Tamil Co-operative Homes Inc. v. Arulappah

Tamil Co-operative Homes Inc. v. Arulappah [Indexed as: Tamil Co-operative Homes Inc. v. Arulappah]

49 O.R. (3d) 566

[2000] O.J. No. 3372

Docket No. C32908

Court of Appeal for Ontario

Labrosse, Doherty and Austin JJ.A.

May 10, 2000*

*Note: This judgment recently came to the attention of the

editors.

Appeal -- Mootness -- Board of Directors of non-profit housing co-operative voting to terminate membership and occupancy rights of member and applying to court for judgment to that effect -- Applications judge holding that s. 171.13(12) of Co-operative Corporations Act contemplated reasonableness standard of review of decision of Board to terminate membership and occupancy rights -- Applications judge refusing to exercise discretion under s. 171.21(1)(a) of Act to refuse to grant application for possession where it would be unfair to do so -- Parties reaching settlement before member's appeal heard by Divisional Court -- Divisional Court hearing appeal on merits despite its mootness because appeal raised important issues and represented unique opportunity to address issue of standard of review -- Member's appeal allowed -- Court of Appeal setting aside order of Divisional Court and dismissing appeal as moot -- Issue of applicable standard of review could be raised in case in which the re was live dispute between parties -- Neither standard of review nor scope of discretion granted to court under s. 171.21(1)(a) raising broad question of significant social importance -- Co-operative Corporations Act, R.S.O. 1990, c. C.35, ss. 171.13(12), 171.21(1)(a).

The Board of Directors of the appellant non-profit housing co-operative voted to terminate the membership and occupancy rights of the respondent member and applied to the court for a judgment to that effect. The applications judge ruled in favour of the appellant. In so doing, she found that s. 171.13(12) of the Co-operative Corporations Act contemplated a reasonableness standard of review of the Board of Director's decision to terminate membership and occupancy rights, and she refused to exercise her discretion under s. 171.21(1)(a) of the Act to refuse to grant an application for possession where it would be unfair to do so. The respondent appealed to the Divisional Court. By the time the appeal was heard, the parties had settled their dispute. The Divisional Court decided to hear the appeal on the merits despite its mootness since the standard of review called for by s. 171.13(12) of the Act and the ambit of the discretion described in s. 171.21(1)(a) were important and uniq ue issues. The court allowed the respondent's appeal. The appellant appealed.

Held, the order of the Divisional Court should be set aside and the appeal should be dismissed as moot.

The appeal was moot, and this was not a case in which the court should exercise its discretion to hear the merits of the appeal despite the mootness.

The issue of the appropriate standard of review would undoubtedly present itself for determination on appeal in a case in which there was still a live dispute between the parties. Neither the standard of review issue nor the scope of the discretion granted under s. 171.21(1)(a) of the Act raised a question of general public importance.

Judicial economy would not be promoted by hearing this appeal on the merits. The Divisional Court's resolution of the standard of review issue was of limited value in resolving future cases. Section 171.13(12) does not articulate a standard of review. The determination of the operative standard of review is as much an exercise in judicial self-discipline as it is an exercise in statutory interpretation. The standard of review will vary depending upon the issues raised. It is impossible to hold that s. 171.13(12) creates a single standard of review applicable to each and every challenge made to a Board of Director's decision to terminate membership and occupancy rights. Far from avoiding further litigation, the decision of the Divisional Court would inspire further litigation in which the broad language of that decision would be parsed and crafted to fit the specific circumstances of subsequent cases.

The factors relied on by the Divisional Court in its determination to hear the appeal despite its mootness did not provide a proper basis upon which it would exercise its discretion in favour of hearing a moot appeal. The factors relevant to the exercise of that discretion did not warrant the departure from the usual practice whereby courts will not hear moot appeals. The Divisional Court should have dismissed the appeal as moot.

APPEAL from a judgment of the Divisional Court ((1999), 1999 19939 (ON SC), 44 O.R. (3d) 120, 25 R.P.R. (3d) 85) allowing an appeal from a judgment declaring membership and occupancy rights in a non- profit housing co-operative be terminated.

