Ontario Superior Court of Justice, Divisional Court

Court File No. 898-1997

Date: 2000-04-04

A.G. Campbell, Soublière and Cunningham JJ.

Counsel:

John Mill, for applicant.

Dale Stallard, respondent, appearing on her own behalf.

The judgment of the court was delivered by

A.G. Campbell J.:—

The Issue

[1] Should a court defer to the democratically enacted by-laws of a non-profit housing co-operative? By what standard should a court characterize, as unreasonable, a lock by-law and a pet by-law under to the Co-operative Corporations Act, R.S.O. 1990, c. C.35, s. 171.8(2), which provides that:

2. ... Membership and occupancy rights may not be terminated on a ground in the by-laws that is unreasonable or arbitrary.

The Proceedings

[2] Ryegate (Tecumseh) Co-operative Homes Inc., after twelve or more internal steps and procedures to resolve differences with Dale Stallard, applied in court in Windsor under s. 171.13 of the Act to terminate her membership and occupancy rights and to issue a writ of possession for persistent refusal to comply with the co-op's lock by-law and pet by-law. Zalev J. dismissed the application on the sole basis that the lock by-law and pet by-law were unreasonable. Ryegate appeals to the Divisional Court under s. 171.16(1) of the Act.

Factual Overview

[3] Ms. Stallard moved into the co-op in December of 1996. She signed an occupancy agreement that gave her the right to occupy her unit subject to the by-laws of the co-op as they existed at the time and as they might change in the future. She was given a copy of the by-laws including the 1992 lock by-law.

[4] Before moving in she knew about the co-op policy, not yet a by-law, that prohibited cats. She told the co-op she would give her cat to her parents before she moved in.

[5] In January of 1997 Ms. Stallard changed her lock and persistently declined to comply with the lock by-law. It was her position that she did so in order to prevent co-op officials from entering her apartment without permission. There was a conflict of evidence on this point. Nothing turns on the conflict because there is no issue as to the reasonableness of her conduct or that of the co-op officials. The only issue is whether the lock by-law itself, quite apart from its application to this particular member, is in itself unreasonable.

[6] After the pet by-law was confirmed by the co-operative and its members in February of 1997, the co-op learned that Ms. Stallard was keeping a cat in her townhouse contrary to the by-law. It asked her to comply with the rules and she persistently refused.

[7] The process of eviction involved at least a dozen separate steps. After a series of notices to Ms. Stallard and meetings where the issue was discussed, and further notices and meetings, without resolution, the board of directors of the co-op eventually decided to terminate Ms. Stallard's tenancy on the grounds that she persistently refused to comply with the lock by-law and the pet by-law. Ms. Stallard appealed that decision to the general membership. On July 6, 1997, the co-op held a general membership meeting to consider Ms. Stallard's appeal. After hearing from her the members voted to evict her. The co-op applied to the court pursuant to s. 171.13 for an order declaring her membership and occupancy rights were terminated and for a writ of possession.

[8] Zalev J. dismissed the eviction application on the sole ground that the lock by-law and the pet by-law were unreasonable. He gave no effect to Ms. Stallard's arguments, which she repeated with great sincerity in this court, that the co-op officials were unreasonable in their attempted enforcement of the by-laws and unfair in the eviction process. Despite the sincerity of her arguments the evidence provides no basis to re-open those issues. The only legal issue in this appeal is whether the court should have struck down the lock and pet by-laws as unreasonable.

Non-Issues

[9] This case has nothing to do with the conduct of the co-op officials or the member they evicted, the reasonableness of the co-op's attempts to apply and enforce its by-laws, or the fairness of the procedures that led ultimately to the final eviction vote.

Mootness

[10] Ms. Stallard moved out of her apartment on April 30, 1998 and does not seek re-entry or reinstatement. To that extent the appeal is moot. But the by-laws, declared unreasonable, present live issues for the co-operative and its members. This invokes the discretion of the court to give judgment in a moot case.

The Co-operative

[11] The Appellant, Ryegate (Tecumseh) Co-operative Homes Inc., is a co-operative corporation and a non-profit housing co-operative as defined by the Act. Its object is to provide non-profit housing to its members. It owns several properties in Essex County including the building in question at 1537 Community Crescent in the Town of Tecumseh. Its Board of Directors passed a number of by-laws to regulate its business and affairs, including the impugned by-laws.

The Impugned By-Laws

[12] The two by-laws struck down by Zalev J. as unreasonable are the 1992 lock by-law and the 1997 pet by-law.

