CITATION: Alexandra Park Co-operative v. Hamilton, 2010 ONSC 1277
COURT FILE NO.: 375/09
DATE: 2010/03/04
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
DAMBROT, SWINTON, SACHS JJ.
B E T W E E N:
ALEXANDRA PARK CO-OPERATIVE
Applicant/Respondent in the Appeal
- and -
ANTON HAMILTON AND FILICIA HAMILTON
Respondents/Appellants in the Appeal
Bruce D. Woodrow, for the Applicant/Respondent in the Appeal
Joseph Kary, for the Respondents/Appellants in the Appeal
HEARD at Toronto: February 9, 2010
REASONS FOR DECISION
H. Sachs J.:
[1] This is an appeal from the decision of Code J. dated July 3, 2009, terminating the membership and occupancy rights of the appellants, Anton and Filicia Hamilton, and issuing a writ of possession in favour of the Alexandra Park Co-operative.
FACTUAL BACKGROUND
The Parties
[2] The co-operative is a non-profit housing co-operative in Toronto consisting of 104 units. As such, it provides housing to members on a non-profit basis and receives financial assistance from the Canadian Mortgage and Housing Corporation, including subsidies to cover part of the housing charges on some of the units.
[3] The Hamiltons reside in one of the subsidized units with their seven children (at the time of the hearing before the application judge they had six children). All of their children are between the ages of one and 12. The father is unemployed and the mother is a university student. The family relies on her student loans to pay their housing charges and other bills. The regular housing charge for their four-bedroom townhouse is $1298.00 per month. They receive a subsidy of $1043.00 per month, leaving them with the obligation to pay $255.00 per month.
[4] The mother has been a member of the co-operative since 1998 and the father since 1999. It is the only home that the children have ever known. The children are the fourth generation of their family to live in the co-operative. Their schools, their extended family and their support system are in the community.
The Events Leading up to the Eviction Decision
[5] The Hamiltons have a history of late housing charge payments, as summarized by the application judge at para. 18 of his reasons:
In summary, and covering only the last 6 years, the co-op records reveal the following: in 2003 there were late payments and small arrears but the arrears were paid off by the end of the year; in 2004 there were 3 NSF cheques, a lot of late payments and arrears but, again, by the end of the year the arrears had been paid off and there was a small surplus in the Respondents’ ledger; in 2005, things deteriorated as the Respondents were continually in arrears throughout the year and 5 late payment charges were imposed; in 2006, the Respondents lost their subsidy and they fell more deeply into arrears throughout the year; in 2007, their subsidy was restored but they remained in arrears until April 24 when they made a large single payment of $2300 which paid off the arrears and put their ledger into a surplus position where it remained until the end of the year; in 2008, the Respondents fell back into arrears as they made payments on only 5 months, often late, while making no payments at all on 5 other months.
The Board’s Decision to Evict
[6] On October 28, 2008, the co-operative’s board of directors decided to evict the Hamiltons because of the arrears that existed at the time (three months worth of arrears) and because of their repeated failure to pay their housing charges in full and on time. The Hamiltons appeared at the board meeting and made submissions. They advised the board that Ms. Hamilton had had a difficult pregnancy in 2008. She was hospitalized for an extended period of time due to complications that arose from the birth of her child. As a result, she missed the student loan application deadline and received her student loan money late. This left her without funds to pay the housing charges as they became due.
[7] After hearing from the Hamiltons, the board decided to evict the family, but agreed to suspend their decision on certain conditions. The first condition was that the Hamiltons pay their arrears, which they did. The second was that in the future they pay their housing charges in full and on time “on the first day of the month.” After the board meeting, the co-operative sent the Hamiltons a letter stating: “So that we are very clear. The first time you are late paying your housing charge the co-op will immediately advise our lawyers to file for a judgment from the court for a writ of possession of your unit.”
[8] The co-operative’s records show that the December 2008 payment was received on December 11 and that in January the rent cheque was dropped off on January 5, returned by the bank for insufficient funds and replaced on January 16. According to the Hamiltons, the January payment was made late because of a misunderstanding about the co-operative’s office hours over the New Year holiday and because of an error by the bank. Ms. Hamilton found out about the error on January 8 and took immediate steps to replace the cheque with a money order that she gave the co-operative on the 8th, before they were aware that her cheque had been returned for insufficient funds.
[9] On January 29, 2009 the co-operative staff issued a notice to the Hamiltons to vacate their unit. When they did not do so, these proceedings were commenced. At the time the proceedings were commenced the Hamiltons owed the co-operative $10.00 in late payment fees. When the matter was heard the Hamiltons were not in arrears.
The Application Judge’s Decision
[10] The application judge reviewed the history of the matter and concluded that there was no basis to challenge the co-operative’s actions on grounds of procedural fairness.
