ONTARIO COURT OF JUSTICE

CITATION: R. v. Ashley Developments Ltd., 2016 ONCJ 677

DATE: June 28, 2016

COURT FILE No.: Mississauga 15-000961

BETWEEN:

Regina

— AND —

Ashley Developments Ltd.

Before Justice of the Peace V. Fisher-Grant

Heard on March 3, 2016 and May 12, 2016

Reasons for Judgment released on June 28, 2016

Ms. Bourgeois ............................................................................................. for the prosecution

Mr. Abbas......................................................................................................... for the defendant

JUSTICE OF THE PEACE FISHER-GRANT:

[1] Ashley Developments Ltd. is charged with two offenses arising out of the Building Code Act. Namely, making alterations to a building without a permit contrary to section 36(1)(c) and failing to comply with an order contrary to section 36(1)(b).

[2] The facts of this matter are largely not in dispute. What is in dispute is whether Ashley Developments Ltd. (hereinafter referred to as “Ashley”) as the landlord is the proper party to have obtained the permit and therefore be charged. And if so, Ashley argues due diligence in dealing with the matter when it came to their attention.

[3] Briefly the facts are as follows: Building Inspector Ryan Russell testified for the prosecution. He indicated after a Fire Insurance inspection he conducted a check to make sure that the units at 900 Rathburn Rd W. had a building permit or application for alterations therein. He then attended the property on May 30, 2014. He observed that the property had been expanded into neighbouring unit #6C. There had been a floor to ceiling glass partition installed. He took various photos of the property upon his inspection on May 30, 2014. The photographs show from the outside of the units in question that they are supermarkets. Inside there is a glass partition where the grocery was expanded into unit 6. The glass wall appears to have created a deli/butcher shop area[^1].

[4] On June 5, 2014 he issued an order to comply[^2] under the Building Code. That order was served on Ashley as the corporate owner[^3] of the premises via regular mail[^4].

[5] Inspector Russell checked on August 5, 2014 via the City of Mississauga database computer and found that a building permit had not been issued. He attended the site, where he found the alterations still existed. Thereafter he sent a follow up letter[^5] to Ashley.

[6] On October 6, 2014 Inspector Russell conducted a follow up inspection at the property. As before he checked the records via his City of Mississauga database accessible computer and found that there was no permit issued. He thereafter attended the property and found it in the same condition as before. He then laid the charges that are before the Court.

[7] A building permit application[^6] was subsequently made on July 16, 2015 for units 4, 5, 6. The building permit[^7] was granted on September 1, 2015.

[8] In cross-examination, Inspector Russell indicated that he knew the property was occupied by a tenant because the property contained a grocery store. He did not ask the tenant who constructed the alterations because he felt the alterations were illegal and a permit needed to be obtained. He believed that the owner bears ultimate responsibility for compliance and thus it mattered not to him whether or not the tenant had permission to make the alterations.

[9] For the defense, Mr. Dragutin Vukovic testified as the manager of Ashley. He has worked there for 30 years and is responsible for construction and obtaining permits for their buildings. He indicated he had no knowledge of the construction by the tenants at 900 Rathburn. The tenants have rented three units from Ashley since February 1, 2012.

[10] Mr. Vokovic testified that he received the letter with the order of June 10, 2014. He did not know about the construction before that time. Upon receipt of the letter he sent a letter[^8] to the tenant on June 12, 2014 to either obtain a permit or move out as per their lease agreement[^9].

[11] Mr. Vukovic testified that he followed up with the tenant by introducing the tenant to an architect. The architect worked on the matter and it took 3-4 months before the application was ready. Mr. Vukovic testified he was advised on a regular basis of the status of the application by the architect.

[12] Mr. Vukovic indicated that the only thing Ashley does as the Landlord at this plaza is maintain garbage services. They pass on the obligation for permits to the tenants and do not enter into tenant’s units. In cross-examination, he agreed that he is aware of Ashley’s obligations but does not enter into a unit after it has been rented because they have no business to enter unless they have been called. He agreed that he never goes back to a property once it has been rented to check on it.

[13] Once Mr. Vukovic was advised of the situation he testified he felt he had two alternatives either to assist the tenants with getting a permit or to cancel their lease. He felt it was prudent to assist with their permit although he felt it was not his job to ensure their compliance.

2: ISSUES BEFORE THE COURT

[14] As indicated there are two issues before the Court. First whether the infraction here under the Building Code Act (hereinafter the “Act”) applies to a landlord when made by a tenant. Second, if it does apply to the landlord was the landlord here duly diligent in remedying the issue?

[15] The Building Code Act states:

8(1) the Act indicates that no person shall construct or demolish a building or cause a building to be constructed or demolished unless a permit has been issued ….

