Court File and Parties

COURT FILE NO.: 15-63793 DATE: 2023/05/01

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

Emmy Verdun, Dave Seibel, and Sandra Morval Plaintiffs – and – Paulette Martel and Richard Martel Defendants

COUNSEL: Melinda Andrews, for the Plaintiffs Paulette Martel, self-represented Defendant

HEARD: January 16, 17, 18, and 19, 2023

REASONS FOR JUDGMENT

RYAN BELL J.

Overview

[1] King’s Landing is comprised of 60 residential freehold townhouses and certain shared property in Ottawa along the Rideau Canal. It is a private community governed by a Co-Tenancy Agreement registered on title to all units. The plaintiffs, Emmy Verdun, Dave Seibel, and Sandra Morval, are owners, elected as members of the co-tenancy committee (the “Committee”) which is responsible for the management of the Shared Property and the administration of the Co-Tenancy Agreement. All owners are contractually bound by the Co-Tenancy Agreement, which requires the owners to pay their proportionate share of the Shared Expenses used to operate the community.

[2] The defendant, Paulette Martel, was the owner of 40 King’s Landing Private until 2020 when she sold her unit. The action was dismissed against Richard Martel. The plaintiffs say that between 2013 and 2020, Ms. Martel failed to pay the full amount of her proportionate share of the Shared Expenses. Ms. Martel does not dispute the amount at issue - $19,902 – but she maintains that she owes no arrears under the Co-Tenancy Agreement for two reasons. First, she says the amounts at issue do not form part of the Shared Expenses as defined in the Co-Tenancy Agreement. Second, she says the applicable limitation period expired prior to the commencement of the action. If she does owe arrears in respect of the Shared Expenses, Ms. Martel maintains that the rate of interest provided for in the Co-Tenancy Agreement does not apply.

[3] I find that Ms. Martel owes arrears under the Co-Tenancy Agreement in the amount of $19,902. The plaintiffs are entitled to judgment in this amount, together with interest as set out in the Co-Tenancy Agreement. The plaintiffs are also entitled to their costs of the action.

The Co-Tenancy Agreement

[4] The recitals to the Co-Tenancy Agreement include the following:

AND WHEREAS this agreement is necessary to define and establish the rights and obligations with respect to the use, operation, management, supervision, maintenance, repair and replacement by the Owners, mortgagees and tenants, from time to time respectively of the Units on the Lands and with respect to the said Shared Property;

AND WHEREAS pursuant to this Agreement, all purchasers will take title subject to a covenant to be bound by the provisions of this Agreement.

[5] Section 1 of the Co-Tenancy Agreement lists the following definitions:

1.1 Definitions. (a) “Co-tenancy interest” means the tenancy in common in the lands described in Schedule “C”. (b) “Lands” means all of the lands and premises described in Schedule “A” attached hereto. (c) “Proportionate Share” means the equal percentage that each of the Owners shall bear of the Shared Expenses. (d) “Shared Elements” means certain elements of the project which are for the joint and mutual use and benefit of only certain Owners. These elements are described in Section 2.4. (e) “Shared Expenses” means the expenses relating to the maintenance and repair of the Shared Property and are described herein in Section 4.1. (f) “Shared Property” means that part of the Lands and appurtenances thereon which are described in Section 2.3 and Schedule “C”..

[6] Ownership rights are addressed in section 2 of the Co-Tenancy Agreement, which provides in part:

2.3 Shared Property. The Shared Property includes the following: (b) services and utilities located on or under the Shared Property and on or under the Units to service the Units and the Shared Property, including hydro transformers , pathway lights, catch basins, street lighting and fire hydrants together with conduits and enclosures for hydro and cable utilities; (e) landscaped areas adjacent to certain Units which exist for the exclusive use of certain Owners as set out in Section 2.6; (h) the sound attenuation fence along the easterly boundary of the Lands; (l) any other elements located in the Shared Property which benefit all owners.

2.4 Shared Elements. [...] Other Shared Elements between these Unit Owners are: (c) privacy fences separating the rear yards of the Units abutting Greenfield Avenue along the easterly boundary of the Lands.

