Costs – When An Owner Sues The Condominium Corporation And Loses

There have been some recent cases where condominium owners have sued the condominium corporation in Small Claims Court – and lost. See for example the following: Wexler v. CCC 28 (currently under Appeal), Wu v. CCC 383 and Pearson v. Carleton Condominium Corporation No. 178.

When a condominium corporation successfully defends an owner’s claim, should the condominium corporation be entitled to a “special cost award”? Or should the usual cost principles apply? Note that the Courts have previously said that a condominium corporation may be entitled to full costs (under Section 85 of the Condominium Act) whenever a dispute relates to collection of common expenses. In this blog, I’m referring to disputes related to other matters.

For instance, in Small Claims Court, the successful party is generally entitled (at most) to be awarded costs equal to 15% of the amount of the claim. The winning party is only entitled to additional costs if the losing party has been guilty of misconduct that prolonged the litigation or otherwise added to the costs.

But should there be an exception in the condominium setting – where the court combatants are a condominium corporation and an owner? In such cases, should a successful condominium corporation be entitled to a “higher-than-normal cost award”?

From a review of the above decisions, the answer seems to be: maybe. But only if the particular condominium’s governing documents contain a clear provision allowing for such. And the usual indemnification provisions (contained in many declarations) may not be sufficient.

In the Wexler case, the Deputy Judge of the Small Claims Court stated that the condominium corporation was entitled to a higher-than-normal cost award:

“…because [the owner’s] claim was dismissed and because the condominium corporation has a Declaration, By-laws and Rules providing for full indemnity, and especially because it would be unfair that the [other] unit owners should bear all the costs of this litigation when the condominium corporation is unnecessarily sued.”

However, the owner (Ms Wexler) has been granted leave to appeal. And the Superior Court decision granting leave includes the following statement:

“It is my view that the decision referenced by the Applicant (Pearson (Litigation Guardian of) v. Carleton Condominium Corporation No. 178, 2012 ONSC 3300 (Canlii)) demonstrates a difference in principles chosen to guide discretion.”

Justice P.E. Roger goes on to say:

“Further, I find that there is good reason to doubt the correctness of the Deputy Judge’s decision and that the appeal raises matters of general importance.”

So, we still don’t have clear answers to the above questions.

But we’ll have another piece of the puzzle when the Wexler appeal is decided.

Have more questions about cost awards and litigation? Contact our Condominium Law Group today.