COURT FILE NO.: 332/05

DATE: 20060519

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

MÉTIVIER R.S.J., GRAVELY and EPSTEIN JJ.

in the matter of an appeal pursuant to s. 171.16(1) of the Co-operative Corporations Act, R.S.O. 1990, c. C.35.

B E T W E E N:

JOYCE EDWARD AND REX EDWARD

Appellants

• and -

NIAGARA NEIGHBOURHOOD HOUSING CO-OPERATIVE INC.

Respondent

Joseph Kary for the Appellants

Bruce Woodrow for the Respondent

HEARD at Toronto: March 21, 2006

EPSTEIN J.:

1In this proceeding the Niagara Neighbourhood Housing Co-operative Inc. is seeking relief against Mr. Rex Edward and his wife, Joyce Edward, arising from their arrears in paying monthly housing charges. In a judgment dated August 18, 2005, Cameron J. terminated the Edwards’ occupancy rights in the Co-operative and ordered that a writ of possession be issued. The application judge also ordered Mrs. Edward to pay the full arrears of $10,009.10 and Mr. Edward to pay arrears from the date of his bankruptcy on December 22, 2004 in the amount of $5,434.10. The judgment also contained a term that Mr. Edward owed the Co-operative arrears of $4,575.00 to the date of bankruptcy but that the collection of that amount is subject to a stay pursuant to s. 69.3 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the “BIA”).

2Mr. Edward’s appeal to this court from the judgment raises two issues. The main issue is whether the judgment breaches the provisions of the BIA given it includes a term that identifies the amount of indebtedness for pre-bankruptcy arrears. Secondly, Mr. Edward submits that he was denied procedural fairness at the hearing before Cameron J., due to the fact that the application judge refused the request for an adjournment and there is no transcript of the proceedings in which the request for an adjournment was refused, there are only brief reasons for the refusal to adjourn, and the Edwards were self-represented at the time.

Factual Background

3The Edwards are members of the Co-operative, a non-profit housing co-operative. The Co-operative is a democratic body, governed by a Board of Directors elected by and from its members. Decisions to evict members are governed by the by-laws of the Co-operative and the provisions of the Co-operative Corporations Act, R.S.O. 1990, c. C.35 (the “CCA”).

4Mr. Edward declared bankruptcy on December 21, 2004. As of that date he owed the Co-operative $4,575.00. He did not advise the Co-operative of the bankruptcy nor did he list the Co-operative as a creditor in his sworn list of creditors.

5On March 9, 2005 the Board of Directors decided to evict the Edward family due to their repeated failure to pay their monthly housing charges. The eviction decision was effective March 31, 2005. The Edwards appealed the decision to a general meeting of the members. On April 14, 2005 the decision was upheld.

6When the Edwards refused to vacate their unit, the Co-operative, on June 1, 2005, commenced an application under s 171.13 of the CCA for a writ of possession and payment of arrears of housing charges. On June 10, 2005, in the presence of Mr. Kary, representing the Edwards, the Deputy Registrar adjourned the matter to be heard by a judge on July 20, 2005.

7On July 6, 2005, the Co-operative first learned of Mr. Edward’s bankruptcy when his trustee served the Co-operative with a notice of a Stay of Proceedings under s. 69.3(1) of the BIA. After receiving a letter from the Co-operative on July 9, the trustee executed a consent to have the stay lifted.

8On July 20, 2005, the Co-operative’s application for relief under s. 171.13 of the CCA came before Perell J. Mr. Kary appeared on behalf of the Edwards, but indicated he was not retained beyond that date. Perell J. adjourned the matter to August 18, 2005. In addition to the adjournment, Perell J. made an order lifting the stay solely for the purpose of scheduling the hearing and to allow the Co-operative to make a motion in bankruptcy court to lift the stay.

9On August 11, 2005, Deputy Registrar Nettie dismissed the Co-operative’s motion to have the stay lifted on the ground that it was unnecessary, given the stay did not apply to post-bankruptcy arrears.

10On August 15, 2005 Mr. Kary advised the Co-operative’s lawyer that he was again retained and asked for an adjournment to dates in the latter part of September. The Co-operative responded saying that it would not agree to an adjournment unless the issue of mounting arrears could be addressed. There was no further response from Mr. Kary.

11At the hearing before Cameron J., Mr. Edward requested an adjournment. He presented to the court a letter from Mr. Kary, stating that Mr. Kary had just obtained legal aid authorization but was unavailable on the date set by Perell J. In that letter, Mr. Kary also raised issues about the stay and its effect on the Co-operative’s ability to proceed with the application.