[11] He then found that there was a reasonable basis for the co-operative’s decision to evict the Hamiltons given their history of late payments in clear breach of the co-operative’s bylaw. With respect to the late January payment, he found that the Hamiltons’ explanations for what happened “at best, suggest only that the breaches of the by-laws were not willful. They do not negate the fact of the breaches.” He upheld the decision to evict not only on the basis of reasonableness, but also on the basis that it was correct.
[12] The last issue that the application judge addressed was the one that he described as “the only close issue in the case”: the question of whether or not to exercise his discretion under s. 171.21 of the Co-operative Corporations Act, R.S.O. 1990, c. C.35. That section provides that a judge may, despite any other provision of the Act or the co-operative’s by-laws, refuse to grant an application for a writ of possession “if he or she is satisfied, having regard to all the circumstances, that it would be unfair to grant it.”
[13] The application judge then reviewed all of the circumstances and decided that he was not satisfied that his discretion under s. 171.21 ought to be exercised.
THE ISSUES ON THE APPEAL
[14] The appellants’ factum raises three issues on the appeal:
(a) Did the application judge err by adopting an overly restrictive approach to the standard of review?
(b) Did the application judge err by adopting an overly restrictive approach towards the exercise of his discretion?
(c) Did the application judge err in his calculation of the per diem compensation owing?
[15] In oral argument counsel for the appellants conceded that given the application judge’s finding that he would have upheld the decision to evict not only on the standard of reasonableness, but also on the standard of correctness, he was not pursuing the first issue. The third issue was also not pursued in oral argument. This leaves us with the real issue in the case – the exercise of the application judge’s discretion.
THE STANDARD OF REVIEW
[16] The Supreme Court of Canada discussed the review of a discretionary decision in R.v.Regan, 2002 SCC 12, [2002] 1 S.C.R. 297. Several principles emerge from that case. First, a discretionary decision should not be lightly interfered with by an appellate court. Second, “where a trial judge exercises his or her discretion, that decision cannot be replaced simply because the appellate court has a different assessment of the facts.” Third, “ an appellate court will be justified in intervening in a trial judge’s exercise of his discretion only if the trial judge misdirects himself or if his decision is so clearly wrong as to amount to an injustice” (para. 117, QL).
ANALYSIS
[17] The appellants submit that the application judge misdirected himself as to the law that applies to the exercise of his discretion. Specifically, while s. 171.21 directs a judge to look at “all the circumstances”, the application judge in this case saw the relevant question as being “whether there has been some change in circumstances, since the board made its decisions in October and January, that can be characterized as ‘exceptional’ and that would now make it ‘unfair’ to evict” (para. 44 of the application judge’s reasons, emphasis added). This error led him to balance the competing interests in an overly restrictive way, resulting in a decision that he might not otherwise have made had he approached those interests through the correct legal lens. In making this submission, the appellants emphasize what is clear from the application judge’s thorough and well-written reasons – this was a decision that the application judge struggled with, one that he identified as a “close” issue.
[18] The application judge begins his analysis on the discretion issue by noting that a judge should only exercise his or her discretion under s. 171.21 in “exceptional circumstances.” He finds that it will be rare that a board’s decision to evict will be reasonable and procedurally fair, yet held to be unfair within the meaning of s. 171.21. However, instead of looking at “all the circumstances” to determine unfairness, the application judge applies a test requiring a “change in circumstances.”
[19] The application judge bases his analysis upon the decision of Ground J. in Hugh Garner Housing Cooperative Inc. v. Scholar, [1997] O.J. No. 4531 (Gen. Div.). In that case, Ground J. found that “the circumstances referred to in s. 171.21 must be the circumstances at the date the application is heard” (para 5). Having articulated this test, the next time that the application judge deals with the issue as to whether he should exercise his discretion he states “as set out above” (referring back to Hugh Garner and the other cases that follow that decision), “the relevant question is whether there has been some change in circumstances since the board made its decisions.”
[20] In framing the “relevant question” as “whether there has been some change in circumstances since the board’s decision,” the application judge appears to have read the cases he relies on in an overly restrictive way. Those cases do not stand for the proposition that there needs to be a change in circumstances between the time that the co-operative’s board makes its decision and the court hears the application before an application judge can exercise his or her discretion to refuse to grant the application. Rather, the cases make it clear that in considering whether to exercise his or her discretion under s. 171.21, an application judge is entitled to consider not only the circumstances that existed at the time of the board’s decision, but also any changes in those circumstances that have arisen since the board’s decision. This is most clearly stated by Cullity J. in William Punnet Housing Co-operative Inc. v. Clarke, [1998] O.J. No. 6683 (Gen. Div.) at para 4:
As far as the residual discretion of the court is concerned, I am in respectful agreement with the view of Ground J. in Hugh Garner Housing Co-operative Inc. v. Dorothy Scholar, [1997] O.J. No. 4531 (G.D., Rel. November 5, 1997) that the circumstances to be considered under sub-section 172.21(1)(a) are not confined to those known to, or considered by, the Board when making its decision (emphasis added).
