Specific Legal Issues

May, 10 2023 Published by Toronto and Area Chapter - By Megan Mollo, Ashley Winberg

Decisions From The Courts

From the Spring 2023 issue of CCI Toronto Condovoice Magazine.

Dealing With Serial Litigants And More...

Leitch v. Niagara North Condominium Corporation No. 69, 2023 HRTO 11
In Leitch v. NNCC 69, the applicant, Ms. Leich, was described by the Ontario Human Rights Tribunal as a “prolific filer of applications”, filing over 160 applications since January 2019 and 162 in total. A large majority of the applications were filed against the condominium corporation, NNCC 69, its property manager, its board of directors, individual board members, spouses of board members, and/or other condominium residents. The applicant had also threatened to file a human rights complaint against her doctor and his staff because, among other things, he had advised that she did not meet the criteria for a disability parking permit and refused to give her one.

Of the 72 applications reviewed by the Tribunal for completeness, the vast majority were incomplete as filed and missing material information, including details of the respondents and particulars of the alleged incidents of discrimination. Although the Tribunal repeatedly tried to assist the applicant in remedying deficiencies, she continued to file new, incomplete applications and frequently missed deadlines. The effect of the applicant’s actions was that most applications languished in the early stages of the Tribunal’s process.

On June 7, 2022, the Tribunal directed that a preliminary hearing be held to determine whether to declare the applicant a vexatious litigant and dismiss some or all of the applications filed as abuses of process pursuant to Rule A8 of the Tribunal’s Rules. The Tribunal directed the applicant to explain at the preliminary hearing which of her applications had merit and should continue and which should be closed as incomplete or for other reasons. In response, the applicant defended all 162 applications as legitimate, and argued that because her applications were filed in good faith, they were not clearly unmeritorious.

Based on testimony from the applicant, the respondents’ submissions, and the documentary evidence provided, the Tribunal found that, in filing her applications, the applicant was not solely attempting to advance valid claims, but at least in part intended to harass or vex the respondents. The Tribunal also found evidence of bad faith for the applicant’s use of a threat of a human rights complaint against her doctor.

In light of the above, the Tribunal declared the applicant to be a vexatious litigant pursuant to Rule A8.2 in respect of all existing and future applications before it, and held that she would not be permitted to file further applications with the Tribunal without first obtaining its permission. The Tribunal also confirmed that the applicant would have 45 days to file separate requests for leave to continue each of her 155 applications which remained open before it, otherwise, they would be dismissed without further notice.

Surprisingly (or not), the Applicant also sought an anonymization order and a sealing order with respect to her medical records. However, the Tribunal declined to grant the applicant’s requests as it found no exceptional circumstances that would justify such orders.

The Takeaway
What do you do with a serial litigant? When does one’s right of access to justice become the harassment of the intended respondent(s)?

Case law affirms that an order restricting the rights and free access of an individual to the Courts will not be granted readily; however, due regard must be afforded to applicable laws, rules of procedure, and the integrity of the administration of justice. The Courts have recognised the importance of protecting others against being indiscriminately made the subject of vexatious proceedings and preventing such proceedings from squandering the resources of the Court.

While the number of applications filed does not, in itself, determine that someone is a vexatious litigant, it is one factor that may be considered. Other criterial include whether a litigant has commenced litigation: a) with respect to an issue already determined; b) where it is obvious it cannot succeed or would lead to no good; c) other than to assert legitimate rights; and d) rolling-forward issues previously raised.

Carleton Condominium Corp. No. 56 v. Chreim, 2022 ONSC 4654
The 2012 Ontario Superior Court decision in The Royal Bank of Canada v. Metropolitan Toronto Condominium Corp. No. 1226 stands out among common expense collection litigation due to the repeated failure on the part of that condominium corporation to discharge a lien registered against an owner’s unit upon receipt of full payment of the arrears, as well as the rather unique circumstance where the Court’s decision rendered the interests of the condominium corporations lawyer in conflict with its client.

The case of Carleton Condominium Corp. No. 56 v. Chreim started as a dispute between CCC 56 and a unit owner, Ms. Chreim, over a chargeback to her unit for plumbing and water bill invoices in mid-2018 for less than $1000. In the spirit of “deja vu all over again”, the legal costs eventually sought (unsuccessfully) in relation to this nominal chargeback exceeded $52,000.

