Sharing Between Condominium Corporations

In the case of OCCC 574 v. OCCC 573, there was a retaining wall located (essentially between the two condominiums) partially on each property. About 60% of the retaining wall was on the OCCC 574 property, and about 40% of the retaining wall was on the OCCC 573 property. The retaining wall was nearing the end of its life, and needed to be rebuilt. There was no registered agreement addressing responsibility for the retaining wall. The two corporations could not agree on the sharing, and this dispute ultimately ended up in Court. Our firm acted for OCCC 574, which was entirely successful on the Application. 

OCCC 574 argued that the cost-sharing should be 60/40 (based upon the relative portions of the retaining wall as actually located on each property). Among other things, OCCC 573 argued that it should only be responsible for 8.11% of the cost, based upon the original proposed location of the retaining wall shown on the original site plan for the development. 

Again, the Court agreed with OCCC 574. The Court said:

574 owns roughly 60% of the Wall. 573 owns roughly 40%. This suggests the obvious starting point to allocate the costs of repairing and maintaining the Wall. There is no cogent evidence that suggests a fairer way to allocate costs.

The Court also decided – on the facts of this case – that it didn’t make sense to try to allocate the cost-sharing obligations based upon the relative benefit of the retaining wall to each property.  The Court said that the retaining wall clearly benefited both properties and the relative benefit to each was not a helpful or practical method to determine responsibility (in this case).

The Court also awarded OCCC 574 costs on a substantial indemnity basis, in light of the history of the dispute. The Court also noted the reasonableness of the costs claimed by OCCC 574.

In the case of CCC 519 v. OCSCC 656 et al., there was an electrical vault on the CCC 519 property containing electric switchgear (“ESG”) serving three condominiums. Again, there was no registered agreement. The ESG was past its reasonable life expectancy, and needed replacement. CCC 519 argued that the other condominium corporations should share the costs (to repair, maintain and replace the ESG) based upon the relative benefit received by each property. The Court agreed, based upon the principle that there would otherwise be an “unjust enrichment” to the other condominiums corporations.

The Court directed a reference to determine an equitable sharing of the costs as between the three corporations. 

OCSCC 656 appealed the decision. The decision was upheld by the Ontario Court of Appeal.

In our view, the decisions in these cases make good sense and stand for the following basic principle:  When there is no agreement respecting cost-sharing for a shared facility, the goal should be to come up with a sharing that is fair and reasonable in all of the circumstances.

We also add the following:

1. For condominium corporations, these sorts of disagreements about shared facilities should hopefully be reduced if and when the proposed Section 21.1 of the Condominium Act comes into force.  By way of summary, Section 21.1 will make shared facilities agreements mandatory in most such cases.
2. In our view, much of the confusion has been caused by some historical legal precedents which, in our respectful view, are simply not correct in law. The case of TSCC 1633 v. TSCC 1809 is an important example. In that case, TSCC 1809 had the benefit of an easement over part of the TSCC 1633 lands, namely a shared laneway.  However, there was no cost-sharing agreement.  The Court determined that there was no legal basis on which TSCC 1809 could be forced to contribute to the laneway costs. Respectfully, we don’t agree with the TSCC 1633 decision.   

In our view, a long-standing principle of our common law is that someone having the benefit of an exclusive easement over another person’s property bears the obligation to maintain and repair the easement lands. In the case of shared rights (for instance, where both the owner and easement holder have the right to use the easement lands), it follows, in our view, that the repair and maintenance obligations should be reasonably shared.   

In the case of condominium properties, note as well that Section 12 of the Condominium Act may create statutory easement rights. Section 12 (1) 4 states as follows:

Easements

12 (1) The following easements are appurtenant to each unit and shall be for the benefit of the owner of the unit and the corporation:

4.  If a corporation is entitled to use a service or facility in common with another corporation, an easement for access to and for the installation and maintenance of the service or facility over the land of the other corporation, described in accordance with the regulations made under this Act.

Note the specific reference to maintenance in the above section. 

In our view, easements are also appurtenant interests that normally form part of the common elements (accordingly falling within the obligations of the corporation to repair and maintain the common elements). 

Again:  If these obligations are shared with another party, in our view the task is to determine a fair and reasonable sharing (not whether or not the basic obligations exist).

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