Executive Summary: Key Legal and Evidentiary Issues

• Pre-August 31, 2021 contribution claims were statute-barred under the Limitations Act and thus unrecoverable.

• Legal fees related to the Special Assessment were not collectible through caveat enforcement under the Condominium Property Act.

• Surplus funds from Black Seas were applied to contribution arrears, preventing the Condo Corp from later reallocating them to legal fees.

• BMO’s liability as owner commenced only upon foreclosure; it was not retroactively responsible for previous owner arrears.

• Caveat registration did not give priority for legal fees; such costs were not recoverable as contributions under the Act.

• Absence of board resolution or proper notice rendered some claimed contribution arrears procedurally unsupported.

Background and foreclosure context
Black Seas Homes Corporation owned a residential unit and a parking unit in the Scona Gardens condominium complex (Condominium Corporation No. 0728679). The Bank of Montreal (BMO) held a mortgage against these units. Following default, BMO obtained an Order for Foreclosure on September 6, 2023, and became the registered owner.

Prior to this, Black Seas had failed to pay a Special Assessment levied by the Condo Corp. As a result, the Condo Corp registered a caveat. Black Seas later paid the full amount of the assessment in December 2022, along with a $1,871 surplus, prompting discharge of the caveat. In June 2023, the Condo Corp notified Black Seas it would apply the surplus to arrears of condominium fees. These were applied against invoices for common expenses from May to August 2022 and an interest charge from June 2022.

On August 3, 2023, legal fees of $1,296.22 were billed to the Condo Corp for services related to the Special Assessment. These remained unpaid at the time BMO became owner. On August 29, 2023, the Condo Corp registered a second caveat for contribution arrears and initiated an action on August 31, 2023. The claimed arrears included condominium contributions from November 2020 through August 2021, which were more than two years old.

Limitations and liability analysis
BMO contested liability for the arrears, arguing that claims for contributions older than two years were statute-barred under section 3 of the Limitations Act. The Court agreed, classifying each missed monthly contribution as a distinct, complete breach. Therefore, all contribution claims predating August 31, 2021 were unenforceable.

The Court also considered the impact of section 39.2(1)–(2) of the Condominium Property Act, which makes contributions payable upon the passing of a board resolution. However, no such resolution was entered into evidence. Bylaw 47 of the Condo Corp indicated that contributions were due in twelve equal monthly installments beginning on the first of each month, with unpaid installments accruing interest. Though Bylaw 47(m) allowed prior assessments to continue temporarily, the Court interpreted this as a stop-gap and not sufficient to recharacterize missed payments as an ongoing or cumulative debt.

As for BMO’s standing, the Court noted that while a mortgagee cannot be directly sued for unpaid contributions, liability transfers upon foreclosure. Once BMO became the owner of the units, it was responsible for contributions from that point forward—but not retroactively.

Recovery of legal fees and caveat enforcement
The Condo Corp sought to collect the August 2023 legal fees through the caveat. The Court firmly rejected this. It found that legal fees related to a Special Assessment were not recoverable through a caveat under the Condominium Property Act. Though Black Seas had overpaid the assessment, and that surplus could potentially have covered legal costs, the Condo Corp had already applied it to other arrears. The Court concluded that it was too late to reallocate those funds, emphasizing that ledgers cannot be revised simply because the result is inconvenient.

Similarly, legal fees for general contribution recovery were also not recoverable. The only amount acknowledged by BMO was $462, covering caveat registration costs.

Decision and costs
The Court held that BMO had no obligation to pay contribution arrears incurred before August 31, 2021 or the Special Assessment legal fees. It ordered that the caveat registered by the Condo Corp be discharged immediately, regardless of the requirements in section 191(1) of the Land Titles Act. A cost award of $1,500 was set in favour of BMO, with the $462 caveat registration cost deductible from that amount. The Court further clarified that any remaining claims were enforceable only in personam against Black Seas Homes Corporation and not against BMO or any subsequent purchasers of the units. The Condo Corp was directed to issue an estoppel certificate upon request.