Court File and Parties

COURT FILE NO.: CV-23-00694064-0000 DATE: 2024-05-28 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

YORK REGION STANDARD CONDOMINIUM CORPORATION NO. 972 Plaintiff – and – PETER TAK MING LEE and MUN CHUNG LEUNG Defendants

Counsel: Tony Bui, for the Plaintiff Self-Represented, for the Defendants

HEARD: May 2 and 3, 2024

Akazaki J.

Reasons for Judgment

Introduction

[1] The plaintiff condominium corporation seeks an order for possession of the defendants’ unit pursuant to a statutory lien. The decision also entails setting a monetary value covered by the lien. The plaintiff contends that the lien covers the expenses for obtaining a court order for compliance with its decision to replace potentially defective plumbing recalled by the manufacturer. It also claims that the lien covers the legal expenses of this lien action.

[2] The defendants are pensioners of modest means who professed little understanding of legal process but always had to be right. Whatever possessed them to remain the sole holdouts against the remedial work and to force themselves into wave after wave of futile litigation, including baseless allegations of the plaintiff’s fraud on the court, they now face the forced sale of their home.

[3] At this end of the long arc of litigation, the defendants finally conceded the pipes had to be replaced and that there was never any substance to their allegations of fraud.

[4] Before that late-trial change of position, the defendants’ intransigence exposed them to significant legal liabilities of which they either possessed no comprehension or feigned ignorance. What determines whether the defendants keep their home is the dollar amount the court must fix for the discharge of a lien under s. 85 of the Condominium Act, 1998, S.O. 1998, c. 19 (“the Act”), registered on February 2, 2022. Failing payment and discharge of the lien, s. 85(6) provides that it can be enforced in the same manner as a mortgage in default.

[5] The defendants paid their monthly common expense levies by pre-authorized debit and continue to do so throughout the litigation. The lien originated from a compliance order by this court under s. 134 of the Act which grew and grew on the common expenses ledger, as the litigation progressed. The issues arise from three subsections of s. 85.

[6] The first subsection establishes the lien for arrears in payment of the unit owner’s share of common expenses:

Lien upon default

85 (1) If an owner defaults in the obligation to contribute to the common expenses payable for the owner’s unit, the corporation has a lien against the owner’s unit and its appurtenant common interest for the unpaid amount together with all interest owing and all reasonable legal costs and reasonable expenses incurred by the corporation in connection with the collection or attempted collection of the unpaid amount. 1998, c. 19, s. 85 (1); 2015, c. 28, Sched. 1, s. 78 (1).

[7] The second subsection sets a three-month expiry period for the lien, unless it is registered on title:

Expiration of lien

(2) The lien expires three months after the default that gave rise to the lien occurred unless the corporation within that time registers a certificate of lien in a form prescribed by the Minister. 1998, c. 19, s. 85 (2).

[8] The third subsection, which will attract the greatest scrutiny in these reasons, sets out three categories of arrears and expenses that the lien covers; in other words, the discharge value:

Certificate of Lien

(3) A certificate of lien when registered covers,

(a) the amount owing under all of the corporation’s liens against the owner’s unit that have not expired at the time of registration of the certificate;

(b) the amount by which the owner defaults in the obligation to contribute to the common expenses payable for the owner’s unit after the registration of the certificate; and

(c) all interest owing and all reasonable legal costs and reasonable expenses that the corporation incurs in connection with the collection or attempted collection of the amounts described in clauses (a) and (b), including the costs of preparing and registering the certificate of lien and a discharge of it. 1998, c. 19, s. 85 (3); 2015, c. 28, Sched. 1, s. 78 (1).

[9] To arrive at a figure for what the lien covers and to determine the remedy that is fair to the parties, the court must address the following three issues:

1. the sum of costs from the compliance litigation under s. 134 of the Act that formed the common expense arrears under clauses 85(3)(a) and (b), excluding expired liens under s. 85(2),
2. statutory interpretation of clause 85(3)(c) to determine how much of the corporation’s remaining legal expenses are covered by the lien, and
3. application of the principle of relief from forfeiture.

