Legal

August 4, 2026 Published by Toronto and Area Chapter - By Patricia Elia

The Rapid Legal Fire Panel: Part 2

From the Summer 2026 issue of CCI Toronto Condovoice Magazine.

The Toronto Condominium Conference of 2025 was an overwhelming success. The Rapid Legal Fire Panel was quick, substantively heavy and opinionated. Thank you to the panel who made it a positive experience. We have had them put together their comments on the various topics for your reading pleasure. Here is Part II of our three-part article series.

Moderator & Speakers:

Patricia Elia, Elia Associates PC
Bharat Kapoor, Horlick Condominium Law
Maria Dimakis, Deo Condominium Lawyers
Jason Rivait, Stack Condo Law

Condominiums rely on a cost-sharing system - every owner must contribute their proportionate share of the annual budget so that the condominium corporation can pay its obligations as they come due. When owners do not pay, the shortfall affects the condominium corporation’s bottom line. That is the reason why the Condominium Act, 1998 (the “Act”) gives condominiums one of the strongest debt-collection tools at law: the “super priority lien”. However, not every amount owed by an owner can be secured with a lien. To have lien security, an amount must qualify as a “common expense”.

What is a Common Expense?

The obvious category of common expenses includes an owner’s share of the annual budget and special assessments. When these amounts come due but are not paid, a condominium corporation’s lien automatically arises, and a condominium corporation has to perfect its lien by (1) serving the statutorily required Notice of Lien giving the defaulting owner 10 days to pay the amount owing, and (2) registering its Certificate of Lien within three months of the payment due date.

The other category is commonly referred to as “chargebacks”. These are amounts that are properly attributable to a specific owner or unit, rather than to the ownership as a whole, and which the condominium corporation looks to recover from a specific owner.

Not all chargebacks can be secured with a lien. Only chargebacks that qualify as a “common expense” either under the Act or in the declaration can be secured with a lien.

There are specific sections under the Condominium Act that create “chargebacks” that can be secured with a lien, such as:

• (a) costs that the Condominium Authority Tribunal orders in favour of a condominium corporation under Section 1.45 of the Act;
• (b) costs that can be added to an overoccupied unit if the condominium corporation has an occupancy standards by-law under Section 57 of the Act;
• (c) costs incurred for performing an owner’s maintenance and repair obligations under Section 92 of the Act;
• (d) costs incurred for an owner’s failure to comply with an agreement under Section 98 of the Act;
• (e) an owner’s responsibility for an amount up to the condominium corporation’s deductible under Section 105 of the Act; and,
• (f) costs incurred to secure compliance orders on a court application brought under Section 134 of the Act, if the court awards costs.

In the case of a declaration, it all comes down to the indemnification clauses. These will vary from condominium corporation to condominium corporation, but they are critical to determining whether lien security exists. Although there are different types of indemnification clauses in declarations, the two most common are ‘damaged-based’ indemnification clauses and ‘compliancebased’ indemnification clauses.

A damage-based indemnification clause generally permits recovery where the owner, their tenant, someone else residing in the owner’s unit, or an invitee or licensee of the unit commits an act or omission to or with respect to the common elements or other units that causes a loss or cost to the condominium corporation.

A compliance-based indemnification clause can be broader, and can, but does not always cover breaches of the Act, the declaration, the by-laws or rules.

If an amount that a condominium corporation is trying to recover does not fall within the scope of the indemnification clause in the declaration, then it cannot be secured with a lien. For example, if a condominium is trying to recover legal costs for a compliance letter sent to an owner because the owner breached the rules, but the condominium corporation’s declaration only has a damage based clause, then the amount incurred cannot be secured with a lien. Similarly, if a condominium corporation incurs legal costs for a compliance letter delivered to an owner who breached the declaration, but the condominium corporation’s compliancebased indemnification clause only covers breaches of rules, then the amount incurred cannot be secured with a lien.

Even where an amount falls perfectly within the scope of an indemnification clause, but the clause does not explicitly state that the amount can be added to the common expenses, or that it can be recovered in the same manner as common expenses, then it cannot be secured with a lien.

In Amlani v. YCC 473, the condominium corporation was pursuing the unit owner over a smoking dispute, and the condominium corporation added its legal costs for letters and other compliance steps to the common expenses for the owner’s unit. However, the condominium corporation only had a damage-based indemnification clause in its declaration. For that reason, the court found that the condominium corporation could not recover its legal costs with a lien, and instead had to first secure a compliance order under Section 134 of the Act.

The decision in Amlani caused (and still causes) a stir. Luckily, the court clarified Amlani in O’Regan v. CCC 169. The dispute in O’Regan involved a unit owner who started a fire while cooking eggs and the condominium corporation charging back repair costs up to its deductible. The owner argued that the condominium corporation could not charge the repair costs without first obtaining a compliance order under Section 134, citing Amlani. The court disagreed and instead confirmed that a lien for a chargeback will depend on the provisions in the Act and the declaration.

Enforcement Tools to Deal with Smoking

Where a condominium corporation has not expressly prohibited smoking in the units and the exclusive use of common elements in its governing documents, enforcement tools are more limited. Statutory tools are available, but in limited circumstances. The first is the Smoke-Free Ontario Act, and the second is Section 117(2) of the Condominium Act, 1998 (the “Act”).

The Smoke-Free Ontario Act restricts smoking in enclosed public spaces and enclosed workspaces. In the condominium context, the Smoke-Free Ontario Act typically captures the indoor common elements, such as the corridors, lobbies, elevators and amenity spaces. However, the Smoke-Free Ontario Act does not prohibit smoking in residential units or on open exclusive use of common elements, such as balconies and terraces, because those spaces are not “enclosed public spaces”. While the Smoke- Free Ontario Act can be helpful where smoking is occurring in the indoor common elements, it is not a solution for smoke migration disputes between units.

