A recent Superior Court decision is an important new “piece of the puzzle” respecting second-hand smoke and respecting chargebacks for enforcement costs.
In the case of Amlani v. YCC 473, the condominium corporation (at least initially) did not have a “no smoking” Rule. One of the owners was a smoker – and neighboring residents complained about second-hand smoke reaching their units. The condominium corporation took some steps (sealing joints and penetrations between units) which seemed to considerably improve the situation. The smoker (Mr. Amlani) also took various steps to minimize the problems (including smoking only in a particular room and using air filters). However, it seems that ultimately there were further complaints.
Mr. Amlani expressed a willingness to meet and discuss the problems and possible solutions (with engineering assistance), and to bear the engineering costs. However, the corporation was not very receptive to these requests (and essentially took the position that it was not technically possible to completely stop the smoke transfer). The corporation therefore demanded that the smoking stop (based upon the argument that the smoking constituted a nuisance, in contravention of the corporation’s general Rules). Ultimately the Amlanis moved out.
The corporation then passed a “no smoking” Rule – subject to grandfathering of smokers currently residing in the building. However, the corporation refused to grandfather Mr. Amlani (because he was not a resident of the building at that time…having moved out as noted above).
The key finding of the Court is that the condominium corporation improperly refused to grandfather Mr. Amlani. The Court therefore set aside the condominium corporation’s refusal; and the Court accordingly held that Mr. Amlani was entitled to be grandfathered, “provided that the dissipation of the smell of smoke from the unit can be reduced to a level at which it does not disturb other residents of the Corporation”. In my view, this is important because this serves to confirm that, in cases where a condominium resident is permitted to smoke, the resident has a duty to take steps to ensure that their smoke does not disturb other residents.
The Court also held that the condominium corporation’s treatment of Mr. Amlani was oppressive (particularly the corporation’s lack of cooperation in terms of exploring possible solutions). The Court didn’t agree that no solution was possible. The Court said:
“Once more I underscore that this is not intended to tie the hands of condominium boards when faced with recalcitrant unitholders. It is simply to say that where a unitholder is willing to discuss a practical solution and practical solutions appear evident, boards have an obligation to explore those solutions in good faith.”
As a result, the Court ordered the condominium corporation to reimburse various expenses incurred by the Amlanis, particularly in relation to their need to move out of the unit.
The first message, I think, is that condominium corporations need to be working with their owners (as reasonably possible) to seek any available solutions. Put another way: as confirmed by Section 17 (3) of the Condominium Act, a condominium corporation’s enforcement efforts must be reasonable. Otherwise, condominium corporations run the risk of a Court finding against them.
That brings me to the question of the corporation’s legal costs.
In the various dealings with the Amlanis (before the commencement of the Court process), the condominium corporation had incurred legal costs of roughly $25,000. The corporation treated these amounts as being added to the common expenses of the Amlanis, and liened their unit (to recover those costs). The Court declared the lien invalid and ordered that it be discharged.
The Court held that the condominium corporation was not entitled to add the legal costs (incurred outside any Court process) to the Amlanis’ common expenses. And, in the course of the decision, the Court appears to say that the condominium corporation was not able to recover the particular costs (as common expenses) because “the costs it claims related to compliance and enforcement costs without being embodied in a court order.” But I don’t read the case as saying that a Court order is required for all chargebacks to owners in relation to enforcement costs.
My reading of the decision is that the Court concluded, in this particular case, that the costs incurred were not recoverable under the terms of the particular indemnification provision contained in YCC 473’s Declaration. I say this for a number of reasons:
- The Court carefully examined the indemnification provision in the YCC 473 Declaration and noted the words “to or with respect to the common elements and/or all other units” (which can be found in many such provisions). The Court said that “There was no act of Mr. Amlani to the common elements or to all other units.” In other words, the Court held that the wording of the indemnification provision didn’t apply to the particular enforcement costs incurred in that case. This analysis was fundamental to the Court’s decision – and would have been entirely unnecessary if the Court was deciding that a Court order is necessary in every case.
- In many other cases, the Courts have applied indemnification provisions in condominium Declarations to add similar expenses (although not relating to smoking violations) to an owner’s common expenses (essentially as a contract between all of the owners of the community). But again, in each case, the Court must be satisfied that the wording of the indemnification provision fits the particular facts.
- New provisions of the Condominium Act – in Sections 7 and 84 (not yet in force) – specifically acknowledge and confirm the possibility for such indemnification provisions (and resulting chargebacks to owners). In other words, coming amendments to the Condominium Act will be clarifying and confirming all of this law.
- Of particular importance: In the Amlani case, the Court’s primary concern was that the condominium corporation had acted unreasonably (in the Court’s view). Put another way: The facts in this case simply did not support the condominium corporation’s claims.
- Indemnification provisions (in condominium Declarations) are tremendously important cost-saving provisions (both for non-compliant as well as innocent condominium owners). Without such provisions, condominium corporations could be forced to pursue expensive Court processes, in every case, in order to recover their costs from a non-compliant owner. In my view, that isn’t in anyone’s interest (and in my view, it is not what the Court was saying in the Amlani decision).
I believe there are two important and valuable messages to take from the Amlani decision:
First, condominium corporations need to be acting fairly and reasonably (and the costs claimed under any alleged right of indemnification must in turn be reasonable). Otherwise, a condominium corporation can’t hope to be successful or to recover its related costs.
Second, as we’ve previously reported, condominium corporations need to be checking the wording of their indemnification provisions (in their Declarations) – and seeking to improve the wording (by amending the Declaration) where appropriate and where possible. We now know that the words “to or with respect to the common elements and/or all other units” (found in many indemnification provisions) may be problematic in some cases.
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