Chargebacks against Condominium Unit Owners

Condo Unit Owner's tenants cause trouble, Condo charging back expenses to owner--any limits?

This article is outside of my usual area of comment in that the legal issues engage the Ontario Condominium Act, 1998, SO 1998, c 19 and unfortunately does not engage my comfort zone area being the Ontario Residential Tenancies Act and the relationship between residential landlords and tenants.  I suppose, in a sense, that it is worthwhile noting that the Residential Tenancies Act is effectively and utterly useless to a condo unit owner when disputing with the Condominium Corporation the chargebacks and threats to lien the unit.  Even though the damage and issues were caused by or contributed to by the actions of the condo unit owner's residential tenants the Residential Tenancies Act offers no help to the residential landlord who is caught between the Condo Corp's demands for compliance and the procedural processes of the Ontario Landlord and Tenant Board.

The legal research question and a fact outline

A condominium unit owner decides to rent out the unit to tenants. Renting the unit is permitted by the Condo Bylaws and there are no restrictions as to occupancy.  The unit owner advertises the apartment/unit for rent and receives rental applications.  A standard form Ontario Lease (as required by section 12.1 RTA) indicating that the rental unit is a condo, with all the usual terms, is reviewed and signed by the landlord and the tenant.  The tenant assumes occupancy as a tenant with the protections of the Residential Tenancies Act.  Then, all hell breaks loose.

What is this hell?  The tenant smokes in the hallways, tosses cigarette butts from balconies, lets their dog do it's business on the balcony (above balconies of neighbours below), drags dripping garbage bags through hallways, damages the common area entrance areas and does such a poor job at housekeeping that various pests (cockroaches, bed bugs) so severely infest the rental unit that other neighbour units are being infested and no amount of pest control treatment in the surrounding units can knock back the burgeoning pest populations.  The landlord is informed of all of the problems by the property management company and urged to take immediate action.   The landlord/owner is shocked but immediately contacts the tenants to tell them of the problems and that this all has to stop immediately.  Instead of contrition, the landlord is told that the allegations are all false, pure lies, because the people who are complaining are hateful liars.  With contrasting stories, the landlord/owner tries to go back to the property manager to get information, evidence, proof, and seek help in dealing with the problem.  Unfortunately, the property manager while trying to help increases pressure by saying that legal action will be taken to enforce compliance and that all the costs will be charged back to the owner.  A few days after speaking with the property manager the unit owner gets a lawyer's letter from the condo's lawyer demanding immediate compliance with the bylaws with a lengthy explanation of how everything the unit owner's tenants are doing breaches the condominium act, the declaration, and bylaws of the Condominium Corporation.

The unit owner, stressed out, seeks legal help and discovers that the governing legal structure with the tenant is the Residential Tenancies Act.  The landlord/owner instructs counsel (or a paralegal) to prepare and deliver Notices of Termination and to file the appropriate paperwork to get an order terminating and evicting the tenant at the first possible opportunity.   Counsel tells the landlord/owner that the problem is going to be that the Ontario Landlord and Tenant Board is a broken system and that the earliest the landlord can expect a hearing is sometime many months from now, but hopefully within the next year.  And then, a hearing may be adjourned for procedural issues and extended wait times will be endured until rescheduling. Eventually a merits hearing will happen but receiving a decision can take months and then the Landlord and Tenant Board will likely "stay" any Order that is received for a "Review Hearing" (taking many months more) at the tenants' request.  Presuming eventual success the tenant will then possibly file an Appeal to the Divisional Court causing a further automatic stay of several months while an expensive motion is brought by the landlord to deal with the appeal.  The legal costs to the owner/landlord---ranges in the thousands of dollars with zero chance of recovering those costs because the Ontario Landlord and Tenant Board doesn't hold parties accountable for legal costs (regardless of their conduct) [note: costs are available at the Divisional Court for appeal proceedings].

Stricken by this advice, the unit owner informs the property manager of steps being taken.  The reality it seems is that the tenants will continue their behaviour without consequence for at least a year or more before the landlord/owner can get any kind of legal Order that evicts the tenant.  Neighbouring unit owners, when informed, exert extreme pressure on the Board of Directors to force compliance and action as living with the current circumstances is utterly unacceptable.  The Board of Directors instructs the condo's lawyer to commence proceedings, the property manager hires third party security, increased pest control, installs video cameras, and does whatever it can to lockdown the actions of the tenants with restrictions and controls.   These steps cost several thousands of dollars--even 10's of thousands of dollars.  The landlord/unit owner, sympathetic with the other owners and even agreeing that the tenants' behaviour is unacceptable, is astonished to receive huge bills demanding payment and threatening additional chargebacks and liens on the unit due to tenant behaviour.

