Condo Law Digest – January 2017

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CIBC Mortgages Inc. v York Condominium Corporation No. 385, 2016 ONSC 8036
Decision Date: December 21, 2016

This is a decision on costs in a case I covered last month. The dispute was over whether the mortgagee or the condominium corporation should receive the proceeds from the forced sale of a unit. The amount at issue was about $100,000.

Justice Dunphy began by chiding the parties for their “excessive zeal” in disregarding the limitations he had imposed on submissions. CIBC Mortgages asked for costs of about $70,500 while YCC 385 requested that the costs award be limited to a nominal amount.

The judge awarded CIBC Mortgages costs in the amount of about $62,500. His main consideration in making this award was that CIBC Mortgages had made two previous offers to settle for about half the proceeds from the sale. He reduced the costs requested by $8000 to reflect that excessive time and energy were spent in cross-examinations and examinations of witnesses, which ended up having little use at trial. Justice Dunphy rejected YCC 385’s arguments that “innocent” unit owners should not have to foot the bill. As he said, “The unit holders elect their managers and the conduct of litigation by management is ultimately their responsibility.”

Comment: It is worth repeating the judge’s remark that, “proportionality and reasonableness ought ever to be the lodestar held in view when conducting litigation.”

2308478 ONTARIO INC. v YRCC NO. 715, 2016 ONSC 6256
Decision Date: December 9, 2016

YRCC 715 is an industrial-retail building and the applicant, Steven Torok, owns and operates a business in one of the units. In December 2014 he issued a claim against the Corporation and five directors for property damage, loss of profit, business interruption and breach of contract. In this action of April 2016 he seeks an order appointing an Administrator to manage the Corporation, saying that the current Board of Directors has not acted in the best interest of the corporation. In particular, they had not maintained an adequate reserve fund, had neglected to do maintenance, and had not addressed some parking issues.

While the Board spent almost no money on repairs or maintenance from 2012-14, they engaged a new property management company in Fall 2013, did significant roof repairs in 2014-15, and retained Ontario Parking Authority to tag illegally parked vehicles. Justice Dow agreed with Mr. Torok that it was his 2014 application to the court that prodded the Corporation to fulfill their responsibilities. However, given that self-governance is the norm and the appointment of an Administrator is supposed to be an exception, the judge dismissed the application.

Comment: In an unusual move, Justice Dow awarded costs of $2500 to Mr. Torok, although his application was unsuccessful.

Bastien v Egalite, Collings, Langlois, Bliss and Chinkiwsky 2016 ONSC 7652
Decision Date: December 2, 2016

The plaintiffs purchased a condominium unit with the assistance of Mr. Egalite, a real estate lawyer. When the sale closed on January 3, 2014, the plaintiffs found extensive water damage in the unit due to a burst pipe and advised the vendors that they wanted to rescind (cancel) the purchase. The vendors refused and offered either a monetary settlement or to carry out the required repairs.  Mr. Egalite attempted to negotiate a rescission of the purchase but was unsuccessful. In February 2014 the plaintiffs retained Mr. Collings, a litigation lawyer, to make claims against the vendors, Mr. Egalite, and an insurance company. The plaintiffs failed to pay Mr. Collings’ invoices and so he withdrew. In July 2014 the plaintiffs retained another lawyer, Mr. Langlois, to assist them. When the plaintiffs did not give him further instructions, Mr. Langlois returned to them the unspent portion of their $1000 retainer and closed the file.

The plaintiffs allege that all three lawyers were negligent because they failed to take steps to rescind the condominium purchase. They have claimed $700,000 against Mr. Egalite, $500,000 against Mr. Collings and $300,000 against Mr. Langlois. These three defendants brought a motion to dismiss the action on the grounds that the claim has no chance of success. They argue that the plaintiffs have not offered any facts to support their allegations, and that they have not suffered any damages because of the defendants’ action or inaction. Justice R. Smith agreed and dismissed the action as frivolous and vexatious.

Comment: In his ruling Justice Smith provides an interesting discussion of the legal principles involved in dismissing an action as frivolous or an abuse of process.

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Posted in Condo Disputes.

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