COURT FILE NO.: 553/01
DATE: 20030422
SUPERIOR COURT OF JUSTICE – ONTARIO
DIVISIONAL COURT
RE: DAVID B. ARCHER CO-OPERATIVE INC. v. DAVID D’OLIVEIRA
BEFORE: A. CAMPBELL, E.G. McNEELY, & Ellen MACDONALD JJ.
COUNSEL: Bruce D. Woodrow, for the Applicant/Co-operative (Appellant) Paul Neil Feldman, for the Respondent/Member (Respondent in Appeal)
ENDORSEMENT
By The Court
[1] The appellant appeals from the decision of Ground J. dated July 17, 2001 wherein he dismissed the application of the David B. Archer Co-operative Inc. (“Archer”) for an order declaring that the membership and occupancy rights of the Respondent, David D’Oliveira (“Mr. D’Oliveira”) were terminated and for a writ of possession in favour of Archer. The basis of Archer’s application before Ground J. was that it was entitled to terminate the membership and occupancy rights of Mr. D’Oliveira because Mr. D’Oliveira was “overhoused” in a 2-bedroom unit and had refused on three occasions to downsize to a 1-bedroom unit. Archer is a non-profit housing Co-operative located at 158-160 The Esplanade, Toronto.
[2] The by-laws of Archer establish a minimum household size for each size of unit. Guests are not considered part of a household. A household may be required to relocate to a smaller unit. Archer submits on this appeal that Ground J. erred when he found that Archer was not entitled to evict Mr. D’Oliveira (terminating his membership and occupancy rights) because Mr. D'Oliveira was overhoused in a 2-bedroom unit and refused to relocate to a 1-bedroom unit.
[3] Ground J. found that Archer contravened subsection 171.21(3)(a) of the Co-operative Corporations Act R.S.O. 1990 c. C35 (“CCA”). In paragraph 8 of his endorsement he stated:
More importantly, it is my view that the termination of Fernandes’ membership was not carried out in accordance with the provisions of The Co-operative Corporations Act 1992 (the “CCA”). Subsection 171.8(2) of the CCA provides in effect that membership and occupancy rights may be terminated only if the member ceases to occupy a member unit or on a ground set out in the by-laws. In addition, the subsection provides that the member must be given written notice that the Board of Directors will consider terminating the member’s membership and occupancy rights and that such notice must be given at least ten days before the meeting of the Board of Directors at which the matter will be considered. The subsection further sets out the information which must be contained in the notice including advising the member that he or she need not vacate the unit but that the co-op may obtain possession of the unit by obtaining a writ of possession following the termination of the member’s membership and occupancy rights, that the member may appear and make submissions at the Board’s meeting and that the member may appeal the Board’s decision to the members. There is no evidence before this court that Archer complied with these provisions of the CCA in terminating Fernandes’ membership.
[4] With deep respect to our colleague, we allow the appeal for the following reasons. Essential to the finding of Ground J., is his conclusion that the situation between Archer and Fernandes had arisen because of “Archer’s termination of Fernandes’ membership and occupancy rights and its refusal to approve membership and occupancy rights for any other applicant on the basis that Mr. D’Oliveira was not a member in good standing because he continued to occupy the unit after Fernandes’ membership had been terminated by Archer. We do not interpret the evidence as supporting the conclusion that Archer breached its by-laws by refusing to approve membership and occupancy rights by any other applicant on the basis that Mr. D’Oliveira was not a member in good standing. The evidence is that there was a refusal of one application. One of the two reasons for the refusal was incorrect in that it referred to Mr. D' Oliveira as not being a member in good standing at the time of the application. The other reason was valid. It was that the combined incomes of D'Oliveira and the proposed member exceeded the threshold income level stipulated by Central Mortgage and Housing Corporation.