The unit owner/landlord reviews the charges and sees all kinds of charges.  Condo legal fees, property management fees, third party security fees, additional cleaning fees, pest control fees, the list goes on and on.  Some charges seem fair, others seem high, unnecessary, or unreasonable.

What is the extent of the unit owner's liability for these chargebacks?  Is there any way to dispute or fight the charges?  What is the law? 

Unfortunately, I was unable to find any direct authority setting out a specific procedure for disputing excessive and unreasonable chargebacks levied against a unit under the Condominium Act, 1998. However, insight may be gleaned from the relevant statutory provisions and the following decisions, in which those provisions are applied by decision-makers. 

The following expenses can be charged back to the contribution to the common expenses payable for an owner's unit: 

- a levy assessed by the corporation to account for increases to the common expenses caused by a person's contravention of the occupancy standards of a unit (ss. 57(4) and (5));

- the cost of repairs and maintenance done by a corporation to a unit on behalf of a unit owner (s. 92(4));

- the cost of charges, interest and expenses resulting from the owner's failure to comply with an agreement in respect of changes to the common property (s. 98(4));

- the lesser of the costs of repairing damage done to the owner's unit by a tenant and the deductible limit of the insurance policy obtained by the corporation (s. 105(2)); and 

- an award of damages or costs in an order made against an owner or occupier of a unit to enforce compliance with the Act, the declaration, the by-laws, the rules or a specified agreement (s. 134(5)). 

If an owner defaults in the obligation to contribute to the common expenses payable for the owner’s unit, the corporation has a lien against the owner’s unit and its appurtenant common interest for the unpaid amount together with all interest owing and all reasonable legal costs and reasonable expenses incurred by the corporation in connection with the collection or attempted collection of the unpaid amount (s. 85(1)).  (Condominium Act, 1998, SO 1998, c 19)

Common expenses, in their most traditional form, apply to the monthly fees each unit owner pays for utilities and the general upkeep of the condominium project. If a unit owner defaults on those monthly obligations, the default can be liened and the unit can be sold to enforce the lien. It is one thing to allow the corporation to enforce, by way of lien, common expenses that are applicable to all unit holders and that a majority of unitholders have approved. It is entirely another to allow a condominium corporation the unfettered, unilateral right to impose whatever costs it wants on a unitholder, refer to them as common expenses and thereby acquire the right to sell the unitholder’s apartment. (Amlani v. York Condominium Corporation No. 473, 2020 ONSC 194 (CanLII))

In Amlani v. York Condominium Corporation No. 473, 2020 ONSC 194 (CanLII), the owner purchased the unit with the knowledge that there were no prohibitions against smoking in the unit. When the neighbours complained about smoke migrating into their units, the corporation attempted to seal any leaks and, when that didn't work, asked the owner to stop smoking in the unit. The corporation incurred legal fees to attempt to enforce the requirement that the owner stop smoking and registered a lien against the unit pursuant to s. 85(1) of the Condominium Act, 1998.

Koehnen J. held that the legal expenses were not lienable pursuant to s. 85(1) of the Condominium Act, 1998 without a court order, despite a declaration that the corporation interpreted as allowing such legal expenses to be lienable in the absence of a court order. The Court held that the corporation's interpretation contravened s. 134 of the Act and an interpretation that contravenes a statutory provision is, by definition, unreasonable.

In Rahman v. Peel Standard Condominium Corporation No. 779, 2021 ONCAT 13 (CanLII), the unit owner had a disability and possessed an accessible parking permit. He used the accessible parking spaces at the condominium despite the objections of the corporation that his use violated the corporation's declaration. The corporation took the position that the accessible parking spaces were for visitors only. The Tribunal interpreted the declaration and found that the owner was entitled to park in the accessible spaces. The Tribunal held that the corporation had unreasonably imposed costs of enforcing its declaration against the unit owner and added those costs to the owner's common expenses and filed a lien against the unit. The corporation was therefore not entitled to add the reasonable expenses related to the enforcement to the common expenses payable for the unit pursuant to s. 134(5) of the Condominium Act, 1998.

Because the corporation had not quantified the costs it claimed related to its enforcement of the declaration against the owner, the Tribunal was unable to determine what part of the lien related to the unreasonably imposed costs. The Tribunal ordered the corporation to stop its enforcement proceedings, including the registration of the lien against the unit, and to provide the owner with an accounting of the costs related to enforcement.

In Metro Toronto Condominium Corporation No. 545 v. Stein, 2006 CanLII 20838 (ON CA), the corporation determined that all unit owners were required to carry out Level 5 remediation in response to a mold problem. The respondents carried out Level 1 remediation in their unit, which was more affordable and was suggested to them by a mycologist. The corporation's application to enter the unit to carry out the Level 5 remediation was denied. The corporation appealed from that order, arguing that the application judge erred by failing to defer to the corporation's decision to require Level 5 remediation.  

