A condominium corporation which intends to bring a compliance application is generally faced with a dilemma. On the one hand, s. 134(1) of Ontario’s Condominium Act, 1998, S.O. 1998, c. 19 (the “Condominium Act”) permits the condominium corporation to proceed via court application against a unit owner. On the other hand, s. 134(2) of the Condominium Act states that if the mediation and arbitration processes described in s. 132 of the Condominium Act are required, then the condominium corporation cannot proceed by court application.
The balancing act of choosing the right process has never been an easy one. In one of the leading cases on this issue, Metropolitan Toronto Condominium Corporation No. 747 v. Korolekh, 2010 ONSC 4448, Justice Code stated that the duty to mediate compliance disputes against unit owners only applied to “lesser disputes” concerning “the declaration, the by-laws, the rules or an agreement,” but that breaches of the Condominium Act itself could be brought by court application.
Historically, where a unit owner disputed the court application process as being the correct process for a compliance dispute, the unit owner could bring a motion to stay the proceeding. However, an endorsement from earlier this year presents a new risk for condominium corporations.
In the recently released TSCC 1630 v. Vallik, 2021 ONSC 5570 (“Vallik”), the unit owner had not responded to the court application. Notwithstanding this, Justice Myers unilaterally raised the issue of the court’s jurisdiction to hear the application. Citing recent appellate and Supreme Court authority, Justice Myers stated that “It is the law and public policy of the Province of Ontario that regular disputes about compliance issues between condominium owners and the condominium corporation be resolved out of court.”
Court applications for compliance matters against unit owners in Ontario remain routine, even for matters which possibly could proceed via mediation and arbitration. For instance, in Toronto Standard Condominium Corporation No. 1466 v. Weinstein, 2021 ONSC 1306, the condominium corporation proceeded via mediation and arbitration in relation to a Kitec piping dispute. By contrast, in YRSCC No. 972 v. Lee, 2021 ONSC 3877, the condominium corporation proceeded via court application over a nearly identical Kitec piping dispute.
The Vallik endorsement raises two concerns. One is a possible shift to narrowing the circumstances in which a compliance application can be brought in court. Secondly, it reflects that the challenge to jurisdiction does not even need to be made by the responding party to the application, but can be raised by a judge on their own.
Condominium corporations should think long and hard about the appropriate dispute resolution mechanism prior to initiating legal proceedings. Choosing the wrong path may lead to cost consequences even if the condominium corporation is ultimately successful.