COURT FILE NO.: CV-21-0750
DATE: 2021/11/02
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Sophiya Benjamin and Dinesh Benjamin
Applicants
– and –
JHS Properties Inc.
Respondent
Mr. L. Honickman and Mr. W. McLennan, for the Applicants
Mr. J. Heimpel, for the Respondent
HEARD: at Kitchener, Ontario,
on October 15, 2021
THE HONOURABLE JUSTICE j. r. hENDERSON
REASONS FOR DECISION
INTRODUCTION
[1] This is an application by Sophiya Benjamin and Dinesh Benjamin for a declaration that the applicants are not in breach of a restrictive covenant, and that the applicants are permitted to install solar panels on the roof of their home.
[2] The respondent, now known as Deer Ridge Heights Inc. (“DRH”), is the developer of a residential subdivision known as Deer Ridge Estates. Deer Ridge Estates was intended to be an exclusive community of high-quality homes.
[3] In order to maintain quality standards, DRH, then known as JHS Properties Inc., established a restrictive covenant as an element of the development of Deer Ridge Estates. The restrictive covenant was registered on title against the properties in the subdivision in approximately 2006.
[4] The restrictive covenant gives the developer architectural control over all aspects of the construction of structures and houses in the subdivision. It provides that the developer’s approval is required prior to building or erecting any structures whatsoever on the properties.
[5] The applicants purchased their home, known as 229 Longview Crescent, Kitchener, Ontario (“the Benjamins’ property”) in 2014. It is one of the high-quality homes in Deer Ridge Estates. The applicants acknowledge that the restrictive covenant applies to the Benjamins’ property.
[6] In March 2021 the applicants retained Guelph Solar Mechanical Inc. to install solar panels on the roof of their home. They did not seek the approval of the developer. On March 3, 2021, Guelph Solar started the installation by affixing the racking system to the roof of the Benjamins’ property.
[7] Shortly thereafter, the applicants observed posts on a Facebook group page in which their neighbours raised questions about the solar panels. The applicants therefore paused the installation of the solar panels on March 4, 2021, to consider their position.
[8] By letter dated March 11, 2021, counsel for DRH informed the applicants that they had violated the restrictive covenant because the applicants had not obtained the developer’s approval for the installation of the solar panels and because the installation did not comply with the developer’s architectural controls. Further, DRH’s counsel demanded that the solar panels be removed, and the roof returned to its original condition, within 21 days. A brief negotiation between the parties was unsuccessful, and the applicants then commenced this application.
[9] The restrictive covenant does not make any specific reference to solar panels. DRH relies upon section 7 of the restrictive covenant, which reads, in part, as follows:
The Purchaser and any subsequent owner of the land agrees to obtain the Developer’s approval in writing of any plans, including location and colour scheme, prior to building or erecting of any temporary or permanent structures whatsoever, including any additions or alterations to any existing structure or house as previously approved by the Developer. [Emphasis added]
[10] The applicants submit that solar panels do not constitute a “structure”, and therefore the developer’s approval is not required by section 7 of the restrictive covenant. In the alternative, the applicants submit that section 7 of the restrictive covenant is vague and uncertain, and accordingly it is not enforceable in these circumstances.
[11] DRH submits that the wording of section 7 captures the installation of solar panels, and therefore the applicants require the approval of the developer, which they have not obtained. Further, DRH submits that section 7 is clear, unambiguous, and enforceable.
ISSUE #1 – DO SOLAR PANELS CONSTITUTE A STRUCTURE?
[12] A restrictive covenant must be interpreted in accordance with general principles of contract law. The contract must be read as a whole, giving the words used their ordinary meanings, and interpreted in the context of the intention of the parties, the surrounding circumstances, and sound commercial principles. See the decisions in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, at para. 47, and Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205, at para. 24.
[13] There is no dispute as to the factual circumstances or the objectives of the restrictive covenant in this case. The parties agree that the developer created the restrictive covenant in order to provide a mechanism through which it could control and maintain the high-quality standards for properties in Deer Ridge Estates.
[14] I note that there are many sections of the restrictive covenant that refer to specific structures or items. For example, the restrictive covenant prohibits above-ground pools (section 7), storage sheds (section 7), signs, billboards, and notices (section 8), heavy trucks, buses, and boats (section 9), roof antennae (section 13), and satellite dishes (section 13).
