Charging Back Costs To An Offending Unit: Superior Court Clarifies Amlani, But Not Before Condo Authority Tribunal Mis-Applies It
As many in the industry are already aware, last year’s case of Amlani v. York Condominium Corporation No. 473, 2020 ONSC 194 (“Amlani”) has caused a great deal of confusion and uncertainty in condominium corporations across Ontario – especially after the Divisional Court of Ontario upheld the Superior Court’s ruling a few months later (2020 ONSC 5090).
The confusion caused by Amlani has also trickled into the Condominium Authority of Ontario (the “CAO”) and the erroneous advice posted on their official CAO website. It has even led the Condominium Authority Tribunal of Ontario (the “CAT”) to issue a decision that does not take into account the state of the law on chargebacks. The CAO, and apparently now even the CAT, unfortunately believe – as do some unit owners in this province – that Amlani stands for the proposition that a condominium can never charge back a particular unit owner for its legal costs of enforcement without first obtaining a Court Order against the owner.
While we appreciate that the CAO does not explicitly intend to provide legal advice, we strongly suggest that readers check with their own legal counsel to verify that the CAO’s general guidance applies to their specific situation.
[UPDATE (March 16th 2021): The CAO's public website advice about "Chargebacks" has now been revised/corrected, after this article was published by Elia Associates on February 23rd 2021.]
Not only is the CAO and the CAT’s interpretation of Amlani incorrect in our view, but it also leads to the practical consequence that condominiums will now be pre-emptively commencing many more Compliance Applications in Superior Court against unit owners, in order to avoid the perceived Amlani problem.
The Superior Courts in both Toronto and Ottawa have now clarified that Amlani does not stand for the proposition that a condominium can never charge back a unit owner without a Court Order. Unfortunately, the CAT has ignored this case law from the Superior Court.
What Happened in Amlani Regarding Chargebacks?
In Amlani, the condominium tried to add the legal costs of its enforcement against a smoking unit owner to the common expenses owed by that owner’s unit (a “chargeback”). However, the condo’s Declaration at issue in Amlani had an outdated “limited indemnity” type of clause, which read:
"Each owner shall indemnify and save harmless the Corporation from and against any loss, cost, damage, injury or liability whatsoever which the Corporation may suffer or incur resulting from or caused by an act or omission of such owner, […] to or with respect to the common elements and/or all other units except for any loss, costs, damages, injury or liability caused by an insured (as defined in any policy or policies of Insurance) and insured against by the Corporation.” [emphasis added]
This type of limited indemnity clause is primarily meant to capture incidents of physical damage caused by a particular unit owner; for example, if a particular unit owner rides his skateboard through the hallway and physically damages the interior wall.
Due to the specific wording of this condo’s limited indemnity clause, and because the smoking was only a non-physical contravention of the condo’s no-smoking Rule and not physical damage “to or with respect to the common elements and/or all other units”, the Superior Court in Amlani denied the condo’s attempt to charge back the legal costs of enforcement against the smoking owner’s unit.
When Can a Condo Charge Back for Costs of Enforcement?
Condominium corporations in Ontario not only differ in type, size, location, and demographics, but also in the way that their Declarations are worded. Many condominium corporations in this province – especially newer ones registered after 2001 – will have more “modern” Declarations with more expansive indemnity clauses in them.
One common type of broader, more expansive indemnity clause found in newer Declarations tends to read along the lines of:
“Each Owner shall pay to the Corporation his or her proportionate share of the Common Expenses and the assessment and collection of contributions toward Common Expenses may be regulated by the Board pursuant to the By-laws. In addition to the foregoing, any losses, costs or damages incurred by the Corporation by reason of a breach of any provision of this Declaration, or in any By-laws or Rules in force from time to time by any Owner, or by such Owner's family members, tenants and/or their employees and/or their respective invitees or licensees, or as a result of any breach or non-compliance with any Applicable Zoning By-laws, or other laws or regulations, shall be borne and paid for by such Owner and may be recovered by the Corporation against such Owner in the same manner as Common Expenses.” [emphasis added]
Another wider-drafted indemnity clause in newer Declarations provides:
“All costs, charges and expenses including solicitors’ costs, on the basis of costs between a solicitor and the solicitor’s own client, incurred by the Corporation in enforcing its rights against an owner, arising from the Act, the Declaration, the By-Laws, the Rules or otherwise, including the costs of bringing an application under Section 134 of the Act, shall be payable by the Owner to the Corporation. All monies, interests and costs payable by an Owner to the Corporation may be collected as additional Common Expense payments and shall be recoverable as such.”