Issue #1: Cost to Obtain Compliance Order, Less Expired Liens

[10] The plaintiff’s overall position as of the end of the trial was that the value of the lien had increased to $71,352.05 including the cost of the trial. The defendants opposed this without really taking a position. They did not appear to understand fully what the lien represented. The figure includes the first indebtedness secured by the lien, the common expense arrears attributable to unpaid costs of the compliance litigation under clauses 85(3)(a) and (b) of the Act.

[11] The legal significance of the compliance litigation was that the award of damages or costs triggered the plaintiff’s ability to add all its legal costs, even those not ordered by the court, to the defendants’ common expenses ledger, pursuant to s. 134(5) of the Act:

(5) If a corporation obtains an award of damages or costs in an order made against an owner or occupier of a unit, the damages or costs, together with any additional actual costs to the corporation in obtaining the order, shall be added to the common expenses for the unit and the corporation may specify a time for payment by the owner of the unit. 1998, c. 19, s. 134 (5).

[12] The amount the corporation may add to the common expenses pursuant to s. 134(5) has been held to be limited to the cost of obtaining the order, including any appeal: Metropolitan Toronto Condominium Corp. No. 1385 v. Skyline Executive Properties Inc., at para. 10.

[13] The common expense ledger is significant because what properly enters it forms part of the value of the lien. Since the defendants fastidiously paid their regular common expense payment (a.k.a. ‘the maintenance fee’), the cost of obtaining the compliance order superimposed extraordinary expenses on this ledger pursuant to s. 134(5).

[14] Following certain flooding events in the building in 2017 and 2018, the plaintiff discovered that units in the building were constructed with Kitec plumbing. The water pipes in question had been recalled due to manufacturing defects. The defendants contended that the floods had not occurred due to the Kitec equipment. This was one of the arguments for resisting unit owners’ incurring the cost of replacement. Indeed, they maintained that position at the trial of this action. What they failed to appreciate, apparently until I as the trial judge explained the original court decision to them during their final arguments, that it did not matter whether the defective plumbing was the cause. It had to be removed because it was found in the building, and the very presence of defective plumbing made the building more costly to insure and could lead to catastrophic property damages.

[15] A comprehensive description of the initial debate over the need to remediate the building’s plumbing appears in the May 28, 2021, decision of C. J. Brown J. in YRSCC No. 972 v. Lee, 2021 ONSC 3877. The defendants’ refusal to abide by the condominium board’s decision resulted in a compliance order and costs fixed against them in the amount of $4,541.95.

[16] During that initial round of litigation, the defendants escalated their opposition by accusing the board, building staff, and lawyers of collusion and fraud. The defendants unsuccessfully appealed the above judgment to the Court of Appeal and then sought to set aside the dismissal of the appeal based on fraud on the court. Throughout this litigation, the defendants represented themselves and had little objective perspective on what they were doing and on the potential consequences to them. They took extreme positions without offering any evidence backing them up.

[17] On December 22, 2021, the Court of Appeal added $4,500 of further costs consequences to the defendants. The plaintiff then brought a proceeding before the Toronto Assessment Office because the original compliance order allowed additional legal expenses to be added, as well as some modest amounts originally paid to an engineering firm.

[18] While the parties were waiting for their appointment with the assessment officer, the plaintiff’s lawyers issued a letter on January 6, 2022, demanding payment of $13,631.30. This consisted of the $4,541.91 awarded by this court and the full $9,089.35 incurred by the plaintiff before the Court of Appeal. On January 19, 2022, the plaintiff added the $13,631.30 amount to the common expenses ledger for the defendants’ unit.

