Summary

Keywords

Property — Divided co ownership — General meeting of co owners — Developer — Reduction in number of votes — Evidence — Whether fraction not intended for sale can be excluded from sale to public and kept by developer or its successors in order to retain all their votes in syndicate of co owners, despite reduction in votes provided for, as matter of public order, in arts. 1092 and 1093 of Civil Code of Québec — Whether mere assertion made by party’s lawyer at hearing concerning information that is not part of evidence in record and is not subject of admission can be considered by Court of Appeal and can subsequently enable developer and its successors to qualify for exception set out in arts. 1092 and 1093 of Civil Code of Québec — Civil Code of Québec, CQLR, c. CCQ 1991, arts. 1092 and 1093.

Summary

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On July 14, 2005, a declaration of co ownership was published in the land register, establishing divided co ownership of a vacation resort in Saint Donat consisting of a hotel and eight buildings, each of which had four dwelling units. At the time, 9088 9288 Québec inc. (“9088”) and 9137 9271 Québec inc. (“9137”) were the only owners of the site and owned eight fractions and two fractions, respectively. 9088 later sold four fractions to 9137, and they therefore owned four fractions and six fractions, respectively, on April 11, 2007. In 2012, 9088 sold two more of its fractions to a third company: lot 74, where the hotel was situated, and lot 75. That company declared bankruptcy in 2015. On October 21, 2016, the respondent, Hôtel & Suites Le Lincoln inc. (“Lincoln”), purchased those lots from the receiver in bankruptcy. Lincoln, which is 9088’s successor, had the hotel demolished in 2018 for the purpose of building a new one. The declaration of co ownership specified that 7,176 votes were attached to the lots in question. On August 20, 2017, during a general meeting of the co owners, the applicant, the Syndicat des Copropriétaires Cond’Eautels du Manoir (“syndicate”), informed Lincoln that its votes had been reduced from 7,176 to 2,500 in accordance with arts. 1092, 1093 and 1099 of the Civil Code of Québec (“C.C.Q.”), which provide, among other things, that the votes of a developer (a term that is also defined) are to be reduced as of the second year after the publication of the declaration of co ownership,

The Superior Court allowed Lincoln’s originating application for a declaratory judgment and declared that the relative value of its fractions was 71.76% and that the number of votes attached to them was 7,176. The court found that the reduction in votes required by art. 1092 C.C.Q. had ceased to apply when 9088 had stopped owning the majority of the fractions. At the hearing before the Court of Appeal, the syndicate disputed the fact that Lincoln intended to occupy its fractions. Lincoln’s lawyer stated that plans for the construction of a new hotel had been filed with the municipality. The Court of Appeal dismissed the syndicate’s appeal. It found that the judge had misinterpreted arts. 1092 and 1093 C.C.Q. but that his errors had not affected his conclusion that the application should be allowed. In the Court of Appeal’s view, the exception provided for in art. 1093 C.C.Q. applied in this case. Lincoln was not a developer because it had acquired its fractions in good faith for a price equal to their market value with the intention of occupying them in accordance with the declaration of co ownership.

Lower Court Rulings