Court File and Parties

COURT FILE NO.: CV-13-473390
DATE: 20130908
SUPERIOR COURT OF JUSTICE – ONTARIO

RE: ANDREA DAVIS, Plaintiff/Applicant

AND:

PEEL CONDOMINIUM CORPORATION NO. 22, Defendant/Respondent

BEFORE: Stinson J.

COUNSEL:
Andrea C. Lusk, for the plaintiff/applicant
Antoni Casalinuovo, for the defendant

HEARD: In writing

COSTS ENDORSEMENT

[1] In my decision released June 7, 2013, I dismissed this application brought under ss. 134 and 135 of the Condominium Act, 1998, S.O. 1998 c. 19 (the "Act"). The applicant had sought a review of the ruling of a chairperson in allowing proxy votes to be cast at a condominium corporation meeting, and to annul the results of that meeting. I concluded that the chairperson of the meeting acted appropriately, discharged the functions that were assigned to her and reached conclusions that she was entitled to reach. I therefore held that there was no non-compliance with the Act and that the meeting was regularly and properly conducted. I further held that the allegation that the conduct of the Corporation was oppressive or unfairly prejudicial to the applicant or unfairly disregarded her interests, was not made out. In paragraph 30 of my decision, I invited the parties to reach agreement on costs or otherwise to make written submissions. They were unable to agree and subsequently filed written submissions with me.

[2] The successful respondent, Peel Condominium Corporation No. 22 ("PCC 22"), seeks costs on a substantial indemnity basis, in the amount of almost $46,000. The applicant submits that each party be ordered to pay their own costs or in the alternative that PCC 22 pay her partial indemnity costs, pursuant to rule 57.01(2). She submits that the costs claimed by PCC 22 are excessive and further that the threshold to award substantial indemnity costs has not been met.

liability for costs

[3] As the successful litigant, in the ordinary course PCC 22 would be entitled to an award of costs against the unsuccessful party. The applicant, however, submits that the facts of this case are such that the ordinary practice should not apply.

[4] This dispute raised the question of the legitimacy of the election of the new Board of Directors of PCC 22. The election of the new board followed a period of dissatisfaction and dissent among some unit owners regarding the fashion in which the affairs of PCC 22 were conducted. Among other things, there was dissatisfaction regarding the practices of the management company hired by PCC 22 to operate the affairs of the corporation and maintain the corporation’s financial and other records. That dissatisfaction was, in part, justified given the poor state of the records when the new Board of Directors assumed control. Indeed, it was the status of those records that in large part gave rise to the disputes that led to this application.

[5] Although a new Board of Directors was elected at the disputed meeting and remains in place, one cannot lose sight of the fact that the substandard fashion in which the records of the corporation were maintained led to the problem and the litigation. The corporation is distinct from its Board of Directors and its management company, yet it cannot escape responsibility for their actions and failures. In this case the failure to maintain proper records must be laid at the feet of the corporation. Had those records been current, accurate and reliable, the voting eligibility of all unit owners would have been clear at the outset of the meeting. The confusion as to voter eligibility and the resultant need for the rulings by the chair would have been obviated. In turn, there would have been no question in the mind of the applicant concerning the legitimacy of the procedure followed and the outcome of the meeting

[6] The applicant is merely a unit holder. She was not a member of the old Board of Directors. She cannot be held responsible for the shortcomings in the record-keeping of PCC 22. Indeed, although they were ultimately decided adversely to her, she raised legitimate questions regarding the propriety of the voting process. Those questions would not have arisen had PCC 22 maintained its records in the fashion that it should have. Although I ultimately concluded that the new Board of Directors was legally installed, PCC 22 cannot avoid responsibility for the situation that gave rise to the concerns about the legitimacy of the election process.

[7] In my view, this was a matter of interest and general concern to all unit owners at PCC 22. Each has an interest in the proper governance of the corporation and the proper adherence to due process in the conduct of the affairs of the unit owners. In this case, one unit owner brought those concerns to court and the legitimacy of the election process was affirmed. The applicant incurred a significant personal expense to retain her own counsel to raise these questions. Having regard to the circumstances described above, and in particular the reasons for the problem in the first place, in my view it would be inappropriate and unfair to require the applicant to pay any costs to PCC 22.

[8] In addition, the applicant has requested an order under rule 57.01(2) that her costs be paid by PCC 22. Although the applicant may have had cause initially to be concerned about the legitimacy of the vote, she continued with the application despite having received information which indicated that her complaint could have had no impact on the outcome. In addition, she declined to accept an offer from PCC 22 for the withdrawal of the application on a without costs basis. Her decision to proceed to the hearing notwithstanding that offer negates any suggestion that she should be paid her costs by the successful party.

[9] In light of the foregoing analysis, I conclude that each party should bear their own costs of the application. I therefore make no order as to costs.

Stinson J.

Date: October 8, 2013