2188160 Ontario Limited v. City of Toronto, 2018 ONSC 4653

CITATION: 2188160 Ontario Limited v. City of Toronto, 2018 ONSC 4653

DIVISIONAL COURT FILE NO.: 597/16

DATE: 20180731

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: 2188160 ONTARIO LIMITED, Appellant/Plaintiff

AND:

City of toronto, Respondent/Defendant

BEFORE: Wilton-Siegel, J.

COUNSEL: David A. Weisman, for the Appellant/Plaintiff

Georgia Tanner, for the Respondent/Defendant

HEARD at Toronto: June 14, 2018

ENDORSEMENT

[1] The appellant, 2188160 Ontario Limited (the “appellant”), appeals the judgment dated November 28, 2016 of Deputy Judge Buie of the Small Claims Court, Toronto Region (the “Judgment”) which dismissed the appellant’s action.

Factual Background

[2] The plaintiff is a corporation incorporated under the laws of Ontario that owns an apartment building known municipally as 2135 Avenue Road in the City of Toronto (the “Building”).

[3] The defendant, the City of Toronto (the “City” or the “respondent”), is a municipality incorporated pursuant to section 2(2) of the City of Toronto Act, 1997, S.O. 1997, c.2 and continued pursuant to section 125(1) of the City of Toronto Act, 2006, S.O. 2006, c.11, Sch A.

[4] The City collects garbage, recyclable materials, organic waste, yard waste and other items eligible for collection pursuant to the Toronto Municipal Code.

[5] On May 27, 2008, the Toronto City Council enacted a by-law which amended the Toronto Municipal Code to provide amendments that would impose fees on all property owners who received solid waste management services from the City, which provisions were designed to promote recycling (the “Solid Waste Management Provisions”).

[6] The Solid Waste Management Provisions required the City to impose, and owners of apartment buildings to pay, per dwelling unit fees on apartment buildings that received solid waste management services from the City.

[7] Prior to the Solid Waste Management Provisions coming into force, the City conducted an extensive campaign to educate the public about these changes. In this regard, a notice was mailed to the registered owner of the Building.

[8] The Solid Waste Management Provisions came into force on July 1, 2008. The Building continued to receive solid waste management services from the City and the owner was therefore obligated to pay the applicable fees for such services.

[9] On August 15, 2008, the appellant acquired an undivided 50% in the Building. The principal of the appellant at all material times was Ludy Minicucci (“Minicucci”). Thereafter, Minicucci managed the operations of the Building. Minicucci was not aware of the Solid Waste Management Provisions at the time the appellant acquired its interest in the Building.

[10] Due to an internal error at the City, solid waste management fees for services rendered to the Building were not charged until August 9, 2010. On that date, the appellant was charged fees for services incurred between March 20, 2009 and July 1, 2010 for a total of $17,625.48. The appellant was never billed for services between July 1, 2008 and March 19, 2009.

[11] The appellant paid the following fees for waste management services after July 1, 2009 pursuant to direct debit facilities established by the appellant in favour of the City:

(1) $343.97 on May 11, 2009 (for the period March 9, 2009 to March 31, 2009);

(2) ($343.97) on June 8, 2009 (for the period in #1);

(3) ($6,399.08) on July 6, 2009 (for the period July 1, 2008 to April 3, 2009);

(4) $6,399.08 on July 7, 2010 (for the period in #3);

(5) $17,625.49 on August 9, 2010 (for the period March 20, 2009 to July 1, 2010); and

(6) $1,267.66 on September 13, 2010 (for the period July 1, 2010 to August 6, 2010).

[12] On September 23, 2010, the appellant wrote to the City requesting an explanation of the foregoing charges and sought a credit for the last two charges. Minicucci stated that, if he had been aware of these charges for solid waste management services, he would not have agreed to the amount and would have looked into what the problem was. He says that the appellant could have contracted with a private company or reduced the size of its bins and put a lock on the gates so that contractors or others could not put their refuse into the appellant’s bins.

