| The High Price Of Condominium Arbitration |
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By Murray H. Miskin Reprinted from The Lawyers Weekly September 15, 2006 In Ontario you can not take a condominium dispute to Small Claims Court or any other court. A condominium is a community of people with common interests and the theory is that the community should try to resolve disputes by agreement rather than the adversarial process. Mediation is seen as a “win-win” process which allows disputes to be resolved by a communication process leading to a common understanding of the needs of the condominium community. Mandatory mediation and arbitration of Ontario condominium disputes came into effect with three years notice in May 2001 when the Condominium Act, 1998 was proclaimed in force. Since then the courts have been spared some of the bothersome cases they used to hear and a new industry has arisen within Alternative Dispute Resolution. This has caught on within the ADR community which has suffered from reduced work for the thousands of trained mediators since Mandatory Mediation of civil law suits has faded away under new court rules. Mediators apply their interpersonal skills to resolving the disputes that arise when individual condominium owners run afoul of the detailed strict rules and regulations that come with every condominium. These rules become difficult to justify and enforce for the Condominium Boards of Directors especially when they are older rules written in a time when there were less diverse communities. Dog weight restrictions are an example. It is hard to justify a rule prohibiting dogs over 20 pounds. Newer condominiums tend to have a limit at 45 pounds or it’s metric near equivalent of 20 kilograms. Rules should be reviewed every few years for relevance and sensibility. When a dispute arises the usual Management or Board of Directors view is that a rule is a rule and the unit owner must comply. Most unit owners believe they or their pets are special or that there is discrimination against them by lack of complete enforcement. These things can be worked out face to face at Mediation with a good mediator looking for a practical solution. When Mediation fails, Arbitration is mandatory. At that point each side gets a lawyer and sometimes a counterclaim is added. Lawyers will spend time preparing the case and negotiating to agree on an Arbitrator. A process can then be worked out for the Arbitration. Every dispute is different and the process should be tailored to the particular dispute. When it is simply a matter of interpretation or reasonableness of a rule a hearing may not be needed. Documentary evidence and a written exchange of legal argument will save the cost of three lawyers for a day of hearing time. When a condominium hearing is necessary it can often be done with one or two brief witnesses and take half a day or less. At the end of the process the Arbitrator must consider the evidence and all of the law coming from submissions of the parties and arrive at a decision. To make a decision is not easy and requires time and careful consideration. The arbitrator is then required to carefully write reasons for decision paying close attention to actual evidence as presented in the Arbitration. The decision is then released. The Arbitrator usually awards full costs which are more than the Court normally awards. An average small Arbitration case can cost a losing party in the range of $15,000 for their own lawyer, the full bill of the Arbitrator and the bill of the other party’s lawyer. These costs multiply if the award is appealed. The costs of Arbitration would be prohibitive for many disputes if the parties were aware of them sooner. The owner of the barking dog and the Board of Directors which thinks it knows which dog does the barking, need to carefully consider their options before arbitrating their dispute. Once the dispute reaches arbitration it is an all or nothing situation where one side wins and one side loses based on the actual evidence at a usually brief hearing. It is a costly loser pays system. As arbitrator, I can not mediate a dispute and then decide it if mediation fails to resolve it. In condominium disputes I tend to see documents setting out opposing positions and I have no chance to talk to the parties about sensible compromises and creative solutions. My first contact with the parties is at a hearing where witnesses are excluded and the process runs its course. In an attempt to keep down the costs there are very few preliminary meetings or discussions in Condominium Arbitration. This cost savings usually takes away the opportunity for the arbitrator to even try to encourage settlement discussions. That is why I want to take you back to mediation. If a serious effort to resolve a dispute is made at mediation it will usually succeed. Often mediation is not taken seriously for a variety of reasons. The old mentality of “taking them to court” still exists with the hope of a party to show the other party that they are wrong. Arbitration is more satisfying than mediation at meeting the self righteous response to a dispute. Condominium managers and boards tend to believe their rules are carved on stone tablets and must be obeyed or there will be dire consequences. Unit owners do not accept the freedom they lose when they agree to be part of a condominium community. Mediation allows for sensible resolution of the type of disputes that arise in condominiums. Arbitration is an all or nothing gamble which is not much better than court. Murray H. Miskin The author is a practicing civil litigation lawyer who teaches and also works as an Arbitrator. He is a condominium resident and President on the Board of his Condominium Corporation. |