Court File and Parties

Court File No.: CV-20-653150 Date: 2022-03-28 Superior Court of Justice - Ontario

Re: Mitchell Worsoff, Plaintiff And: Metropolitan Condominium Corporation No. 1168, Crossbridge Condominium Services Ltd. et al., Defendants

Before: Associate Justice Graham

Counsel: David Marcovitch, for the plaintiff David Plotkin, for the defendants

Heard: March 21, 2022

Reasons for Decision

(Motions for costs of a discontinued action)

[1] The plaintiff’s claim arose from his ownership of a residential condominium at 2 Covington Road, Toronto. In late April or early May, 2020, shortly after both his acquisition of the condominium and the onset of the Covid-19 pandemic, he initiated renovations to his unit. He commenced this action on December 15, 2020, claiming damages from the condominium corporation (“MCC 1168”) and its manager and agent Crossbridge Condominium Services Ltd. (“Crossbridge”) and alleging oppressive conduct under s. 135 of the Condominium Act, S.O. 1998, c. 19 on the basis that the defendants treated him differently from other unit owners in relation to what they were required to do to renovate their units.

[2] The plaintiff also sued the individual MCC 1168 Board members and the corporation’s former lawyers. The action against the Board members was dismissed on consent without costs on May 21, 2021 and against the former law firm and lawyer was discontinued on consent without costs on September 27, 2021.

[3] Examinations for discovery of the plaintiff and MCC 1168’s representative Mr. Boldes were held on October 27, 2021. On December 21, 2021, the plaintiff discontinued the action against the remaining defendants MCC 1168 and Crossbridge (“the defendants”).

[4] The plaintiff and the defendants each now move for payment of their costs of the discontinued action. Both motions are under Rule 23.05(1) of the Rules of Civil Procedure:

23.05(1) If all or part of an action is discontinued, any party to the action may, within thirty days after the action is discontinued, make a motion respecting the costs of the action.

Submissions of the plaintiff

[5] The plaintiff submits that he is entitled to recover the costs of his discontinued action because the defendants’ conduct justified him starting it. Plaintiff’s counsel refers to Digiuseppe v. Todd, 2012 ONSC 1028 in which McCarthy J. quotes the following test from Provincial Crane Inc. v. AMCA International Ltd. (1990), 44 C.P.C.(2d) 46 (at para. 22 of Digiuseppe):

22 In order to establish that it ought to be relieved of costs in the court’s discretion it is my opinion that, at this early stage of the action the plaintiff must satisfy the court that the material filed discloses a bona fide cause of action, that is not frivolous or vexatious and which the plaintiff has some justification to commence, having regard to the conduct of the defendant. Since the court cannot, at this early stage, make final findings of fact or credibility, the court is left to determine if, notwithstanding conflict, there is some evidence to justify the commencement of the action whether or not it can be said that the action may or may not ultimately succeed.

[6] In finding that the case before him satisfied this de minimis test for a bona fide cause of action, McCarthy J. commented (at para. 24):

24 A consideration of what constitutes a bona fide claim should not involve speculation on the ultimate merits of the claim nor on what might have been the result had the claim been adjudicated. Similarly, it should not be part of the court’s analysis to weigh the merits of potential defences available to the defendant. Moreover, the fact that the claim is ultimately discontinued should not be a factor to consider in the assessment of a claim’s bona fides.

[7] The plaintiff’s claim is based on the oppression provision in s. 135 of the Condominium Act:

135(1) An owner, a corporation, a declarant or a mortgagee of a unit may make application to the Superior Court of Justice for an order under this section.

(2) On an application, if the court determines that the conduct of an owner, a corporation, a declarant or a mortgagee of a unit is or threatens to be oppressive or unfairly prejudicial to the applicant or unfairly disregards the interests of the applicant, it may make an order to rectify the matter.

[8] The Condominium Act, s. 135 refers to a proceeding by application and the defendants submit that the plaintiff is precluded from seeking oppression relief in his action. I will address this submission now. The defendants did not plead this objection in their statement of defence or raise it at any time before responding to this motion. As Juriansz J. (as he then was) concluded in addressing a similar submission in McKinstry v. York Condominium Corp. No. 472, [2003] O.J. No. 5006 (at para. 43), there is no prejudice to the defendants arising from the plaintiff seeking the s. 135 relief in his action, and he should be considered to have made his application to the court within the action.