Borowski v. Canada (Attorney General), 1989 123 (SCC), [1989] 1 S.C.R. 342, 75 Sask. R. 82, 57 D.L.R. (4th) 231, 92 N.R. 110, [1989] 3 W.W.R. 97, 38 C.R.R. 232, 47 C.C.C. (3d) 1, 33 C.P.C. (2d) 105, consd Other cases referred to M. v. H., 1999 686 (SCC), [1999] 2 S.C.R. 3, 43 O.R. (3d) 254n, 171 D.L.R. (4th) 577, 238 N.R. 179, 62 C.R.R. (2d) 1, 46 R.F.L. (4th) 32; New Brunswick (Minister of Health and Community Services) v. G. (J.), 1999 653 (SCC), [1999] 3 S.C.R. 46, 216 N.B.R. (2d) 25, 177 D.L.R. (4th) 124, 244 N.R. 276, 552 A.P.R. 25, 66 C.R.R. (2d) 267, 50 R.F.L. (4th) 63, 26 C.R. (5th) 203; Ryegate (Tecumseh) Co- operative Homes Inc. v. Stallard, Ont. Div. Ct., April 4, 2000 (unreported); Sault Dock Co. v. Sault Ste. Marie (City), 1972 572 (ON CA), [1973] 2 O.R. 479, 34 D.L.R. (3d) 327 (C.A.); St. Louis v. Feleki (1993), 1993 9356 (ON SCDC), 107 D.L.R. (4th) 767 (Ont. Div. Ct.) Statutes referred to Co-operative Corporations Act, R.S.O. 1990, c. C.35 (am. 1992, c. 19), ss. 171.13(12), 171.21(1)(a) Courts of Justice Act, R.S.O. 1990, c. C.43, s. 134(1)(a)

Bruce D. Woodrow, for appellant. Allan Rouben, for respondent.

The judgment of the court was delivered by

DOHERTY J.A.: --

I.

[1] This appeal is brought pursuant to leave granted by this court on September 27, 1999. The substantive issues raised in the appeal have sparked divergent views in the courts below. The parties have, however, settled their dispute. The appeal is moot. This is not a case in which the court should exercise its discretion to hear the merits of the appeal despite the fact that it is moot.

II.

[2] The appellant, Tamil Co-operative Homes Inc. (the "Co- operative") is a non-profit housing co-operative founded in 1985 primarily to assist Tamil refugees in obtaining affordable housing. The Co-operative owns an apartment building and persons residing in the building are members of the Co- operative. The relationship between the Co-operative and its members is governed by the provisions of the Co-operative Corporations Act, R.S.O. 1990, c. C.35, as amended by S.O. 1992, c. 19 (the "Act") and the by-laws of the Co-operative. The respondent, Ms. Arulappah, was a member of the Co-operative and occupied a unit in the building owned by the Co-operative from 1988 until the spring of 1994.

[3] In April 1994, the Board of Directors voted to terminate the membership and occupancy rights of Ms. Arulappah effective May 20, 1994. In June 1994, the Co-operative obtained a default judgment declaring that Ms. Arulappah's membership and occupancy rights were terminated and directing that a writ of possession issue. On March 16, 1995, an order was made by Pitt J. setting aside the default judgment and directing that the application be heard on its merits. The application was heard over four days by Molloy J. in June and July of 1995. In a judgment dated March 6, 1996, she ruled in favour of the Co- operative and declared Ms. Arulappah's membership and occupancy rights terminated. She also held that the Co- operative was entitled to possession of the unit formerly occupied by Ms. Arulappah.

[4] In so holding, Molloy J. found that s. 171.13(12) of the Act contemplated a reasonableness standard of review of the Board of Directors' decision to terminate membership and occupancy rights. In addition, Molloy J. refused to exercise her discretion under s. 171.21(1)(a) of the Act which provides that the court may refuse to grant an application for possession where it would "be unfair to grant it".