Both of these newer indemnity clauses do not contain the restrictive wording that was at issue in Amlani. In Amlani, the condominium’s indemnification provision in the Declaration was restricted to any loss/cost/damage/injury/liability that arose “to or with respect to the common elements and/or all other units”. Instead, these newer indemnity clauses allow the condominium to charge back for any enforcement costs incurred due to a violation of the condominium’s governing documents or the Condominium Act, 1998, S.O. 1998, c. 19 (the “Act”).
More than a decade ago, the Ontario Superior Court of Justice ruled that a condominium corporation can charge back its enforcement costs to a particular unit’s common expenses, if the Declaration contained an indemnity clause that allowed for it. In Italiano v. Toronto Standard Condominium Corp. No. 1507,  O.J. No. 2642 (“Italiano”), the Superior Court held that the wording of the Declaration in that condominium permitted the Board to charge back its enforcement costs to the noisy unit. In Italiano, the condominium’s Declaration contained an indemnity clause that stipulated:
“In the event that the Owner of such Residential Unit fails to abate the noise, the Board shall take such steps as shall be necessary to abate the noise [...] and the Owner shall be liable to the corporation for all expenses incurred by the Corporation in abating the noise, which expenses are to include reasonable solicitor’s fees on a solicitor and his or her own client basis and shall be deemed to be additional contributions to Common Expenses and recoverable as such.” [emphasis added]
The Superior Court in Italiano also specified that Section 134(5) of the Act “only applies to court orders”. Section 134(5) of the Act stipulates:
“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.” [emphasis added]
Section 134(5) of the Act does not prohibit a condominium from charging back a particular unit without a court order, as the CAO’s official website erroneously states. Section 134(5) of the Act merely allows a condo, if the condominium has successfully obtained a Section 134 Compliance Order from the Superior Court, to charge back the condominium’s legal costs in pursuing that Compliance Application onto the offending unit’s common expenses. Section 134(5) does not stipulate that this is the only way in which a condominium can charge back.
Amlani’s Misinterpretation by Self-Represented Unit Owners
One of the first cases to subsequently consider the impact of Amlani on the Ontario condominium industry was by Justice Myers. In TSCC 1466 v. Weinstein, 2020 ONSC 5269 (“Weinstein”), His Honour was dealing with a self-represented unit owner who claimed that the Divisional Court’s ruling in Amlani meant that the condominium’s charge back and consequent Certificate of Lien registered on title to his unit, for the condominium’s legal costs of enforcing its right of entry into his unit to repair plumbing, was unlawful since no Compliance Order had been obtained from the Superior Court permitting the charge back. Justice Myers deftly advised the self-represented unit owner that he may be misinterpreting the Amlani ruling and mis-applying it to his own case.
This year, Amlani was raised again by a self-represented unit owner, this time in Ottawa. In O’Regan v. Carleton Condominium Corporation 169 et al, 2021 ONSC 945 (“O’Regan”), the unit owner argued that the condominium was required to obtain a Compliance Order under Section 134 of the Act before it could charge back the costs of the condominium’s repair work to his unit. Mr. O’Regan had left his eggs on the stove unattended, and the condominium consequently charged back its costs of remediating the smoke that resulted.
The Ontario Superior Court of Justice held in O’Regan that:
“ The plaintiff contends that the Corporation was not entitled to charge him for remediation work under that section because it was not a “common expense”. He argues that the only expenses that can be charged under section 85 are an owner’s regular monthly fees, which cover utilities and general upkeep. Mr. O’Regan argues that the Corporation should have first obtained a compliance order under s. 134 of the Act. Any damages or costs awarded to the Corporation following a successful s. 134 application could then be added as common expenses and liened as such. […]
 […] I do not accept these arguments.
