Court of Appeal Summaries (July 20 – 24, 2020)

Please find below our summaries of last week’s civil decisions of the Court of Appeal for Ontario.

Topics covered included the following:

1. Condo law - Responsibility for repairing exclusive use common elements in a condominium under the condominium’s declaration and the Condominium Act, 1998 (unit owners were found responsible for repairing their exclusive use chimneys).
2. Rights of Way - The scope of a right of way to access a cottage beach (did not include the right to drive a boat to the beach to launch and retrieve it).
3. Family Law - The limitation period for setting aside a marriage contract (there is no limitation period, since the Court determined that this involves merely seeking a declaration with no consequential relief – in a concurring opinion Brown J.A. agreed on the result but disagreed that there was no applicable limitation period).
4. Administrative Law – A labour arbitrator had exclusive jurisdiction over disciplinary proceedings against graduate students who were also unionized teaching assistants in respect of the York University strike of 2018. The University had no jurisdiction to discipline the students as a result of specific legislation that ended the strike.
5. Commercial Leases – A notice of breach and termination need not include a demand for compensation for the breach under ss. 19(1) of the Commercial Tenancies Act. Mere demand for remedying of the breach is sufficient to constitute a valid notice permitting termination and re-entry.

Metropolitan Toronto Condominium Corporation No. 590 v. The Registered Owners and Mortgagees of Metropolitan Toronto Condominium Corporation No. 590, 2020 ONCA 471

[Juriansz, Fairburn and Nordheimer JJ.A.]

Counsel:

Eli S. Lederman and Kelly Hayden, for the appellant

Mark H. Arnold, for the respondents

Keywords: Real Property, Condominiums, Exclusive Use Common Elements, Civil Procedure, Appeals, Standard of Review, Questions of Law, Condominium Act, 1998, S.O. 1998, c. 19, ss. 7(5), 109(3), Condominium Act, R.S.O. 1980, c. 84, s. 41(5)(d), Housen v. Nikolaisen, 2002 SCC 33, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53

Facts:

The appellant condominium corporation is responsible for operating the common elements of a high-rise condominium in Toronto built in the early 1980’s. Of the 120 residential units in the building, 23 contain wood-burning fireplaces. The fireplaces were built at the time the building was constructed. Each of the units that have fireplaces are located on the top four floors of the building. Each fireplace is serviced by an individual flue and chimney which is dedicated to that fireplace. The chimney flues begin at the fireplace and extend through the building to the roof.

In 2013, the appellant’s Board of Directors hired specialists to investigate the state of the fireplaces. The specialists determined that the chimney flues had deteriorated to the point that they were no longer serviceable, and needed to be replaced or removed from service. In 2016, it was determined that it would cost approximately $1.5 million to remove and replace the chimney flues. It was also estimated that it would cost approximately $13,000 to cap and decommission all of the chimney flues.

The unit owners that have fireplaces want the appellant condo corporation to bear the cost of removing and replacing the chimney flues. The appellant argues that the individual owners of units with fireplaces should bear the cost of removing and replacing the chimney flues or, alternatively, the costs of capping and decommissioning the chimney flues.

The appellant brought an application in which it sought, under s. 109(3) of the Condominium Act, 1998, to amend the condo Declaration in two main respects. First, it sought to amend the Declaration to add Schedule F that would specify that the chimney flue servicing each individual unit fireplace was an exclusive use common element. Second, it sought to amend ss. 22 and 23 of the Declaration to make it clear that the owners of units with fireplaces, and not the appellant, were responsible for the maintenance and repair of all exclusive use common elements. In response, the respondents brought a separate application in which they sought, among other things, an order requiring the appellant to repair or replace, at its cost, the chimney flues. The hearing of the respondents’ application was ordered to await the determination of the appellant’s application. It remains outstanding.

The application judge granted the appellant’s application to amend its Declaration to specify that the dedicated chimney flues are exclusive use common elements. He dismissed the balance of the appellant’s application. This appeal was from the application judge’s refusal to grant the order sought to amend ss. 22 and 23 of the Declaration to make it clear that the owners of units with fireplaces, and not the appellant, were responsible for the maintenance and repair of all exclusive use common elements.

