



COURT OF APPEAL FOR ONTARIO

CITATION: Middlesex Condominium Corporation 229 v. WMJO
    Limited,

2017 ONCA 27

DATE: 20170117

DOCKET: C60908

MacPherson, Hourigan and Miller JJ.A.

BETWEEN

Middlesex Condominium Corporation 229

Plaintiff (Respondent)

and

WMJO Lsimited
,
    Ayerswood Development Corporation

Middlesex
    Condominium Corporation 282, Middlesex

Condominium
    Corporation 392 and Middlesex

Condominium
    Corporation 500

Defendant (
Appellant
)

F. Scott Turton, for the appellant

M. Paul Morrissey, for the respondent

Heard: January 12, 2017

On appeal from the judgment of Lynne Leitch J. of the
    Superior Court of Justice, dated July 17, 2015.

ENDORSEMENT

[1]

The appellant WMJO Limited (WMJO) appeals the
    declaration that it is obligated to contribute on a
pro rata
basis to the expenses incurred by the respondent
Middlesex Condominium Corporation 229 (MCC 229)
to maintain and operate the
sanitary
    sewer pumping station

located at 1199 Hamilton Road.
    The trial judge found WMJO liable based on the principles of unjust enrichment and
    contract. For the reasons that follow, we dismiss the appeal.

Facts

[2]

MCC 229 is a condominium
    corporation created under the
Condominium Act
, 1998, S.O. 1998, c. 19,
    located in London (the City). MCC 229 is built on the same parcel of land as
    three condominium projects owned by WMJO. The land on which all four
    condominium projects are built is lower than the adjacent city street Hamilton
    Road. Thus the City requires the sewage from these condominiums be pumped
    uphill to the city sewer that runs under Hamilton Road.

[3]

In 1989, Trenlon Developments
    Corp (Trenlon), the owner of the parcel of land upon which all four
    condominium projects would eventually be built, entered into a development
    agreement with the City (the Development Agreement), which was registered on
    title pursuit to the
Planning Act
, S.O. 1983, c. 1. The Development
    Agreement required Trenlon to construct and maintain at its sole expense a sanitary
    sewer pumping station. The Development Agreement was binding on Trenlons
    successors on title.

[4]

Also in 1989, Trenlon conveyed the
    land to Award Development Ontario Ltd. (Award). Prior to this deal closing,
    Trenlon constructed the required sanitary sewer pumping station. In March 1990,
    Award transferred the part of the land upon which MCC 229 would be built and
    upon which the sanitary sewer pumping station was located to a related company,
    Double G Contractors Limited (Double G).

[5]

In December 1990, Double G and
    Award entered into a Joint Use and Maintenance Agreement (the Joint Use Agreement),
    which was also registered on title. The Joint Use Agreement contemplated the
    development of one condominium project by Double G, and that three further
    condominium projects would be developed in phases by Award on the balance of
    the land. The Joint Use Agreement provided for the sharing of the sanitary
    sewer pumping station, and stipulated that the costs of the system would be
    shared
pro rata
among the properties
    built on the land. The Joint Use Agreement contained a provision that it would
    be binding on successors on title.

[6]

Double G developed its property,
    and in June 1991 registered the declaration creating MCC 229. The sanitary
    sewer pumping station was included as part of the common elements of MCC 229. In
    1991, the balance of the parcel of land (i.e. excluding MCC 229) was lost by
    Award pursuant to a mortgage default. This land eventually came into the
    possession of WMJO, who built three condominium projects during the years 1993
    to 2002. As each of these projects were constructed, they were connected to the
    existing sanitary sewer pumping station operated by MCC 229.

[7]

Since 1991, MCC 229 has managed
    and operated the sanitary sewer pumping station. For more than ten years, WMJO
    contributed its proportionate share for the costs of the sanitary sewer pumping
    station, in line with the Joint Use Agreement. WMJO stopped making payments
    after 2006, taking the position that it had no obligation to do so.

