2014 QCCA 105, 2014 QCCA 105

Unofficial English Translation Gestion Almaca inc. c. Syndicat des copropriétaires du 460 St-Jean 2014 QCCA 105 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No.: 500-09-022322-127 (500-17-043133-084) DATE: JANUARY 21, 2014 CORAM: THE HONOURABLE JACQUES CHAMBERLAND, J.A. ALLAN R. HILTON, J.A. JULIE DUTIL, J.A. GESTION ALMACA INC. APPELLANT – Plaintiff v. SYNDICAT DES COPROPRIÉTAIRES DU 460 ST-JEAN RESPONDENT – Defendant JUDGMENT [ 1 ] The appellant appeals from a judgment rendered by the Superior Court, District of Montreal (the Honourable Mr.

Justice Michel Delorme) on December 13, 2011, that dismissed its motion for declaratory judgment [ 2 ] For the reasons of Dutil, J.A., with which Chamberland and Hilton, JJ.A. agree, THE COURT : [ 3 ] ALLOWS the appeal in part, with costs; [ 4 ] VARIES the trial judgment to add the following conclusions, and specifies that the orders regarding the posting of names and the installation of mail boxes must be executed within forty-five days of this judgment, and those concerning the provision of keys must be executed within fifteen days of this judgment: [80 (a)] ORDERS the respondent not to hinder or obstruct in any way the plaintiff's access to the 460 St-Jean entrance, which is a common portion benefiting all co-owners, or the access thereto of its representatives, employees and clients; [80 (b)] ORDERS the respondent to provide the plaintiff with any and all keys allowing the occupants of the commercial portions to come and go at will from the 460 St-Jean entrance hall; [80 (c)] ORDERS the respondent to post the names of the tenants or occupants of the commercial portions on the billboard set up for this purpose in the 460 St-Jean entrance hall; [80(d)] ORDERS the respondent to permanently install one or more mail boxes clearly identified with the names of the occupants of the commercial portion of the building.

JACQUES CHAMBERLAND, J.A. ALLAN R. HILTON, J.A. JULIE DUTIL, J.A.

Mtre Yves Papineau Papineau Avocats Inc.

For the Appellant Mtre Marc Lanteigne De Grandpré Joli-Coeur For the respondent Date of hearing: November 28, 2013 REASONS OF DUTIL, J.A. [ 5 ] Are the co-owners of properties in divided co-ownership (condominium units) benefiting from common portions for restricted use the only ones who are required to contribute to the contingency fund for major repairs to these common portions and their replacement or are such contributions the responsibility of all co-owners? [ 6 ] Gestion Almaca Inc. (Almaca) also seeks orders from the Court to give effect to the trial judge's ruling that declared certain portions of the building to be common but that failed to order the injunctive relief measures that are the immediate and logical consequence of recognizing the right to use certain areas.

FACTS [ 7 ] On April 1, 1985, the building at 460 St-Jean Street and 261 St-Sacrement Street in Montreal was converted to divided co- ownership (condominiums). It houses 28 dwelling units and a single commercial unit, which occupies most of the building's main floor and basement. [ 8 ] On September 20, 2004, Almaca purchased the commercial unit. [ 9 ] The declaration of co-ownership dated April 1, 1985, provides that the commercial portion's contribution to common expenses is 8.42% even though the relative value of its fraction of co-ownership is 23.8%.

On June 21, 1994, an amendment to the declaration of co-ownership was adopted following a general meeting of co-owners. This amendment was adopted further to the enactment of the Civil Code of Québec , and in particular

article 1064 thereof, on January 1, 1994. It was then that the commercial portion's contribution to the common expenses and contingency fund was established at 23.8 %. [ 10 ] In 2008, Almaca filed a motion for declaratory judgment that was amended on three occasions prior to the trial. During the hearing of October 6, 2011, it once again amended its conclusions so that they read as follows: [ translation ] ... MAY IT PLEASE THE COURT: DECLARE that, in accordance with the principles set out in

article 1064 of the Civil Code of Québec , only those co-owners who benefit from the common portions for restricted use shall contribute to the contingency fund for major work to be performed on these common portions and for their replacement. DECLARE that, failing a provision to this end in the declaration of co-ownership ... and its amendments ... ,