[13] In this action, the appellant says that, if it had known of the Solid Waste Management Provisions, it would have cancelled the City’s delivery of solid waste management services and contracted with a private company for such services. The appellant says that it would thereby have paid only $388 plus GST per month, or $5,820 plus GST in total, over the fifteen month billing period to July 1, 2010. As a result, the appellant claims damages of $11,805.48 plus GST, being the difference between what the appellant was billed for City services during that fifteen month billing period and what it would have paid for private solid waste management services over the same period.

The Decision of the Deputy Judge

[14] The appellant commenced a small claims court action on January 11, 2013 claiming this amount. The action was tried before the Deputy Judge on three days between February 22, 2016 and August 22, 2016. Pursuant to the Judgment, the Deputy Judge dismissed the appellant’s claim.

[15] In the Judgment, after setting out the positions of the parties and the testimony of the witnesses and relevant facts, the Deputy Judge made the following findings.

[16] First the Deputy Judge rejected the respondent’s argument that the appellant’s conduct was immoral or illegal such that recovery should be denied.

[17] Second, the Deputy Judge held that the appellant did not discover its cause of action until the City responded to its correspondence in February 2012 and, accordingly, the action was not statute barred. On the other hand, the City’s counterclaim for the amount owing by the appellant for the period July 2008 to March 2009 did not constitute a claim of equitable set-off and, accordingly, was statute-barred.

[18] Third, the Deputy Judge held that the respondent met any obligation it might have had in educating the public regarding its Waste Management Diversion Program. Further, the Deputy Judge held that the responsibility for educating himself on the management of the Building, including waste collection, rested with Minicucci.

[19] Fourth, the Deputy Judge found that the billing practices of the respondent were confusing, that the Building had been incorrectly identified for billing purposes, and that the respondent failed to bill for 8-9 months and then issued “incredibly confusing invoices.”

[20] Nevertheless, the Deputy Judge held that the appellant had no claim against the respondent for breach of a common law duty of care because it had failed to establish that the elements of such a duty of care existed in the present circumstances.

[21] In reaching this conclusion, the Deputy Judge relied on the principle in Maritime Electric Co. Limited v. General Dairies Limited, [1937] 1 All E.R. 749 (J.C.P.C). In that case, the Privy Council denied a defence of promissory estoppel asserted against a claim by a public utility for historical electricity costs that had inadvertently been underbilled.

The Standard of Review

[22] The appeal is brought pursuant to section 31 of the Courts of Justice Act, R.S.O. 1990, c. C.43. The standard of review is set out in Housen v. Nikolaisen 2002 SCC 33, [2002] 2 S.C.R. 235 in paras. 6-10 and 36-37. On a pure question of law, the standard of review is correctness. The standard of review for findings of fact is that such findings are not to be reversed unless it can be established that the trial judge made a "palpable and overriding error". Questions of mixed fact and law are subject to the “palpable and overriding error” standard, unless it is clear that the trial judge made an error of law or principle that can be identified independently in the judge's application of the law to the facts of the case.

The Ground of Appeal

[23] The appellant submits that the Deputy Judge erred in finding that it had failed to demonstrate the necessary elements required to find a common law duty of care on the part of the respondent in favour of the appellant.

[24] In its Claim, the appellant states its position as follows:

The Plaintiffs state that the Defendant was negligent in failing to provide them with notice that their account could be reduced substantially if they participated in a solid waste management diversion program. In the alternative the Defendant was under a duty to provide the aforesaid information and advice to the Plaintiffs, and by not doing so, it breached its duty of care.

[25] On this hearing, the appellant described the duty of care as a duty to provide accurate statements of account on a timely basis which arose because of the City’s failure to do so over a 25-month period.

