with respect to arrears arising in the two years immediately preceding thecommencement of this Action. [28] The condominium corporation is entitled to maintain the caveat it filed against title until all arrears have been paid, includingarrears which accrued more than two years preceding the commencement of this action.

Costs If the parties cannot agree on the costs outcome of this decision they may make written submissions to me in that regard.. Heard on the 1st day of December, 2022. Dated at the City of Calgary, Alberta this 9th day of December, 2022. J.T. Prowse A.J.C.K.B.A. Appearances:

John M. McDougall Scott Venturo Rudakoff LLP for the Plaintiff Marin Leci / Brett Nguyen Borden Ladner Gervais LLP for the Defendant