In a recent Ontario case, TSCC No. 2032 v. Boudair, tenants of a condominium unit were held responsible for their violation of the condominium corporation’s rules regarding smoking.
The lease contained an express provision that smoking in the unit was not permitted, as well as a covenant that the tenants would abide by the rules of the condominium corporation. Shortly after the tenants moved in, residents of neighbouring units lodged complaints with the corporation about excessive smoke emanating from the unit and infiltrating into their units. Upon being notified about these complaints by the corporation, the unit owner advised his tenants and demanded that they not smoke in the unit. Despite numerous communications from the unit owner to stop smoking and efforts by the owner to persuade the tenants to move out, the tenants continued to smoke and the corporation continued to receive complaints from other residents.
After receiving a letter from the corporation’s legal counsel demanding compliance with the corporation’s rules, the owner forwarded that letter to the tenants with a warning that the lease would be terminated and the tenants would be responsible for all costs relating to their smoking in the unit.
After the corporation commenced its court application for an order requiring compliance with the corporation’s rules, the unit owner filed an Application for Early Termination of the lease with the Landlord and Tenant Board. Eventually the parties consented to an order enforcing compliance with the corporation’s rules and the tenants agreed to terminate the lease and vacate the unit.
The condominium corporation sought have its costs of the application (which were in excess of $32,000) paid by the owner and his tenants. The owner took the position that he should not have to pay these costs and sought to have the corporation and the tenants pay his legal costs of approximately $25,000. The tenants did not claim any costs, but requested that they not be required to pay any costs to either the owner or the corporation.
After reviewing the course of action that the owner took upon learning about the smoking complaints (including attempts to negotiate an early termination of the lease), the Judge concluded that the owner had satisfied his obligation under section 119 of the Condominium Act, 1998 as he had taken all reasonable steps to ensure the tenants complied with the corporation’s rules. The Judge further concluded that the corporation had moved too quickly in seeking a compliance order before the owner was able to finalize negotiations with the tenants to move out. Had the corporation not been so hasty to commence court proceedings, its costs would have been considerably less.
At the end of the day, the Judge ordered that there would be no costs as between the corporation and the owner. The tenants were ordered to pay the corporation costs in the amount of $10,000 (including disbursements and HST) and the same amount to the owner for his costs. In reaching this decision, the Judge confirmed that the awarding of costs is a discretionary decision of the Court that takes into account
“the principle of indemnity for the successful party, the expectations of the unsuccessful party and the complexity of the issues. Overall, the Court is required to consider what is ‘fair and reasonable’ in fixing costs, and it is to do so with a view to balance and compensation of the successful party with the goal of fostering access to justice.”
As a result of this cost award, the corporation was left with over $22,000 in unrecovered legal costs (which will be added to the corporation’s common expenses) and the owner was out-of-pocket over $15,000 in legal costs. Even though the tenants had persistently and continuously violated the corporation’s rules and had breached their lease with the owner, the amount that they had to pay the other parties was considerably less that the amount of the costs that the other parties had to absorb. The corporation would have been in a much better position had the Court ordered the unit owner to pay costs instead of the tenants. If the unit owner failed to pay a costs award then the corporation would be in a position to file a lien against the owner’s unit. With the costs awards being made against the tenants, there is no guarantee that either the corporation or the owner will actually be able to collect from the tenants.