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Toronto Real Estate Competition Bureau targets condo renovation industry in criminal probe

The CN Tower, office buildings and condos are seen in downtown Toronto. The Competition Bureau is invesigating what it calls ‘allegations of bid-rigging and conspiracy’ involving the Greater Toronto Area’s multimillion-dollar condo renovation industry.

Fred Lum/The Globe and Mail

Canada's Competition Bureau is setting its sights on the booming condominium sector in the Greater Toronto Area, ordering more than 100 condo boards to hand over records as part of a sweeping criminal investigation.

The bureau is probing what it calls "allegations of bid-rigging and conspiracy" involving the region's multimillion-dollar condo renovation industry.

Earlier this month, a Toronto court granted an order allowing federal Commissioner of Competition John Pecman to compel 141 condominium buildings across the GTA to turn over records related to "the budget, tendering, bidding, negotiating and awarding of a contract for renovations to the common areas of the condominium corporation's building(s)," according to court records.

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The investigation was launched by the federal bureau's Cartels Directorate and requests condo boards provide details about the companies and individuals involved in bidding on contracts to renovate shared spaces, such as lobbies, party rooms and parking garages.

"The bureau is looking into allegations of bid-rigging and conspiracy in the supply of condominium refurbishment services in the Greater Toronto Area," Competition Bureau spokesperson Marie-France Faucher confirmed in an e-mail. Both are considered to be criminal charges under the federal Competition Act.

While most of the buildings are in Toronto, the bureau's investigation involves condominiums from Burlington to Newmarket to Whitby. All of the buildings have hired companies to perform extensive renovations to their common areas.

The renovation contracts date as far back as August of 2006 and as recently as September, 2014, and the bureau said in court filings that it may expand its investigation to other condos.

Those familiar with the situation say the board may be targeting up to 400 condominiums whose names were found on computers seized by investigators roughly a year ago as part of a probe into a small group of three or four interior designers and contractors involved in condo renovations.

Condo lawyers say the federal watchdog's order compelling more than 100 individual condo buildings to hand over detailed financial records is highly unusual.

"I've been doing this 28 years and I've never seen the Competition Bureau ask condominiums any information," said lawyer Mario Deo, who is also president of the Canadian Condominium Institute, a condo-industry lobby group.

The May 10 court order gives condo boards 90 days to turn over the information, which has left many boards scrambling to compile records that go back up to a decade.

"They're not the world's best record-keepers," said condo lawyer Audrey Loeb, who was working on drafting letters for her clients that explain their legal obligations in plain English. "In a single-purpose company, you would have all these records, but in a condo, God only knows what they're going to find."

Most of the details of the Competition Bureau's investigation were sealed by the court. Bureau lawyers wrote in court filings that the records should be sealed "due to the size and complexity of the bureau's investigation" and also over fears that "future targets … may destroy or remove evidence."

However, Ms. Faucher said condominium owners were "not the targets" of the investigation. She declined to elaborate, citing the confidentiality of the investigation, which the bureau says is "ongoing" and had not yet found any evidence of wrongdoing. "Should evidence indicate that the Competition Act has been contravened, the Commissioner will not hesitate to take appropriate action," she wrote.

Legal experts say the bureau appears to be targeting companies that supply the goods used in the renovations or the interior-design companies that oversee the projects, rather than condo boards or property managers. The federal agency may be looking into whether condo directors and owners are the victims of potential collusion and price-fixing when they enter into contracts for renovation projects that can run into the millions of dollars.

"I think what they're worried about is people from whom our clients may have bought goods may have done something improper or illegal in terms of pricing their goods," Ms. Loeb said.

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Most condos hire third-party professionals to manage their renovation projects, including dealing with suppliers and handling budgets. Many use a formal tender process to award renovation contracts, involving sealed bids and overseen by professional engineers, particularly for large and expensive projects.

But the contracts are just as often left to relatively unsophisticated condo owners struggling to navigate a complex and expensive bidding process.

"If the goal of this investigation is to say: Listen, there are forces in the marketplace that are causing condo corporations to spend more money than they otherwise ought to, then it's probably a good thing," condo lawyer Chris Jaglowitz said.

Robert Weinberg, president of the Association of Condominium Managers of Ontario, said members of his property-management organization adhere to strict ethical standards when it comes to managing the bidding process for renovation contracts, including requiring interior-design companies to disclose any relationship they have with suppliers.

