Chapadeau v. Devlin, 2018 ONSC 6456

Chapadeau et al. v. Devlin et al.

Ontario Superior Court of Justice R. Bell J. October 30, 2018 143 O.R. (3d) 365 | 2018 ONSC 6456

Case Summary

Real property — Building scheme — Restrictive covenants — Co-tenancy agreement registered on title to each townhouse in building scheme prohibiting owners from making any alteration to townhouse exterior that was not minor or cosmetic without approval of co-tenancy committee — Applicants' application to discharge that provision under s. 61(1) of Conveyancing and Law of Property Act dismissed — Provision not spent or of no continuing practical value — Provision not ambiguous, vague or uncertain — Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34, s. 61(1).

The applicants were the owners of a townhouse in a building scheme which had unifying architectural and landscaping features. A co-tenancy agreement which was registered on title to each townhouse provided that an owner was not to make any alteration to the exterior of the unit that was not minor or cosmetic in nature without the approval of the co-tenancy committee, and that the co-tenancy committee's decision on whether or not an alteration was minor or cosmetic was final (s. 6.2). The applicants renovated their deck without obtaining the prior approval of the co-tenancy committee. They brought an application to discharge s. 6.2 of the co-tenancy agreement under s. 61(1) of the Conveyancing and Law of Property Act ("CLPA"). They also argued that s. 6.2 was unenforceable because it was ambiguous, vague and uncertain and that it was unenforceable because it was obsolete.

Held, the application should be dismissed.

Section 61(1) of the CLPA does not require the court to balance the competing interests of adjacent landowners by considering whether the modification will be beneficial to the persons principally concerned. The test under s. 61(1) requires the moving party to prove that the covenant under consideration is either spent or that its discharge or modification would have no negative or detrimental impact on the lands benefitting from the restriction. It could not be said that s. 6.2 of the co-tenancy agreement was spent or of no continuing practical value. Maintaining the original design features of the community had always been important to the community's owners. Section 6.2 of the co-tenancy agreement was not ambiguous, vague or uncertain. It had to be interpreted in the context of a community of interests, where a purchaser buys with full knowledge of restrictions, and often because those restrictions confer specific benefits on each owner within the building scheme. There was ample evidence that s. 6.2 was capable of interpretation and had, in fact, been interpreted by successive co-tenancy committees. Minor inconsistencies in application did not constitute evidence of an inherent ambiguity. Finally, previous violations of s. 6.2 had not rendered the provision obsolete. The applicants had failed to establish that any such violations had resulted in an erosion of the overall character of the community.

Dean Park Estates Community Assn. v. Wachal, 2017 BCSC 1258; Kerr v. King's Landing Co-Tenancy Committee, 2015 ONSC 84 (S.C.J.); Paterson v. Burgess, 2017 BCCA 298, 100 B.C.L.R. (5th) 271, 82 R.P.R. (5th) 183, [2018] 3 W.W.R. 425, 282 A.C.W.S. (3d) 210, consd

Sekretov v. Toronto (City), [1973] 2 O.R. 161, [1973] O.J. No. 1885, 33 D.L.R. (3d) 257 (C.A.), distd