[9] In Weir v. Peel Condominium Corporation No. 485, 2017 ONSC 6265, Petersen J. stated (at para. 10):

10 In order to establish entitlement to a remedy under s. 135, a claimant must satisfy a two-prong test. She must show that (i) the respondent failed to meet her reasonable expectations and (ii) the respondent’s conduct was or threatened to be oppressive or unfairly prejudicial to her or unfairly disregarded her interests. [citations omitted] Proof of a reasonable expectation may be linked to one or more of the concepts of oppression, unfair prejudice, or unfair disregard of interests such that the two prongs of the test effectively merge. [citations omitted]

[10] The plaintiff’s grievance is essentially that, in undertaking renovations to his unit, he was required to disinfect the common areas used by his contractors, particularly the elevators, and to pay for security guards, and it did not appear that other unit owners who were renovating their units were required to take these steps. He submits that he had a reasonable expectation that he would be treated like the other unit owners and his perception that his reasonable expectation was not honoured by the defendants constituted reasonable grounds for him to commence the action. He also submits that the defendants’ pleading provided him with grounds to continue his action.

[11] With respect to the manner in which the litigation proceeded, the plaintiff refers to his Statement of Claim:

• He alleges that in May and June, 2020, the defendants did not require other residents or “attendees” in the common areas to post security guards, to disinfect elevators or to wear gloves and masks; “these requirements were directed solely at him.” (para. 25)
• He particularizes the actions of other condominium owners and their agents. He submits that other owners’ contractors did not have to meet the same safety standards as he was required to meet. (paras. 29-32)

[12] The plaintiff also refers to the defendants’ Statement of Defence:

• The defendants plead that the plaintiff “was held to the same standards as all other residents who requested renovations or repairs to their unit during the relevant periods.” (para. 76)
• The defendants plead that the only two unit owners besides the plaintiff who were permitted to undertake renovations provided all necessary supporting documentation and paid the required $500.00 deposit. (para. 78)

[13] The plaintiff takes issue with the failure of the defendants to include in their pleading anything to do with the requirement of all unit owners to pay for security guards and disinfecting. Had the defendants disclosed this initially, he would not have commenced or continued the litigation. Further, he was not advised that all approvals for renovations required the unit owners to provide security guards and disinfect common areas. He was eventually provided with copies of the other two unit owners’ renovation agreements stipulating these conditions after his own examination for discovery.

[14] The plaintiff acknowledges that the defendant’s “Covid-19 renovation policy”, which came into effect on July 13, 2020, states that “the approval process will include an evaluation of the risk of exposure to Covid-19.” However, counsel submits that this written policy contains no term requiring disinfection and security guards. Other unit owners did not appear to have to comply with any such requirement so the plaintiff thought that there was room for the exercise of discretion in his case. The defendants did not plead that other unit owners were required to disinfect and provide security, so the plaintiff was taken by surprise when the defendants produced the other two unit owners’ renovation agreements after he was examined.

[15] The plaintiff submits that the defendants’ conduct tended to lengthen or prolong the action by failing to plead the content of the other two renovation agreements and then failing to disclose and produce the two renovation agreements. The defendants failed to provide him with relevant information before he commenced the action, and omitted it from their statement of defence, and again in their documentary disclosure. More timely disclosure would have persuaded him either not to have commenced the action, or to have discontinued the action at an earlier stage.

[16] With respect to the defendants’ submission that the plaintiff substantiated little or no damages, counsel submits that if the plaintiff could prove oppression on the basis that he was treated differently, he still had an actionable claim for which he could recover damages.

Submissions of the defendants

[17] The defendants submit that the plaintiff, who is a litigation lawyer, was and is well aware that “regardless of how an action turns out, a plaintiff always runs the risk of having to pay the costs of any defendant it chooses to sue.” (Bank of Nova Scotia v. Pappas, 2019 ONSC 840) The plaintiff claimed that other unit owners were treated differently from him when undertaking renovations but provided no specific examples. The defendants further submit that Mr. Worsoff’s subjective belief does not substantiate objective bona fides with respect to his commencement of the action.