 The Corporation was not required to apply for a compliance order before charging for the cost of the remedial work, because section 134 does not apply in these circumstances. Section 134 of the Act applies to “compliance orders”, which are orders to enforce “compliance with any provision of this Act, the declaration, the by-laws […]”. Here, the Corporation does not require an order to force Mr. O’Regan to comply with the Act, the condominium’s declaration or any of its by-laws. The Corporation charged Mr. O’Regan for certain expenses it incurred as a result of Mr. O’Regan leaving his eggs burning on the stove. As will be explained below, these expenses fall within the definition of “common expenses” under the Act and the condominium’s declaration, and are accordingly subject to the automatic lien provisions under s. 85.
 Moreover, as this Court has previously held, a Court Order is not always required to back charge for amounts that do not relate to regular monthly common expenses. There are many provisions in the Act which authorize the collection of certain amounts as “common expenses” without a Court order.” [emphasis added]
The Superior Court even cited the Amlani case as the legal basis for its denial of the self-represented unit owner’s arguments.
Interestingly, the Ottawa-based condominium lawyers who successfully argued the Amlani case in favour of the smoking unit owner, were also the same condominium lawyers who then had the Superior Court in O’Regan distinguish away from the self-represented unit owner’s reliance on the Amlani precedent. It might appear at first glance that those condominium lawyers were able to “bake their cake and eat it too” by using the Amlani principle in favour of a charged-back unit owner and then against a charged-back unit owner, especially since the Ottawa condo at issue in O’Regan had the same “limited indemnity” type of clause in its Declaration. However, the key difference in O’Regan was that the burning eggs on the stove actually did cause physical smoke odours to damage the common elements (namely, the hallway walls, ceiling, and floor). Accordingly, the “limited indemnity” type of clause in that Ottawa condominium’s Declaration did apply, and was properly interpreted by the Court in O’Regan.
Thus, it appears that whether a condo can charge back a particular unit for its enforcement costs will depend on:
- What type of indemnity clause is in the Declaration?
- How did the costs arise, and does that fit within the wording of the indemnity clause?
Unfortunately, the CAO and the CAT have, incorrectly in our view, taken the overly-broad position that no condo whatsoever, under any circumstances, is allowed to charge back its enforcement costs to the offending unit without first obtaining a Court Order.
The CAO’s Advice on its Website regarding Chargebacks
As of the date of this writing, the CAO’s official website contains an article about “Chargebacks” that says:
“Your condo corporation may attempt to add (in the form of a chargeback) legal or enforcement costs to a unit owner’s common expenses fees through the indemnity provision in the condo corporation’s declaration. However, it is important to remember that under section 134 (5) of the Condo Act, a court order is required for legal and enforcement costs to be added to a unit owner’s common expenses and recovered through a lien.” [emphasis added]
The CAO then goes on to cite the Superior Court’s ruling in Amlani as the case law supporting this proposition.
However, in Amlani, the condominium was not able to charge back the smoking owner’s unit for its legal costs of enforcement, because of the limited indemnity wording in its Declaration. The Superior Court in Amlani explicitly ruled, that due to the limited wording of the indemnity clause at issue: “The indemnity applies only with respect to costs the Corporation incurs arising out of acts by owners “to or with respect to the common elements and/or all other units.” There was no act of Mr. Amlani to the common elements or to all other units.” Accordingly, the Superior Court could not allow the condominium in Amlani to charge back its legal costs under the typical lien provisions set out in Section 85 of the Act.
Pursuant to Italiano, a Declaration can authorize a condominium to add its legal and enforcement costs to a particular unit’s common expense contributions, if the condominium’s Declaration contains a wide-enough indemnity that captures the specific costs at issue. In O’Regan, the Superior Court allowed the chargeback under Section 85 of the Act, instead of under Section 134 of the Act, because the damage caused by the frying eggs was caught within that Ottawa condominium Declaration’s limited indemnity wording of “to or with respect to the common elements”.
