Metropolitan Toronto Condominium Corp. No. 1250 v. Mastercraft Group Inc. et al., 2009 ONCA 584

• Judge: Winkler, C.J.O., Goudge and Epstein, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: July 23, 2009
• Jurisdiction: Ontario
• Citations: 2009 ONCA 584;(2009), 255 O.A.C. 253 (CA)

Toronto Condo. v. Mastercraft Group (2009), 255 O.A.C. 253 (CA)

MLB headnote and full text

Temp. Cite: [2009] O.A.C. TBEd. JL.093

Metropolitan Toronto Condominium Corporation No. 1250 (plaintiff/respondent/appellant/respondent by way of cross-appeal) v. The Mastercraft Group Inc., 188 Eglinton Inc. , 188 Lofts Inc., Lomico 188 Inc. , Bruce C. Greenberg and S-99 Limited (defendants/applicant/respondents/ appellants by way of cross-appeal )

(C46857; 2009 ONCA 584)

Indexed As: Metropolitan Toronto Condominium Corp. No. 1250 v. Mastercraft Group Inc. et al.

Ontario Court of Appeal

Winkler, C.J.O., Goudge and Epstein, JJ.A.

July 23, 2009.

Summary:

Promoters purchased a multi-storey building, renovated it and converted it into a condominium. A dispute arose between the promoters and the condominium corporation. The condominium corporation sued the promoters. The following issues were raised: (1) whether one particular promoter was a "declarant" for the purposes of the Condominium Act, R.S.O. 1990, c. C-26; (2) whether a lease under which a third party corporation purported to lease central heating, ventilating and air conditioning equipment (HVAC) to the condominium corporation was null and void; (3) whether the promoters breached the terms of the agreements of purchase and sale of the condominium units by failing to carry out repairs to the underground garage; and (4) whether two of the promoters breached the agreements of purchase and sale of the condominium units by failing to rent a parking space at market rates to each unit owner.

The Ontario Superior Court, in a decision reported [2007] O.T.C. 335, answered as follows: (1) the particular promoter was a "declarant"; (2) the HVAC lease was null and void; (3) the promoters breached the terms of the agreements of purchase and sale of the condominium units by failing to carry out repairs to the underground garage; and (4) two of the promoters breached the agreements of purchase and sale of the condominium units by failing to rent a parking space at market rates to each unit owner. The condominium corporation appealed in respect of the first three issues. Two promoters cross-appealed in respect of the fourth issue.

The Ontario Court of Appeal allowed the appeal and dismissed the cross-appeal. The court ordered a reference to resolve the amount to be paid as damages for failure to repair the parking garage and the market rate to be paid for the rental of the parking spaces.

Practice - Topic 3769

References and inquiries - When available - To determine remedies (incl. damages) - [See both Real Property - Topic 9004 ].

Real Property - Topic 4205

Fixtures - General principles - What constitutes a fixture - [See Real Property - Topic 9003 ].

Real Property - Topic 8807

Condominiums - General - "Declarant" defined - On May 22, 1997, Mastercraft purchased a building for conversion into a condominium - Mastercraft incorporated three companies, Eglinton, Lofts and Lomico, to carry out the project - On the same day, Mastercraft transferred its interest to Eglinton and Lomico exercised an option to purchase the eighth floor - Eglinton held the eighth floor in trust for Lomico - On May 16, 1999, Eglinton registered a declaration of condominium - On the same day, Lomico "surrendered its undivided interest [on the eighth floor] in exchange for the condominium units" - On July 6, 2000, a deed purported to transfer the 13 units on the eighth floor from Eglinton to Lomico for $2.00 - Since then, Lomico retained ownership of the eighth floor units, renting seven of them out as residential units, with the rest being used as offices - The Ontario Court of Appeal held that Lomico was a "declarant" within the meaning provided by s. 1(1) of the Condominium Act, R.S.O. 1990, c. C-26, where Lomico was not "a purchaser in good faith of a unit who actually pays fair market value" and was "the owner or owners in the fee simple" of the eighth floor of the building as set out in the statutory declaration - See paragraphs 11 to 26.

Real Property - Topic 8818

Condominiums - Purchase and sale agreements - Interpretation - Construction warranty provision - [See first Real Property - Topic 9004 ].