36(1) A person is guilty of an offence if the person, …

(b) fails to comply with an order, direction or other requirement made under this Act; or

(c) contravenes this Act, the regulations or a by-law passed under section 7.

The definition of “construct” within the Act includes a material alteration. Person is not defined in the Act. The defense here urges me to accept a definition of cause that only applies where the owner has authorized or directed the tenant to undertake the construction.

[16] The prosecution submits that the Act should be interpreted more broadly with a purposeful approach and a view to the intention of the drafters.

[17] I have been given cases by both sides in support of their respective positions.

[18] In Chief Building Official for City of Toronto and Manolan Enterprises Ltd. et al, [1978] 22 O.R. (2d.) 60, the High Court of Justice sitting as a trial court, held that the Building Code therein was not enforceable against the landlord. In similar factual circumstances as this matter the Tenant had made alterations of partitioning to the property without the benefit of a permit. The Building Code at that time did not specify “to cause” as it does today. Counsel submits that regardless of the word cause being there now it still does not bring the landlord into the ambit of the section.

[19] Manolan was followed by the Court of Queen’s Bench in New Brunswick in the case of the City of Moncton and Steldon Enterprises Ltd., 2000 Canlii 17210 (NB QB). There the premises were leased to Steldon by landlord, Northland. Renovations were allegedly done on the property without a building permit having been obtained. Orders to comply were issued and it was alleged that both defendants failed to comply with the orders. The landlord took the position that the orders were not applicable to it as its only interest in the premises was as a landlord. The court followed the reasoning in Manolan that the Building Code orders should only apply to the lessee. The Court found that other orders regarding zoning applied to both.

[20] In Podolsky and Cadillac Fairview Corp. Ltd., YCC Ltd. and CF/Realty Holdings Inc. 2013 ONCJ 65, the Court discussed the meaning of cause versus permit, in the context of the OSPCA Act. The court found that “the word ‘cause’ may, depending on context, encompass conduct consonant with the term ‘permit.’ … the former term, ‘cause’ suggests some active role in the infliction of the prohibited harm while the latter, ‘permit’, allows for a finding of culpability founded on mere passive participation.”[^10]

[21] The Court continued that there was doubt then that the defendant landlord’s passive ownership and management of buildings fell within the scope of the offenses charged. The OSPCA Act specifies both terms “cause” and “permit” therein to attract liability. As previously mentioned, the Building Code Act today uses the word “cause” and does not use the term permit.

[22] In Mac’s Convenience Stores Inc. and Minister of the Environment for Ontario re Suncor Inc. et al., [1984] O.J. NO. 3338, the court again discussed the terms “cause” and “permit” this time in the context of the Environmental Protection Act. At paras. 16-17, the court concluded that the verb “cause” means “the doing of something or giving a positive mandate to do something by a person in a position of control…”. The court continued that “permit” means “the giving of express of implied permission … or the failure to interfere or prevent a foreseeable occurrence by a person in a position of control.”

[23] In R. v. Consolidated Maybrun Mines Ltd., 1996 CanLII 449 (ON CA), [1996] O.J. No. 881 (OCA), the Court held that when a party is given an order to comply they can appeal the validity of the order. The prosecution argues that that was the appropriate route for Ashley to take in this matter and is what they are indirectly trying to do here. The prosecution continues that when an owner leases a property they do not absolve themselves of responsibility. There may be a resulting civil action available to the owner as against the Tenant but the owner is still responsible. Further, the prosecution argues that since Ashley did not have any systems in place to ensure their Tenant was following the law they cannot be said to be duly diligent. The defendant argues that, pursuant to this case, the defense of due diligence still applies even when compliance was completed after the date in the order. Although the acquittal of the defendant was overturned on appeal on other issues the acquittal on this issue was upheld.

[24] In R. v. Deneen Allen and Associates, [2008] O.J. No. 4005, one of the issues on appeal was whether the owners of the property were responsible for the property whether or not they had leased the property to tenants in relation to a sign by-law. The by-law therein indicated it was an offense to “display a sign without first obtaining a sign permit.” The by-law did not contain any requirement that the [person charged] actually painted or caused to be painted the [sign]. Therefore the landlord was responsible for the property and for the acts of their tenants unless they could establish due diligence.

[25] In Moosa v. Mississauga, [2013] O.J. No. 3387 (SCJ), the owner was assessed costs by the City when a clandestine drug lab on the subject property caused a fire. The owner argued that the bylaw required knowledge of the prohibited conduct. However the court held that the by-law did apply to the applicant. The wording of the bylaw stated in Part 2 that: “a. No person, owner or occupant … shall permit or allow ….” The prosecution argues that in the case the owner was liable even when they hired a property management company. The defense argues that the language of the by-law in the case is much broader that the language of the Building Code Act and as such is not applicable.

