07/02/2017 – Jurisdiction Ontario
Part 58 published on 06/01/2018
Manager obligated to indemnify condominium corporation in relation to the costs of the proceeding
At the Ontario Court of Appeal, the condominium corporation had been found jointly liable to an owner who had purchased a unit with an illegal third floor (built into the common element attic space). The Court of Appeal also ordered the condominium corporation’s manager to indemnify MTCC 1056 for the damages the condominium corporation owed the owner because of the negligent estoppel certificate issued to the owner. [See Condo Cases Across Canada, Part 49, February 2015]
The Court of Appeal remitted two issues back to the trial judge:
- The valuation of the owner’s damages for the loss of third floor of her condominium; and
- A determination of whether the condominium corporation could also claim indemnity from the property manager for costs paid and owed in the proceeding.
This decision dealt with the second issue – the indemnification obligations of the property manager.
The Court held that the manager was obligated to indemnify the condominium corporation in relation to all costs paid and owed in the proceeding.
The Court said:
In my view, there are two reasons that (the manager) must indemnify MTCC 1056 for the costs it incurred and also for those that it has had to pay to the Plaintiff. First, the Court of Appeal found that (the manager) was the agent of the condominium corporation and in that capacity, it was negligent in the completion of the estoppel certificates. A principal who is not negligent by reason of its own actions but who is liable to another party in negligence as a result of the action of its agent can claim indemnification from the agent: (the case of Fenn v. Peterborough (City)).
Second, the crossclaim advanced by MTCC 1056 claims indemnity for any amounts it is found to be owing. In my view, that includes not only payment of damages, but also payment of costs. This case is one in which the quantum of costs exceeded the amount of damages awarded, so it would be unfair in these circumstances for a party who was found to be negligent by virtue of the actions of its agent, not to be able to claim indemnification for the costs from the negligent agent. To accept the argument of (the manager) would be to render the crossclaim by MTCC 1056 against its property manager of little effect.
