CITATION: Foley v. Shamess, 2008 ONCA 588
DATE: 20080818
DOCKET: C44565 & C45668
COURT OF APPEAL FOR ONTARIO
LASKIN, MOLDAVER and FELDMAN JJ.A.
BETWEEN:
JOHN WILLIAM FOLEY and DOROTHY JOAN FOLEY
Plaintiffs (Respondents/Cross-Appellants)
and
MARGARET SHAMESS, MARION KINCH, THE ESTATE OF ALBERT SHAMESS, ELAINE SCARR, LYNDA LINDSAY, CARA LYNNE SHAMESS AS ESTATE TRUSTEE OF THE ESTATE OF EDWIN SHAMESS, SHAMESS HARBOUR PROPERTIES LIMITED and THE CORPORATION OF THE TOWN OF PARRY SOUND
Defendant, The Corporation of the Town of Parry Sound (Appellant (C44565)/Respondent (C45668)/Respondent in Cross Appeals)
Defendants, Elaine Scarr, Lynda Lindsay, Cara Lynne Shamess as Estate Trustee of the Estate of Edwin Shamess and Shamess Harbour Properties Limited (Respondents (C44565)/Appellants (C45668)/Respondents in Cross Appeals)
David A. Tompkins for The Corporation of the Town of Parry Sound, the appellant in (C44565), the respondent in (C45668) and respondent in cross appeals
W. Bruce Cunningham for Elaine Scarr, Lynda Lindsay, Cara Lynn Shamess as Trustee of the Estate of Edwin Shamess, and Shamess Harbour Properties Limited, the respondents in (C44565), the appellants in (C45668) and respondents in cross appeals
Michael P. Farace for John William Foley and Dorothy Joan Foley, the respondents/cross appellants
No one appearing for the defendants Margaret Shamess, Marion Kinch, and The Estate of Albert Shamess
Heard: January 16, 2008
On appeal and cross-appeal from the judgment of Justice J. Stephen O’Neill of the Superior Court of Justice dated November 9, 2005, with reasons reported at 2005 53775 (Ont. C.S.J.), and with supplementary reasons reported at 2006 20850 (Ont. S.C.J.), dated June 7, 2006.
LASKIN J.A.:
A. OVERVIEW
[1] The Foleys, the Shamesses and the Town of Parry Sound litigated for 19 days over a 100-year old building, which the Town eventually demolished. The building had three storeys and three units. The Shamess family owned the western and middle units; the Foleys owned the eastern unit. The Shamess units were rundown and unoccupied. The Foley unit needed some repair, but tenants occupied the main floor and the top floor.
[2] In the fall of 1994, the Town of Parry Sound issued notices of violation under its property standards by-law against both the Shamess and Foley units. The owners repaired some but not all of the deficiencies. By 1997, the Shamess units had further deteriorated. The Town’s chief building official declared the entire building unsafe and ordered the owners to undertake short and long term repairs. They did no repairs, prompting the Town to prohibit the use or occupancy of the building.
[3] The Town also tried to get the owners to agree on how to deal with the building. They could not agree. The Shamesses wanted to demolish the entire building. The Foleys wanted the Shamess units demolished and their unit preserved at the expense of the Shamesses or the Town. When neither the Shamesses nor the Foleys did any of the repairs that had been ordered, the Town served notice of its intention to demolish the building. In September 2001, the entire building was demolished.
[4] The Foleys sued for damages for negligence and nuisance. They claimed that the Shamesses’ failure to repair or demolish their units in response to the 1994 notice, and the Town’s failure to enforce its property standards by-law, had deprived them of the use of their unit. The trial judge found all parties negligent and apportioned liability 40 per cent to the Town, 40 per cent to the Shamesses and 20 per cent to the Foleys. In essence, he found both the Town and the Shamesses liable for failing to act on the 1994 notice of violation. In his opinion, by 1997 either the Town or the Shamesses should have demolished the Shamess units, leaving the Foley unit as a free-standing structure. He fixed damages for loss of profit and loss of the building at $51,000.[^1]
[5] Both the Town and Shamesses appeal only on liability. Each submits that the trial judge’s finding of liability was unreasonable. The Town contends that it had no obligation to undertake a partial demolition of the building when the owners themselves did not agree to do so. The Shamesses contend that they had no obligation to demolish only their units, which was a difficult and costly course of action. The Foleys had cross-appealed on the trial judge’s apportionment of liability and dismissal of their claim for punitive damages, but abandoned the cross-appeal during oral argument.
