Unsuccessful Lawsuit By Condo Owner - The Cost Implications

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http://www.condoreporter.com/assets_c/2011/05/condo%20row%20house%20project3-thumb-250x187-11515.jpgIn a previous blog, we reported on a case, Harvey v. Elgin Condominium Corporation No. 3, where an unhappy unit owner sued the Corporation for various alleged infractions relating to the replacement of existing wooden decks, which was funded by a special assessment. All of the owner’s claims were completely dismissed by the Judge after a three-day trial. Because the condo corporation was entirely successful at trial, it sought full recovery from the owner of its legal costs, which amounted to $61,817.21. The costs decision has now been released.

The condo corporation argued that it would not be fair or equitable for all the other blameless/innocent unit owners to have to bear costs that were incurred by the unwarranted conduct of one unit owner. The Corporation felt that its claim for full indemnity was further justified because (i) the owner had made unsubstantiated allegations of deceit, concealment and bad faith on the part of the Board; and (ii) he insisted on pressing forward with the litigation after he knew, or ought to have known (long before the trial), that the claim was completely without merit.

The Courts of Justice Act provides that costs are in the discretion of the Court and the Court may determine by whom, and to what extent, costs shall be paid. However, section 134(4) of the Condominium Act (the “Act”) provides that if a corporation obtains an award of damages against an owner or occupier, the damages or costs, together with the additional costs to the corporation in obtaining the order, shall be added to the common expenses for the unit; but this is limited to situations where the condominium corporation has sought and obtained a compliance order pursuant to section 134 of the Act. In the Harvey case as a unit owner sued the condominium corporation and there was no compliance order in favour of the Corporation, section 134 of the Act was not applicable. 

The Court noted that except as specifically provided in section 134 of the Act, a condominium corporation is not automatically entitled to full indemnity costs in relation to litigation with unit owners. An award of costs on a full indemnity basis is a departure from the norm and the overall goal is to award costs in an amount that is fair and reasonable for the successful party to pay. 

Although the Judge agreed that the owner’s conduct had unnecessarily prolonged the litigation and involved steps that were unnecessary or improper, this conduct could not, however, be characterized as “reprehensible, scandalous or outrageous.” However, the owner did cross the line by making unproven allegations of dishonesty and fraud. 

The Court awarded the Corporation its costs of the trial on a substantial indemnity basis. With respect to the pre-trial motions where the costs were to be determined by the trial judge, costs were awarded only on a partial indemnity basis. 

As previously stated, this owner was self-represented. While he himself did not incur any legal expenses to pursue his claim, at the end of the day, he ended up paying for a large portion of the Corporation’s legal expenses. (The decision does not quantify the exact amount that the unit owner was required to pay.) It probably would have been much less costly for him had he retained legal counsel experienced in condominium matters to act on his behalf in this matter. As the Judge stated, “this case provides a sad example of how a failure to obtain even a modest amount of timely and professional legal advice can lead to ill-advised and unnecessary litigation, with corresponding exposure to significant adverse cost awards.”

Topics:  Condominium Act, Condominiums, Legal Costs

Published In: Business Organization Updates, Business Torts Updates, Civil Remedies Updates, Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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