Section 117(2) of the Act took effect on January 1, 2022. Most are familiar with Section 117(1) of the Act, which is the provision that prohibits what is commonly referred to as “dangerous conditions”. Section 117(2) of the Act was added to address conditions that amount to a nuisance, but that are not necessarily dangerous.

Section 117(2) of the Act prohibits a person from carrying on an activity in a unit, the common elements or assets if it results in the creation of unreasonable noise or one of the other prescribed nuisances. One of those other prescribed nuisances is smoke and another is odour. However, Section 117(2) of the Act does not impose strict liability – meaning, that simply detecting the smell of smoke and determining the source unit is not sufficient. Strict liability is only possible where a condominium corporation has prohibited smoking in its governing documents prohibiting smoking.

A condominium corporation relying on Section 117(2) of the Act to prevent nuisance caused by smoking must satisfy the test at law for “nuisance”, which requires proving that the nuisance caused by the smoking is substantial and unreasonable, assessed objectively. What that means is that a trivial interference will not amount to a nuisance, and since the assessment has to be objective, it is based on what a reasonable person would consider substantial and unreasonable. It also means, however, that for those condominium corporations that do not prohibit smoking in the governing documents, that some interference by smoking will be acceptable and will need to be tolerated.

For those condominium corporations that permit smoking in the units and/or the exclusive use of common elements, or have smoking prohibitions in their governing documents, but have grandparented smokers, the question becomes the extent of a condominium corporation’s responsibility to affected owners or occupants. The court’s decision in Mackay v. MTCC 985 provides good direction.

In Mackay, the unit owners complained about cigar smoke entering from the unit above. The smoke migration was sufficiently severe that the owners’ insurer concluded that the unit was uninhabitable, forcing the owners to relocate to a hotel for an extended period. The condominium corporation did not intervene in the owners’ complaint right away. Instead, it waited nearly two months before starting its investigation.

The condominium corporation hired several different consultants to determine how the smoke was travelling from the upstairs unit and how the problem could be solved. However, none of the consultants could fully resolve the issue, prompting the owners to bring a court application for a declaration that the condominium corporation breached its duty to maintain and repair the common elements, and for orders compelling the condominium corporation to implement what the owners described as a “perfect fix”.

After the owners brought their court application, the condominium corporation hired a further consultant who identified additional odour migration paths and recommended repairs that ultimately resolved the issue. However, the owners demanded extensive sealing work throughout their unit to guarantee that there would be no further recurrence.

The court decided that the standard that the condominium corporation had to satisfy was the reasonable person standard – not the standard of perfection – and rejected the owners’ request for a perfect fix. The court also found that the condominium corporation eventually met that reasonable person standard and its duty to repair, but the court nevertheless awarded costs against the condominium corporation, because of the initial delay in responding to the owners’ complaints.

The takeaways from the Mackay case are (1) act with reasonable dispatch – do not wait months after receiving complaints to investigate, (2) use experts early to trace migration paths, recommend repairs and test the repairs, and (3) document all steps taken to be able to establish that the condominium corporation acted reasonably.

Cost Recovery

A concerning trend has emerged in condominium enforcement proceedings: the gradual erosion of a condominium corporation’s ability to meaningfully recover its costs in proceedings where successful.

This trend is particularly pronounced before the Condominium Authority Tribunal (the “CAT”). Unlike courts, which exercise inherent jurisdiction and which are bound by precedent, the authority of tribunals, including the CAT, to award costs is governed by their enabling statutes and rules of practice. Moreover, tribunals, including the CAT, are not bound by their prior decisions.

One of the concerns arising from CAT jurisprudence is inconsistency in cost awards. In part, this stems from the fact that the CAT is not bound or constrained by the doctrine of precedent. However, precedent serves an essential function in our legal system – it gives the law consistency, predictability and legitimacy. In the case of condominium disputes, that consistency and predictability is essential to allow owners and condominium corporations to understand their rights and obligations, and to be able to assess the risks of non-compliance, including potential financial consequences.

The further concern arising from CAT jurisprudence is proportionality. Even where the CAT awards costs to a condominium corporation that is successful in its application or in defending an application, those awards are frequently disproportionate to actual amounts reasonably incurred. The gap between actual costs and recoverable amounts can be, and often is, significant.

It is understandable that many owners appearing before the CAT are self-represented, and adjudicators may be inclined to exercise leniency when awarding costs against owners.

However, the Condominium Act, 1998 is consumer protection legislation – not solely for the benefit of an owner who initiates or defends a CAT application, but for the collective body of owners.

When a disgruntled owner advances an application with little or no prospect of success and faces no meaningful cost consequence, the financial burden is redistributed on the remaining owners who subsidize the litigation. That redistribution of the financial burden is also the case where a condominium corporation is compelled to bring an application – for example, to address nuisance – but the responding owner escapes without meaningful cost exposure. The financial burden becomes the collective burden.

All of this raises a fundamental question: who, in these circumstances, is the “consumer” being protected?

The CAT plays an important and valuable role in enhancing access to justice. However, access to justice must also be accompanied by accountability. A just outcome must extend not only to the substantive issues in a dispute, but also to costs. Without meaningful cost consequences in appropriate cases, a different system of injustice risks being created – one borne by the compliant majority of owners.

---

Patricia Elia, Barrister and Solicitor, Elia Associates PC