[6] For the reasons that follow, I would allow the Town’s appeal and dismiss the action against it. I would dismiss the Shamesses’ appeal and reapportion liability 66⅔ per cent to the Shamesses and 33⅓ per cent to the Foleys.
B. BACKGROUND FACTS
1) The parties and their ownership interests
[7] The Shamess siblings and cousins owned their two units – 5 and 5A Parry Sound Road – for many years. The Shamesses were elderly and some were in poor health. They took few steps to maintain the building, and, for example, had not taken out insurance on their units since 1988. Over the years they tried to sell their interests but received no offers.
[8] In 1995, the Shamess family transferred their interests in the building to Shamess Harbour Properties Limited, a company that they had incorporated the previous year. They did so in part to make it easier to deal with their ownership interests, and in part to shield themselves from personal liability. However, in fixing liability, the trial judge pierced the corporate veil and held the individual Shamess defendants liable. No appeal has been taken from that holding.
[9] The Foleys purchased their unit in the building – 1 Emily Street – in 1988 for $85,000. Their unit had been in disrepair and abandoned after the death of its elderly occupant in the mid-1980s. A new owner in 1987 had made a few repairs before selling to the Foleys.
[10] When the Foleys bought, they, of course, knew that they were buying only a part of the building, and they knew as well that the other part was owned by the Shamesses and was rundown. However, the Foleys never asked the Shamesses what they intended to do with their part of the building.
[11] The Foleys bought their unit as an income earning investment. They rented out the top floor to a residential tenant and the main floor to a commercial tenant.
2) The 1994 notices of violation and the period November 1994 to October 1997
[12] The Foleys first complained about the condition of the Shamess units in 1994, and they complained not to the Shamesses, but to the Town. The Town responded to the complaint in early November 1994 by sending a by-law inspector to inspect the building. The inspector concluded that the Shamess units did not comply with the Town’s property standards by-law. On November 18, 1994, the Town sent a notice of violation to the Shamesses, setting out a long list of deficiencies that needed to be repaired to bring the units into compliance with the by-law. The notice stipulated that the repair work “should be completed as soon as possible.”
[13] Although some repairs had been made to the Foley unit, the Town also sent the Foleys a notice that their unit did not comply with the property standards by-law.
[14] The trial judge found that in response to the notices of violation, the Shamesses did some demolition work to the outside of their building but did nothing further. Most of the Town’s serious concerns were not remedied. The trial judge also found that by March 1995, the Foleys had repaired some but not all of the deficiencies in their unit.
[15] Over the next two years, the Town continued to monitor the Shamess units. It wrote letters demanding that the deficiencies set out in the 1994 notice be repaired. The Town imposed deadlines for the work to be done. However, the deadlines passed and still the Shamesses undertook no remedial work. They had apparently concluded that their units had no economic value. They wanted the building demolished.
[16] The Town’s last letter to the Shamesses in this period was sent on September 9, 1996. The trial judge found that from then until October 1997, the Town took no further action. In October 1997, the Town’s chief by-law inspector concluded that the Shamess units “had deteriorated to such an extent as to pose a safety threat and extensive work needs to be accomplished immediately to remove the hazards.” The trial judge’s finding of liability against the Town rested on its inaction during the period September 1996 to October 1997.
3) Este’s orders and the Town’s effort to mediate a solution
[17] By the fall of 1997, the Town had hired a new chief building official, John Este. The Foleys asked him to come out to the property and look at their unit and the Shamesses’ units. He did so in early October 1997. After thoroughly inspecting the building, he told both the Foleys and the Shamesses that he had serious concerns about the structural integrity of the building. Before making any order, however, he convened a meeting of the owners and their counsel. Este testified that he wanted to make an order “as agreeable as possible, to all parties.”