In December 2018, however, CCC 56’s lawyers registered a lien against Ms. Chreim’s unit for $2,241 for the outstanding expenses, interest, and legal administrative fees. The legal fees were stated to be $650, much more than CCC 56 was later billed for the work done to this point.

Ms. Chreim paid the amount stated in the notice of lien by cheque on January 27, 2019. However, on receipt of the cheque, CCC 56’s lawyers told her that she would have to pay an additional $1,340 in legal expenses to obtain a discharge of the lien. Ms. Chreim then sent a second cheque for this amount on January 31, 2019. Despite this, CCC 56 refused to remove the lien, because Ms. Chreim had sued its property management company in Small Claims Court a few days earlier for damages consisting of the amounts she had paid to CCC 56 for the disputed chargeback, plus punitive damages.

CCC 56’s lawyers told Ms. Chreim that, unless she abandoned her Small Claims Court action, the lien would remain in place and she would be liable for CCC 56’s costs of defending the action. Ms. Chreim did not abandon her lawsuit. CCC 56 kept the lien in place, and the arrears continued to accumulate. Ms. Chreim did, in fact, eventually lose her Small Claims Court lawsuit in May 2021. By that time, CCC 56 had been added as a defendant. In its cost submissions, CCC 56 sought recovery of over $22,000 in costs. The Deputy Judge limited the costs to CCC 56 to $4,524. Ms. Chreim tendered payment for the costs awarded by the Deputy Judge, conditional on the lien being discharged and a release granted in her favour.

However, CCC 56 did not accept these conditions and the costs remained unpaid.

In November 2021, CCC 56 commenced an action in the Superior Court to enforce its lien, and subsequently brought a summary judgment motion seeking payment of $34,561 in common expense arrears allegedly secured under the lien. CCC 56 also sought full recovery of $52,613 in legal fees and disbursements, a declaration that the lien against Ms. Chreim’s unit and the Notice of Sale were valid, an order for vacant possession, and other related relief.

The Superior Court confirmed that resolution of the proceeding by summary judgment was appropriate, especially since the parties had already spent thousands of dollars disputing a fairly trivial amount. The Court affirmed that CCC 56 “indisputably had the right to register a lien against Ms. Chreim’s condominium unit on December 28, 2018”. However, in questioning whether CCC 56 had the right to refuse to remove the lien after Ms. Chreim had paid all amounts owed as well as the anticipated legal fees (to discharge the lien) for the removal, the Court concluded that it did not.

In reviewing Section 85(7) of the Condominium Act, which states that a condominium corporation shall prepare and register a discharge of a certificate of lien upon payment of the amounts secured under the lien, the Court found that, as of January 29, 2019, Ms. Chreim had paid the amount originally secured by the lien, as well as all interest and legal fees incurred in connection with the collection of the unpaid common expenses. On the plain, unequivocal, and imperative language of Section 85(7), the Court held that CCC 56 was required to discharge the lien on receipt of Ms. Chreim’s second cheque.

The Court found that although Section 85 of the Act gives condominium corporations enormous leverage, its language does not support the theory that a condominium corporation could keep a lien in place to defend a legal challenge to the billing of amounts already fully paid by a unit owner. The Court accordingly held that the lien on Ms. Chreim’s unit was maintained without justification after she paid all arrears owed, and that the costs incurred by CCC 56 in defending the Small Claims Court action were not costs incurred “in connection with the collection or attempted collection” of her share of common expenses.

The Court also found it deeply concerning that the money delivered by Ms. Chreim for outstanding common expenses in January 2019 was not credited to her ledger with CCC 56, but was instead apparently kept in trust for CCC 56’s anticipated legal expenses in defending Ms. Chreim’s lawsuit. Ms. Chreim, in the meantime, was charged interest at 12% yearly compounded monthly.

The Court concluded that CCC 56 was foreclosed from claiming defence costs and interest above and beyond the Deputy Judge’s award as it found them to be unreasonable and inclusive of interest that should never have been charged. The Court held the legal fees incurred by CCC 56 to be grossly disproportionate to the amount at issue and unreasonable. Ultimately, CCC 56 was not awarded any of the relief sought in its action.

