ONTARIO

SUPERIOR COURT OF JUSTICE

NEWMARKET COURT FILE NO.: CV-12.1086622.00
(Toronto Action) CV-12-449118
DATE: 20120831

BETWEEN:

MARINA PERPER AND NATALIYA LYSENKO
Applicant

– and –

YORK REGION CONDOMINIUM CORPORATION NO. 860
Respondent

Derrick M. Fulton, for the Applicant

Matthew Morden, for the Respondent

AND BETWEEN:

YORK REGION CONDOMINIUM CORPORATION NO. 860
Applicant

– and –

MARINA PERPER AND NATALIYA LYSENKO
Respondent

Matthew Morden, for the Applicant

Derrick M. Fulton, for the Respondent

By written submissions

RULING ON COSTS

QUINLAN J.

OVERVIEW

[ 1 ] York Region Condominium Corporation No.860 (“YRCC 860”) brought an application pursuant to section 134 of the Condominium Act, 1998 , for a declaration that the requisition (“Requisition”) to vote on the removal of three members of the board of directors (“Board”) of YRCC 860 delivered by Marina Perper (“Perper”) and Nataliya Lysenko (“Lysenko”) was invalid and no meeting should be called or held in respect of the Requisition. They also sought injunctive relief restraining any meeting from being held, any further dissemination by Perper or Lysenko of certain information and canvassing or soliciting by Perper or Lysenko.

[ 2 ] Perper and Lysenko brought an application pursuant to section 134 of the C ondominium Act, 1998 , for a declaration that a special meeting for the removal of three members of the Board be called, together with related relief in relation to the meeting, and an order restraining YRCC 860’s management company from canvassing or soliciting in respect of the meeting.

[ 3 ] YRCC 860 was successful on their application. I granted YRCC 860:

(a) A declaration pursuant to section 134 of the Condominium Act, 1998 that the Requisition to vote on the removal of three members of the Board of Directors of YRCC 860 delivered by Marina Perper and Nataliya Lysenko was invalid and that no meeting should be called or held in respect of the Requisition;

(b) A permanent injunction restraining any meeting from being called or held pursuant to the Requisition;

(c) A permanent injunction restraining Marina Perper and Nataliya Lysenko from further dissemination of the Letter dated February 15, 2012 and the Requisition, or the allegations therein; and

(d) An interim injunction restraining Marina Perper and Nataliya Lysenko from canvassing and/or soliciting, directly or indirectly, in respect of, or for, any election or owners’ meeting of YRCC 860 until December 31, 2012.

[ 4 ] Perper and Lysenko's application was dismissed.

[ 5 ] YRCC 860 seeks its costs of the application on a substantial indemnity basis in the amount of $41,000.

[ 6 ] At the hearing of the application, Perper and Lysenko were self-represented. They retained counsel to assist them with their written costs submissions.

[ 7 ] The position of Perper and Lysenko is that the application was not brought pursuant to section 134 of the C ondominium Act, 1998 , the matter should have been subject to mandatory mediation and arbitration as set out in section 132 of the Act and no order for costs should be made. In the alternative, the costs sought are excessive and an appropriate award of costs is $5000.

ANALYSIS

Were the applications brought pursuant to section 134 of the Act ?

[ 8 ] YRCC 860’s application and Perper and Lysenko's application were both styled as applications pursuant to section 134 of the Act. Each of the parties sought declaratory relief. Each sought compliance with the Act . It was clear from YRCC 860’s factum that reliance was being placed upon section 134 of the Act .

[ 9 ] Section 134(1) of the Act provides that an owner, occupier or a corporation may make an application to the Superior Court of Justice for an order enforcing compliance with any provision of the Act .

[ 10 ] The Requisition in question was prepared and delivered pursuant to section 46 of the Act . The issue before me was whether the Requisition complied with the Act and whether a meeting should be held in accordance with the Act .

[ 11 ] I found that the Requisition was invalid and that forcing YRCC 860 to call a meeting of unit owners pursuant to an invalid Requisition would violate YRCC 860’s right to require compliance with the Act .

[ 12 ] Section 134(3) states that, on an application, the court may grant the order applied for and grant such other relief as is fair and equitable in the circumstances.

[ 13 ] I agree with the position of YRCC 860 that section 134(3) of the Act does not restrict the relief that the court may grant to ensure compliance with the Act in the manner suggested by Perper and Lysenko in their costs submissions.