2.6 Landscaped areas. The Owners acknowledge there are landscaped areas adjacent to certain Units which form part of the Shared Property which shall be allocated for the exclusive use of the Owners and occupants of such Units subject to the terms of this Agreement and the requirements of the City of Ottawa and the National Capital Commission.

2.7 Shared Expenses. Each of the Owners shall contribute in equal shares to the Shared Expenses.

2.11 Contractual relationship between Owners. Each Owner of a Unit is deemed to have contracted directly with each other Owner with respect to the provisions in this Agreement.

[7] Section 3 addresses the management of the Shared Property. Section 3.1 provides that the management and supervision of the maintenance and repair of the Shared Property, excluding the party walls, shall be exercised by the Committee. The Committee’s duties include preparing an annual budget for the maintenance, repair, and general upkeep of the Shared Property “and all other areas that are the obligation of all the Owners under Section 4,” estimating the amount of Shared Expenses for the ensuing fiscal year, and establishing a reserve fund for contingencies, including the major repair and replacement of the Shared Property.

[8] Section 4 of the Co-Tenancy Agreement deals with Shared Expenses. Section 4.1 provides a non-exhaustive list:

4.1 Shared Expenses. The Shared Expenses of the Shared Property shall include the following: (c) the cost of repair, replacement and maintenance of the Shared Property; (d) the cost of landscaping and snow removal of the Shared Property, it being understood and agreed that such landscaping shall include all grassed areas, whether located within Unit boundaries or not, save and except for the fenced rear yards of the Units abutting Greenfield Avenue along the easterly boundary of the Lands; (e) the cost of repair, replacement, maintenance and snow removal of all driveways, curbs, steps and walkways leading to Units and Shared Property, whether they form part of the Shared Property or not; (g) the cost of legal, accounting, managing, auditing and engineering services or other professional advice and services required by the Co-Tenancy Committee ; (k) such other expenses as are normally incurred in maintaining a high quality residential development.

Notwithstanding that certain parts of the dwellings may project into Shared Property, each Owner is responsible for maintaining and repairing both the interior and exterior of his or her own dwelling including all door sills and/or thresholds and decks or balconies.

[9] Each owner is required to pay to the treasurer of the Committee their proportionate share of the Shared Expenses at such time as determined by the Committee, regardless of when the expense is incurred, without set off or deduction: section 4.3.

[10] An owner cannot avoid their obligation for the Shared Expenses by waiving or abandoning their right to use the Shared Property: section 4.6(c).

[11] The means by which substantial changes to the Shared Property may be effected are addressed in section 5.2 of the Co-Tenancy Agreement. Section 5.2 provides:

5.2 Substantial Change to Property. (a) The Co-Tenancy Committee may, by a confirming vote of at least forty (40) Owners at a meeting where a quorum is present, make any substantial additions, alterations or improvements to, or renovation of the Shared Property. For this purpose, any addition, alteration or improvements to, or renovation of the Shared Property shall be deemed to be substantial if the cost of such addition, alteration or improvement to or renovation of the Shared Property is in excess of twenty percent (20%) of the current annual budget. (b) The Co-Tenancy Committee may, by a confirming vote of at least thirty (30) Owners at a meeting where a quorum is present, make any other addition, alteration, or improvement to, or renovation of the Shared Property.

[12] Section 4.5 provides for the priority of Shared Expenses as follows:

4.5 Priority of Shared Expenses. The Owners agree that every amount from time to time payable by him for Shared Expenses shall constitute a first charge upon the Owner’s Unit subject only to municipal taxes having statutory priority and that any such amounts that may from time to time be in arrears will have priority to the rights of any purchaser or mortgagee of such interest, whether the instrument in favour of such purchaser or mortgage is registered before or after such common expense payments due. This charge shall be deemed to be a charge to which the Mortgages Act, R.S.O. 1990, c. M. 40 applies.

[13] Finally, the Co-Tenancy Agreement provides in section 4.6 that, in the event an owner defaults in payment of the Shared Expenses, the amount of arrears bears interest at a rate of interest which is the greater of 15 per cent per annum, calculated monthly and a rate which is equal to five per cent per annum above the bank rate of the Royal Bank of Canada.

