Temedio v NNCC 6: Where a Non-Compliant Unit Owner Must Pay the Condominium’s Legal Fees

Decision release date: December 3, 2018

In this interesting recent case, a condominium unit owner sought a court assessment of the legal costs incurred by her condominium and charged to her in connection with obtaining a compliance order against her. For the reasons discussed below, the court granted the assessment for one portion of the legal fees and dismissed the rest of her claim.

Facts and Law

The Applicant, Ms. Temedio, owns a unit in Niagara North Condominium Corporation No. 6 (“NNCC”). In response to Ms. Temedio’s compliance issues, NNCC sent her letters requesting compliance and, when those failed to work, NNCC successfully sought a compliance order against her in court. Ms. Temedio then brought a motion for leave to appeal the order, which did not succeed.

NNCC incurred legal fees for each of these three stages of action: sending the letters, obtaining the order, and addressing the motion for leave to appeal. The Condominium Act, 1998 (the “Act”) permits NNCC to charge the legal fees it incurred in connection to the compliance order to Ms. Temedio by adding these costs to her common expenses. Accordingly, NNCC added its legal fees to her common expenses.

However, the Solicitors Act permits Ms. Temedio to request an assessment of those legal fees charged to her, if certain criteria are met. An “assessment” is the process in which the Assessment Officer of the Superior Court reviews a lawyer’s bill in dispute. This brings us to the current case: Ms. Temedio applied to court for an assessment of the legal fees added to her common expenses by NNCC.

Analysis and Decision

The court divided its analysis according to the three sets of legal fees mentioned above: the letters, the order, and the motion for leave to appeal. For the following reasons, the court granted an assessment only for the legal fees connected to the motion for leave to appeal:

      1. Legal fees for sending compliance letters: NNCC first incurred legal fees for    sending Ms. Temedio letters requesting compliance. Since these fees were delivered to her more than 12 months before she sought the assessment, the Solicitors Act requires her to show special circumstances exist to justify the assessment. The court held that no special circumstances exist here because, back in 2015 when these fees were first delivered, she argued they were unreasonable but did not seek an assessment. Based on her previous actions, the court felt her opportunity to assess these fees had passed and there were no special circumstances justifying an assessment today.

       2. Legal fees for the compliance application: Again, Ms. Temedio sought an assessment of these fees more than 12 months after they were delivered, so she had to show special circumstances exist to justify an assessment. Her sole argument here was that the fees were excessive. The court held that given the complexity of the case, the legal fees were not excessive. Accordingly, there were no special circumstances and an assessment was not granted.

       3. Legal fees for the motion for leave to appeal: These fees were paid within 12 months of applying for an assessment, which also requires the applicant to show special circumstances justify the assessment. Ms. Temedio again argued the fees were excessive – and this time the court agreed. The court found the legal fees charged in this simple motion to be out of proportion with the legal fees incurred in the complex compliance application, thereby qualifying as special circumstances. The court ordered an assessment of these fees. 

Ms. Temedio also sought an injunction which, if granted, would prohibit NNCC from enforcing the lien for the unpaid common expenses against her unit while the assessment is pending. The court applied the three-stage test from RJR-MacDonald v Canada and concluded an injunction was not available. She satisfied the first step: there was a serious issue to be tried. But she failed steps 2 and 3: she did not show there would be irreparable harm if the injunction were not granted, and she did not show the balance of convenience favours her.

On step 2, she argued the injunction would cause her to sell her unit, which would cause irreparable harm to her sister-in-law and autistic grandson who live in the unit. But she did not provide sufficient evidence to substantiate this claim.

On step 3, the court found the balance of convenience favoured NNCC, not Ms. Temedio, because Ms. Temedio’s failure to pay these costs was causing financial hardship to NNCC and undermined the Act’s intention to protect condominiums and innocent unit owners from the costs incurred in connection to non-complying owners. 

Finally, Ms. Temedio requested the assessment be held in Toronto (where she resides) instead of St. Catherines (where NNCC is located). The court dismissed this request as not being in the interests of justice because the Toronto courts are already overburdened, a transfer would delay the assessment and other Toronto court matters, and the witnesses are located in Hamilton thereby making St. Catherines an equally (if not more) convenient venue.

In the end, the court granted an assessment of the legal fees from the motion for leave to appeal, and dismissed her other claims.

Take-Aways

An important take-away from this case is a reminder that unit owners who cause the condominium to incur legal fees may be responsible for paying those fees, and may not be entitled to have those fees assessed. The underlying rationale here is that a condominium, and the innocent owners who fund the condominium, should not be responsible for costs incurred in enforcing compliance against non-compliant owners.

As a second key take-away, the Solicitors Act does not require special circumstances for an assessment sought within 30 days of the bill being delivered, so this whole issue could have been avoided if Ms. Temedio had sought an assessment of her fees within 30 days.

Additionally, although only mentioned briefly in this decision, it is important to remember that a condominium has the duty to ensure owners and occupants comply with the Act. This means NNCC was obligated to address Ms. Temedio’s non-compliance, and the legal fees incurred go hand in hand with this obligation.

And finally, Ms. Temedio tried to argue that, as a unit owner with a lien on her unit, she was akin to a mortgagor. If this creative argument had succeeded, she would have had the right to an assessment and would not have to show special circumstances. The court rejected this analogy. This rejection sheds some light on how courts may interpret the Act’s provision allowing liens to be enforced in the same manner as a mortgage.