Analysis and Conclusions

[26] Section 441-2 of the Toronto Municipal Code requires the City to impose scheduled fees therein for the solid waste management services provided to the Building and section 844-26 of the Code provides in effect that an owner of an apartment building who receives such services shall pay the applicable fees for such services. Accordingly, I am of the view that the principle in General Dairies applies in this case.

[27] However, and perhaps for that reason, the appellant has framed his claim as an action for damages resulting from a breach of a duty of the City to provide the appellant with accurate statements of account. The appellant says that the circumstances of this case raised a common law duty of care in its favour. It relies on the decision of the Court of Appeal in Rausch v. Pickering (City), 2013 ONCA 740, 369 D.L.R. (4th) 691. In that decision, at paras. 51-52, the Court of Appeal held the following with respect to the principles governing a common law duty of care alleged to be owing by a municipality:

… Therefore, to determine whether a cause of action in negligence based on a common law duty of care has a reasonable prospect of success …, consideration must be given to whether the general requirements for liability in tort are met according to the two-stage Anns test, as honed and consistently applied by the Supreme Court in subsequent decisions, most notably, Cooper v. Hobart, 2001 SCC 79, [2001] 3 S.C.R. 537; and Edwards v. The Law Society of Upper Canada, 2001 SCC 80, [2001] 3 S.C.R. 562.

In the first step of the Anns test, the plaintiff must establish a prima facie duty of care by demonstrating reasonable foreseeability of harm and a proximate relationship between the plaintiff and the defendant. At this stage, the court must also examine whether policy considerations arising out of the relationship support a finding of proximity. If the court finds both foreseeability and proximity, it then proceeds to the second step, in which the evidentiary burden shifts to the defendant to raise additional policy factors that should eliminate or limit the prima facie duty found under the first branch of the test.

[28] There are therefore three requirements that must be satisfied to establish a common law duty of care owning by a municipality, which are summarized well in Williams v. Toronto (City), 2016 ONSC 42, 48 M.P.L.R. (5th) 321 at para. 61 as follows:

As developed by the case law, if the relationship between the plaintiff and the defendant does not fall within a recognized class whose members have a duty of care to others, then whether a duty of care to another exists involves satisfying three requirements: (1) foreseeability, in the sense that the defendant ought to have contemplated that the plaintiff would be affected by the defendant's conduct; (2) sufficient proximity, in the sense that the relationship between the plaintiff and the defendant is sufficient to give rise to a duty of care; and (3) the absence of overriding policy considerations that would negate any prima facie duty established by foreseeability and proximity.

[29] The City had a statutory duty to inform the public, including the owners of apartment buildings in the City who receive solid waste management services from the City, of the Solid Waste Management Provisions. It discharged that obligation by mailing a copy of a notice to the public regarding the Solid Waste Management Provisions to the address of the registered owner of the Building and otherwise engaged in an extensive public educational campaign. Therefore, the City satisfied its statutory duty owed to all owners of apartment buildings in the City, including the owners of the Building.

[30] Accordingly, to succeed in its claim, the appellant must established a common law duty of care in its favour. To do so, the appellant must establish a sufficient proximity between itself and the City based on specific circumstances that gave rise to a “close and direct relationship” that distinguishes the appellant from all such other owners of apartment buildings. I think it is plain and obvious that such circumstances do not exist in this case and, therefore, that no common law duty of care arose in its favour that the City breached, as the appellant alleges.

[31] The appellant suggests that the City’s failure to deliver accurate statements on a timely basis over a period of time gave rise to the alleged duty of care. This is, in effect, reading backwards from the City’s alleged breach or failure to meet the required standard of care for its alleged common law duty of care to the existence of the alleged duty of care. These are two entirely separate concepts.

[32] As mentioned, to succeed on this appeal, the appellant must demonstrate facts in the context of the appellant’s circumstances that establish a “close and direct” relationship between the appellant and the City. In Rausch, those circumstances arose because the plaintiff was the target of a specific investigation for non-compliance with a municipal by-law which, in turn, required the municipal investigator to consider whether a particular statute applied to the plaintiff’s farming activities. The investigator’s failure to do so constituted the alleged breach, not the basis for the alleged duty.

