Legal Blog

Cheap

Mediation and arbitration provisions were added to the Condominium Act, 1998. Presumably, the purpose of this was to make resolution of disputes cheaper for condominium corporations and their unit owners. However, not all disputes will be resolved cheaply. One example is found in Italiano v. TSCC No. 1507 [2008] O.J. No. 2642, a 2008 decision of the Ontario Superior Court of Justice.

Dispute

The unit owner moved into his unit in November 2006. Before moving in, but after receiving permission from the condo, he installed hardwood laminate flooring.

Shortly after the owner took occupancy, the condo received noise complaints from the neighbouring unit and the unit immediately below. In January 2007, the condo sent a letter of complaint to, and met with, the owner. During the next four months, the condo’s security attended on several occasions in response to complaints and made two reports confirming that the sound from the unit was “loud”.

In February 2007, the condo referred the matter to its legal counsel, who sent the owner a cease and desist letter. The owner requested the condo to test the acoustics of the materials between the unit and the neighbouring unit; the condo rejected this request.

The condo referred the matter to mediation in May 2007. The owner did not attend – on the (bad?) advice from his lawyer. The condo then submitted the dispute to arbitration.

In September 2007, the owner requested the arbitrator to allow him to obtain an expert to investigate the common element walls. The arbitrator ordered an independent acoustical engineer to report to him on the walls – at the owner’s expense. The expert tested the walls and reported that the sound transmission materials met Code, although barely.

Result

The arbitration took 4 days. The arbitrator found that:

1.   The unit was a frequent source of noise that was annoying and disrupting other occupants.

2.   This noise was generated at all hours of the night and day and was in callous disregard of the other occupants.

3.   The condo had made every reasonable effort to encourage the owner to comply with the condo’s declaration and rules regarding noise before resorting to the extreme measure of an arbitration. Further, the condo made useful suggestions as to how the owner might resolve the problem.

Consequently, the arbitrator declared that the owner had breached the declaration and rules regarding noise emanation; ordered that the owner comply with them; ordered that the owner pay the substantial indemnity costs of the arbitration, including the arbitrator’s fees; and ordered that all of the costs be collected in the same manner as common expenses.

The arbitrator entertained submissions as to the quantum of costs. The owner’s counsel refused to make submissions because, he alleged, the arbitrator was functus. Why he took this position is beyond us. Conversely, the condo was quite happy to make submissions. The arbitrator fixed the costs at $39,000 for the condo’s counsel, $7,000 for disbursements, and $35,800.00 for the arbitrator’s fees. The total award was $81,800.00. This is not what we would call cheap.

The owner was not happy with the result; he moved for leave to appeal the decision to the court on a matter of law.

Appeal

The owner had numerous grounds for appeal. For most of these, the judge refused to grant leave to appeal because they were not matters of law only; some were matters of fact and some were matters of mixed law and fact. For others, the judge granted leave to appeal and then dismissed the appeal. For all of them, the judge agreed with the arbitrator’s decision. Some of the grounds follow:

1.   The arbitrator used a subjective, rather than an objective, standard to determine whether noise was a nuisance.

– mixed fact and law. In any case, there was sufficient evidence to show that the noise was offensive.

2.   The condo did not make reasonable suggestions to resolve the problem.

–    mixed fact and law. In any case, the owner had the duty to comply; the condo did not have to make any recommendations at all.

3.   The arbitrator did not account for the efforts the owner took.

–    mixed fact and law. In any case, the efforts were insufficient.

4.   The arbitrator did not allow the owner to make submissions as to the scale of costs. This was a denial of natural justice.

– question of law. The judge held that the arbitrator had allowed the owner to make submissions as to costs and, therefore, the owner could have made submissions as to quantum if he wished. Further, as to the scale, the judge held that the arbitrator was bound to order substantial indemnity costs – given his findings, a decision of the Ontario Court of Appeal, the Act, and the condo’s bylaws.

5.   The costs order should not have been collectible as a common expense payment.

– question of law. However, the judge noted that prior cases stipulated that the costs burden associated with a condominium corporation obtaining a compliance order should shift from the innocent condominium corporation and other owners to the guilty unit owner. More importantly, the condo’s declaration imposed the obligation on a non-compliant owner to pay all costs of compliance, including all legal fees, to be recoverable as a common expense payment.

6.   The costs did not bear a reasonable connection to what the owner would have reasonably contemplated. 

– not a question of law. The Court of Appeal laid down the proportionality rule for the fixing of costs in the courts. However, the judge held that the owner should have been aware of the mounting costs, particularly because the condo had been complaining about them. Further, the judge had no sympathy for the owner because he was making the noise.

Upshot

The judge’s decision on the costs of the leave to appeal application was not reported; however, we assume that the costs were significant. Accordingly, the owner had to pay his own costs throughout, the condo’s costs of the application, and $81,800. This was not a cheap process to resolve the dispute.

This situation is not new to us. Jonathan Speigel mediated a dispute in which a unit owner had paid about $30,000 in costs to his condominium corporation regarding a dispute about noise emanating from his unit due to his hardwood floors. He sued the contractor, who had installed the floors, for reimbursement of these costs. The case hinged on whether the contractor had installed the proper type of flooring. The matter was resolved at the mediation. However, it demonstrates that costs for noise disputes escalate quickly; in the case that was mediated, the dispute between the owner and his condominium corporation had not even gone to arbitration.

Accordingly, when you are acting for condominium owners accused of making excessive noise, warn them that the costs of dispute could be far greater than the costs of compliance.