Other cases referred to

Beardmore (Re), [1935] O.R. 526, [1935] O.J. No. 256, [1935] 4 D.L.R. 562, [1935] O.W.N. 479 (C.A.); Berry v. Indian Park Assn. (1999), 44 O.R. (3d) 301, [1999] O.J. No. 1419, 174 D.L.R. (4th) 511, 119 O.A.C. 58, 23 R.P.R. (3d) 169, 87 A.C.W.S. (3d) 1072 (C.A.); Creston Moly Corp. v. Sattva Capital Corp., [2014] 2 S.C.R. 633, [2014] S.C.J. No. 53, 2014 SCC 53, 2014EXP-2369, J.E. 2014-1345, 373 D.L.R. (4th) 393, [2014] 9 W.W.R. 427, 59 B.C.L.R. (5th) 1, 461 N.R. 335, 25 B.L.R. (5th) 1, 358 B.C.A.C. 1, 614 W.A.C. 1, 242 A.C.W.S. (3d) 266; Furr v. Duhamel, [2018] O.J. No. 1737, 2018 ONSC 1780 (S.C.J.); Girard (Re), [2007] O.J. No. 5216, 61 R.P.R. (4th) 288 (S.C.J.); Lafortune v. Puccini (1991), 2 O.R. (3d) 689, [1991] O.J. No. 447, 16 R.P.R. (2d) 16, 26 A.C.W.S. (3d) 135 (Gen. Div.); Mohawk Square Developments Ltd. v. Suncor Energy Inc., [2007] O.J. No. 3552, 62 R.P.R. (4th) 100 (S.C.J.); Ontario Lime Co. (Re) (1926), 59 O.L.R. 646, [1926] O.J. No. 505, [1927] 1 D.L.R. 765; Podwin v. Gondziola, [2004] S.J. No. 362, 2004 SKQB 225, [2004] 10 W.W.R. 686, 248 Sask. R. 256, 37 C.L.R. (3d) 81, 20 R.P.R. (4th) 278, 132 A.C.W.S. (3d) 770; Remicorp Industries Inc. v. Metrolinx (2017), 138 O.R. (3d) 109, [2017] O.J. No. 2805, 2017 ONCA 443, 414 D.L.R. (4th) 611, 83 R.P.R. (5th) 15, 279 A.C.W.S. (3d) 653; Silver Seven Corporate Centre Inc. v. 2871220 Canada Ltd., [2017] O.J. No. 4651, 2017 ONSC 5091, 90 R.P.R. (5th) 147, 285 A.C.W.S. (3d) 430 (S.C.J.)

Statutes referred to

Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34, s. 61(1) [as am.]

Authorities referred to

Manderschied, Don J., "Restrictive Covenants: An Alberta Perspective" (2000), 30 R.P.R. (3d) 23

APPLICATION to discharge restrictive covenant and for other relief.

Remi Chapadeau and Shawn Henderson, self-represented.

Christy Allen and Melinda Andrews, for respondents Michel Duhamel, Emmy Verdun and Catherine Barnes.

No one appearing for respondents Steve Furr and Kathleen Lundgren.

R. BELL J. : —

Overview

1The applicants, Remi Chapadeau and Shawn Henderson, are the owners of a townhouse at 31 King's Landing Private, Ottawa. All of the owners at King's Landing, including the applicants, are bound by a co-tenancy agreement registered on title to each townhouse.

2Section 6.2 of the co-tenancy agreement provides:

Alterations to Exterior. An Owner shall not make any alteration to the exterior of the Unit without the prior written approval of the Co-Tenancy Committee, unless such alteration is minor or cosmetic in nature, in which event such approval shall not be required. The Co-Tenancy Committee shall determine whether an alteration is minor or cosmetic and its decision shall be final and binding. Such alterations shall be subject to the requirements, if any, of the National Capital Commission.

3In 2016, the applicants renovated their rooftop deck. They did not obtain the prior written approval of the co-tenancy committee (at the time, the respondents Michel Duhamel, Emmy Verdun and Catherine Barnes) before they did so. Like the applicants, all of respondents are owners at King's Landing.

4The applicants' position is that s. 6.2 of the co-tenancy agreement

(i) should be discharged pursuant to s. 61(1) of the Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34 (the "Act");

(ii) is unenforceable because it is ambiguous, vague and uncertain; and

(iii) is unenforceable because it is obsolete.

5The applicants admit that if s. 6.2 is valid and enforceable, it binds all properties at King's Landing, including their own.

6For the reasons that follow, I confirm that s. 6.2 of the co-tenancy agreement is valid and enforceable. The application is dismissed.

Background Facts

7The materials filed on the application are extensive. The issues to be determined are, however, relatively narrow; it is therefore not necessary for me to review the evidence in the record in detail.

8King's Landing is comprised of 60 residential freehold townhouses and certain shared property in Ottawa along the Rideau Canal. It was developed in 1998 by Claridge Homes as a high-quality community, with unifying architectural and landscaping features.

9The co-tenancy agreement was registered on title to each townhouse on December 24, 1998. The applicants purchased 31 King's Landing on August 28, 2013. In June 2014, they agreed to assume the obligations of the sellers under the co-tenancy agreement pursuant to an assumption agreement.