Rouleau J.A., for the Court of Appeal, upheld the application judge's decision, which was based on the finding that the corporation had not acted reasonably in imposing its standard of remediation and that reasonable lower cost alternatives ought to have been considered, especially in light of there being no evidence of harm to other units. The Court held that the Court of Appeal's decision in Dvorchik did not apply in this case because the corporation had made the strategic decision not to make the requirement for Level 5 remediation a rule.

Applicable Law

Section 57(4) and (5) of the Condominium Act, 1998, SO 1998, c 19 enable a corporation that has passed an occupancy standards by-law to levy an assessment against a unit in which the by-law has been contravened and provide that such a levy shall form part of the contribution to the common expenses payable for the unit: 

Assessments

(4) If the corporation has passed a by-law under subsection (1) and a person contravenes the standards for the occupancy of a unit set out in the by-law, the board may, by resolution, levy against the unit,

(a) an assessment for the amount that reasonably reflects the amount by which the contravention increases the cost of maintaining the common elements and repairing them after damage; and

(b) an assessment for the amount that reasonably reflects the amount by which the contravention increases the cost of using the utilities that form part of the common expenses. 1998, c. 19, s. 57 (4); 2015, c. 28, Sched. 1, s. 53 (2).

Part of common expenses

(5) The assessments mentioned in subsection (4) shall form part of the contribution to the common expenses payable for the unit. 1998, c. 19, s. 57 (5).

Section 92(4) of the Condominium Act, 1998, SO 1998, c 19 provides that the cost of any repairs or maintenance done by the corporation to the unit on behalf of the owner shall be added to the contribution to the common expenses payable for the owner's unit: 

Cost

(4) An owner shall be deemed to have consented to the work done by a corporation under this section and the cost of the work shall be added to the contribution to the common expenses payable for the owner’s unit. 1998, c. 19, s. 92 (4); 2015, c. 28, Sched. 1, s. 83 (2).

Section 98(4) of the Condominium Act, 1998, SO 1998, c 19 provides that the corporation may add the costs charges, interest and expenses resulting from the owner's failure to comply with an agreement in respect of changes to common property to the common expenses payable to the owner's unit: 

Lien for default under agreement

(4) The corporation may add the costs, charges, interest and expenses resulting from an owner’s failure to comply with an agreement to the common expenses payable for the owner’s unit and may specify a time for payment by the owner. 1998, c. 19, s. 98 (4).

Section 105(2) of the Condominium Act, 1998, SO 1998, c 19 provides that the corporation can add the lesser of the costs of repairing damage done to the unit by a tenant and the amount of the insurance policy deductible to the common property expenses payable for the owner's unit: 

Owner’s responsibility

(2) If an owner, a lessee of an owner or a person residing in the owner’s unit with the permission or knowledge of the owner through an act or omission causes damage to the owner’s unit, the amount that is the lesser of the cost of repairing the damage and the deductible limit of the insurance policy obtained by the corporation shall be added to the common expenses payable for the owner’s unit. 1998, c. 19, s. 105 (2).

Section 134(5) of the Condominium Act, 1998, SO 1998, c 19 provides that where a corporation obtains an award of damages or costs in an order made against an owner or occupier of a unit to enforce compliance with the Act, the declaration, the by-laws, the rules or a specified agreement, those damages or costs can be added to the common expenses for the unit: 

Addition to common expenses

(5) If a corporation obtains an award of damages or costs in an order made against an owner or occupier of a unit, the damages or costs, together with any additional actual costs to the corporation in obtaining the order, shall be added to the common expenses for the unit and the corporation may specify a time for payment by the owner of the unit. 1998, c. 19, s. 134 (5).

Section 85 of the Condominium Act, 1998, SO 1998, c 19 provides that a corporation has a lien against the owner's unit for failure to contribute to the common expenses payable for the owner's unit: 

Lien upon default

85 (1) If an owner defaults in the obligation to contribute to the common expenses payable for the owner’s unit, the corporation has a lien against the owner’s unit and its appurtenant common interest for the unpaid amount together with all interest owing and all reasonable legal costs and reasonable expenses incurred by the corporation in connection with the collection or attempted collection of the unpaid amount. 1998, c. 19, s. 85 (1); 2015, c. 28, Sched. 1, s. 78 (1).

In Amlani v. York Condominium Corporation No. 473, 2020 ONSC 194 (CanLII), the owner purchased the unit with the knowledge that there were no prohibitions against smoking in the unit. When the neighbours complained about smoke migrating into their units, the corporation attempted to seal any leaks and, when that didn't work, asked the owner to stop smoking in the unit. The corporation incurred legal fees to attempt to enforce the requirement that the owner stop smoking and registered a lien against the unit pursuant to s. 85(1) of the Condominium Act, 1998.

