One of the many duties the board of directors of a condominium corporation has is to enforce the condominium’s rules, declaration and bylaws as well as the Condominium Act. Directors are often criticized for either not taking enough action or taking an overly aggressive approach.

Sometimes this criticism is directed at the property manager who usually implements enforcement steps in order to carry out the board’s directions.

How can a property manager or board member understand what steps to take when enforcing the governing documents? The starting point is always section 17 of the Condominium Act, which instructs the board (and by default the property manager) to take reasonable steps.

Unfortunately, the Act does not provide any further direction on what is reasonable. Given that most of the enforcement-type issues condominiums are going to deal with will now be dealt with at the CAT if voluntary compliance is not achieved, a review of recent CAT cases provides some insight into what the CAT expects of condominium corporations and property managers when they enforce the rules.

A duty to enforce

In Manna v. York Condominium Corporation No. 62, the CAT made it very clear that the condo corporation has a duty to enforce. Period. As the CAT pointed out, the duty to enforce exists even if the owner is not on good terms with the board. It does not matter if the owner has a bad history with the board or if they may not raise issues appropriately.

As stated by the CAT, the board’s duties under the Act are not erased just because you are dealing with a difficult owner. As such, it is important for boards to separate the request for enforcement from any other issue they may have with an owner. Even a difficult owner has a right under the Act to expect that the board will fulfill their duties to enforce the rules.

The Manna case also provides a good discussion on the difference between situations where the board has some discretion as to whether they enforce a rule or not and cases where there is no discretion.

The CAT reminded us that if the board is going to exercise their discretion to not enforce, they must be able to provide a valid purpose for not doing so. On the other hand, when the rules are clear and mandatory (such as you cannot park in a parking space unless the vehicle is licensed), there is no discretion for the board to exercise. A failure to enforce a clear and mandatory rule would be considered an arbitrary exercise of discretion and a finding that the board has not fulfilled their duty to enforce.

The lesson to be learned is that you need to carefully review your rules (and perhaps amend them) to determine whether or not there is any discretion built into them. In addition, if you are going to exercise discretion, be sure to document the reasons why in case the exercise of discretion is challenged.

A step too far

On the other end of the spectrum, in Hum v. Waterloo Standard Condominium Corporation No. 670, the CAT criticized the condominium for going too far when exercising their discretion regarding enforcement options. This case involved the ticketing and towing of a vehicle for failing to display a parking pass. The owner commenced a CAT application against the condominium, seeking damages equal to the cost of the ticket and towing fees incurred.

The CAT awarded the owner the towing costs and Tribunal fees on the basis that the condominium corporation was acting unreasonably when they exercised their discretion to have the vehicle towed. In this case, the owner had just moved in one week before his car was ticketed and towed, and as such this was clearly not a case of chronic infractions.

The CAT held that the rule in question indicated that ticketing was mandatory, but there was discretion with towing as it indicated that towing was a possibility. The CAT held that a ticket would have been a sufficient warning to this new owner, and the condominium corporation failed to provide an explanation as to why the extreme remedy of towing was necessary, given that this was not a chronic problem.

When deciding what enforcement step you are going to take, it is always a good idea to ask yourself whether the step is necessary in the circumstances to obtain compliance or would another step, that would result in lesser consequences, be sufficient.

When employing a consequence that will have a significantly higher cost or inconvenience to the owner or occupant, can you justify the decision to go with the harsher route? If not, you should likely consider taking a different step first.

The concept of progressive discipline, often found in the employment context, can be incorporated into the condominium setting. Starting off with a lesser consequence for first-time offenders and progressively increasing the consequences should be something that boards and property managers consider when deciding what steps to take in terms of enforcement. Beginning with a letter from property management or the board reminding owners of the rules and asking them to comply is always a good first step.

As we know, many people who move into condominiums are unfamiliar with all the rules and sometimes just need a friendly educational reminder about what is required of them. The goal in condominiums should always be to obtain voluntary compliance. This can be achieved when people are first made aware that a rule has been breached and are asked nicely to comply.

Investigating for evidence

Another important lesson from the CAT about enforcement is that condominiums must undertake proper investigations as part of their enforcement procedures. The CAT in Ottawa Carleton Standard Condominium Corporation No. 656 v. Denize reinforced this obligation. In this case, the condominium corporation alleged that Denize violated the nuisance rules with respect to smoking.

Denize conceded that smoking occurred on one occasion shortly after he moved in but stopped after he was notified of the rules. Denize consistently denied that smoking continued in his unit after that one incident. He invited the board to inspect his unit and he agreed to participate in any investigations.

