Carleton Condominium Corporation No. 449 v 622294 Ontario Limited, 2016 ONSC 2306

Court File and Parties

COURT FILE NO.: 11-51446 DATE: 2016/04/18 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

CARLETON CONDOMINIUM CORPORATION NO. 449 Plaintiff (Moving Party) – and – 622294 ONTARIO LIMITED Defendant (Responding Party)

COUNSEL: Rodrigue Escayola, for Plaintiff Joseph Y. Obagi, for the Defendant

HEARD: December 8, 2015

Reasons for Judgment

SHEARD J.

Overview

[1] The plaintiff brings a motion for partial summary judgment. It asks this Court to find that the respondent remains liable to pay 38.45% of certain shared expenses in accordance with an agreement entered into among the parties in 1988. It further asks the Court to find that the two buildings erected by the respondent are not sufficient to trigger the agreement’s reapportionment provisions.

[2] In 1988, the three owners of neighbouring properties entered into a Joint Use Agreement. Among other things, the agreement provided for “the joint use, operation, management, supervision, maintenance and repair of the common interior roadways and the shared service easements.” I will refer to these as the “common roadway expenses”. The JUA set out how the three owners would share the common roadway expenses. The agreement was dated November 24, 1988 and amended on March 29, 1994 (collectively the “JUA”).

[3] The three owners are: the plaintiff/moving party and owner of the Phase I lands, Carleton Condominium Corporation No. 449 (“CCC 449”), Carleton Condominium Corporation No. 517, which owns the Phase II lands (“CCC 517”), and the defendant/responding party and owner of the Phase III lands, 622294 Ontario Limited* (“622”). CCC 517 is not a party to this action or motion but is on notice of it. *For the purposes of this motion, 622 and its predecessor, 670685 Ontario Inc., are referred to as “622”.

[4] The parties to the JUA agreed to share the common roadway expenses using a formula based on the square footage of the commercial/industrial condominiums that had been, or were to be, built on the Phase I, II, and III lands. In the JUA 622 is defined as “Owner”. The JUA states that “…until the Phase II and Phase III condominium Corporations are registered, if ever, the Owner its successors and assigns shall pay and be responsible for the proportionate share of [the common roadway expenses]…”

[5] 622 has never built the 65-unit 65,186 sq. ft. industrial warehouse/office project contemplated by the JUA nor registered a condominium Corporation.

[6] In the JUA, 622 states that it intends to build a 65-unit 65,186 sq. ft. industrial warehouse/office project on the Phase III lands. Based on the formula agreed by the parties to the JUA, 622’s proportionate share of the common roadway expenses is 38.45% of the total common roadway expenses.

Background

[7] In 1996, 622 began using its land for a snow dump: a place for trucks to offload their loads of snow. 622 determined that it did not want or need to build the industrial warehouse/office condominium contemplated by the JUA.

[8] The other owners and some of their tenants objected to the use of the Phase III land as a snow dump. Their objections included concerns about surface drainage of the snow dump site and the adverse impact of the use of the common roadway by heavy vehicles, including the accompanying noise, mud and slush.

[9] In January 1999, 622 obtained a Judicial Declaration allowing the Phase III lands to be used for a snow dump. The principal of 622, Paul Beauchamp (“Beauchamp”), was involved in that court application. He remains a principal of 622 and was the affiant for 622 on this motion for partial summary judgment. Beauchamp is an Officer and Director of 622 as well as 670685 Ontario Inc. In his affidavit, he refers to both corporations collectively as “622 Ontario”.

[10] In 1999, a second court application was brought to determine what share, if any, 622 had to pay toward the common roadway expenses. At that time, 622 argued that it had not built on its lands and did not intend to do so and, therefore, its share of the common roadway expenses should be zero.

[11] By Judgment dated November 25, 1999 Madam Justice MacKinnon (“the Mackinnon Judgment”), determined that the JUA was “valid and subsisting and sets out the proportionate liability for cost of maintaining, repairing, replacing, inspecting or altering the common interior roadway and the service easements [the common roadway expenses]. She declared that, despite that 622 had built nothing on its lands, 622 was still liable to pay 38.45% of the total common roadway expenses in accordance with paras. 6(a) and 6(b) and Schedule “A” of the JUA.

