By Mtre Gérald Denoncin
In the Spring and Summer 2023 editions, we presented the rights, obligations and limitations of a Syndicate in the event of a loss, as well as its position in relation to tenants in the same context. We also discussed the delicate and complicated nature of the procedural exercise of recourse involving both a tenant and a co-owner in such circumstances.
In this article, we'll take a look at some of the clauses that can be found in a declaration of co-ownership, such as arbitration clauses and joint and several liability clauses for co-owners and tenants.
BASIC PRINCIPLE
Although the landlord is required, prior to entering into the lease, to provide the tenant with a copy of the by-laws of the immovable dealing with the rules governing the enjoyment, use and maintenance of the dwelling and common areas , the tenant does not thereby become a party to the declaration of co-ownership. He is bound by it only to a certain extent.[1], the tenant does not thereby become a party to the declaration of co-ownership. He is bound by it only to a certain extent.
The declaration of co-ownership is in fact a contract to which the purchasers/co-owners have freely subscribed, thereby renouncing the exercise of certain individual freedoms in favor of the interests of the community. This declaration has legal effects for all successive purchasers[2]. The tenant, on the other hand, is not a purchaser. He is the person who, by virtue of a contract called a bail (or louage), in return for the payment of rent to the lessor - in this case, a co-owner - obtains the enjoyment of an immovable (or movable) property for a certain period of time[3].
The declaration of co-ownership is therefore binding on the co-owners, their successors in title and the persons who signed it, and is effective against them from the time it is registered[4]. According to some authors, it is not binding on the tenant, with the sole exception of the by-laws of the immovable and any amendments thereto, from the moment he receives a copy[5]. In our opinion, however, publication of the declaration makes it enforceable against third parties[6], and binds the tenant in its entirety. It would be inconceivable that, for example, an article in the deed of incorporation prohibiting animals in the building could not be set up against tenants on the grounds that only the by-laws apply to them. However, this debate is not the subject of this article and will be discussed in a future issue.
In any event, the nature of the legal relationship between the syndicate and a tenant is therefore extra-contractual, unlike that between the syndicate and a co-owner.
CLAUSES IN THE DECLARATION OF CO-OWNERSHIP
- Arbitration clauses
The most recent declarations of co-ownership often include an arbitration clause stipulating that in the event of a dispute or disagreement relating to the declaration of co-ownership or arising from its interpretation or application, failing settlement by mediation, the dispute or disagreement must be settled by arbitration. This arbitration clause binds the parties to the contract of adhesion that is the Declaration of Co-ownership.
Arbitration is the process by which the parties appoint an arbitrator, either by mutual agreement or after having asked a third party to do so, to settle their dispute in accordance with the rules of law and, if necessary, to determine the damages[7],
As the tenant is not a party to the declaration of co-ownership, the arbitration clause does not apply to him[8]. The syndicate could not invoke the application of such a clause in a dispute with the tenant. What's more, as soon as there is a dispute or warranty claim between the tenant and the landlord, the exclusive jurisdiction of the Tribunal administratif du logement must prevail. In such cases, the dispute between the syndicate and the co-owner-landlord will be settled under the arbitration clause, while the dispute between the co-owner and his tenant will be referred to the Tribunal administratif du logement.
This is how the Superior Court of Quebec rejected the syndicate's request to refer the case to an arbitrator in accordance with the declaration of co-ownership, in a dispute where the co-owner and his tenant submitted the legality of a by-law prohibiting cannabis smoking adopted by the syndicate[9].
For reasons we respectfully disagree with, the Court held that the arbitration clause in the Declaration of Co-ownership is intended to settle any dispute or disagreement relating to its application or interpretation. However, according to the Court, the by-laws of the immovable are not part of the said declaration of co-ownership, and consequently, the by-laws prohibiting the smoking of cannabis. The arbitration clause cannot therefore be applied. The Court added, however, that if the arbitration clause had been applicable, the landlord party to the contract would have been subject to it. As for the tenant, given that he is not a party to the contract (...) the Court would have been inclined to dismiss the claim.
An arbitration clause in a declaration of co-ownership does not apply to the tenant. It must apply to the parties to the contract, and only to them, because of the prevailing principle of the autonomy of the parties' will, as the Supreme Court recalled in GreCon Dimter inc. v. J.R. Normand inc.[10] concerning a choice of court clause in private international law.
This leads us to reiterate what we already mentioned in the Summer 2023 issue, namely that such a situation can lead to contradictory decisions by two separate bodies, and requires legislation.
- Joint and several liability clause
Many declarations of co-ownership contain a clause stating that the co-owner is jointly and severally liable for any damage caused to the syndicate or another co-owner by the fault or negligence of his tenant.
