In a recent Small Claims Court decision, MTCC No. 659 v. Truman, the Court considered whether a condo corporation could charge an owner for disproportionate and excessive use of water in the owner’s unit.
The condo corporation consisted of 20 commercial units. The owner of unit 7 used the unit to grow marijuana pursuant to a licence from Health Canada, which authorized him to produce marijuana for his own medical purposes.
The condo corporation was billed by the City of Toronto for water consumption for the entire condo as there was only one bulk meter measuring water consumption. Water consumption costs formed part of the common expenses that the owners paid in accordance with their proportionate share as set out in the corporation’s declaration. The declaration specified that water charges were to be included in common expenses, except for hot water and except for water “that is used for commercial and industrial purposes.”
After the owner of unit 7 purchased his unit, the property manager noted that water consumption had increased substantially beyond any historic variations in the past. A plumber retained by the condo corporation to investigate the spike in water consumption verified that there were no leaks in the plumbing system. After learning that unit 7 was being used as a marijuana grow-op, the condo corporation installed a separate meter to measure consumption of water in that unit. The corporation then billed the owner of unit 7 for disproportionate use of water during the period prior to the installation of a separate meter, asserting that the disproportionate water usage constituted a commercial use.
The owner of unit 7 refused to pay, taking the position that:
- the corporation failed to mitigate its damages and was estopped by its inactivity and failure to act prior to the installation of the separate meter;
- prior to the installation of the separate meter there was no proof of excessive water usage in unit 7; and
- the corporation’s claim was barred by the Statute of Limitations as more than two years had passed since the corporation discovered the excessive water usage.
The Court rejected all of the defences submitted by the owner of unit 7. During the period that the corporation was investigating the water charges, the owner of unit 7 continued to enjoy excess water usage and there was no failure by the corporation to mitigate its damages. The Court also concluded that the corporation’s calculation of excess water charges attributable to unit 7 prior to the installation of the separate meter was fairly arrived at. The unit owner’s position that the corporation’s claim was barred by the Statute of Limitations failed on a strictly technical basis, as the expiry of the limitation period was not pleaded in the owner’s statement of defence, it was only included in the owner’s submissions to the Court.
After determining that commercial/industrial usage comprised “production, trade, sale and profit” the Court concluded that the owner was not using the unit for industrial or commercial purposes. However, as the declaration contemplated that each owner would pay his proportionate share of common expenses, the Court determined that this was inconsistent with the notion that an owner who consumed a disproportionate share of water would expect the costs to be shared by all owners:
“I accept, without hesitation, that Mr. Truman’s use of water was disproportionate to the allotted 5.13% share of common expenses and in the result, inequitable and unfair, not only to the plaintiff, but to the other nineteen unit owners. In effect, his cultivation of medical marijuana was being subsidized.”
In reaching his decision in favour of the condo corporation, the Judge went beyond the strict wording of the declaration, relying on the principles of equity and fairness.