Ms. Martel’s Position

[14] Ms. Martel maintains she has paid all charged expenses that relate to the maintenance and repair of the “co-owned lands” and that were incurred with the approval of the owners pursuant to the Co-Tenancy Agreement. Ms. Martel says some of the expenses she has refused to pay relate to “expenses that are outside the Shared Property and they are expenses that the Co-tenancy Committee had no authority to incur except on behalf of any owner who consented to pay for the incurring of the expenditure.” She says other expenses she has refused to pay were related to the Shared Property, but “they were over 20% of the current annual budget and they were incurred without the approval of the owners as required.”

The Principles Governing the Interpretation of the Co-Tenancy Agreement

[15] The law on contractual interpretation was set out by the Supreme Court of Canada in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633. A decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract: Sattva, at para. 47. The meaning of words is often derived from a number of contextual factors, including the purpose of the agreement and the nature of the relationship created by the agreement: Sattva, at para. 48. The surrounding circumstances are relied upon in the interpretive process; however, courts cannot use the surrounding circumstances to deviate from the text of the contract such that the court effectively creates a new agreement: Sattva, at para. 57.

[16] This court has repeatedly confirmed that the Co-Tenancy Agreement is a valid contract, binding on all owners: Kerr v. King’s Landing Co-Tenancy Committee, 2015 ONSC 84; Chapadeau v. Devlin, 2018 ONSC 6456, aff’d 2019 ONCA 767; Furr v. Duhamel, 2018 ONSC 1780, aff’d 2019 ONCA 824, application for leave to appeal dismissed 2020 25163 (SCC). Section 2.11 of the Co-Tenancy Agreement provides that each owner is deemed to have contracted directly with each of the other owners with respect to the provisions in the Agreement. As Beaudoin J. put it in Furr, at para. 5, owners of the units own their townhomes and the lands within their unit boundaries in fee simple, but they agree to be subject to the provisions of the Co-Tenancy Agreement.

[17] King’s Landing is a valid building scheme where reciprocity is the founding concept: Chapadeau, at paras. 28-29. A building scheme involves a community of interests where each owner shares in both the benefits and burdens created in the Co-Tenancy Agreement: Chapadeau, at para. 29.

[18] The interpretation of the Co-Tenancy Agreement requires a contextual analysis of the community’s interests: Kerr, at para. 18. I agree with the plaintiffs that there are mutual and equal interests embedded in the Co-Tenancy Agreement that should be fostered through an interpretation of the Agreement which promotes those interests and protects the building scheme as a whole.

[19] The decision in Furr is particularly relevant to the issues raised at trial. In Furr, Beaudoin J. was required to determine whether the community’s retaining wall formed part of the Shared Property. The wall was installed to stabilize the development’s soil at the time of original construction. Because of the development’s grading, the retaining wall is located on land that forms part of the units, not on the parcels of Shared Property. While the Co-Tenancy Agreement does not list the retaining wall as part of the Shared Property, Beaudoin J. observed that the Committee had always planned for its repair and maintenance as part of the Shared Property since preventing erosion of the soil on which the townhouses are constructed benefits the entire community.

[20] Ms. Martel was an intervener in Furr and the only appellant before the Court of Appeal for Ontario. Justice Beaudoin rejected the narrow interpretation of the Co-Tenancy Agreement advocated for by the applicants and Ms. Martel. He reasoned:

51. To exclude the retaining wall would lead to an absurd result that the fence would be a shared expense, but that [the] wall is somehow excluded, and that the Community could be required to repair one without maintaining the other.

52. The list of Shared Property is not limited to the items listed in section 2.3. The words: “The Shared Property includes ” appear. This is in contrast to paragraph 2.4, which describes Shared Elements and provides that “other Shared Elements... are .” “Shared Expenses” are even more broadly described to include a number of items as well as “such other expenses as are normally incurred in maintaining a high quality residential development.” The lack of a specific reference to the retaining wall does not fatally undermine its inclusion as either Shared Property or as a Shared Expense.