[5] We agree with the submission of Archer that non-profit housing co-operatives such as Archer are democratic organizations governed by the CCA and the by-laws adopted by its Board of Directors and confirmed at general meetings of the membership. The record in this matter discloses that Archer was diligent in its efforts to comply with the by-laws. We also agree with the expression of the nature of a co-operative contained in the reasons of Molloy J. in Tamil Co-operative Homes Inc. v. Arulappah, [1996] O.J. No. 768 (Gen. Div.). Co-operatives operate on the principle of “one member, one vote”. Boards of Directors are elected by and from among the members of the Co-operative. The members can requisition general meetings of members and also meetings of the Board of Directors. The members can remove all or some of the Board of Directors, and replace them. The relationship between the members and the Co-operative is based on a concept of collective ownership. Members have a right to participate fully in the collective operation and management of the Co-operative. Indeed, they are expected to. Members individually have a right of occupancy and security of tenure, provided they comply with the by-laws.
[6] The by-laws provide that members must be ordinarily resident in the Co-operative. Paragraph 43 of the Occupancy by-law provides that there should be "no less than one and no more than two persons per bedroom" in the Co-op's units. Paragraph 48 of the by-law provides that "if the number of persons in the household has decreased below the minimum number of persons for that type of unit, the household must apply for relocation to a smaller unit unless the cause for the decrease is temporary. Mr. D’Oliveira and John Paul Fernandes (“Fernandes”) jointly applied to Archer on November 22, 1993. On May 11, 1994, Archer offered them occupancy at 160 The Esplanade, Unit 204, Toronto, as of June 1, 1994. They accepted and Mr. D’Oliveira moved in into the unit a few months later in late August or mid September, 1994.
[7] The Vice President and Corporate Director of Archer, Margaret White testified that the Board of Directors eventually became concerned about the occupancy of Mr. D’Oliveira’s unit because they had observed that Fernandes was not participating in the Co-operative and the Chair of the membership committee reported that Fernandes was not living in the unit. An unrelated person had applied for membership in the unit. Another member of Archer reported a conversation in the fall of 1994 in which Fernandes stated that he was not living in the Co-operative. In his reasons, Ground J. recorded that he was not satisfied that Fernandes was not ordinarily resident at the unit as of April 1996. Mr. D’Oliveira and Fernandes admitted that Fernandes was living in Montreal and going to College there during 1995, 1996, and part of 1997. Mr. Choo moved into the unit in June 1995 at a time when Fernandes was, according to Mr. D’Oliveira, still living in the unit. Mr. Choo contributed to the housing charges. On September 15, 1995, Mr. D’Oliveira applied for guests status for Mr. Choo until December 1995. Although Mr. D’Oliveira takes the position that Fernandes was at that time living in the unit most weekends, Fernandes testified that he did not know that his room was rented out to someone else.
[8] In early 1996, Fernandes was removed from the membership list of Archer on the basis that he was not ordinarily resident at Archer. Mr. D’Oliveira wrote to Archer inquiring about the membership status of Fernandes because he had noticed that Fernandes was not on the membership list at a general meeting. Archer advised Mr. D’Oliveira that Fernandes’ membership had been terminated. Archer gave its reasons for the termination and indicated to Mr. D’Oliveira that this matter could be appealed.
[9] Fernandes admitted to a conversation with Margaret White wherein he stated he was not living in the Co-operative. He moved out in January 1997. When he was advised that he was not living in the Co-operative, Margaret White explained that he could not continue to be a member of Archer. Fernandes did not appeal the termination of his membership.
[10] Mr. Choo applied for membership in 1996. His application was rejected for two reasons. First, Mr. D’Oliveira who was sponsoring Mr. Choo was not in good standing because he was overhoused. Second, the combined incomes of Mr. D’Oliveira and Mr. Choo exceeded the income threshold set by Canada Mortgage and Housing Corporation. We agree that the first reason was not a valid reason for rejecting the application. However, the second reason for the rejection was valid and did not contravene the by-laws of Archer. Mr. Choo moved out in May 1996.