Koehnen J. held that the legal expenses were not lienable pursuant to s. 85(1) of the Condominium Act, 1998 without a court order, despite a declaration that the corporation interpreted as allowing such legal expenses to be lienable in the absence of a court order. The Court held that the corporation's interpretation contravened s. 134 of the Act and an interpretation that contravenes a statutory provision is, by definition, unreasonable: 

[27] The enforceability of the lien turns on whether the amount the Corporation claims falls within s. 85 or s. 134 of the Act.

[28] Section 85 of the Act provides:

85 (1) If an owner defaults in the obligation to contribute to the common expenses payable for the owner’s unit, the corporation has a lien against the owner’s unit and its appurtenant common interest for the unpaid amount together with all interest owing and all reasonable legal costs and reasonable expenses incurred by the corporation in connection with the collection or attempted collection of the unpaid amount.

[29] Section 134 of the Act allows the Corporation, among others, to apply to the Superior Court of Justice for an order “enforcing compliance” with any provision of the Act, the condominium’s declaration, bylaws or rules (which I may refer to from time to time as its constating documents) and recover the costs of doing so in a court order: 

134 (1) Subject to subsection (2), an owner, an occupier of a proposed unit, a corporation, a declarant, a lessor of a leasehold condominium corporation or a mortgagee of a unit may make an application to the Superior Court of Justice for an order enforcing compliance with any provision of this Act, the declaration, the by-laws, the rules or an agreement between two or more corporations for the mutual use, provision or maintenance or the cost-sharing of facilities or services of any of the parties to the agreement (Emphasis added).

(5) If a corporation obtains an award of damages or costs in an order made against an owner or occupier of a unit, the damages or costs, together with any additional actual costs to the corporation in obtaining the order, shall be added to the common expenses for the unit and the corporation may specify a time for payment by the owner of the unit.

[30] The Corporation submits the lien amounts fall within s. 85 of the Act and are automatically enforceable. The Amlanis submit that the lien amounts fall within section 134 of the Act and are not enforceable in the absence of a court order that awards the Corporation damages or costs. Since there has been no court order, the Amlanis submit that the lien is invalid and must be vacated. 

[31] In determining which interpretation I adopt, the Corporation submits that I must keep in mind the overall purpose of those sections and of the Act which is to place the financial burden created by the conduct of any one unit holder on that particular unitholder rather than on the Corporation. If the financial burden is placed on the Corporation, it is effectively placed on innocent unitholders who must pay for the Corporation’s expenses by way of common expenses or special assessments: Metropolitan Toronto Condominium Corp. No. 1385 v. Skyline Executive Properties Inc., 2005 CanLII 13778 (ON CA), [2005] O.J. No 1604 at para. 40.

[32] I accept that this is part of the overall scheme of the Act but am nevertheless of the view that the expenses the Corporation claims are not common expenses under s. 85 but are expenses that relate to “enforcing compliance.” It is clear that s. 134 costs cannot be added to the common expenses of the Amlanis’ apartment without an order under section 134 (5): Metropolitan Toronto Condominium Corp. No. 1385 v. Skyline Executive Properties Inc., 2005 CanLII 13778 (ON CA), [2005] O.J. No 1604 at para. 35 (C.A.). Here, however, the Corporation seeks to shift the financial burden from itself to Mr. Amlani without a court order authorizing it to do so.

[33] Common expenses, in their most traditional form, apply to the monthly fees each unit owner pays for utilities and the general upkeep of the condominium project. If a unit owner defaults on those monthly obligations, the default can be liened and the unit can be sold to enforce the lien. Section 84 (1) of the Act underscores this interpretation when it provides that a unitholder shall pay common expenses in the proportions specified in the declaration.

[34] It is one thing to allow the corporation to enforce, by way of lien, common expenses that are applicable to all unit holders and that a majority of unitholders have approved. It is entirely another to allow a condominium corporation the unfettered, unilateral right to impose whatever costs it wants on a unitholder, refer to them as common expenses and thereby acquire the right to sell the unitholder’s apartment.

[35] I am strengthened in this view by other provisions in the Act that specifically allow a condominium corporation to add certain types of costs unique to a single owner to the common expenses of the particular unit holder without a court order. By way of example, sections 92(1) and (4) provide that a corporation can carry out certain repairs if an owner fails to do so and can add the cost of such repairs to the owner’s common expenses. In a similar vein, section 105(2) provides that if an owner causes damage, the lesser of the cost of repair or the corporation’s insurance deductible may added to the owner’s common expenses. Legal fees and enforcement costs do not fall into these categories. 