10In 2016, the applicants renovated their rooftop terrace. They removed the pre-existing structure and replaced it with a new cedar deck, several inches higher than the original structure. They expanded the surface of the terrace, built a privacy/wind screen on the back portion of the terrace and extended the length of the pre-existing privacy screen built by Claridge. They removed the pre-existing glass railings and replaced them with a tempered glass railing system. In June 2017, the applicants erected a 20-foot flagpole on their terrace.

11In July 2016, Mr. Duhamel, the president of the co-tenancy committee, made inquiries about the work being done at 31 King's Landing. Mr. Duhamel informed the applicants that the railing system they were proposing to install had been rejected by the co-tenancy committee the previous year. Mr. Duhamel also informed the applicants of a February 2001 resolution adopted at a special meeting of owners which provides guidance to the co-tenancy committee in relation to exterior alterations.

12The applicants queried why the work being done at 31 King's Landing was different than other features that the co-tenancy committee had apparently approved in the past. The co-tenancy committee requested more information about the nature of the renovations.

13Ultimately, the co-tenancy committee concluded as follows:

• The extension of the rooftop deck was conditionally approved, provided that the original railing or a similar style replacement would be reinstalled and provided that the deck did not impact drainage.
• Approval for the privacy wall extension and the addition of the privacy wall was denied because these renovations adversely impacted the neighbours' privacy and the sightlines of other owners, and altered the architectural and visual integrity of the development.
• The request for the particular tempered glass railing system was denied on the basis that another owner had previously made the same request and rooftop rails are considered a unifying architectural feature at the development.
• The flagpole was provisionally approved on condition that it would not be a permanent structure, would not exceed a maximum height of eight feet, would not be lit and would only be raised at certain times per year.

Section 6.2 Should Not Be Discharged Under the Conveyancing and Law of Property Act

14The applicants assert that s. 6.2 of the co-tenancy agreement should be discharged pursuant to s. 61(1) of the Act on the basis that the covenant's discharge would be "of great benefit" to them and "there is no possible detriment to the Respondents in the discharge of an unenforceable covenant". I reject this argument for the following reasons.

15Section 61(1) of the Act provides:

61(1) Where there is annexed to land a condition or covenant that the land or a specified part of it is not to be built on or is to be or not to be used in a particular manner, or any other condition or covenant running with or capable of being legally annexed to land, any such condition or covenant may be modified or discharged by order of the Superior Court of Justice.

16As the Court of Appeal stated in Ontario Lime Co. (Re) (1926), 59 O.L.R. 646, [1926] O.J. No. 505 (C.A.), at p. 651 O.L.R. (cited in Remicorp Industries Inc. v. Metrolinx (2017), 138 O.R. (3d) 109, [2017] O.J. No. 2805, 2017 ONCA 443, at para. 91), the court's discretion under the Act should be

. . . exercised with the greatest caution, and an order should seldom, if ever be made which will operate to the prejudice of an adjacent landowner who has any real rights. The true function of the statute is to enable the Court to get rid of a condition or restriction which is spent and so unsuitable as to be of no value and under circumstances when its assertion would be clearly vexatious.

17The purpose of s. 61(1) is not to reallocate rights between adjacent landowners; that is a matter for the parties themselves to settle through negotiation rather than an order under the Act (Silver Seven Corporate Centre Inc. v. 2871220 Canada Ltd., [2017] O.J. No. 4651, 2017 ONSC 5091, 90 R.P.R. (5th) 147 (S.C.J.), at para. 35).

18Contrary to the applicants' submission, s. 61(1) does not require the court to balance the competing interests of adjacent landowners by considering whether the modification [at para. 20] "will be beneficial to the persons principally concerned" (Beardmore (Re), [1935] O.R. 526, [1935] O.J. No. 256 (C.A.), at paras. 21-23). The test under s. 61(1) requires the moving party to prove that the covenant under consideration is either "spent" or that its discharge or modification would have no negative or detrimental impact on the lands benefitting from the restriction. I note, parenthetically, that if, as the applicants assert, s. 6.2 is unenforceable, then neither the applicants nor the respondents would benefit from its discharge.

19It cannot be said that s. 6.2 of the co-tenancy agreement is spent or of no continuing practical value. The uncontradicted evidence in the record compels the conclusion that maintaining the original design features of King's Landing has always been important to the community's owners. I highlight only a few examples. First, the co-tenancy agreement, through s. 7.2, is designed to ensure privity of contract is maintained through each successive owner of a particular townhouse.