Issue 1: Does the BCA apply to the defendant in the circumstances?

[26] Issue one: Does the Building Code Act herein apply to Ashley, as landlord? In my view, after reviewing the aforementioned case law, the answer is no.

[27] The prosecution argues pursuant to the case of Maybrun Mines, supra, that the defendant is barred from attacking the validity of the legislation against it as a collateral matter wherein they have a right of appeal. In my view the rationale of Maybrun is not on point with this matter. The matter dealt with an order under the Environmental Protection Act that the defendants chose not to follow. Once the matter was brought before the Court the defense argued that the Director did not have reasonable and probable grounds to make it. The court there indicated that when looking at whether a collateral attack against an administrative order is permissible the court should look at various factors. supra, para. 59. The factors in Maybrun led to the holding that the defendant should not have been allowed to attack the order on the basis that it did. Herein the defendant is not challenging the validity of the order per se. The defense is challenging the applicability of the order to them, not the justification or reasonableness of said order as in Maybrun. As such, the question here is simply one of statutory interpretation.

[28] In the cases of Moosa, and Deneen where the landlord is liable for the actions of the tenant the language of the applicable legislation is much broader. In Moosa, the language specifically included “no person, owner or occupant” which specifically references the inclusion of owners and occupiers in the section while the language in the BCA here stops at “no person.” Furthermore, the bylaw in Moose uses the terms “permit or allow” not cause. As discussed below, this is much more encompassing language that what is contained in the Act herein.

[29] In Deneen, the language of the sign bylaw simply states it is an offense to display the sign. It does not require anyone specifically to display the sign; the mere fact of the display is an offense. It is an offense of absolute liability. In my view because the sign by-law does not require any person to have performed the violation, the violation is simply the display, it is much broader in its scope that what is contemplated in the Building Code Act.

[30] In the cases of Manolan and City of Moncton, supra, the Courts therein found the landlord was not responsible for the violations under the Building Code Act. While the Act in those matters did not specify “cause” as it does today, in my view, the word “cause” in the current Act does not bring the Landlord here into the ambit of culpability under the section.

[31] A plain reading of the word cause as defined in Webster’s Dictionary is “to make (something) happen or exist: to be the cause of (something); to make (someone) feel, have, or do something”. In Mac’s Convenience Stores, the Court held that “cause” means doing something or giving a positive mandate to do so.

[32] In this case, what evidence is there of a positive mandate by the landlord for the tenant to do anything? Mr. Vukovic testified he was unaware of the construction on the premises and did not attend there during the course of the lease agreement. A review of the agreement indicates the rental is for units #C4, 5 and 6. At section 10.01 the agreement states that the use of the premises shall be for an “Indian/west Indian grocery store.” At Section 10.02 the lease indicates that the “tenant shall … comply with all provisions of law including … building by-laws ….” At section 7.04, entitled maintenance and repairs, it provides that “the Tenant shall not make any alterations, replacements, decorations, or improvements to any part of the Leased Premises without the Landlord’s written approval …. The Landlord shall reasonably require, and evidence satisfactory to the Landlord that the Tenant has obtained all necessary consents, permits ... from all governmental authorities ….”

[33] In my view, the Lease agreement’s provisions specifically limit the Tenant’s ability to undertake any construction on the premises without the Landlord’s prior approval and without the Tenant having obtained a permit. The limiting language of these clauses cannot be said to give the Tenant any impression that they are allowed to do anything on the subject property without permission of the Landlord nor without having obtained a permit. The language in the Lease is clear regarding each party’s obligations in this regard. Due to the limiting language of the Lease, and no other evidence of tacit approval, I find that Ashley did not “cause” the alterations on the property.

[34] I have also been provided with the case of City of London and Westpark (London) Limited, 1991 CarswellOnt 3033 [OCA], wherein the Court concluded that “cause” must include the “situation of an owner who would reasonably be expected to be the one who authorizes construction on its own property.” The defendant argues that there is no evidence here that Ashley would have been reasonably expected to have authorized the construction given the lease provisions and their efforts at compliance once they received the Order to comply. Based on the foregoing, I agree.

[35] In City of Moncton while the court found that the renovation permit violations were the responsibility of the tenant, zoning violations could be assessed against both the landlord and tenant. In my view, this makes sense. The landlord has knowledge and control of what for and how the property is going to be used which is within the purview of zoning issues. This is not necessarily the case with respect to interior alterations made by a tenant that are, depending on the facts of the case, not within a landlord’s immediate and direct control.

[36] The prosecution argues that the language should be interpreted broadly to reflect the concern that the intention of the Building Code is reflected in its enforcement. However, based on my review of both this Act and the cases involving other legislation, in my view the drafters could easily have included language in the definitions or the section to reflect this intention.