[11] The evidence before Ground J. is that in February 1997, Mr. D’Oliveira was still maintaining with Archer that Fernandes was still living in the unit and that Mr. D’Oliveira resided alone in the unit for approximately 32 months from January 1997 until October 1999. Abraham Lau moved into the unit on October 1, 1999. Mr. D’Oliveira advised Archer that Mr. Lau had moved into the unit and indicated that Mr. Lau might apply for membership. Mr. Lau eventually applied for membership but subsequently withdrew his membership application in May 2000 and moved out a few months later. There was an issue at trial as to whether or not Mr. Lau withdrew his application because of a poor credit check. Ground J. did not permit evidence in reply on this point although Archer’s counsel requested that he be permitted to do so. Mr. Lau's application was not rejected by Archer.
[12] The evidence is that from May 2000 until April 2001, three persons resided in the unit at separate times, none of whom applied for membership. David Young resided at the unit from May to August 2000. Mr. D’Oliveira testified at trial that he had no intention of having Mr. Young apply for membership. Liezel May resided at the unit from September to December 2000. She moved out without applying for membership. Jose Corora moved into the unit in January 2001 and remained there until April 2001. He was a student and returned to St. Catharines to live with his family when he was not in school. He did not apply for membership.
[13] The Board of Directors of Archer invited Mr. D’Oliveira to come to a board meeting on September 1, 1999. This meeting was rescheduled for September 27, 1999. The purpose of the meeting was to discuss Mr. D’Oliveira’s overhousing situation and the need to downsize to a 1-bedroom unit. After Mr. D’Oliveira met with the Board of Directors, Archer informed him that he must downsize and he would be notified when a 1-bedroom unit was available. Archer offered him a 1-bedroom unit, number 302 on January 11, 2000 which he refused to accept. Archer confirmed in writing that Mr. D’Oliveira refused the 1-bedroom unit offered to him at that time and confirmed that Mr. D’Oliveira was entitled to be offered two more 1-bedroom units in accordance with the by-laws.
[14] Archer offered another unit number 308 on March 1, 2000. Mr. D’Oliveira refused to accept it. Archer confirmed his refusal in writing and that Mr. D’Oliveira was entitled to be offered one more 1-bedroom unit. Archer offered 419 effective November 15, 2000 and reminded him that this was the third offer of a 1-bedroom unit and his failure to accept it would mean that he was in breach of the by-laws. Mr. D’Oliveira did not accept unit 419.
[15] Archer then initiated its eviction process. Mr. D’Oliveira was invited to a board meeting on November 8, 2000. Mr. D’Oliveira requested that the meeting be rescheduled to January 3, 2001. On January 3, 2001, the board met with Mr. D’Oliveira and his counsel. The board deferred its decision to January 15, 2001 to allow Mr. D’Oliveira time to decide whether or not he would agree to relocate to a 1-bedroom unit if Archer gave him sixty days notice. Mr. D’Oliveira did not agree. On January 15, 2001, the Board of Directors voted to terminate his membership and occupancy rights as of April 16, 2001 because he was overhoused and had turned down three offers to move to a 1-bedroom unit. Mr. D’Oliveira appealed the eviction decision. A general meeting of the members, held on February 15, 2001 considered the appeal and voted to confirm the eviction decision.
[16] We consider that the totality of the evidence supports Archer's position in this appeal. It had solid legal grounds to terminate the membership of Fernandes. Mr. D’Oliveira was the only member living in a 2-bedroom unit. As such, he was required to comply with by-law 48. The fact that the Board's first reason for the rejection of the Choo application was incorrect, does not entitle Mr. D’Oliveira to a finding that Archer’s application should be dismissed. To conclude as such would mean that Mr. D’Oliveira could, on this basis, violate the occupancy by-law in perpetuity. The transcript of the proceeding before Ground J. demonstrates that Mr. D’Oliveira misled Archer about the status of Fernandes’ membership.[^1] His refusal on three occasions to relocate to a 1-bedroom unit when he appeared to be in contravention of the overhousing by-law begs questions about the bona fides of D'Oliveira. He demonstrated a thorough understanding about the nature, purpose and benefits of Co-operative housing.