[19] I pause to observe that the three-month period for registration of a lien to preserve the lien created by the original costs order of this court expired on August 28, 2021. This does not affect the additional amounts yet to be assessed, but it did eliminate the $4,541.95 May 28, 2021, costs order from the registered lien. The fact that the plaintiff delayed adding that figure to the common expenses ledger for the unit does not detract from the immediate effect of s. 134(5) in adding the costs to the common expenses for the unit. The lien claims making up the $13,631.30 therefore included amounts that had expired. The initial unexpired amount covered by the lien was, instead, $9,089.35.

[20] There was some initial debate with the assessment officer about the basis for his jurisdiction to assess the lawyers’ accounts, but ultimately he allowed the assessment to proceed. The amount he fixed in his Certificate of Assessment of August 11, 2022, was $10,294.11.

[21] On December 20, 2023, the Court of Appeal dismissed the defendants’ motion to set aside the dismissal of the appeal and awarded a further $2,500 in costs. The total amount covered by the lien registration in respect of the cost of obtaining the compliance order under s. 134(5) was $21,883.46. This is the lien value for the purposes of clauses 85(3)(a) and (b) of the Act.

Issue #2: What Costs Are Covered by the Lien Under Clause 85(3)(c)?

[22] Having set the amount covered by the lien under clauses 85(3)(a) and (b) of the Act, what is left is the amount under clause 85(3)(c). The plaintiff presented a rolling ledger that apparently picked up periodic law firm billings as the lien action progressed, including an estimate to the conclusion of trial.

[23] On October 5, 2022, there was a charge of $1,300 for the legal expense to register a lien. The same day, a further charge of $20,999.70 for “interest on lien” and a deduction for $1,300 to be collected by the lawyers increased the arrears to a net amount of $35,345.23. The entry for $20,999.70 was then changed to “unpaid cea [common element assessment] fee and interest on it as per lawyer letter” on November 2, 2022. That “lawyer letter” was not introduced into evidence. However, the plaintiff did file a stack of law firm accounts showing that the charges generally entailed the cost of this lien enforcement action.

[24] According to the evidence of Wendy Kwok, by November 16, 2022, the amount secured by the lien registration was $40,646.13. The referenced Notice of Sale stated that this amount consisted of $37,088.69 of common expense arrears, plus interest to date of $1,357.44, $1,200.00 for the legal costs of the lien, and $1,000.00 for the power of sale.

[25] By the opening of the trial, the unit common expense ledger showed a total arrears of $54,892.05. Based on the anticipated costs of the trial, the plaintiff estimated a total of $71,352.05 as the plaintiff’s final position. By deducting $21,883.46 attributable to the first category, including the expired lien value, it appears the corporation contemplated adding $49,468.59 to the lien value as of the conclusion of trial. The plaintiff’s presentation of these figures clearly indicated that it was adding the legal costs this lien action to the value of the lien.

[26] For their part, the defendants failed to comprehend how such amounts could be incurred. The plaintiff admitted “that the Defendants do not understand civil procedure and that this unnecessarily forced YRSCC 972 to continue incurring legal fees.” From the court’s perspective, it was not unreasonable to contemplate the plaintiff’s incurring $49,468.55 in legal expenses including those related to the preparation and hearing of the trial. Nevertheless, the legal question I must decide is whether the legal expenses for this lien action should be added to the discharge value of the lien.

[27] The inquiry must start with statutory construction of clause 85(3)(c), which I repeat for ease of review:

(c) all interest owing and all reasonable legal costs and reasonable expenses that the corporation incurs in connection with the collection or attempted collection of the amounts described in clauses (a) and (b), including the costs of preparing and registering the certificate of lien and a discharge of it. 1998, c. 19, s. 85 (3); 2015, c. 28, Sched. 1, s. 78 (1).

[28] Because of the “enormous leverage” that s. 85 affords condominium corporations, including the loss of a unit holder’s home, the courts have been careful not to treat this provision as carte blanche to incur legal expenses thinking the individual unit holders will be responsible for their payment: Carleton Condominium Corp. No. 56 v. Chreim, 2022 ONSC 4654, at paras. 59-60.

