Yet Another Case of a Limited Recovery of Enforcement Costs

In a Toronto condominium this past September, complaints were received about the smell of tobacco smoke permeating into units surrounding Unit 115. This unit was occupied by two new tenants pursuant to a lease that prohibited smoking. The smells and complaints occurred shortly after the tenants moved in.

The evidence before the court in Toronto Standard Condominium Corporation No. 2032 v Boudair, et al. was that the Condominium Corporation notified the unit owner of the complaints received approximately three weeks into the lease, and the unit owner then advised the tenants and instructed them not to smoke in the unit. However, further complaints were received by the Condominium Corporation, and the owner continued to communicate with the tenants about their ongoing breach of the smoking prohibitions.

The Condominium Corporation then sent a demand letter to the unit owner on November 4, 2015, requesting compliance with the rules and regulations. The unit owner forwarded the Corporation’s letter to the tenants with a note that if the tenants did not act properly and stop smoking, or vacant the unit, they would be responsible for all expenses incurred.

Despite this, further complaints were received by the Condominium Corporation, and an application was commenced on November 27, 2015. Once the application record was served on the owner, he also served a notice to terminate the lease, and secured the earliest available date (February 2016) with the Landlord and Tenant Board to terminate the tenancy.

The parties agreed before the Court in January 2016 to a compliance order under s. 134 of the Condominium Act, 1998, enforcing compliance with the rules, an order prohibiting the tenants from smoking in the unit, and an order terminating the lease pursuant to s. 134(4) of the Act. They then returned to Court to argue the issue of costs.

The Condominium Corporation was seeking costs against the owner and the occupants on a substantial indemnity basis of $32,976.94, or on a partial indemnity basis of $25,125.00.

The Court exercised its discretion and made a partial indemnity costs award of $10,000 in favour of the Condominium, payable only by the tenants, not the unit owner. The Court also awarded costs against the tenants to the unit owner.

In making the decision that the owner did not have to pay any costs, the Court determined that the unit owner did take all reasonable steps in that he “did not sit by and do nothing”. He made considerable efforts to obtain compliance, he threatened the tenants with termination, he was very active once he learned of the existence of the complaints, and pursuing an early termination of the lease was a prudent course of action.

In exercising its discretion and awarding only $10,000 in costs to the Condominium Corporation, the Court stated:

“I do not believe that all of the costs sought by the applicant and Dong should lay at the feet of the tenants. I have already found that the applicant jumped the “smoking gun” by moving straight for a compliance order under section 131 of the Act without working with and assisting Dong with his efforts. Prior to the issuance of this application, the tenants were already in negotiations with Dong to move out of the unit and were moving towards that goal.”

“… Overall, the Court is required to consider what is “fair and reasonable” in fixing costs, and it is to do so with a view to balance and compensation of the successful party with the goal of fostering access to justice”

This case is another example of the Court’s exercise of its discretion in awarding costs, shifting further away from the Condominium Corporation’s statutory and contractual indemnification protections in compliance proceedings.

While the initial position may be full indemnity in accordance with these protections, these decisions rely on case-specific facts that, in the Court’s view, justify a reduction of the scale and quantum of awards. The reasons cited often point a finger at the Condominium Corporation for having not done enough to find a resolution, or because a Board made what was likely one or more innocuous choices at the time, which, despite obtaining the compliance order, then backfire on the issue of costs.