[ 14 ] Stulberg v. York Condominium Corp. No. 60, 1981 CarswellOnt 1140 (CA) , the decision relied upon by Perper and Lysenko, was decided pursuant to the Condominium Act, 1978 , which addressed the performance of the duty imposed by that Act and not the broader concept of compliance with the Condominium Act, 1998 .

[ 15 ] Perper and Lysenko argue that I should exercise my discretion and find that my decision was not a compliance order and that the cost ramifications under section 134(5) do not apply.

[ 16 ] Both parties sought declaratory relief and compliance with the Act. I have already exercised my discretion in making the compliance order under section 134. There is no basis for me to now alter the relief I granted so that there are no cost ramifications for the losing party.

Was there a requirement for mediation or arbitration?

[ 17 ] Section 132 of the Act applies to specific agreements between a condominium corporation and a unit owner and disagreements concerning the declaration, by-laws or rules. I agree with the position of YRCC 860 that the within application did not concern matters to which section 132 of the Act applies. As such, mediation and arbitration were not mandatory.

[ 18 ] I note as well that Perper and Lysenko brought an application under section 134. They did not seek mediation or arbitration, nor did they argue that mediation or arbitration were required before the court could proceed to hear and determine the applications.

What is the appropriate scale of costs?

[ 19 ] YRCC 860 argues that:

a. the conduct of Perper and Lysenko in making deliberate misrepresentations to the unit owners and inaccurate and misleading submissions to the court warrants an award of substantial indemnity costs;

b. unit owners must not think that they can do or say whatever they believe is necessary to remove members of the Board, without regard for the truth of their statements;

c. this conduct can disturb the unit owners, create false acrimony within the condominium corporation and interfere with the condominium corporation's management of its affairs;

d. Perper and Lysenko could have added each of their supporters as applicants in their own application; YRCC 860 named only Perper and Lysenko because they were the individuals who delivered the Letter and Requisition; and

e. the unfounded allegations and the insistence by Perper and Lysenko that a meeting be held pursuant to the invalid Requisition obliged YRCC 860 to commence an application.

[ 20 ] Perper and Lysenko argue that:

a. there has been no reprehensible conduct;

b. an award for substantial indemnity costs will be viewed as a punitive award, sending a message that will discourage unit owners from questioning the running of the corporation;

c. the court must balance the rights of the Board and management with those of unit owners; other unit owners were not made a party to the application for ease and economics; and

d. any costs award should reflect a fair and reasonable amount. The hours expended are unjustified. No costs should be awarded; alternatively, a more appropriate award of costs is $5000.

[ 21 ] Although I found that Perper and Lysenko, amongst other things, made false and misleading representations in the Letter and Requisition and made inaccurate submissions before me, I am not satisfied that their conduct merits an award of substantial indemnity costs. Although their conduct was improper and their claims against the members of the Board were without basis, I do not find that their conduct can be said to be "reprehensible".

[ 22 ] The application brought by Perper and Lysenko was without merit. However, in exercising my discretion as to the appropriate scale and quantum of costs, I consider that little additional time was required in the determination of Perper and Lysenko's application, given that it proceeded along with YRCC 860’s application.

[ 23 ] Accordingly, costs shall be awarded on a partial indemnity scale.

What is an appropriate award of costs?

[ 24 ] As the successful party, YRCC 860 has a prime facie entitlement to costs on a partial indemnity basis. The costs sought on a partial indemnity basis are fees in the amount of $27,850 and disbursements in the amount of $4,125, for total fees and disbursements in the amount of $31,975.

[ 25 ] I have reviewed the costs outline provided by YRCC 860. In particular, I find that the time spent on the initial review of the Letter and Requisition, consultation with the client and correspondence to unit owners, correspondence with the client regarding materials, proceedings and strategy and drafting of the factum is excessive.

[ 26 ] Over 110 hours were spent on the application, including attendances at cross- examinations and three attendances in court. I agree with Perper and Lysenko that this amount is excessive and that it is not fair and reasonable that Perper and Lysenko should pay such costs.

[ 27 ] Any cost award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of actual costs to the successful litigant: York Condominium Corp. No. 482 v. Christiansen , 2003CarswellOnt 1198 (SCJ) , referring to Zesta Engineering Ltd. v. Cloutier , 2002 25577 (ON CA) , 2002 CarswellOnt 4020 (CA).

[ 28 ] Having considered the factors set out in rule 57 of the Rules of Civil Procedure , I find that an appropriate award of costs, inclusive of disbursements and HST, is $18,000.

[ 29 ] Accordingly, Perper and Lysenko are ordered to pay to YRCC 860 its costs of the application in the amount of $18,000.

QUINLAN J.

Released: August 31, 2012