Unfortunately, the board made a big mistake by not taking Denize up on his offer. The CAT found that the board was unreasonable in persisting in their accusations against Denize without first conducting an independent investigation in the face of his repeated denials. The CAT dismissed the condominium’s case against Denize and ordered that the condominium pay him $4,000 in legal costs.

This case is an important reminder to those who are enforcing the condominium’s governing documents to make sure that they do not just rely on the evidence of the individuals making the complaints. When a complaint is received, especially a nuisance type complaint such as smoking and noise, the condo corporation must undertake an independent investigation. It would also be wise for the condominium to secure independent third-party evidence as well as photographic or video evidence of the offenses being alleged before formal enforcement steps are taken.

Costs and chargebacks

Finally, you cannot discuss enforcement in condominiums without dealing with the issue of costs and chargebacks. It has long been a principle recognized by the courts that the “innocent owners” should not be saddled with the costs of enforcement as a result of one owner/occupant breaching the rules.

Historically, the courts have been more generous in awarding condominiums a fairly good percentage, if not all, of their costs in compliance type cases. The Act is also clear that when a condominium was successful in obtaining a compliance order and even some but not all costs, the remainder of the costs (provided they were reasonable) could be charged back to the unit regardless of the actual costs awarded by the court.

The transfer of most compliance type cases usually heard by the court to CAT has now occurred. Very few, if any cases, will be heard in the courts going forward. Unfortunately, the transfer of how costs are handled has not followed suit. The cases decided by the CAT have demonstrated that its adjudicators are inconsistent in how they approach the issue of reimbursement of costs through damages and costs awards. In cases where costs are awarded, the percentage of costs recovered versus costs incurred is nowhere near what the courts were awarding in pre-CAT days.

The approach by the CAT, to date, has created a great deal of uncertainty for all parties involved, and the ability to obtain a fair reimbursement for costs incurred is highly dependent on the adjudicator you are assigned. However, recently, we have a glimmer of hope in Toronto Standard Condominium Corporation No. 2804 v. Micoli that the pre-CAT days and the courts approach to costs will resurface.

In this case, the condominium corporation was able to recover approximately 65 per cent of costs of the pre-Stage 3 costs incurred jointly from both the owner and the tenant and approximately 50 per cent of the costs incurred during Stage 3.

These percentages are more in line with the partial indemnity cost recovery scales awarded by the courts to a successful party. It is refreshing to see not only a recognition of, but also the actual application of, the “innocent owner” principle the courts historically employed in a CAT decision.

We can only hope that this case is a signal that other adjudicators at the CAT will be moving in the same direction, and we will begin to see a more consistent approach to the reimbursement of actual costs incurred by a condominium with the award of a mixture of damages and costs that are in line with what the courts had historically established.

This would be a welcome change for the innocent condo owners who have been saddled with the vast majority of costs of compliance, thus making any victory at the CAT a hollow victory.

Achieving compliance in a condominium setting should not be considered a “cost of business” for the condo. Condominiums are not businesses. They do not operate to make a profit. They are communities and their costs are borne by individuals.

In communities, one should expect that individuals who have voluntarily decided to join the community by virtue of purchasing or renting a unit therein will comply with the rules of the community they are choosing to be a part of.

When an owner/tenant decides not to follow the rules they have agreed to live by, the consequences of forcing the community to fulfill the duty to enforce the rules should be reimbursement to the community of the costs incurred to obtain compliance. This approach will avoid burdening innocent owners with the costs of enforcement, especially since the CAT has indicated that a condominium does not have a choice when it comes to enforcement, but rather a duty.

On the other hand, the act of noncompliance with a community’s rules is a choice, which should have consequences. The governing documents, which have been accepted by the community, recognize that distinction and implements (in most cases) full indemnification provisions for breaches of the rules. Now we only need the CAT to consistently recognize and respect that contractual term when they award damages and costs in cases where compliance orders have been obtained.

Sonja Hodis is a litigation lawyer based in Barrie who practices condominium law in Ontario. She advises condominium boards and owners on their rights and responsibilities under the Condominium Act, 1998 and other legislation that affects condominiums. She represents her clients at all levels of court, various Tribunals and in mediation/arbitration proceedings. She also acts as mediator or arbitrator in condo disputes. Sonja can be reached at (705) 737-4403, [email protected] or via her website at www.hodislaw.com.

This article is provided as an information service and is not intended to be a legal opinion. Readers are cautioned not to act on the information provided without seeking legal advice with respect to their specific unique circumstances. Sonja Hodis, 2023 All Rights Reserved.