Condo Corporation Declaration Insufficient To Oust Small Claim Court Cost Rules
Condominium Corporation Declarations often seek to protect the majority of unitholders from the litigation costs incurred when a single unitholder is taken to court. The Declarations often contain indemnification provisions that require the unsuccessful unitholder to indemnify the Condominium Corporation so that the majority of unitholders do not bear the costs. What happens, however, if the amount to be indemnified exceed the cost rules for Small Claims Court?
Recently, Divisional Court looked at this question and overturned the decision of a Small Claims Court Deputy Judge who had awarded $20,000.00 in costs against an unsuccessful unitholder based on an indemnification provision. The unitholder had been unrepresented by legal counsel, and her disorganization caused the trial to last three days.
Divisional Court overturned the ruling citing Section 29 of the Courts of Justice Act which cap Small Claims Court awards at 15% of the amount claimed unless the court finds it necessary in the interests of justice to penalize a party for unreasonable behaviour in the proceeding. Since the unitholder had not acted unreasonably, the cost award was reduced.
Specifically, the court was troubled by the wording of the indemnification provision that limited the indemnification to damages or injury caused to the common elements and/or all other units.
The Lesson: Indemnification provisions in Condominium Corporation Declarations may be insufficient to protect other unitholders from having to bear the costs of litigation. Wording in indemnification provisions must be broad enough to ensure that any damage or injury caused by the unitholder is subject to indemnification.
Wexler v Carleton Condominium Corporation No. 28, 2017 ONSC 5697 (ONSC) https://www.canlii.org/en/on/onscdc/doc/2017/2017onsc5697/2017onsc5697.html?resultIndex=1
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