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January 6, 2022 - By Victor Yee

CAT Says Hurry, But Will Their New Costs Regime Catch Up?

Condominium corporations often want to enforce against a unit owner or resident’s violating behaviour as quickly as possible.  But condominium managers and condominium lawyers have been trained, after decades of case law from the Ontario Superior Court of Justice, to believe that “jumping the gun” and going straight to Court for enforcement against an individual’s incalcitrant behaviour would look heavy-handed – perhaps even disentitling the condo from recovering its full legal costs, even if the condo is successful in obtaining a Court Order restraining against the problematic behaviour under Section 134 of the Condominium Act (the “Act”).

As such, many condominium Boards have been advised to give multiple warnings and repeat opportunities to the offender, before escalating the matter to the condo’s legal counsel for further enforcement and commencing court proceedings.  For example, the traditional belief was that the unit owner and/or resident should be given at least 2 or 3 warning letters from the Condominium Manager first (absent exigent circumstances like a dangerous condition involving Section 117 of the Act), before formally involving the condo’s legal counsel who then issues multiple enforcement letters of their own – a “three strikes you’re out” approach that was intended to give the violator ample opportunity to rectify their behaviour.

But a new case from the Condominium Authority Tribunal (the “CAT”) upends that traditional belief.  In the very 1st publicly-released Decision of the CAT in 2022, the CAT reduced the condo’s recovery of its legal costs; not for “jumping the gun” as the Superior Courts have previously punished condos for, but rather, for not firing the gun fast enough.


The Peeing Cat

In Metropolitan Toronto Condominium Corporation No. 736 v. Verstova, 2022 ONCAT 1 (“Verstova”), the condominium corporation brought a CAT Application under the Tribunal’s pets, vehicles, parking, or storage (PVPS) jurisdiction against an owner who was keeping a cat in her unit.  The condo also alleged that Ms. Verstova’s cat was damaging the common elements by peeing on her exclusive-use balcony, which dripped onto the balcony below.

The condo’s Declaration registered on March 4th 1987 prohibited any animals or pets of any kind, but the condo subsequently passed a Rule that allowed pets (we will leave aside the question of whether a Rule can contradict a Declaration in the hierarchy of governing documents).  In 2013, the condo amended its Rule to state that only pets which were registered by owners within 30 days could be kept; and Ms. Verstova submitted a pet registration form which indicated that she had 1 dog and 2 birds.

After receiving complaints of cat urine leaking through the wooden floor of Ms. Verstova’s balcony onto the balcony below, the Condominium Manager issued a warning letter to the owner on April 22nd 2019 (the “1st Warning Letter”).  After receiving additional complaints about cat urine odour penetrating into the hallway, the Manager issued another warning letter to Ms. Verstova on December 23rd 2019 (the “2nd Warning Letter”).  Because the situation was not resolved after the 2nd Warning Letter, the Board of Directors sought advice from the condo’s legal counsel.

On April 13th 2020, the condo’s legal counsel issued an enforcement letter to the owner (the “1st Enforcement Letter”), which demanded that the cat be removed by May 1st 2020.  Ms. Verstova did not comply, and the unit owner below took matters into his own hands by installing insulating foam around Ms. Verstova’s balcony to try and stop the cat urine from leaking.  On November 19th 2020 the condo’s legal counsel issued another enforcement letter to Ms. Verstova (the “2nd Enforcement Letter”), which deemed the cat to be a nuisance and demanded its permanent removal by December 7th 2020.


The CAT Application about the Peeing Cat

On June 7th 2021, the condo commenced a CAT Application against Ms. Verstova, asking the Tribunal to formally order her to permanently remove the cat, prohibit her from acquiring additional pets, and require her to pay a legal costs award of $21,171.23; comprised of $14,551.04 in legal costs incurred to enforce her compliance, $125.00 in CAT filing fees, and $6,495.19 for the contractor to repair the urine damage to the wooden balconies.  Ms. Verstova did not participate in the CAT proceedings whatsoever, so the Application proceeded directly from Stage 1 Negotiation to Stage 3 Adjudication on the basis of the condo’s evidence and arguments alone.

