At Lash Condo Law, we recently represented a condominium corporation in a dispute before the Condominium Authority Tribunal (CAT). You can read the decision here.
While the corporation was successful in defending its position, the adjudicator declined to award costs—citing the relatively small amount that each unit owner would bear if the expenses were spread across the ownership.
We respectfully disagree with this rationale.
The principle of cost recovery is fundamental to ensuring that condo corporations can reasonably enforce their rights without unfairly burdening the collective ownership. When a corporation acts reasonably in bringing or defending a claim or application, and is ultimately successful, it should be entitled to recover its legal costs, at least in part, just as it would before before the Superior Court of Justice or the Small Claims Court.
Failing to award costs in these cases creates a troubling precedent. It may discourage corporations from pursuing enforcement simply because the fear of unrecoverable legal fees. This undermines effective governance and leaves rule-abiding owners to absorb the consequences of disputes caused by a few.
Moreover, condo corporations should not be penalized or discouraged from seeking legal counsel when navigating CAT proceedings. While condo managers are capable of representing corporations at the CAT, they are already stretched thin managing day-to-day operations. Similarly, directors, often volunteers with full-time jobs and personal commitments, should not be expected to spend countless hours handling legal matters for which they may lack the necessary expertise.
The takeaway? Condo corporations must continue to act prudently in litigation and take the necessary steps to obtain compliance, but decision-makers must also consider the broader implications of denying cost recovery. A fair and balanced approach is necessary—one that recognizes both the financial realities of condo governance and the importance of upholding condo rules without placing undue financial strain on the corporation or the innocent unit owners who end up subsidizing these costs through their common expenses.
Something needs to change.