[13] The 1992 lock by-law provided that members could not change their locks without written permission and that members have to give to the co-op keys to new-locks:

Members must not change their locks without written permission from the co-op. They must give the co-op keys to new locks. If a member loses their key, they will be charged for the replacement of the key.

[14] The co-operative and its members adopted the lock by-law to ensure access to all units in emergencies including fire and flooding. The only two people with access to the keys were the office coordinator and the president of the co-operative.

[15] The 1997 pet by-law formalized an earlier pet policy and provided that fish and small birds were the only pets allowed in the co-operative and that no other pets could be kept:

The only pets that are allowed in the co-operative are fish and small domestic birds. No other pets may be kept by any member at the co-operative for any length of time.

The Reasons for Judgment

[16] The learned judge after hearing the evidence gave these clear and succinct reasons for judgment:

The applicant is a non-profit co-operative corporation governed by the Co-operative Corporations Act. The applicant applies for an order declaring that the respondent's membership and occupancy rights are terminated and for a writ of possession.

The basis of the application is an allegation of a violation of the pet bylaw number seven and violation of occupancy bylaw number two.

It is alleged and established that the respondent has a cat, neutered and declawed and described as an inside cat in the unit with herself and her children, aged 13 and 11. The other ground of the application is based on the respondent having changed the lock to the premises to her unit, contrary to a special bylaw which requires the locks to be such as can be opened by the master key held in the office by the applicant.

I find as a fact that the lock was changed without any permission. As I have said, I find that there is a cat being kept in the premises along with the applicant and her children.

Complaints were made to the applicant orally and in writing and eventually notice was given to the respondent in writing of a meeting of the Board of Directors to consider having her evicted from the premises by reason of her breach of the two by-laws which I have mentioned.

In due course, the Board of Directors held a meeting and voted in favour of evicting the respondent. She filed notice of appeal and, in turn, that appeal was heard by the general membership in accordance with the statute. At that meeting, the general membership voted to confirm the resolution of the Board of Directors terminating the respondent's membership and evicting her from the premises.

The statute provides:

"Membership and occupancy rights may be terminated only if the member ceases to occupy a member unit or on the grounds set out in the bylaws. Membership and occupancy rights may not be terminated on a ground in the bylaws that is unreasonable or arbitrary".

The premises in question consists of row house units. Evidence was given by the office manager, setting out the reasons why the pet bylaw was enacted. There are many children residing in these units. One of the reasons was the matter of health, because pets tend to scratch and bite, particularly children, and that there are people who are allergic to pets, The only permitted pets are fish and small domestic birds.

Two witnesses were called, on behalf of the applicant, who are occupants of units in the co-op. One is a committee chairman and one is now the President of the co-op. These witnesses themselves considered that the pet bylaw was unreasonable.

The reason given, apparently, for the lock and key bylaw was that it might be necessary to get into the unit in the case of fire and in the case of water leaks. There are many blocks of apartments in this city and I hear evidence about them from time to time and I am sure I could take judicial notice, as any reasonably intelligent and informed person in this community, would know that there are numerous apartment units in this city, both high rise blocks and row houses, which do not have such a requirement that only a lock can be used which would permit the landlord to gain entrance from time to time with a master key. It seems to me that that bylaw is completely unreasonable.

In my view, having regard to the pet that was described by the respondent, that in relation to her, that that bylaw is also unreasonable.

For those reasons therefore, the application must be dismissed.

Evidence: The Pet By-Law

[17] It was Ms. Stallard's position that her cat was not a nuisance, that other co-ops permit cats and that the cat was part of her family and had a right to stay in the townhouse.

[18] The members of the co-operative adopted the earlier pet policy and the later pet by-law to prevent damage and to protect members and their children from health and safety problems like allergies and scratches and bites. The co-operative members were particularly concerned that there were so many young children, about 80 of them from infants to teenagers, living in such close quarters.

[19] Betty Hlozan, the office coordinator, explained the reasons for the by-law in her affidavit:

Pets tend to cause destruction of property, use the playground as a litter box, cause flea problems, leave stains on carpets, cause the possibility of someone being bit, or causing allergic reactions, etc.

[20] In her testimony she said this:

Q. After you became aware of the issue of going — with respect to the cats, what is the problem with a cat?

A. Well, in many co-ops, there's been a lot of damage that has occurred by pets, or other housing developments, I suppose, but it is — it helps to control the cost. A co-op can't really afford to be repairing units constantly due to damages and it's a close living area for a lot of people and if pets were allowed, I'm afraid that there would be a lot of problems with complaints and children — there's sand boxes. So, parents wouldn't be able to allow their children to play in the sand boxes. Some people are good with their pets, and some people aren't, unfortunately.

