Annoying Parrots and Stubborn Green Grocers
Much ado has been made, certainly in the popular press, about the case of the expensive parrot, or, as The Globe & Mail so eloquently dubbed it, “A bird called trouble: The cautionary tale of the $40,000 parrot.” While the case of MTCC 744 v. Bazlinsky did involve a unit owner’s surreptitious maintenance of a pet parrot in violation of the condominium’s no-pet rules, the bird itself was no more than a red herring.
The Bazlinsky case really has nothing to do with parrots. At the heart of the case is the ability of condominium corporations’ ability to recover the costs it incurs in getting court ordered assistance chasing down unit owners who refuse to comply with the condominium’s declaration, by-laws, rules or other similar agreements. In the Bazlinsky case, the condominium’s rules prohibited pets and the unit owner violated those rules by keeping a parrot, but the case could equally have been about balcony barbecues, outdoor storage, illegal parking, or any other of the plethora of things that can be governed by a condominium’s declaration, rules, by-laws and agreements, and that can be violated by a unit owner intent on non-compliance.
Section 134(5) of the Condominium Act, 1998 provides an extraordinary remedy to condominium corporations: If a corporation obtains an award of damages or costs in an (compliance) 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…
It follows naturally that, if the condominium corporation adds the damages and/or costs, as well as the additional actual costs to the common expenses, and these amounts go unpaid, the condominium corporation then has a lien against the unit under the Condominium Act and, ultimately, to realize upon that lien if the amounts owing are then still not paid.
The purpose of Section 134(5) is to protect condominium corporations (and, indirectly, all innocent unit owners) from the high costs of litigating against the few wayward unit owners who chronically or blatantly refuse to abide by the Act and/or the terms of the condominium’s declaration, by-laws, rules and agreements. Introduced in 2001 as part of sweeping reforms to the Condominium Act at the time, Section 134(5) was intended to ensure that, regardless of what damages or costs that a corporation may be awarded by the court in a compliance action against an owner, that condominium corporation would be able to add its additional actual costs to the “bill” payable by the unit owner, then lien in respect of that bill if the unit owner does not pay. Typically in litigation, even if a party is victorious, it only gets to recover from the losing party a relatively modest portion of the actual legal costs incurred to mount the litigation. Rather than suffering the indignity and costs of actually winning the law suit against a non-compliant unit owner and then finding itself still financially prejudiced by having to pay for the legal fees and other litigation costs, Section 134(5) is intended to allow the successful condominium corporation to recoup all of its actual costs incurred in dutifully enforcing the condominium’s declaration, by-laws, rules and agreements.
The Bazlinsky case seems, at first blush, to eviscerate the operative provisions of Section 134(5). In Bazlinsky, the condominium corporation incurred total actual costs of just over $40,000 to obtain a court order against the unit owner forcing the removal of the parrot from the unit. However, a judge in Ontario’s Superior Court re-assessed the reasonable costs in the litigation to be merely around $6,500, rejecting the corporation’s claim for approximately $34,000 of legitimate additional actual costs under Section 134(5).
Now, the Bazlinsky case is not the first time the courts have grappled with and pared back the potentially extraordinary scope of Section 134(5). In the 2005 decision in MTCC 1385 v. Skyline Executive Properties the Ontario Court of Appeal considered Section 134(5) and concluded that the additional costs that a condominium corporation could add to common expenses for the unit was limited only to the costs up to and including the actual court order (and subsequent cases have included maintaining such court order against appeals), but expressly excludes additional costs incurred by the condominium corporation in then trying to enforce that court order.
Although Section 134(5) was probably never intended to be read so narrowly, it is now universally accepted that, until there is further law reform expressly changing this situation, Section 134(5) cannot be extended to include additional actual costs incurred by a condominium corporation to enforce a court order. At the same time, the Court of Appeal also made it clear in Skyline, that Section 134 (5) means what it say, and that it takes effect after a judge hearing a compliance application awards any damages or costs against a recalcitrant owner.
In a 2011 case, TSCC 1633 v. Baghai Development Limited and Rabba Fine Foods — a case conceptually similar to the Bazlinsky case — a unit owner was found liable for having breached the corporation’s declaration, by-laws and rules by hogging-up sidewalk space intended to be open common elements. The Ontario Superior Court considered Section 134(5) and concluded that, yes, the condominium corporation was entitled to all of its “additional actual costs” required to obtain the court order, but then went on to say that Section 134(5) could not then be interpreted as then allowing the condominium corporation to go on a legal rampage and incur wildly outrageous legal bills under the protection of Section 134(5). As explained in the Rabba Fine Foods case, “…section 134(5)…does not allow the [condominium corporation] to authorize its counsel to expend any amount and then ask to be completely indemnified for costs that are otherwise disproportionate and unreasonable. The Court retains its discretion to determine what amount of costs is fair and reasonable to award…” The Court in the Rabba Find Foods did exactly that – it exercised its discretion to drastically reduce the legal fees that the condominium corporation could charge back to the unit as a common expense, all to reflect what the court thought was disproportionate and unreasonable legal fees incurred as part of a “scorched earth” litigation strategy. This kind of uber-aggressive litigation has come under fire before — the Ontario Superior Court of Justice reached a similar conclusion in the 2010 case of Peel Condominium Corporation No. 452 v. Jaworowski.
It is not really clear how the judge in the Bazlinsky case came to her conclusion. On the one hand, she cites the rule in Skyline implying that the lion’s share of the additional actual costs were, in fact, enforcement costs incurred after the court order had been obtained. It is hard to reconcile this with the facts in the case. On the other hand, she also concludes that the “value of the work performed on a solicitor and client basis is no more than $6,500”, but this too is hard to reconcile with the facts in the case since there is no real discussion in Balzinsky of a deliberate “scorched earth” litigation strategy or any of the other signs of overly aggressive litigation that the judges in Rabba Find Foods and in Jaworowski carefully laid out as the grounds for their decisions.
In the end, neither the Bazlinsky case nor the Rabba Fine Foods case is likely going to be quite as disastrous as some condominium managers and boards might be prone to think. These cases do not wholly eviscerate Section 134(5) and replace it with a judge’s discretion as to what might be fair under the circumstances. In fact, both of these cases actually affirm, at least in principle, that, in addition to whatever the court may otherwise award the condominium corporation by way of damages or costs, the condominium corporation can still charge and lien for legitimate “additional actual costs” (and this includes additional actual legal costs on a solicitor and client basis), so long as they were incurred in order to obtain a compliance order against the offending unit owner (and not in enforcing that compliance order). Furthermore, there are overwhelmingly more cases where condominium corporations are indeed successful in remaining financially whole because of Section 134(5) but, of course, by their very nature, these “successful” applications of Section 134(5) rarely get reported. These two new cases on Section 134(5) do, however, warn condominium managers and their boards that such litigation cannot be done so recklessly or so aggressively so as to be perceived by the courts as some sort of “scorched earth” strategy giving rise to unreasonable and disproportionate legal bills.