Graff v. 1960 Queen Street, 2016 ONSC 4358
CITATION: Graff v. 1960 Queen Street, 2016 ONSC 4358
DIVISIONAL COURT FILE NO.: 631-15
DATE: 20160715
SUPERIOR COURT OF JUSTICE – ONTARIO
DIVISIONAL COURT
RE: Brian Graff, Moving Party (Appellant)
AND:
1960 Queen Street East Ltd. and Reserve Properties Limited, Responding Parties (Respondents)
BEFORE: L. A. Pattillo J.
COUNSEL: P. Tunley and D. Wood, for the Moving Party
David Bronskill, for the Respondents, 1960 Queen Street East Ltd. and Reserve Properties Limited
Stan Floras, for the Ontario Municipal Board
HEARD: June 21, 2016
ENDORSEMENT
Introduction
[1] The Moving Party, Brian Graff, seeks leave to appeal from both the decision of the Ontario Municipal Board (the “Board”) dated August 25, 2015 (the “Cost Decision”) which awarded costs against him personally in the amount of $28,693.22 and the Review Decision dated November 10, 2015 (the “Review Decision”) which denied the request but reduced the amount to $15,000.00. Mr. Graff also seeks an order extending the time for serving and filing a motion for leave to appeal the Cost Decision.
Background
[2] On June 8, 2012, Toronto City Council approved the development application filed by the Respondents 1960 Queen Street East Ltd. and Reserve Properties Limited (“Reserve”) (together the “Respondents”) facilitating the redevelopment of property at 1960 and 1962 Queen Street East with a six-storey condominium building and enacted Zoning By-law No. 772-2012 (the “Rezoning By-Law”).
[3] Two appeals of the Rezoning By-Law were filed with the Board: one by Cecile and Michael Cramer and the other by the Beaches Residents Association of Toronto (“BRAT”) (the “Appeals”).
[4] BRAT is a non-profit public interest corporation formed on July 5, 2012. It was established to deal with a variety of activities in regard to land development in the Queen Street East and Beach communities. Mr. Graff was one of the three founding directors of BRAT.
[5] In November 2012, the other two founding directors of BRAT resigned. On December 11, 2012, BRAT’s counsel on the Appeals withdrew and advised all parties to the Appeals that future correspondence should be directed to Mr. Graff. On December 19, 2012, the Board sent the parties to the Appeals an Appointment for Hearing on February 5 to 7, 2013.
[6] On December 21, 2012, a new board of directors excluding Mr. Graff was elected by BRAT’s members (the “New Board”). The New Board took power on January 12, 2013 at which time Mr. Graff was formally replaced. While Mr. Graff passed correspondence concerning the Appeals from Reserve’s counsel to the New Board, he did not advised Reserve’s counsel that he was no longer a director of BRAT. Nor did he respond to any of the communications.
[7] The New Board decided to continue BRAT’s appeal. They retained counsel who agreed to act on the condition that the hearing of the Appeals would be adjourned. BRAT’s counsel subsequently filed a motion with the Board to adjourn BRAT’s appeal.
[8] On February 4, 2013, Mr. Graff wrote to the Board and advised that he was no longer on BRAT’s board of directors and that he would be seeking status in the Appeals on behalf of a newly incorporated non-profit corporation, the Save Queen Street Association Inc. (“SQS”) and that it be added as a party. Mr. Graff also advised that if given status, SQS would be requesting an adjournment to permit adequate representation.
[9] Also on February 4, 2013, the Cramers wrote the Board and advised that they were withdrawing their appeal.
[10] At the hearing on February 5, 2013, the Board denied SQS’s request for party status and BRAT’s request for an adjournment. The Board offered Mr. Graff Participant status which would not include the right to call evidence or cross-examine the Respondents’ witnesses. Mr. Graff declined the offer and withdrew from the hearing. BRAT’s counsel also withdrew but BRAT proceeded with the hearing represented by one of its directors.
[11] On February 6, 2013, at the conclusion of the hearing, Reserve indicated that it was withdrawing its request for costs of the adjournment motion against BRAT and the New Board but retaining its “right” to seek costs against BRAT’s previous executive. The Board gave oral reasons dismissing BRAT’s Appeal followed by written reasons dated February 26, 2013 (the “Merits Decision”).
[12] On May 8, 2013, Reserve served and filed a motion with the Board seeking costs against Mr. Graff personally in the amount of $63,900. The motion was dealt with in writing.
