Sep 8, 2015

COURT OF APPEAL SUMMARIES (AUGUST 31 – SEPTEMBER 4, 2015)

Durham Condominium Corporation No. 45 v. Swan, 2015 ONCA 590 (CanLII)

Counsel:

Howard Wright, for the appellant
Timothy Duggan, for the respondent

Keywords: Real Estate, Condominium Law, Condominium Act, 1998, s. 37(1) and s.38(1), Vexatious Litigant

Facts:

The appellant is a former director and a unit owner of the respondent condominium corporation. The appellant appeals with leave from a costs order made against him in the from an application brought against him by the respondent.

The respondent sought costs on a full indemnity basis in the amount of $198,880.92 or on a partial indemnity basis in the amount of $126,855.22. The appellant claimed he was indemnified against costs under the By-laws of the condominium corporation and ss. 38(1) of the Condominium Act, 1998. The application judge ordered appellant to pay costs of $45,000 to the respondent on partial indemnity scale. The respondent brought an application seeking the following orders under the Courts of Justice Act:

  • A declaration that the appellant is a vexatious litigant;
  • A declaration that the respondent’s Board of Directors has the authority to enter into contracts for third party management of the condominium;
  • A declaration that the present property management company contract with MCD Enterprises (MCD) is binding; and
  • An injunction prohibiting the appellant from having any contact with the respondent’s Board of Directors, MCD, and its principal, Catherine Debbert.

Additionally, the respondent also sought further relief under the Condominium Act, 1998: (i) a declaration finding that the appellant, as a Director with the condo corporation, failed to carry out his duties and exercise the care and diligence required in that office according to subsection 37(1) of the Act; and (ii) an order that the appellant remove, at his expense, the satellite dish installed on the common elements.

The Appellant brought a cross application. The application judge dismissed the respondent’s application that the appellant be declared a vexatious litigant and denied its application for an injunction to bar the appellant from contacting the board of directors. The judge made several findings against the appellant. Specifically, the application judge found that the appellant failed to exercise the care, and diligence and skill that a reasonably prudent person would exercise in carrying out his duties as director of the condominium. The appellant’s cross application was dismissed in its entirety and the application judge found that the appellant’s actions put the proper management of the condominium at risk.

Issues:

Is the appellant entitled to be indemnified for the costs and expenses he incurred in the litigation?

Holding:

Appeal Allowed. Costs order set aside, and matter is remitted to the application judge.

Reasoning:

The Court held that it is at a significant disadvantage in dealing with this matter. Neither party in this case took out a judgment following the application judge’s decision. There was considerable uncertainty during oral argument as to the nature of the judgment that would have been issued. The court also ruled that it was unclear how the application judge came to the amount of $45,000, or what that amount covers.

The court stated that the main difficulty is that the application judge’s decision on the applicability of the indemnity provided by the respondent’s by-law is ambiguous. The court remitted the matter back to the application judge to determine the following:

1) applicability of ss.37(1)(a) and (b) of the Condominium Act, 1998 and the by-law to the facts of the case;

2) whether, and the extent to which, the indemnity applies;

3) the quantum of costs and expenses, if any, covered by the indemnity; and

4) the breakdown of the costs as between the application and the cross-application.

Subsequently, the court found that the appellant is entitled to costs on this appeal of $6,000

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