[21] The Court of Appeal dismissed Ms. Martel’s appeal from the judgment of Beaudoin J., noting that, “[t]he application judge correctly articulated and applied the principles governing the interpretation of a contract. Contrary to the appellant’s submission, he read the contract as a whole”: Furr (C.A.), at para. 3.

[22] The retaining wall – and Ms. Martel’s liability for the Shared Expenses related to it – is again at issue before me. So, too, is Ms. Martel’s narrow interpretation of the Co-Tenancy Agreement.

The Disputed Arrears are Part of the Shared Expenses

[23] The disputed arrears are in respect of the following items:

• retaining wall repair costs;
• legal fees associated with Redmond Place;
• stair railings on private/unit owner lands;
• spraying for ants;
• electrical fire in the service lines;
• indemnification of the Committee for its legal fees;
• asphalt/interlock repair project; and
• courtyard improvement costs.

[24] I will consider each disputed item in turn.

Retaining wall repair costs

[25] The retaining wall repair costs form the largest portion of Ms. Martel’s alleged arrears. In challenging the retaining wall repair costs, Ms. Martel seeks to relitigate precisely the same issue that Beaudoin J. determined in Furr. There is no new evidence before me that would compel a different result, simply Ms. Martel’s submission that Beaudoin J. interpreted the Co-Tenancy Agreement incorrectly and “changed the agreement” when he concluded that the retaining wall forms part of the Shared Property. Justice Beaudoin’s approach to interpreting the contract was upheld by the Court of Appeal.

[26] Because of the development’s grading, the retaining wall is located on land that forms part of the units, and not on the parcels of Shared Property; however, preventing erosion of the soil on which the townhouses are constructed clearly benefits the entire community. Although the Co-Tenancy Agreement does not list the retaining wall as part of the Shared Property, the uncontroverted evidence before me is that the Committee has always treated the retaining wall as part of the Shared Property. The retaining wall has always been included in the reserve fund studies that plan for the repair and maintenance of such components.

[27] The list of Shared Property in section 2.3 of the Co-Tenancy Agreement is not an exhaustive list. I agree with Beaudoin J. that to exclude the retaining wall from the Shared Property would result in an absurdity where the Committee would be required to maintain and repair the fence but not the retaining wall.

[28] I therefore find, as did Beaudoin J., that the retaining wall is part of the Shared Property under section 2.3 of the Co-Tenancy Agreement. Under section 4.1(c) of the Agreement, the cost of repair, replacement, and maintenance of the Shared Property forms part of the Shared Expenses. The retaining wall repair costs are Shared Expenses and Ms. Martel is liable for these arrears under the Co-Tenancy Agreement.

Redmond Place legal fees

[29] Around 2011, the Committee became aware that a neighbouring property would be developed. There was a concern that the development would negatively impact King’s Landing. Because the majority of owners were concerned about the issue, the Committee sought legal advice to determine the community’s rights, as a neighbouring owner, to purchase part of Redmond Place as provided for by the City’s policy on closing public streets. In the end, the City changed its policy and sold Redmond Place to the developer.

[30] Under section 4.1(g) of the Co-Tenancy Agreement, the cost of legal advice required by the Committee forms part of the Shared Expenses. I find that the legal fees incurred by the Committee to obtain advice as to the community’s rights in relation to Redmond Place are Shared Expenses under section 4.1(g). Ms. Martel is liable for these arrears under the Co-Tenancy Agreement.

Stair railings on private/unit owner lands

[31] Under section 4.1(e) of the Co-Tenancy Agreement, repair of the steps leading to units is a Shared Expense. This is true regardless of whether the step forms part of the Shared Property. The railings on the steps form an integral part of the step because the railing is required for safety. The evidence is that the Committee plans for the repair of the railings and the steps as part of the Shared Expenses and in the reserve fund studies. The point is to ensure safety on the property and to avoid exposure to liability for accidents under the community’s insurance policy. This is to the benefit of the entire community.