[12] Paragraph 4 of the Mackinnon Judgment allowed for a future variation of 622’s share of the common roadway expenses in accordance with paragraph 6(f) of the JUA. In this action and motion, 622 argues that paragraph 6 (f) operates to obligate the parties to readjust its share of the common roadway expenses to reflect the size of the buildings it has built on the Phase III lands.

[13] Paragraph 6(f) of the JUA states:

The Owner intends to construct buildings on its lands containing the square footage set out in Schedule “C” hereto. However, should the actual square footage change from that presently intended, resulting in a change in the Proportionate Interest of [CCC 449] and the Owner, then [CCC 449] and the Owner covenant and agree to effect an appropriate readjustment between themselves in respect of the amounts payable by them so that the proportionate share of each phase accords with the final proportionate interest of each party.*

[* Note: Schedule “C” was not attached to the JUA and is not found in any of the materials put before me on the motion. ]

Buildings Erected on Phase III lands after Mackinnon Judgment

[14] After the Mackinnon Judgment, 622 erected two small buildings on the Phase III lands. The two buildings sit on cinder block foundation and are used seasonally as an office and for storage for 622’s snow dump operation. The buildings have no running water. They are not connected to the hydro grid: electricity is created by way of a solar power system, sufficient to power a television, lights, and as a power station for a cell phone and computer. Heat comes from a permanently installed propane furnace. The plaintiff/moving party labels them as “seasonal sheds”.

[15] In this action and motion, 622 argues that its proportionate share of the common roadway expenses should be reapportioned. It asserts that it is unfair that its share of the common roadway expenses is based on the 65,186 square foot industrial building contemplated in Schedule “A” to JUA when the actual square footage of its structures is significantly smaller: 28.09 and 98.06 square feet respectively. 622 argues that Clause 6(f) requires the parties to reapportion the cost allocations.

[16] CCC 449 seeks to enforce the JUA and for an order that 622 is still required to pay 38.45% of the common roadway expenses. CCC 449 argues that the structures erected on the 622 lands are not bona fide buildings that can or should trigger the reapportionment provisions found in clause 6(f).

Issues on the Summary Judgment Motion:

1. Can the parties’ obligations pursuant to the JUA be determined on a motion for summary judgment?
2. If so, do the two structures built on 622’s property trigger the reapportionment provisions of clause 6(f)?
3. If the answer to this question is “yes”, then can the Court adjudicate the reapportionment by way of motion for summary judgment or is a trial required?
4. If the structures do not trigger a readjustment, is 622 still responsible to pay 38.45% of the common maintenance and repair expenses?
5. 622 raises additional issues: (a) Is CCC 449 statute-barred from bringing a claim for payment of asphalt repairs which were originally invoiced on December 30, 2008, but not sued upon until May 26, 2011? (b) Has CCC 449 unilaterally (and improperly) changed the manner in which it has calculated snow removal costs?

[17] Since 2008, 622 has resisted paying 38.45% of the common roadway expenses. 622 has asserted that the buildings on its lands are very small and that its share of the common roadway expenses should be based on the square footage of the buildings it actually built, not on buildings that it has no plans to build. It wants to reapportion the percentages as mandated by paragraph 6(f).

[18] The evidence of CCC 449 is that 622 refused to pay the amount invoiced by CCC 449 in 2010 for 622’s proportionate share of asphalt repairs in the amount of $43,608.76 or its share of the 2010 snow removal costs in the amount of $5,967.86. If it is successful on this motion, CCC 449 has asked for a reference to determine the exact amount owing by 622. I reference these figures here not for their accuracy but to illustrate the relatively modest amounts in issue.

[19] 622 also argues that CCC 449’s claim on an unpaid invoice to 622 for asphalt work is statute-barred because it relates to expenses incurred and originally invoiced in 2008, more than two years before the statement of claim was issued. The invoice being sued upon is dated June 10, 2010, well within two years of the issuance of the statement of claim on May 26, 2011.

