Metropolitan Toronto Condominium Corporation No. 1328 v. 2145401 Ontario Inc., et al, 2019 ONSC 2057
In our March 2019 article, “Rights of Entry,” we discussed the case of Metropolitan Toronto Condominium Corp. No. 1328 v. 2145401 Ontario Inc., & Starkman, 2019 ONSC 733. Here, a unit owner was the subject of numerous complaints regarding noise and vibrations emanating from the unit into those below. Pursuant to section 19 of the Condominium Act, 1998, S.O. 1998, c. 19 (the “Act”), the Condominium requested entry into the unit to investigate. The owner vigorously refused and contentious litigation ensued. The Court determined that the Condominium had a right to enter the unit to ensure compliance with the Declaration, By-laws and Rules and that the receipt of complaints triggers the Condominium’s duty to investigate. As the Condominium was successful in the litigation the only remaining issue (a contentious issue in itself) was that of costs.
In the follow-up decision (2019 ONSC 2057), the Court was left with determining the amount of costs to be awarded to the Condominium (the successful party). The Condominium sought the full amount of its costs (roughly $16,000.00). It relied upon the indemnity provisions of its Declaration, By-laws and Rules, arguing that such are designed to protect other, blameless, unit owners from bearing the costs (through their common expenses of the Condominium having to invoke the court’s assistance in enabling it to carry out its obligations and duties). The unit owner argued that since there was not a declaration that he was in breach of the Act, the Declaration, By-laws or Rules, and that the Condominium took considerable time in investigating the complaints, that costs should be awarded on a partial indemnity basis (approximately $7,000.00).
The Court looked at the circumstances in light of: (i) the result of the application; (ii) the principles of indemnity in civil proceedings; (iii) the indemnity provisions of the Declaration, By-laws and Rules; and (iv) the conduct of the parties. In its reasons, the Court determined that, “While it is important not to unduly burden the innocent other unit holders with the costs of an application such as this, it is also not unreasonable to expect that the common expenses will be applied towards the ordinary cost of doing business which fairly may include some litigation (and other) expenses, even if occasioned by the conduct of only one or a small number of unit holders.” The Court found that neither party’s conduct was entirely without fault. Although the unit owner wrongly denied access and was unduly aggressive, the Condominium was less than diligent and transparent in assessing the initial complaints. A significant amount of time passed between receipt of the complaints and when the Condominium determined to investigate. As such, the Condominium was awarded $10,000.00 plus disbursements; an amount representing the top end of the partial indemnity scale.
Boards of directors should be aware that strict reliance on the indemnity provisions of their respective declarations, by-laws and rules may not guarantee full recovery; even where a unit owner is in the wrong. An award of partial indemnity indicates that courts will look at the conduct of the condominium when assessing the amounts that may be recovered from a non-compliant unit owner. Here, the Condominium was penalized for its lack of diligence and transparency in its initial responses to complaints of nuisance and noise and the considerable time delay between the receipt of the complaints and the Condominium’s initial attempts to investigate.
Finally, the Court stressed that it is not unreasonable for unit owners to expect that a portion of their common expenses are applied to litigation. The costs incurred in pursuing compliance through litigation (at least a portion thereof) is, as the Court stated, the “cost of doing business” for condominiums.
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