[5] Ms. Arulappah appealed to the Divisional Court. For some unexplained reason, her appeal was not perfected until August 1998. By the time the appeal came on for oral argument in the Divisional Court in February 1999, the Co-operative and Ms. Arulappah had settled their dispute. In executed minutes of settlement, Ms. Arulappah abandoned any claim to membership in the Co-operative and any claim to occupy the unit in the building. In the minutes of settlement, both parties agreed that the appeal should proceed "in the discretion of the court" and that there would be no order as to costs.

[6] The parties made full disclosure of the settlement to the Divisional Court. They submitted, however, that the court should hear the merits of the appeal. Counsel advised the court that the standard of review called for by s. 171.13(12) of the Act and the ambit of the discretion described in s. 171.21(1) (a) of the Act were significant issues that had not been addressed at the appellate level since the Act was amended in 1992.

[7] Both the majority (per Rosenberg J.) and the dissent (Cumming J.) in the Divisional Court acknowledged that the dispute between the parties was moot [reported (1999), 1999 19939 (ON SC), 44 O.R. (3d) 120]. Both proceeded to address the merits of the appeal describing the issues as "important" and "unique".

[8] The appeal in the Divisional Court proceeded on the basis that the Co-operative had reasonable grounds for reaching the decision it did, but that the facts on which the Board relied were incorrect. This was the conclusion reached by Molloy J. While both parties indicated a willingness to have the appeal heard in the Divisional Court on the basis of the two factual assumptions outlined above, it is clear from the facta filed in this court that neither party accepts either assumption as accurate.

[9] Ms. Arulappah's position prevailed with the majority in the Divisional Court. Rosenberg J. held that s. 178.13(12) of the Act required that the court determine whether the grounds for eviction were established. In his view, it was inappropriate to speak in terms of deference to the decision of the Board of Directors. Rosenberg J. further held that Molloy J. should have exercised her discretion under s. 171.21(1)(a) of the Act and refused to grant an order of possession. In coming to that conclusion, Rosenberg J. relied on facts which were in dispute.

[10] Cumming J., in dissent, agreed with the standard of review applied by Molloy J. He did not address the scope of the discretion provided for in s. 171.21(1)(a) of the Act.

[11] The Co-operative sought leave to appeal. In the leave material, it was made clear that the dispute between the parties had been settled. Ms. Arulappah opposed leave, but did not rely on the mootness of the appeal as a basis for that opposition.

[12] Neither party addressed the mootness issue in their facta filed in this court. At the outset of oral argument, the court confirmed with counsel that there was no ongoing dispute between the parties and advised counsel that it wished to hear submissions on the propriety of addressing the merits of a moot appeal. Counsel were granted a two-day adjournment to prepare their submissions. Both argued that the court should hear the appeal. At the conclusion of oral argument, the court advised counsel that it would not hear the merits of the appeal and that reasons would follow.

III.

[13] Courts exist to resolve real disputes between parties and not to provide opinions in response to hypothetical or academic problems. Courts will, however, on occasion address the merits of an appeal even where the dispute giving rise to the appeal has dissolved. Where a question of mootness is raised, the court must first decide whether the appeal is moot. If the appeal is moot, the court must then decide whether it should nonetheless hear the merits of the appeal. The discretion to hear a moot appeal is intended to address those exceptional cases where the circumstances are such that the general rule against hearing appeals where there is no live controversy between the parties should not be followed: Borowski v. Canada (Attorney General), 1989 123 (SCC), [1989] 1 S.C.R. 342 at p. 353, 47 C.C.C. (3d) 1 at p. 9; New Brunswick (Minister of Health and Community Services) v. G. (J.), 1999 653 (SCC), [1999] 3 S.C.R. 46, 177 D.L.R. (4th) 124; M. v. H., 1999 686 (SCC), [1999] 2 S.C.R. 3 at pp. 44-45, 171 D.L.R. (4th) 577.

