There have been a number of recent decisions, across Canada, about the rights of condominium corporations to recover costs from owners. Those cases tell us that full recovery may be possible in some cases (depending on the jurisdiction) provided the costs are reasonable and are properly proven. This edition of Condo Cases Across Canada contains a number of case summaries on point. Here’s my summary of one case that involved a particularly disappointing result for the condominium corporation:
Durham Standard Condominium Corporation No. 187 v. Morton (Ontario Divisional Court) September 14, 2012
Condominium corporation must clearly prove the “additional actual costs” for purposes of Section of 134(5) of the Condominium Act, 1998.
The condominium corporation had been successful on its application for removal of the owner’s dogs. [See Condo Cases Across Canada Part 37, February 2012].
On the initial application, the Court had awarded the corporation costs of $10,000; but this award did not include “additional actual costs” within the meaning of Section 134(5) of the Condominium Act, 1998.
The condominium corporation then registered a lien against the owner’s unit in the amount of $73,802.91. This amount included the $10,000 as well as additional legal costs that the corporation said had been actually incurred to obtain the compliance order.
The owner then applied to the lower Court for an order determining the total costs, including the “additional actual costs” under Section 134(5). The Court fixed the costs of the condominium corporation at $29,000 and awarded costs to the owner (for the costs application) in the amount of $6,000. This meant that the corporation was owed the net amount of $23,000.
Both parties appealed to the Divisional Court. The Divisional Court ruled in favour of the owner and reduced the corporation’s cost award back to $10,000 (being the original amount awarded by the lower Court). The Divisional Court said that the condominium corporation was entitled to zero additional costs under Section 134(5).
The Divisional Court said that Section 134(5) entitles the corporation to recover all costs properly or reasonably incurred by the condominium corporation in obtaining a compliance order. However, when those costs are being determined (either by a Court or by an assessment officer) the corporation must provide full evidence of the costs, just as would be the case on an assessment between a condominium corporation and it’s own legal counsel. [The Divisional Court indicated that this would normally include copies of invoices and docket entries showing the time devoted to obtaining the compliance order – and this detail should not be withheld on the basis of privilege.] The Divisional Court said that the condominium corporation had failed, on the costs application, to provide proper evidence of the additional actual costs. The Court said:
The only evidence before (the judge hearing the second application respecting costs) relating to properly claimed costs under s. 134(5) was the costs award of $10,000 made by (the original Application judge). Consequently, any award made by (the costs Application judge) must be limited to this amount.
The Divisional Court also awarded costs of the appeal in favour of the owner, in the amount of $10,946.00. The net result was that that the condominium corporation owed the owner the sum of $6,946.00.
The Divisional Court ordered the condominium corporation to discharge the lien.
[Editorial Notes:
- The strong message in this decision is as follows: In Section 134(5) of the Condominium Act, Ontario condominium corporations have a powerful tool to recover full costs from owners who violate (or whose tenants violate) the Act, Declaration, By-Laws or Rules. However, the amounts claimed must be reasonable and the corporation must be ready to provide clear proof of the amounts, when those amounts are assessed (whether by a judge or an assessment officer) – just as would be the case on a hard-fought assessment between the condominium corporation and its own legal counsel.
- I found this to be a very tough result for the condominium corporation, in this case. The condominium corporation’s actual costs clearly exceeded $10,000, since that amount had been awarded by the original Application judge on a “partial indemnity basis”. Both the lower Court and the appeal Court confirmed that the condominium corporation was entitled to recover 100% of its actual, reasonable costs in obtaining the compliance order. But this case shows that the Courts may be hard on condominium corporations if the Courts have the sense that the total amount claimed is too high, without supporting invoices and docket entries.]