article 1064 has always applied as outlined in the preceding paragraph; DECLARE that the contribution of the Syndicat des copropriétaires du 460 Saint-Jean to the contingency fund for the common portions for restricted use shall be determined separately as of the date of the judgment to be rendered, in accordance with articles 1064 and 1072 of the Civil Code of Québec , depending on whether these common portions are general or for restricted commercial or residential use; DECLARE that the entrance hall, entrance, janitorial service area, waste disposal area, hallway and stairwell leading to the 460 Saint- Jean Street entrance are general common portions pursuant to the declaration of co-ownership ... and its amendments; ORDER the defendant syndicate to constitute its contingency fund so that it is split between the common portions for restricted commercial or residential use and the general common portions, so that the commercial portion does not have to contribute to major repair work or the replacement of common portions for restricted use whose use is allocated to the residential portions and the residential portions do not have to contribute to the cost of major repair or replacement work required for the common portions for restricted commercial use; ORDER the defendant syndicate: - to refrain from hindering or obstructing the plaintiff's access to the 460 Saint-Jean entrance, or that of its representatives, employees and clients, said entrance being a common portion benefiting all co-owners;

... - within the same time period, to provide the plaintiff with any and all keys allowing the occupants and clients of the commercial portions to come and go at will in the entrance hall of 460 Saint-Jean; - within the same time period, to post the names of the tenants or occupants of the commercial portions on the billboard set up for this purpose in the 460 Saint-Jean entrance hall; - to permanently install one or more mail boxes clearly identified with the names of the occupants of the commercial portion of the building; SHOULD THE SYNDICATE FAIL TO COMPLY WITHIN THE DEADLINE PROVIDED IN THE JUDGMENT TO BE RENDERED: ALLOW the plaintiff itself to do the work indicated above at the syndicate's expense; ORDER the defendant syndicate to pay the plaintiff the amount of $8,612.67, with interest at the legal rate and the additional indemnity provided by law as of August 15, 2007; ORDER the defendant syndicate to reimburse the plaintiff the amount of $32,475.20 for extrajudicial fees, with interest at the legal rate and the additional indemnity provided by law from the date of service of this motion ... ; ORDER the defendant syndicate to pay the plaintiff the amount of $20,000 in punitive and exemplary damages damages with interest at the legal rate and the additional indemnity provided by law from the date of service. (Paragraph numbers omitted.) [ 11 ] In a counterclaim, the Syndicat des copropriétaires du 460 St-Jean (the Syndicate) claims $43,753.34 from Almaca for the reimbursement of its extrajudicial fees, expert fees, and the sum of unpaid common expenses. [ 12 ] On December 13, 2011, the judge rendered the judgment in appeal.

THE TRIAL JUDGMENT [ 13 ] After reviewing the scholarly commentary and case law, the judge found that all the co-owners must contribute toward the costs of day-to-day administration, maintenance, and minor repairs of the common portions. With respect to the common portions for restricted use, however, only the users must pay. [ 14 ] The situation is different regarding the contingency fund that was created to pay for the replacement of and major repairs to the common portions, whether or not for restricted use.

All the co-owners must contribute in proportion to the relative value of their fraction of co-ownership. According to the judge, this is so because these costs are related to ownership rather than use. Under the second paragraph of

article 1072 C.C.Q. , exceptions to these principles may be set out in the declaration of co-ownership, but there are no such exceptions in this case. [ 15 ] Moreover, the judge found that the entrance, entrance hall, janitorial service area, waste disposal area and hallway leading to the 460 St-Jean entrance are all common portions (for non-restricted use). He refused, however, to grant the conclusions sought by Almaca to have access to these portions and to post the names of the tenants or occupants of the commercial portions on the billboard set up for this purpose in the 460 St-Jean entrance.

