Condo Litigation Costs: Why Do They Add Up So Quickly?

One of the first questions that I get from any client when dealing with condominium litigation matters is "How much is it going to cost?". My response invariably is something along the lines of me being unable to predict the costs, because there is an extensive range of factors that could impact the legal costs incurred in any legal matter. This is not me trying to avoid the question; I really cannot predict how much it is going to cost, and I don't want to create unrealistic expectations.

The conduct of the opposing party is one factor that can drastically increase the costs of a legal matter: if the opposing party refuses to do what they are required to do under the relevant rules (whether Small Claims or Superior Court, or mediation/arbitration), then steps will have to be taken to force their compliance, and that unfortunately but unavoidably is going to cost my client money.

But the opposing party's conduct is certainly not the only factor that will cause legal costs to rise; there is also the fact that circumstances can change during the course of the proceedings, which may give rise to new and previously unforeseen steps having to be taken by one of the parties. The recent decision of Peel Condominium Corporation No. 346 v. Florentine Financial Corporation, 2018 ONSC 2636, is a perfect example of this factor.

In this case, the Corporation commenced an action against one of the unit owners in late 2016 for common expense arrears. The action was started in the Small Claims Court because the amount owing at the time that the action was started was $15,000.00, well under the $25,000.00 limit of the Small Claims Court. However, the unit owner continued to fail to pay its common expenses, thereby driving up the amount owing to the Corporation. By the time that 11 months had passed and the case was about to go to trial, the unpaid arrears had increased to $46,654.99, well over the limit of the Small Claims Court. This meant that, unless the Corporation moved the action to the Superior Court, it would lose over $20,000.00 in unpaid common expenses.

The Corporation brought a motion to have the action moved to the Superior Court, and the unit owner opposed the motion. After an analysis of the applicable law, Justice Fragomeni decided that the Corporation would be permitted to move the action to the Superior Court. So the Corporation was successful on its motion, BUT (and this is where the costs issue comes in) His Honour also decided that the Corporation would not be entitled to any costs of the Small Claims Court action up to that date, AND the unit owner would be entitled to (at least some of) its costs of the Small Claims Court action up to that date.

There are multiple ways in which this change in circumstances lead to a significant change in what were the likely anticipated costs that the Corporation would incur and be able to recover:

1. the costs of the motion to move the action to Superior Court would not have been anticipated at the start of the action;
2. the Corporation would have anticipated that it would recover at least some of its costs from the Small Claims Court action if successful against the unit owner;
3. the Corporation would not have been required to pay any costs to the unit owner if successful in the Small Claims Court action; and
4. the Corporation started the action anticipating the costs of a Small Claims Court action rather than a Superior Court action, and Superior Court proceedings are generally much more costly.

At the time that the action was started, the amount owing meant that the action was properly within the jurisdiction of the Small Claims Court; the Corporation did nothing wrong by starting the action there. The unfortunate combination of the length of time involved in legal proceedings and the unit owner's continued refusal to pay common expenses led to an unavoidable situation, which ended up having a significant impact on what likely costs expectations of the Corporation.

So in summary, this is why litigation costs can add up so quickly, and why it is next to impossible to predict what the costs of a litigation matter will be. When lawyers say that they cannot provide a quote for a litigation matter, they really do mean that they CAN not, not that they WILL not!