In a recent case, Y.C.C. No. 187 v. Sandhu, the Ontario Superior Court of Justice granted a judgment in favour of the condominium corporation, giving it possession of an owner’s unit and enabling it to sell the unit.
This drastic consequence ensued as a result of the actions of the owner’s tenant. The tenant had been in constant conflict with the corporation and building management and then sued the corporation for damages of over $5,000,000. The tenant’s claim failed, as did the tenant’s appeal.
The legal expenses of the corporation to defend both the trial and the appeal (which amounted to approximately $86,000) were added to the common expenses of the unit. While the owner paid her monthly common expenses, she did not pay the outstanding legal fees and the corporation registered a lien against her unit.
The corporation’s by-laws provided that each owner must reimburse the corporation for any loss which is caused by a unit owner or any resident or tenant in the owner’s unit. This applied even though the tenant had commenced legal proceedings against the corporation without the owner’s permission.
The owner claimed that she had never received the notice of lien and that the lien was thus invalid. However, the corporation’s lawyer had sent numerous registered letters to the owner advising what would happen if the costs were not paid, and a notice of lien was properly served, as it was sent to the owner’s address for service which she had previously provided to the corporation. The Court concluded that the corporation had fulfilled all of the legal requirements to validly put a lien on the owner’s unit and that the corporation’s by-laws requires the corporation without exception to register a lien against any owner where the owner falls in arrears in paying the common expenses.
The owner also argued that it would be an injustice for her to be responsible for the unauthorized actions of her tenant. However, the Court disagreed with the owner’s position and determined that it would be unfair for all of the other 253 unit owners in the building, if those owners had to pay the legal costs to defend the legal proceedings commenced by the owner’s tenant.
The Court noted that while the owner did not authorize the tenant to commence the litigation against the corporation, the owner did not take any steps to intervene in the litigation or to get the tenant to discontinue the proceedings.
This case should emphasize to unit owners that they are financially responsible if their tenants breach the condominium documents or cause the corporation to incur expenses due to the tenant’s acts or omissions. There is no obligation on the corporation to seek redress from the tenant.
There are also many instances in which unit owners, not tenants, commence litigation against the corporation where the corporation is left to bear the costs of defending claims by unit owners. This case may be useful if applied to those instances, hopefully allowing corporations to recover their full costs of defending those unit owner claims.
At the end of the day the unit owner was responsible not only for the legal costs incurred by the corporation to defend the tenant’s actions, but the owner also was obligated to pay the corporation’s costs incurred in seeking possession of the unit.
