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Law Column

June 2010 Law Column

CONDOS

Claiming legal fees against a co-owner

Jean-François Mallette, lawyer

 

In a recent decision, the Québec Superior Court (Syndicat des copropriétaires du Elgin v. Al-Shawa, JE 2010-146) shed new light on the reimbursement of certain expenses incurred by a syndicate in connection with a co-owner’s failure to pay condominium fees.

 

In this case, the syndicate filed a motion for the forced surrender and sale under court order of a condominium following the co-owner’s failure to pay condominium fees. The co-owner responded with a defence and counterclaim, asking for $218,000 from the syndicate.

 

Three years later, in June 2009, the parties participated in an out-of-court settlement conference and reached an agreement in principle for the sale of the condominium by the syndicate and payment assignment to the syndicate under which the buyer would pay the syndicate’s debt obligation (lawyer fees, stair repair costs, condominium fees and 24% interest/year). Along with this agreement, the parties signed a mutual discharge and transaction document stating that: “les honoraires et déboursés extrajudiciaires du syndicat à l’égard des procédures dans le présent dossier [the syndicate’s fees and extrajudicial disbursements pertaining to the procedures in this matter]” constituted part of the co-owner’s debt.

 

Once the sale went through, the said co-owner refused to reimburse the extrajudicial fees incurred by the syndicate. The Court rejected the co-owner’s argument, citing that “contraire du créancier hypothécaire conventionnel, le syndicat n’a pas eu le choix de son débiteur. Il se retrouve créancier d’un mauvais payeur qu’il est obligé de subir, au contraire du prêteur hypothécaire qui a eu le loisir de décider s’il voulait s’engager dans une relation d’affaires avec l’emprunteur. [unlike a conventional mortgage creditor, the syndicate did not choose its debtor. It is owed by an imposed deadbeat while the mortgage creditor can choose the people with whom it enters into a business relationship.]”

 

The Court also stated that “le créancier hypothécaire [peut] demander de condamner le débiteur hypothécaire à assumer intégralement les honoraires extrajudiciaires qui ont été encourus dans l’exercice des recours hypothécaires, notamment lorsque la défense proposée par le débiteur ou son refus de délaisser sont frivoles ou dilatoires. [the mortgage creditor can ask for the mortgager to bear all of the extrajudicial fees incurred while seeking mortgage recourse, especially when the mortgager’s defence or refusal to surrender is frivolous or time-consuming].”

 

The Court therefore rejected the co-owner’s case and ensured that the syndicate’s fees were reimbursed.

 

It is interesting to note that the Court has now opened the door to the reimbursement of a syndicate’s legal fees.

 

If you have any questions or would like further information on the legal issues affecting your syndicate or condominium, do not hesitate to contact Me. Mallette at (514) 735-0099.