O’Regan also pointed out that in Amlani, the Divisional Court stated that, “There are numerous sections allowing condominium corporations to charge back expenses to an owner and to have a lien if the owner defaults, without the requirement of an order.” So even under Amlani itself, a Court Order is not always required for legal and enforcement costs to be charged back to a particular unit, contrary to the CAO’s advice on its official website. Rather, the issue of whether a chargeback can be levied is highly dependent on the wording of the indemnity clause(s) found in that particular condominium’s Declaration.
The CAO cannot give legal advice, and it is unfortunate that its official website attempts to do so, which is enabling conflict to escalate rather than assisting with managing and defusing conflict. Based on this overly-broad interpretation of Amlani to any and all circumstances, parties may have taken mistaken positions about the law.
This issue was compounded by the fact that for several months after Amlani was decided by the Divisional Court, the Superior Court’s original ruling in Amlani was not publicly available on CanLII (CanLII does not contain every decision in Canada). Only the Divisional Court’s ruling in Amlani was uploaded to CanLII, and the Divisional Court’s ruling did not reproduce the actual text of the limited indemnity clause at issue – whereas the Superior Court’s ruling did. A reading of the actual limited indemnity clause at issue in Amlani could have helped provide more clarity to everyone, and made it better known that the courts' rulings in Amlani turned on the wording of that particular condominium’s Declaration.
The CAT’s Ruling in Rahman
[UPDATE (March 11th 2021): An Application for Judicial Review has been filed by the condominium corporation with the Divisional Court of Ontario for the CAT case of Rahman v. Peel Standard Condominium Corporation No. 779.]
On October 1st 2020, the CAT’s jurisdiction expanded to includes disputes relating to parking, pets, vehicles, and storage, subject to certain exceptions. In the very 1st publicly-reported case by the CAT under its newly-expanded jurisdiction, the CAT dealt with a dispute where a self-represented unit owner was parking his vehicle in the condominium’s aboveground parking lot, despite owning 2 separately-deeded Parking Units in the underground parking garage. The unit owner brought an Application to the CAT against the condominium, regarding this parking dispute (as well as bringing an Action in Superior Court, bringing an Application to the Human Rights Tribunal of Ontario, threatening an Action in the Small Claims Court, threatening to file a complaint against the condominium’s lawyer with the Law Society of Ontario, and repeatedly urging the Peel Regional Police to file criminal charges against the condominium’s lawyer).
At first, the condominium brought a Motion to Dismiss the CAT Application due to the dispute being outside of the CAT’s newly-expanded jurisdiction. Pursuant to Section 1(3) of O. Reg. 179/17 (the “CAT Regulation”) made under the Act, the CAT’s expanded jurisdiction into parking disputes does not apply where the dispute “is also with respect to section 117 of the Act”. As per the relevant case law from the Supreme Court of Canada and the Ontario Court of Appeal, the specific wording used in the CAT Regulation here means that this Section 117 “carve-out” exception to the CAT’s jurisdiction should be given the widest possible scope.
Here, the very first enforcement letter from the condominium to this unit owner was regarding both his harassment of the Condominium Manager and his parking in the aboveground parking lot. The courts of Ontario have repeatedly held that a unit owner’s harassment of a Condominium Manager constitutes workplace harassment, and requires the condominium to take action to prevent this breach of Section 117 of the Act because workplace harassment causes psychological injury. Accordingly, this unit owner’s parking dispute was always “with respect to section 117 of the Act”, and therefore the unit owner’s own behaviour from the very beginning took this parking dispute outside of the CAT’s jurisdiction.
However, in Rahman v. Peel Standard Condominium Corporation No. 779, 2021 ONCAT 1 (the “Motion Decision”), the CAT Vice-Chair denied the condominium’s Motion to Dismiss, and held that the widely-drafted Section 117 carve-out did not apply to the parking dispute. In our view – and subject to a potential appeal by the condominium to the Divisional Court of Ontario – this Motion Decision was incorrect.
A potential issue was also discovered which caused the condominium to bring a Motion for Recusal, and led to the CAT Vice-Chair recusing himself from the file.
The final Decision on the main Application was subsequently issued by another CAT Member, and has now been published as Rahman v. Peel Standard Condominium Corporation No. 779, 2021 ONCAT 13 (“Rahman”). In our view, this final Decision in Rahman (which again is subject to a potential appeal) has further underscored the engagement of the Section 117 carve-out in this case.