Real Property - Topic 9003

Condominiums - Common property - What constitutes - On May 22, 1997, Mastercraft purchased a building for conversion into a condominium - Mastercraft incorporated three companies, Eglinton, Lofts and Lomico, to carry out the project - Greenberg was the principal of Mastercraft and controlled Eglinton, Lofts and Lomico - On the same day, Mastercraft transferred its interest to Eglinton - Eglinton then held floors two to seven in trust for Lofts - Lofts carried out renovations on those floors and began marketing the resulting residential units to purchasers in 1997 - The first unit owners took possession in November 1998 - By that time, the heating, ventilation and air conditioning equipment (HVAC) was installed and operational - The equipment was connected to the building by piping, ducting and wiring that ran throughout the building - In March 1999, Greenberg incorporated S-99 - S-99 purportedly acquired the HVAC equipment from Lofts - On May 16, 1999, Eglinton registered a declaration of condominium - The MTCC 1250 condominium corporation was thus created, with Greenberg and two others constituting the board of directors - Shortly after the registration, S-99 purportedly leased the HVAC equipment to MTCC 1250 - The Ontario Court of Appeal held that the lease of the HVAC equipment was null and void where S-99 had no interest in it since it was fixtures which were part of the common elements owned by unit holders - See paragraphs 27 to 43.

Real Property - Topic 9004

Condominiums - Common property - Parking and storing vehicles - Agreements of purchase and sale of condominium units between the vendors and the purchasers contained this provision: "The Purchaser acknowledges that the Building is a substantial renovation of an existing building and that the base building remains as originally constructed" - The building's underground parking garage needed repairs which included removing existing topping and deteriorated concrete and installing new heating cables and a new waterproofing system - The repairs were not done - Instead, a new coat of white paint was applied - On appeal, the Ontario Court of Appeal held that the vendors breached the construction warranty given to purchasers and contained in the above provision - The purchasers intended to purchase units in a substantially renovated building with a substantially renovated parking garage - That is what the vendors promised to deliver - Doing nothing more than paint the garage fell "far short" of the parties' reasonable expectations - The court ordered a reference under rule 54.02(1) of the Rules of Civil Procedure (Ont.) to determine the amount to be paid as damages for failure to repair the garage - See paragraphs 44 to 63.

Real Property - Topic 9004

Condominiums - Common property - Parking and storing vehicles - The Ontario Court of Appeal affirmed that the purchaser of residential condominium units in a multi-storey building had the right to lease parking spaces at market rates in the underground garage where the vendors made representations to that effect in the "original" agreements of purchase and the declarant of condominium also made a representation in the disclosure statement that the purchasers would be entitled to lease a parking space - As for determining what constituted the market rental rate, the court ordered a reference under rule 54.02(1) of the Rules of Civil Procedure (Ont.) - Arbitration was not available under the Condominium Act, R.S.O 1990, c. C-26 - See paragraphs 64 to 93.

Real Property - Topic 9062

Condominiums - Arbitration - When available - [See second Real Property - Topic 9004 ].

Cases Noticed:

Carsons' Camp Ltd. v. Municipal Property Assessment Corp. et al. (2008), 232 O.A.C. 297; 88 O.R.(3d) 741; 2008 ONCA 17, refd to. [para. 23].

York Condominium Corp. No. 167 v. Newrey Holdings Ltd. (1981), 32 O.R.(2d) 458 (C.A.), leave to appeal refused [1981] 1 S.C.R xi; 38 N.R. 129; 32 O.R.(2d) 458, consd. [para. 37].

Stack v. Eaton (T.) Co. et al. (1902), 4 O.L.R. 335 (Div. Ct.), refd to. [para. 39].

Ventas Inc. et al. v. Sunrise Senior Living Real Estate Investment Trust et al. (2007), 222 O.A.C. 102; 85 O.R.(3d) 254 (C.A.), refd to. [para. 59].

3869130 Canada Inc. et al. v. I.C.B. Distribution Inc. et al. (2008), 239 O.A.C. 137 (C.A.), refd to. [para. 59].

ATCO Electric Ltd. v. Energy and Utilities Board (Alta.), [2004] 11 W.W.R. 220; 361 A.R. 1; 339 W.A.C. 1 (C.A.), refd to. [para. 59].

Statutes Noticed:

Civil Procedure Rules (Ont.) - see Rules of Civil Procedure (Ont.).

Condominium Act, R.S.O. 1990, c. C-26, sect. 1(1) [para. 12]; sect. 132(1), sect. 132(2) [para. 86].

Rules of Civil Procedure (Ont.), rule 54.02(1) [para. 90].

Authors and Works Noticed:

Waters, Donovan W.M., The Law of Trusts in Canada (3rd Ed. 2005), p. 1272 [para. 41].

Counsel:

Andrew Robinson and Patricia Conway, for the appellant;

Bruce O'Toole and Amanda Heydon, for the respondents, Lomico 188 Inc. and S-99 Ltd.;

Allan Sternberg, for the respondents, The Mastercraft Group Inc., 188 Eglinton Inc., 188 Lofts Inc., and Bruce C. Greenberg.

This appeal and cross-appeal were heard on February 10 and 11, 2009, by Winkler, C.J.O., Goudge and Epstein, JJ.A., of the Ontario Court of Appeal. The following decision of the Court of Appeal was delivered by Goudge and Epstein, J.A., and released on July 23, 2009.