[29] That said, the scheme is designed to ensure other unit owners are not left holding the burden of legal fees and costs incurred to enforce a debt owed by another owner: Metropolitan Toronto Condominium Corp. No. 868 v. Pang, 2021 ONSC 2737, paras 9-13. See also: York Condominium Corporation No. 385 v. Vianellis, 2023 ONCAT 72, at para 24, regarding the additions to the lien value the cost of collecting the unit owner’s indebtedness. As contended by the plaintiff, most of the costs incurred in this lien action arose from the defendants’ unreasonable litigation positions. That in itself does not justify folding into the value of the lien the cost of litigating the lien itself.

[30] The first item in clause 85(3)(c), interest, refers to the interest owing on arrears items earlier on the list. In this case it is interest owed on $21,883.46. While no interest calculation was offered by Ms. Kwok, I extrapolate from her entry of $1,357.44 for interest on common expense arrears of $37,088.69 (some of which I have disallowed for inadequate evidence) an amount of $800.93. In this regard, I do trust her knowledge of the interest rate in the corporation’s Declarations as part of the ordinary course of her business as a property manager. This brings the subtotal under the lien to $22,684.39.

[31] The second part of clause 85(3)(c) is less straightforward. It is bifurcated into two subclauses: the cost of collection of the earlier items, viz. the $21,883.46, and the inclusion of the preparation, registration, and discharge of the lien itself. I do not construe the combination of these subclauses as limiting the lien value to “including the costs of preparing and registering the certificate of lien and a discharge of it.” The inclusion of those specific items does not restrict the generality of the previous subclause. The ejusdem generis rule, a.k.a. the ‘limited class rule,’ does not apply where general terms are followed by specific terms and connected by the word “including”: National Bank of Greece (Canada) v. Katsikonouris, [1990] 2 SCR 1029, at 1040-41. However, it does not follow that the cost of the lien action can be included, since the wording limits the inclusion to specific items.

[32] The cost of the lien registration was $1,200. Assuming the cost of discharge would be similar, the total formal cost of the lien would be $2,400. The issue regarding the balance of clause 85(3)(c) therefore depends on whether the cost of the lien enforcement action, including the expenses of the trial, come within the meaning of “the collection or attempted collection” of the $21,883.46.

[33] A liberal reading of para. 85(3)(c) could be informed by its purpose as a means of securing payment, ultimately backed up by the enforcement by power of sale or other remedy analogous to mortgage remedies, under s. 85(6). However, securing an indebtedness is not the same as collecting. Most secured transactions never require lenders to incur costs of collection. I appreciate that this may seem to be an artificial distinction. However, all statutory liens require the court to exercise surgical precision because of the potential for impacting vested property rights.

[34] I was not referred to any case, either at the trial or at the appellate level, directly addressing this question whether the cost of the lien enforcement action can be included in the value of the lien, so that the cost hurdle for discharge multiplies because of the litigation. It is a notable fact that the prayer for relief in the statement of claim seeks a possessory order only. It does not seek a money judgment for common expenses arrears under s. 84.

[35] In CIBC Mortgages Inc. v. York Condominium Corporation No. 385, 2017 ONCA 542, at para. 51, the Court of Appeal stated that s. 85 provided a means for collecting the costs of obtaining the s. 134 compliance order. However, that interpretation did not extend to treating the costs of enforcement of the lien under s. 85(6) in the same manner as s. 134 costs, i.e. to be added to the common expenses to be enforced by lien. In York Condominium Corporation No. 82 v. Bujold, 2013 ONCA 209, at para. 14, the Court of Appeal also held that the s. 85 lien covers future defaults of payment of common lien expenses. This point renders suspect the applicant’s reasoning that the costs incurred in enforcing the lien in this action operates like a running slate chargeable against the unit owner’s common expense ledger. The courts narrowly construe statutes against impairing vested rights, absent clear wording: Gustavson Drilling (1964) Ltd. v. Minister of National Revenue, [1977] 1 SCR 271, at 282.