The CAT ultimately ordered Ms. Verstova to permanently remove her cat within 14 days, and to refrain from bringing any additional pets into her unit.

However, the CAT halved Ms. Verstova’s responsibility for the costs of the contractor’s repairs to the wooden balconies from $6,495.19 to $3,247.60.  Because it was the unit owner below who installed the insulating foam, and not the condo, the CAT held that Ms. Verstova should only be liable for the repair costs in an amount of up to $3,247.60.

The CAT noted that the indemnification provisions in MTCC 736’s governing documents stipulate that the condo ought to recover 100% of its legal costs of enforcement.  However, out of the $14,551.04 in legal costs sought by the condo, the CAT reduced the $8,815.52 portion – which represented the condo’s legal costs of pursuing the CAT Application (the “in-CAT costs”) – by half.  The CAT held that because it was an uncontested Stage 3 Adjudication and Ms. Verstova did not participate in the proceedings at all, the 14 hours spent by the condo’s legal counsel for in-CAT costs was excessive given that the condo “was required only to make one submission” which should have been “relatively short and straightforward”.

Regarding the balance of $5,735.52 – which were the legal fees that were incurred by MTCC 736 before it filed the CAT Application on June 7th 2021 (the “pre-CAT costs”) – the CAT held that the condo should have better mitigated its own costs, by proceeding straight to the Tribunal instead of sending the 2nd Enforcement Letter on November 19th 2020.  The CAT reduced the $5,735.52 by $1,019.32, which was the amount of the legal costs incurred by the condo for the 2nd Enforcement Letter.

At paragraphs 37 and 38, the CAT ruled:

The legal demand letter sent in April, 2020 stated that the corporation intended to take legal steps to enforce Ms. Verstova’s compliance if she did not remove the cat from the property. On October 1, 2020, jurisdiction over disputes relating to provisions in governing documents which prohibit pets was transferred to the Tribunal. Rather than filing an application with the Tribunal, the corporation sent a second legal demand letter in November 2020, notwithstanding that the two letters sent by Mr. Marshall in 2019 and the April, 2020 legal letter had all failed to secure her compliance.

MTCC 736 delayed filing an application with the Tribunal until June, 2021, more than a year after the first legal demand letter was sent. This delay resulted not only in additional legal costs associated with the November 2020 letter but also in continued inconvenience to the owners affected by Ms. Verstova’s violation of the pet rules.” [emphasis added]

While the CAT’s concern about the delays in enforcement may have been appropriate in these circumstances, perhaps the condo’s decision not to file an enforcement Application with the CAT until June 7th 2021 was the direct result of the CAT’s own rules around the recovery of legal costs at the time (an issue that I have repeatedly written about previously hereherehere, here, and here).  


Why Didn’t the Condo Go to the CAT Sooner?

It may be useful to survey the legal landscape at the time.  Between the 1st Enforcement Letter on April 13th 2020 and the 2nd Enforcement Letter on November 19th 2020, the case law emanating from the CAT all appeared to indicate that due to the CAT’s default presumption against awarding legal costs, a condo was not likely to recover its legal costs incurred in pursuing a CAT Application against an incalcitrant unit owner.

Accordingly, it is understandable that condos at the time would have been hesitant about bringing a CAT Application against a unit owner’s pet – and instead, would choose to issue a 2nd Enforcement Letter to try and obtain the owner’s compliance without having to spend thousands of dollars in likely-irrecoverable legal fees at the CAT.

It was not until the CAT’s Decision in Peel Condominium Corporation No. 96 v. Psofimis, 2021 ONCAT 48 (“Psofimis”), that the CAT awarded a condominium corporation with their full legal costs for the very 1st time against a violating unit owner under the Tribunal’s PVPS jurisdiction.