[36] In the Corporation’s communications with Mr. Amlani and in its law firm’s accounts, the services in respect of which the Corporation seeks reimbursement are described as compliance and enforcement expenses, not as common expenses. By way of example:

(a) The Fine & Deo letter of July 6, 2017 stated that if Mr. Amlani failed to “comply” he would be held liable for the Corporation’s “cost of enforcing your compliance by means inclusive of a court application under section 134 of the Act”.

(b) The Fine & Deo account of October 4, 2017 is for “legal costs incurred in enforcement of the Corporation’s Declaration and Rules.”

[37] It is only in the notice of lien that these enforcement costs are referred to as “common expenses”.

[38] The Corporation submits that the Declaration allows it to add these costs to Mr. Amlani’s common expenses through two provisions: the definition of common expenses and an indemnification provision.

[...]

[43] The Corporation argues the Declaration contains an indemnity in article 11 which allows it to act as it has. The indemnity provides:

“Each owner shall indemnify and save harmless the Corporation from and against any loss, cost, damage, injury or liability whatsoever which the Corporation may suffer or incur resulting from or caused by an act or omission of such owner, … to or with respect to the common elements and/or all other units except for any loss, costs, damages, injury or liability caused by an insured (as defined in any policy or policies of Insurance) and insured against by the Corporation. (Emphasis added)

All payments pursuant to this clause are deemed to be additional contributions toward the common expenses and recoverable as such.”

[44] The Corporation interprets the indemnity as meaning that the legal expenses of its lawyers are lienable under section 85 (1) of the Act and relies on London Condominium Corporation No. 13 v. Awaraji, 2007 ONCA 154 for the proposition that a court should not interfere with a condominium corporation’s interpretation of its declaration unless it is unreasonable.

[45] In my view, the Corporation’s interpretation of the indemnity is unreasonable.

[46] The indemnity applies only with respect to costs the Corporation incurs arising out of acts by owners “to or with respect to the common elements and/or all other units.” There was no act of Mr. Amlani to the common elements or to all other units. Moreover, the costs the Corporation incurred after Mr. Amlani left his unit could not possibly arise out of acts by Mr. Amlani to the common elements or all other units because he was out of the building and was not engaging in any acts with respect to the common elements or otherwise. Finally, the interpretation the Corporation advances contravenes section 134 (5) of the Act because the costs it claims related to compliance and enforcement costs without being embodied in a court order. An interpretation that contravenes a statutory provision is, by definition, unreasonable. Here again it is relevant to note that the legal accounts for which the corporation claims indemnity describe the services as relating to the “enforcement of the Corporation’s Declaration and Rules” and not as relating to the protection of any common elements.

In Rahman v. Peel Standard Condominium Corporation No. 779, 2021 ONCAT 13 (CanLII), the unit owner had a disability and possessed an accessible parking permit. He used the accessible parking spaces at the condominium despite the objections of the corporation that his use violated the corporation's declaration. The corporation took the position that the accessible parking spaces were for visitors only. The Tribunal interpreted the declaration and found that the owner was entitled to park in the accessible spaces. The Tribunal held that the corporation had unreasonably imposed costs of enforcing its declaration against the unit owner and added those costs to the owner's common expenses and filed a lien against the unit. The corporation was therefore not entitled to add the reasonable expenses related to the enforcement to the common expenses payable for the unit pursuant to s. 134(5) of the Condominium Act.

Because the corporation had not quantified the costs it claimed related to its enforcement of the declaration against the owner, the Tribunal was unable to determine what part of the lien related to the unreasonably imposed costs. The Tribunal ordered the corporation to stop its enforcement proceedings, including the registration of the lien against the unit, and to provide the owner with an accounting of the costs related to enforcement:

[35] PSCC779 issued its second enforcement letter on June 19, 2020. This letter raises new grounds of harassment against Mr. Rahman, including writing two emails 2 minutes apart to PSCC779 board members in violation of the “Communication Policy” of PSCC779. The condominium corporation repeats its position that Mr. Rahman has not provided sufficient medical evidence to support a human rights accommodation to a handicap parking space. PSCC779 claims a chargeback of $1,833.99 for “Legal Costs of Enforcement” to that date. The claim is made in a one-line statement with no details provided.

[36] On June 23, 2020, PSCC779 issued a third enforcement letter. This letter responded to emails from Mr. Rahman. In this letter, PSCC779 took the position that the accessible parking spaces were for visitors only. The letter concludes by advising Mr. Rahman that, “because of your further harassment of the Corporation’s Building Manager, you are responsible for indemnifying the Corporation for its increased legal costs in this enforcement matter against you . . ..” The letter attaches an updated legal bill, with a one-line charge of $2,522.16 for undetailed legal costs.