[36] Sections 85 and 134 are related in that the legal costs added to the ledger under s. 134 become part of the lienable amount under s. 85, because of wording of s. 134 that is nevertheless absent in s. 85. The courts have said much about the legislative purpose of requiring the innocent unit holders to remain fully indemnified from the non-compliance of the offending unit holder. However, the wording that allows such a purposive construction for s. 134 does not allow such a meaning read into s. 85 in the absence of specific language. Had the legislature meant clause 85(3)(c) to operate like s. 134, it would have used wording that denotes that intent. Such wording is absent.

[37] The final words of La Forest J.’s reasons in the above-cited National Bank of Greece case for refusing to apply the limited class rule require the court to consider whether the references to preparation, registration, and discharge of the lien as extensions of scope to specific legal services outside of collection. After considering the meaning of the word “including” after general terms and preceding specific ones, he stated:

This meaning finds confirmation in legal lexicons as well: the entries under “include” and “including” in Stroud's Judicial Dictionary (5th ed. 1986) to take but one example, again make it clear that these words are terms of extension, designed to enlarge the meaning of preceding words, and, not, to limit them.

[38] The legislature could have adding to preparation, registration and discharge, the enforcement of the lien under s. 85(6). The failure to do so invokes another basic rule of construction, expressio unius est exclusio alterius: to express one thing is to exclude another. The Federal Court of Appeal, in Canada (Canadian Private Copying Collective) v. Canadian Storage Media Alliance, 2004 FCA 424, [2004] F.C.J. No. 2115, stated, at para. 96:

The rule is that the expression of one thing in a statute usually suggest the exclusion of another (expressio unius est exclusio alterius). Pursuant to this maxim, if a statute specifies one exception (or more) to a general rule, other exceptions are not to be read in. The rationale is that the legislator has turned its mind to the issue and provided for the exemptions which were intended.

[39] Aided by these principles, the legislature’s intention becomes clear that it intended to include in costs of collection specific examples of the cost of preparing, registering, and discharging the lien as a form of security, as extending the scope to legal services not normally associated with collection. Had it intended to include the cost of enforcement under s. 85(6), it could have added the word “enforcing” or referred to that subsection. The legislature did not do so, and the natural conclusion is that the costs of the enforcement action cannot be added to the common expense ledger or to the lien. As Prof. Sullivan stated:

The reasoning here is essentially counterfactual: if the legislature had intended to include comparable items, it would have mentioned them expressly or used a general term sufficiently broad to encompass them; it would not have mentioned some while saying nothing of the others. This reasoning is grounded not only in drafting convention but also in basis principles of communication.

Sullivan, The Construction of Statutes, Seventh Ed. (Toronto: LexisNexis, 2022), at p. 248.

[40] I therefore conclude that the costs of the lien action, including the trial, are not captured by clause 85(3)(c) of the Condominium Act as costs of collection. The grounds for discharge of the lien must therefore be rooted in the additional common expenses pursuant to s. 134(5) as well as the cost of lien registration and discharge. That is a clear example of a provision expressly adding a type of legal expense to the common expense ledger of a unit – a further indication of the legislature’s intention in having declined to give the costs of lien enforcement the same treatment in s. 85. As I will cover in the costs ruling, I appreciate that in declining to include the costs of the lien action in the discharge value of the lien does not eliminate the jeopardy to the defendants’ unit ownership, because the enforcement of the money judgment for costs can ultimately include seizure and sale. Nevertheless, as a matter of statutory construction, I do not read clause 85(3)(c) as including the costs of an action for lien enforcement.

[41] Only $2,400, the cost of registration and the cost of discharge, should be added to the value covered by the lien as coming within the language of clause 85(3)(c). The total value of the lien therefore comes to $25,084.39.

