90 George Street Ltd. v. Ottawa-Carleton Standard Condominium Corporation No. 815 (Ontario Superior Court)

At arbitration, the declarant was ordered to pay the budget shortfall experienced in the first year of the condominium.  [See Condo Cases Across Canada, Part 44, November 2013.]  The declarant appealed.  The appeal was dismissed.  The Appeal Court said:

• On an appeal from an arbitration award in the condominium setting, the standard of review is correctness.

• “It is my finding that a declarant is fully liable to the condominium corporation for any budget shortfall in the first-year of operation; however, a declarant’s liability is not absolute.  Through the mandated alternative dispute resolution process a declarant may argue, and an arbitrator may consider, the propriety and reasonableness of any elements contained in the shortfall.”

• However, the arbitrator had in fact considered the reasonableness of the expenses incurred by the condominium corporation in this case; and had concluded that the expenses were reasonable.

• The declarant was also obligated to pay interest on the first-year shortfall at the rate applicable to arrears of common expenses, set out in the by-laws of the condominium corporation.

• Finally, the arbitrator’s award of costs on a substantial indemnity basis – including the costs of the mediation – was not overturned.  The arbitrator’s rationale for the award of costs on a substantial indemnity basis was incorrect because the declarant had the right to challenge the propriety and reasonableness of the corporation’s first-year expenses.  Even so, an award of costs on a substantial indemnity basis was acceptable in this case, given offers to settle that had been made by the condominium corporation.