Motion for Summary Judgment

[20] The facts relevant to the issues on this motion are uncontroversial. That alone makes the issues before the Court well-suited to be determined on a motion for summary judgment. In addition, to some extent, the issues before this Court were addressed and determined by the Mackinnon Judgment.

[21] Rule 20 of the Rules of Civil Procedure, RRO 1990, Reg. 194, permits a party to bring a motion for summary judgment. Rule 20.04(2) directs the court to grant summary judgment if satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.

[22] In determining whether or not there is a genuine issue for trial, rule 20(2.1) permits the judge to weigh the evidence; evaluate the credibility of a deponent; and/or draw any reasonable inference from the evidence.

[23] Hryniak v. Mauldin, 2014 SCC 7, is the leading authority on motions for summary judgment. CCC 449 referred the Court to the following principles and paragraphs found in Hryniak:

(a) There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result [para. 49];

(b) …The new rule, with its enhanced fact-finding powers, demonstrates that a trial is not the default procedure. [para. 43];

(c) On a summary judgment motion, the evidence need not be equivalent to that at trial, but must be such that the judge is confident that she can fairly resolve the dispute… [para. 57];

(d) In assessing whether it is in the “interests of justice” to exercise the new fact-finding powers granted under Rule 20 to arrive at a judgment at the motion stage instead of insisting on a full trial, the court must consider the principle of proportionality, assessing the relative cost and speed of the motion versus trial, and the consequences of the motion for the litigation as a whole [paras. 28-33.]

[24] Most of the issues before me do not require me to use the expanded fact-finding powers under Rule 20. However, as more fully set out below, I did accept the evidence put forth by CCC 449 over that of 622 on the issue of whether the claim for payment of the asphalt repairs was statute-barred and on the issue of whether CCC 449 had changed its square footage. To the extent that my findings on those issues required me to weigh the evidence I did exercise the additional powers under Rule 20. In doing so, I considered the principles set out in Hyrniak, and in Toronto Standard Condominium Corporation No. 1487 v. Market Lofts Inc., 2015 ONSC 1067.

[25] Having read the evidence and heard submissions I am satisfied that there are no genuine issues that require a trial and a motion for summary judgment is “a proportionate, more expeditious and less expensive means to achieve a just result . ” The facts are not really in dispute; the amounts involved are relatively small and the issues are relatively uncomplicated.

Do the two structures built on 622’s property trigger the reapportionment procedure set out in clause 6(f) of the JUA?

[26] CCC 449 argues that the structures on 622’s land are not “ bona fide ” buildings for the purposes of the JUA.

[27] To understand the JUA and to assess whether the 622 buildings can be considered “ bona fide” for the purposes of the JUA, I must “search for an interpretation that is in accordance with the parties’ intention at the time they entered into the contract.”(MacDougall v. MacDougall)

[28] The subject matter of the JUA were the lands and premises owned by CCC 449, (the “Phase I lands”), and the lands and premises owned by 622, (defined as “the Owner”), which included lands lying adjacent to the Phase I lands and the Phase II and Phase III lands. JUA begins with a number of recitals including:

AND WHEREAS the Owner intends to develop and construct a 65 unit industrial warehouse and office project on the lands…called the Phase III lands.

AND WHEREAS the Corporation and the Owner have entered into this Agreement for the purpose of providing for the joint use, operation, management, supervision, maintenance and repair of the common interior roadway’s and the shared service easements.

[29] The cost-sharing provisions begin at para. 6 of the JUA in which the parties covenant and agree to maintain and keep the common roadway in good repair and agree that the servicing easements and the cost of maintaining, repairing, replacing, inspecting or altering the same shall be borne as set out in subparagraphs 6 (a) - (f), reproduced in part below:

(a) [CCC 449] and the Owner, their successors and assigns shall pay and be solely responsible for that proportion or percentage of the total cost of maintaining, repairing, replacing, inspecting or altering the common interior roadway and the Servicing Easement in the proportion that the number of square feet of building space of each of the three Phases bears to the total number of square feet of building space in all three Phases (hereinafter referred to as its “proportionate interest” or “proportionate share”). The square footage of the building space of the Phase I lands together with the proposed square footage of the building space of the Phase II and III lands and their respective proportionate interests are set out in Schedule “A” hereto ;