[18] Counsel also submits that the plaintiff had opportunities to discontinue his action without costs, he substantiated little or nothing in the way of actual damages, and he should have proceeded by arbitration as required by the Condominium Act. (As the defendants did not plead the requirement to arbitrate in their statement of defence and did not raise the issue before this motion, I do not consider it to be a factor on this motion.)

[19] Defendants’ counsel addressed the plaintiff’s allegation in paragraph 25 of the statement of claim (para. 11 above) that the defendants did not require other unit owners to arrange security guards or to disinfect elevators, and his submission on this motion that he was not aware of the defendants’ renovation policy. The defendants rely on the following events:

• July 13, 2020 - The plaintiff received a copy of the renovation policy when it was circulated electronically to all unit owners or delivered in person;
• January 14, 2021 – The defendants served their statement of defence pleading the substance of the renovation policy;
• April, 2021 – The defendants served their affidavit of documents which contained the renovation policy;
• April 23, 2021 – The defendants served their first offer to settle agreeing to a dismissal without costs;
• August, 2021 – The defendants served their second offer to settle for $1,000.00 for all claims, which also meant that they waived their costs;
• October, 2021 - Examinations for discovery were held at which time the plaintiff read the renovation policy which was always available to him, and he then discontinued the action.

[20] The defendants’ first renovation policy following the onset of the Covid-19 pandemic was contained in a Notice to Residents in April, 2020 and stated that no renovations were permitted. Counsel submits that the plaintiff’s reasonable expectation from the outset should have been that renovations were not permitted.

[21] Defendants’ counsel also refers to an email from Mr. Boldes of MCC 1168 attaching their revised Covid-19 emergency policy dated July 13, 2020, which was posted to “Condo Control” for distribution electronically or delivered in person to those unit holders who did not have access to Condo Control. The plaintiff acknowledged “seeing” this policy but not reading it. Section VII.c. of this policy provides for the circumstances in which MCC 1168 would “allow urgent repairs and renovations to proceed, where they can be done safely” and provides rules in this regard. This policy sets out the steps that all unit owners must take to have renovations approved.

[22] One of the options with respect to approval of a unit owner’s renovation project was that the Board may allow the project to proceed “with the resident/owner being assessed additional charges for cleaning and supervision of the project.” Counsel submits that there were only three unit owners, including the plaintiff Mr. Worsoff, whose renovations were approved based on their compliance with this term. Counsel refers to para. 16 of the statement of defence which specifically refers to the defendants’ “Covid Repairs Policy” banning “all non-emergency renovations and repairs”, and which applied to all residents. Notices advising all residents of these restrictions were posted on each floor of the building near the elevators (para. 17).

[23] The defendants also refer to the following pleadings in their statement of defence:

• The plaintiff disregarded their “rules and policies” (para. 69),
• The plaintiff was treated the same as all other residents who requested approval for renovations (para. 76 – see above),
• “77. During the relevant period, only two (2) other units [sic] requested emergency repairs to their units. One unit had a flooding issue that required immediate attention. The second unit had a mould growth issue that also required immediate attention.”
• “78. In support of their requests, both units [sic] completed Renovation Agreements, provided all supporting documentation, and paid their $500.00 deposit. They adhered to the Governing Documents and their requests were granted by the Board.”
• “79. No renovation or repair work was authorized or permitted by the Corporation in any other unit of the Corporation during the relevant period. The Board in fact rejected several projects requested by owners during the pandemic that did not adhere to the requisite policies.”

[24] Defendants’ counsel notes that Mr. Worsoff first commenced his renovations in May, 2020, during the effective period of the first Covid-19 period “No Renovation” policy. It was during the effective period of that policy that the defendant MCC 1168 reached an agreement with Mr. Worsoff to allow him to continue with his renovations, but this was before the second Covid-19 Renovation Policy was distributed. Essentially, the defendant modified the blanket “No Renovations” policy for Mr. Worsoff in June, 2020, after he had commenced his renovations, and then formalized the policy for all unit owners on July 13, 2020.

[25] Plaintiff’s counsel acknowledges that the plaintiff’s renovations were conducted in June, 2020 before the new renovation policy was distributed. The defendants submit that regardless of the timing of the formalized renovation policies, the plaintiff was treated fairly and reasonably and no differently than the only other unit owners whose renovations were approved by the MCC 1168 Board.