[18] The meeting took place in October 1997. It was not productive. The Shamesses wanted to demolish the entire building; they considered a partial demolition of their units too risky and too costly. Alternatively, they offered to sell their units to the Foleys. The Foleys declined their offer. Then the Shamesses offered to buy the Foleys’ unit. The Foleys never gave them a price. The Foleys did not put forward any solution. They wanted their unit preserved at the sole expense of the Shamesses or the Town, a position they maintained through the trial.
[19] On November 10, 1997, because of the owners’ inaction and failure to agree, Este made an order under s. 15(3) of the Building Code Act, 1992, S.O. 1992, c. 23 declaring the building unsafe. He ordered both the Shamesses and the Foleys to do some remedial work by December 31, 1997 and further remedial work by July 31, 1998. He warned both parties that a failure to comply with his order could lead to a further order prohibiting occupancy and ultimately to demolition.
[20] Neither the Shamesses nor the Foleys appealed Este’s order. Nor did they comply with it. On January 19, 1998, Este made an order prohibiting the use and occupancy of the building.
[21] Then the Shamesses and Foleys each retained an engineer to canvass the various options for the building. The two engineers prepared a joint report, which they submitted to the owners for their consideration. Early in their report the engineers said, “[i]t is incumbent on the owners to select a mutually agreeable option, and an agreeable cost sharing method.” The engineers laid out three options for the owners to consider:
- Demolition of the entire building, which they considered the least expensive and technically the easiest option;
- Repair of the entire building, which they considered the most expensive and technically the most difficult option;
- Demolition of the Shamesses’ units and stabilization of the Foleys unit, which they considered costly and challenging, but nonetheless an option that met the needs of all parties and therefore warranted investigation.
[22] The owners failed to act on the engineers’ report. The Town began a Provincial Offences Act, R.S.O. 1990, C. P. 33 prosecution for failure to comply with Este’s order. In October 1999, the Foleys started this litigation. They sought an injunction essentially requesting that the Shamesses repair or demolish their units on the ground that their condition presented an imminent hazard to the entire building. The Foleys’ motion for an injunction was dismissed. The building remained unoccupied.
4) The order of H. Spiegel J. and the demolition of the building
[23] In December 2000, Este wrote to the owners that the Town intended to proceed with the demolition of the entire building as it was entitled to do under s. 7.03 of its property standard by-law. The Foleys brought an application in the Superior Court to set aside Este’s demolition order and to require the Town either to repair and stabilize the entire building or to demolish the Shamesses’ units and stabilize their unit, all at its expense.
[24] H. Spiegel J. dismissed the application. He upheld the demolition order. He said that Este had acted reasonably in concluding the building was unsafe, and that the Foleys’ failure to take any steps to remedy the defects justified the order. Significantly, he found that the Town had “acted with admirable fairness and reasonableness throughout.” The Foleys did not appeal Justice Spiegel’s order.
[25] The Town continued to show a willingness to allow the owners to come to an agreement. It postponed demolition through the spring and summer of 2001, hoping that the Shamesses and Foleys could arrive at a solution. They could not. In September 2001, the Town demolished the entire building.
C. ANALYSIS
1) The Town’s appeal
[26] Once the Town made a policy decision to enact a property standards by-law, it could be liable to property owners for the negligent enforcement of its by-law. See Oosthoek v. Thunder Bay (City) (1996), 1996 1530 (ON CA), 30 O.R. (3d) 323 (C.A.), leave to appeal to S.C.C. refused, [1996] S.C.C.A. No. 577. The Town accepts this principle but submits that the trial judge misapplied it. I agree.
[27] The trial judge found no fault with the Town’s enforcement of its by-law once Este took over as chief building official. Nor could he. From October 1997 on, the Town acted very responsibly. As I have already outlined, Este inspected the building in October 1997, declared it unsafe because of its numerous defects, and ordered the owners to undertake remedial work. When they failed to do so, he prohibited occupancy of the building. At the same time he twice brought the parties or their representatives together to try to forge an agreement on how to deal with the building. Only when it became apparent that the Shamesses and the Foleys could not agree on what to do and would not comply with the order to remedy the defects did the Town demolish the building.