(b) Provided that until the Phase II and Phase III condominium Corporations or registered, if ever, the Owner its successors and assigns shall pay and be responsible for the proportionate share of such maintenance and repair costs for and in respect of each of the adjacent Phases. The Corporation hereby confirms that from the date of registration of its declaration it shall pay and be solely responsible for its proportionate share of such maintenance and repair costs;

(d) Any amounts not contributed by the Corporation or the Owner in accordance with the foregoing provisions, shall, until advanced, bear interest at the rate of twenty-four (24%) per cent per annum, calculated and compounded monthly on such amount as is from time to time unpaid, and until so paid, such amount together with interest thereon as aforesaid shall, to the extent thereof, be and constitute a first lien and charge against :

(i) Such of the Owner’s Lands upon which no condominium is registered, where the Owner ought to have contributed such sum in respect of same.

(Emphasis added)

[30] Paragraph 6(f) (reproduced at para. 13, above) must be read in the context of the whole JUA and, in particular, para. 6(b) clearly contemplates that the Owner will pay its proportionate share until “the Phase II and Phase III condominium Corporations or registered, if ever.” It does not contemplate that the proportionate share should not be paid in the event that 622 decides not to develop the Phase III lands or not to build a condominium Corporation. That was not the agreement that the parties entered into.

[31] Schedule “A”, inadvertently omitted from the JUA, was incorporated into the JUA by agreement dated March 29, 1994. Schedule “A” provides that the total square feet for Phase III is 65,186 sq. ft. and, based on that and the square footage of the other two condominiums, 622’s proportionate interest/share of the common roadway expenses is 38.45%.

[32] As at March 29, 1994, only 622 had not built on its lands. The owner of Phase II had built and incorporated a condominium Corporation (CCC 517). That is strong evidence that even as at March 29, 1994 the parties, including 622, intended and agreed that the lands would be developed into commercial Condominiums. The interior roadway was built in anticipation of those developments, which were suitable for the size of the lands allocated to each of Phase I, II and III.

[33] The Court must consider the “factual matrix” in interpreting the JUA. The objective of that exercise to avoid “commercial absurdity”. (See, Salah v. Timothy’s Coffees of the World Inc., 2010 ONCA 673).

[34] In considering that “factual matrix”, the Mackinnon Judgment concluded that the parties agreed and expected that the three properties would share the costs of those common roadways, whether or not the commercial warehouses or offices had been built. Considering both the wording of the JUA and the Mackinnon Judgment, it is difficult to conclude that the parties could have intended that an owner who had constructed buildings totalling approximately 126 square feet (.2% the size of that of the originally contemplated) versus the contemplated 65,186 square foot warehouse/office condominium, would be entitled to a corresponding reduction of its proportionate share.

[35] However, the question before me is not by how much, if any, 622’s share should be reapportioned. The question is: do the buildings of the size and nature constructed by 622 trigger the provisions of the reapportionment clause? If so, the determination of the proper reapportionment would be determined in accordance with that clause.

[36] CCC 449 argues that, in interpreting what the parties intended by the word “building” in the JUA, the Court could consider the interpretation of the word “building” as that term is defined in the Ontario Building Code Act, 1992. Under that Act the structures that 622 put on its lands would not fall within the definition of building.

[37] It is a well-accepted principle of contract interpretation that you must read the contract as a whole in order to determine the intentions of the parties. (Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53). 622 rejects the notion of looking beyond the JUA to understand what the parties meant by the words used in it. It argues that the Court must give the words used by the parties their ordinary meaning. Therefore, it would be wrong to apply the Building Code Act definition of “building” to the meaning intended by the parties to the JUA.

[38] I am guided by the intentions of the parties in the JUA. They built the common roadways in anticipation that all three Phases would be developed. They agreed to a formula for sharing those expenses based on what could be built on the Phase I, II and III lands. The Mackinnon Judgment concluded that the JUA was clear that the formula applied whether or not the contemplated condominiums had been built. It would seem to lead to an unintended and “commercially absurd” result, that one owner could build structures that are so qualitatively different from those contemplated by the JUA and still seek to argue that they constitute the “buildings” contemplated by the JUA.

