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October 7, 2021 - By Victor Yee

CAT Gets Amlani Wrong Again; Why Does It Matter?

In my previous article dated February 23rd 2021, I pointed out how the Condominium Authority Tribunal (the “CAT”) has misinterpreted the confusing decision from the courts in Amlani v. York Condominium Corporation No. 473, 2020 ONSC 194 (“Amlani”).  After receiving plenty of positive feedback from readers who finally understood how a condominium corporation could charge back a specific unit owner for violations without having to first obtain a court order, I was hopeful that the Amlani confusion had finally been cleared up; especially since the Superior Court itself subsequently offered some clarity on how to read Amlani in the case of O’Regan v. Carleton Condominium Corporation 169 et al, 2021 ONSC 945 (“O’Regan”).

Unfortunately, the CAT has continued to misinterpret the Amlani case.  In the CAT’s October 1st 2021 decision in Middlesex Vacant Land Condominium Corporation No. 605 v. Cui, 2021 ONCAT 91 (“Cui”), the CAT has yet again failed to understand that Amlani was confined to the specific facts in that specific case – including, most notably, the particular wording in that condominium’s Declaration.

This misinterpretation of Amlani has real-life consequences for condominiums on the ground, and for the CAT and the civil justice system as a whole.

The Defecating Dogs: Off-Leash and Barking Excessively

In Cui, the unit owner had two Shepherd dogs, weighing 170 pounds and 100 pounds.  Other residents of the condominium corporation complained that the unit owner was allowing her dogs to run off-leash on the common elements and charge other dogs, that they were barking excessively and continuously inside her garage, and that she was failing to properly clean up after their defecation.

The unit owner claimed that her dogs were not barking more than other dogs in the community and that she was being targeted by the condominiumbecause she is Asian and her spoken English is not perfect”.  The CAT found no evidence to support Ms. Cui’s allegation of unfair targeting and ruled that the condominium’s evidence was more credible, reliable, and consistent than hers (partly due to at least 1 resident having kept a specific incident log of the violations involving Ms. Cui’s dogs).[1]

Accordingly, the CAT found that Ms. Cui was in violation of the condominium’s governing documents, and ordered that she must permanently remove her 2 dogs within 30 days.

Arriving at a Just Outcome, But Making an Error of Law Along the Way

Based on the CAT’s previous decision in Peel Condominium Corporation No. 96 v. Psofimis2021 ONCAT 48 (“Psofimis”), released earlier this year (and which I discussed here), the CAT in Cui awarded the condominium with its full “pre-CAT” legal costs; namely, the $3,776.21 that the condominium spent on having warning letters sent from Management and then 2 legal enforcement letters from the condominium’s counsel.  The CAT found that there were “exceptional reasons” here to rebut the CAT’s default presumption against awarding legal costs.  Specifically, the CAT was persuaded by the condominium’s numerous efforts to notify Ms. Cui of her violations, the ample time and multiple opportunities that were given to Ms. Cui to rectify her violations, and the condo’s offer to engage in Mediation prior to commencing litigation.

However, with regards to the “in-CAT” legal costs of $17,989.41 being sought by the condo – namely, the legal costs incurred by the condominium in prosecuting its CAT Application against Ms. Cui – the CAT found that while “exceptional reasons” exist to award at least a portion of those legal fees, the $17,989.41 amount should be reduced to $4,497.35 instead.

Ultimately, the Tribunal’s decision on whether – and if so, how much – to award a party’s legal costs is subject to that individual CAT Member’s discretion.  We are not privy to all of the details in this particular CAT case, because of a Confidentiality Order that seals away certain Exhibits from the public record; Middlesex Vacant Land Condominium Corporation No. 605 v. Cui, 2021 ONCAT 90 (the “Sealing Order”).  Whatever is behind that Sealing Order, was apparently powerful enough to persuade the CAT Member in Cui to reduce the condo’s “in-CAT costs” award to only 25% of the full amount.[2]

Amlani Does Not Stand for the Proposition that a Chargeback Requires a Prior Court Order

Unfortunately, the CAT misinterpreted the Amlani case along the path to arriving at that equitable outcome.  At para. 39 of the CAT’s Decision in Cui, the CAT Member stated that Amlani stands for the proposition that a condominium corporation cannot add compliance or enforcement costs to the common expenses for a unit owner (a “chargeback”) without first obtaining a court order authorizing it to do so.  Notably, the CAT’s Decision in Cui does not cite a specific paragraph or portion of the Amlani decision – or the Divisional Court’s ruling on the appeal (2020 ONSC 5090) – to support this erroneous reading of Amlani.

In addition to the explanation already set out in my February 23rd 2021 article, I note that contrary to the CAT’s belief that compliance or enforcement costs must always fall under Section 134 of the Condominium Act (the “Act”), Section 136 of the Act specifically stipulates:

Unless this Act specifically provides the contrary, nothing in this Act restricts the remedies otherwise available to a person for the failure of another to perform a duty imposed by this Act.

Nowhere in the Act does it stipulate that compliance or enforcement costs can only be charged back to a unit owner under Section 134 of the Act.  In fact, as the courts of Ontario have held for many years, a valid chargeback can be pursued under Section 85 of the Act instead.

At para. 32 of Amlani, the Superior Court stated that Section 134(5) of the Act stands for the proposition that a condo’s legal enforcement costs cannot be charged back to the violating unit owner without a prior court order.

