In the compliance proceeding case MTCC No. 634 v. Adamo, a condominium corporation had asked that fireplace maintenance be completed; however, one owner steadfastly refused to fix the problems with his unit’s fireplace to bring it into compliance. Prior to the court hearing in October, 2015, the owner had finally complied, and the Court was only required to decide the issue of costs.
The Court suggested that the owner alone was effectively responsible for the matter ending up in court, but refused to allow the condominium indemnity for costs of “extra-litigation efforts” to identify and rectify the problem. The Court indicated that the recovery of costs was restricted to only the costs reasonably necessary for the litigation.
By the time compliance proceedings get to court, the costs incurred are usually significant. A condominium corporation will often make attempts to find a resolution throughout a dispute; however, sometimes things cannot be resolved with an uncooperative owner unless a court proceeding is commenced, no matter how reasonable the proposed solutions.
In this case, the Court commented that:
- The maintenance problem had to be fixed, although it was no doubt unwelcome news for the affected owners
- The owner resisted fiercely and he claimed that the problem was due to the condominium corporation’s failure to perform annual maintenance; however, he did not prove this claim
- The owner refused to remedy the problem and took the position that the condominium corporation would have to get a court order against him
- The condominium corporation took all reasonable steps and showed patience with the owner, prior to commencing the application
- The owner only had himself to blame for the fact that the condominium corporation incurred costs to bring the matter to Court
- Given the nature of the application, the Court felt that the costs claimed were “exorbitant”. However, after reviewing the history of the file, the Judge understood how the costs got higher than one would expect for a matter of this nature.
The Court decided that the condominium corporation’s entitlement to indemnity ($15,000 was being claimed) should be restricted to the costs reasonably necessary for the litigation itself; that is, not the extra-litigation efforts to identify and rectify the problem. It stated that the costs must be proportional and consistent with the owner’s reasonable expectations of the costs he might be called upon to pay.
As such, we have another case in which the court is recognizing the indemnification principles when an owner is in breach of their obligations, and nothing in the Court’s comments suggests that the condominium corporation acted improperly. However, the Court limited the reimbursement of costs owed by the owner to the corporation to $9,000, by concluding:
- What an owner could reasonably expect the costs to be in this type of case
- That the indemnification principles in this case do not apply to all costs incurred in the dispute, just the costs required for the litigation.
To read more about indemnity and enforcement, take a look at our previous blog post.