The Hammer or the Fly Swatter? – Condo Corporations and Litigation

As many condominium corporations are no doubt aware, using the court or an arbitration to resolve a dispute is sometimes unavoidable. It can often be the only effective manner in which to deal with a difficult owner who is either unwilling or unable to comply with the Act and/or a condominium’s governing documents. The Condominium Act in Section 17 (3) clearly states that condominium corporations have a duty to take all reasonable steps to enforce the Act, declaration, by-laws and rules; and this duty is owed to all residents of the community. It’s an important provision, directed at protecting and preserving the comfort of all condominium occupants in Ontario.

Because of these obligations, Section 134 of the Act (and often the declaration) includes a mechanism that effectively ensures the condominium corporation is fully indemnified in such situations. That is, it enables the corporation to recover all of the costs reasonably incurred in attaining compliance.

Balancing the interests of the innocent, compliant owners with those of the individual who is unwilling or unable to comply can be a challenging task. The compliant owners are entitled to enforcement; but the enforcement steps must also be reasonable. And the situation can be even more complicated when a non-compliant resident suffers from a disability (rendering him or her incapable of compliance), because condominium corporations have a duty to accommodate such disabilities. In my view, this doesn’t mean that non-compliance in such cases must be tolerated, so that enforcement becomes impossible.

I think the basic principle is as follows: Condominium corporations must consider all of the unique circumstances of each situation, and then determine a reasonable course of action to achieve compliance.

Courts are increasingly making decisions that appear to indicate that, in some cases, condominiums may be taking a hard-line approach that goes beyond what is reasonable in the circumstances.

In the December 2015 case Couture v. TSCC No. 2187, Justice Myers made the following statement as a footnote in his decision:

“Perhaps the board had an eye toward subsection 134 (5) of the statute that entitles a condominium corporation to full indemnity costs in litigation against a unit owner in which the condominium corporation obtains any award of damages or costs. This subsection performs an important role to protect innocent unit owners from paying the price of unmeritorious litigation. However, it also provides a skewed incentive to boards of directors and their advisors who can wield a heavy sword over the heads of unit owners… This section unfortunately incentivizes recalcitrant, litigious behaviour by condominium boards of directors and their advisors whom may be so inclined.

Clearly not every condominium’s behaviour would be characterized as “recalcitrant” or “litigious”. However, this footnote offers important insight into the perspective of the courts on applications for compliance, a perspective we’ve noticed is also reflected, to some extent, in other recent cases. Courts appear to be sending a signal to condominiums that while they are legally entitled to full indemnity costs in cases of non-compliance, they nonetheless have a duty to ensure that those costs are incurred carefully and reasonably. In other words, it’s best to avoid using a hammer, when a fly swatter will do.