[32] Ms. Martel argues that railings are only legally required if there are more than three risers. Assuming this to be correct, it does not negate the evidence that the Committee consistently planned for the repair of the railings in the reserve fund studies and considered the benefit to the community of reducing liability under the King’s Landing insurance policy. I am satisfied that, as an integral part of the steps leading to the units and as a safety component, the railings are Shared Expenses under section 4.1(e) of the Co-Tenancy Agreement. Ms. Martel is liable for these arrears under the Co-Tenancy Agreement.

Spraying for ants

[33] Several years ago, the Committee received a complaint from an owner that ants had infested their unit through one of the utility boxes that had fallen into disrepair. The utility boxes form part of the Shared Property under section 2.3(b) of the Co-Tenancy Agreement. The immediate problem was addressed by the Committee, who replaced the doors to the utility box and retained a professional exterminator. On the advice of the professional exterminator, the Committee now sprays the foundation of all units annually to ensure there is no repetition of the problem and ants do not cause damage to either the Shared Property or private property. The evidence before me is communal pest removal is a normal expense in a high-quality residential development such as King’s Landing.

[34] Ms. Martel’s position that the Committee has “no mandate within the private property” ignores section 4.1(k) of the Co-Tenancy Agreement, which includes among the Shared Expenses, “such other expenses as are normally incurred in maintaining a high quality residential development.” I find that spraying for ants is a Shared Expense under section 4.1(k) of the Co-Tenancy Agreement. Ms. Martel is therefore liable for these arrears.

Electrical fire in the service lines

[35] In 2014, an electrical fire occurred in the underground electrical service lines that run between the Hydro Ottawa transformer on the property and one of the units. Ms. Martel objects to these costs on the basis that the owners of the units do not own the utilities.

[36] Utilities, including underground utilities, are part of the Shared Property under section 2.3(b) of the Co-Tenancy Agreement which specifically refers to utilities located on or under the Shared Property or the units, including hydro transformers. While Hydro Ottawa is responsible for problems up to the transformer on the property, the Committee is responsible for problems between the transformer and the electrical boxes/meters at each unit, given that the underground electrical services form part of the Shared Property. Owners are responsible for any problems beyond the electrical boxes into the units. Because the issue occurred between the transformer and the electrical box, it occurred on Shared Property and the Committee was required to complete the repair and reinstate the landscaping. The expenses in so doing are Shared Expenses. I find Ms. Martel liable for these arrears under the Co-Tenancy Agreement.

Indemnification of the Committee for its legal fees

[37] In 2016, the owners of one of the units sued the Committee members to seek clarification from the court in relation to one of the provisions of the Co-Tenancy Agreement. As named respondents, the Committee members were required to respond. It was not possible to make a claim against King’s Landing’s insurance. The matter carried on for several years.

[38] While Ms. Martel maintains the Committee members were required to cover their own legal fees when they were sued, that is simply not what the Co-Tenancy Agreement provides. Section 3.7 of the Co-Tenancy Agreement provides that the Committee and the officers of that Committee are entitled to be indemnified by the other owners from and against any liability they sustain in respect of a proceeding commenced against them for or in respect of the execution of the duties of their office. Under section 11.3, the Committee is entitled to indemnification when they are sued:

11.3 Indemnification of Co-tenancy Committee. Except in the case of gross negligence or fraud on the part of the Co-tenancy Committee, as servants or agents, the Owners shall indemnify and save harmless the Co-Tenancy Committee members from and in respect of any and all liability and from all claims or demands arising out of damage or injuries to persons or property in or about or in any way connected with the Shared Property and defend at the expense of the Owners all suits which may be rendered against the Co-tenancy Committee members on account thereof.

[39] There is no evidence to suggest the Committee members engaged in gross negligence or fraud. In fact, the Committee was successful in defending the application and responding to the related appeal. I find that the Committee members were entitled to be indemnified from the Shared Expenses. Ms. Martel is liable for these arrears under the Co-Tenancy Agreement.