[28] Although the trial judge accepted that the Town was not negligent for the four-year period leading up to the demolition of the building (October 1997 to September 2001), he found the Town liable to the Foleys because of its conduct over the 13-month period from September 1996 to October 1997, when on his finding, the building continued to deteriorate. He concluded that the Town ought to have enforced its property standards by-law during that period, and that its failure to do so contributed to the eventual demolition of the building. At the same time, he found that “an enforcement proceeding would not have resulted in expensive repairs being carried out to the building.” Instead, he found the Town negligent for failing to demolish the two Shamess units by October 1997. In his words: “No policy reason was put forward by the [T]own to explain why it did not move to demolish units 5 and 5A, and to recover the cost of such work as against the owners.”
[29] In my view, finding the Town negligent for failing to undertake a partial demolition of the building was unreasonable. Although the Town owed a duty to the Foleys to enforce its property standards by-law, it owed no duty to them to undertake a partial demolition. For it is one thing to say a municipality has a duty to enforce its by-laws. The way it enforces them is quite another thing. As I read the case law, a municipality has a broad discretion in determining how it will enforce its by-laws, as long as it acts reasonably and in good faith. That makes common sense. The manner of enforcement ought not to be left to the whims or dictates of property owners. See Froese v. Hik, 1993 2815 (B.C.S.C.) and Nesbitt Aggregate Ltd. v. Smiths Construction Co. (Arnprior), [2000] O.J. No. 1233 (Ont. S.C.J.).
[30] Here, the trial judge made no finding that the Town had acted in bad faith. But it seems to me that requiring the Town to spend its limited resources on what expert engineers conceded was a costly and challenging undertaking placed an unreasonable burden on this municipality. If the Foleys wanted the building partially demolished and their unit left intact, they could have sought the Shamesses’ agreement to do so on appropriate terms, or failing agreement, could have sought a court order for partial demolition.
[31] In effect, the trial judge forced the Town to solve the very problem the owners of the building could not solve or would not solve on their own. Both the Shamesses and the Foleys were well aware of the option of a partial demolition and well aware of its expense and risks. They would not agree to undertake it. Why, I ask rhetorically, should the Town be required to do it for them?
[32] My view is supported by the reasons of Justice Spiegel on the Foleys’ application to set aside the Town’s demolition order. In dismissing that application, Justice Spiegel found that the Town had “acted with admirable fairness and reasonableness throughout.” That finding contradicts the trial judge’s finding of negligence. The Foleys seek to circumscribe Justice Spiegel’s finding by contending that it relates only to the period from October 1997 onwards, whereas the trial judge’s finding of negligence relates to the earlier period, September 1996 to October 1997. I do not read Justice Spiegel’s finding to be so limited. Although we do not have the record of the material before him, presumably he was apprised of the history of the building, and the parties’ dealings with it, since at least 1988 when the Foleys purchased their unit. He found that the Town had acted fairly and reasonably, not negligently.
[33] I, too, conclude that the Town acted reasonably. Certainly it cannot be faulted for not undertaking a partial demolition in the fall of 1997. I would allow the Town of Parry Sound’s appeal, set aside the judgment against it, and dismiss the Foleys’ action against the Town.
2) The Shamesses’ appeal
[34] The trial judge found the Shamesses liable to the Foleys in negligence and nuisance. He assessed their degree of fault at 40 percent. In support of his liability finding he made the following findings of fact:
- Except for doing some demolition work to the outside of their units in December 1994, the Shamesses took no steps in response to the Town’s November 1994 notice of violation;
- Although they were aware of the serious deficiencies in their units, they neither remedied them nor demolished their units; and
- The structural integrity of the building deteriorated between November 1994 and October 1997, and the Shamesses knew of this ongoing deterioration.
[35] In the trial judge’s view, even though it may have been prohibitively expensive to repair the deficiencies, the Shamesses could have demolished their units and left the Foley unit as a free-standing structure.
[36] The trial judge also found the Foleys 20 per cent contributorily negligent. He assessed a lower percentage degree of fault against the Foleys than against the Shamesses because the Foleys had addressed many of the Town’s concerns with their unit, while the Shamesses largely had not addressed the Town’s concerns with their units.