But the association represents a minority of the more than 300 property-management companies in the province. "Whether or not it goes on, this has been a shock to most management companies who have started getting served with this," he said.

The move by the federal competition watchdog is part of a broader push by government to examine the burgeoning industry that services the proliferation of high-rise construction in the GTA, where close to three-quarters of new homes are condos and many aging buildings now require costly upgrades.

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"There is this gargantuan sea change in just the size and the value of the services and materials that these condo corporations consume," Mr. Jaglowitz said. "It is now a sizable portion of just about any aspect of the economy."

The provincial government recently overhauled its condo laws and is working on regulations that would require condo boards to award certain contracts through a proper tender process.

Canada Revenue Agency has also looked into the financial activities of condo corporations, which are considered non-profits but that often have profitable businesses renting out parking spaces, empty suites or signing leases with companies to put solar panels and cellular towers on the rooftops.

In a 2013 report that charity lawyer Mark Blumberg obtained under the federal Access to Information Act and posted to his blog last month, the CRA concluded some of the profits were actually flowing to individual condo owners and should be taxed as personal income.

GTA condos involved in investigation

Condo addressRenovation Date
35 Church Street, TorontoAugust 2006
80 Front Street East, TorontoAugust 2006
447-449 Walmer Road, TorontoDecember 2006
1515 Lakeshore Road East, MississaugaJuly 2006
29 Pemberton Avenue, TorontoJune 2006
39 Pemberton Avenue, TorontoJune 2006
430 Mclevin Avenue, TorontoMay 2006
22 Southport Street, TorontoOctober 2006
1001 Cedarglen Gate, MississaugaSeptember 2006
20 Southport Street, TorontoSeptember 2006
7 Broadway Avenue, TorontoFebruary 2007
480 Mclevin Avenue, TorontoFebruary 2007
20 Guildwood Parkway, TorontoJanuary 2007
10 Guildwood Parkway, TorontoJuly 2007
50 Kingsbridge Garden Circle, MississaugaJuly 2007
4235 Sherwoodtown Boulevard, MississaugaJuly 2007
88 Corporate Drive, TorontoJune 2007
2900 Yonge Street, TorontoJune 2007
480 Queens Quay West, TorontoJune 2007
2045 Lakeshore Boulevard West, TorontoOctober 2007
550 Queens Quay West, TorontoOctober 2007
100 Canyon Avenue, TorontoSeptember 2007
2171 Lakeshore Road, BurlingtonSeptember 2007
80 Mill Street, TorontoSeptember 2007
5 San Romanoway, TorontoSeptember 2007
801 King Street West, TorontoApril 2008
18 William Carson Crescent, TorontoJune 2008
715 Don Mills Road, TorontoMarch 2008
333 Clark West, ThornhillOctober 2008
10 Delisle Avenue, TorontoSeptember 2008
18 Lower Village Gate, TorontoApril 2009
35 Empress Avenue, TorontoDecember 2009
2175-2185 Marine Drive, OakvilleDecember 2009
3590 Kaneff Crescent, MississaugaOctober 2009
50 Old Mill Road, OakvilleOctober 2009
330 Adelaide Street East, TorontoSeptember 2009
18 Concorde Place, TorontoSeptember 2009
18 Concorde Place, TorontoSeptember 2009
25 Kingsbridge Garden Circle, MississaugaSeptember 2009
265 Ridley Boulevard , TorontoSeptember 2009
270 Davis Drive, NewmarketApril 2010
16 & 18 Harrison Garden Boulevard, TorontoDecember 2010
750 Bay Street, TorontoMarch 2010
77 Harbour Square, TorontoMarch-April 2010
7323 Martin Grove Road, WoodbridgeOctober 2010
231 Fort York Boulevard, TorontoAugust 2011
260 Queens Quay West, TorontoAugust 2011
1271 Walden Circle, MississaugaDecember 2011
19 Four Winds Drive, TorontoFebruary 2011