Asphalt/Interlock repair project

[40] Since 2001, the King’s Landing reserve fund studies contemplated the replacement of the asphalt and interlocking pavers in the roadway, courtyards, and driveways. The evidence is that the cost and timing of this work was adjusted in each study as wear and tear increased over the years. In 2015, the timing of these repairs was pushed back so that additional repairs to the retaining wall could proceed first. The original plan for the asphalt/interlock repair project was to reuse the existing pavers where possible and only replace those pavers that were damaged; however, the Committee received advice from technical experts that it would be better to replace all the pavers with new ones that would last longer and have a uniform appearance. In addition, the old pavers in the courtyards were not in good condition, with the original estimate of only 10 per cent of the old pavers needing to be replaced being “far off the mark.”

[41] Initially, Ms. Martel refused to have her driveway included as part of this project: she took the position that because her driveway formed part of her unit, not part of the Shared Property, the Committee had no authority to repair it. Ultimately, however, Ms. Martel requested that her driveway be releveled, using the old pavers, as part of this project. The cost to complete the work in relation to Ms. Martel’s driveway was paid for out of the Shared Expenses.

[42] Under section 4.1(e) of the Co-Tenancy Agreement, the cost of repair, replacement, and maintenance of all driveways, curbs, steps, and walkways leading to the units and the Shared Property forms part of the Shared Expenses, “whether [those components] form part of the Shared Property or not.” There is no doubt that the costs of this project formed of the Shared Expenses; indeed, Ms. Martel herself benefitted from her driveway’s repair. Ms. Martel is liable for these arrears under the Co-Tenancy Agreement.

Courtyard improvement costs

[43] At the 2016 annual general meeting, a sub-committee proposed work to improve the courtyard. The courtyard is centrally located, highly visible, and used by owners for social gatherings. A vote was taken, with 45 owners in favour of the motion, four against, and one abstention. In accordance with the Co-Tenancy Agreement, the Committee levied an additional assessment to cover the costs in the amount of $720.

[44] Under section 5.2 of the Co-Tenancy Agreement, the Committee may make any substantial addition, alteration, improvement, or renovation to the Shared Property where a vote is taken at an owners’ meeting and at least 2/3 or 40 units vote in favour of the improvement. The courtyard is part of the Shared Property and these costs are therefore Shared Expenses under the Co-Tenancy Agreement, for which Ms. Martel is liable.

The Limitation Period is Ten Years

[45] Ms. Martel maintains that the plaintiffs’ claim arose in October 2012 when she objected to paying for the retaining wall repairs at a special meeting of owners. She says the Committee was out of time when it issued the statement of claim more than two years later on March 31, 2015.

[46] Ms. Martel is incorrect for two reasons. First, she did not owe arrears in October 2012. Second, and in any event, the applicable limitation period is ten years.

[47] On the evidence before me, I find that the first time Ms. Martel failed to make the required Shared Expense payment was April 1, 2013 when Ms. Martel made only a partial payment of the $222 then owing. The Committee issued the statement of claim on March 31, 2015.

[48] As to Ms. Martel’s objection to paying for the retaining wall repairs, in the period October 2012 to May 2013, there were other owners in addition to Ms. Martel who disputed the additional assessment. A vote held on May 28, 2013 went in favour of the Committee’s interpretation of the Co-Tenancy Agreement and upheld the validity of the additional assessment. So as to ensure that all owners were given the same opportunity to pay the additional assessment, the Committee set a deadline of May 31, 2013. Therefore, there were no arrears in respect of the additional assessment until June 1, 2013.

[49] In any event, the applicable limitation period is not two years, but ten. Section 4.5 of the Co-Tenancy Agreement provides that an owner’s arrears in respect of Shared Expenses shall constitute a first charge upon the owner’s unit, subject only to municipal taxes having statutory priority, and that such charge “shall be deemed to be a charge to which the Mortgages Act, R.S.O. 1990, c. M. 40 applies.”