[26] With respect to the renovation agreements for the other two unit owners whose renovations were approved, the defendants acknowledge that those documents were not produced until the day of examinations for discovery, after Mr. Worsoff’s examination and before the examination of Mr. Boldes, MCC 1168’s representative. These two renovation agreements are the same form of agreement that Mr. Worsoff signed for his own renovations. The defendants submit that based on their pleading that Mr. Worsoff was treated the same as all other residents who requested approval for renovations, Mr. Worsoff should have been aware that the renovation policy was applied equally to himself and the other two unit owners.

[27] Counsel refers to the plaintiff’s admission that he did not read his own renovation agreements before signing them. With respect to the claim that the defendants took too long to approve his renovation, counsel submits that the plaintiff initially failed to attach any of the required documents or to pay the required fee.

[28] Defendants’ counsel also refers to the plaintiff’s admissions that it was possible that other unit owners had the same restrictions as were applied to him (Q. 78 of his examination for discovery), and that he could not say whether any other unit owners were charged security costs (Q. 86).

[29] The defendants submit that the plaintiff has no valid claim against Crossbridge, MCC 1168’s management company, against which it has pleaded only that Crossbridge directed MCC 1168 to act oppressively. Another consideration in determining the disposition of the costs of the discontinued action is that the purpose of costs in condominium litigation is to protect the other condominium owners, who are ultimately the source of funds used to defend litigation against the corporation.

[30] Counsel submits that a further consideration is what he describes as an unnecessary appearance before Myers J. to argue about whether examinations for discovery should be held in person or by videoconference.

Analysis and decision

[31] The plaintiff Mr. Worsoff’s claim is based on his assertion that the defendants acted oppressively towards him in that, by treating other unit owners differently than him, they undermined his reasonable expectations through conduct that was coercive, abusive and that unfairly disregarded his interest. In considering the plaintiff’s position on this motion, that when he issued the statement of claim on December 15, 2020, he was asserting a bona fide cause of action, it is important to note the following passage from McKinstry v. York Condominium Corp. No. 472, supra (at para. 33):

33 This new creature of statute [the oppression remedy in s. 135 of the Condominium Act] should not be unduly restricted but given a broad and flexible interpretation that will give effect to the remedy it created. Stakeholders may apply to protect their legitimate expectations from conduct that is unlawful or without authority, and even from conduct that may be technically authorized and ostensibly legal. The only prerequisite to the court’s jurisdiction to fashion a remedy is that the conduct must be or threaten to be oppressive or unfairly prejudicial to the applicant, or unfairly disregard the interests of the applicant. . . . It must be remembered that the section protects legitimate expectations and not individual wish lists, and that the court must balance the objectively reasonable expectations of the owner with the condominium board’s ability to exercise judgment and secure the safety, security and welfare of all owners and the condominium’s property and assets. [emphasis added]

[32] Based on Digiuseppe v. Todd, supra, the issue on this motion is whether “the plaintiff [can] satisfy the court that the material filed discloses a bona fide cause of action, that is not frivolous or vexatious and which the plaintiff has some justification to commence, having regard to the conduct of the defendant.” With respect to the oppression relief sought by the plaintiff under s. 135 of the Condominium Act, the key words in the highlighted passage from McKinstry are that the oppression remedy protects the “objectively reasonable expectations” of the owner, which must be balanced with the Board’s ability to protect the interests of the owners collectively. In determining whether the plaintiff displayed bona fides in commencing his action, the court must therefore consider whether there was an objectively reasonable basis for him to do so, based on all the surrounding circumstances. The plaintiff’s subjective view that he had valid reasons for commencing the action is not sufficient.

[33] The onset of the Covid-19 pandemic in Canada was in March, 2020 and the events in issue in this action occurred during the following months. The defendants’ policies, first prohibiting renovations and then allowing the MCC 1168 Board to require unit owners conducting renovations to arrange and pay for security and disinfection of the premises, were, in the face of the pandemic, reasonable and entirely in keeping with their “ability to exercise judgment and secure the safety, security and welfare of all owners” as contemplated by Juriansz J. in McKinstry, supra.

