Ontario Superior Court considers cost sharing and responsibility for repairs in a mixed-use strata
June 2, 2016
BY Kevin Zakreski
In Middlesex Condominium Corp No 195 v Sunbelt, 2016 ONSC 1528, the Ontario Superior Court of Justice examined three issues that have raised concerns in British Columbia strata-property law as well. These issues are: (1) allocation of common expenses between commercial and residential strata lots in a mixed-use strata; (2) application of the Limitation Act to strata-property disputes; and (3) responsibility to repair windows.
Facts and background
The case involved “a seven-storey mixed-use (residential and commercial) condominium” located in London, Ontario. The condominium had 28 commercial units on its first two floors and 45 residential units on its upper five floors.
The nub of the parties’ dispute turned on responsibility to pay for hydro. As the court explained, the condominium had the following arrangement:
The residential units are supplied hydro through a bulk feed from the local hydro service. The commercial units on the second floor are provided power through 11 meters, which are separate from the bulk feed.
Since at least 2006, the accounts for hydro on the second floor of the building have been paid by MCC195. On September 25, 2012 the board of directors of MCC195 resolved to commence paying the hydro accounts for the first floor.
In 2014, the condominium corporation (MCC195) retained an electrician “to determine the destination of the hydro feeds from the individual source meters in the utility room.” The report determined that “each of the 11 hydro meters provided hydro to the commercial units and portions of the common elements.”
Based on this report, MCC195 resolved “to rescind the earlier motions that they pay these hydro accounts,” leaving responsibility for them in the hands of the owner of the commercial units, Sunbelt.
MCC195 and Sunbelt also had a separate dispute over responsibility to repair windows. In 2012, MCC195 hired engineers “to conduct a condition survey at the condominium.” The engineers’ report concluded that:
lateral movement of the building walls had caused a deflection that had placed stress on the aluminum framed window openings set in the concrete walls. These engineers concluded that the windows would need to be replaced to allow for movement of the concrete and to avoid placing further load on the window framing.
After obtaining a legal opinion, MCC195 decided to “pay the entire invoice for the window replacement in the sum of $35,805.00.”
The cost-sharing issue
Cost sharing is a major issue for mixed-use condominiums. Considering this issue is an important part of BCLI’s ongoing work on complex stratas.
Unlike British Columbia’s Strata Property Act, Ontario’s Condominium Act, 1998, contains no enabling provisions for the creation of separate sections. Mixed-use condominiums in Ontario tend to rely on separate metering to manage the tensions that may arise from sharing common expenses strictly in accordance with unit entitlement.
This issue turned on the definition of “common expenses” and the implications of separate metering. The condominium’s declaration defined “common expenses” for its purposes to include “all sums of money levied or charged to the Corporation on account of any and all public and private suppliers of insurance coverage, taxes, utilities and services including, without limiting the generality of the foregoing, levies or charges for . . . (v) fuel including gas, oil and electricity, unless these utilities are separately metered for each unit.”
Sunbelt argued that this provision was inapplicable to the facts. In its view, “separately metered” must be read as calling for separate metering for each condominium unit. In this building, “[m]any of the individual legally described condominium units have been combined to create so called ‘suites’ for the commercial tenants.” So there wasn’t a one-to-one correspondence between the 11 hydro meters and the commercial units.
The court rejected this argument, noting that “Sunbelt had control over the configuration of its units.”
The limitation issue
The parties also disputed the scope of liability for hydro payments. MCC195 claimed “reimbursement of the hydro accounts commencing in 2006.” Sunbelt relied on section 4 of Ontario’s Limitations Act, 2002, arguing that MCC195’s claim should be barred for any amounts incurred two years or more before the proceedings were commenced on 15 April 2014.
MCC195 raised two arguments in support of its position. First, it pointed to the following provision in its declaration:
The failure to take action to enforce any provision contained in the Act, this declaration, the bylaws or any other rules and regulations of the corporation, irrespective of the number of violations or breaches which may occur, shall not constitute waiver of the right to do so thereafter, nor be deemed to abrogate or waive any such provision.
In MCC195’s view, this provision was effectively an agreement recognized by section 22 of the Limitations Act, 2002, which operated to “extend the limitation period applicable to MCC195’s claim for reimbursement of the hydro accounts.” The court rejected this argument, finding that a declaration can’t be characterized as an agreement for this purpose.
MCC195 also pursued a discoverability argument, arguing that it “only became aware that the hydro accounts were properly chargeable to Sunbelt in late 2013 and it has pursued its claim within the applicable limitation period.” The court accepted this argument, finding that the condominium corporation only became aware of its rights in late 2013 after it “sought legal counsel with respect to its obligations for the hydro accounts.”
Responsibility to repair windows
The court found that the windows were part of the condominium’s common elements. In Ontario, the obligation to repair and replace common elements and units is set out in section 90 of the Condominium Act, 1998. The court noted that section 90 is subject to section 91, which “permits a condominium corporation in its Declaration to alter the maintenance and repair obligations after damage by providing;
- subject to s. 123, each owner shall repair the owner’s unit after damage;
- the owners shall maintain the common elements or any part of them;
- each owner shall maintain and repair after damage those parts of the common elements of which the owner has the exclusive use; and
- the corporation shall maintain the units or any part of them.”
The court characterized the effect of these statutory provisions as follows:
the Act does not grant a condominium corporation the authority to impose on a unit owner the obligation to repair common elements after damage, except for common elements designated for the exclusive use of an owner.
So this issue turned on whether the declaration “properly shifted the repair after damage obligation to Sunbelt.”
MCC195 based its claim on a provision of the declaration that read:
the owners of the commercial units shall be solely responsible for the maintenance and repair of all windows enclosing their Units, all doors and doorframes, as well as the maintenance and repair of all glass, plastic or other material utilized in the full or partial enclosure thereof.
The court refused to entertain this argument, because the declaration failed to comply with certain requirements found in the act and its regulation:
However, the Declaration does not contain a Schedule F, which is required in a Declaration where exclusive use common elements are to be specified according to s. 5 (7) of Ontario Regulation 48/01.
Further, there is no Part II, being an exclusive use portions survey, in the description, which according to s. 2(1)(b) and the definition is s. 1 of O. Reg 49/01 is required if the property includes exclusive use portions.
So the court concluded that “the windows are not common elements over which Sunbelt has exclusive use. Therefore, MCC195 has the obligation to maintain those common elements.”
Result
In the result, success was divided. The court found that “Sunbelt is responsible for the hydro accounts servicing the commercial units. The exact amounts of that liability must now be calculated by the parties with the assistance of counsel.” And it found that “MCC195 is responsible for the cost of the window replacement.”