[33] There are no circumstances in the present case that are comparable to the investigation in Rausch that permit a distinction to be drawn between the appellant and all other taxpayer recipients of statements of account for solid waste management services by the City, or even between the appellant and all other taxpayers who received inaccurate account statements from the City for a period of time. In particular, there was no representation of the City to the appellant, nor any reliance by the appellant on any statement made by any City representatives, that could ground a specific duty in the appellant’s favour at common law. In short, the appellant was not “individualized” by the City.

[34] The appellant relies upon the decision of Perell J. in Williams v. Toronto (City). In that decision, the City was held liable for breach of a common law duty of care in failing to advise certain tenants, who were the plaintiffs in the action, that they were entitled to a rent reduction. In that case, however, the motions judge was able to establish proximity based on facts specific to the plaintiffs – the distinctive or added feature of the plaintiffs’ participation in the Parkdale Pilot Project “…that placed the Class Members in a closer relationship than other tenants in Toronto who were also entitled to receive notices from the City”. Such facts do not exist in the present proceeding as discussed above. In fact, Williams highlights the defect in the appellant’s case in the present proceedings.

[35] Accordingly, the Deputy Judge did not err in finding at paragraph 53 of the Judgment that the necessary elements to find a common law duty of care did not exist in this case.

Limitations Issues

[36] In its Defence in the action, the City asserted, by way of a defence to the appellant’s claim, that it was statute-barred pursuant to the Limitations Act, 2002, S.O. 2002 c.24, Sched. B. The City also asserted in the Defence that, to the extent that the appellant was entitled to damages, the City had a claim for equitable set-off in the amount of the fees that the City had failed to bill for the period July 1, 2008 to March 19, 2009. The Deputy Judge treated this defence as a counterclaim of the City.

[37] In the Judgment, the Deputy Judge held that the appellant’s claim was not statute-barred. The Deputy Judge dismissed the City’s counterclaim for equitable set-off on the basis that it was statute-barred. The Deputy Judge reasoned that the counterclaim did not flow from the appellant’s actions but rather from the “non-actions of the City”. She held that the City “knew or ought to have known of the non-billing and as such its claim expired in March 2011.”

[38] On this appeal, the City raised the limitation determinations of the Deputy Judge by including argument on these issues in its factum.

[39] The City is entitled to raise the limitation issue in its factum as a defence to the appellant’s appeal. As the City was successful in regard to the appellant’s claim, it is not appealing the Judgment and has no other means of asserting its position regarding this defence. However, in view of the determination above regarding the appellant’s ground of appeal, it is not necessary to address this issue and I therefore decline to do so.

[40] With respect to the City’s counterclaim, the Deputy Judge dismissed this claim as statute-barred. It is not clear from the supplementary written submissions of the City whether it also wishes to raise this issue. However, if the City had intended to appeal this determination, it was necessary to do so by way of a cross-appeal. As it did not do so, it cannot raise the Deputy Judge’s determination regarding the City’s set-off claim in this hearing.

[41] Moreover, on this appeal, the relief sought by the City in its factum is limited to a dismissal of the appeal. Consistent with this position, in its factum, the City appears to raise the set-off issue only in the context of the equity of a set-off against any damages that might be awarded in favour of the appellant, which presupposes a successful appeal. This presents a further reason why it is unnecessary to address this issue.

Conclusion

[42] Based on the foregoing, the appeal is dismissed. The City claims costs of approximately $4,900. In view of the appellant’s costs submissions in the amount of approximately $11,700 plus HST, this is well within the appellant’s reasonable expectations and is also eminently reasonable for this appeal. Accordingly, costs in the amount of $4,350 plus HST are awarded in favour of the City.

Wilton-Siegel J.

Date: July 31, 2018