September 26, 2017 - A recent Ontario judgment addressed a sensitive issue, namely the ability of a syndicate (in that province) to recover interest on unpaid common expenses (condo fees). The court also ruled on the reimbursement of fees resulting from legal proceedings by the unsuccessful party.
Before going to court, the co-owner and the syndicate had agreed on the amount to be reimbursed of the common expenses in arrears. However, both parties were unable to reach an agreement on the interest payable.
A 30% rate
The declaration of co-ownership provided that the monthly interest rate on arrears amounted to 30%. The co-owner tried, unsuccessfully, to convince the court to exercise its discretion to reduce the interest rate. Rather, the judge ruled that there was "no reason" to reduce the percentage because it is part of a contractual agreement between the co-owners of the immovable.
In the end, the syndicate obtained $ 30,000, including legal fees, disbursements and taxes. It was not mentioned how much it asking for, but the judge found that several items of the claim were not recoverable. As a result, the syndicate was unable to recover all the court costs it had to disburse.
Negotiation rather than litigation
The Ontario Court of Appeal reiterated that if unsuccessful parties had to reimburse all the court costs to victorious parties, it could have the effect of discouraging litigants from asserting their right before the courts. It is therefore strongly recommended to opt for negotiation in such cases, instead of filing legal recourses, as costs continue to increase as the case progresses.
What about Quebec?
In Quebec, since the coming into force of the new Code of Civil Procedure, the unsuccessful party no longer has to reimburse the legal fees spent by the winning party, with the exception of legal costs. However, a reimbursement could be imposed if the court finds that there has been an abuse of process.
As for the interest rate imposed for unpaid common expenses, a Quebec syndicate of co-owners could easily provide for it in its declaration of co-ownership. All that would be needed is to add it to the By-laws of the immovable, and to have it voted in by the general meeting.
Montreal, September 26, 2017
Source : Lash/Condo Law
