Wellington upheld

Wellington Corp. No. 61 v. Marilyn Drive Holdings Ltd., [1998] 37 O.R. (3rd) 1 is an important condominium law decision.  Today’s decision in Essex Condominium Corporation No. 89 v. Glengarda Residences Ltd., 2010 ONCA 167 upholds Wellington:

ANALYSIS

Was Wellington correctly decided?

[15]         The appellant argued that this court’s decision in Wellington was wrongly decided and should be overruled.  It submits that Wellington is incorrect because it provides that a condominium corporation can recover damages for breach of s. 52(5) of the Act without complying with the requirement in s. 52(5) of showing that the unit purchasers suffered losses in reliance on a material misstatement or omission of information in a disclosure statement required to be delivered by a declarant to unit owners.

[16]         I would reject this submission.

[17]         The need to address the reliance requirement in s. 52(5) differently in an action by a condominium corporation as compared to an action by a unit owner was fully explored in Wellington.  At pp. 19 and 20 of that decision, Rosenberg J.A. explained that s. 14(2) of the Act created a cause of action for the condominium corporation “even if the corporation was not a party to the contract in respect of which the action is brought.”  As he explained, read in the context of the legislation, it was manifest that the legislator intended “that the corporation be entitled to recover damages where the real injury is to the owners as a group rather than to any individual.”  He went on to explain that “in s. 52(5), the legislature has given the corporation the power to recover damages for false statements that were not made to it and upon which it therefore could not have relied.”  He then concluded that he could not “accept that the legislature nevertheless intended that the corporation prove it actually relied upon those statements.”  As a result, he concluded that “actual reliance need only be proved where the unit owner brings an action for damages.”

[18]         I see no basis to disagree with these observations.  They reflect a reasoned and contextual interpretation of the relevant sections of the Act.

[19]         Further, I do not, as the appellant suggests, view the test established in Wellington as ignoring the legislature’s intention to restrict damages awarded for breach of s. 52(5) of the Act to losses suffered in reliance on a material misstatement or omission of information from the disclosure statement.  Wellington simply struck a different approach to the requirement that the condominium corporation establish reliance, an approach that takes into account the fact that the statute creates a right of action even though the condominium corporation was not a party to the contract in respect of which the disclosure statement was made and the action brought.

[20]         As set out by Rosenberg J.A., the condominium corporation nonetheless needs to establish reliance.  It does so, however, by demonstrating that “it cannot reasonably carry out its duty to control, manage and administer the common elements and the assets of the corporation and to manage the property without incurring the expense occasioned by the false, deceptive or misleading statement or information or the expense that should have been disclosed in the disclosure statement.”

[21]         In my view, therefore, there is no need to revisit the Wellington decision.