12While there is no transcript of what transpired during the hearing before Cameron J., there is uncontradicted affidavit evidence¹ of Ms. Rejminiak, an individual in attendance on behalf of the Co-operative, as to the following:

1. Mr. Woodrow and Mr. Edward discussed whether the Edwards could pay their full housing charge for September as a term of an adjournment. Mr. Edwards was unable to make that commitment;
2. There was no dispute as to the amounts the Co-operative was claiming; and
3. The Edwards were not taking the position that the Co-operative failed to comply with its by-laws and the CCA in making its eviction decision.

13Cameron J. refused the adjournment request and granted judgment in favour of the Co-operative. His reasons, in full, read as follows:

The claims for pre-bankruptcy liabilities are subject to the stay. There is no way the Co-op can be forced to continue to grant credit. There is no chance of Mr. Edward paying $1215.00 for September so that an adjournment can be granted to enable a lawyer to appear. While I have every sympathy for Mr. Edward, this matter must come to a stop so that the members of the Co-op will not be liable for even more money, arrears now totaling over $10,000.00. Order to go in form signed by me.

14On September 26, 2005, the Co-operative obtained an order requiring Mr. Edward to pay his housing charges in full on the first of the month, commencing October 1, 2005, failing which the Registrar was directed to issue an order authorizing the eviction. There is no challenge to Mr. Kary’s submission that Mr. Edwards has complied with the terms of this order.

Issues

15This appeal raises two issues.

1. Was the judgment obtained in breach of the BIA?
2. Was Mr. Edward denied procedural fairness?

The Standard of Review

16The Supreme Court of Canada has addressed the standards of review of an appeal from a judge’s decision in Housen v. Nikolaisen (2002), 2002 SCC 33, 211 D.L.R. (4th) 577 (S.C.C.). Since the issue concerning whether the judgment violates the BIA, is a matter of law, the standard of review is correctness.

17In Gismondi v. Ontario (Human Rights Commission), [2003] O.J. No. 419, this Court determined that where a tribunal's decision is attacked on the basis of a denial of natural justice, it is not necessary for the Court to engage in an assessment of the standard of review. The question is whether the rules of procedural fairness have been adhered to. In London (City) v. Ayerswood Development Corp., [2002] O.J. No. 4859, the Court of Appeal stated, at para. 10:

When considering an allegation of a denial of natural justice, a court need not engage in an assessment of the appropriate standard of review. Rather, the court is required to evaluate whether the rules of procedural fairness or the duty of fairness have been adhered to. The court does this by assessing the specific circumstances giving rise to the allegation and by determining what procedures and safeguards were required in those circumstances in order to comply with the duty to act fairly. See Moreau-Bérubé, (2002), 2002 SCC 11, 209 D.L.R. (4th) 1 (S.C.C.), at paras. 74-75.

Issue 1

18The thrust of the submissions advanced on behalf of Mr. Edward is that the proceedings the Co-operative commenced included a claim provable in bankruptcy, namely the amount of pre-bankruptcy occupancy payment arrears. Relying on the decision of this court in Forestwood Cooperative v. Pritz (2002), 31 C.B.R. (4th) 243, Mr. Kary submits that the term that identified the amount of pre-bankruptcy arrears, notwithstanding that the term specifically provided that the collection of this amount was stayed, was in violation of s. 69.3 of the BIA. The effect of this violation was to render the entire judgment, void. On this basis it should be set aside.

19Mr. Woodrow, counsel for the Co-operative, argues that Forestwood has no application to the facts present here and that the impugned term of the judgment is nothing more than a mathematical calculation representing the difference between the total amount owing for arrears and the amount that the Co-operative can claim for post-bankruptcy arrears. As such, in all the circumstances it should not act to nullify the entire proceeding.

Analysis

20Gonthier J. explained the “two distinct goals” of our bankruptcy system in Husky Oil Operations Ltd. v. Canada (Minister of National Revenue), [1995] 3 S.C.R. 453 at para. 7: (1) to ensure the equitable distribution of a bankrupt debtor’s assets among the estate’s creditors inter se; and (2) to rehabilitate insolvent individuals financially.

21In pursuit of these objectives, the automatic stay under s. 69.3 of the BIA is intended to prevent proceedings by one creditor that might give it an advantage over other creditors. Section 69.3(1) provides that on the bankruptcy of any debtor, no creditor shall have any remedy against the debtor or his property or shall commence or continue any action for the recovery of a claim provable in bankruptcy, until the trustee has been discharged, unless leave is granted by the court.

22Since, in this proceeding, the Co-operative claimed arrears against Mr. Edward that accumulated both pre-bankruptcy and post-bankruptcy, part of the claim was for an amount provable in bankruptcy. What are the consequences of this, having regard to the fact that part of the claim was specifically stayed by the terms of the judgment?

