The Court of Appeal recently rendered its decision in the case of Wentworth Condominium Corporation No. 198 v. McMahon, known as the "hot tub case".
By considering the meaning of the words "addition", "alteration" and "improvement" that appear in Section 98 of the Condominium Act, 1998, the court presumably made it easier for condominium corporations to determine what type of owners' changes to the common elements fall under Section 98. In fact, the court created more confusion, not to mention consternation.
According to McMahon, an "addition" requires that something be joined or connected to a structure, an "alteration" requires a permanent change in a structure, and an "improvement" requires a betterment of the property that enhances the value of the property.
These definitions appear straightforward, so what is the problem? Simply put, by adopting such rather broad definitions and by failing to provide sufficient examples to clarify their meaning, the court has only managed to open the door to potentially more unit owner challenges to the board's interpretation of Section 98. As well, the court has cast doubt about certain changes which before were generally considered to fall under Section 98. For example, would an owner replacing the common element door lock constitute an addition, alteration or improvement? Probably not, according to McMahon. What about an owner painting the common element door in a different colour? Installing an air conditioner on the back patio? Replacing the patio stones with other stones of a different design or colour?
There are at least two implications flowing from the McMahon case:
a. firstly, some alteration agreements that have been entered into pursuant to Section 98 may now be vulnerable to legal challenge (on the basis that the alteration that was the subject matter of the agreement was not in fact an alteration under Section 98); and
b. secondly, because certain changes that were commonly thought of as being alterations for the purposes of Section 98 are probably not, it is no longer sufficient for a corporation to simply rely on Section 98 to control certain alterations that unit owners have made or intend to make to the common elements. The board of directors must now carefully consider the possible changes that unit owners may make but should not be permitted to make (or should only make with prior board approval) and then pass appropriate rules regulating those types of changes. Complacency is no longer an option.
It would have been great if McMahon would have truly clarified the meaning of the words "addition", "alteration" and "improvement" that appear in Section 98. However, it did not. What it did do is call into question some of the earlier assumptions and open the door to more unit owner challenges to the board of directors' interpretation of Section 98.