The Cost Decision
[13] The Cost Decision sets out the background leading up to the hearing of the appeal and Mr. Graff’s role on behalf of BRAT and SQS. The Board criticizes him for not communicating with either Reserve or the Board concerning his resignation from BRAT’s board and not ensuring that BRAT was prepared to proceed with its appeal. The Board states that in its view, Mr. Graff played games with both it and Reserve arising from his failure to communicate. The Board referred to its jurisdiction to award costs both under s. 97(1) of the Ontario Municipal Board Act, R.S.O. 1990, c. O.28 (the “OMB Act”) and the Statutory Powers Procedure Act, R.S.O. 1990, c. S. 22 (the “SPPA”) and Rule 103 of the Board’s Rules of Practice and Procedure (the “Rules”). It noted that while it was rare to award costs against a non-party the Board has done so under unusual circumstances (Tempo Foundation v. Owen Sound (City), [1997] O.M.B.D. No. 1162). It stated the question for determination to be whether the non-party against whom costs are sought was the actual party.
[14] At paragraph 23 of the Cost Decision, after setting out Mr. Graff’s various failures to communicate with Reserve prior to the hearing concerning BRAT’s appeal, the Board stated:
…. Mr. Graff did not step away from these realities and responsibilities simply by leaving BRAT; nor did his departure make them the responsibilities and liabilities of the “straw man” he had left holding the bag, namely BRAT. Mr. Graff was the real litigant in this matter. Being the soul of BRAT, and of its reincarnation, SQS, Mr. Graff was de facto a Party in this matter.
[15] The Board’s award of $28,693.22 covered the costs of Reserve’s expert witnesses in order to meet “an unknown case against it”.
The Review Decision.
[16] The Review Decision of the Associate Chair, S. Wilson Lee, found that Mr. Graff’s request failed to satisfy the requirements of the Board’s Rules to warrant a review of the Cost Decision awarding costs against him personally. Based on Board jurisprudence, the Board may award costs against a non-party in exceptional circumstances where the non-party is found to be the real litigant. The Associate Chair concluded that the Board made no legal error in finding that Mr. Graff was de facto a party in the BRAT appeal.
[17] The Associate Chair then went on to conclude that the Board erred in its assessment of the costs by failing to take into account the reasonable preparation costs incurred in respect of the Cramer appeal and to respond to the BRAT appeal and the evidence of the participants who testified at the appeal. As a result, the Associate Chair reduced the amount of the costs to $15,000.00.
The Test for Leave to Appeal
[18] Section 96(1) of the OMB Act provides that an appeal lies to this court on a question of law, with leave.
[19] Leave will be granted if it appears that: (a) there is good reason to doubt the correctness of the Board’s decision; and (b) the Board’s error involves a question of law of “sufficient importance to merit the attention of the Divisional Court: Emshih Developments Inc. v. Waterdown Bay Ltd., 2015 ONSC 1958 (Div. Ct.) at para. 2.
[20] To meet the first branch of the test, it is not necessary to show that the decision is wrong or “even probably wrong”. The moving party need only show that the correctness of the decision is “open to serious debate.” See: Emshih, at paras. 2 and 3.
The Issues
[21] Mr. Graff submits that there is good reason to doubt the correctness of the Cost Decision and the Review Decision because:
a) There is no statutory authority or other jurisdiction in the Board to award costs against a non-party. In the alternative, if there is jurisdiction, the Board erred in principle in ordering costs against him on the facts.
b) Mr. Graff was not given fair notice that costs would be sought against him; and
c) The Board failed to consider that Reserve’s motion for costs was a Strategic Lawsuit Against Public Participation proceeding (“SLAPP”) brought for the improper purpose of limiting free expression and deterring public participation in Board proceedings.
Analysis
a) Jurisdiction
[22] The question of whether the Board has the jurisdiction to award costs against a non-party is a question of law.
[23] The Board’s jurisdiction to award costs is derived from two statutes: s. 17.1 of the SPPA and s. 97 of the OMB Act.
[24] Section 17.1 of the SPPA provides that a tribunal has the authority to order costs, but clearly specifies that costs can only be ordered against a “party”.
[25] Section 97 of the OMB Act provides:
97(1) The costs of and incidental to any proceeding before the Board, except as herein otherwise provided, shall be in the discretion of the Board, and may be fixed in any case at a sum certain or may be assessed.
97(2) The Board may order by whom and to whom any costs are to be paid, and by whom the same are to be assessed and allowed.
97(3) The Board may prescribe a scale under which such costs shall be assessed.
[26] Rule 103 of the Board’s Rules provides that the Board “may only order costs against a party if the conduct or course of conduct of a party has been unreasonable, frivolous or vexatious or if the party has acted in bad faith.”
[27] Similar wording to s. 97(2) of the OMB Act concerning who costs may be ordered against is found in s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”) which provides:
131(1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.