[15] However, I find that the list of prohibited structures is not limited to those specific items that are mentioned in the restrictive covenant. I find that the first sentence of section 7 was intended to give the developer a broad general control over the properties. That is, it provides the developer with general control over any structures that a homeowner may wish to install on the property, even if the structure is not specially referenced in the restrictive covenant.
[16] Therefore, the issue is whether the installation of solar panels is captured by the phrase “building or erecting of any temporary or permanent structures whatsoever, including any additions or alterations to any existing structure or house…” If so, the approval of the developer is required.
[17] The applicants submit, and I accept, that a structure should be defined as a complex whole constructed by bringing together the essential parts. Counsel for the applicants submits that solar panels do not fall within this definition; they are not built or constructed, and therefore do not constitute a complex whole constructed by bringing together the essential parts.
[18] Counsel for the applicants also submits that the word “structure” in section 7 must be read as being the same as, or similar to, a house. Counsel relies on the use of the words “building” and “erecting” in section 7 as support for his position that the structures that are prohibited by section 7 must be similar to a house.
[19] In my view, counsel’s submissions on this issue amount to a torturous attempt by the applicants to circumvent the clear meaning of the words used in section 7.
[20] Steve Dyck, president of Guelph Solar, deposed that the installation of solar panels starts with an aluminum racking system that has to be affixed to the roof of the house. Then, the optimizers are mounted to the racking system. Then, the solar panels are mounted above the optimizers.
[21] I find that the combination of the racking system, the optimizers, and the solar panels constitutes a structure within the meaning of section 7. That is, the combination constitutes a complex whole constructed by bringing together the essential parts.
[22] Moreover, in the alternative, if the solar panel system does not constitute a stand-alone structure, I find that it constitutes an addition or alteration to the existing structure.
[23] For these reasons, I find that the installation of solar panels on the roof of a house in Deer Ridge Estates falls within the provisions of section 7 of the restrictive covenant.
ISSUE #2 – IS SECTION 7 UNENFORCEABLE FOR UNCERTAINTY?
[24] As a limitation on the free use of land, restrictive covenants are to be strictly interpreted. See the case of Girard, Re, (2007), 61 R.P.R. (4th) 288.
[25] Further, restrictive covenants must be precise in terms, and if they are vague, ambiguous, or indefinite in meaning they will not be enforced. See the decisions in Noble v. Alley, 1950 CanLII 13 (SCC), [1951] S.C.R. 64, and Blackburne Creek Homeowners Association v. Burt, 2019 ABQB 608.
[26] The applicants submit that section 7 is unenforceable as it is vague, ill-defined, and uncertain. In summary, counsel submits that a homeowner could not read section 7 and determine whether it applied to a particular proposed building or structure. Even if a homeowner could make this determination, counsel submits that a homeowner could not, on a plain reading of section 7, determine whether a request for the developer’s approval would in fact be successful.
[27] Counsel for the applicants raises three types of uncertainty. The first type of uncertainty relates to the lack of an apparent procedure to be followed for the developer’s approval. I accept that the process set out in the restrictive covenant is not extensive, but I find that it is not uncertain. In simple terms, the restrictive covenant provides that the homeowner must seek out the developer and obtain the developer’s approval in writing. The name and address of the developer is stated in the registration of the restrictive covenant. The fact that the developer has changed its name through amalgamation does not create uncertainty.
[28] The second type of uncertainty is whether a particular project, such as the installation of solar panels, is covered by section 7. I find that there is no uncertainty as to what is covered for the reasons discussed under Issue #1. If the proposed installation falls within the definition of a structure, it is covered. The installation of solar panels is covered by section 7.
[29] However, it is important to note that section 7 is a general catchall section of the restrictive covenant. That is, section 7 is designed to cover items that are not specifically mentioned elsewhere in the restrictive covenant. Therefore, the installation of solar panels is not like the installation of an above-ground pool, which is specifically prohibited. This difference between structures that are specifically prohibited and those that fall within the general wording of section 7 leads to the third type of uncertainty.
[30] The third type of uncertainty is whether a proposed structure that is not specifically referenced in the restrictive covenant would be prohibited or approved by the developer. This uncertainty arises from the absence in the restrictive covenant of any objective criteria to be applied in the consideration of a homeowner’s request for the developer’s approval.