[37] On October 2, 2020, PSCC779 sent a “follow-up” to its third enforcement letter. The letter refers to alleged violations of PSCC779’s Communication Policy and alleged harassment by Mr. Rahman as well as to his continued use of the accessible parking spaces. This letter offered Mr. Rahman the opportunity to lease a space in the handicap parking for, by way of example, $100 per month if Mr. Rahman would provide “sufficient medical documentation”. The letter concluded by stating that the “payout statement” included in the June 23rd letter was no longer valid and that if Mr. Rahman wished to pay off the chargeback, he should contact PSCC779’s legal counsel for an updated account. The letter refers to the outstanding chargeback as being added to “your Unit’s arrears”. It is not clear from this reference if PSCC779 was adding its claims for legal costs of enforcing compliance to Mr. Rahman’s common expenses but that is the implication.

[38] On October 8, 2020, Mr. Rahman’s doctor provided a letter, as discussed above. The letter ends,

Mr. Rahman Has a disability parking permit and has spoken to me on a number of occasions regarding harassment by his condo management which he has told me is causing stress and anxiety in his life. Any action to reduce this stress would obviously benefit Mr. Rahman’s overall Health. IF you require any further information please do not hesitate to contact our office.

PSCC779 submitted that they did not find the letter sufficient support for Mr. Rahman’s request and wrote to the doctor for more specific information. They did not receive a reply, which they assume was on Mr. Rahman’s instructions.

[39] During the month of October, there were a number of email exchanges between the parties, during some of which Mr. Rahman threatened to report PSCC779’s counsel to the Law Society of Ontario, a threat for which Mr. Rahman subsequently apologised.

[40] On October 14, 2020, PSCC779 served Mr. Rahman with a Notice of Lien in the amount of $6,982.70. On October 26, 2020, PSCC779 emailed Mr. Rahman and advised Mr. Rahman that it was on that date registering a Certificate of Lien on Mr. Rahman’s condominium unit. The email continues, “Please be advised that PSCC779’s costs of our continued involvement in this enforcement matter against you is [sic] being charged back to your Unit’s common expenses – including the legal costs of having to defend and/or counterclaim against the Action in the Brampton Superior Court which you apparently electronically-issued [sic] this morning.” PSCC779 submitted that, pursuant to its Declaration, it was charging Mr. Rahman interest at 18% per annum, compounded monthly, on its cost claims.

[41] There are a series of letters in November and December advising Mr. Rahman that the amount secured by the lien was increasing. On December 31, 2020, a Notice of Sale was registered by PSCC779 against Mr. Rahman’s condominium for an amount of $13,839.68, which was expected to increase by February 1, 2021 to $15,162.51. PSCC779 advised that if payment in full was not received by February 19, 2021, PSCC779 would proceed to sell Mr. Rahman’s condominium.

[42] Mr. Rahman had earlier protested that PSCC779 could not add its legal costs in this matter to his common expenses without a court order. Mr. Rahman cited subsection 134(5) of the Act, which reads:

 If a corporation obtains an award of damages or costs in an order made against an owner or occupier of a unit, the damages or costs, together with any additional actual costs to the corporation in obtaining the order, shall be added to the common expenses for the unit and the corporation may specify a time for payment by the owner of the unit.

[43] In response, PSCC779 cited the case of Amlani v. York Condominium Corporation No. 473, 2020 ONSC 194, a decision of the Superior Court of Ontario. PSCC779 takes the position that this case authorises them, with properly constructed indemnification clauses in its Declaration, to add its costs of enforcing compliance with its Declaration to Mr. Rahman’s common expenses without seeking a court order. The importance of this interpretation is that common expenses may be the subject of a lien and that lien may be enforced through the sale of, in this case, Mr. Rahman’s condominium unit.

[44] The Amlani case deals with the interpretation of an indemnification clause and the operation of section 134 of the Act. However, the case does not stand for the proposition that, through deft wording of an indemnification clause, a condominium corporation can deprive an owner of his or her day in court as provided for in subsection 134(5) of the Act. In fact, the Court says, at paragraph 34,

It is one thing to allow the corporation to enforce, by way of lien, common expenses that are applicable to all unit holders and that a majority of unitholders have approved. It is entirely another to allow a condominium corporation the unfettered, unilateral right to impose whatever costs it wants on a unitholder, refer to them as common expenses and thereby acquire the right to sell the unitholder’s apartment.