The judge stated that Almaca had not insisted on this issue at the hearing. [ 16 ] As for the requests presented by Almaca for the reimbursement of the contributions, the judge dismissed them in light of his conclusion on the first issue. He also dismissed the Syndicate's claims for exemplary damages and reimbursement of extrajudicial fees, as well as its counterclaim. ANALYSIS [ 17 ] Only two issues remain on appeal. The first concerns the

interpretation of articles 1064, 1071 and 1072 C.C.Q. to determine whether co-owners of common portions that are for their exclusive use are the only ones required to contribute to the contingency fund for these portions. The second issue is whether the judge should have ordered the injunctive relief to allow Almaca to enjoy the portions that were declared to be common.

Contingency fund [ 18 ] Almaca maintains that the co-owners who use the common portions for restricted use must not only contribute to defraying the cost of minor repairs and maintenance, but also support the cost of major repairs and the replacement of these portions by themselves. This is the meaning it ascribes to the last sentence of

article 1064 C.C.Q. Their contribution to the contingency fund must be adjusted accordingly. [ 19 ] With respect, I do not share this point of view. Like the trial judge, I believe that the word "costs" found in the last sentence of

article 1064 C.C.Q. covers only minor repairs and maintenance. [ 20 ] Articles 1064, 1071, and 1072 C.C.Q. read as follows:

1064. Chacun des copropriétaires contribue, en proportion de la valeur relative de sa fraction, aux charges résultant de la copropriété et de l'exploitation de l'immeuble, ainsi qu'au fonds de prévoyance constitué en application de l'article 1071. Toutefois, les copropriétaires qui utilisent les parties communes à usage restreint contribuent seuls aux charges qui en résultent. 1064. Each co-owner contributes in proportion to the relative value of his fraction to the expenses arising from the co-ownership and from the operation of the immovable and the contingency fund established under

article 1071, although only the co-owners who use common portions for restricted use contribute to the costs resulting from those portions. 1071. Le syndicat constitue, en fonction du coût estimatif des réparations majeures et du coût de remplacement des parties communes, un fonds de prévoyance, liquide et disponible à court terme, affecté uniquement à ces réparations et remplacements. Ce fonds est la propriété du syndicat. 1071.

The syndicate establishes, according to the estimated cost of major repairs and the cost of replacement of common portions, a contingency fund to provide cash funds on a short-term basis allocated exclusively to such repairs and replacement. The syndicate is the owner of the fund. 1072.

Annuellement, le conseil d'administration fixe, après consultation de l'assemblée des copropriétaires, la contribution de ceux-ci aux charges communes, après avoir déterminé les sommes nécessaires pour faire face aux charges découlant de la copropriété et de l'exploitation de l'immeuble et les sommes à verser au fonds de prévoyance. La contribution des copropriétaires au fonds de prévoyance est d'au moins 5% de leur contribution aux charges communes. Il peut être tenu compte, pour l'établir, des droits respectifs des copropriétaires sur les parties communes à usage restreint.

Le syndicat avise, sans délai, chaque copropriétaire du montant de ses contributions et de la date où elles sont exigibles. 1072. Each year, the board of directors, after consultation with the general meeting of the co- owners, fixes their contribution for common expenses, after determining the sums required to meet the expenses arising from the co-ownership and the operation of the immovable, and the amounts to be paid into the contingency fund. The contribution of the co-owners to the contingency fund is at least 5% of their contribution for common expenses.

In fixing the contribution, the rights of any co-owner in the common portions for restricted use may be taken into account. The syndicate, without delay, notifies each co- owner of the amount of his contribution and the date when it is payable. [ 21 ] Articles 1064, 1071 and 1072 C.C.Q. establish the rules that apply to the allocation of maintenance costs (minor or major repairs) for a building in divided co-ownership. The word "costs" used in

article 1064 C.C.Q. covers only minor repair expenses and maintenance costs related to the use of the common portions. The last sentence provides that the costs for the common portions for restricted use are to be allocated differently. The contribution to the contingency fund covers the costs of major repairs and the replacement of any common portions (whether or not for restricted use). The legislator states that all co-owners must contribute to the fund in proportion to the relative value of their fraction of co-ownership. The second paragraph of

article 1072 C.C.Q. confirms this

interpretation. Indeed, the respective rights of co-owners in the common portions for restricted use may be taken into account when establishing the contribution to the contingency fund. This indicates, however, that the contribution to the contingency fund does not take these rights into consideration unless the declaration of co-ownership contains a specific clause on the matter. [ 22 ] This is only logical because major repairs to a building are related to the ownership of these common portions, not their enjoyment. It is with approval that I quote Mtre Christine Gagnon's opinion on the matter.