[39] What 622 has built on its lands are not condominium Corporations. Further they in no way resemble the “buildings” that the parties contemplated in the JUA. Beauchamp describes the building built in 2003 as “... a metal building with cinderblock foundation equipped with windows on all sides and a steel door.” He describes the building built in 2004 as a wood-framed, fully insulated building, sitting on a cinderblock foundation…[with] vapour barriers on all four walls, along the floor and in the ceiling. The roof is a shingle roof … and [T]he building is heated by way of a permanently installed propane furnace. Electricity is provided by way of a solar power system which is sufficient to power a television, lights and serves as a power station for a cell phone and computer.

[40] Beauchamp confirms “…that the square footage of the first metal building is 28.09 square feet and that the square footage o f the wood framed office building is 98.06 square feet.”

Proposed Improvements to the 622 Buildings

[41] In its materials, CCC 449 includes colour photocopies of photographs taken of the 662 buildings. The president of CCC 449 describes them as a “toll booth type structure”. Judging from the photographs, that is a fair description of the buildings.

[42] Notwithstanding that in 2015, 622 applied for a building permit to improve the buildings, the improvements do not change the character of the structures. The improvements are described as: Lift existing building to construct a slab foundation beneath it.” The building permit describes the proposed use as an office/storage building. The upgraded building will still not have running water or washroom facilities and will not be connected to hydro.

[43] I find as a fact that these two buildings are qualitatively so different from the 65,186 square foot warehouse/office building contemplated by the parties to the JUA that, for the purposes of the JUA they cannot be considered buildings so as to trigger the readjustment clause. They are little more than no buildings at all.

[44] A fair interpretation of what has happened on the 622 lands is that, for the purposes of the JUA, they have not been developed. Indeed, that is essentially what Beauchamp admits when he says that 622 has no need or intention of building anything much beyond what it has already erected.

[45] In view of my findings above regarding the nature of the buildings, I conclude that the readjustment clause in para. 6(f) of the JUA has not been triggered.

[46] As a result, I see no basis to deviate from the conclusions in the Mackinnon Judgment that 622 is required to pay 38.45% of the common roadway expenses.

Is CCC 449’s Claim for Asphalt repairs Statute-Barred?

[47] In his affidavit, Beauchamp asserts that the claim against 622 for asphalt repairs in the amount of $48,608.76 is statute-barred by reason that the claim was issued on May 26, 2011, more than two years after the initial invoice dated December 31, 2008.

CCC 449’s Evidence on the Asphalt Repairs

[48] In her supplementary affidavit sworn April 29, 2014, Jennifer Jones (“Jones”), on behalf of CCC 449, explained that all of the common roadway expenses are paid by CCC 449 which then allocates the cost between the shared areas and the exclusive areas on the basis of the JUA.

[49] Jones acknowledges that the invoice on which CCC 449 is suing was re-issued on June 14, 2010, but covered asphalt expenses incurred in 2008. She explains that when the invoice was originally rendered, 622 refused to pay it on that basis that the allocation of expenses as between the common and the exclusive portions of the roadway was wrong.

[50] In the winter of 2010, CCC 449 hired a surveyor to determine the exact locations of the common interior roadway and the exclusive portions of the roadway. The surveyor’s report was obtained on April 28, 2010. It provided an accurate allocation of expenses to the common roadway. On June 14, 2010, a new invoice was rendered to 622, based on the surveyor’s report.

[51] Jones states that CCC 517 accepted the new figures and paid its share. 622 did not. On a without prejudice basis, CCC 449 then reverted to its previous method of calculating 622’s shares using the 14.25% factor. 622 also refused to pay these invoices. As a result, CCC 449 liened the 622 lands and issued its statement of claim.

[52] I accept the evidence of Jones. It is supported by correspondence and business records that explain why the original invoice was replaced by one dated June 14, 2010. I also accept that any limitation period should commence from June 14, 2010. As a result, I find that claim was issued within two years of the invoice and is not statute-barred.

Other reasons for the JUA to require an adjustment of the proportionate shares.

