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First decisions issued in condo records disputes

New online tribunal dismisses case, issues penalty and rules on costs
Thursday, July 19, 2018
By Michelle Ervin

Condo corporations that reject records requests without a legal basis to do so may face penalties. Unit owners that file vexatious applications may see their complaints tossed out without a hearing. And industry members might be overestimating what constitutes reasonable fees for locating and redacting records.

These are some of the early signals coming out of the Condominium Authority Tribunal, or CAT, which recently issued its first five decisions. The online tribunal was set up by Ontario’s previous provincial government to provide a cheaper, faster alternative to taking common condo disputes to court.

The CAT started accepting applications concerning records-related disputes on Nov. 1, 2017. As of mid-July, the tribunal had received 84 case submissions, which works out to an average of 2.3 applications per week.

Higher penalties possible

In the interest of transparency, unit owners are entitled to access a broad range of condo corporation records, including board meeting minutes and reserve fund studies. There are necessarily some limits to this right, such as exemptions for actual or pending litigation and personal information about other unit owners.

Recent changes to Ontario’s condo laws — the same reforms that established the CAT — introduced a new process for making and responding to records requests, which is structured by deadlines and mandatory forms. Condo corporations are required to provide their legal rationale in cases where they’re rejecting records requests from owners.

“I’m relieved to see that three out of the five cases [at the CAT] resulted in a conclusion that condominium corporations are doing what they’re supposed to be doing,” said condo lawyer Rod Escayola, partner at Gowling WLG. “There are only two corporations where there was an order to disclose more documents.”

In one case, in addition to being ordered to deliver records, the condo corporation was ordered to pay a $1,000 penalty as well as the owner’s costs of bringing the application to adjudication at the tribunal. The CAT member who decided the case found that the condo corporation had been unresponsive to the unit owner’s application until it was headed to a hearing for a binding decision, and that the corporation had ultimately fallen short of its obligation to provide access to the records.

Escayola suspected that this decision will discourage condo corporations from shrugging off this obligation, especially now that it carries a higher fine — up to $5,000.

“Under the prior version of the [Condominium] Act, the risk of penalty was $500, and most importantly, to get to that $500, somebody needed to go to court, and so the risk was lower,” he said. “If, in fact, we see on a regular basis that the tribunal imposes that fee or the now higher penalty, maybe that’s going to be a lesson for everybody moving forward.”

What are ‘reasonable’ fees?

Condo corporations are obligated to give owners an upfront quote of the fee it expects to charge to cover the costs associated with delivering documents that are eligible for reimbursement. The legislation caps photocopying fees at 20 cents per page, but leaves labour fees open to interpretation, simply requiring them to be “reasonable.”

Two of the first five CAT cases look at what constitutes reasonable labour fees. Both of the resulting decisions suggest condo corporations, and their advisors, might be missing the mark.

In one case, the adjudicator found that the hourly rate of an articling student ($130), rather than a lawyer ($225), would be reasonable for calculating the fee for redacting records containing legal information exempt from disclosure.

In the other case, the adjudicator rejected a quote of $63 per hour as a reasonable rate for the clerical work involved in locating, photocopying and re-filing records . The adjudicator, having received no evidence as to what a reasonable rate for these tasks would be, doubled the minimum wage and added HST for a rate of $31.50 per hour, leaving open the door to divergent decisions on this in the future.

“I’m not sure what other comparables we could use if we were going to set an hourly wage for something that’s fairly mechanical in most cases, and I think maybe we can look at what financial institutions do,” offered Escayola, the condo lawyer. “If you’re going to ask for historic records from a bank, what’s their hourly rate to go and fish these out?”

Would-be applications preempted?

The CAT is designed to help unit owners and condo corporations resolve their records-related disputes with the least amount of intervention necessary. Its three-step process requires parties to at least attempt to come to a settlement agreement, first through negotiation amongst themselves and second through guided mediation.

The Condominium Authority of Ontario (CAO), which manages tribunal operations , also provides online information and tools such as email templates in an effort to preempt applications to the CAT. So far, the 9,384 visits to the records issues page on the CAO website since September, 2017, have translated into 84 case submissions to CAT since November, 2017.

“In a short period of time, the CAO’s rich ecosystem of resources is already contributing to a growing awareness [of] rights, responsibilities and obligations amongst individuals within condo communities across the province, and the availability of a dedicated, online tribunal is an incentive for promoting early compliance with records requests,” Michelle Di Rocco, manager of communications at the CAO, said in an email.

“As such, and in line with the CAO’s vision and goals, the large majority of issues and concerns are effectively being addressed before they become disputes,” Di Rocco added. “For issues that remain unresolved, the CAO’s online tribunal is resolving disputes quickly, conveniently, and affordably, in support of condominium living in the province.”

Applicants to the CAT pay a non-refundable fee to move their applications through each step of the process — $25 for negotiation, $50 for mediation and $125 for adjudication. One of the first five CAT decisions underscored that parties to a dispute should not expect to get reimbursed by way of a cost award for any legal fees incurred.

“I found it interesting that a corporation asked for legal fees,” said Escayola, the condo lawyer. “It is clear in the tribunal’s rules: You may get cost — the filing fee at the tribunal — but you will not get your lawyer’s legal fees unless there are some extraordinary circumstances.”

Each step of the tribunal takes place online — although adjudication may include live proceedings such as phone or video conferences — which gives parties the freedom to access the system at their time and location of choice.

“Early analysis shows that peak usage is between 1 p.m. and 9 p.m., outside the traditional workday, and users have participated in their case from as far away as Africa,” Di Rocco wrote.

In cases resolved through a settlement agreement, parties can return to the CAT to obtain a compliance order if necessary. Tribunal decisions and orders can only be appealed on questions of law and are otherwise binding and enforceable through the courts.

Michelle Ervin is the editor of CondoBusiness.

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