The Takeaway
The Courts have equated common expense contributions as the “life blood” of a condominium, which is why the Condominium Act provides a means (the ability to register a lien) to assure the collection of such contributions, along with interest, reasonable legal costs, and other costs incurred in such collection.

Where a unit owner disputes the quantum or validity of the condominium lien, the Courts have continued to endorse that the proper process is to first render payment under protest to avoid the incurrence of additional costs, and then to commence litigation challenging the validity of the lien to avoid the risk of having the costs of defending that litigation secured under the lien.

Case law continues to affirm the requirement in the Act that, once a unit owner makes payment in satisfaction of the amounts secured under the lien (as set out in a payout statement provided by the condominium) it then has an obligation to discharge the lien.

However, unfortunately for condominium corporations, the Court in Chreim found that costs incurred by a condominium corporation to defend a challenge relating to amounts secured under its lien before the lien is satisfied cannot be considered to be “costs incurred in the collection or attempted collection of the debt.” The logic is difficult to reconcile; however, due to the extreme nature of the facts (and costs) involved, the Court appears to have been left with no choice but to send a very strong message.

Hovagimian v. Toronto Standard Condominium Corporation No. 1754, 2023 ONCAT 5
Over a period of four-years, the Applicant in Hovagimian v. Toronto Standard Condominium Corporation No. 1754, 2023 ONCAT 5, had complained about noise coming from the unit directly above his unit, which was owned and occupied by Mr. Convrey who participated in the Application as an Intervener. The Applicant claimed that Toronto Standard Condominium Corporation No. 1754 (“TSCC 1754”) failed to address his concerns in a timely manner.

The first question before the Tribunal, was whether the noise that the Applicant had complained of constituted a violation of TSCC 1754’s rules and/or Section 117(2) of the Condominium Act, 1998, S.O. 1998, c. 19 (the “Act”).

TSCC 1754 acknowledged that on occasion Mr. Convrey did cause excessive noise that may have disturbed the comfort and quiet enjoyment of the Applicant; however, the disturbances were sporadic, ceased in March 2022 and did not constitute a “nuisance”.

The Tribunal, however, noted that a finding of nuisance was not required in order for TSCC 1754’s rules to be violated as: one of the rules at issue prohibited disruptive conduct and made no reference to the word “nuisance”; and the other rule at issue prohibited noise that may or does disturb the comfort or quiet enjoyment of others. Accordingly, the Tribunal found that the two rules at issue could be violated in absence of noise constituting a “nuisance”. The Tribunal went on to note that TSCC 1754’s board and management are responsible for determining whether the foregoing rules have been breached, and based upon the ten enforcement letters sent to Mr. Convrey over the four-year period, it was clear that TSCC 1754 found Mr. Convrey to be in breach of the foregoing rules on ten separate occasions.

The second question, was whether TSCC 1754 had complied with its statutory duty under Section 17(3) of the Act to take all reasonable steps to ensure that its owners and occupants comply with the Act and TSCC 1754’s rules.

TSCC 1754 submitted that it responded appropriately to the Applicant’s complaints
and that Mr. Convrey complied in a timely manner whenever requested by TSCC 1754. Accordingly, TSCC 1754 argued that the Applicant had no legitimate reason to bring the Application and asked for the same to be dismissed.

The Tribunal found that TSCC 1754 had a procedure for responding to noise complaints, which commenced with security being dispatched to investigate and file an internal incident report. Management thereafter would review the same and issue a rule enforcement letter if management deemed that the same was warranted. In the rule enforcement letters sent to Mr. Convrey, he was repeatedly advised that if he failed to comply, he would receive a second warning letter after which the matter would be referred to TSCC 1754’s solicitors.

The Tribunal found that TSCC 1754’s procedure was a reasonable form of escalation. However, the Tribunal found that TSCC 1754 did not escalate the matter in accordance with its stated procedure since whenever there was a lengthy pause in the noise complaints TSCC 1754 would reset its escalation procedure and start again with a first rule enforcement letter. Accordingly, the Tribunal found that TSCC 1754 had not taken all reasonable steps to ensure that Mr. Convrey complied with its rules and as such, the Tribunal found that TSCC 1754 breached its statutory duty under Section 17(3) of the Act. Accordingly, the Tribunal ordered TSCC 1754 to post the Tribunal’s decision prominently in the building with the expectation that the board and management would be held accountable for enforcing the same.

