In the 2022 Alberta Court of King’s Bench decision The Owners: Condominium Plan No. 9311533 v Shui Ming Tong Foundation,[1] the Applications Judge was asked to determine two questions:
- Whether a unit owner is entitled, by operation of the Limitations Act, RSA 2000, c L-12 (the “Limitations Act”), to immunity from liability for unpaid contributions which arose more than two years prior to legal proceedings being commenced against them; and
- Whether, if some of the contribution arrears are limitations barred, can a condominium corporation still maintain a caveat registered against the owner’s certificate of title notwithstanding that all contribution arrears which are not limitations barred have been paid.[2]
The court in Shui Ming Tong Foundation concluded that the condominium corporation was entitled to maintain the caveat it registered against the defendant unit owner’s certificate of title under s. 39.2(6) of the Condominium Property Act, RSA 2000, c C-22 (the “CPA”), notwithstanding that the amounts secured by the caveat were limitations barred and the condominium corporation was no longer entitled to pursue debt or foreclosure proceedings to collect the outstanding contributions.[3] The court supported its finding in this regard by concluding that limitations barred arrears are still an “amount owing” to a condominium corporation and that, pursuant to section 39.2(4) of the CPA, the condominium corporation retains its entitlement to garnish rental income from tenants in cases were the unit in arrears is being rented out, which did not require a “remedial order” and is therefore not captured by the provisions of the Limitations Act.[4]
Following the release of the Shui Ming Tong Foundation decision, our Condominium & Strata Group published an article expressing concern from both a legal and policy perspective with the conclusion that a condominium corporation is entitled to maintain a caveat that solely secure limitations barred contribution arrears. Our article on the Shui Ming Tong Foundation decision can be found at: Maintaining a legally unenforceable caveat on title to a condominium unit: Should this be permitted?
Recently, in Scotia Mortgage Corporation v Conejero,[5] the court concluded that the Shui Ming Tong Foundation decision has been effectively overturned by Justice Arcand-Kootenay’s unreported decision in Condominium Corporation 0220695 v Scotia Mortgage Corporation (Condo Corp 022), which was rendered on February 9, 2023. That is, condominium corporations are not permitted to register and maintain s. 39.2(6) caveats for limitations barred contribution arrears.
In Condo Corp 022, the defendant unit owner defaulted under their mortgage and the defendant’s mortgagee, Scotia Mortgage Corporation (“Scotia”), initiated foreclosure proceedings against them. In addition to being in default under their mortgage, the defendant was indebted to their condominium corporation for outstanding contributions and, as a consequence, the condominium corporation had registered a s. 39.2(6) caveat against their unit’s title. During the course of the foreclosure proceedings, Scotia sought a declaration that there were no amounts owing to the condominium corporation by operation of the Limitations Act, and for an order directing the discharge of the condominium corporation’s caveat.[6]
Scotia’s application was heard by an Applications Judge a few months prior to the Shui Ming Tong Foundation decision, and the court granted the relief sought by Scotia. The condominium corporation appealed that decision and, in reliance on the Shui Ming Tong Foundation decision, argued that by registering its caveat it had preserved its claims for contributions in perpetuity and had effectively protected that claim from the operation of the Limitations Act.[7]
In dismissing the condominium corporation’s appeal, Justice Arcand-Kootenay confirmed that the Limitations Act applies for unpaid contributions and held that “a caveat cannot save an action that is otherwise statute barred,” further stating that:
“Where the caveat no longer relates to a valid claim, whether defeated by the passage of time, as the limitation period had lapsed to commence an action for the amounts owing under the caveat, the caveat ceases to meet the requirements of either section 39.2(8) or section 39.2(11) and thus will not remain registered as contemplated by either section.”[8]
As in the Condo Corp 022 decision, the defendant unit owner in the Conjero decision defaulted under their mortgage and the defendant’s mortgagee, Scotia, initiated foreclosure proceedings against them. At the time the defendant’s unit was sold within the foreclosure proceedings, the defendant’s condominium corporation had a caveat registered against the unit which purported to secure contribution arrears that were limitations barred.[9] Following this, the condominium corporation and Scotia sought advice and direction from the court with regard to whether the condominium corporation was entitled to maintain its caveat notwithstanding that certain contributions were limitations barred and the issuance of a new title to the purchaser of the defendant’s unit through the foreclosure proceedings.[10]
The Applications Judge in Conejero relied on Condo Corp 022 to conclude that the condominium corporation could not maintain the registration of its caveat, and directed that the condominium corporation’s caveat be discharged.[11]
As discussed in our article on the Shui Ming Tong Foundation decision, condominium corporations are reliant on owners paying their contributions when assessed and levied to maintain sufficient cash flow to carry out their ongoing obligations. Considering the importance of timely payment of contributions by all owners, and the fact that s. 39.2(6) of the CPA is an extraordinary statutory enforcement tool to secure the repayment of contributions unique to condominium corporations, there is a strong policy rational for precluding condominium corporations from “sleeping” on its enforcement rights, to the detriment of other owners who must then carry that owner’s arrears. By applying the Limitations Act to a condominium corporation’s ability to enforce and maintain a s. 39.2(6) caveat, condominium corporations are encouraged (and required) to take timely enforcement steps to recover outstanding contributions, to the benefit of all owners.
If you have any questions about the registration and enforcement of s. 39.2(6) caveats, or have any other condominium-related issues, please reach out to a member of Miller Thomson’s Condominium& Strata Group.
[1] The Owners: Condominium Plan No. 9311553 v Shui Ming Tong Foundation, 2022 ABKB 826 at paras 1-2 (Shui Ming Tong Foundation).
[2] Shui Ming Tong Foundation, ibid at para 3.
[3] Shui Ming Tong Foundation, ibid at para 28.
[4] Shui Ming Tong Foundation, ibid at paras 23-24.
[5] Scotia Mortgage Corporation v Conjero, 2024 ABKB 66 at para 12 (Conjero).
[6] Conjero, ibid at paras 13-15.
[7] Conjero, ibid
at paras 16-17.
[8] Conjero, ibid at para 18.
[9] Conjero, ibid at paras 3-5.
[10] Conjero, ibid at paras 6, 21.
[11] Conjero, ibid at para 20.
