Legal

February 2, 2022 Published by Toronto and Area Chapter - By Ari Nguyen, Tony Bui

Decisions From the Courts

From the Winter 2021 issue of CCI Toronto Condovoice Magazine, Volume 26, Issue Number 2

Recent Court Cases Revisit a Recurring Question in Compliance Applications – Who is Responsible for a Condominium Corporation’s Costs?

Evdassin – Even reduced court costs may entitle s. 134(5) “additional actual” costs

In the Evdassin series, the condominium obtained a section 134 compliance order against an owner who refused to cooperate with the condominium’s Kitec removal program. In the Court’s costs decision, the judge noted that section 134 of the Act “did not interfere with the Court’s jurisdiction to fix costs in amount that is fair and reasonable in the circumstances of a particular case” nor did it “suggest that the Court should assess costs on a full indemnity basis as a matter of course”. With this in mind, the Court only awarded partial legal costs to the condominium.

The condominium later registered a lien to recover its full legal costs for the Kitec issues and the owner’s ongoing disruptive behaviour. The owner challenged the validity of the lien arguing that it exceeded the partial costs the Court awarded.

Despite only awarding partial costs, the same judge then held that the condominium was entitled to recover its full costs through sections 134(5) of the Act or its indemnity provision in the Declaration. The court ruled that “so long as the costs added to the common expenses were incurred to obtain a compliance order… they are appropriate even if they exceed what is ordered”.

Takeaways: The wording of section 134(5) of the Act is key here:
If a corporation obtains an award of damages or costs in an order made against an owner or occupier of a unit, the damages or costs, together with any additional actual costs to the corporation in obtaining the order, shall be added to the common expenses for the unit and the corporation may specify a time for payment by the owner of the unit.

Determining costs under 134(5) of the Act is effectively a two-part exercise: the first part involves “obtaining an award of damages/costs from the Court (i.e., fixing costs)” and the second is the “addition of actual costs in obtaining the order”.

On the first part, costs in any legal proceeding are generally fixed by the courts after a decision is rendered – here the Court awarded the condominium its partial legal costs. But on the second part, the owner overlooked that section 134(5) of the Act and the indemnity provision allowed the condo to add “additional actual legal costs” to its lien. “Additional actual legal costs” are costs added beyond the costs fixed by the Court, even if the “additional actual legal costs” include amounts not fixed by the Court. In essence, since the court awarded the condominium some costs under a compliance order, this opened the door for the condominium to recover its full costs as “additional actual costs” despite what the Court fixed.

However, while section 134(5) of the Act affords a corporation significant latitude to recover its full legal fees, it should not be interpreted as a guarantee or right to full legal recovery. “Additional actual costs” must still be reasonable and “incurred to obtain the compliance order” if they are to be legitimate.

MTCC 1025 v. Hui – Unit owner financially responsible for tenant’s conduct

This case involved a tenant whose disturbing conduct over a span of a few short months led to the condominium to obtain a compliance order against the unit owner and tenant to comply with section 117 of the Act and a substantial cost award against them. The tenant moved in on May 1, 2021. By promid- June, the tenant engaged in threatening and disturbing behaviour until he was arrested in early August and no longer on site. The tenant:

• Threatened a security guard with a knife;
• Exposed himself and performed lewd acts in the common elements of the condominium building;
• Enabled an individual to deal drugs on the condominium premises;
• Attempted to force his way into a resident’s car and a contractor’s van;
• Set up a chair and blocked the entrance of the building, and did not allow residents to enter;
• Defaced unit doors and nearby walls;
• Banged on a neighbour’s door at 1 a.m.;
• Broke the window in the unit and threw his belongings out of the window.

The court was satisfied that the tenant breached the corporation’s declaration and rules and section 117 of the Act because his conduct caused or was likely to cause damage to property or injury to an individual, and the Occupational Health and Safety Act when misconduct was levelled at the corporation’s staff. The court granted the condominium an order pursuant to section 134 of the Act enforcing compliance.

The unit owner cooperated with corporation once she was notified of her tenant’s behaviour by the corporation in June 2021. She delivered a N7 Notice to End the Tenancy for Causing Serious Problems in the Rental to the tenant the very next day and applied to the Landlord and Tenant Board for an urgent hearing. The owner’s request for an expedited hearing was denied and there no was no date for the eviction hearing at the time of the decision. The unit owner also agreed to pay for the cost of additional security guard to specifically monitor the tenant. The corporation was required to incur the costs of pursuing the application. The corporation was successful and sought to recover its costs from the unit owner and tenant. The corporation’s governing documents provided that a unit owner must indemnify and save harmless the corporation against any loss, cost, damage or injury caused to the common elements or other units because of the willful or unlawful act or omission or breach of the rules by the owner or any resident or occupant of the unit.

The unit owner argued that she should not be personally liable for any cost awards, including that:

(i) She fully cooperated with the corporation and took immediate steps to have the tenant evicted, but her request for an expedited hearing was denied. She also provided an undertaking to proceed expeditiously with the eviction hearing and paid for added security; and

(ii) The application proceeding was unnecessary once the tenant was arrested, and the police advised that he was not permitted back into the building.

The court sympathized with the unit owner for cooperating with the corporation and taking steps to have the tenant removed from the unit but determined that it was unfair to the other unit owners to be responsible for the costs of the application which was required to compel the tenant to comply. The court also found that the application was necessary because there was no information before the court to show whether the tenant may be permitted to return to the building.

The court awarded costs of $10,000 for the application, payable by the unit owner and tenant jointly and severally. The unit owner in this case will likely be responsible for the entire cost award unless she can recover some of the costs from her tenant.

Takeaway
Unit owners are ultimately responsible for their occupant’s conduct even when an owner cooperates and takes reasonable steps to obtain their tenant’s compliance. This protects other innocent owners because it is not fair that other owners are responsible for one resident’s misconduct. Condominium corporations should notify owners early when there are rule violations so owners may take necessary steps to resolve the problem. Doing so will help justify the corporation’s next enforcement.