[14] In Borowski, supra, at p. 353 S.C.R., p. 9 C.C.C., Sopinka J. defined mootness in these terms:

Accordingly if, subsequent to the initiation of the action or proceeding, events occur which affect the relationship of the parties so that no present live controversy exists which affects the rights of the parties, the case is said to be moot.

[15] Counsel for the Co-operative argued that the dispute was not entirely moot from his Co-operative's point of view in that a pronouncement by the court would be relevant in any potential future litigation in which the Co-operative sought an order under the Act terminating membership and occupancy rights. The mere fact that a party may at some future time resort to the same process which is the subject of the proceedings before the court does not give that party a direct or indirect interest in the litigation so as to give continued life to the controversy which precipitated the litigation. [See Note 1 at end of document]

[16] I do not think there could be a clearer example of mootness than this case. The dispute between the parties has been settled by minutes of settlement. Neither party now has anything to gain or lose directly or indirectly from this litigation. Counsel for Ms. Arulappah frankly acknowledged that she had no greater or lesser interest in the outcome of this appeal than would anyone else who happened to have a interest in the operation of the Act. The parties remain adversarial only in the sense that they take different positions on the legal issues raised before the courts below. They are aptly described as opposing debaters taking affirmative and negative positions on legal propositions and not as litigants opposed in interest in an ongoing legal controversy. The appeal is moot.

IV.

[17] Having concluded, as did the Divisional Court, that the appeal is moot, I turn to the second stage of the analysis -- should the court nonetheless hear the appeal? At this stage of the analysis, the onus rests on the party or parties seeking a determination on the merits to demonstrate why the court should depart from its usual practice of refusing to hear moot appeals. In Borowski, supra, Sopinka J. dealt at length with several of the factors to be considered in determining whether to hear a moot appeal. He was, however, careful to observe that the court's exercise of its discretion to hear moot appeals could not be fettered by the rigid application of pre- established criteria. He noted that the discretion had to be exercised with a view to the circumstances of each case and with careful regard to the "usual" practice of declining to decide the merits of moot appeals. He said, at p. 358 S.C.R., p. 13 C.C.C.:

In formulating guidelines for the exercise of discretion in departing from a usual practice, it is instructive to examine its underlying rationalia. To the extent that a particular foundation for the practice is either absent or its presence tenuous, the reason for its enforcement disappears or diminishes.

[18] The Divisional Court decided to hear the appeal for two reasons. First, it viewed the appeal as presenting a "unique opportunity" to address the standard of review issue. Second, it agreed with the parties that the issues raised were important and warranted appellate consideration.

[19] The uniqueness referred to by the Divisional Court flowed from the finding of Molloy J. that the Co-operative's decision was reasonable but wrong on the facts as she found them to be. That finding made the determination of the applicable standard of review crucial to the outcome of the proceedings before Molloy J. It did not, however, give the question of the applicable standard of review any uniqueness. The determination of the standard of review to be applied on an application under s. 171.13(12) of the Act must be made in every application brought under that section. I see no reason to think that the standard of review issue would not present itself for determination on appeal in a case in which there was still a real dispute between the parties.

[20] The standard of review is not an issue which is "evasive of review" in the sense that it is not amenable to judicial scrutiny through the normal litigation process: New Brunswick (Minister of Health and Community Services) v. G. (J.), supra, at pp. 71-72. Where a legal issue raised in a moot appeal is one which will recur in the normal flow of litigation involving live disputes between parties, it is best to determine that issue in a genuine adversarial context: Borowski, supra, at p. 361 S.C.R., p. 15 C.C.C.; St. Louis v. Feleki (1993), 1993 9356 (ON SCDC), 107 D.L.R. (4th) 767 (Ont. Div. Ct.).

[21] Nor can it be suggested that the scope of the discretion granted to a court under s. 171.21(1)(a) raises a unique question. I do not understand the Divisional Court to have suggested otherwise.

[22] With respect to the contrary view, I see nothing unique in the legal issues raised before the Divisional Court which justified hearing a moot appeal.