30 Greenfield Avenue, TorontoJuly 2011
50/70 Baif Boulevard, Richmond HillJune 2011
77 Maitland Place, TorontoMarch 2011
1333 Bloor Street West, MississaugaMay 2011
1001 Bay Street, TorontoSeptember 2011
18 Sommerset Way, TorontoSeptember 2011
3880 Duke of York Boulevard, MississaugaAugust 2012
28 Sommerset Way, TorontoAugust 2012
890 Sheppard Avenue West, TorontoDecember 2012
2665 Windwood Drive, MississaugaDecember 2012
212 Kerr Street, OakvilleFebruary 2012
8 Mondeo Drive, TorontoJuly 2012
8 Mondeo Drive, TorontoJuly 2012
18 Kenaston Gardens, TorontoJune 2012
88 Corporate Drive, TorontoMarch 2012
3 Navy Wharf Court, TorontoMarch 2012
61&63 St. Clair Avenue West, TorontoMarch 2012
78 Dalhousie Street, TorontoMarch 2012
909 Bay Street, TorontoNovember 2012
7601 Bathurst Street, VaughanOctober 2012
401 Queens Quay West, TorontoOctober 2012
270 Wellington Street West, TorontoOctober 2012
1 Bedford Road, TorontoSeptember 2012
81 Townsgate Drive, ThornhillAugust 2013
10/20/30 Fashion Roseway, TorontoDecember 2013
55 Harrison Garden Boulevard, TorontoDecember 2013
211 Queens Quay West, TorontoDecember 2013
451/455/481/485 Rosewell Avenue, TorontoDecember 2013
120 Carlton Street, TorontoJune 2013
16 Yonge Street, TorontoJune 2013
130 Carlton Street, TorontoJune 2013
17 Barberry Place, TorontoMarch 2013
230 Derry Road West, MississaugaMay 2013
50/60 Disera Drive, ThornhillMay 2013
15 Kensington Road, BramptonMay 2013
61 Markbrook Lane, TorontoMay 2013
28 Sommerset Way, TorontoMay 2013
23 Brant Street, TorontoNovember 2013
2511 Lakeshore Road West, OakvilleNovember 2013
225 Merton Street, TorontoNovember 2013
265 Ridley Boulevard , TorontoOctober 2013
55 Austin Drive, UnionvilleSeptember 2013
188 Bonis Avenue, TorontoSeptember 2013
1200 Don Mills Road, TorontoSeptember 2013
1210 Don Mills Road, TorontoSeptember 2013
155 Main Street North, NewmarketSeptember 2013
71 Simcoe Street, TorontoSeptember 2013
60 St. Clair Avenue West, TorontoSeptember 2013
100 Wingarden Court, TorontoSeptember 2013
131 Beechcroft Road, TorontoApril 2014
240 Scarlett Road, TorontoApril 2014
250 Manitoba Street, TorontoAugust 2014
11 Neilson Drive, TorontoAugust 2014
399 South Park Road, ThornhillAugust 2014
360 Watson Street West, WhitbyAugust 2014
2 Covington Road, TorontoFebruary 2014
8 Covington Road, TorontoFebruary 2014
381/397 Front Street West, TorontoFebruary 2014
2662 Bloor Street West, TorontoJuly 2014
120 Dundalk Drive, TorontoJuly 2014
2119 Lakeshore Boulevard West, TorontoJuly 2014
80 Port Street East, MississaugaJuly 2014
2545 Bloor Street West, TorontoJuly 2014
88 Corporate Drive, TorontoJuly 2014
4640 Kimbermount Avenue, MississaugaJuly 2014
260 Scarlett Road, TorontoJuly 2014
1740 Bayview Avenue, TorontoJune 2014
8 Hillcrest Avenue, TorontoJune 2014
8351 McLaughlin Road South, BramptonJune 2014
1055 Bay Street, TorontoMarch 2014
135 Dalhousie Street, TorontoMarch 2014
155 Dalhousie Street, TorontoMarch 2014
155 Dalhousie Street, TorontoMarch 2014
155 Dalhousie Street, TorontoMarch 2014
25 Kingsbridge Garden Circle, MississaugaMarch 2014
35 Kingsbridge Garden Circle, MississaugaMarch 2014
50/80/100 Quebec Avenue, TorontoMarch 2014
18 Parkview Avenue, TorontoMay 2014
1900 The Collegeway, MississaugaMay 2014
701 King Street West, TorontoOctober 2014
570 Wellington Street West, TorontoOctober 2014
25 Earlington Avenue, TorontoSeptember 2014
30 Harding Boulevard West, Richmond HillSeptember 2014
18 Lower Village Gate, TorontoSeptember 2014
288 Mill Road, TorontoSeptember 2014
23 Sheppard Avenue East, TorontoSeptember 2014
33 Sheppard Avenue East, TorontoSeptember 2014
101 Subway Crescent, TorontoSeptember 2014
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