Canadian Lawyer

LEGAL REPORT REAL ESTATE AN ONTARIO RULING revealed vastly different opinions across the condo law bar when it comes to charging condo unit owners with a lien for the legal cost of enforcing a rule — before a dispute has even been decided. The case, heard by Justice Markus Koeh- nen, centres on applicants Nasiralli Amlani and Nasimbanoo Amlani and respondents York Condominium Corporation No. 473. The condo corporation demanded Amlani pay $25,108.77 in legal fees for its lawyers' ser- vices, and it said it would place a lien on the unit and enforce the lien by selling the unit. These legal fees — used to try and stop Am- lani from smoking in the unit — piled up while the Amlanis weren't even living there, thanks to an indemnity clause that said: "Each owner shall indemnify and save harmless the corpo- ration from and against any loss, cost, dam- age, injury or liability . . . resulting from or caused by an act or omission of such owner," except those covered by insurance. The clause also dictates that "all payments pursuant to this clause are deemed to be additional con- tributions toward the common expenses and recoverable as such." The interpretation of indemnity used in the case of the Amlanis was unreasonable, Koeh- nen concluded. Rodrigue Escayola, a partner in Gowling WLG's Ottawa office, who represented the unit owners in in Amlani v. York Condomini- um Corporation No. 473, 2020 ONSC 194, says the decision has the potential to level the playing field for condo clients. Liens were meant to be used when unit owners fell be- hind on normal monthly payments, not com- pliance, he says. "In certain cases — I would say, such as this case — owners were sort of bullied into complying with a mechanism, the lien mecha- nism, which was really never meant to be used that way," says Escayola. Under his interpretation, says Escayola, a condo corporation could send out a flurry of non-compliance letters until it accrued enough legal fees to sell the unit out from un- der the owner — whether or not the owner was ultimately found to be flouting the rules. However, notes Escayola, lawyers have pos- ited competing interpretations to the ruling. "There's really two schools of thought out there. One of them is . . . you need to get an order before you're going to slap on fees. The pure reading of the Amlani case, therefore, would result in corporations never being able to add compliance and enforcement costs un- less and until there's an adjudication," he says. "The second school of thought in the indus- try is 'No, no, the Amlani case turns on the indemnity provision, [which] was insufficient to capture those common expenses.' And the solution for those people in that school of thought is you need to have a more robust in- demnity provision." The Amlanis bought a condo unit in 2013 after shopping around specifically for a com- plex that allowed smoking. Although the "Owners were sort of bullied into complying with a mechanism, the lien mechanism, which was really never meant to be used that way." Rodrigue Escayola, Gowling WLG Recent Superior Court of Justice decision could be interpreted as a 'gamechanger' for condo law Selling condo — to pay neighbours' legal fees? 40 www.canadianlawyermag.com

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