The CAT’s final Decision in Rahman contradicts the Motion Decision, where at paragraph 14, the CAT Vice-Chair advised the unit owner to perhaps avoid “express[ing] his concern for personal safety in a way that has allowed the Respondent to suggest this connection” between Section 117 of the Act and his parking dispute, since such a connection would trigger the Section 117 carve-out and take the dispute outside of the CAT’s jurisdiction. The CAT’s final Decision in Rahman made it blatantly clear that the Section 117 carve-out should apply to this CAT Application.
If, as per the final Decision in Rahman, there were indeed “mutual claims of harassment” [paras. 6 and 33] and “PSCC779 has engaged in harassment and has caused Mr. Rahman understandable stress and anxiety” [para. 54], then Section 117 of the Act is indeed engaged and therefore this dispute is outside of the CAT’s jurisdiction. As the courts of Ontario have repeatedly held, harassment of or by a unit owner in a condominium setting can constitute a “dangerous condition” which triggers Section 117 of the Act. The very fact that the CAT Member ordered $1,500 compensation to the unit owner for his “stress and anxiety” [para. 53] indicates that indeed, psychological injury is at issue here in this dispute and therefore, the Section 117 carve-out is engaged.
Even on the merits of the CAT Application however, it is our view – again, subject to a potential appeal by our client to the Divisional Court of Ontario – that the Decision in Rahman was incorrect.
For example, it is clear from the factual history of the case that in seeking to park his vehicle in the aboveground accessible parking spaces, the unit owner is seeking disability-related accommodation under the Ontario Human Rights Code, R.S.O. 1990, c. H.19 (the “Code”).
Under the Code, a unit owner must provide sufficient medical evidence to support their disability-related needs, pursuant to the precedent cases from the Ontario Superior Court of Justice in Waterloo North Condominium Corp. No. 186 v. Weidner, 2003 CanLII 44549 (“Weidner”) and Simcoe Condominium Corporation No. 89 v. Dominelli, 2015 ONSC 3661 (“Dominelli”). We also note that Dominelli was subsequently cited with approval by the Human Rights Tribunal of Ontario (the “HRTO”) in Bottiglia v. Ottawa Catholic School Board, 2015 HRTO 1178 (“Bottiglia”), which itself was affirmed on appeal by a unanimous panel of the Divisional Court of Ontario (2017 ONSC 2517).
However, the CAT held that none of the human rights case law applied here, and therefore none of the above-cited case law applying the Code to condominium corporations mattered for its Decision. This also conveniently allowed the Decision in Rahman to sidestep the HRTO’s ruling in Taite v. Carleton Condominium Corporation No. 91, 2014 HRTO 165 (“Taite”), where the HRTO held that the mere evidence of a government-issued accessible parking permit was insufficient for the purposes of finding that a condominium unit owner was entitled to disability-related parking accommodations.
The involvement of human rights law in this dispute was even further clarified by the unit owner himself, nearly a week before the Rahman decision was released by the CAT. After the written submissions in the CAT Stage 3 Hearing had concluded, the HRTO served a Notice of Application that was filed by the unit owner in 2020 against the condominium corporation, based on the same facts and the same communications at issue in the unit owner’s CAT Application. The condominium offered to provide a copy of the HRTO-served Notice of Application to the CAT Member, but the CAT declined to receive a copy of same. In our view, the HRTO Notice of Application would have undermined the CAT Member’s overall argument that this unit owner had not been seeking human rights accommodation under the Code and therefore human rights law did not apply. Instead, a few days later, the CAT simply released its Decision in Rahman on February 16th 2021.
Finally, contrary to what the Decision in Rahman says, the condominium corporation did not rely on the Amlani case [para. 43] to argue that the condo was authorized to charge back its legal costs of enforcement onto this owner’s unit. Instead, it was the unit owner himself who raised Amlani – just like the self-represented unit owners did in Weinstein and O’Regan, as discussed above. In fact, the condominium subsequently brought a Motion for Correction/Clarification under Rule 43 of the CAT’s Rules of Practice, seeking to have the CAT’s drafting error in paragraph 43 clarified; but the CAT denied same.
