In a prior blog post we reported about a commercial unit owner who had commenced a court application to amend the declaration because the unit owner and its employees were not permitted to use the condominium recreational facilities. A provision in the declaration provided that only the owners, household members and invited guests of the dwelling units were entitled to use and enjoy the recreational facilities. For approximately 37 years since the creation of the condo, usage of the recreational amenities was restricted to the residents to the exclusion of the owners or occupants of the commercial units.
In its court application, the commercial unit owner argued that Section 7(2)(f) of the Condominium Act, 1998 (the “Act”) requires inclusion and specification in Schedule F of a declaration for any parts of the common elements that are to be used by some of the owners and not all of the owners. As the recreational amenities were not listed in Schedule F, the restriction was inconsistent with the Act and thus, the Court should amend the declaration to remove the restriction. Alternatively, the unit owner argued that if the restriction remained, then the common expenses for the commercial units should be reduced to reflect that the owner and its employees were not entitled to use the recreational facilities.
The corporation argued that Section 7(4)(b) of the Act states that a declaration may contain conditions or restrictions with respect to the use of the common elements. The provision in the declaration fell squarely within the types of provisions permitted by section 7(4)(b) of the Act.
After the unit owner’s application was dismissed, the owner appealed the decision to the Court of Appeal. The owner argued that the only way to restrict an owner from using a portion of the common elements that other owners are entitled to use is by specifying and designating the area as an exclusive use common element. The appeal was also dismissed. Josh Milgrom and Joseph Salmon of our firm represented the corporation.
In dismissing the appeal, the Court of Appeal confirmed the reasoning of the application judge. Only exclusive use common elements, which are “things such as terraces that are set aside for the exclusive use of particular units” need to be listed in Schedule F. Where a declaration restricts the use of a portion of the common elements to a certain class of units, that type of provision is permitted in accordance with section 7(4)(b) of the Act. In contrast to an exclusive use common element, a restriction with respect to the use of a common element does not have to be specified in Schedule F.
The corporation argued that the unit owner’s interpretation of section 7(2)(f) and 7(4)(b) of the Act would have created an absurd result (i.e. a result that is illogical or incompatible with the objects of the legislation). As section 19 of the Act clearly states that a corporation is required to provide reasonable notice to owners prior to entering any unit and any part of an exclusive use common element, the corporation would have been required to provide prior written notice to all of the residential unit owners on a daily basis in order to maintain the swimming pool, gym, and other recreational facilities. It could not have been the intention of the legislature to impose this type of unreasonable requirement on corporations that restrict the use of parts of the common elements to different classes of units.
The unit owner’s interpretation was also inconsistent with the City of Toronto site-specific by-law which required that the recreational space be provided solely for the use of the residents.
Additionally, section 84(3) of the Act contemplates restrictions on the use of common elements being set out in a corporation’s by-laws and rules, as well as the declaration (and, contrary to the owner’s argument, not only in Schedule F), and specifically states that an owner is not exempt from the obligation to contribute to common expenses even if the owner is restricted from using the common elements or part of them.
If the unit owner’s argument had been successful, this would have had significant consequences on existing and future similar mixed-used condos in Ontario. Declarations with similar restrictions in existing condos would have been susceptible to comparable challenges and possible amendments. Developers, lawyers and surveyors would have needed to change the way that they draft declarations and descriptions in order to designate as exclusive use any common elements with different rights and responsibilities for different classes of units.