The Law
[17] We conclude that the decision to terminate Mr. D’Oliveira’s membership was a justifiable decision made in accordance with the by-laws of Archer. The record indicates that Archer complied with its by-laws in its dealings with Mr. D’Oliveira. Archer is entitled to considerable judicial deference when a decision to terminate is considered. See Ryegate (Tecumseh) Co-operative Homes Inc. v. Stallard, 2000 30138 (ON SCDC), [2000] O.J. No. 5423 (Div. Ct.). A court should only interfere with a decision of a Co-operative when it is apparent that the decision was so unreasonable that no reasonable authority could have made it. See Associated Provincial Picture Houses v. Wednesbury Corporation, [1948] 1 K.B. 223. We find that it was not unreasonable for Archer's board to conclude that Fernandes was not ordinarily resident in the unit and that he should be removed from the membership list. It is germane to our considerations in this respect that Fernandes did not make any formal objection or appeal to the removal of his name from the membership list. The reality of the evidence is that Fernandes could not reasonably object because he was not living at the unit.
[18] Subsection 171.8 of the CCA is applicable to decisions made by a Co-operative to terminate membership and occupancy rights for cause. We find that Archer is correct when it submits that it was not in breach of the CCA or its own by-laws to remove Fernandes from the membership list. We depart from the reasoning of Ground J. in that we have concluded that there was sufficient evidence before Ground J. that Archer did not breach the CCA or its own by-laws when it rejected the application for membership from Mr. Choo.
Disposition
[19] We agree with Archer’s submission on this appeal that the trial judge was obligated to determine Archer’s claim that Mr. D’Oliveira was overhoused before considering whether there was any basis for an exercise of discretion in favour of Mr. D’Oliveira. We agree that, in the circumstances of this case, the dismissal of Archer’s application without such a finding arguably gives Mr. D’Oliveira carte blanche to violate paragraph 48 of the Occupancy By-law in perpetuity. We conclude that Mr. D’Oliveira has breached the by-law provisions respecting overhousing. We further conclude that there was no proper basis on which to refuse Archer’s application under subsection 171.21(3)(a). Accordingly, we would allow the appeal and set aside the judgment of Ground J. and in its place substitute the following:
A declaration that the membership and occupancy rights of Mr. D’Oliveira in the Co-operative are terminated;
A writ of possession shall issue in respect of the premises known at 160 The Esplanade, Unit 204, Toronto, Ontario, M5A 3T2 effective 60 days from the release of these reasons;
Mr. D’Oliveira shall pay to Archer any arrears outstanding as of the date of the release of these reasons and shall pay compensation at the applicable rate until there is vacant possession of the unit; and
Costs of this appeal are awarded to Archer on a substantial indemnity basis in accordance with paragraph 18 of the Occupancy By-law of Archer.
A. Campbell J.
E.G. McNeely J.
Ellen Macdonald J.
DATE:
COURT FILE NO.: 553/01
DATE: 200303----
SUPERIOR COURT OF JUSTICE–ONTARIO
DIVISIONAL COURT
RE: DAVID B. ARCHER CO-OPERATIVE INC. v. DAVID MR. D’OLIVEIRA
BEFORE: A. CAMPBELL, E.G. McNEELY, & Ellen MACDONALD JJ.
COUNSEL: Bruce D. Woodrow, for the Applicant/Co-operative (Appellant) Paul Neil Feldman, for the Respondent/Member (Respondent in Appeal)
ENDORSEMENT
[^1]: In his endorsement, Ground J. referred to D'Oliveira's imprecision on the matter of Fernanades residency. In our view, D'Oliveira's evidence on this key point was evasive and non-responsive.