Landmark Decision: No More Liens for En- forcement Costs, and the Duty to Negotiate in Good Faith - by Laura Glithero, Director, & Stephanie Sutherland
owner’s common expenses and lien for enforcement costs without a Supe- rior Court order. The Judge found that section 134 of the Act made it clear that those enforcement costs could only be added to common expenses if a court enforcement order had been made, and that any indemnity provi- sion in the Declaration was contradic- tory to the Act. As the Act would rule over the Declaration, the provision in the Declaration was not valid. Specifi- cally, the Judge found that the condo’s interpretation of their own indemnity provision in the Declaration was “unreasonable”. In our view, the condo industry in On- tario will need to carefully consider the risks of charging back the legal costs incurred for enforcement matters. Oppression – Duty to Negotiate in Good Faith In addition to the court’s finding above, the larger issue dealt with in this decision was the condo Board’s failure to comply with its duty to nego- tiate in good faith. The Court noted that, in this case, the unit owners had made all efforts to address and resolve the issue, including requesting to meet with the condo Board and neighbour- ing unit owners to discuss solutions; retaining their own engineer to come up with solutions to smoke and odour transfer; and even temporarily moving out of the unit so that there was no smoking in the unit while the matter was (hopefully) being resolved. Despite the unit owners’ efforts, the condo Board: refused to meet with the owners; demanded immediate cessa- tion of the smoking (despite there not, at the time, being a non-smoking pro- vision in the condo’s documents); ap-
The Ontario Superior Court of Jus- tice’s recent decision in the case of Amlani v. York Condominium Corporation No. 473 is a landmark decision for the Ontario condominium industry. The facts in Amlani are lengthy, but briefly, the unit owner was the subject of nui- sance complaints about smoking in the unit. The parties participated in media- tion, unsuccessfully, and the condo ultimately charged the unit owner over $25,000 in legal fees related to the nui- sance issue. The unit owner successful- ly brought an oppression claim against the condo and the board was found to have not acted in good faith. As a re- sult, not only was the lien discharged, but the owner received damages for oppression. There are two areas in the decision that we think condo boards and man- agers should be aware of: (1) whether/ when a condo can lien for pre- litigation enforcement costs or, in fact, add legal costs for compliance matters to the common expenses of a unit owner, and (2) the duty of a condo’s Board of Directors to negotiate in good faith when it comes to enforce- ment matters. Adding Legal Fees to Common Ex- penses and Liening for Non-payment The condo argued that it was entitled to add its legal costs to the owner’s common expenses and lien for en- forcement costs under section 85 of the Condominium Act, 1998 (the “Act”). It argued that the condo was entitled to do so because of an indemnity clause in its Declaration. The Court found that the condo could not add the legal costs for pre- litigation compliance matters to an
Laura Glithero, JD is a partner with Cohen High- ley LLP in London and Stephanie Sutherland is an associate in our Kitche- ner Office. Cohen Highley LLP has offices in Lon- don, Kitchener, Chatham, Sarnia and Stratford. Laura and Stephanie provide risk management and regulato- ry compliance advice to condominium corpora- tions, unit owners, and property management companies.
8 — 2019/2020 - 4
Made with FlippingBook flipbook maker