[28] In Television Real Estate Ltd. v. Rogers Cable T.V. Ltd. (1997), 1997 999 (ON CA), 34 O.R. (3d) 291 (C.A.), the court considered the issue of whether a trial judge had jurisdiction to award costs against two individuals who were officers and directors of the plaintiff but were not parties. In holding that the trial judge exceeded his jurisdiction, Finlayson J.A., on behalf of the court, referred to s. 131 of the CJA and then stated at para. 12:
12 The phrase “by whom ... the costs shall be paid” has been judicially interpreted to mean “by which of the parties to the proceedings before the court or judge”: see Rockwell Developments Ltd. v. Newtonbrook Plaza Ltd. (1972) 1972 531 (ON CA), 27 D.L.R. (3d) 651 (Ont. C.A.) at p. 659. Arnup J.A., for the court, was dealing with s. 82 of the Judicature Act, R.S.O. 1970, c. 228, the predecessor to s. 131 of our present Act. Accordingly, this section of the Act provides no basis for an award against two of the three principals of the corporate plaintiff. Eberle J. recognized this but relied upon what he described as an exception to the salutary rule in Rockwell. In point of law, the exception was expressed earlier by Middleton J. in Re Sturmer and Town of Beaverton (1911), 25 O.L.R. 190 (H.C.J.); affirmed 1912 588 (ON SCDC), 25 O.L.R. 566 (Div. Ct.). Middleton J. was dealing with an applicant in a proceeding to quash a by-law who, in the view of all the judges who dealt with the case, was not the true applicant but was put forward by others, who themselves had status to bring the proceedings. They all characterized the applicant as a “man of straw”. Middleton J. stated at p. 191:
The Court has inherent jurisdiction to prevent abuse of its process, and, as part of this jurisdiction, will stay proceedings, as being taken against good faith, when a man of straw is put forward by those really litigating, until they either give adequate security or consent to be added as parties, so that an order for costs may be made against them in the event of failure.
[29] The Board cites and relies on Re Sturmer in the Cost Decision in utilizing the “straw man” analogy to award costs against Mr. Graff. But as pointed out by Middleton J. in the above quote from Re Sturmer, the jurisdiction to award costs against a non-party arises from the court’s inherent jurisdiction. The Board has no inherent jurisdiction. It derives its jurisdiction from statute.
[30] The Board submits that s. 38 of the OMB Act gives it the jurisdiction to make a cost order against a non-party as part of its oversight role to safeguard its processes and prevent abuse. Section 38 grants to the Board “all such powers, rights and privileges as are vested in the Superior Court of Justice” with respect to certain specific procedural matters but makes no mention of costs. Whether that section grants the necessary jurisdiction to the Board to enable it to order costs against a non-party is not a question to be resolved on a leave application.
[31] Accordingly, I conclude within the meaning of the requirement that there is good reason to doubt the correctness of the Cost Decision concerning whether it had jurisdiction to award costs personally against Mr. Graff in the absence of him being a party. I conclude the same in respect of the Review Decision which affirmed the Board’s jurisdiction to award costs against a non-party.
[32] In the alternative to his jurisdiction argument, Mr. Graff submits that even if the Board had jurisdiction to award costs against him personally, it erred in principle in doing so on the facts before it. Specifically he submits that the Board erred in law by failing to apply the test set out at para. 15 in Television Real Estate.
[33] There is no question that an award of costs against a non-party is an “extraordinary” remedy that should only be made in the clearest of cases: Smith v. Canadian Tire Acceptance Ltd., 1995 7163 (ON SC), [1995] O.J. No. 327 (Ont. Ct. G.D.) at para. 42; aff’d (1995), 26 O.R. (3d) 94 (C.A.).
[34] It is not apparent to me, in reading the Cost Decision and the Review Decision, that in awarding costs against Mr. Graff personally, the Board properly applied test set out at para. 15 of Television Real Estate having regard to the record before it. Accordingly, I conclude there is good reason to doubt the correctness of the Board’s decision in that regard.
[35] Further, I consider both the question of the Board’s jurisdiction to award costs against a non-party and its decision to do so on the record before it in this case to be of “sufficient importance to merit the attention of the Divisional Court.”
[36] The jurisprudence concerning the jurisdiction issue is primarily that of the Board. Counsel for the Board advised there are two leave to appeal decisions of this court from decisions of the Board concerning costs against non-parties which were dismissed. Only one is reported: Re Innisfil Restricted Area By-law 78-80, 1982 CarswellOnt 4111 (Div. Ct.) and it is a two-line dismissal without reasons. I am satisfied, therefore, that the question of the Board’s jurisdiction to award costs against a non-party needs to be considered by the full court.
