Aug 17, 2020

COURT OF APPEAL SUMMARIES (August 10 – 14, 2020)

Siemon v. Perth Standard Condominium Corporation, 2020 ONCA 503 (CanLII)

[Strathy C.J.O., Lauwers and van Rensburg JJ.A.]

Counsel:

Gavin J. Tighe and Anna Husa, for the appellants

A. Paul Parlee, for the respondents

Keywords: Real Property, Condominiums, Oppression, Civil Procedure, Procedural and Natural Justice, Costs, Condominium Act, 1998, S.O. 1990, c. 19, s. 135, Retirement Homes Act, 2010, S.O. 2010, c. 11, Ontario Hydro-Electric Power Commission of Ontario v. City of St. Catharines et al. (1971), 21 D.L.R. (3d) 410 (Ont. H.C.), aff’d on other grounds [1972] 1 O.R. 806 (C.A.), aff’d (1973) 36 D.L.R. (3d) 160 (S.C.C.), Rodaro v. Royal Bank of Canada (2002), 59 O.R. (3d) 74 (C.A.), BCE Inc. v. 1976 Debentureholders, 2008 SCC 69, Walia Properties Ltd. v. York Condominium Corporation No. 478 (2007), 60 R.P.R. (4th) 203 (Ont. S.C.), rev’d in part 2008 ONCA 461, Noguera v. Condominium Corporation No. 22, 2020 ONCA 46, Hamilton v. Open Window Bakery Ltd., 2004 SCC 9

Facts:

McCarthy Place is a 124-unit condominium building located in Stratford, Ontario. It is a retirement home as defined in s. 2 of the Retirement Homes Act, 2010. The appellant Cedarcroft 2 Facility Inc. (“Cedarcroft”) acquired the original owner/developer’s 106 units in 2015 and has since acquired an additional seven units. The appellant Cedarcroft 2 Facility Limited Partnership (“Cedarcroft LP”) took over from the original Services Manager as the provider of food and other services to the retiree residents of McCarthy Place. The appellant All Seniors Care Living Centres Ltd. (“All Seniors”) is the board-appointed manager for Perth Standard Condominium Corporation No. 39 (“Condo 39”). Cedarcroft, Cedarcroft LP and All Seniors are related corporations with common ownership. Two of Condo 39’s three-person board of directors are employees of Cedarcroft LP and All Seniors.

Cedarcroft rents out all of its 113 units. The remaining 11 units are owned by individuals. The respondents are the owners of eight of these units.

The Declaration and By-laws require each unit owner, in addition to paying common expenses, to participate in a Services Program (consisting of “Standard Services” and “Optional Services”), and to enter into a Services Operation Agreement with the Services Manager in the form then in use by the Services Manager. An owner is not entitled to opt out of the Services Program or the fees to be paid for the program. No owner may convey or lease a unit unless the purchaser or lessee enters into the then current form of the Services Operation Agreement with the Services Manager.

When the respondents purchased their units, they entered into identical Services Operation Agreements with the original owner/developer and Services Manager of McCarthy Place. Their Services Operation Agreements have remained in place without change since they acquired their units. The Services Operation Agreement, consistent with the By-laws, sets out the Services Program. The monthly fee was $500 plus $385 per additional occupant for the “Standard Page: 5 Services”, consisting of the use of amenities such as the indoor spa-wellness centre and a movie theatre, access to social, recreational and cultural programs, eight meals per month in the dining room and 24-hour emergency response. “Optional Services”, such as additional meal packages, housekeeping and personal care, were available on a user-pay basis for an additional fee set out in the Services Operation Agreement. Each unit occupant was required by the By-laws to subscribe to a minimum level of “Optional Services” for a monthly fee of at least $125 per occupant. There have been annual increases in the service fees since Cedarcroft LP took over as Services Manager.

The tenants of Cedarcroft’s units have not entered into Services Operation Agreements with the Services Manager. Rather, Cedarcroft requires its tenants to enter into a Residency Agreement that includes both rent and services. The Residency Agreement provides for a “Total Basic Fee” which is broken down between “Basic Rent”, “Primary Basic Care Services and Meals”, “Second Person Occupancy Fee” and “Secondary Person Basic Care Services and Meals”. Schedule “A” to the Residency Agreement, entitled “Included Facilities, Services and Meals”, sets out a list of “Residential Facilities” and a list of “Care Services and Meals”. Also attached is a “Care Package Agreement”, setting out fees for meals and various services, with applicable fees. Each Cedarcroft tenant receives a “Care Home Information Package” (“CHIP”), a form of disclosure that is required by the Retirement Homes Act, 2010. The CHIP sets out what is included in the “Accommodation Component” and a “Care and Service Component”, and, for each type of rental suite in the building, sets out the “maximum charges” for each of the two components. A “Schedule of Additional Services” is included in the CHIP, which corresponds with the “Care Package Agreement” attached to the Residency Agreement.

The respondents commenced an action. They claimed, among other things, that the appellants were enforcing certain provisions of the By-laws in a discriminatory manner, specifically by requiring them to pay a higher monthly service fee than the Cedarcroft tenants were required to pay.

By way of summary judgment, the motion judge ordered that “all occupants of McCarthy Place shall be required to enter into the same services agreement with the services manager, separate and apart from the rental agreement”. She was of the view that this was the “least intrusive remedy”. She declined, however, to make any order respecting the makeup of the board of directors or the choice of Services Manager, and she dismissed the claim for damages, after concluding that there was no proof of a specific loss.