[21] The fact that the application judge saw his task as being guided by the need to find a “change in circumstances” since the board’s decision that would now make it unfair to evict is reinforced by two more statements in his reasons. In para. 48 of those reasons he states that “the family’s limited income and its long term tenure in the unit are the factors that have caused me the greatest difficulty.” He then proceeds to give his analysis regarding these factors and ends that analysis with the statement “[t]he family’s lack of income and continuing dependence on OSAP loans, while sympathetic from one perspective, means that there is no real change in circumstances such that the co-op can anticipate timely and full payment in the future” (emphasis added).
[22] In the next paragraph of his reasons, he deals with what he describes as the “last factor” in his assessment “the Respondents’ alleged commitment to the co-op over many years.” Again, he concludes his analysis on this factor by stating, “[t]his record does not support the assertion of real commitment to the co-op nor, more importantly, does it suggest that there has been a change in circumstances such that it would now be unfair to evict” (emphasis added). The application judge then concludes that he is not satisfied that “the s. 171.21 discretion ought to be exercised.”
[23] In my view, the reasons of the application judge raise a concern that the application judge introduced a new test that had to be met before he could exercise his discretion under s. 171.21, one that is not supported by the wording of the statute or by the case law. In doing so he committed an error in principle that affected his weighing of the relevant factors he had to consider.
[24] It is clear that in exercising his or her discretion under s. 171.21 a judge must balance not only the interests of the resident, but also the interest of the co-operative. Co-operative boards are democratically elected bodies whose decisions must be given considerable deference. Residents who violate a co-operative’s by-laws can undermine the effective operation of the community the co-operative represents, which is unfair to the other residents. That is why the case law has made it clear that to establish “unfairness” under s. 171.21(1) (a) it is not enough to show that the board’s decision to evict will create “hardship” for the persons affected by that decision. The interests of the co-operative and the “unfairness” to them that could be created by not respecting their decision must also be weighed by the Court (Windward Co-operative Homes Inc. v. Shuster (2007), 2007 8010 (ON SCDC), 222 O.A.C. 311 (Div. Ct.)).
[25] There is one factor that makes this case exceptional – the fact that the Hamiltons had six (and now have seven) young children who have never lived anywhere else and whose schools and support system are in the community. The application judge did allude to this factor, but, in my view, his unreasonable dismissal of it underlines the fact that he wrongly saw his task as focusing on whether there had been a change in circumstances since the board’s decision. If the Hamiltons are evicted from their home the effect on their children could be devastating. Adequate alternative housing for a family of eight or nine at a rate of $255.00 per month will be very difficult, if not impossible, to find. If it cannot be found, the family could be left living in a shelter or face being split up.
[26] This is not to say that because the Hamiltons have so many children, the co-operative is without a remedy if they breach the co-operative’s by-laws, or that the co-operative cannot evict them if they do not pay their housing charges. However, in balancing the unfairness to the co-operative in the situation before us, where there are no arrears owing, as against the unfairness to the Hamiltons, particularly their children, if they are evicted, the balance weighs in favour of giving the Hamiltons one last chance to keep their home.
CONCLUSION
[27] For these reasons, I would allow the appeal, set aside the application judge’s decision, restore the Hamiltons’ membership in the co-operative, issue a writ of possession that is to stay in effect for a period of 12 months from the date of the release of these reasons, but is not to be enforced unless the Hamiltons fail to pay any of their housing charges on or before the first day of the month. For the sake of clarity, it will be up to the Hamiltons to ensure that their rent is received by the co-operative by the first of the month. If there is a holiday or the office is closed the rent is to be put in the drop box at the co-operative office. The by-law respecting the right to have one NSF cheque per year will not apply to the Hamiltons. Any payments must be in the form of valid tender. As indicated, this order is to remain in effect for 12 months from the date of the release of these reasons. Non-compliance with this order may be proved by filing an affidavit, served on the Hamiltons, with the Divisional Court office, and eviction not to occur before 30 days following the service of the affidavit.
[28] While the Hamiltons were successful on this appeal, their actions caused the co-operative to take the steps that it did, steps that were not unreasonable from their perspective. Hence, I would make no order as to costs.
Sachs J.
Dambrot J.
Swinton J.
Released: March 4, 2010
CITATION: Alexandra Park Co-operative v. Hamilton, 2010 ONSC 1277
COURT FILE NO.: 375/09
DATE: 2010/03/04
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
DAMBROT, SWINTON, SACHS JJ.
B E T W E E N:
ALEXANDRA PARK CO-OPERATIVE
Applicant/Respondent in the Appeal
- and -
ANTON HAMILTON AND FILICIA HAMILTON
Respondents/Appellants in the Appeal
REASONS FOR DECISION
SACHS J.
Released: March 4, 2010