Under the law, solidarity between debtors cannot be presumed. It exists only when it is expressly stipulated by the parties or provided for by law[11]. In the absence of a contractual relationship and an express stipulation to this effect, the obligation to make reparation for injury caused to another by the fault of two or more persons is joint and several, when this obligation is extra-contractual[12]. As already mentioned, the legal relationship between a syndicate and its co-owners is contractual.
With respect for the contrary opinion, we believe that the clause of joint and several liability of the co-owner and his tenant bilaterally and in the absence of any fault on the part of the landlord is no longer valid since December 13, 2018. Such a clause, designed to engage the liability of a co-owner towards the syndicate when the latter suffers prejudice due to the fault of his tenant, is irreconcilable with the terms of article 1074.2 CCQ. which is of public order. It is difficult to envisage the co-owner's liability being incurred without fault by the mere effect of this clause, when the law requires the syndicate to prove fault on the part of the co-owner in order to recover sums incurred for the payment of deductibles and compensation for damage caused to property in which he has an insurable interest.
This clause is all the more difficult to envisage as joint and several liability allows the creditor to claim the totality of his loss from the joint and several debtor of his choice. The possibility of a syndicate claiming the totality of its prejudice by the effect of this clause seems to us irreconcilable with the limitation placed on the syndicate to claim from the co-owner at fault the damages for which, otherwise, he would have been compensated by his insurer. In other words, while the syndicate may claim from the lessee, who is a third party, the full amount of his loss, it cannot claim from the co-owner-lessor more than the deductible applicable to the loss, or compensation for damage caused to the insured property[13]. It is not conceivable that, through a joint and several liability clause, the Syndicate could also claim the entirety of its loss from the co-owner-landlord due to the fault of its tenant, which is precisely what the Law aims to prevent.
On the other hand, we are of the opinion that a clause in the declaration could provide for the possibility of the syndicate obtaining damages for any other prejudice other than the recovery of sums incurred by the syndicate for the payment of deductibles and the repair of prejudice caused to the property. An example would be the recovery of costs incurred by the syndicate for an overtime manager to handle a claim. This is not an expense incurred to pay deductibles or repair damage to the property.
The undersigned is not aware of any court ruling on the validity of such a solidarity clause. However, the Court of Québec, Small Claims Division, has ruled[14] on several occasions since the adoption of Bill 141 on the liability of a co-owner in the context of prejudice caused to the syndicate by the fault of his tenant. In the Court's view, the tenant's fault is not sufficient to engage the co-owner-landlord's liability, notwithstanding the existence of a solidarity clause and without proof of fault on the part of the co-owner-landlord. Although the Court did not rule on the validity of the clause as such, the reasons for these decisions suggest that a solidarity clause is no exception to the obligation for the syndicate to prove the fault of a co-owner if it wishes to obtain recovery of sums incurred for the payment of deductibles and compensation for damage caused to property in which the co-owner has an insurable interest.
IN CONCLUSION
The adoption of Bill 141 and its application have created a number of potentially problematic situations, requiring interpretation by the courts and even intervention by the legislator.
The uniqueness of the procedures is essential in a context that is an exception to the general principles of civil liability set out in articles 1457 and 1458 CCQ, due to the obligation of a syndicate of co-owners to repair damages for which it is rarely responsible.
Considering the possibility of a syndicate instituting a recourse against a tenant responsible for the prejudice it suffers, the syndicate should be able to rely, by exception, on the obligatory content of the lease contract to which the tenant is bound, in order to demonstrate the latter's fault before a court that is not the Tribunal administrative du logement, whose remit is very specific and limited to housing lease matters.
[1] Art. 1894 CCQ
[2] Yves Papineau, Le manuel de gestion d’un syndicat de copropriété divise au Québec, 3e édition, Wilson & Lafleur, 2020.
[3] Art. 1851 CCQ
[4] Art. 1062 CCQ
[5] Art. 1057 CCQ
[6] Art. 2941 CCQ
[7] Art. 620 et 624 du Code de procédure civile du Québec
[8] Yves Papineau, Médiation et arbitrage en copropriété, les particularités, Développements récents en droit de la copropriété divise (2023), Barreau du Québec — service de la formation continue, p. 103 ;
[9] Lahaye-Abenhaïm c. Association des copropriétaires du Lowney 1, 2018, QCCS 3215
[10] GreCon Dimter inc. c. J.R. Normand inc., 2005, CSC, 46
[11] Art. 1525 CCQ.
[12] Art. 1526 CCQ.
[13] Art. 1074.1 CCQ.
[14] Barat Condominium c. Nawan, 2022, QCCQ 5982 ; Syndicat de la copropriété du 3149 et 3151 Boulvard de la Gare c. Azalea Immobilier inc., 2023 QCCQ, 1503 ; Syndicat des copropriétaires Tod 1 c. Xu, 2022 QCCQ, 3594; Sacré-Cœur syndicat des copropriétaires c. Thériault, 2022 QCCQ, 10199.