[53] In addition to challenging its obligation to pay 38.45% of the common roadway expenses, Beauchamp asserts that CCC 449 unilaterally changed the way it calculated the allocation of the common roadway expenses, which has allegedly doubled 622’s purported liability for those costs. Beauchamp specifically alleges that historically, the total cost of snow removal was multiplied by 14.25%, which was the percentage allocated to the common roadway. This number was then multiplied by the proportionate share of each owner. In the case of 622, the formula would be: the total cost of snow removal multiplied by 14.25% x 38.45%.

[54] I accept Jones’ explanation of how 622’s proportionate share of the snow removal expenses was calculated and reject 622’s assertions that a wrong formula was applied by CCC 449.

[55] Beauchamp also asserts that in July 1993, CCC 449 amended the site plan to remove “Building F” from the Phase III lands. The result was that, what had been intended to be a building was replaced by parking spaces, which reduced the overall square footage of Phase III from 65,185 to 47,930 [sq. ft.].

[56] This site plan amendment predated the Mackinnon Judgment which found the 622’s proportionate share to be 38.45%. I conclude therefore that 622 is estopped from making this argument and that this issue is res judicata .

[57] Finally, Beauchamp asserted that CCC 449 has increased the square footage of its buildings on its Phase I lands and estimates that they have increased by 39,000 feet to an estimated total of 113,290 square feet. He suggests that this change in square footage would alter the proportionate shares of the parties to the JUA.

[58] In her affidavit, Jones denies Beauchamp’s allegation that CCC 449 has increased the square footage of its buildings. Her evidence is corroborated by CCC 449’s Declaration pursuant to the [Condominium Act, R.S.O. 1980, CH. 84]. Section 3(b) of Schedule C and Schedule D of the Declaration make reference to the second floor assemblies to which Jones believes Beauchamp is referring in his assertion that the second floor assemblies constitute an increase in square footage.

[59] The affidavit of Kazimierz Jacob Kasey Krupa (“Krupa”) sworn April 29, 2014 in support of the motion brought by CCC 449 also supports a finding that there has been no increase in the square footage of its condominium.

[60] Krupa is on the Board of Directors of CCC 449 and is a unit holder. He asserts that, contrary to Beauchamp’s allegations, there have been no changes and, in particular no recent changes, to the layout or square footage of the buildings on CCC 449. He states that they have not increased in size and their footprint has not changed. He asserts that the “second floor assemblies within the existing cubic space of the units”, which he believes Beauchamp refers to as “duplexing”, does not increase the footprint of the buildings and is not new. He further states that the second floor assembly on certain units was in place at the time of the initial construction and predated the JUA.

[61] Krupa states that he bought his unit in December 1988 and had visited many units before buying. At that time, he visited many “duplexed” units. Finally, he refers to s. 3.2 of CCC 449’s Declaration which specifically prohibits the addition, removal, extension or alteration of any boundary wall or floor without the prior written consent of CCC 449. He has no recollection of any such request.

[62] I find that the evidence of Jones and Krupa fully responds to and answers Beauchamp’s allegations regarding an alleged increase in the Phase I square footage.

Conclusion

[63] For the reasons set out above, I grant partial summary judgment and find as follows:

(1) The JUA remains in force and the allocations of the common roadway expenses as set out in Schedule A to the JUA. Namely, 622 remains obligated to pay 38.45% of the common roadway expenses;

(2) The reapportionment provisions of section 6(f) of the JUA have not been trigged by the buildings erected by 622 on its lands;

(3) The plaintiff’s claim for payment of the asphalt invoice dated June 10, 2011 is not statute barred and I grant judgment in that amount;

(4) If the parties cannot otherwise agree on the amounts, then I order a reference to be conducted by the Master to determine the amount payable by 622 to CCC 449 based on 622’s proportionate share of 38.45% of the common roadway expenses.

Costs

[64] CCC 449 has been successful on this motion for partial summary judgment and is entitled to its costs. If the parties cannot agree on amount, they may file submissions not exceeding three pages in length, together with Bills of Costs within 30 days of the date of this decision.

The Honourable Madam Justice Liza Sheard

Released: April 18, 2016