20Second, in 1999, the co-tenancy committee was asked to approve the construction of a sunroom on the back of a townhouse. The request was denied because it did not conform with the original design. The co-tenancy committee maintains a record of those exterior alterations it determines are not acceptable under s. 6.2.

21Third, in February 2001, a majority of the owners passed a resolution aimed at clarifying the type of exterior alterations the community would consider acceptable under s. 6.2. The preamble to the resolution states that it is "[i]n recognition of the desire of homeowners to preserve the architectural integrity, quality and value of the community".

22Fourth, and finally, in February 2017, a meeting of owners at King's Landing was held to gauge the community's attitude towards s. 6.2. Owners were asked to vote on two motions:

(1) Section 6.2 of the Co-Tenancy Agreement is important to me, and it is important for the protection of the property value at King's Landing.

(2) Do you agree that the rooftop renovations at Unit 31 are an exterior modification that are subject to the Committee's approval pursuant to Section 6.2 of the Co-Tenancy Agreement?

23A large majority of owners voted in favour of both motions.

24A building scheme's importance is not exhausted just because the character of a neighbourhood is established. Typically, the scheme will remain important to ensure that the neighbourhood's established character is preserved (Paterson v. Burgess, 2017 BCCA 298, 100 B.C.L.R. (5th) 271, at para. 28). I find that s. 6.2 of the co-tenancy agreement confers an ongoing benefit to the community of owners at King's Landing.

25This is not to say that s. 6.2 cannot be modified; however, that is a matter for private negotiation as opposed to a court exercising the limited jurisdiction contemplated by s. 61(1) of the Act.

Section 6.2 is Not Ambiguous, Vague or Uncertain

26The applicants submit that s. 6.2 of the co-tenancy agreement is uncertain, that the word "unit" is ambiguous, and that the phrase "minor or cosmetic" is vague and subjective. Their position is that s. 6.2 imports a subjective interpretation that renders the covenant ambiguous, vague and uncertain and, ultimately, unenforceable.

27I am not persuaded by the applicants' arguments.

28It is common ground that King's Landing is a valid building scheme:

(i) both the applicants and the respondents (or their predecessors in title) derived title under a common vendor;

(ii) prior to selling the lands to which the applicants and the respondents are entitled, the vendor laid out his estate for sale in the lots subject to restrictions intended to be imposed on all lots and which, though varying in detail as to particular lots, are consistent and consistent only with some general scheme of development;

(iii) the restrictions were intended by the common vendor to be and were for the benefit of all the lots intended to be sold, whether or not they were also intended to be and were for the benefit of other land retained by the vendor; and

(iv) the applicants and respondents, or their predecessors in title, purchased their lots from the common vendor upon the footing that the restrictions subject to which the purchases were made were to enure for the benefit of the other lots included in the general scheme whether or not they were also to enure for the benefit of other lands retained by the vendor (Berry v. Indian Park Assn. (1999), 44 O.R. (3d) 301, [1999] O.J. No. 1419 (C.A.), at para. 16).

29Reciprocity is the founding concept of a building scheme: benefits within a building scheme must accrue to and increase the value of all the lots, with each lot within the building scheme being both dominant and servient in respect of each of the other lots (Mohawk Square Developments Ltd. v. Suncor Energy Inc., [2007] O.J. No. 3552, 62 R.P.R. (4th) 100 (S.C.J.), at paras. 78-79). It is within this context of a community of interests, where a purchaser buys with full knowledge of restrictions, and often because those restrictions confer specific benefits on each owner within the building scheme, that s. 6.2 must be interpreted.

