Ontario Condo Law Blog : Toronto Condominium Lawyer & Attorney : Gardiner Miller Arnold Law Firm : Ontario, Ottawa, Hamilton, Kitchener

#7 -- Jia v. Toronto Standard Condominium Corporation No 1479, 2010 ONSC 3433

A Toronto condo was found liable and ordered to pay $50K for assault and battery when its superintendent physically ejected a “trespasser.”  There is nothing new about the concept of employers being vicariously liable for the acts and omissions of their employees, but the brutal assault in this case is noteworthy. See our case comment and our quotes in the Law Times.

#6 -- East of Bay (2003) Development Corp. v. MPAC, 2010 ONSC 3337

Assessing property for tax purposes is a lot like making sausages – you probably don’t want to see how it’s done.   In this case brought by the condo developer to set aside MPACs assessment for the first two years of the condo’s existence and for a refund of all taxes paid, the court slapped MPAC for its "questionable" two-stage property tax assessment process for new condo units. The fact that MPAC was understaffed and unable to cope with a deluge of new condos on the market was no justification for using a two-stage assessment not expressly permitted by the Assessment Act, s.33(1).

#5 -- Metropolitan Toronto Condominium Corporation No. 675 v. Unit Owners, (unreported)

A condo corporation successfully obtained a court order to amend its declaration to unitize and sell an unused superintendent’s suite despite opposition by at least one unit owner. While it’s good to see a court stepping up to fill the void where needed, it’s troubling that a court might override the requirement in the Condo Act for a large majority of unit owners to democratically approve amendments to the declaration, which could include drastic plans to unitize and sell off common elements, a difficult and controversial decision. It is not clear what percentage of owners supported the amendment in this case as there are few facts set out in the court’s endorsement or the case comment by the condo’s counsel. This type of scenario is arguably addressed more appropriately by a change to the Condo Act rather than judicial intervention.

#4 -- Nipissing Condominium Corporation No. 4 v. Kilfoyl, 2010 ONCA 217

The Ontario Court of Appeal affirmed that single family occupancy restrictions in a condominium declaration do not violate the Ontario Human Rights Code.  While the court’s reasons were sparse, this troubling issue is now definitively answered. We can tell that the Ontario Human Rights Tribunal is listening because they relied on the court’s decision in throwing out a human rights complaint made by that same unit owner on the same issue (see 2010 HRTO 1036).

#3 – TIE: Metropolitan Toronto Condominium Corporation No. 985 v. Vanduzer, 2010 ONSC 900 and Kilfoyl v. Nipissing Condominium Corporation No. 4 (re costs), 2010 ONSC 6023

In cases where unit owners are responsible to fully indemnify their condo corporation for the legal costs of enforcing the declaration, by-laws and rules under Condo Act, s. 134(5), the court can order that the lawyers’ accounts be assessed.  By so doing, the court can ensure that cases are not “overlawyered.” See our case comment on Vanduzer and, for a case applying this principle, see Peel Condominium Corp. No. 452 v. Jaworowski, 2010 ONSC 4567, where the court reduced the recoverable legal costs by a whopping 66% after finding that the corporation’s lawyers had “over-resourced” a condo lien enforcement case.

#2 -- Weinberg v. Metropolitan Toronto Condominium Corporation No. 1019, 2010 HRTO 1527

The Ontario Human Rights Tribunal dismissed a unit owner's complaint about the condo’s enforcement of a “no pets clause” where an arbitrator appointed under the Condo Act had already considered the complainant’s disability and ordered the dog's removal. The case reminds us that every litigant has only one “kick at the can.” An arbitrator’s ruling on an issue cannot be revisited by another tribunal.   Similarly, in Atkinson v. Essex Condominium Corp. No. 5, 2010 HRTO 123, the Human Rights Tribunal ordered a unit owner’s complaint over a “no pets” clause to be deferred pending the outcome of the condominium corporation’s concurrent enforcement application to the Superior Court. Multiplicity of proceedings should be avoided.