She writes: [ translation ] There are two categories of expenses related to common portions for restricted use. The first concerns the expenses that are the result of use, that is, minor repair expenses and maintenance costs. These are the expenses that are directly related to the use of these common portions for restricted use. They are allocated among the users as indicated in

article 1064 C.C.Q. in fine , insofar as calculating a particular share of the fees is possible and significantly useful. ... ... The second category of expenses relates to major repairs and the replacement of these common portions for restricted use. Let us first say that under articles 1071 and 1072 C.C.Q. these expenses are covered by a contingency fund, which, in fact, does not distinguish between general common portions and common portions for restricted use.

The contingency fund therefore covers major repairs and the replacement of common portions for restricted use, such as windows and balconies on a vertically divided co-ownership. This makes perfect sense because these expenses are related to the ownership of these common portions and not to their enjoyment.

Article 1064 C.C.Q. states the general rule that all co-owners contribute to the contingency fund in proportion to the relative value of their fraction. The second paragraph of

article 1072 C.C.Q. , however, allows for exclusive enjoyment rights to be taken into account to determine the contribution of co-owners to the contingency fund, that is, their contribution to major repairs and the replacement of common portions. There is some flexibility in this respect. [1] ...

[Citations omitted.][Emphasis added.] [ 23 ] In 2001, the Court ruled on the

interpretation of articles 1064, 1071 and 1072 C.C.Q. in Syndicat des copropriétaires de Verrières I v. Bombardier . [2] In that case, the Court had to determine whether it was possible to create two contingency funds following the coming into force of the Civil Code of Québec on January 1, 1994. After explaining that there could be only one contingency fund per divided co-ownership, the Court concluded that the legislator had not established a distinction between contributions to the contingency fund for common portions for unrestricted use and those for restricted use: [ translation ] [10] It is true that

article 1064 C.C.Q. contains specific provisions with respect to expenses resulting from the use of common portions for restricted use. The co-owners who use these common portions for restricted use have sole responsibility for the resulting expenses. Mtre Christine Gagnon makes the following observations on the subject: [ translation ] “We know that in the former state of the law, there was a practice of allocating day-to-day maintenance costs for a common portion to those who held the exclusive right to enjoy the common portion in question. The major expenses were assumed by the community.

This allocation distinguished fairly between the responsibilities resulting from use and those resulting from ownership. It therefore made perfect sense. We believe that the same principle still applies under the Civil Code of Québec .” [11]

Article 1071 C.C.Q. does not express any such distinction with respect to the contingency fund. The contribution is established in proportion to the relative value of each fraction.

This rule is necessary because the contingency fund is directly related to ownership of the common portions rather than their actual enjoyment . [12] In this respect, the only possibility left is not to create more than one contingency fund but to take into account the respective rights of co-owners in the common portions for restricted use (1072(2) C.C.Q. ) when establishing the contributions to the contingency fund . [3] [Citations omitted.] [ Emphasis added . ] [ 24 ] The trial judge therefore did not commit any error.

The judge was right to dismiss the motion for declaratory judgment because the declaration of co-ownership does not include any provisions that allow, under the second paragraph of

article 1072 C.C.Q. , a departure from the general rule that all co-owners must contribute to establishing the contingency fund in proportion to the value of their respective fractions. Use of the general common portions of 460 St-Jean [ 25 ] The judge was also asked to determine whether certain areas on the St-Jean Street entrance side of the building were common portions for general use or for restricted use. He found that, except for a stairwell, the other portions – that is, the entrance, entrance hall, janitorial service area, garbage disposal area and hallway –were all common portions for general use.

Even though he maintained that Almaca had the right to use and enjoy these common portions just like the other co-owners, the judge refused to grant the injunctive relief sought by Almaca which would have allowed it to benefit fully from this right to use.

