In for a penny, in for a pound? A cautionary tale on costs.

In the past few years there has been a trend toward full or substantial indemnity costs for condominiums enforcing against unit owners. However, in York Condominium Corporation No. 345 v. Qi, [2013] O.J. No. 3214 the courts have again awarded only partial indemnity to a successful condominium. Although the court acknowledged the previous case law supporting full indemnity costs for condominiums that are successful in enforcing against unit owners, it also reiterated that judges have retained their general discretion to award costs. In making its decision, the court had the following concerns in awarding costs in favour of the condominium:

– the condominium’s legal fees ($35,767.73) were “immensely disproportionate” to the owners’ arrears ($497.51)
– the condominium had been charging a high rate of interest on arrears (12%) and a $25.00 charge per month for arrears
– “the reasonability of these amounts [the legal fees] or whether they are excessive”
– the condominium could have taken steps to reduce the conflict with the owners by explaining and/or apologizing to them when it was claimed hurtful and discriminatory language was used toward them
– failing to consider an offer to settle made by the owners that would have allowed the parties to “exit gracefully” from the dispute.

This case is another cautionary tale for condominiums. You shouldn’t act as if you can spend the owners’ money with impunity – you won’t always get your costs. Act reasonably and you can expect a reasonable level of costs in return. Act unreasonably and you’ll have a difficult time explaining the increased monthly fees to the owners.