Issue #3: Relief from Forfeiture

[42] The plaintiff did not strenuously oppose a remedy that could allow the defendants to keep their home. Nevertheless, the corporation is obligated to all unit owners to collect from the defendants what it can. The defendants finally dropped their untenable positions and essentially placed themselves at the mercy of the court.

[43] The justice of any case involving a potentially punitive outcome is the relief from penalties and forfeitures set out in s. 98 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (CJA). There is a two-part test for the availability of the provision: (1) whether the penalty or forfeiture is out of proportion to the damages suffered by the plaintiff, and (2) whether it would be unconscionable to grant the order amounting to penalty or forfeiture. See: Redstone Enterprises Ltd. v. Simple Technology Inc., 2017 ONCA 282, at para. 15.

[44] Here, the proportionality of the balance between lien enforcement, resulting in the defendants’ loss of their home, and the plaintiff’s damages is defined by s. 85(3). It is therefore not a penalty per se but, rather, an application of the evidence to the statute. Insofar as the failure to discharge the lien leads to the forced sale of the defendants’ unit, there is an element of penalty in the sense that the sale represents the ultimate consequence of the unit owner’s non-compliance with the condominium’s rules and decisions.

[45] I appreciate that the defendants were entirely responsible for the litigation in having taken outrageous and unfounded positions regarding fraud and conspiracy on the part of the condominium agents and stakeholders in the decision to replace the plumbing. Nevertheless, as the plaintiff’s counsel stated in his opening submissions, the condominium is a community. Although exclusion from the community must occur from time to time, the issue here originates in a disagreement over a financial decision and not in damage to common elements or a nuisance to communal living.

[46] I therefore grant the main lien enforcement relief sought in the plaintiff’s draft judgment, but with a suspension of the judgment for a period of 60 days. The plaintiff suggested a shorter period of 45 days but was not opposed to 60.

Costs

[47] The plaintiff submitted a bill of costs for the action ranging from $21,237.25 at the partial indemnity rate, to $27,797.70 at substantial indemnity, to $34,358.15 in full indemnity.

[48] A judgment for costs can ultimately bear a similar consequence as the lien in that an unsatisfied money judgment can lead to enforcement including a writ of seizure and sale under rule 60.07. However, this is a different process than lien enforcement under s. 85 of the Condominium Act.

[49] Until their last-minute conversion to the evidence and facts of the case, the defendants were responsible for the plaintiff having to incur legal expenses. Their conduct fit all the criteria of abusive and reprehensible conduct in the litigation in the case law, as summarized in Hordo v. Zweig, 2021 ONSC 2244, at para. 19. The cost of the lien enforcement action do not come under the full indemnity principle in s. 134(5). Therefore, the appropriate costs remedy in this case is to award the plaintiff its costs on a substantial indemnity scale.

[50] When asked to comment on the amounts sought by the plaintiff in the bill of costs, the defendants again stated that the legal issue was beyond their understanding. I find that the amounts sought are entirely reasonable and proportional to the nature of the case and the level of preparation exhibited in the trial. I therefore award the plaintiff substantial indemnity costs in the round figure of $27,000, inclusive of disbursements and HST.

Conclusion

[51] I therefore grant judgment to the plaintiff and order (1) that the defendants shall deliver possession of their unit to the plaintiff and (2) that the plaintiff has leave to issue a writ of possession in respect of the unit. The total value of the lien to be realized on any sale, or the cost to the defendants to discharge the lien, is fixed in the amount of $25,084.39. This part of the judgment is suspended for a period of 60 days.

[52] If the defendants discharge the lien within 60 days hereof, the possessory orders in paragraph 50 above shall be deemed set aside.

[53] The plaintiff is entitled to an award of costs in the amount of $27,000, all-inclusive, for the costs of the action.

[54] The plaintiff’s counsel may contact my judicial assistant at Melissa.Issa@ontario.ca to submit a draft order for my review giving effect to the order in paragraphs 50-52 above.

Akazaki J.

Released: May 28, 2024