Analysis

[8]

The trial judge found WMJO liable on
    the basis of unjust enrichment. She held that WMJO had been enriched through
    connecting to the sanitary sewer pumping station operated by MCC 229 rather
    than building its own, and thus having no responsibility to manage the sanitary
    sewer pumping station or deal with contractors. The trial judge found that MCC
    229 had suffered the corresponding deprivation of not receiving compensation from
    WMJO, and being forced to operate a sanitary sewer pumping station larger than
    required for its number of units.

[9]

WMJO cited
Amberwood Investments
    Ltd. v. Durham Condominium Corporation No. 123
(2002), 58 O.R. (3d) 418
    (Ont. C.A.), which held that positive covenants do not run with freehold land,
    as establishing that there was a juristic reason for the
    enrichment/deprivation. The trial judge disagreed, holding that
Amberwood
was
    not intended to restrict a partys right, in the face of an unenforceable
    contract, to seek restitution on the basis of unjust enrichment.

[10]

On appeal, WMJO largely raises the same
    arguments it made at trial. We see no basis on which to interfere with the
    findings of the trial judge in regard to enrichment and corresponding
    deprivation. There was ample evidence to establish that WMJO receives the
    benefit of the use of the sanitary sewer pumping station, without having to pay
    operating or management costs. As a result, MCC 229 suffers the corresponding
    deprivation of increased costs for electricity, repairs and maintenance. It was
    also established at trial that the risk of breakdown of the sanitary sewer
    pumping station increases with the volume of sewage.

[11]

WMJO
submits that the trial judge failed to
    properly conduct the two-part analysis of the absence of
juristic
reason provided for in
Garland v. Consumers Gas
,
    2004 SCC 25, [2004] 1 S.C.R. 629.
Under the first part of that analysis,
    the plaintiff must show that no juristic reason from an established category
    exists to deny recovery.  The established categories include a contract, a
    disposition of law, a donative intent, and other valid common law, equitable or
    statutory obligations.  If there is no juristic reason from an established
    category, then the plaintiff has made out a
prima facie
case
    for recovery.  The
prima facie
case is rebuttable,
    however, where the defendant can show that there is another reason to deny
    recovery.  Courts should have regard at this point to two factors: 
    the reasonable expectations of the parties and public policy considerations.

[12]

WMJO relies on the Development
    Agreement and the
Ontario Water Resources Act
, R.S.O. 1990, c. O. 40, as
    juristic reasons for MCC 229 to bear the entirety of the costs of the sanitary
    sewer pumping station. We would not give effect to this submission.

[13]

The Development Agreement does obligate
    MCC 229 as successor to Trenlon to maintain the sanitary sewer pumping station.
    However, the Development Agreement also provided in clause 9 that the owner of
    each phase of development would enter into an agreement with the owners of the
    other phases to provide for the joint use and maintenance of common internal
    driveways and services. Thus, the Development Agreement always contemplated
    the sharing of expenses for the maintenance of the sanitary sewer pumping
    station.

[14]

The fact that the respondent has an
    obligation to maintain and operate the sanitary sewer pumping station under the
Ontario Water Resources Act
is not a juristic reason for why WMJO should
    obtain the benefit of the system free of charge. The statute does not deal with
    who should be responsible for the cost of maintaining such a system.

[15]

Pursuant to this courts decision in
Amberwood,
the positive covenants in the Joint Use Agreement are not enforceable upon
    subsequent owners of the land. WMJO submits that
Amberwood
establishes a
    public policy rationale for not using the remedy of unjust enrichment to
    enforce positive covenants upon subsequent owners of land.

[16]

We reject this submission. An
    unenforceable contract is a recognized basis for granting a remedy in unjust
    enrichment. This courts decision in
Amberwood
does not impact on that
    principle. In
Amberwood
the sole issue was whether the covenant was
    enforceable against a successor in title. There was no issue of a benefit, and
    thus a remedy for unjust enrichment was neither sought nor available.

[17]

In light of our conclusion on the issue
    of unjust enrichment, it is unnecessary to consider the appellants argument
    regarding the contractual basis for its liability.

[18]

The appeal is dismissed. The respondent
    is entitled to its costs of the appeal, which we fix at $9,800, inclusive of
    fees, disbursements, and taxes.

J.C. MacPherson J.A.

C.W. Hourigan J.A.

B.W. Miller J.A.


