Court File and Parties

COURT FILE NO.: CV-19- 777 DATE: 2023/07/ 19 ONTARIO SUPERIOR COURT OF JUSTICE

Application Under s. 134 of the Condominium Act, 1998, S.O. 1998, C. 19

BETWEEN:

WATERLOO STANDARD CONDOMINIUM CORPORATION NO. 399 Applicant – and – YI JUAN LEE & TZU ARCHIE YU Respondents

Before: The Honourable Justice C.D. Braid

Counsel: Danielle Marks, Counsel for the Applicant Meng Dan Li, Counsel for the Respondents

HEARD: In Writing

Costs Endorsement

I. OVERVIEW

[1] Ms. Yi Juan Lee and her son, Mr. Tzu Archie Yu, are the registered owners of a 1,400 square foot condominium unit. They purchased the unit in 2009 and made extensive modifications to its layout, transforming a two-bedroom, two-bathroom unit into a five-bedroom, three-bathroom unit. Waterloo Standard Condominium Corporation No. 399 is the condominium corporation (“the condominium”) responsible for the management of the residential condominium where the owners reside.

[2] The condominium brought an application seeking an order to return the unit to its original configuration. In the alternative, the condominium asked for an order requiring the respondents to bring the added bathroom into compliance with the Ontario Building Code (“Building Code”).

[3] In reasons cited at Waterloo Standard Condominium Corp. No. 399 v. Lee et. al., 2023 ONSC 3807, I found that the respondents are in breach of their obligations pursuant to s. 117 of the Condominium Act, 1998 with respect to the added bathroom modifications that are not in compliance with the Building Code. I ordered the respondents to complete the work required to correct the Building Code deficiencies or to remove the added bathroom. If the respondents do not complete this work by a specified date, the applicants may complete the work at the respondents’ cost.

[4] There was a mixed result on the application. I permitted the parties the opportunity to file written costs submissions if either party had served an offer to settle. I am advised that the applicant served a formal offer, and I have now received written costs submissions.

[5] For the reasons that follow, I find that a fair and reasonable award of costs on the application, payable by the respondents to the applicant condominium, is $5,000.

II. ANALYSIS

A. Was the Ruling as Favourable or More Favourable Than the Offer to Settle?

[6] On September 21, 2022, the applicant condominium made a formal offer to settle. The offer was not accepted by the respondents. The offer was made at least seven days before the commencement of the hearing (heard on January 10, 2023), was not withdrawn and did not expire before the commencement of the hearing.

[7] I find that the court’s decision was as favourable or slightly more favourable to the applicant condominium than the terms of the offer to settle, and therefore complied with Rule 49.10 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

B. Should the Court Award Costs as Set Out in Rule 49.10?

[8] The condominium seeks full indemnity costs of $46,432.62, pursuant to the indemnity provision at Article VI(1)(a) and (b) of the Condominium Declaration. In the alternative, the condominium seeks substantial indemnity costs of $37,479.22. The respondents submit that they should be awarded costs of $20,105.09 or that this amount be reduced by approximately $5,000 to credit the applicants for work completed after the offer to settle was served.

[9] Pursuant to Rule 49.10, the applicant condominium is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise [Emphasis Added]. The court has discretion to make a costs order that is different than set out by the rule.

[10] In this case, the original Notice of Application sought a declaration that the respondents were not in compliance with ss. 98, 117 and 119 of the Act and requested an order requiring the respondents to remove all of the added rooms and restoring the unit to its original configuration. The application also mentioned that the alterations to the bathroom were not in compliance with the Building Code, resulting in a condition likely to damage condominium property and/or cause injury to an individual.

[11] In its reply factum dated December 20, 2022, the applicant condominium raised, for the first time, an alternate remedy - an order to bring the added bathroom into compliance with the Building Code as a result of a s.117 breach. Although the initial application alleged a s.117 breach, the alternate remedy was not articulated in prior material. In the end, the court found that the request for this alternate remedy was the only argument that could proceed, and that other issues had to be arbitrated first.

[12] Rule 49 contains cost incentives and penalties designed to encourage litigants to make and accept reasonable offers to settle. In this case, the respondents were entitled to take the position that the court did not have jurisdiction to hear the application until they received the applicant’s reply factum on December 20, 2022. This document provided notice to the respondents that the applicant would seek a remedy for the s.117 breach. Once this notice was given, the offer to settle became a reasonable one that should have been accepted. The applicant is only entitled to costs after its reply factum was served.

[13] In determining quantum, the court is to consider the factors set out in Rule 57.01 of the Rules of Civil Procedure, as well as s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. Those factors include the principle of indemnity, the reasonable expectations of the parties, the complexity of the proceeding, the importance of the proceeding, and the conduct of the parties in litigation. I have considered these factors.

[14] The fixing of costs should reflect what the court views as a fair and reasonable amount to be paid, rather than any exact measure of the actual costs to the successful litigant. Because of the unique circumstances of this case, I find that the applicant condominium is not entitled to the full cost consequences set out in Rule 49.10. I find that a fair and reasonable award of costs for this application is $5,000.

III. CONCLUSION

[15] For all of these reasons, the respondents shall pay $5,000 to the applicant condominium as costs of this application, inclusive of HST and disbursements.

Braid, J. Released: July 19, 2023