Legal

January 9, 2020 Published by Toronto and Area Chapter - By Audrey Loeb, Inderpreet Suri

Decisions From the Ontario Courts: Unnecessary Applications Against Unit Owners

From the Winter 2019 issue of the CCI Toronto Condovoice Magazine. Toronto Standard Condominium Corporation No. 2130 v. Geraldine Berholz and David Berholz

Toronto Standard Condominium Corporation No. 2130 v. Geraldine Berholz and David Berholz, 2019 ONSC 5121 

The Applicant, Toronto Standard Condominium Corporation No. 2130 (the "Corporation"), commenced an application against the Respondents, Geraldine Berholz and her son, David Berholz, for an order prohibiting David from entering the Corporation's common elements or from residing in the Corporation. The Corporation previously obtained an interim ex parte order and wanted a permanent order. 

Geraldine lived in a unit in the Corporation with her husband, Harry Berholz. David has a bi-polar disorder. He did not live with his parents in the unit but visited often. Geraldine and Harry helped David in relation to his mental illness for many years. 

In May of 2019, on Mother's Day, David damaged a neighbouring unit's door based on a mistaken belief he had. David believed that his friend was in the unit and was trying to commit suicide. David broke the door down to try to save his friend's life. The court accepted that this incident was the result of David's mental illness. After discovering the damage, Geraldine and Harry accepted responsibility for the situation and paid for the damages. 

The following day, Geraldine and Harry went to the Corporation's management office to apologize for the incident and to convey how sorry David was about what had happened. They also informed the property manager that they had banned David from the building and that David intended to comply with the ban. 

Geraldine and Harry did not hear from the Board after the incident. On May 22, 2019, Geraldine wrote to the Board again to apologize for the incident and confirm that David had been banned from the building. The Corporation did not respond to the May 22, 2019 letter. 

Geraldine and Harry assumed that the matter had been resolved to everyone's satisfaction. The Corporation did not contact Geraldine and Harry after the incident to advise them that the matter was not resolved. Instead, the Corporation brought an application to obtain a court order containing terms to which Geraldine and Harry had already consented. 

Geraldine and Harry had no idea that the Corporation was incurring legal costs that the Corporation intended to recover from them. As soon as the they found out about the court proceedings, they consented to the relief sought, except for costs. 

In deciding costs, Justice Nakatsuru held that the court has a broad discretion when determining the issue of costs. Justice Nakatsuru held that "the overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant". 

In this case, counsel for the Corporation was claiming $27,198.30 for full indemnity costs. Justice Nakatsuru accepted the Berholzes submissions on costs and characterized Geraldine and Harry as being not only "caring parents" but "responsible unit owners". He accepted that when "David conducts himself in a fashion that is alleged against him in this case, they do not shirk their responsibility". 

When deciding on the issue of costs, Justice Nakatsuru stated the following: "while I understand why the Board may have wanted to go the route they did, and I appreciate that a judicial order may have been the best solution for all, the way the Board conducted themselves in getting that order was largely unnecessary. The costs expended could have been avoided by simply finding out whether the Berholzes would agree to a consent order. The Board did not do so. The Berholzes agreed to it just as they said they would." Accordingly, Justice Nakatsuru held that this was not a case where costs should be awarded and that each side was to bear its own costs. 

Authors' Note: Condominium corporations should be careful when deciding to pursue applications against unit owners. If the matter could have been resolved by way of consent and court proceedings could have been avoided, a court may not be inclined to order costs to the condominium corporation, despite being successful on its application. 

Tonu Orav v. York Condominium Corporation No. 344, 2019 ONCAT 18 

The Applicant unit owner, Tonu Orav ("Orav"), commenced a Condominium Appeal Tribunal ("CAT") proceeding against the Respondent condominium corporation, York Condominium Corporation No. 344 (the "Corporation"). Orav had requested records from the Corporation on multiple occasions and claimed that the Corporation had not provided adequate replies to his records requests. Orav sought an order for the requested records and the imposition of a penalty against the Corporation for failing to adequately address his requests and his costs. 

The Corporation, through its counsel, did not participate in the proceedings after April 11, 2019. The hearing was held from April 11, 2019 to May 22, 2019. The Tribunal found that Orav was entitled to the records he requested and an award of $200 for filing fees. The Corporation did not make any submissions in relation to any issues.

Orav also sought a penalty of $5,000 under section 1.44(1)(6) of the Condominium Act, 1998 as the Corporation failed to adequately address his record requests. The Tribunal decided that the Corporation had failed to adequately reply to Orav's requests. The Tribunal considered this along with the Corporation's lack of participation in the hearing as a refusal to provide Orav with the records. Since the Corporation did not participate in the hearing, it did not offer a reasonable excuse for its refusal. 

Accordingly, the Tribunal ordered a penalty against the Corporation in the amount of $2,000, an amount that was consistent with an earlier CAT decision entitled Tharani Holdings Inc. v. Metropolitan Toronto Condominium Corporation No. 812, 2019 ONCAT 3, in which the Tribunal had also ordered the respondent condominium corporation to pay a penalty of $2,000 due to its failure to respond to the applicant unit owner's requests and its failure to participate in the proceedings. 

In this case, on April 11, 2019, on the CAT-ODR system, the Corporation's counsel confirmed it would be acting on behalf of the Corporation. As such, the Corporation was aware that a hearing was taking place. The Corporation's counsel did not respond after April 11, 2019. When the Corporation missed several hearing participation deadlines, the hearing was delayed in order to provide the Corporation with a chance to request more time to participate. The Corporation did not request additional time. All in all, the Corporation had 37 calendar days, including 25 business days, to participate in the hearing but it did not. The Corporation missed 9 participation deadlines during the hearing. The Tribunal found that the Corporation had adequate knowledge of the hearing and had sufficient opportunity to participate in it – however, the Corporation failed to participate in the hearing. 

When awarding the penalty amount, the Tribunal also took Orav's behaviour in making the requests into consideration. The Tribunal found that Orav had submitted multiple and frequent records requests. Orav's behaviour was disruptive to the Corporation. It complicated matters and presented an unfair burden on the Corporation. As such, the penalty sought by Orav was reduced to $2,000. The Tribunal held that Orav's conduct should not be encouraged as it does not promote healthy condominium communities. 

Authors' Note: This decision demonstrates the importance of adhering to CAT participation deadlines. If a condominium corporation does not participate in the hearing, not only will presumptions be made against it by the Tribunal but a hefty penalty award may also be awarded against it.