However, as the Superior Court has subsequently clarified in Toronto Standard Condominium Corporation No. 1724 v. Evdassin, 2021 ONSC 6271 (“Evdassin”), Section 134(5) of the Act does not stand for such a proposition.  Instead, Section 134(5) of the Act merely means that a condominium can charge back even more legal costs than what the Court has already ordered as a legal costs award after the Section 134 compliance Application has been adjudicated by the Court.  At paras. 16 to 20 of Evdassin, Justice Davies explicitly relied on the wording of the indemnity clause in that particular condominium’s Declaration to rule that the condominium properly charged back its full legal costs of $29,572.90 on top of the $11,446.82 that Justice Davies had previously ordered as a legal costs award for the condominium.

If, as per Evdassin, the condominium Declaration allows the condo to charge back the violating unit owner for “any losses, costs or damages” incurred by the condominium to enforce against his violations, then as per the Superior Court’s ruling in Italiano v. MTCC 1507 (discussed in my February 23rd 2021 article), such a chargeback for the condominium’s legal costs of enforcement is valid under Section 85(1) of the Act – even without a prior court order.

This is precisely what the O’Regan decision that followed Amlani clarified.  If the condo’s Declaration has an adequate indemnity clause that is triggered, then all the costs that are covered by that indemnity clause – which could include physical repair costs and the legal costs of enforcement – can be charged back.

Why Is Amlani So Confusing?

The confusion in Amlani may stem from the judicial discussion in both the Superior Court ruling and the Divisional Court ruling, about the 2 potential routes for a chargeback to arise, namely either:

  1. under Section 85 of the Act, as a chargeback authorized by the Act itself (e.g. Section 92(4) of the Act) or by that condominium’s Declaration (if there is an indemnity clause which is applicable to that particular situation); or
  2. under Section 134 of the Act (i.e. after a compliance Application has been adjudicated). 

In Amlani, the condominium tried to recover their legal costs of enforcement through Section 85 of the Act, even though the limited indemnity clause in YCC 473’s Declaration did not contain broad enough wording to capture the particular enforcement costs at issue.  So because the Section 85 chargeback route was not available to YCC 473 in that particular situation, the Superior Court in Amlani (and the Divisional Court on appeal) held that the only other way for YCC 473 to recover their legal costs of enforcement was to pursue a Section 134 compliance Application against the unit owner and obtain a court order first.  We agree with the rulings in Amlani, as confined to the specific facts of that specific case – the limited indemnity clause in YCC 473’s Declaration did not apply in those circumstances.

But because of Amlani’s focus on the 2nd route of Section 134, the CAT and others have been forgetting about the 1st route of Section 85.

As per para. 35 of the Superior Court’s ruling in Metropolitan Toronto Condominium Corporation No. 596 v. Best View Dining Ltd., 2018 ONSC 5058 (“Best View”), these are 2 separate routes; a condominium can recover their legal costs of enforcement under Section 85(1) of the Act, without having to go through Section 134 of the Act.[3]

As per Italiano, Section 1(1) of the Act allows a condominium’s Declaration to define what can be included in a unit owner’s “common expenses”.  If an indemnity clause in a condominium’s Declaration stipulates that a unit owner’s “common expenses” can include chargebacks for legal costs incurred by the condominium in enforcing against him, then pursuant to the Section 85 route, the condominium can levy such a chargeback onto the violating unit’s ledger of common expenses and then register a Certificate of Lien to secure same if necessary – all without a prior court order under Section 134 of the Act.

We hope that this unfortunate error in the CAT’s ruling in Cui is not reproduced further, and that the confusion surrounding Amlani can finally be put to rest.

Courts and CAT Will be Overwhelmed If Amlani is Not Interpreted Correctly

If, as per para. 41 of the CAT’s Decision in Cui, condominiums truly are required to commence a Section 134 compliance Application to obtain a court order from the Superior Court (or a CAT Application to obtain an order from the Tribunal) every single time a condominium needs to enforce against a violation and charge back the legal costs of such enforcement, then the Superior Courts in Ontario will become overwhelmed with condo litigation.  The CAT’s jurisdiction is expanding on January 1st 2022 to include noise and other nuisance disputes, but the Superior Court is still the residual forum for many condo disputes that are outside of the CAT’s limited jurisdiction.

Even with the CAT’s expanded jurisdiction into noise, odour, light, vibrations, smoke, and vapour (“NOLVSV”) issues, not even the online CAT will be able to keep up with the flood of CAT Applications if a CAT Order is indeed required before issuing every single chargeback for NOLVSV violations.  The City does not need to go to court before issuing each parking ticket – of course, the option is available to the vehicle owner to dispute the ticket in court afterwards, but a court order is not a prerequisite.  The monetary consequence of a parking ticket, like the chargeback mechanism for condos, is the first and primary method of enforcing against such day-to-day community violations.

For example, some condominiums have false fire alarms due to residents violating the no-smoking Rules, multiple times a week – sometimes multiple times a day.  These false fire alarms suddenly ring throughout the building at all times of the day and night, significantly disrupting people’s sleep and daytime meetings.  The condo must rely on the chargeback mechanism, as authorized by the modern indemnity clause(s) in the condo's Declaration, to enforce against and dissuade such disruptive behaviour.  But if the CAT is requiring every single condominium corporation in Ontario to obtain a CAT Order from them first before levying such a chargeback, as the misinterpretation of Amlani in Cui seems to imply, then the CAT will be overwhelmed with CAT Applications from now until the day that people stop violating communal rules.

 


[3] I also note that the Court’s decision in Best View was written by Justice Paul Perell, a well-respected judge of the Superior Court in Toronto who also taught real estate law – including condominium law – for many years to law school students.  Perell J. is widely seen as one of the few judges on the Superior Court bench with expertise in real estate law, and perhaps one of the only judges on the Superior Court who has taught condominium law.

 


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