The Tribunal also addressed the Applicant’s conduct as he had repeatedly spoken aggressively to TSCC 1754’s staff and had threatened to bang on the doors of board members if his complaints were not addressed. With respect to the Applicant’s conduct, the Tribunal noted that there was no excuse for the course of action that the Applicant threatened and the action that he took. Of particular concern to the Tribunal was that the Applicant did not express any remorse for his threats or actions, and justified his threats and actions as necessary in order to get TSCC 1754’s attention.

The Takeaway
There are two important takeaways from this decision.

First, policies and protocols created by a corporation will only serve their intended purpose if they are adhered to and consistently followed by the corporation that has chosen to implement them. In fact, the creation of a policy or protocol that is not consistently followed, may actually expose a corporation to more risk than had no policy or protocol been created in the first place.

Second, a successful condominium community is one that respects and upholds civility, compromise and patience. As stated very eloquently by the Tribunal in the decision, far too often the parties before the Tribunal have failed to demonstrate one or more of these attributes. All members of a condominium community have a duty to treat one another with respect and civility, even when they appear to be at the opposite sides of a dispute – as doing so can prevent a dispute from escalating into a full-blown conflict.

Gangoo and Giuntoli v. Toronto Standard Condominium Corporation No. 1737
The court in Gangoo and Giuntoli v. Toronto Standard Condominium Corporation No. 1737, 2023 ONSC 260, found that the Respondent, Toronto Standard Condominium Corporation No. 1737 (“TSCC 1737”), through the actions of its property management team, acted in a manner that was unfairly prejudicial to and/or unfairly disregarded the interests of the Applicants, amounting to a breach of Section 135 of the Condominium Act, 1998, S.O. 1998, c. 19 (the “Act”).

The Applicants were two candidates running for positions on the board of TSCC 1737. As would ordinarily be the case, the Applicants collected proxies from owners to support their bid to get elected.

The Applicants proceeded prudently, and prior to the meeting, attended the on-site property management office to meet with the on-site property manager a few hours in advance of the meeting to find out whether the proxies that they had collected were completed correctly. The Applicants left the on-site property management office that afternoon with the understanding that they had received confirmation from the on-site property manager that the proxies that they had collected had been completed correctly. When the Applicants arrived at the meeting, they registered and submitted their proxies to TSCC 1737. Shortly thereafter and prior to board election portion of the meeting, the Applicants were advised by a senior member of TSCC 1737’s property management team that their proxies were invalid and would not be accepted. The Applicants asked that the invalid proxies be returned to them so that they could get them fixed; however, they were advised by senior management that upon submitting the proxies to TSCC 1737, the proxies became the property of TSCC 1737 and could not be returned to them.

In advance of the meeting, the Applicants did not submit candidate disclosure forms and as such, they were required to give oral disclosure during the meeting itself. The senior member of TSCC 1737’s property management team took over as chair during the election portion of the meeting and instead of asking the Applicants the standard question of whether or not they were a party to a legal action against TSCC 1737, which is intended to elicit a “yes” or “no” answer, senior management went off-script and asked the Applicants a much broader question, which elicited information from the Applicants that does not need to be disclosed by potential candidates. By doing so, the court found that senior management led the owners in attendance at the meeting, owners who had not yet voted, to view the Applicants in a less favourable light.

Logically, the court found TSCC 1737 due to its property management team’s handing of the Applicants’ proxies on the day of the meeting, and the way in which the Applicants were questioned by senior management during the candidate disclosure portion of the meeting, had acted in a manner that was unfairly prejudicial to and/or unfairly disregarded the interests of the Applicants, which amounted to a breach of Section 135 of the Act.

The Takeaway
The current norm in many condominium by-laws is that the board president of a corporation shall act as the chair at any meeting of owners, failing which the board president shall have the right to delegate the role of chair. The intention of this provision is to allow a board president to delegate the role of chair to their corporation’ solicitor. The increasing prevalence of virtual meetings in conjunction with rising costs, has had many corporations reconsider whether the attendance of their solicitor at their owners’ meetings is necessary. However, this decision should serve as a reminder to all condominiums that they should not underestimate the importance of having an experienced and knowledgeable professional attend their owners’ meeting for the purpose of chairing same.

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