In the condominium's main submissions to the CAT during the Stage 3 Hearing, the condo explicitly distinguished from Amlani, and emphasized that the three (3) indemnity clauses in the condo's more modern Declaration were not as narrowly-drafted as the single limited-indemnity clause at issue in Amlani.
Article 2.2 of the condo's Declaration at issue in Rahman explicitly states:
“Each Owner […] shall pay to the Corporation its Proportionate Share of the Common Expenses […] In addition to the foregoing, any losses, costs or damages incurred by the Corporation by reason of a breach of any rules and regulations of the Corporation in force from time to time by any Owner […] shall be borne and paid for by such Owner, and may be recovered by the Corporation against such Owner in the same manner as Common Expenses.” [emphasis added]
Article 6.1 of the Declaration provides:
“Each Owner shall indemnify and save harmless and be liable to the Corporation and to every other Unit Owner, for all damages […] as a result of any breach of the Act, the Declaration, the By-laws or the Rules by the Owner” [emphasis added].
Article 6.3 of the Declaration also stipulates:
“All costs, charges and expenses including solicitors’ costs, on the basis of costs between a solicitor and the solicitor’s own client, incurred by the Corporation in enforcing its rights against an owner, arising from the Act, the Declaration, the By-Laws, the Rules or otherwise, including the costs of bringing an application under Section 134 of the Act, shall be payable by the Owner to the Corporation. All monies, interests and costs payable by an Owner to the Corporation may be collected as additional Common Expense payments and shall be recoverable as such.” [emphasis added]
Despite these 3 indemnity clauses in the Declaration not containing the same limited indemnity language as was at issue in Amlani, the CAT dismissed these clauses as merely “deft wording” [para. 44]. The CAT found, incorrectly in our view, that Amlani stood for the unwavering proposition that the condominium “could not add these costs to his common expenses without a court order as required under subsection 134(5) of the Act” [para. 46]. This is yet another example of the Amlani decision causing confusion in the condominium industry – even amongst the entities that are supposed to specialize in condominium issues.
Going Forward: More Balance is Needed
Condominiums and unit owners alike should be concerned about the CAO’s “legal” advice on its official website about chargebacks, and that the principles of condominium law and human rights law are not being followed by the CAT.
In a common law system like in Ontario, the rule of law requires that existing precedent and stare decisis to be followed. Previous case law, whether from a higher court or from an older specialized Tribunal like the HRTO, should not be entirely disregarded.
The overall purpose of this article is not to unduly criticize the CAT. We recognize that the arrival of the CAT is meant to signal a shift towards cost-effective conflict resolution systems based on evidence and correct legal analysis. We also recognize that the CAT is still in its early infancy as a wholly-online Tribunal, especially with the October 1st 2020 expansion of jurisdiction amidst the ongoing COVID-19 pandemic. However, we are concerned that in pushing all or most condominium disputes into the CAT’s jurisdiction, the rule of law and the role of precedent is getting lost in the shuffle.
The purpose of this article is to serve as a wake-up call to everyone involved in the condominium industry – whether Board members, Condominium Managers, or individual unit owners – that the rule of law is in danger of being eroded by misunderstandings and widespread confusion in this niche area of practice.
We are deeply concerned that the balanced approach necessary to fair decision-making is being disregarded by CAT Members in favour of a predisposition that leans in favour of an individual complainant at the expense of the collective community, with the consequent result being that CAT Members may be starting from a default presumption that “the customer is always right”.
As the Amlani saga has shown to date, and is likely to continue demonstrating into the future, condominium law is much more nuanced than that.
[DISCLAIMER: CAT Member Marc Bhalla is a Mediator, an Arbitrator, and a Senior Law Clerk at Elia Associates. He is not a lawyer or advocate for any one side in any of the private Mediations or Arbitrations that he presides over. Pursuant to the internal firewall established at our firm between our law practice and his role as a CAT Member (as well as between our law practice and his separate role as a private Mediator/Arbitrator), CAT Member Bhalla has not been apprised of the contents of this article nor did he provide any input into same. The comments and opinions expressed in this article are solely that of the author and Elia Associates, save and except for CAT Member Bhalla.]
All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.
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