Navigating legal disputes in condominium communities can be challenging, especially when negotiations or mediation do not resolve issues. Understanding the various legal forums and procedures helps condo directors and property managers protect their communities effectively.

For some disputes between a condominium corporation and unit owners, such as disagreements over the declaration, by-laws, rules, budget, or agreements with owners, the Condominium Act, 1998, requires parties to first attempt mediation. If mediation is unsuccessful, the matter proceeds to binding arbitration, which generally resolves the dispute without the need for court proceedings. Court involvement is only necessary in limited circumstances, such as enforcing the arbitration award. Disputes that are not suitable for arbitration proceed directly to the courts.

Small Claims Court is often used for simpler disputes involving claims under $50,000 (recently went up from $35,000). One example is when a unit owner files a Small Claims claim online for alleged damages from a unit leak, seeking compensation from the condominium corporation or the corporation’s insurance. Sometimes, unit owners name the property manager personally or individual directors if they are unsure whom to sue. Even if the condominium corporation is not named as a defendant, it often defends the property management company through its legal counsel, relying on the indemnity clause in the contract between the corporation and the property manager to clarify responsibilities and obligations. The defence also cites relevant provisions from the Condominium Act or the corporation’s governing documents. A mandatory settlement conference with a judge follows to encourage resolution. If settlement fails, the case proceeds to trial, where evidence is presented, and a judge issues a decision.

The Superior Court of Justice handles more complex claims over $50,000. Examples of lawsuits before this court include cases where the condominium corporation seeks to recover unpaid common expenses, lawsuits to enforce payment or obtain possession of a unit to recover debts, claims against developers for significant construction deficiencies, and disputes with contractors over unpaid fees or poor workmanship. When the condominium corporation is the claimant, it files a Statement of Claim through legal counsel naming defendants. Defendants respond with Statements of Defence and sometimes counterclaims. The parties exchange relevant documents and conduct examinations for discovery, often via video conference. Some jurisdictions require mandatory mediation in these lawsuits to explore settlement options. If a mediation fails, a pre-trial conference prepares the case for trial. At trial, evidence, including expert testimony from engineers or other professionals, and legal arguments are presented. The judge issues a binding decision, with appeals possible depending on the outcome.

Certain condominium disputes proceed to tribunals rather than courts. The Condominium Authority Tribunal (CAT) offers a faster, largely written process for common issues, such as records requests, pet or parking issues, and nuisance complaints. Most communications, submissions, and evidence in CAT proceedings are exchanged in writing, though some hearings occur via video. After a CAT application is commenced, parties first attempt negotiation and mediation. If unsuccessful, the matter advances to a hearing before a CAT adjudicator. CAT decisions are binding on the parties, but CAT itself is not bound by its previous decisions the way courts are bound to follow their own previous decisions. This can make outcomes less predictable when going before CAT. Appeals of CAT decisions are made through judicial review in the courts.

Alleged discrimination claims are heard by the Human Rights Tribunal of Ontario (HRTO). For example, if a unit owner alleges harassment or differential treatment based on protected grounds, such as race or disability, the HRTO addresses the dispute. There are times when owners bring claims to HRTO thinking the condominium corporation is treating them unfairly by seeking compliance from them and seeking the legal fees related to compliance efforts from them, but it turns out they did not understand their obligations under the Condominium Act or the corporation’s governing documents.

Successful litigation can result in monetary damages, orders compelling compliance with the law or governing documents, and awards for legal costs. Losing parties may face cost orders. Early legal advice and understanding the procedures of each forum are essential.

Property managers must observe strict deadlines for serving and responding to claims, including filing defences. When notified of any legal claim, property managers should promptly forward the notice to the condominium board and legal counsel. Counsel will assess whether proper service was made and if a defence is necessary. Receiving a claim by email does not always constitute valid service under the law, so legal guidance is important.

Legal expense insurance may help offset litigation costs. Many condominium corporations include this coverage in their policies. It can cover legal fees and disbursements, allowing corporations to proceed with confidence. To access coverage, the property manager and the board typically email the insurance broker with the claim attached, request confirmation of coverage, and ask to connect the condominium corporation’s legal counsel with the insurance adjuster.

Being informed about litigation options and procedures enables boards and property managers to make timely, confident decisions that protect the condominium community’s long-term interests. 

All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this article is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.

Yeganeh Pejman has nearly a decade of experience in civil and commercial litigation. She has also served as a prosecutor for the Ontario Ministry of Transportation, where she has honed her skills in trial advocacy.
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