23In Forestwood, supra, the respondent co-operative had applied to the court for arrears and the remedy of possession as a result of financial obligations to the co-operative that had accumulated prior to the date of the appellants’ bankruptcy. The co-operative then obtained judgment for payment of the arrears and for a writ of possession. Chapnik J. dismissed the appellants’ motion to set aside the judgment. The Divisional Court allowed the appeal from the decision of Chapnik J. on the basis that she had erred in failing to find that the co-operative’s claim was stayed by the operation of s. 69.3(1) of the BIA.

24In Forestwood, the co-operative’s position was that it could separate the claim for possession from the claim for payment of arrears. By declaring an intention not to pursue the arrears it could proceed with its claim for possession, a claim, it argued, was not provable in bankruptcy. This Court rejected this argument as being artificial. Both remedies arose out of a pre-bankruptcy debt, a claim provable in bankruptcy.

25The case at bar is quite different. Here, the Co-operative started the application initially seeking to recover the entire amount of the arrears, some of which were, unbeknownst to the Co-operative, subject to the stay imposed by s. 69.3. The Co-operative then learned of the problem associated with part of its claim for arrears in rent. Its response was to continue the proceeding and seek relief only in relation to the post-bankruptcy arrears. For completeness, the judgment identified the amount of pre-bankruptcy arrears that were the subject of a stay. However, Cameron J. explicitly declined to order payment of the pre-bankruptcy arrears. The judgment in Forestwood had the effect of giving the co-operative a right to which it was not entitled by reason of the operation of the BIA. The judgment of Cameron J. has no such effect.

26The effect of a stay under s. 69.3 should be limited to the words of the provision; the stay operates as against the recovery of a claim provable in bankruptcy. There is nothing in the judgment that violates the BIA.

27There are other factors that would merit consideration, were the judgment technically in violation of the BIA. First, the Co-operative had no notice of Mr. Edward’s bankruptcy until well after it commenced these proceedings. Secondly, the trustee consented to the lifting of the stay in these circumstances. Thirdly, the Co-operative relied upon the Registrar’s views that it would not need to lift the stay in order to pursue the claim with respect to post-bankruptcy arrears. Finally, the Co-operative’s decision to respond to the fact that the initial application was, in part, based on pre-bankruptcy arrears by restricting its claim for relief only in respect of the post-bankruptcy arrears was in keeping with the procedures under the CCA, a regime specifically designed to be summary in nature.

28Against this background, even if an aspect of Cameron J.’s judgment did technically violate the BIA, I would exercise my discretion to vary the judgment so as to remove the portion regarding pre-bankruptcy arrears. Under s. 134(1)(c) of the Courts of Justice Act, R.S.O. 1990, c. C.43, a court to which an appeal is taken may make any order or decision that is considered just.

29In all of these circumstances, I do not accept Mr. Kary’s submissions that the judgment ought to be set aside by reason of the inclusion of the identification of the amount of pre-bankruptcy arrears.

Issue 2

30Mr. Edward submits that he was denied procedural fairness when his adjournment request was refused by Cameron J. In support of his request that the appeal be allowed and the matter sent back for a new hearing, Mr. Edward relies on the following:

1. Mr. Edward was self-represented at the hearing. His lawyer had just obtained a legal aid certificate but was unavailable on the date set.
2. The reasons of Cameron J. are brief. Cameron J. did not mention any evidence that he relied upon in concluding that Mr. Edward had “no chance” of paying the charges for the month of September.
3. There is no transcript of the proceedings. It is impossible to evaluate the extent to which Mr. Edward’s ability to present his case was compromised by the refusal of the adjournment.

31Counsel for the Co-operative submits that a transcript of the hearing was not required. In the face of the evidence before us as to what transpired before the application judge, together with his reasons, brief though they may be, allow this Court to examine the basis upon which Cameron J.’s decision was made to dismiss the request for the adjournment. Cameron J. properly exercised his discretion in dismissing the request for the adjournment.

Analysis

32This aspect of the appeal gives rise to two considerations. First, is this court in a position to review the decision to refuse the adjournment request? If so, did the application judge exercise his discretion to deny the request, on proper principles?

33It is well established that the granting or refusal of an adjournment is discretionary, and that a trial judge is entitled to deference in making such a decision. As stated by the Court of Appeal in Khimji v. Dhanani (2004), 69 O.R. (3d) 790 at para. 14 (C.A.):

A trial judge enjoys wide latitude in deciding whether to grant or refuse the adjournment of a scheduled civil trial. The decision is discretionary and the scope for appellate intervention is correspondingly limited. In exercising this discretion, however, the trial judge should balance the interests of the plaintiff, the interests of the defendant and the interests of the administration of justice in the orderly processing of civil trials on their merits. In any particular case, several considerations may bear on these interests. A trial judge who fails to take account of relevant considerations may exercise his or her discretion unreasonably and if, as a result, the decision is contrary to the interests of justice, an appellate court is justified in intervening.