[45] Another way of considering the matter is to determine if PSCC779’s interpretation of its indemnification clauses is reasonable. Here again, reference may be had to the Amlani case, where the Court wrote, at paragraph 46:

Finally, the interpretation the Corporation advances contravenes section 134 (5) of the Act because the costs it claims related to compliance and enforcement costs without being embodied in a court order. An interpretation that contravenes a statutory provision is, by definition, unreasonable

[46] From the outset PSCC779 took an aggressive posture in enforcing compliance despite the fact that it would have been clear to a reasonable person that Mr. Rahman had, at the minimum, a prima facie case for his use of the accessible parking space. PSCC779’s position became increasingly aggressive. It added its legal costs in enforcing the Declaration, together with associated interest charges, to Mr. Rahman’s common expenses. Despite Mr. Rahman, correctly, advising PSCC779 that it could not add these costs to his common expenses without a court order as required under subsection 134(5) of the Act, PSCC779 persisted. It not only added those costs to Mr. Rahman’s common expenses but attempted to collect its legal costs and interest by way of lien and notice of sale. It proceeded despite hearing from Mr. Rahman’s doctor that its treatment of him was causing him stress and anxiety.

[47] PSCC779 has not quantified the costs it is claiming related to its enforcement of compliance of Article 4.2 of its Declaration against Mr. Rahman. It is impossible to determine what part of the lien registered against Mr. Rahman’s property or the Notice of Sale relates to claims of indemnity of enforcement costs concerning Mr. Rahman’s use of the accessible parking. Despite being specifically invited to set out its costs in this hearing, PSCC779 declined to do so. As discussed above, it apparently takes the position that it is sufficient to assert a claim in order to force Mr. Rahman to defend against it. PSCC779 is doing exactly what the Court in the Amlani case warned against, that is, PSCC779 claims, “the unfettered, unilateral right to impose whatever costs it wants on a unitholder, refer to them as common expenses and thereby acquire the right to sell the unitholder’s apartment.”

[48] At some point in pursuing this matter, PSCC779 tipped over from aggressively pursuing its claims to harassing one of its condominium unit owners. PSCC779 persistently ignored Mr. Rahman’s claims, brushed off his references to the Act and the Mississauga Parking By-Law. Most egregiously, despite the letter from Mr. Rahman’s doctor testifying to the stress it was causing, PSCC779 registered a lien on Mr. Rahman’s condominium units and is now moving to enforce the lien by selling Mr. Rahman’s home. It is important to underscore that both the lien and the Notice of Sale are being pursued in contravention of subsection 134(5) of the Act, which requires a court order before enforcement costs can be added to Mr. Rahman’s common expenses.

[49] What is to be done about this? The first step is to have PSCC779 provide Mr. Rahman with a complete accounting of what costs it has claimed for enforcement of Article 4.2 of its Declaration against Mr. Rahman. It is important that Mr. Rahman understand what part of the lien against his property and the Notice of Sale relates to this matter and what part he will have to seek a remedy for in another forum.

[50] Second, PSCC779 must stop any enforcement actions it is currently taking that relate to costs it claims in enforcing Article 4.2 of its Declaration against Mr. Rahman. Included in these actions are the registration of a lien against Mr. Rahman’s condominium units and the Notice of Sale served by PSCC779 against him.

[51] I will direct PSCC779 to pay Mr. Rahman’s costs in this matter in the amount of $200 under subparagraph 1.44(1) 4 of the Act.

In Metro Toronto Condominium Corporation No. 545 v. Stein, 2006 CanLII 20838 (ON CA), the corporation determined that all unit owners were required to carry out Level 5 remediation in response to a mold problem. The respondents carried out Level 1 remediation in their unit, which was more affordable and was suggested to them by a mycologist. The corporation's application to enter the unit to carry out the Level 5 remediation was denied. The corporation appealed from that order, arguing that the application judge erred by failing to defer to the corporation's decision to require Level 5 remediation.  

Rouleau J.A., for the Court of Appeal, upheld the application judge's decision, which was based on the finding that the corporation had not acted reasonably in imposing its standard of remediation and that reasonable lower cost alternatives ought to have been considered, especially in light of there being no evidence of harm to other units. The Court held that the Court of Appeal's decision in Dvorchik did not apply in this case because the corporation had made the strategic decision not to make the requirement for Level 5 remediation a rule: 

[19] The application judge rejected the Corporation’s submission that, by remediating to a Level 1 rather than a Level 5 standard, the respondents had created a dangerous situation as contemplated by s. 117 of the Condominium Act. She went on to find that this section of the Act did not empower the Board of the Corporation to impose a particular method of remediation where it could not establish that the method chosen by the respondents had not reasonably dealt with the problem.

[20] The application judge concluded that the Corporation failed to meet its onus of proving that a condition currently existed that was “likely to damage the property or cause injury to an individual”.[3] In the event that she was wrong on this point, and that the Corporation had in fact established the existence of such a condition, she went on to consider whether the Corporation was acting reasonably so as to justify the court granting the discretionary relief being sought. On this latter issue the application judge concluded that the Corporation had not acted reasonably in imposing its standard of remediation. Central to this conclusion was her finding that the Board of the Corporation had failed to consider reasonable alternatives to the requirement that all units carry out a Level 5 remediation. Reasonable lower cost alternatives ought to have been considered, especially in light of there being no evidence of harm to other units.

