Changes to CAT Rules Respecting Costs

Prior to January 1, 2022, the CAT Rules of Practice stated that the CAT would not order a party (for instance the losing party) to pay another party’s legal fees unless there were “exceptional reasons” to do so.

In a small number of cases, the CAT did find that exceptional circumstances existed, and the CAT therefore ordered one party to pay legal costs to another party in those cases.

For example, in the case of Peel Condominium Corporation No. 96 v. Psofimis, the CAT found that exceptional circumstances existed because the non-compliant owner had “deliberately and repeatedly ignored the condominium’s numerous attempts to request his voluntary compliance”. The CAT therefore ordered the owner to pay legal costs, incurred by the condominium corporation, for the CAT proceedings.

However, the CAT was evidently concerned that it still wasn’t clear what circumstances would qualify as “exceptional” for these purposes.

Therefore, the particular Rule has been amended (effective January 1, 2022). The Rule now reads as follows:

Reimbursement of Legal Costs and Disbursements at any stage

48.2    The CAT generally will not order one Party to reimburse another Party for legal fees or disbursements (“costs”) incurred in the course of the proceeding. However, where appropriate, the CAT may order a Party to pay to another Party all or part of their costs, including costs that were directly related to a Party’s behaviour that was unreasonable, undertaken for an improper purpose, or that caused a delay or additional expense.

This new wording makes the test a little more clear. In particular, the party seeking an award of legal costs will need to show that the other party’s behaviour “was unreasonable, undertaken for an improper purpose, or … caused a delay or additional expense”. 

However, the Rule also says that “The CAT generally will not order one Party to reimburse another Party for legal fees or disbursements”. So, the bottom line is that the CAT will still be reluctant to award legal costs. But it’s clear that legal costs may be awarded in some circumstances.  

The CAT has also issued a Practice Direction which I think provides some helpful additional guidance on the question. Among other things, the Practice Direction says that, in deciding whether or not there should be an award of legal costs, the CAT can consider the following:

• The conduct of each party and their representatives.
• Whether or not the case was filed in bad faith or for an improper purpose.
• The potential impact of a cost award upon the parties.
• The attempts by the parties to resolve the dispute and/or avoid the claim.
• Any failure of a party to comply with a previous order.
• Any relevant provisions in the condominium’s governing documents.  (Note, however, that the Practice Direction makes it clear that any such provision won’t be considered determinative on the question of entitlement to costs.)
• Any other factor(s) that the CAT considers relevant.

The Practice Direction goes on to say that, in deciding upon the amount of any cost award, the CAT can consider all of the above factors, as well as the complexity of the case and the reasonableness of the costs that are claimed.

The revised Rule and the new Practice Direction provide helpful guidance about the circumstances under which the CAT might order one party to pay legal costs incurred by another party in relation to a CAT proceeding.

Stay tuned to Condo Law News to keep up to date on the latest developments on CAT costs!