Condo’s Trigger May Have Been CAT’s Own Case

In fact, the CAT’s Decision in the Psofimis case was released on May 20th 2021 – approximately 2 weeks before MTCC 736 commenced its CAT Application against Ms. Verstova on June 7th 2021.  While this author is unaware of what solicitor-client privileged advice the condo’s legal counsel gave to the MTCC 736 Board at the time, such advice could have been that it was now possible for the condo to recover its full legal costs against Ms. Verstova for her violating pet.  The Psofimis case may have been the trigger that nudged MTCC 736 to proceed with its own CAT Application on June 7th 2021.

Unfortunately, since Psofimis, the CAT has walked back from its initial position of awarding 100% legal costs to a successful condo.  As discussed previously here, the subsequent cases of Middlesex Vacant Land Condominium Corporation No. 605 v. Cui2021 ONCAT 91 (“Cui”) and Halton Standard Condominium Corporation No. 490 v. Paikin2021 ONCAT 95 (“Paikin”) indicate that instead, only a portion of a successful condo’s legal costs will be awarded.

The CAT’s significant reduction of the condo’s legal costs award to less-than-full-indemnity in Verstova continues this worrying trend for condominium corporations.  By cutting a unit owner’s responsibility for legal fees in half, it forces the other “innocent” non-violating unit owners at the condo to shoulder the other half of the financial burden of enforcing against that 1 specific person’s contraventions.  This understandably makes condominiums reluctant to bring a CAT Application in the first place. 

Many condominiums in Ontario are not the thousand-unit mega high-rises that attract the most attention in the province’s urban skyline.  MTCC 736 in Verstova consists of only 66 units across 3 storeys in southwest Etobicoke.  Those 66 units would be responsible for paying the remaining $8,674.67 that the CAT did not award; around $131.44 each, for a single owner’s urinating pet cat.

If the CAT is serious about wanting condos to proceed directly to the Tribunal to have their disputes resolved instead of sending multiple enforcement letters to an owner, then the CAT should award 100% of a successful condo’s legal costs – not merely a portion of it.


CAT’s New Costs Recovery Regime as of January 1st 2022

Perhaps the CAT’s new “modified” costs recovery regime, announced on December 29th 2021 – only a few days before the CAT’s expansion into noise, odour, smoke, vapour, light, or vibration (NOSVLV) issues on January 1st 2022 – will give CAT adjudicators more leeway in awarding full legal costs going forward.

Under the new Rule 48.2 of the CAT’s Rules of Practice, the CAT still has a default presumption against awarding legal costs.  But where appropriate, the CAT may now award a party with their legal costs if the opposing party’s behaviour “was unreasonable, undertaken for an improper purpose, or that caused a delay or additional expense”.

According to the CAT’s Practice Direction effective January 1st 2022 (titled “Approach to Ordering Costs”), when deciding whether to order a legal costs award at all – i.e. in departure from the CAT’s default presumption – a CAT adjudicator should consider: (a) whether the opposing party’s conduct was unreasonable, for an improper purpose, or caused delay or expense; (b) whether the CAT Application was filed in bad faith or for an improper purpose; (c) the conduct of all the parties and representatives, including the party requesting the costs award; (d) the potential impact a costs award would have on the parties; (e) whether the parties attempted to resolve their dispute prior to the CAT Application being filed; (f) whether the opposing party failed to comply with a previous order of the CAT; and (g) the indemnity provisions in the condo’s governing documents.  When deciding the quantum of costs to be awarded, a CAT adjudicator should consider: (a) some or all of the aforementioned factors; (b) the nature and complexity of the issues in dispute; and (c) whether the costs being requested are reasonable.

We look forward to seeing whether the decades of case law from the Superior Court regarding the cost factors under Rule 57.01 of the Rules of Civil Procedure, will have any bearing on at least some of the mirrored factors for consideration in this CAT Practice Direction.

The incoming wave of CAT cases under the Tribunal’s new NOSVLV jurisdiction will be fertile testing grounds for the CAT’s new costs regime.  In the ever-expanding sandbox of condominium disputes being decided by the CAT, perhaps this new regime will help sift out the unmeritorious litter.


All of the information contained in this article is of a general nature for informational purposes only and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this article is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.