There has been much ado about the recent condo matter involving an expensive parrot. While the case of
Metropolitan Toronto Condominium Corp. No. 744 v. Bazilinsky did involve a unit owner’s surreptitious maintenance of a pet parrot in violation of the condominium’s no-pet rules, the bird itself was no more than a red herring.
The Bazilinsky case really has nothing to do with parrots, at least in the sense that the principles dealt with in the case could have applied equally to any condominium board’s efforts to enforce compliance with any of the provisions of its declaration, bylaws, rules or other similar agreements.
In this particular case, the condominium’s rules prohibited pets and the unit owner violated them by keeping a parrot, but the case could easily have been about balcony barbecues, outdoor storage, illegal parking or any of the plethora of things that can fall under by a condominium’s declaration, rules, bylaws, and agreements.
What the Bazilinsky case does affect, perhaps profoundly, is the specific cost-recovery powers given to condominium corporations under s. 134(5) of the Condominium Act.
It provides an extraordinary remedy to condominium corporations: “If a corporation obtains an award of damages or costs in an order made against an owner or occupier of a unit, the damages or costs, together with any additional actual costs to the corporation in obtaining the order, shall be added to the common expenses for the unit and the corporation may specify a time for payment by the owner of the unit.”
It follows naturally that if the condominium corporation adds the damages as well as the additional actual costs to the common expenses and these amounts go unpaid, it then has a lien against the unit under s. 85 of the Condominium Act.
The purpose of s. 134(5) is to protect condominium corporations from the high costs of litigating against the few wayward unit owners who chronically or blatantly refuse to abide by the act and the terms of their declaration, bylaws, rules, and agreements.
Introduced in 2001 as part of sweeping reforms to the Condominium Act at the time, s. 134(5) was intended to ensure that condominium corporations would be able to add their additional actual costs to the bill payable and then secure a lien if the unit owner doesn’t pay.
Typically in litigation, even if a party is victorious, it only gets to recover a relatively modest portion of the actual legal costs incurred.
Rather than suffering the indignity and costs of actually winning a lawsuit against a non-compliant unit owner and then finding itself still financially prejudiced by having to pay for the legal fees and other litigation costs, s. 134(5) allows condominium corporations to recoup all of their actual costs incurred in dutifully enforcing their declaration, bylaws, rules, and agreements.
The Bazilinsky case seems, at first blush, to eviscerate the operative provisions of s. 134(5). In Bazilinsky, the condominium corporation incurred total actual costs of just over $40,000 to obtain a court order against the unit owner forcing the removal of the parrot.
However, a judge in Ontario’s Superior Court reassessed thereasonable costs in the litigation to be about $6,500.
The Bazilinsky case isn’t the first time the courts have grappled with and pared back the potentially extraordinary scope of s. 134(5). In the 2005 decision in
Metropolitan Toronto Condominium Corp. No. 1385 v. Skyline Executive Properties Inc., the Ontario Court of Appeal considered s. 134(5) and concluded that the additional costs a corporation could add to common expenses for the unit were limited to those up to and including the actual court order.
At the same time, it expressly excluded additional costs incurred by the condominium corporation in then trying to enforce the order.
In a 2011 case, Toronto Standard Condominium Corp. No. 1633 v. Baghai Developments Ltd. and Rabba Fine Foods Inc., the court found a unit owner liable for having breached the corporation’s declaration, bylaws, and rules by taking up sidewalk space intended to be open common elements.
The Ontario Superior Court considered s. 134(5) and concluded the condominium corporation was entitled to all of its additional actual costs required to obtain the court order but then went on to say the provision wouldn’t then allow it to go on a legal rampage and incur wildly outrageous legal bills.
As a result, the court exercised its discretion to drastically reduce the legal fees the condominium corporation could charge back to the unit as a common expense in a reflection of what it deemed to be the disproportionate and unreasonable legal fees incurred as part of a scorched-earth litigation strategy.
The Superior Court reached a similar conclusion in the 2010 case of
Peel Condominium Corp. No. 452 v. Jaworowski.
It’s not really clear how the judge in the Bazilinsky case came to her conclusion. On the one hand, she cited the rule in Skyline implying that the lion’s share of the additional actual costs did in fact relate to enforcement efforts following the court order.
But it’s hard to reconcile this with the facts in the case. On the other hand, while she also concluded that the value of the work performed on a solicitor and client basis “is no more than $6,500,” this, too, is hard to reconcile with the facts.
There’s no real discussion in Bazilinsky of a deliberate scorched-earth litigation strategy or any of the other signs of overly aggressive actions that the judges in Rabba and Jaworowski carefully laid out as the grounds for their decisions.
In the end, neither Bazilinsky nor Rabba is likely to be as disastrous as some condominium managers and boards might think. These cases don’t wholly eviscerate s. 134(5) and replace it with a judge’s discretion as to what might be fair under the circumstances.
In fact, both of these cases actually affirm, at least in principle, that in addition to whatever the court may otherwise award by way of damages or costs, the condominium corporation can still charge and lien for legitimate additional actual costs as long as it incurred them in order to obtain a compliance order against the offending unit owner and not in enforcing it.
Furthermore, there are many other cases where condominium corporations are indeed successful in remaining financially whole because of s. 134(5) but, of course, these successful applications rarely make the news.
These two new cases do, however, warn condominium managers and their boards that they can’t undertake such litigation so recklessly and aggressively as to prompt the courts to deem their tactics as part of a scorched-earth strategy giving rise to unreasonable and disproportionate legal bills.
Jeffrey W. Lem is a partner in the real estate group at Miller Thomson LLP. His e-mail address is [email protected].
