



COURT OF APPEAL FOR ONTARIO

CITATION: Cottage Advisors of Canada Inc. v.
    Prince Edward Vacant Land Condominium Corporation No. 10, 2022 ONCA 107

DATE: 20220204

DOCKET: C69232

Doherty, Tulloch and Sossin
    JJ.A.

BETWEEN

Cottage Advisors of Canada Inc.

Appellant (Applicant)

and

Prince Edward Vacant Land
    Condominium Corporation No. 10

Respondent (Respondent)

Megan Mackey, for the appellant

Jason Mangano, for the respondent

Heard: January 6, 2022 by
    video conference

On appeal from the order of Justice Paul
    Schabas of the Superior Court of Justice dated February 17, 2021, with reasons
    reported at 2021 ONSC 1203.

REASONS FOR DECISION


I



[1]

The respondent, Prince Edward Vacant Land Condominium
    Corporation No. 10 (the Condominium), is a 237-unit cottage resort built near
    the Sandbanks in Prince Edward County, Ontario. The units are individually
    owned. The property is a summer resort, complete with pools, sports courts, and
    a fitness centre. The resort is not open in the winter. The units cannot be
    used as primary residences.

[2]

From the outset, it was understood the owners of
    individual units could rent out their units on a short-term basis when they
    were not using them. Some owners chose to do so, and others did not. As of this
    application, over half of the unit owners rented out their units on a
    short-term basis. Renters had access to the common amenities on the property.

[3]

The appellant, Cottage Advisors of Canada Inc.
    (CAC), has been involved in the Condominium from the beginning. CAC was the
    developer and declarant of the Condominium. It has owned multiple units in the
    Condominium from the outset. At the time of the application, CAC owned 25
    units.

[4]

The resort opened by 2011. CAC, through a sister
    company (SSVRM), provided management services for the Condominium and onsite
    rental services for those unit owners who wished to rent their units. SSVRM
    charged fees for those services. A by-law passed in July 2011 directed that
    renters would be subject to a rental amenity fee charged by the Corporation from
    time to time. SSVRM collected the amenity fee. None of the unit owners,
    including CAC, ever challenged the fee.

[5]

The Condominium has been operating under the
    authority of a Board of Directors since 2016. The relationship between the Board
    and SSVRM has deteriorated over the years. The Condominium and SSVRM have
    litigated over SSVRMs voting rights. The Condominium Board also terminated SSVRMs
    management agreement. CAC takes the position that the Board is controlled by owners
    who do not rent and favours the interests of that group over the owners who do
    rent. CAC is an owner/renter.

[6]

The Board decided it would take over the
    oversight, control and management of the rental activities at the Condominium.
    In furtherance of that goal, the Board introduced By-Law No. 7 in November 2020.
    The By-Law passed overwhelmingly by a vote of 155 for and 16 against. CAC did
    not vote its 25 votes.

[7]

By-Law No. 7 addressed various aspects of the
    rental activities. CAC challenged the
vires
and reasonableness of
    several components of the By-Law. The application judge struck down parts of the
    By-Law and upheld other parts. There is no appeal from the part of the application
    judges order striking down parts of the By-Law. CAC does, however, appeal the
    application judges refusal to strike down two specific components of By-Law
    No. 7.

[8]

First, CAC submits the application judge erred
    in holding the Condominium had the authority to charge owners who rented their
    units an administrative fee of about $120 each time the unit was rented. According
    to the By-Law, the fee was intended to cover costs associated with the renting
    process, e.g. registering renters, providing parking passes, and controlling
    access to the property.

[9]

Second, CAC argues the application judge was
    wrong in upholding the Condominiums power to impose an amenity fee of $310 per
    week. The fee was payable by any owner who rented his unit and was intended to
    compensate for additional wear and tear on facilities and additional staffing
    costs said to relate to short-term renting.

[10]

CAC, like the application judge, begins with
    bedrock principles. Condominium corporations are creatures of statute. By-Laws
    passed by a condominium must be consistent with the declaration establishing
    the condominium and authorized under the terms of the
Condominium Act, 1998
,
    S.O. 1998, c. 19. A by-law which is either inconsistent with the condominiums
    declaration or not authorized by the
Condominium Act
is
ultra
    vires
:
Condominium Act
,
1998,
ss. 56(6)-(8).