Issues:

Did the motion judge err in:

1. granting relief that was different from the relief the respondents sought in their statement of claim and notice of motion;

2. failing to deal with a number of issues in the litigation, thereby granting what amounted to partial summary judgment;

3. concluding that the appellants’ conduct was unfairly prejudicial and unfairly disregarded the respondents’ interests;

4. granting relief against persons who were not before the court; and

5. awarding costs against the appellants, when some of the issues were decided in their favour and other issues were abandoned?

Holding:

Appeal allowed in part.

Reasoning:

1. No. There was no procedural unfairness. The fact that the respondents did not specifically plead s. 135 of the Condominium Act, 1998 or the relevant provisions of the Retirement Homes Act had no merit. It is only when a statutory provision would take the opposing party by surprise that it must be specifically pleaded before it can be relied on. Here, the statement of claim clearly advanced a claim for oppressive conduct, even though it did not expressly plead s. 135. AS for the provisions of the Retirement Homes Act, there was no question that McCarthy Place, as a retirement home, operates under that legislation.

The motion judge did not step outside of the pleadings or the case developed by the parties to find liability. The appellants were not taken by surprise by the issues raised on the motion, how they were determined, or the relief that was granted. All were squarely raised and addressed in the motion. While the notice of motion requested relief that was broader than what was granted, the motion judge had broad remedial power to make any order she deemed proper upon a finding that the conduct complained of was oppressive. The declaratory relief granted by the motion judge, and the order requiring enforcement of the Declaration and By-laws with respect to the services agreement for all occupants of McCarthy Place was the least intrusive remedy.

2. No. The respondents expressly abandoned their claims for other relief claimed in the statement of claim at the hearing of the summary judgment motion, and the motion judge’s judgment specifically dismissed the balance of the relief sought by the respondents on the motion. The motion judge awarded costs for the summary judgment motion and the action. This was not a case of partial summary judgment and the motion judge’s reasons were not deficient.

3. No. The motion judge did not misapprehend the evidence about what services are provided to and paid for by the Cedarcroft tenants relative to those of the respondent unit owners. The motion judge also properly identified the relevant principles for oppression. Section 135 of the Condominium Act, 1998 is meant to protect the reasonable expectations of shareholders and unit owners: Unfair prejudice has been described as “a limitation on or injury to a complainant’s rights or interests that is unfair or inequitable” and that unfair disregard has been described as “unjustly ignoring or treating the interests of the complainant as being of no importance”.

After considering the relevant legal principles, the motion judge found that the Declaration and By-laws contemplated that all occupants of McCarthy Place are to be treated equally, that they are required to have the same services agreement with the Services Manager, and that they are to pay the same amount for required services. Based on these findings, she concluded that the respondents “reasonably expected that all occupants of McCarthy Place would be treated equally and charged the same amount for services”, and that by not ensuring that all occupants be charged the same amount for their services, the appellants “have received an unfair advantage in renting out their units, in that they have been able to offer incentives not available to the plaintiffs”. This was the basis for the finding of unfairness. The failure to comply with the Declaration and By-laws had resulted in unfairness: while the respondents, in renting their units, were bound by the terms of the Services Operation Agreement, Cedarcroft’s tenants signed alternative Residency Agreements that enabled the appellants to manipulate the fees, and to obtain an advantage not available to the respondents in renting out their units.

The fact that the motion judge, in considering the appropriate remedy, did not award damages does not undermine her finding that the appellants’ failure to comply with the Declaration and By-laws was unfairly prejudicial to the respondents and unfairly disregarded their interests. The remedy she fashioned was intended to address the unfairness that she found, and to level the playing field between the parties on a prospective basis by requiring compliance with the Declaration and By-laws. While the motion judge declined to award damages for past contraventions in the absence of any proof of a specific loss, her remedy upholds the respondents’ rights as unit owners and provides an appropriate remedy to prevent ongoing harm to their interests.

4. Yes. The relief that was ultimately granted by the motion judge did not make it clear that the appellants would be required to ensure that all occupants of McCarthy Place would enter into the same services agreement with the services manager, separate and apart from the rental agreement, only on a go-forward basis. The Court agreed that this provision of the judgment was problematic because it could be interpreted as affecting the interests of persons that were not before the court, that is, the tenants of both the appellants and the respondents who have existing agreements in respect of the services they receive and the fees they are required to pay. The Court therefore amended the judgment below to ensure that the existing rights of persons not before the court were not affected, while ensuring that all future residents are provided with the same services at the same rates that the respondents receive and are required to pay for.

5. No. There was no reason to interfere with the motion judge’s costs order. The appellants continue to characterize their wrongdoing as an “administrative failure”, understating the implications and importance of the relief obtained by the respondents. The respondents were successful in the litigation. They established that the appellants’ conduct was unfairly prejudicial and unfairly disregarded their interests, and that they were entitled to a remedy under s. 135 of the Condominium Act. The relief granted by the motion judge meant that the appellants must cease their non-compliance with the Declaration and By-laws and can no longer use their positions as the owner of the majority of units in McCarthy Place and as Service Manager to unfairly prejudice the individual unit owners who wish to rent out their units. In this way, as the motion judge pointed out, the respondents were successful on the primary issue before her and were thus entitled to costs.