34A trial judge has the discretion to adjourn a matter. That discretion must be exercised judicially, balancing the interests of the parties, the objective being to provide a fair hearing, as expeditiously as possible.

35Although a discretionary decision of this nature lies at the heart of a judge’s expertise, deference does not mean immunity from review. Reviewing courts have been prepared to examine the principles upon which adjournment requests have been refused. Such an examination may include both the record of proceedings in the court below and the reasons for refusing the adjournment. An example is found in the analysis of the Court of Appeal in McLeod v. Castlepoint Development Corp.(1997), 31 O.R. (3d) 737 (C.A.):

In order to succeed on this ground, the appellants must show that in refusing the adjournment and ordering the application to proceed, MacKinnon J. failed to exercise his discretion judicially. As his decision reveals, MacKinnon J. weighed the competing interests of the respective parties and gave cogent and compelling reasons for ordering the matter to proceed. Nothing in the record causes me to conclude that the appellants' ability to fully and adequately defend the application was prejudiced by MacKinnon J.'s proposed method of proceeding. It follows that, in my view, the appellants have failed in their bid to show that MacKinnon J. erred in the exercise of his discretion. Accordingly, this ground of appeal must fail. [emphasis added]

36There was no requirement that the proceedings before Cameron J. be recorded. However, where possible, it is the practice of the court to have a reporter present and the proceedings transcribed where a self-represented litigant is involved. Unfortunately, for reasons unknown, this practice was not followed in this instance. There is therefore no transcript to assist in understanding what took place at the hearing.

37This takes me to the reasons. The Supreme Court has stated that the provision of reasons is a factor to take into consideration when determining whether or not the requirements of procedural fairness have been met. As stated in Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817 at para. 43:

…it is now appropriate to recognize that, in certain circumstances, the duty of procedural fairness will require the provision of a written explanation for a decision. The strong arguments demonstrating the advantages of written reasons suggest that, in cases such as this where the decision has important significance for the individual, when there is a statutory right of appeal, or in other circumstances, some form of reasons should be required.

38In this case, the absence of both a transcript of the proceedings and detailed reasons explaining the basis of the decision to refuse the adjournment request, is problematic. This is particularly so given the Edwards were self-represented.

39However, I do have the unchallenged affidavit of Ms. Rejminiak, whose evidence establishes that Cameron J. engaged in a discussion with the Edwards and Mr. Woodrow for about an hour concerning the key issues relevant to the question of whether the matter should proceed that day or be adjourned, including the context of the request, the history of the proceedings and balancing the interests of the parties.

40Against this background, it does appear that Cameron J. declined the request for an adjournment on proper principles. The matter had previously been adjourned. It was also reasonable for the application judge to take into consideration the prejudice caused to the Co-operative by further delay. Moreover, the uncontradicted affidavit evidence states that the Edwards did not disagree with the amounts claimed, nor did they take the position that the Co-operative had failed to comply with the law in reaching its eviction decision.

41I have considered the fact that Mr. Edward was self-represented, and that he sought the adjournment in order to appear with the assistance of counsel. I do note, however, the nature and extent of Mr. Kary’s participation throughout the history of the matter. It appears that Cameron J. engaged in discussions with Mr. Edward in an attempt to balance his interests as a self-represented litigant against those of the Co-operative. Cameron J. determined that there was “no chance” that Mr. Edward could commit to making the payment for the month of September in order to alleviate the prejudice to the Co-operative.

42Although his reasons are brief, Cameron J. did articulate his concern with the mounting arrears and was clearly satisfied that a fair arrangement could not be arrived at. In the face of his taking into consideration legitimate factors, the exercise of his discretion is entitled to deference.

43The reasons, together with the affidavit evidence, allow for adequate appellate review of the basis upon which the application judge refused the adjournment request. In my view, Cameron J. did not err in exercising his discretion to refuse the adjournment.

Conclusion

44For these reasons, the appeal is dismissed. The enforcement of the writ shall not take place before May 30, 2006. If the parties are not able to resolve the issue of costs, they may make written submissions, within 20 days of the release of these reasons.

MÉTIVIER R.S.J.

GRAVELY J.

EPSTEIN J.

RELEASED: May 19, 2006

COURT FILE NO.: 332/05

DATE: 20060519

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

MÉTIVIER R.S.J., GRAVELY AND EPSTEIN JJ.

IN THE MATTER OF an appeal pursuant to s. 171.16(1) of the Co-operative Corporations Act, R.S.O. 1990, c. C.35.

Footnotes

1. 1No issue was taken about the court’s receiving this evidence