[23] The Divisional Court also decided to hear the appeal because it regarded the standard of review issue as an important one. I agree that the issue is important in the sense that it must be addressed on all applications brought under s. 171.13 of the Act. In some situations, it will be determinative of the application.

[24] The importance of a legal issue raised in a proceeding is a relevant consideration in determining whether a court should hear a moot appeal. It is not, however, determinative. There are an almost infinite number of important legal issues lurking in the myriad of rules and regulations governing the citizenry upon which those interested in the issue would appreciate the opinion of an appellate court. If the importance of a legal issue is enough to overcome concerns associated with hearing moot appeals, the doctrine has little value. It means no more than that the court should not waste its time and resources deciding unimportant legal issues in cases where there is no longer a live dispute between the parties. This would seem self-evident. [See Note 2 at end of document]

[25] The importance of the legal issue raised when considered in the context of the exercise of the discretion to hear moot appeals must be measured by reference to the public importance of the legal issue. As Sopinka J. said in Borowski, supra, at p. 361 S.C.R., p. 15 C.C.C.:

There also exists a rather ill-defined basis for justifying the deployment of judicial resources in cases which raise an issue of public importance of which a resolution is in the public interest. The economics of judicial involvement are weighed against the social cost of continued uncertainty in the law.

(Emphasis added)

[26] A review of the cases in which the Supreme Court of Canada has heard moot appeals demonstrates that there was a strong public interest in the resolution of the issues raised in those cases. The issues involved questions of broad social and constitutional importance. Furthermore, the parties to the appeals (including various levels of government and other intervenors) and the record before the court ensured that the court was in a position to make a fully informed decision on the broad issues raised in those appeals: see M. v. H., supra.

[27] This appeal has none of the characteristics associated with public interest litigation. The only parties to the proceedings, the Co-operative and Ms. Arulappah, are private litigants with no claim to represent any interest beyond their own. Nor does the record go beyond the specifics of the dispute between the Co-operative and Ms. Arulappah. Stripped to its essentials, this is a case that began as a routine piece of private litigation and, like many pieces of private litigation, it was settled in the course of the proceedings. Subsequent to that settlement, at the instigation of the parties, it took on the appearance of a reference to the Divisional Court based on hypothetical facts. The reference process is, of course, not available to private litigants.

[28] There is nothing in this record to support the contention that the standard of review issue raised broad questions of significant social importance so as to warrant its resolution despite the mootness of the appeal. Nor can it be said that the scope of the discretion granted under s. 171.21(1)(a) of the Act raised a question of general public importance.

[29] Counsel submitted that this court should take a pragmatic approach when determining whether to hear the merits of the appeal. They argued that considerations of judicial economy now favour a hearing of the appeal on the merits even if those same concerns spoke against hearing the appeal on the merits in the Divisional Court. Counsel observed that considerable time and effort have been expended by the parties and by the judiciary to bring the case to this stage. They contend that those efforts will be wasted, at least to some extent, if this court now declines to hear the merits of the appeal. It is their position that a definitive resolution of the issues raised by this appeal by the province's highest court is worth the modest additional expenditure of judicial resources that would be required.

[30] A similar argument was made and rejected in Borowski, supra. In that case, the appeal became moot after leave to appeal had been granted by the Supreme Court of Canada. It was argued that the substantial efforts put into the case before it became moot would be wasted if the Supreme Court of Canada did not hear the merits of the appeal. In rejecting this argument, Sopinka J. said, at p. 363 S.C.R., p. 17 C.C.C.:

To give effect to this argument would emasculate the mootness doctrine which by definition applies if at any stage the foundation for the action disappears.

[31] Like Sopinka J., I do not think that the need to promote the efficient use of judicial resources can be approached on an ad hoc basis. It is not simply a question of the judicial resources needed to dispose of the particular appeal. The question must be whether the case should have been permitted to continue to absorb judicial resources once it became moot. That question must be answered having regard not only to the specific case, but also to similar cases which would have an equal demand on the resources of the court. As this appeal was moot before the Divisional Court heard the appeal, this court should hear the merits of the appeal only if it is satisfied that the Divisional Court could, in the proper exercise of its discretion, have heard the appeal. If the Divisional Court should not have heard the appeal, its failure to properly exercise its discretion cannot become an argument in favour of this court hearing the merits of the appeal.