[31] The restrictive covenant in this case provides the developer with the unfettered discretion to decide whether or not to approve a homeowner’s request under section 7. The applicants submit that the developer has an obligation to identify objective criteria that will be applied. In my view, when considered in light of the generality of section 7, this submission has considerable merit.
[32] A homeowner could read the restrictive covenant and easily determine that an above-ground pool, for example, is prohibited; however, a homeowner who wished to install solar panels would need to consider whether a solar panel would be the type of structure that would be prohibited by the developer. For this reason, although the definition of a structure is not uncertain, I find that the generality of section 7 puts an onus on the developer to clearly define the types of structures that would or would not be acceptable to the developer.
[33] In the case of Sekretov v. Toronto (City), 1973 CanLII 712 (ON CA), [1973] 2 O.R. 161 (Ont.C.A.), the Ontario Court of Appeal considered a restrictive covenant that provided that the use of the land would be determined by municipal council in a resolution to be made at a future date.
[34] Schroeder J.A. wrote, “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.”
[35] In the case of Lone Oak v. Baillie, 2019 ONSC 4667, Templeton J. dealt with a restrictive covenant that required a homeowner to obtain the approval of the developer regarding the construction of a large shed. The developer had the unfettered discretion to approve the construction of the shed. Templeton J. found that the restrictive covenant was unenforceable.
[36] At para. 41 of that decision Templeton J. wrote, “I cannot avoid coming to the conclusion that the lack of specificity in this covenant with respect to the criteria for the exercise of the Developer’s discretion either in favour of or refusal of the proposal renders it unenforceable.”
[37] These cases stand for the proposition that, for certainty, where a developer retains a discretion to approve or prohibit future uses of the land, the developer has an obligation to identify the specific objective criteria that will be applied in the consideration of a request for approval from a property owner, and make those criteria known to the property owner.
[38] A representative of DRH, Tony Bocchino, was cross-examined about the criteria that DRH used to determine whether a homeowner’s proposal would be approved under section 7. In summary, Mr. Bocchino testified that the developer would not approve the building or erecting of a structure if it “may detract from the architectural aesthetics within the subdivision or may disturb or disrupt the neighbourhood for other homeowners, or may impact curb appeal and property values.”
[39] I find that the phrases “architectural aesthetics”, “disturb or disrupt the neighbourhood”, and “curb appeal” are all ill-defined, vague terms. These criteria are entirely subjective. Consequently, on the basis of these criteria, a homeowner would have great difficulty determining whether a proposed structure would be approved by the developer. In my view, the only possible objective criteria mentioned by Mr. Bocchino is the reference to property values, but in this case there is no strong evidence either way with respect to the effect of solar panels on property values.
[40] Moreover, a homeowner at Deer Ridge Estates would not be able to accurately assess whether the developer would approve a proposed project as the restrictive covenant in this case does not identify any criteria for the exercise of the developer’s discretion. If there are any criteria for the approval of a structure, the criteria should be stated in the restrictive covenant.
[41] In the present case, I find that there are no discernible objective criteria set out in the restrictive covenant for the approval or rejection of a proposed structure that is covered by section 7. A homeowner who is considering the installation of solar panels cannot determine from the restrictive covenant whether the structure would or would not be approved by the developer.
[42] Therefore, I find that in the circumstances of this case, the first sentence of section 7 of the restrictive covenant that requires the approval of the developer for the building or erecting of any structure is not enforceable as it is vague and uncertain.
CONCLUSION
[43] For these reasons, I find that section 7 of the restrictive covenant is not enforceable in these circumstances. The applicants do not require the approval of the developer for the installation of the solar panels on the roof of their home. Order to go accordingly.
[44] If there are any other issues, including costs, that cannot be resolved, I direct that the party seeking relief shall deliver written submissions to the trial co-ordinator at Kitchener within 20 days of the release of this judgment with responding submissions to be delivered within 10 days thereafter. If no submissions are received within this timeframe, the parties will be deemed to have settled all of the remaining issues as between themselves.
J. R. Henderson J.
Released: November 2, 2021
COURT FILE NO.: CV-21-0750
DATE: 2021/11/02
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Sophiya Benjamin and Dinesh Benjamin
Applicants
– and –
JHS Properties Inc.
Respondent
REASONS FOR decision
J. R. Henderson J.
Released: November 2, 2021