On May 18, 2017, the Ontario Court of Appeal ("the Court") released its decision in Black v. Owen. The appeal concerned the enforceability of the appellants' legal obligation to pay an annual levy as their contribution toward maintenance costs for private roads and other common areas in Wychwood Park, a residential area within the City of Toronto. The payment obligation arose under an 1891 Trust Deed (the "Trust Deed") registered on title to the lands within Wychwood Park.
In its unanimous decision, the three-judge panel of the Court held that "the obligation under the Trust Deed to pay the annual levy is unenforceable as against the appellants".
By way of background, Wychwood Park is a small community of 60 residential properties situated within a central area of the City of Toronto. In 1874, Marmaduke Matthews built the first house in the neighbourhood, and in 1888, residents registered a plan of subdivision. The objective at the time was to create an artists' colony. Today, Wychwood Park is seen as an exclusive residential enclave and in 1985, it was granted official status as a heritage conservation district.
The Trust Deed appointed three Trustees to hold and maintain "the roadways, drives and the park reserve … as private property for the benefit of the owners." To this day, the City of Toronto does not provide any maintenance for the private roads or other lands within Wychwood Park. Instead, the Trust Deed continues to be administered by three Trustees who are appointed from time to time. The Trustees determine the annual levy payable by each owner for the purposes of maintaining of internal roads, including lighting, snow removal and repairs, and for the maintenance of park and ravine lands within Wychwood Park.
In its unanimous decision, the Court overturned a lower court decision which had upheld the validity of the positive covenant in the Trust Deed. In so doing, the lower court judge relied on exceptions to the general common-law rule that trust documents which impose positive obligations (i.e. requiring someone to do something) as opposed to negative obligations (i.e. preventing someone from doing something) were unenforceable as a matter of common law. The Court of Appeal concluded that the exceptions to the general rule against positive covenants requiring the payment of money did not apply under Ontario law, unless specifically authorized by statute. That limited exception did not apply here.
Accordingly, the Court concluded that the positive obligation under the Trust Deed was unenforceable in this case. The Court went on to note that "[w]hile this conclusion may have implications for the rights and obligations of the trustees and other landowners in Wychwood Park under the Trust Deed, the assessment of those rights and obligations is not before this court".
What the future holds for Wychwood Park and similar residential communities elsewhere in Ontario in light of the Court's decision remains to be seen. Ultimately, the viability of long-established regimes for maintaining private internal roads and other common areas within those communities may depend on the willingness of their property owners to make financial contributions on a voluntary basis, rather than through the compulsion of a positive covenant that may not be enforceable at law as a result of the Court's decision.
The information and comments herein are for the general information of the reader and are not intended as advice or opinion to be relied upon in relation to any particular circumstances. For particular applications of the law to specific situations, the reader should seek professional advice.