[11]

CAC submits that under the terms of the Condominiums
    Declaration, common expenses must be shared equally among the units. Section
    84(1) of the
Condominium Act, 1998
requires that owners contribute to
common expenses in the
    proportions specified in the declaration. CAC contends what the Condominium
    calls amenity and administrative fees are in reality fees directed toward the
    payment of common expenses. Under the terms of By-Law No. 7, they are not
    payable equally by all unit owners. Instead, unit owners who rent pay more and
    thereby subsidize the non-renting owners. CAC contends that the part of By-Law
    No. 7 which provides for administrative and amenity fees payable by owners who
    rent are inconsistent, both with the Condominium Declaration and the
Condominium
    Act, 1998
. They cannot stand according to CAC.

[12]

While CACs primary argument is that the
    relevant parts of the By-Law are
ultra vires
the Condominium, it also
    argues those parts of the By-Law are oppressive, contrary to s. 135 of the
Condominium
    Act, 1998
.

[13]

It is appropriate to begin the consideration of
    CACs submissions by reference to the Condominium Declaration. Section 22
    states:

The Cottage Units are part of a Cottage Resort
    Community and are zoned Tourist/Commercial; and it is intended that the
    Cottage Unit shall be rented as tourist accommodation when not being used by
    the Owner. The rental of any Cottage Unit shall be governed by the Rules and
    Regulations with respect to the rental of Cottage Units approved by the Board
    from time-to-time.

[14]

It is explicit in s. 22 that the Condominium
    consists of units owned by owners who do not rent and owners who do rent their
    units. It is equally explicit that those who choose to rent their units will be
    governed in part by Rules and Regulations with respect to the rental of
    Cottage Units approved by the Board.

[15]

The question becomes whether the By-Law, to the
    extent that it sets an administrative fee and an amenity fee in respect of
    rented units, is a Rule or Regulation with respect to the rental of Cottage
    Units.

[16]

This court does not answer that question as a
    matter of first impression, but must have regard to the application judges
    factual findings and due deference to the Boards own interpretation of the
    powers granted to it under the Declaration:
London Condominium Corp. No. 13
    v. Awaraji
, 2007 ONCA 154, at para. 6.

[17]

The application judge was satisfied that the
    fees offset costs attributable to the renting activities of some of the owners:
    Reasons, at paras. 32, 34. That finding was available on the evidence adduced
    on the application. The manner in which fees attributable to renting have
    historically been treated by the Condominium provide strong support for that conclusion.
    Amenity fees attributable to costs relating to renting units have been part of
    the operation of the Condominium from the outset when CAC was in control of the
    operation.

[18]

The Boards interpretation of its powers under
    s. 22 of the Declaration is not unreasonable. Nor is it inconsistent with any
    provisions in the
Condominium Act, 1998
.

[19]

Nor can the By-Laws providing for the fees be
    characterized as oppressive within the meaning of s. 135 of the
Condominium
    Act, 1998
. Oppressive conduct connotes conduct that runs contrary to the
    reasonable expectations of those said to be oppressed. Once again, the history
    of charging these kinds of fees throughout the life and operation of the
    Condominium belies any claim that the owners who rented did not anticipate and
    agree to such fees: see
Walia Properties Ltd. v. York Condominium Corp. No.
    478
, 2007 CanLII 31573, at paras. 23-24 (Ont. Sup. Ct.).

[20]

Any argument that the By-Laws were oppressive
    falls under the weight of the application judges finding that there was a
    reasonable basis upon which the Board could conclude the renting activities
    generated added costs and expenses. The revenue generated by the fees lowered
    the common expenses of all unit owners equally. As the application judge
    appropriately put it, at para. 42:

The By-law reflects a reasonable balancing
    which is confirmed by the overwhelming vote of the owners in favour of it.

[21]

The appeal is dismissed.

[22]

The respondent is entitled to costs of the
    appeal, fixed at $15,000, inclusive of taxes and disbursements. We see no
    reason to modify the costs order made by the application judge. However, if the
    parties wish to make submissions on that issue, they may do so in writing
    within 7 days of the release of these reasons. The submissions shall not exceed
    3 pages.

Doherty
    J.A.

M.
    Tulloch J.A.

L.
    Sossin J.A.


