Arbitration is expensive
Arbitration is expensive and the costs can rival or exceed going to
court. The stakes are high for an owner who may have to pay the
corporation’s costs if they lose but less so for a board who will
spread their costs among all of the owners through their condo fees.
The courts have confirmed that, after reviewing the owner’s prior
conduct, it is within an arbitrator’s discretion to order the owner to
pay up to all the condo corporation’s costs.
These costs can be huge, as in Italiano v. Toronto Standard Condominium Corporation
where the owner was obligated to pay in excess of $81,000 for the
corporation’s legal fees, mediation and arbitration costs. This is a
heavy price to pay for playing loud music in a condo with thin walls.
In a Court of Appeal for British Columbia decision, Hunt v. The Owners, Strata Plan LMS 2556,
the owners, Mr. & Mrs. Hunt requested that a dispute over an owners
plans to install an air conditioning unit go to arbitration.
The Hunts wanted a single arbitrator decide the issue; the strata
wanted three arbitrators. The Hunts, who represented themselves, lost
and were hit with the three strata's legal costs. ON top of that, they
had to pay the arbitrators’ fees, which including taxes, totalled
Remarking on this case, Paul G. Mendes, a BC lawyer, wrote:
"Arbitrators are private judges, and they don’t come cheap. One of the
arbitrators, in this case, charged $400 per hour or $3,000 per day to
hear the arbitration. One of the things that the strata’s lawyer
discussed with the arbitrator in those informal communications was how
worried the unit owners were about the cost of the arbitration after
they were asked to pay $15,000 for their share of the arbitrator’s fees!
Arbitrations can be very effective for resolving specialized disputes
quickly, but they can also be punishingly expensive, so they are
generally not suited to resolving most strata disputes. The dispute
here was over the installation of an air conditioning unit on the
common property. The Hunts opposed the AC unit because they felt it
would be too noisy and that it would unreasonably interfere with the
use and enjoyment of their strata lot. Although it is possible that
that dispute was worth $106,000 to the parties, that seems extremely
unlikely to me.
For that reason, I always advise against using arbitration to decide
most strata disputes. The cost of losing the arbitration can be
punishing and is often disproportionate to what is at stake in the
typical strata dispute.
That is not to say that there is no place for arbitrations in strata
disputes, but it does not mean that you should think long and hard
about initiating a strata arbitration when much less costly options
like Court and the CRT are available."
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