Legal Costs For Condominium Corporations: A Refresher

• Published date: 26 July 2021
• Subject Matter: Finance and Banking, Litigation, Mediation & Arbitration, Real Estate and Construction, Charges, Mortgages, Indemnities, Financial Services, Trials & Appeals & Compensation, Real Estate
• Law Firm: Field LLP
• Author: Ms Erin Berney

The law relating to legal expenses in litigation involving Alberta condominium corporations is evolving, but remains far from settled. In several recent decisions of the Alberta Court of Queen's Bench (Toronto-Dominion Bank v Bachand, 2021 ABQB 271, Tutt v The Owners: Condominium Plan No. 7822572, 2020 ABQB 213), the Court concluded that legal fees incurred by a condominium corporation in recovering unpaid contributions or taking action to enforce bylaws against an owner cannot be added to and treated like an assessment for common expenses, and charged back to the particular owner responsible, regardless of what the corporation's bylaws might say.

The Bachand case was decided by a Master, who is bound to follow decisions made by Justices (which rank higher than Masters in the Court's pecking order). The Tutt decision was made by a Justice, and is expressly referenced by the Master in her reasons for decision. But what happens when there are conflicting authorities at the Justice level?

The result, unfortunately, is that Masters (and Justices) must pick and choose which cases to follow, preferring one line of authority over another. On this particular issue, there have been few decisions over recent years, but there is most definitely a divergence. One branch (the Bachand and Tutt decisions) hold that a condominium corporation's legal fees are not recoverable from an individual unit owner, while another says that they are, provided the corporation's bylaws include the necessary language to permit such disproportionate assessment.

These decisions, starting with the reasons of Master Prowse in Condominium Plan No 8210034 v King, 2012 ABQB 127, and culminating with Justice Lee's finding in Condominium Plan 052 6233 v Seehra, 2014 ABQB 588, rationalize that legal fees, like other costs incurred by condominiums, are expenses of the corporation, like any other. If not charged back to a particular unit owner, they must be charged proportionately to all the unit owners.

The result is an inherent unfairness, in that all bylaw-abiding, non-delinquent unit owners are required to foot the bill for the misconduct of a single owner or group of owners. This is at odds with the objective of the legislative framework for condominiums to achieve fairness among members of a given corporation. And the irony is that the condominium corporation has no choice but to pursue collection of unpaid monthly fees and special levies. Corporations are statutorily required to uphold and...