[32] Nor does the fact that this court granted leave to appeal speak in favour of hearing the merits of the appeal. The granting of leave by one panel cannot bind or limit the powers of the panel hearing the actual appeal. This is particularly true here where the issue of mootness was not raised on the leave to appeal application.

[33] The parties also argue that judicial economy would be promoted by hearing the appeal on the merits in that it would foreclose litigation on these legal issues in subsequent cases. I cannot agree. The question of the scope of the discretion provided for in s. 171.21(1)(a) of the Act could not be addressed effectively in a factual vacuum. This is perhaps why Cumming J. did not address the issue in dissent and why Ms. Arulappah in this court takes the position that the majority should not have considered that issue. Judicial discretion must respond to specific circumstances. Any attempts to describe discretion in a factual vacuum will provide little or no guidance to those required to apply that discretion in subsequent cases.

[34] The Divisional Court's resolution of the standard of review issue is similarly of limited value in resolving future cases. Section 171.13(12) does not articulate a standard of review. The determination of the operative standard of review is as much an exercise in judicial self-discipline as it is an exercise in statutory interpretation. As Campbell J. observed in Ryegate (Tecumseh) Co-operative Homes Inc. v. Stallard, supra, at para. 36, the standard of review will vary depending upon the issues raised. It is impossible, in my view, to hold that s. 171.13(12) of the Act creates a single standard of review applicable to each and every challenge made to a Board of Directors' decision to terminate membership and occupancy rights. Far from avoiding further litigation, it seems to me that the decision of the Divisional Court will inspire further litigation in which the broad language of that decision will be parsed and crafted to fit the specific circumstances of subsequent cases. R yegate (Tecumseh) Co-operative Homes Inc. v. Stallard, supra, indicates that the case-by-case interpretative process is already underway.

V.

[35] The factors relied on by the Divisional Court in its determination to hear the appeal despite its mootness do not provide a proper basis upon which it could exercise its discretion in favour of hearing a moot appeal. The factors relevant to the exercise of that discretion do not warrant the departure from the usual practice whereby courts will not hear moot appeals. The Divisional Court should have dismissed the appeal as moot. Section 134(1)(a) of the Courts of Justice Act, R.S.O. 1990, c. C.43 provides that this court may make any order or decision that ought to or could have been made by the court or tribunal appealed from.

[36] Under that authority, I would set aside the order of the Divisional Court and make an order dismissing the appeal as moot. I would make no order as to costs.

Order of Divisional Court set aside and appeal dismissed as moot.

Notes

Note 1: Ryegate (Tecumseh) Co-operative Homes Inc. v. Stallard, released April 4, 2000 (Ont. Div. Ct.), provides an example of a case where it could be said that the appeal was not moot even though the specific issues of possession and membership in the Co-operative were no longer an issue. In that case, the trial judge had held that certain by-laws of the Co-operative were unreasonable. The Co-operative had an interest in challenging and reversing that ruling apart entirely from the specific dispute between the Co-operative and Mr. Stallard.

Note 2: There is a second reason, applicable to cases like this where leave to appeal is needed, why the importance of a legal issue cannot, standing alone, justify the hearing of a moot appeal. This court will grant leave to appeal from decisions made by the Divisional Court in the exercise of its appellate jurisdiction only in cases where the issues raised have importance beyond a particular case: Sault Dock Co. v. Sault Ste. Marie (City), 1972 572 (ON CA), [1973] 1 O.R. 479, 34 D.L.R. (3d) 327 (C.A.). If the importance of an issue alone is enough to justify the hearing of a moot appeal, then moot appeals which require leave are in no different position than other appeals requiring leave: Borowski, supra, at p. 362 S.C.R., p. 16 C.C.C.