Law Times

Law Times • January 18, 2010 NEW An online resource tool 1.800.263.3269 Bestcase earlug.indd 1 3/26/08 11:52:01 AM Focus On REAL ESTATE LAW Ruling on hot tubs sparks debate Condo installation not an improvement, judges declare BY ROBERT TODD Law Times A recent Ontario Court of Appeal decision has shifted the balance in the battle for use of common ele- ments in condominiums, forcing a board of directors to pass a rule in order to ban the installation of hot tubs. The court's decision in Went- worth Condominium Corp. No. 198 v. McMahon has many law- yers who represent boards shak- ing their heads. "I guess everybody thought that the wording was broad enough in the legislation to in- clude the installation, or the put- ting down of, a hot tub," says Miller Thomson LLP associate counsel and condo law expert Audrey Loeb. "I can honestly say that in a million years, it never oc- curred to me that a hot tub would not be considered installed on the common elements." The case centres on a battle be- tween Jim McMahon, a 73-year- old retiree, and the board of di- rectors of the Waterdown, Ont., condo corporation. Despite the requirement in s. 98 of the Con- dominium Act for an owner to get the board of directors' stamp of approval before making "an addition, alteration, or improve- ment" to common elements, McMahon went ahead and in- stalled a hot tub on his backyard patio in December 2007. He ar- gued the installation didn't meet the threshold that would require him to get the board's OK, an argument Superior Court Justice Joseph Henderson accepted. So, too, did the appeal court panel, led by Justice James MacPherson, in a recent decision. McMahon owned one unit among 31 townhouse-style dwellings that form the con- do complex. His decision to install the hot tub ran coun- ter to the wishes of the condo board, which had previously denied his request to set up the roughly two-metre-long apparatus, which McMahon said would help relieve his arthritis. The tub is linked to his house via an electrical panel in the basement. The board responded by moving for a court order to force the tub's removal. Hen- derson, the motions judge, consulted the dictionary to determine the definitions of the key words add, alter, and improve. According to the ap- peal court ruling written by MacPherson for fellow justices Stephen Goudge and Robert Blair, Henderson ruled "that the word addition means some- thing that is joined or connected to a structure, and the word al- teration means something that changes the structure." The word improvement, said the judge, "re- fers to an improvement or better- ment of the property. That is, to be an improvement, there must be an increase in the value of the property." The judge determined that the hot tub didn't fit those defini- tions, thereby ruling McMahon didn't have to get the board's ap- proval to install it and dismissing the application. At the Court of Appeal, the condo corporation argued the judge had misinterpreted the meaning of the terms in the context of the act. MacPherson disagreed, saying the appellants were off base by trying to "lump Untitled-4 1 www.lawtimesnews.com 1/11/10 2:48:10 PM The Condominium Act doesn't cover enjoyment of the property, meaning the installation of hot tubs falls under the condo rules, says Harvin Pitch. together" the words and push for an overly broad definition. "Barbecues, picnic tables, small inflatable swimming pools, children's toys, and thou- sands of other ordinary articles that are regularly found on backyard patios would consti- tute 'changes' to the common elements of the condominium property under the appellant's definition because they would 'make different the pre-existing condition of the common ele- ments,'" wrote the judge. MacPherson went on to comment: "In my view, the ap- plication judge's interpretation of s. 98(1) of the act strikes an appropriate balance between the rights of individual owners and the rights of the owners col- lectively speaking through their board of directors." Loeb calls the decision "coun- terintuitive to what the Con- dominium Act intended." "I was very disappointed in the outcome, really disappoint- ed as a lawyer who represents condominium corporations," she says. She notes the act aims to give boards control of what people do in common areas, such as McMahon's backyard patio. People are free to make changes in those areas as long as they reach an agree- ment with the corporation, according to s. 98. But the decision now forces condo corporations to take steps to regain the control they thought they had over the com- mon areas, including balconies in high-rise buildings. "Every condominium cor- poration is going to have to contemplate what every poten- tial owner might do in terms of making some kind of addition or putting something on their com- mon elements," says Loeb. To that end, the boards will have to create a rule that tries to identify any possible item a resident could try to place in the common areas. Loeb says she will soon urge her condo board clients to do just that and suggests they move quickly to pass those rules. Any installations in place before those rules take effect will be grandfa- thered, preventing the corpora- tion from forcing their removal. Harvin Pitch of Teplitsky Colson LLP, which represented McMahon, says the condo board was missing a key distinction in its interpretation of the act, namely that the requirement to get board approval for improve- ments to common elements relates to the improvement of property, not the enjoyment of it. "If you want to add to the thing and you want to add to a common element [and] build on it, that's one thing," says Pitch. "If you want to put flower pots, bar- becues, and hot tubs, that's enjoy- ment of property. That's not cov- ered by the act, and so you deal with it in the rules." Pitch suggests the matter really comes down to his client's demo- cratic rights through the condo corporation to argue his case by way of a vote of its members. He says the board tried to circumvent that process through a forced in- terpretation by the courts. The case highlights many condo owners' general lack of un- derstanding of just how restricted they are in the use of common elements, says Daniel Resnick, a Teplitsky lawyer who worked with Pitch on the case. That is particularly true for the influx of elderly people who are mov- ing into condos after a lifetime in freehold homes, he adds. But Loeb suggests there was good reason for the legislature to give condo boards broad dis- cretion to control common ele- ments. Most condo residents don't want hot tubs in those areas, for example, because they attract loud, alcohol-fuelled, late-night gatherings, she says. However, Loeb doesn't think boards should say no to requests unless they have a solid reason for it. But many boards are loath to spend the time and money on consulting a lawyer and creating necessary agreements with unit owners, she says. "My view is that boards of di- rectors, if they properly protect themselves, should allow them. See Appeal, page 12 PAGE 9

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