[50] Section 23(1) of the Real Property Limitations Act, R.S.O. 1990 c. L.15 provides for a ten year limitation period:

No action shall be brought to recover out of any land or rent any sum of money secured by any mortgage or lien, or otherwise charged upon or payable out of the land or rent, or to recover any legacy, whether it is or is not charged upon land, but within ten years next after a present right to receive it accrued to some person capable of giving a discharge for, or release of it, unless in the meantime some part of the principal money or some interest thereon has been paid, or some acknowledgment in writing of the right thereto signed by the person by whom it is payable, or the person’s agent, has been given to the person entitled thereto or that person’s agent, and in such case no action shall be brought but within ten years after the payment or acknowledgement, or the last of the payments or acknowledgments if more than one, was made or given.

[51] On May 29, 2014, King’s Landing registered a s. 71 notice on title to Ms. Martel’s unit. In order to permit Ms. Martel to sell her unit in 2020, the Committee agreed to remove the s. 71 notice in exchange for which Ms. Martel paid $100,000 into court as security. Ms. Martel argues the Committee’s charge was invalid because no amount was specified in the s. 71 notice. She relies on s. 93 of the Land Titles Act, R.S.O. 1990, c. L.5.

[52] Section 93 does not assist Ms. Martel. Section 93 provides:

(1) A registered owner may in the prescribed manner charge the land with the payment at an appropriate time of any principal sum of money either with or without interest or as security for any other purpose and with or without a power of sale. (2) A charge that secures the payment of money shall state the amount of the principal sum that it secures. (3) The charge, when registered, confers upon the chargee a charge upon the interest of the chargor as appearing in the register subject to the encumbrances and qualifications to which the chargor’s interest is subject, but free from an unregistered interest in the land.

[53] The Committee was never a registered owner of Ms. Martel’s unit. On this basis alone, s. 93 has no application. The charge that arises by contract under section 4.5 of the Co-Tenancy Agreement arises automatically and is one to which the Mortgages Act applies. Once the charge arises, the limitation period under s. 23 of the Real Property Limitations Act begins to run. While the Committee registered the s. 71 notice, it was not required to do so.

[54] Ms. Martel’s reliance on Corbett J.’s decision in Toronto Common Elements Condo Corp. No. 2041 v. Toronto Standard Condo. Corp., 2015 ONSC 4245, at paras. 19-20, is misplaced. The charge on the unit created by section 4.5 of the Co-Tenancy Agreement is an interest in real property. That was not the case in Toronto Common Elements where the court was dealing with a condominium and the applicant had a claim for money. The same is true of Amlani v. York Condominium Corporation No. 473, 2020 ONSC 194, upon which Ms. Martel also relies.

The Applicable Rate of Interest

[55] The last issue is the applicable rate of interest. Ms. Martel suggests that the rate provided for in the Co-Tenancy Agreement - the greater of 15 per cent per annum, calculated monthly and a rate which is equal to five per cent per annum above the bank rate of the Royal Bank of Canada – is usurious.

[56] Under s. 347 of the Criminal Code, R.S.C. 1985, c. C-46, the criminal rate of interest is defined to mean an effective annual rate of interest calculated in accordance with generally accepted actuarial practices and principles that exceeds 60 per cent. There is no evidence that the interest rate provided in the Co-Tenancy Agreement should not apply. I find that Ms. Martel was reminded of the applicable rate of interest on the arrears.

[57] Accordingly, I find that the rate of interest applicable to the arrears is 15 per cent per annum, calculated monthly. Ms. Martel does not take issue with the amount of the arrears, being $19,902. Based on the evidence at trial, I find that as at December 1, 2022, the interest on this amount at the rate of 15 per cent per annum, calculated monthly is $27,331.92.

Disposition

[58] For these reasons, judgment is granted to the plaintiffs against Ms. Martel in the amount of $19,902, together with interest at the rate of 15 per cent per annum, calculated monthly in the amount of $27,331.92 for a total of $47,233.92 as at December 1, 2022. Interest will continue to accrue at the contractual interest rate until the judgment is paid.

[59] I also award the plaintiffs their costs of the action. In the event the parties are unable to agree on the amount of costs, they may make written submissions limited to a maximum of three pages, excluding relevant attachments. The plaintiffs shall deliver their costs submissions by May 12, 2023. Ms. Martel shall deliver her responding costs submissions by May 26, 2023. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves.

Justice R. Ryan Bell Released: May 1, 2023