[34] In the context of the pandemic, the fact that Mr. Worsoff did not know that the defendant’s renovation policy was applied to the only two other unit owners who were permitted to conduct renovations between April and July, 2020 does not make that policy any less reasonable, and there was no objective reason for Mr. Worsoff to view himself as “oppressed”. The plaintiff even admitted at his examination for discovery that it was possible that other unit owners had the same restrictions as were applied to him, and that he could not say whether any other unit owners were charged security costs. If anything, Mr. Worsoff was treated more favourably than other unit owners because the defendant accommodated his renovations in May and June, 2020, during the period that their stated policy was “No Renovations”, and before their revised “Covid-19 Renovation Policy” came into effect on July 13, 2020.

[35] I therefore conclude that the commencement of the plaintiff’s action does not meet the de minimis test formulated in Provincial Crane, supra and adopted in Digiuseppe v. Todd, supra, for the recovery of costs on his discontinuance of the action. Accordingly, the plaintiff is not entitled to costs of his discontinued action and the defendants are entitled to their costs of having to defend it.

[36] In April 2021, the defendants made an offer agreeing to a dismissal of the plaintiff’s action without costs and in August, 2021 they made an offer to pay the plaintiff $1,000.00, which meant that they were also prepared to waive their costs at that time. Both of these settlement offers were more favourable to the plaintiff than the award of some costs that the defendants will now recover on this motion, which is a factor to be considered in determining the amount of costs that they should recover.

[37] The plaintiff submits that the defendants should not recover costs of the action because they failed to disclose and produce their renovation agreements with the two other unit owners who undertook renovations in June or July, 2020 until immediately before the plaintiff’s examination for discovery. The defendants’ representative Mr. Boldes discovered these agreements on October 25, 2021 when preparing for the examinations for discovery that were held on October 27, 2021. The documents were provided to defendants’ counsel on the afternoon of October 25, 2021, at which time counsel reviewed them and redacted the information that would identify the owners. Defendants’ counsel then produced the two agreements to plaintiff’s counsel after the plaintiff’s examination for discovery held on the morning of October 27, 2021 and immediately before Mr. Boldes’ examination for discovery that afternoon.

[38] During the hearing, I asked defendants’ counsel (who was also counsel at the examinations for discovery) why he waited until after Mr. Worsoff’s examination to produce the recently discovered renovation agreements. His explanation was that he produced the documents in accordance with the Notice of Examination served on Mr. Boldes, which required him to produce relevant documents at the examination. As I stated to counsel during argument, this is not a satisfactory explanation.

[39] Rule 30.03(1) of the Rules of Civil Procedure requires a party’s affidavit of documents to include all relevant documents. Rule 30.07(b) of the Rules of Civil Procedure requires that a party who discovers that an affidavit of documents is incomplete “forthwith serve a supplementary affidavit specifying the extent to which the affidavit of documents requires modification and disclosing any additional documents.” I accept that the available time between defendants’ counsel receiving the renovation agreements on October 25, 2021 and the examinations for discovery scheduled for October 27, 2021 may not have allowed for the preparation of a supplementary affidavit of documents. However, it was still incumbent on defendants’ counsel to notify plaintiff’s counsel of these new documents “forthwith” (i.e. immediately), and certainly before either party’s examination for discovery on October 27, 2021. Whether or not the new documents had any practical effect on defendants’ counsel’s examination of the plaintiff is irrelevant. The fact is that the applicable Rules required counsel to disclose and produce them upon receiving them from the defendants and he failed to do.

[40] I have ruled that the plaintiff did not have reasonable justification to commence this action based on the defendant’s conduct prior to the issuing of the statement of claim, and on that basis, the remaining defendants are entitled to recover some costs. However, I also accept that the plaintiff should have been provided with the other two unit owners’ renovation agreements before examinations for discovery, and the disposition of the costs of the action should reflect the court’s disapproval of the defendants’ failure to comply with Rule 30.07(b). Instead of recovering costs to the date of one of the settlement offers on a partial indemnity scale and substantial indemnity costs thereafter, the defendants shall recover 75% of their costs of the action, all on a partial indemnity scale.

[41] The defendants’ Bill of Costs sets out total partial indemnity costs of $32,450.73, based on $26,672.58 for fees, $3,467.44 for HST and $2,310.72 for disbursements. Taking into account some duplication given the involvement of two counsel for the defendants, I assess the total partial indemnity costs at $28,000.00. The plaintiff shall pay the defendants the costs of the action fixed at $21,000.00 representing 75% of the total figure.

ASSOCIATE JUSTICE GRAHAM Date: March 28, 2022