A recent decision of the Superior Court of Justice illustrates how the conduct of the parties can sway a judge when it comes to the issue of costs. The case is York Condominium Corporation No. 922 v. Frank Lu et al (2016). The facts are straightforward. The owner refused to permit the condominium’s contractors to enter the unit to investigate it after a flood in the unit, which was caused by the owner’s tenants. The condominium made repeated attempts to gain access to the unit and offered to meet with the owner to discuss the issue, but the owner refused. The condominium engaged a lawyer, who wrote several letters, but the owner still refused to grant the condominium access to the unit.
The condominium started a court application under sections 92, 117, and 134 of the Condominium Act, 1998. The condominium asked the court for an order requiring the owner to allow it to access the unit to investigate the damage, and if necessary, repair the damage to the common elements.
The condominium was successful in its application and sought $15,416.00 in costs from the owner. Continue reading
I am sure that we have all been to meetings where the issue of unruly tenants is raised by a director or owner. The complaints are often about noise, overcrowding, damage to the property, or parking. Sometimes the complaints are about risky behaviour, or even criminal activity. The other residents may try to address the problems with the tenants, but many file complaints with the property manager or board instead. The owner is often unaware of the problems with their tenants until he receives a letter from the manager or board.
Once the owner receives the demand letter he is in the difficult position of trying to get his tenants to comply. Most owners know that if their tenants don’t comply with the condominium’s demands a lawyer will be hired by the condominium to write a letter and the cost may be charged back to the owner. If the owner cannot get his tenants to comply with the rules he is left with the nearly impossible task of trying to get an order for eviction from the Landlord and Tenant Board.
While the board of directors is in the difficult position of trying to elicit compliance from the tenants by enforcing against the owner, there are many provisions in the Act that it can rely upon. Section 119(2) requires the owner to take “all reasonable steps” to ensure that his tenants comply with the Act, the declaration, by-laws and rules. This section is similar to section 17(3) of the Act, which requires the condominium to take “all reasonable steps” to ensure that the owners comply.
What is “all reasonable steps”?
A recent case discussed the term. In Toronto Standard Condominium Corporation No. 2032 v. Boudair et al (2016) the condominium commenced an application against the tenants and owner of a unit after it received complaints about smoke escaping from the unit and entering the adjacent units.
A condominium corporation commenced an application against unit owners seeking orders that they obey the rules, be quiet and leave others alone. The owner commenced a counter-application for the same relief against the condominium. Most of the dispute related to the costs of the proceedings. The condominium insisted upon full recovery, or near full recovery, of all of its costs (about $150,000.00) prior to a ruling by the judge. Neither the condominium or owners were successful in their applications. The condominium sought $30,000.00 in costs.
The ruling on costs is one of many made in the past few years where concerns were raised about a condominium’s aggressive stance toward an owner during a legal proceeding. This aggression seems to stem from the condominium’s confidence that it will be entitled to rely upon subsection 134(5) of the Act to recover all or almost all of its legal costs. Subsection 134(5) states: Continue reading
The Court of Appeal has released a further decision on the implementation of its December 2014 decision and the costs. For those unfamiliar with the Orr v. MTCC 1056 case, you can read more in my previous post.
MTCC 1056 was registered as a condominium in 1993. From 1994 to 1997 one of the declarant’s directors owned a unit within the condominium. The director was also a director for the condominium. He added a third storey in the common element attic space of the unit. In 1997 a new owner purchased the unit. She understood it was a three-storey townhouse unit. Unfortunately, the status certificate did not notify her that the third-storey was improper, despite the director’s knowledge of the changes he made to the unit. Shortly after she moved into the unit the condominium demanded that she close up the attic space and return it to its original condition. The owner brought a claim against the condominium, the property manager, her own lawyer, and several other individuals. The condominium added the seller/director to the action.
At trial, the judge dismissed the claim against the property manager and individuals, but found that the condominium, director and lawyer were liable for damages. The owner was ordered to close up the third floor space and pay the condominium rent for the third floor.
On appeal, the Court of Appeal determined that the condominium was not entitled to demand the owner close up the third floor and restore the unit to a two-storey configuration. The Court also found that the property management company was not liable to the owner as it was acting as agent for the condominium and did not owe a duty to the owner. However, the property management company was ordered to indemnify the condominium for the damages it owed to the owner because of her reliance on the status certificate it prepared. The property manager was not entitled to rely upon a clause in its management agreement that limited its liability. The Court upheld the finding that the law firm was negligent in failing to show all of the plans to the owner prior to her purchase. The Court upheld the award of $50,000.00 owed to the condominium from the seller/director.
This most recent decision awarded the legal costs of the appeal as follows:
- $44,170.81 to the owner by the condominium
- $44,170.81 to the owner by the owner’s lawyer
- $42,490.60 to the condominium by the owner’s lawyer
- $22,651.25 to the property manager by the owner
- $11,325.62 to the property manager by the condominium
- $11,325.62 to the property manager by the owner’s lawyer
The legal costs of the trial were awarded as follows:
- $150,000.00 to the owner by the condominium
- $150,000.00 to the owner by the owner’s lawyer
- $100,000.00 to the property manager by the owner
- $50,000.00 to the property manager by the condominium
- $50,000.00 to the property manager by the owner’s lawyer.
For those keeping track, the legal costs awarded have exceed $675,000.00 so far and this matter isn’t over yet. There are also the damages awarded, which could exceed another $500,000.00 between the various parties.
The Court of Appeal released its decision in the Boily saga in late October. For those of you that are unfamiliar with Boily, it is the case where the board and a group of owners disagreed on various changes to the common elements. The owners commenced an application against the condominium and directors. The court ordered the condominium to restore the common elements. The directors disregarded the court order. The owners brought a motion for contempt of court. The owners were successful. The were further appeals and motions as the parties dug their heels in.
This matter never should have required a court application, or at least not one with multiple hearing dates, motions, and appeals. This type of dispute seems to be the perfect subject-matter for mediation, which would have been a fraction of the cost. The costs wasted on this matter have been astronomical. By my calculation (based on the reported cases), the legal costs of all the parties likely exceeded $500,000.00. Add in the restoration costs of $400,000.00 and you are close to 1 million all because they couldn’t agree on the landscaping for the condominium. Does that seem reasonable to anyone? Continue reading
Section 134(5) of the Condominium Act, 1998, permits the condominium to add “additional actual costs” to the common expenses payable for a unit where it is successful in obtaining an order for damages or costs from the owner or occupant of the unit. Many condominiums rely upon section 134(5) of the Act when seeking costs from owners and occupants after a successful application. The courts have recently begun to resist such claims where the amount sought for legal costs is excessive or unreasonable.
In one of the more recent decisions (York Condominium Corporation No. 301 v. James (2014) SCJ) the condominium sought over $125,000.00 in costs from the owner. The condominium also sought over $27,000.00 for security, plumbing, inspection, and locksmith charges. The court refused to allow the condominium to recover all of its legal costs. The court refused to award any of the other charges.
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,  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: Continue reading