As many our readers will know from our previous blog post, the Ministry of Government and Consumer Services has recently proposed bringing changes to the Condominium Act, 1998 (the “Act”). The proposal, if approved, would proclaim into force a new section 117 of the Act and amend two regulations under the Act (namely, Regulation 48/01 and Regulation 179/17). In addition to changes to the legislation, the government’s proposal would also significantly expand the jurisdiction of the Condominium Authority Tribunal (CAT). Continue reading “The Introduction of Nuisance & the Expansion of the CAT: Should Further Amendments Be Considered?”
The recent decision of Metropolitan Toronto Condominium Corporation No. 596 v Best View Dining Ltd provides further direction respecting when a condominium can recover legal expenses by way of lien. Continue reading “Costs, Costs, Costs… Another Court Decision Considers Recovery of Legal Costs”
Until the Condominium Authority Tribunal expands its jurisdiction, many Ontario condominium corporations continue to find themselves in the Small Claims Court to resolve disputes (either as a plaintiff bringing the claim, or to defend against a claim brought against them). Continue reading “Costs In Small Claims Court: Here’s How It Works”
One of our clients recently had issues with an owner that made an addition to the common elements without authorization from the Condominium Corporation. In this case, the owner installed an air conditioner on the common elements. The air conditioner was not installed in an approved location. As a result, the Corporation tried numerous times to have the owner relocate the air conditioner without success.
In the Wexler case, the owner brought a claim against the condominium corporation in Small Claims Court for total damages of $2,525.14 for alleged harassment, for recovery of costs for clean-up of pigeon droppings (charged to the owner by the corporation), and for recovery of costs for legal advice obtained by the owner. After a three-day trial, the owner’s claims were dismissed. That left the question of responsibility for the costs (of the Court proceeding).
The Small Claims Court ordered the owner to pay the condominium corporation’s legal costs – in the amount of $20,000. This was based, at least in part, on the “indemnification” provision in the condominium corporation’s declaration. Because of that indemnification provision, and also because the Small Claims Court felt that the owner had unnecessarily prolonged the trial, the Court held that the owner should be obligated to pay more than the usual costs ordered in a Small Claims Court matter. [The Rules of Court state that the losing party is (usually) obligated to pay a maximum of 15% of the amount claimed, as costs to the winning party.] But again, the Small Claims Court said that the owner was obligated to pay higher than usual costs in this case.
The decision of the Small Claims Court included the following:
I recognize that the plaintiff was not prepared for trial and that she was disorganized; this directly contributed to unnecessarily prolonging the trial. As such, and because her action was dismissed and because the condominium corporation has a Declaration, By-Laws and Rules providing for full indemnity, and especially because it would be unfair that the unit owners should bear all the costs of this litigation when the condominium corporation is unnecessarily sued, I allow costs in the amount of $20,000, inclusive of HST and disbursements.
The owner appealed and was successful on appeal. On appeal, the Divisional Court said that the indemnification provision, in the condominium corporation’s declaration, did not apply. Based on the wording of the indemnification provision, the Divisional Court said that the provision “is not applicable as there has been no loss, costs, damage, injury or liability suffered or incurred with respect to the common elements and/or all other units caused by an act or omission by Ms. Wexler”.
I don’t disagree with the above reasoning of the Divisional Court. But here’s my concern:
What will this mean for condominium corporations seeking to collect OTHER costs or OTHER expenses – quite apart from Court costs – and seeking to add those amounts to an owner’s common expenses when those costs or expenses have been caused by an act or omission of the owner or by an occupant of the owner’s unit?
Many condominium declarations contain an indemnification provision similar to the provision considered by the Court in the Wexler case. So, based on the Wexler decision, those provisions will only apply to losses, costs, damages, injuries, liability etc. suffered or incurred (and caused by an act or omission of the owner or an occupant of the unit) “with respect to the common elements and/or all other units”.
The problem is: Some costs (caused by an owner or occupant) might not be covered.
And we know from other Court decisions (and from amendments to the Condominium Act) that these sorts of chargeback or indemnification provisions likely need to be in the declaration (in order to allow a condominium corporation to add such amounts to the owner’s common expenses). [Such a provision in the by-laws or rules may not be sufficient.]
Here’s the bottom line: Condominium corporations should consider amending their declarations to replace these imperfect, inadequate indemnification provisions – for the sake of all of the innocent owners in the condominium.