30In support of their position, the applicants rely, in particular, on the Court of Appeal's decision in Sekretov v. Toronto (City), [1973] 2 O.R. 161, [1973] O.J. No. 1885 (C.A.). Sekretov deals with a restrictive covenant that was said to run with land conveyed by the municipality to a resident and imposed partly by means of a deed transferring the land and partly by a resolution of the municipal council passed almost a month after the date of the conveyance. On appeal, the Court of Appeal agreed with the trial judge that the restrictive covenant in the deed was ambiguous and therefore invalid. The Court of Appeal also found that the covenant was vague and uncertain and should not be enforced. The uncertainty arose because the covenant in the transfer could be interpreted as providing that the use to which the land might or might not be put must depend upon the "whim of Council" to be expressed in a resolution to be passed at some future date. As the Court of Appeal put it, "I cannot think of anything more uncertain and more indefinite than such a provision if, by the covenant, the municipal corporation purported to reserve to itself the right to dictate and control by resolution the uses which could be made of the subject land" (Sekretov, at para. 18).

31I distinguish Sekretov from the case before me because Sekretov did not involve a building scheme. The concept of community interests was not at play.

32A restrictive covenant involves a relationship where one property is subject to restrictions for the benefit of another property. As this relationship, by its very nature, interferes with the free use of land, restrictive covenants are strictly interpreted (Girard (Re), [2007] O.J. No. 5216, 61 R.P.R. (4th) 288 (S.C.J.), at para. 34).

33By contrast, under a building scheme, all owners share similar burdens and enjoy benefits relating to limitations on property use. In my view, the interpretation of a restrictive covenant that is part of a building scheme must take into account the building scheme's community of interests, recognizing the burdens imposed upon and the benefits shared by all owners in the community, and considering the building scheme as a whole (Creston Moly Corp. v. Sattva Capital Corp., [2014] 2 S.C.R. 633, [2014] S.C.J. No. 53, 2014 SCC 53, at paras. 48-49 and 57; and Paterson, at para. 22).

34I make two additional observations as to the inapplicability of Sekretov to this case. First, the ambiguity in Sekretov arose as a result of the covenant's failure to identify the dominant and servient land. Under a building scheme, all lots are both dominant and servient. Second, the restrictive covenant at issue in Sekretov was aimed at restricting the use of the land completely. By contrast, s. 6.2 does not create an absolute prohibition against any exterior modifications or alterations.

35In my view, the applicants' reliance on the decision in Dean Park Estates Community Assn. v. Wachal, 2017 BCSC 1258 is misplaced ([2017] B.C.J. No. 1813). In Dean Park, the homeowners' association initiated the proceeding in an attempt to enforce a restrictive covenant in a statutory building scheme against an owner who was initially unaware of the restrictions, but who then attempted to work with the association prior to the court proceeding. The chambers judge concluded that the restrictive covenant was unclear and that its ambiguity must be resolved in accordance with the "strict construction" approach, that is, in favour of the homeowner and non-enforcement (Dean Park, at paras. 49-50). A similar approach was taken by the same chambers judge in respect of the application underlying the British Columbia Court of Appeal's decision in Paterson. The Court of Appeal held that the chambers judge erred in principle in his interpretation of the building scheme by failing to consider the scheme as a whole, based on his "over-reading of a single provision" in the scheme, and an "exclusive focus" on that provision (Paterson, at para. 22).

36Considerable time was spent at the hearing reviewing previous decisions of the successive co-tenancy committees. Rather than supporting the applicants' position, the fact that s. 6.2 has been reviewed and interpreted by those committees over a number of years supports the view that the provision is neither ambiguous nor uncertain.

37Respondents' counsel has referred me to prior decisions of this court dealing with the co-tenancy agreement (Furr v. Duhamel, [2018] O.J. No. 1737, 2018 ONSC 1780 (S.C.J.)), and s. 6.2 in particular (Kerr v. King's Landing Co-Tenancy Committee, [2015] O.J. No. 249, 2015 ONSC 84 (S.C.J.)). Counsel submits that there is no evidence that a court or the co-tenancy committee has had difficulty interpreting either the co-tenancy agreement or s. 6.2.

38In Kerr, Hackland J. was asked to review an arbitration decision resulting from a dispute over a decision taken by the co-tenancy committee pursuant to s. 6.2 of the agreement. In dismissing the application, Hackland J. referred to the February 2001 resolution aimed at clarifying the type of exterior alterations the community would consider acceptable under s. 6.2 and observed that the arbitrator was "very much aware that he was required to balance the unit owners' private interests with the interests of the King's Landing Community". Hackland J. recognized that the arbitrator's decision was owed deference, "just as he properly showed deference to the decision of the Committee (who were elected home owners) who were chosen to make decisions affecting and balancing the interests of the community with those of the individual home owners" (Kerr, at para. 24).