[...]

b) The decision in Dvorchik

[41] In Dvorchik, the Corporation applied under s. 49(1) of the then Condominium Act, R.S.O. 1990, c. C.26, for an order directing the respondent to comply with a corporation rule that prohibited unit holders from having pets weighing more than twenty-five pounds. Section 49(1) is similar to s. 134(1) of the current Condominium Act.

[42] At first instance, Keenan J. found the rule restricting pet size to be invalid and unenforceable. He did so because the Condominium Corporation had failed to provide evidence proving that the twenty-five pound limit was reasonable.

[43] In allowing the appeal, the Court of Appeal made the following statement about the deference to be paid to condominium corporations:

The condominium board was not obliged to hear evidence in reaching its conclusion that larger pets be prohibited. In making its rules, the Board is not performing a judicial role, and no judicialization should be attributed either to its function or its process. In an application brought under s. 49(1), a court should not substitute its own opinion about the propriety of a rule enacted by a condominium board unless the rule is clearly unreasonable or contrary to the legislative scheme. In the absence of such unreasonableness, deference should be paid to rules deemed appropriate by a board charged with responsibility for balancing the private and communal interests of the unit owners (para. 5).

c) Does Dvorchik apply?

[44] The court in Dvorchik was considering the enforcement of a rule adopted by a condominium corporation pursuant to s. 29(1) of the previous Condominium Act (s. 58 of the current Condominium Act). The rule adopted in that case clearly fell within the scope of the rule-making authority of the condominium board. The operative section of the Act specified that the condominium corporation’s rule-making power was only limited by the requirements that the rules be “reasonable” and “consistent” with the Condominium Act.

[45] The case at bar does not involve a rule, and the sections relied on by the Corporation do not contain language similar to s. 29 of the previous Act. The Dvorchik decision is, therefore, clearly distinguishable on its facts.

d) Should the principles in Dvorchik be extended to apply in the present case?

[46] The Corporation argues that its judgment that, absent a Level 5 remediation, a dangerous situation will be allowed to exist in those units is a reasonable one made with the benefit of expert advice. As a result this decision should be given the same deference as provided in Dvorchik without regard to the fact that it is not a “rule” or “by-law” of the Corporation.

[47] In my view, Dvorchik should not be extended to the present case. I say this for two reasons. First, the decision by the Corporation that it would not seek to structure the remediation requirement as a rule creates an important distinction from Dvorchik. Second, this case raises both different and competing rights and duties under the Condominium Act.

[48] It is important not to lose sight of the fact that the Corporation chose to frame its application as a dispute with respect to the interpretation of ss. 117, 119 and134 of the Condominium Act and not as “a disagreement between the parties with respect to the declaration, by-laws or rules” of the corporation (see s. 132(4) of the Condominium Act). Whether or not the remediation requirement could be made into a rule, the Corporation appears to have chosen not to make it a rule so as to avoid the s. 134(2) requirement to go to mediation or arbitration as a precondition to any court application. Thus, the Corporation’s failure to adopt the requirement for Level 5 remediation as a “rule” is more than semantics. It reflects a strategic decision by the Corporation. By choosing this route, the Corporation cannot benefit from the statutory provision relied on in Dvorchik.

[49] More importantly, in the present case, the court is being called upon to enforce a decision of the Corporation that, unlike Dvorchik, is not within the Corporation’s exclusive area of responsibility. Here there are competing obligations and duties. The Condominium Act provides that unit holders are responsible for the maintenance of their units.[6] The Corporation only has authority to interfere with and override these unit holders’ responsibilities and obligations where the unit holder has failed in his obligation to such a degree that a risk outlined in s. 92(3) or a condition likely to damage the property or cause injury to an individual as described in s. 117 is allowed to exist and continue. [7]

[50] As the statutory rights and obligations of both parties are engaged, a careful balancing is required. There is no statutory or principled reason why deference should be afforded to the Corporation’s decision on the facts of this case.

CONCLUSION

[51] For these reasons, I would dismiss the appeal. I would award the respondents their costs on a partial indemnity basis fixed at $10,000 inclusive of GST and disbursements.

Authorities

Condominium Act, 1998, SO 1998, c 19

Amlani v. York Condominium Corporation No. 473, 2020 ONSC 194 (CanLII)

Rahman v. Peel Standard Condominium Corporation No. 779, 2021 ONCAT 13 (CanLII)

Metro Toronto Condominium Corporation No. 545 v. Stein, 2006 CanLII 20838 (ON CA)