[37] In section 8 of the Act, which is the section that applies to building permits, only the word cause is used. In contrast, in section 10 of the Act, the language used is both that of “shall change” and “permit”. As indicated in Podolsky and Mac’s, insertion of the language of “permit” would indicate culpability can be founded on mere passive participation or by a failure to interfere. In this case, the prosecution argues that Ashley abdicated its responsibility of making sure permits were obtained by choosing to not attend the premises once the lease was signed. Mr. Vukovic agreed that they do not attend inside the units once the lease is complete. It is argued that under this factual scenario Ashley might be said to have failed to interfere by no longer attending the premises and therefore permitted the violation. However, the language of “permit” is not included in the applicable section of the Act and as such is not enforceable as against Ashley herein.

[38] Furthermore, in my view, there cannot be said to be a “failure to interfere or prevent foreseeable occurrence.” The lease agreement is specifically designed to prevent such an occurrence and can be construed as an attempt by the landlord to do so. Arguably the lease agreement should not prevent the City from enforcing its bylaws. The Landlord cannot avoid liability simply by shifting the onus to the Tenant in its’ agreement. If the language in the Act were such to impute liability to the Landlord herein or the facts of the matter showed evidence of causation by the Landlord, the lease would not in and of itself assist in overcoming the failure to obtain the permit. Instead, in my view, the said lease agreement could assist the landlord in establishing a defense of due diligence or potentially an action against the tenant regarding the agreement itself.

Issue 2: Due diligence

[39] If I am wrong in my assessment of liability of Ashley in obtaining a building permit, I nonetheless find that Ashley was duly diligent in its actions in this matter.

[40] Due diligence has two branches. The defendant is only required to satisfy one of them. The first branch, applicable herein, requires proof that the defendant took all reasonable care to avoid the commission of the prohibited act. The second branch requires proof that the defendant reasonably believed in a mistaken set of facts which, if true, would render the act or omission innocent: R. v. Sault Sainte Marie (1978), 1978 CanLII 11 (SCC), 40 C.C.C. (2d) 353 (S.C.C.); R. v. Pontes (1995), 1995 CanLII 61 (SCC), 100 C.C.C. (3d) 353 (S.C.C.).

[41] The defendant is required to prove the defence of due diligence on a balance of probabilities. See R. v. Wholesale Travel Group Inc., 1991 CanLII 39 (SCC), [1991] 3 S.C.R. 154 (S.C.C.); R. v. Ellis-Don Ltd., 1992 CanLII 94 (SCC), [1992] 1 S.C.R. 840 (S.C.C.).

[42] In this case the defense argues that the lease agreement provides Ashley with a defense of due diligence while the prosecution argues it does not. Further, the defense argues that once Ashley found out about the issue Ashley did everything it could to remedy the situation. The prosecution submits that the lease does not provide Ashley with a due diligence defense herein because the permit was obtained more than a year (15 months) after the inspector’s letter to them.

[43] A review of the lease agreement executed between Ashley and their tenant included provisions for the tenant to not make alterations without the consent of Ashley. Furthermore, the agreement which is signed and initialled on each page by the parties also specifies that it is the Tenant’s responsibility to obtain consents and permits. The prosecution argues that Ashley should have been more diligent in ensuring compliance with the agreement. I disagree. There has been no evidence to suggest that it was foreseeable by Ashley that the lease agreement would not be complied with. Absent some foreseeability the tenant should enjoy a peaceable occupancy without interference of the landlord.

[44] Both parties argued before me whether Ashley’s actions after they received the notice constituted due diligence. Ashley indicated that they immediately sent a letter to the tenant to obtain a permit or vacate. In addition, Mr. Vukovic indicates that he assisted the tenant with retaining an architect and followed up with the architect several times until the appropriate permit was obtained. The prosecution argues that this was insufficient and indeed took a long time to remedy. I am satisfied that the prompt response of Mr. Vukovic to the letter in sending out a letter to the tenant, buttressed by his follow through with the architect and tenant to ensure compliance is sufficient to meet the due diligence defense standard on a balance of probabilities.

[45] Based on the foregoing and the evidence that I do accept, I find the defendant not guilty in this matter on both counts.

Released: June 28, 2016

Signed: “Justice of the Peace V. N. Fisher-Grant”

[^1]: The photographs were filed collectively as Ex. 6.

[^2]: The order was filed as Ex. 1.

[^3]: The Corporate Profile search was marked Ex. 3.

[^4]: Ex. 2.

[^5]: Ex. 4.

[^6]: Ex. 7.

[^7]: Ex. 8 is a certified copy of the Building Permit.

[^8]: Ex. 9.

[^9]: The lease agreement was filed as Ex. 10. Paragraph 7.04 refers to alterations on the premises.

[^10]: Para. 75 and 76