Q. Is there any safety concern with respect to animals?

A. There's always safety concern with animals. Children getting scratched, bit, allergies.

[21] Two witnesses called by the co-op testified about the pet by-law, Kenneth Hearns, the chair of the maintenance committee and James Jerry Voegeli, the president of the board of directors. The learned trial judge concluded that they "considered that the pet by-law was unreasonable".

[22] Kenneth Hearns said this:

Q. Sir, are you aware of the pet by-law?

A. Yes.

Q. Did you vote in favour of that particular by-law?

A. No.

Q. No? Do you like that particular by-law?

A. No.

Q. Do you understand that by-law?

A. Yes, I do.

Q. Do you agree with it?

A. Not totally.

Q. Not totally? Okay. Did you have to — did you have an animal before moving in?

A. Yes. I had two cats myself.

Q. And as a result of moving to Ryegate, what happened with your . . .

A. My wife and I gave the cats away.

Q. And you understand though that — how many animals do you think would be in that co-op if they were allowed?

A. Quite a few. It would be overwhelmed, probably.

Q. And do you think there would be a problem with the children there?

A. Yes.

[23] Although the witness did not vote in favour of the by-law, and did not like it or totally agree with it, he gave away his own two cats before moving in, he thought that without the by-law the co-operative would be overwhelmed and there would be a problem with the children. This is quite different from saying the by-law was unreasonable. The learned trial judge, in thinking the witness considered the by-law unreasonable, misapprehended the evidence.

[24] James Jerry Voegeli, the president of the board of directors of the co-operative, said this:

Q. And yourself, sir, have you ever had animals?

A. No, not here. Not at the co-op. No.

Q. Prior to the co-op?

A. Yeah, we had a dog.

Q. And how long had you had that dog for?

A. Three years, I believe.

Q. And do you have any children?

A. Two.

Q. And what happened when you moved to the co-op?

A. Well, we had to give up the dog, because of the — the pet policy. So, we gave it up.

Q. And are you — do you understand the rationale of the pet policy at the co-op?

A. I do.

Q. Do you agree with it?

A. Not really.

Q. But do you understand, with respect to the safety of children? Does that make sense to you?

A. Mm-hm. Yes.

Q. Do you think the co-op would be better or worse off without the pet policy?

A. Worse off, for sure, if we had it — if we had the policy.

Q. I am sorry. If we had ...

A. Or, if we had pets. Excuse me.

Q. But you yourself do not happen to like that. Correct?

A. No.

[25] Although the witness did not like the pet by-law or really agree with it, he gave away his own dog before moving in, he understood the rationale of the pet policy, it made sense to him in respect of the safety of the children, and he thought that the co-op would be worse off if they had pets. This is quite different from saying the by-law was unreasonable. The learned trial judge, in thinking the witness considered the by-law unreasonable, misapprehended the evidence.

Conclusion: The Pet By-Law

[26] There was no evidence that the pet by-law was objectively unreasonable or that any member of the co-operative, other than Ms. Stallard, considered it unreasonable. Although the co-op witnesses did not particularly like the pet by-law, they accepted it reluctantly as a reasonable limit on the rights of individual co-operative members in furtherance of the greater good of the co-operative as a whole. The learned trial judge, in concluding that the co-operative's witnesses considered the pet by-law unreasonable, misapprehended the evidence.

Evidence: The Lock By-Law

[27] Although there was a conflict of evidence as to how the lock by-law was applied to Ms. Stallard, nothing turns on the conflict because there is no issue as to the reasonableness of her conduct or that of the co-op officials. The only issue is whether the lock by-law itself, quite apart from its application to this particular tenant, is in itself objectively unreasonable. There was no evidence on this point.

Judicial Notice: The Lock By-Law

[28] The learned judge took judicial notice that there were many blocks of apartments and row houses that did not have a requirement such as the co-op's lock by-law and concluded therefore that the co-op by-law was completely unreasonable.

[29] There are two problems with this approach.

[30] The first problem is that there are two different statutory regimes, the landlord and tenant regime and the non-profit housing co-operative regime. There was no judicial notice of the presence or absence of similar lock by-laws in the co-operative housing regime. That regime is the only regime relevant to this case. To the extent that the judicial notice depended on the judge's experience with the landlord and tenant regime, it was not relevant to this case.

