Part 23 published on 01/09/08
Costs of arbitration added to unsuccessful owner’s common expenses
The condominium corporation received complaints about noise coming from Mr. Italiano’s unit. [The noise was the result of laminate hardwood flooring installed by Mr. Italiano with the consent of the condominium corporation.]
The condominium corporation asked that the noise dispute be referred to mediation. Mr. Italiano did not attend the mediation and the condominium corporation then submitted the matter to arbitration. The arbitrator ruled in favour of the condominium corporation. The arbitrator held that Mr. Italiano was in breach of certain rules of the corporation and certain sections of the corporation’s declaration. The arbitrator also ordered Mr. Italiano to pay the condominium corporation’s costs on a substantial indemnity basis including the full cost of the arbitration. The arbitrator further ordered that such costs could be collected in the same manner as common expenses (i.e., by condominium lien).
On appeal, the arbitrator’s award was largely upheld. On the question of costs, the appeal Court held as follows:
- · The arbitrator properly awarded substantial indemnity costs to the condominium corporation.
- · Although Section 134(5) of the Condominium Act, 1998 does not apply to arbitration awards, the condominium corporation was nevertheless entitled to have the arbitration costs collected in the same manner as common expenses, because this was supported by certain provisions in the corporation’s declaration. The Court said: “…it seems to me that a corporation can collect an arbitral costs award in the same manner as common expenses if they are so specified in the declaration. This would allow it to register a lien, pursuant to s.85(1), for unpaid common expenses.”
- · The arbitrator, however, did not have authority to include, in his costs award, costs which preceded the delivery of the notice of arbitration (specifically, the costs incurred in relation to the mediation).