Mediation/Arbitration vs. Court – A Cautionary Tale

Court stays Court proceeding pending the outcome of mediation/arbitration.

A recent decision from Toronto (MTCC No. 1171 vs. Rebeiro) demonstrates the importance of considering the proper forum for resolving a dispute. There are currently several methods of resolving disputes in condominiums, including:

• The Condominium Authority Tribunal (“CAT”) (if the dispute falls under the CAT’s jurisdiction);
• Mediation/Arbitration under Section 132 of the Condominium Act, 1998 (the “Act”) (and as further defined in some condominiums’ By-laws); and
• The Courts.

Over the years, it has been confirmed that disputes related to a breach of the Act or disputes involving tenants can properly proceed to Court. A dispute with an owner (and not involving a tenant) about a condominium’s Declaration, By-laws and Rules is to go to mediation/arbitration (unless the dispute relates to a matter falling within the jurisdiction of the CAT).

In the Rebeiro case, the condominium corporation brought an Application for compliance against one owner involved in a dispute with another owner.  And it’s clear from the decision that the dispute involved some nasty verbal exchanges between the owners.

The condominium corporation commenced the Application citing Sections 117 and 119 of the Act. Previous Court decisions have confirmed that matters involving an alleged breach of Section 117 can properly proceed to Court (and in some cases, Court assistance may be urgently required). However, in this case, the Court stated as follows:

“In this case, there is no question that the core issues are the disputes under the condominium’s documents. The assertions that ss. 117 and 119 apply are weak and clear efforts to pigeonhole the facts into statutory claims to get out of arbitration.” 

The Court went on to say that the case was not about a risk of injury. Instead, it was a dispute between neighbours that would be better resolved by sitting down to speak with each other and find a way to end the hostilities. The Court said that a long and expensive court proceeding was not the answer in this case. 

This provides a cautionary tale to condominiums about selecting the correct forum in order to avoid unnecessary cost and delay in attempting to resolve a dispute. The Court stated quite clearly that the intention behind Section 132 of the Act is to promote a faster and less expensive process for resolving disputes. As such, when a dispute arises, it is important to carefully consider what forum is best to resolve the dispute (keeping in mind the intention of Section 132).

Sometimes a Court proceeding is necessary, and is the only good and efficient way to resolve a dispute (particularly a dispute involving risks of injury or harm to persons or property). But this case is a reminder that, where appropriate, condominium corporations need to be looking for other ways to resolve disputes.

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