A recent Ontario Superior Court decision clarifies how to quantify the “additional actual costs” incurred by condo corporations in obtaining compliance orders under section 134 of the Condominium Act, 1998.
In MTCC 985 v. VanDuzer, the corporation was successful in obtaining a compliance order requiring the unit owner to remove a gazebo erected by an owner on exclusive use common elements.
Having decided the case in favour of the condominium corporation, the Court said the following about costs:
 The costs incurred by the applicant in the application were for the purpose of obtaining compliance with the Act. I would fix substantial indemnity costs at $18,000 inclusive of disbursements. The applicant is entitled, however, to full indemnity, which would entail a top-up to costs on a scale as between a solicitor and his own client. In cases where an unsuccessful party is required to pay full indemnity costs to the successful party, there is an inherent danger of "overlawyering" a matter with the knowledge that it is the other party who will have to pay. I do not suggest that overlawyering has happened here. The matter was very ably prepared and argued by counsel for the applicant. On the other hand, a condominium corporation’s right to full indemnity is not a carte blanche and the issue is whether the totality of the applicant’s legal expenses in relation to this matter is reasonable and therefore recoverable from the respondent. On that point, the court is not in a better position to assess the matter than an assessment officer. I am therefore referring to the assessment officer the issue of full indemnity costs to be assessed as between a solicitor and his own client. The parties are at liberty, however, to agree to the quantum of costs to avoid the additional expense of the assessment.
Three points worth mentioning arise from this passage.
The first point is trite but important for unit owners and their lawyers to know: Condo corporations are typically entitled to 100% costs recovery when they go to court to obtain a compliance order against a unit owner or occupant. The concept that innocent unit owners shouldn’t be subsidizing costs incurred to deal with a guilty party is set out in section 134(5) of the Condo Act, which has been positively enforced by our courts.
Second, a court may direct that the legal costs incurred by a condominium corporation in obtaining a compliance order be assessed by an assessment officer. This helps ensure that lawyers acting for condo corporations do their work efficiently and ensure that their fees are reasonable. It is important to note, however, that the concept of a condo lawyer’s bills being subject to assessment is not new, and costs awards of this sort should not be referred to assessment as a matter of routine. That said, the parties should work together to review the materials and reach an agreement on costs whenever possible, particularly if there is some question about certain dockets or disbursements.
On this second point, unit owners who think that they can secure a sharp reduction in the legal bill by assessing the bill should think twice. While an assessment officer will closely scrutinize the condo corporation’s legal bills, there generally won’t be a significant reduction in the bill unless the assessment officer finds that the work described in the bills was related to other files, or that the handling of the case was inefficient, grossly excessive or demonstrably unnecessary. Moreover, the cost of the assessment process will probably consume any potential reduction that the unit owner might achieve. Indeed, the unit owner is properly responsible for these costs and is likely just adding to his or her own burden by insisting on an assessment.
A third point is that the $18,000 in costs awarded by the court in this case seems to be in line with other recent decisions. Consider the case of MCC 39 v. Kreutzweiser, another enforcement case decided this spring, where a $19,000 costs award was given against an occupant who refused to remove cats from his condo unit after the board deemed the pets to be a nuisance.
Consider also the 2008 case of Italiano v. TSCC 1507, where a unit owner fought with the condo over whether that owner was making too much noise in his unit. After fighting the case through arbitration and appeals, the owner ended up being responsible to pay the condo’s $80,000 bill, plus his own costs. We described that case previously here.
We’ve said it before, but it is worthwhile saying it again: Unit owners who choose to mount a serious defence to court applications brought by their condominium corporations for compliance orders are gambling with their financial security.
Before coming to court with some vague notion of entitlement or “an issue of principle,” unit owners should think long and hard about whether that notion or principle is worth $15,000 or more out of their pocket, and consider the impact of that cost to them and their family. There’s no need to join the ranks of people who have bankrupted themselves fighting over a dog, etc., in a condo unit.
Condominium unit owners facing a problem with their condo corporation should do themselves a favour and get legal advice from a specialist in condominium law as soon as possible. That small investment will probably save tens of thousands of dollars and help avert financial catastrophe.