Issues:

Did the application judge err in dismissing the appellant’s application to amend the Declaration to provide that the owners of units with fireplaces, and not the appellant, were responsible for the maintenance and repair of all exclusive use common elements?

Holding:

Appeal allowed.

Reasoning:

Yes.

The Court first discussed the standard of review. It determined that, in this case, the standard of review was correctness. While mindful of the deferential standard of review urged by Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 on questions of contractual interpretation involving questions of mixed fact and law, in this case, the Declaration was not an ordinary type of private contract negotiated between two parties, which was the type of contract to which the comments in Sattva were directed. A declaration is a special form of contract, the structure of which is prescribed by statute. It must adhere to certain statutory requirements. Indeed, the Condominium Act, 1998 provides, in s. 7(5), that, if there is any conflict between the statute and the declaration, the statute prevails.

The application judge erred in his conclusion that there was no inconsistency between the sections 22 and 23 of the Declaration. Section 22 requires unit owners to maintain and repair their units including the air conditioning and heating units within their units, but only to maintain any part of the common elements which they have exclusive use of, at their own expense. Section 22 says nothing about repair with respect to those exclusive use common elements.

Section 23 requires the appellant to maintain and repair the common elements “after damage”. It then goes on to provide that “this duty” extends to all exclusive use portions of the common elements. This provision would, at first blush, appear to overlap with the requirements of s. 22. However, the use of the words “after damage” suggest that the duty under s. 23 is only triggered by the occurrence of an event that then leads to the need to repair. It does not appear to contemplate repairing common elements that have simply worn out or are otherwise inoperative simply through the passage of time. If that is so, and one looks only at the two sections, a gap then appears, because neither section addresses the duty to repair (as opposed to maintain) the exclusive use common elements in the normal course.

However, Section 89(1) of the Condominium Act, 1998 requires the corporation to repair the units and common elements after damage. Section 89(2) reads, in part: “The obligation to repair after damage includes the obligation to repair and replace after damage or failure …” Section 90(1) says that the corporation shall maintain the common elements and each owner shall maintain the owner’s unit. It does not specifically address exclusive use common elements. Section 90(2) then goes on to read: “The obligation to maintain includes the obligation to repair after normal wear and tear but does not include the obligation to repair after damage.” [emphasis added] Section 91 of the Condominium Act, 1998, then provides that a declaration may alter the obligations to maintain and repair after damage by requiring a unit owner to maintain and repair after damage those parts of the common elements of which the owner has the exclusive use.

The application judge’s conclusion that the sections create a mutual obligation to maintain and repair exclusive use common elements is not consistent with the language of the two sections and leads to an unsatisfactory result. Finding that there is a mutual obligation immediately raises the question as to which of the two parties has the positive duty to fulfill the obligation. Each side can point to the other as being the one that needs to take the first step. It also does not allow for either party to know what their respective financial responsibilities are, and to plan accordingly. There is also the practical reality that it may not be possible for the necessary work to be divided between the parties, or to permit different contractors to undertake different parts of it. The bottom line is that it is an unworkable result. The purpose of the Declaration is to clearly delineate the responsibilities of the condominium corporation, on the one hand, and the unit owners, on the other. Here that purpose is not achieved. Sections 22 and 23 are inconsistent, or at the very least unclear, in the obligations that they impose.

In the end result, the Court found that the intention was clearly to place on the unit owners the duty to maintain and repair their unit, and to maintain and repair any part of the common elements over which they have exclusive use, after normal wear and tear or the effluxion of time, and to do so at their own expense. In reaching that conclusion, the Court stressed the use of the words “any part” of the exclusive use common elements that are used in s. 22. Those words would clearly embrace the entirety of the chimney flues. It was unnecessary to decide whether the Condominium Act, 1998 applied or the Act in force at the time the Declaration was registered, the Condominium Act, R.S.O. 1980, c. 84, as the result was the same. The Court therefore allowed the appeal, and substituted an order granting an amendment to the Declaration, although not in the form proposed by the appellant.