An Important CAT Case About Compensation and Costs

In the case of TSCC 2804 v. Micoli, the Tribunal ultimately found that a tenant (and the tenant’s co-resident) were “a highly disruptive presence in the condominium, causing nuisances that unreasonably interfere with and disturb the comfort or quiet enjoyment of other residents and the condominium’s staff.” The more serious disruptions involved excessive noise. The Tribunal said: “The noise incidents included ‘loud and excessive screaming, yelling, shouting, arguing, swearing, throwing items, banging, and slamming noises.’” Other key violations included improperly leaving delivery items, boxes, waste and other items on the common elements (including the common hallway).

The Tribunal ordered the tenant to comply with the condominium corporation’s governing documents, and also to take reasonable steps to ensure that guests and co-residents did the same. The Tribunal ordered the landlord to take reasonable steps to ensure that all occupants of the unit complied with these obligations.

In my view, the most interesting aspect of the decision was the Tribunal’s award of compensation and costs.

For purposes of compensation and costs, the Tribunal separated the legal expenses incurred by the condominium corporation into two categories:

Category No. 1:  Legal expenses incurred from the opening of the legal file through to the end of Stage 2 of the CAT process (Mediation). [In this case, this amount totaled $28,060.92.] The Tribunal said that these expenses (again, through Mediation) could possibly be awarded to the condominium corporation as “compensation” under Section 1.44(1)3 of the Condominium Act. In this case, the Tribunal ordered that the tenant and landlord (jointly and severally) pay 65% of this amount, based upon indemnification provisions in the condominium’s Declaration. The Tribunal did not award 100% of this amount because the Tribunal felt that some of the legal expenses did not appear to have been reasonably incurred “as a result of” the violations.

Category No. 2:  Legal expenses incurred during Stage 3 of the CAT process (the Hearing). [In this case, this amount totaled $17,103.00.] The Tribunal said that these expenses (again, for the Hearing) could possibly be awarded to the condominium corporation as “costs” under Section 1.44(1)4 of the Condominium Act – but subject to the Tribunal’s Rules and Practice Direction dealing with costs. In this case, the Tribunal ordered the landlord (but not the tenant) to pay 50% of this amount. The Tribunal did not feel that there was any basis (under the CAT Rules) for such an award against the tenant. However, the Tribunal felt that the landlord had not made any reasonable efforts to encourage his tenant to comply or to attempt to resolve the dispute and therefore “placed the entire burden of enforcement, including the costs of this case, on the shoulders of the Applicant (condominium corporation).” This justified an award of costs against the landlord (under the CAT Rules). However, the Tribunal said that the time spent on the hearing was somewhat more than was necessary and, mainly for that reason, reduced the award of costs against the landlord to 50% of the condominium corporation’s actual costs for the hearing.

In my view, the key “takeaways” from this case are as follows:

(1) Legal expenses fall into two categories:

Expenses through Mediation (Stage 2): May be fully recoverable as “compensation” (particularly where there are relevant indemnification provisions). [Note that this is subject to a recovery limit of $25,000 under Section 1.44(1)3 of the Condominium Act.]

Expenses through Mediation (Stage 3): May also be recoverable under Section 1.44(1)4 of the Condominium Act, but are subject to the CAT’s Rules and Practice Direction respecting “costs.”

(2) Landlords and tenants have simultaneous (though somewhat different) obligations in terms of compliance with the condominium’s governing documents.  In my view, when a tenant is not in compliance, in most cases it is important to dialogue with both the tenant and the landlord.

As always, stay tuned to Condo Law News to keep up to date on the latest developments in condominium law!