[37] I am also satisfied that even if the Board has jurisdiction, the question of whether the Board ought to have awarded costs personally against Mr. Graff based on the record before it is also an issue that needs to be considered by the full court.
b) Absence of Fair Notice
[38] Mr. Graff submits that he was not given fair notice that costs would be sought against him. He submits that before the Board can order costs against a person on the basis of the conduct set out in Rule 103, there must be timely notice by the party claiming costs or by the Board sufficiently in advance to enable the person to correct their conduct and avoid the threat of costs.
[39] As mentioned, Rule 103 provides that the Board may only order costs against a party if the conduct or course of conduct of a party has been unreasonable, frivolous or vexatious or if the party has acted in bad faith. The Rule then sets out a number of examples of such conduct.
[40] The issue of improper notice was raised by Mr. Graff on his review request and dealt with at some length in the Review Decision. The Associate Chair, correctly in my view, identified the issue as a denial of natural justice. He rejected Mr. Graff’s submission that he had not received fair notice of Reserve’s intention to seek costs against him for three reasons: first, he concluded Mr. Graff effectively had notice of Reserve’s intention to seek costs against him personally from the Merits Decision which he had received and which noted Reserve’s reservation of costs against him; second, based on Mr. Graff’s conduct in refusing to communicate with Reserve in advance of the appeal and withdrawing from the hearing at the outset before evidence, there was no practical opportunity for Reserve to advise Mr. Graff of its intention to seek costs against him personally; and third, advance notice of the type sought by Mr. Graff was contrary to the Board’s policy that the parties are not to use the threat of costs awards to deter public participation.
[41] In my view, there is no reason to doubt the correctness of the Associate Chair’s decision concerning Mr. Graff’s submission that he was denied fair notice of the cost proceeding against him such that he was denied procedural fairness. He was given sufficient notice and the opportunity to respond to the claim against him which he did with counsel. There was no denial of procedural fairness. I would not grant leave to appeal on this issue.
c) The Board failed to take into account that Reserve’s motion for costs was a SLAPP proceeding.
[42] Mr. Graff submits that the Board erred in law by failing to take into account the principles as reflected in the Protection of Public Participation Act, 2015, S.R. 2015, c. 23 (“PPPA”) to prevent proceedings taken for the improper purpose of punishing or deterring participation in legal proceedings or discussion about matters of public interest by individuals and representative groups.
[43] The purpose of PPPA is to prevent or control civil litigation that could impact or limit freedom of expression in matters of public interest. It is applicable where a party takes some legal step or proceeding designed to punish or deter participation in, among other things, legal proceedings. In the normal course, however, it would not apply to cost decisions arising at the conclusion of proceedings before administrative tribunals. Further, in the event such actions exist in a proceeding they can be considered by the tribunal as part of its cost award.
[44] Further and assuming jurisdiction, the test required to be met to permit a costs award against a non-party is such that any chilling effect from such an order would only be in respect of the behavior that gave rise to the order as opposed to public participation in the proceeding.
[45] Finally, there was no evidence that Reserve took any legal step or proceeding that prevented Mr. Graff from accessing or using the OMB’s processes in respect of the Appeals such that it was a factor that the Board should have considered in determining costs.
[46] Accordingly, I do not consider that the Board erred in failing to give any weight to the principles in PPPA based on the facts of the case before it. I would not grant leave to appeal on this issue.
Extension of Time
[47] Prior to seeking leave to appeal the Cost Decision, Mr. Graff made a request for review pursuant to s. 43 of the OMB Act. Following denial of that request, Mr. Graff served his notice of appeal from the Review Decision within the time provided along with his request for an extension of time to seek leave to appeal the Cost Decision.
[48] The practice of this court is to require all appellants or judicial review applicants to exhaust all remedies available to them under the statute in question before commencing proceedings in this court either by way or appeal or judicial review. I am satisfied Mr. Graff’s delay in seeking leave to appeal from the Cost Decision within the time required arose as a result of that requirement and that Mr. Graff had an intention to seek such leave within the time required. I also consider, for the reasons noted, that there is merit in the appeal. Finally, I note that the Respondents did not take issue with the request for the extension.
Conclusion
[49] Mr. Graff’s motion for an order extending the time for serving and filing the motion for leave to appeal the Cost Decision is allowed.
[50] Further, for the above noted reasons, leave to appeal from the Cost Decision and the Review Decision is granted only in respect of the following issues:
Does the Board have jurisdiction to award costs against a non-party?
If the answer to question 1 is yes, did the Board err in principle in awarding costs against Mr. Graff in this case?
[51] Mr. Graff and the Respondents have agreed on costs of $5,000. The disposition of those costs is left to the panel hearing the appeal. The Board did not seek costs and no costs order is made against it.
L. A. Pattillo J.
Date of Release: July 15, 2016