[31] The second problem is that even under the landlord and tenant regime it is prohibited for a tenant to alter the locking system of the unit except by mutual consent. Landlord and Tenant Act, R.S.O. 1990, c. L.7, as amended. It is a statutory offence for a tenant to change the lock as did Ms. Stallard. Such conduct may entitle a landlord to terminate the tenancy. Swansea Village Co-op Inc. v. Balcerzak (1988), 1988 4844 (ON SC), 63 O.R. (2d) 741, 49 D.L.R. (4th) 141 (Div. Ct.). So even to the extent that the landlord and tenant regime might have been relevant, the statute itself imposes a standard equivalent to the standard imposed by the co-op.

Standard of Review

[32] There is a long line of judicial authority that courts should generally take a hands-off approach to the review in court of the decisions of non-profit housing co-operatives.

[33] As Hoilett J. said in Wilcox Creek Co-operative Homes Inc. v. Moor, [1996] O.J. No. 2250 (QL) (Gen. Div.) [summarized 63 A.C.W.S. (3d) 1401]:

It is within the context of what might well be described as a form of participatory democracy that the court must approach its task.

... the role of this court is essentially one of review and this court ought not cavalierly to substitute its views for that of a Board properly constituted and acting within the scope of its proper authority.

... if the co-operative form of housing is to succeed as a form of living arrangement governed by the principles of participatory democracy, then, absent compelling circumstances, co-operatives must be allowed to govern their affairs without unwarranted interference by the courts.

[34] See also Mimico Co-operative Homes v. Ward, [1995] O.J. No. 2216 (QL) (Ewaschuk J.) [summarized 56 A.C.W.S. (3d) 898], Coady Housing Co-operative, Inc. v. Fekete (1995), 1995 7057 (ON SC), 23 O.R. (3d) 674 at pp. 677 (Rutherford J.), Hugh Garner Housing Co-operative Inc. v. Scholar, [1997] O.J. No. 4531 (QL) (Ground J.) [summarized 75 A.C.W.S. (3d) 70], La Paz Co-operative Homes Inc. v. Jackson, [1996] O.J. No. 1181 (QL) (Somers J.) [summarized 62 A.C.W.S. (3d) 370].

[35] These cases deal with aspects of co-operative management other that the making of by-laws. But they reflect a general judicial recognition that the consensual and communitarian nature of the cooperative organization commands deference from the courts in any attempt to substitute the view of the court for the democratically governed view of the co-operative and its members.

[36] Nothing in the decision of this court in Tamil Co-operative Homes v. Arulappah (April 28 1999, Rosenberg and Dunnet JJ., Cumming J., dissenting [reported 1999 19939 (ON SC), 25 R.P.R. (3d) 85, 44 O.R. (3d) 120] scheduled to be heard in the Court of Appeal on April 12 [since heard, appeal deemed moot, reported at 2000 5726 (ON CA), 192 D.L.R. (4th) 177]) affects this case. In Tamil the majority made it clear that they were not reviewing a decision of the co-op board, because the board made no effective decision, but rather the factual question, whether there was a breach of the by-law. In this case it is undisputed that the by-laws were breached.

[37] The learned judge, in failing defer in any way to the democratically enacted by-laws of the co-operative and its members, thus erred in principle.

[38] This is a convenient place to note the classic "Wednesbury reasonableness" standard for the judicial review of any democratic body. Absent bad faith, dishonesty, reliance on a matter outside the proper scope of consideration, failure to consider some controlling issue, or some egregious breach of public policy, it is not for the court to substitute its own view of what is reasonable for the view of those who have democratically agreed to live together under a common set of mutual obligations. As the Master of the Rolls said in Associated Provincial Picture Houses v. Wednesbury Corporation, [1948] 1 K.B. 223 at p. 230:

It is true to say that, if a decision on a competent matter is so unreasonable that no reasonable authority could ever have come to it, then the courts can interfere. That, I think, is quite right; but to prove a case of that kind would require something overwhelming, and, in this case, the facts do not come anywhere near anything of that kind.

[39] Those observations apply equally to this case. There is no basis in the evidence to say that the lock by-law or the pet by-law are so unreasonable that they justify intervention by the court.

Conclusion

[40] Because of the misapprehension of the evidence about the pet by-law and the errors in relation to judicial notice and the standard of review, the judgment must be set aside. Because there is no basis in the evidence to say that the lock by-law or the pet by-law are so unreasonable that they justify court intervention, the appeal is allowed.

[41] Appeal allowed.