#1 -- Metropolitan Toronto Condominium Corporation No. 747 v. Korolekh, 2010 ONSC 4448

This was unquestionably the top newsmaker of the year. After hearing evidence of a condo unit owner's bizarre behaviour including verbal assaults, besetting and menacing others with a dog, the Court found the unit owner to be "incorrigible, unmanageable" and ordered her to sell her unit.   See our case comment, our article in Condo Business and our quotes in the Toronto Star and the Law Times.  This appears to be only the fifth Ontario case where a sale order was given. The rarity of such orders was underlined in another 2010 case called Condominium Corporation No. 8110264 v. Farkas, where the Alberta Court of Appeal ruled that evicting condo unit owners is an extraordinary remedy, to be granted only when other incremental remedies fail. 

BONUS:   Lahrkamp v. Metropolitan Toronto Condominium Corporation No. 932, (unreported)

As another instalment of a long-running dispute between a unit owner and his condo corporation, an October 2010 decision of the Ontario Small Claims Court explores the issue of owners’ right to inspect records under Condo Act, s.55. The court rejected the argument that every request for records must be accompanied by a reason for the requested records, but held that the right of a corporation to refuse records may be appropriate where the actual motivation behind the request is being challenged, or the burden and expense to the corporation is a serious issue. Each request must be considered on its own merits. A number of requests for different sorts of records are then raised and decided. 

Thanks for reading our blog this year. Have a happy and healthy 2011.

[35]  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.

Addition to common expenses 
134(5) If a corporation obtains an award of damages or costs in an order made against an owner or occupier of a unit, the damages or costs, together with any additional actual costs to the corporation in obtaining the order, shall be added to the common expenses for the unit and the corporation may specify a time for payment by the owner of the unit.  

In response to these arguments, the court made a further ruling on costs last week. Justice Low concluded that the offer to settle did not represent a significant offer of compromise that would justifying a greater degree of costs indemnity. More interesting, however, is the court’s ruling on section 134(5):

[10] I am not persuaded that s. 134(5) of the Condominium Act, 1998 applies in this case to require substantial or complete indemnity costs to be awarded to the defendant.

[11] This was a case brought by the plaintiffs for slander of title. It was not an application by the Condominium Corporation for an order enforcing compliance with any provision of the Condominium Act, the declaration, the by-laws, etc.

[12] Section 134(5) has to be read in the context of s. 134 as a whole. Accordingly, although the Condominium Corporation obtained a dismissal with costs, the order was not one which arose from an application to obtain an order to enforce compliance.

[13] In Metropolitan Toronto Condominium Corp. No. 1385 v. Skyline Executive Properties Inc., Doherty J.A. drew the distinction between costs of obtaining the order (which include defending the order obtained on appeal) and costs of enforcement. Costs of enforcement are not engaged by s. 134(5).

[14] In my view, the fact that the cause of action asserted by the plaintiff calls into question the correctness of the defendant’s earlier conduct in enforcing its rights by registration of a lien does not bring the proceeding within the terms of s. 134.

[15] For the foregoing reasons, I would not raise the level of indemnity from partial to substantial or full indemnity in favour of the defendant Condominium Corporation.

We agree with the court's ruling that section 134(5) applies only to applications for compliance orders under section 134(1). We wonder, however, whether the result might have been different had the court considered section 85(1) of the Condo Act, which provides:

Lien upon default
85. (1) If an owner defaults in the obligation to contribute to the common expenses, the corporation has a lien against the owner’s unit and its appurtenant common interest for the unpaid amount together with all interest owing and all reasonable legal costs and reasonable expenses incurred by the corporation in connection with the collection or attempted collection of the unpaid amount. [Emphasis added.]

It is also not clear whether the court might have ruled differently had it considered the typical indemnity clause contained in most condo declarations that require unit owners to make good for any loss or cost to the condo that results from an owner's act or omission.

Leaving these additional issues aside, we think that the court’s award of partial costs makes good sense here. Granting condominium corporations 100% legal cost recovery in all cases where unit owner plaintiffs are unsuccessful at trial would remove the important incentive to make a genuine effort to settle cases on a compromise basis at an early stage. The power of the court to award costs is intended to enforce the positive obligation on all parties to take positive steps to try and settle their cases. The award is an exercise of the court’s discretion to reward a party that made sincere efforts to settle a case and to penalize a party that did not.

While the court had previously found that the plaintiffs’ expectations about their rights were unrealistic in this case, it might also be said that the condo corporation’s expectations about the right to recover all of its legal costs were equally unrealistic.