39I agree with respondents' counsel that in Kerr, Hackland J. accepted that the co-tenancy committee has the authority to interpret s. 6.2 and to consider the meaning of "minor or cosmetic" alterations. It is also implicit from the decision that Hackland J. was satisfied that s. 6.2 is enforceable.

40I reject the applicants' submission that a list of "objective criteria" ought to have been included in s. 6.2 of the co-tenancy agreement. The language of s. 6.2 is clear and unambiguous in giving the co-tenancy committee the authority to determine whether an alteration is minor or cosmetic. The language of s. 6.2 is also clear and unambiguous in providing that the co-tenancy committee's decision as to whether an alteration is minor, or cosmetic is final and binding. There is ample evidence in the record that s. 6.2 is capable of interpretation and has, in fact, been interpreted by successive co-tenancy committees. Minor inconsistencies in application do not constitute evidence of an inherent ambiguity.

41Section 6.2 of the co-tenancy agreement requires prior written approval of the co-tenancy committee for alterations to "the exterior of a unit". In interpreting and applying s. 6.2, the co-tenancy committee has considered proposed alterations to the exterior of a home owner's townhome, that is, the building. The applicants submit that another plausible interpretation is that the restriction in s. 6.2 applies to alterations "outside the boundaries of the unit", that is, beyond the private property line. The applicants rely on the description of "the Units" in s. 2.1 of the co-tenancy agreement, which states in part: "[t]he Units to which this agreement applies are identified in Schedule 'B'", and the fact that the boundaries of "the Units" are delineated on the reference plan. The applicants also point to the use of the word "building" (as opposed to "unit") in s. 6.6(b) of the co-tenancy agreement (which provides each owner with a right of access).

42I am unable to accept the applicants' proposed, alternative interpretation as it would, in my view, render s. 6.2 of the co-tenancy agreement meaningless. The King's Landing building scheme, of which s. 6.2 is a part, is intended to preserve the character of the neighbourhood. Interpreted in this context, s. 6.2 prohibits alterations being made to those elements of the privately owned property which are visible to third parties, including other owners.

43In any event, the possibility of more than one interpretation of the words in a covenant is not enough, in itself, to render the covenant ambiguous (Don J. Manderschied, Q.C., "Restrictive Covenants: An Alberta Perspective" (2000), 30 R.P.R. (3d) 23, at pp. 41-42, cited in Podwin v. Gondziola, [2004] S.J. No. 362, 2004 SKQB 225, 248 Sask. R. 256, at para. 16).

44I conclude that s. 6.2 of the co-tenancy agreement is not ambiguous, vague or uncertain.

Section 6.2 Has Not Been Rendered Obsolete

45The applicants also submit that alleged previous violations of s. 6.2 have rendered the section obsolete. Because of the view I take of the case, it is not necessary for me to consider in detail any of the alleged violations or exceptions to the enforcement of s. 6.2 on which the applicants rely. The applicants have failed to satisfy me that any such violations or exceptions have resulted in an erosion of the overall character of King's Landing.

46In Lafortune v. Puccini, upon which the applicants rely, Chadwick J. concluded that the original intent of a subdivision agreement and the restrictive covenants contained in it had been varied by the conduct of the original purchasers and their assignees such that the restrictive covenants were no longer enforceable ((1991), 2 O.R. (3d) 689, [1991] O.J. No. 447 (Gen. Div.)). In Lafortune, there had been both minor and major violations of the restrictive covenants.

47The building scheme at King's Landing remains intact notwithstanding any alleged violations or exceptions to the enforcement of s. 6.2. There is no evidence to the contrary. I conclude that s. 6.2 of the co-tenancy agreement has not been rendered obsolete. It continues to be enforceable.

Disposition

48Section 6.2 of the co-tenancy agreement is valid and enforceable. The application is dismissed.

49The parties are encouraged to try to reach an agreement on costs of the application failing which they may make written submissions limited to a maximum of three pages, double-spaced, exclusive of a costs outline. The respondents shall deliver their costs submissions within 14 days. The applicants shall deliver their costs submissions 14 days following the receipt of the respondents' costs submissions.