He stated the following: [ translation ] [45] In light of this, the Court finds that the following are common portions for unrestricted use: the entrance, entrance hall, janitorial service area, garbage disposal area (now the mail box room) and hallway leading to the building's 460 Saint-Jean Street entrance. [46] Gestion Almaca therefore has a right to use and enjoy these common portions just like any other co-owner. [47] Gestion Almaca asks the Court to order various measures concerning the use of these areas by its representatives, employees, tenants, occupants and clients. [48] The right to use the common portions, however, is subject to respecting the intended use of the building, the building regulation, and the rights of the other co-owners in these same portions.

The rights of co-owners in these common portions for general use are thus exercised within a collective framework that must be respected. Thus, any use appropriating a common portion would not be authorized (Christine Gagnon, La Copropriété divise, 2nd ed., supra at 267). [49] An emergency exit door connects the entrance, entrance hall, janitorial service area, garbage disposal area (now the mail box room) and hallway leading to the building's 460 Saint-Jean Street entrance to the private portion of the property owned by Gestion Almaca.

These portions are basically used exclusively by the co-owners of the private dwelling portions. [50] In this context, the case as it stands and the facts presented as evidence do not allow the Court to grant the conclusions sought by Gestion Almaca. Moreover, Gestion Almaca did not insist on this aspect of its claim during the hearing. [ 26 ] What poses a problem between co-owners is the fact that the building has two intended uses. It houses 28 dwelling units and a single commercial unit.

The co-owners of the dwelling units use the St-Jean Street entrance, and Almaca's representatives and tenants use the St-Sacrement Street entrance. In total, about forty people occupy the offices that make up the commercial unit situated in the basement and on the main floor of the building.

[ 27 ] When Almaca became a co-owner, the president of the Syndicate at the time informed Alain Vinet (Almaca's representative) in no uncertain terms that Almaca did not have access to that portion of the co-property. He was nevertheless given a key card to access the elevator in case of emergency.

It should also be noted that the entrance, entrance hall, janitorial service area, garbage disposal area (now the mail box room), and hallway near the St-Jean Street entrance are connected to the commercial unit by an emergency exit door. [ 28 ] Even though Vinet has a key card to access the 460 St-Jean entrance, he has never used it and on the first day of the trial hearing did not know whether or not his key card actually opened the door in question. Similarly, the evidence reveals that the co-owners of the dwelling units never use the St-Sacrement Street entrance.

In fact, there is no handle on the door leading to the stairs that would give them access their units. They may, however, use this exit in case of fire or emergency. [ 29 ] It is therefore true that the premises have been used a certain way over the years, but this is mainly due to the fact that the representatives of the co-owners of the dwelling units have refused to give Almaca full access to these common portions for general use. [ 30 ] In my view, in these circumstances, the evidence as to the use made of these areas in recent years does not mean that Almaca must lose its rights.

Failing a written agreement, and considering the dispute that has lasted several years, we do not agree that the way things have been done since Almaca's arrival in 2004 bars its claims seeking to benefit fully from its rights in the common portions for general use. With respect to these common portions, Almaca has the same rights as the other co-owners.

If the co-owners wish to regulate the use that may be made of these areas, particularly because of the number of persons that might use the St-Jean entrance in the future, they will have to do so by adopting clear provisions to preserve the peace and quiet in this part of the building, which is used mainly for residential purposes. [ 31 ] For these reasons, I would allow the appeal in part, with costs, and vary the trial judgment to add the following conclusions.

I would also add that the orders regarding the posting of the names and the installation of mail boxes must be executed within 45 days of this judgment, and those concerning the provision of keys must be executed within 15 days of this judgment: [80 (a)] ORDERS the respondent not to hinder or obstruct in any way the plaintiff's access to the 460 St-Jean entrance, which is a common portion benefiting all co-owners, or the access thereto of its representatives, employees and clients; [80 (b)] ORDERS the respondent to provide the plaintiff with any and all keys allowing the occupants of the commercial portions to come and go at will from the 460 St-Jean entrance hall; [80 (c)] ORDERS the respondent to post the names of the tenants or occupants of the commercial portions on the billboard set up for this purpose in the 460 St-Jean entrance hall; [80(d)] ORDERS the respondent to permanently install one or more mail boxes clearly identified with the names of the occupants of the commercial portion of the building.

JULIE DUTIL, J.A.