[37] The Shamesses appeal against the trial judge’s finding of liability on two main grounds. First, they say that at common law they had no duty to repair or maintain the integrity of the building; instead the Foleys had the right, if they so chose, to enter the Shamesses’ units and do the repairs themselves. Second, they say that requiring them to demolish their own units and preserve the Foleys’ unit imposed an unreasonable burden on them. I do not accept these submissions.
[38] It seems to me that the resolution of the dispute between the Shamesses and the Foleys does not turn on legal niceties but is grounded in the facts. The parties together owned a building. The building had common interior and exterior walls, a common roof and a common foundation.
[39] Although as property owner, the Shamesses had a right to do what they wanted with their units, that right was qualified by their obligation to have regard to the property rights of their “neighbour”, the Foleys. The Shamesses could not simply ignore the many deficiencies in their units when doing so threatened the structural integrity of the entire building and therefore the Foleys’ use of their unit. In other words, in a context where they shared walls, a roof and a foundation, the Shamesses could not fail to comply with the Town’s notice of violation, if by doing so they harmed the Foleys’ unit. In short, the Shamesses had a duty to act reasonably.
[40] If authority is needed for this common sense proposition, I rely, as did the trial judge, on the reasons of Grange J. in T.H. Critelli Ltd. v. Lincoln Trust & Savings Co. (1978), 1978 2172 (ON SC), 20 O.R. (2d) 81 (H.C.J.), aff’d (1979), 1980 1773 (ON CA), 28 O.R. (2d) 701 n, who in turn relied on the judgment of Howland J.A. of this court in Pugliese v. Nat. Capital Commission; Dunn v. Ottawa Carleton (1977), 1977 49 (ON CA), 17 O.R. (2d) 129 (C.A.).
Howland, J.A. (as he then was), reviewed the English, American and Australian cases and found that in the latter two jurisdictions the harsh English rule was not accepted. After considering the Canadian cases he refused to apply the English rule and denied to the defendants an “unlimited licence to wreak havoc on their neighbours”. He held there could be liability in negligence or nuisance. In considering the latter cause of action he stated [at p. 153]”
In determining whether a nuisance exists, it is not sufficient to ask whether an occupier has made a reasonable use of his own property. One must ask whether his conduct is reasonable considering the fact that he has a neighbour. As Lord Wright pointed out in Sedleigh-Denfield v. O’Collaghan, [1990] A.C. 880 at p. 903:
A balance has to be maintained between the right of the occupier to do what he likes with his own, and the right of his neighbour not to be interfered with. It is impossible to give any precise or universal formula, but it may broadly be said that a useful test is perhaps what is reasonable according to the ordinary usages of mankind living in society, or more correctly in a particular society.
[41] Here, the record amply demonstrates that the Shamesses did not act reasonably. They carried out virtually none of the remedial work on their units ordered in the Town’s 1994 notice of violation. They knowingly let their units deteriorate to the point where, in 1997, their units constituted a serious hazard. And their inaction over the period November 1994 to October 1997 largely contributed to Este’s order declaring the building unsafe.
[42] Undoubtedly, requiring the Shamesses to demolish their units and preserve the Foleys’ unit would have proved burdensome. That it would have done so does not afford the Shamesses a defence. To use the well-worn phrase, to a great extent the Shamesses are the authors of their own misfortune. It may be, as the trial judge held, that by October 1997, the cost of repairs would have been prohibitively expensive. There is nothing to suggest that the repairs would have been as costly had they been done immediately in response to the Town’s notice of violation. Indeed, the Town’s 1994 notice of violation ordered repair, not demolition. Regrettably, for the most part these repairs were not done. I would dismiss the Shamesses’ appeal.
3) Reapportionment
[43] Because I would dismiss the action against the Town, the degrees of contributory negligence between the Shamesses and the Foleys must be reapportioned. The trial judge found the Town 40 per cent contributorily negligent. There are two choices: assign the entire 40 per cent to the Shamesses, which would yield a reapportionment of 80 per cent to the Shamesses and 20 per cent to the Foleys; or assign the 40 per cent in the same ratio as the trial judge assigned degrees of contributory negligence between the Shamesses and the Foleys (40 per cent to 20 per cent or 2:1), which would yield a reapportionment of 66⅔ per cent to the Shamesses and 33⅓ per cent to the Foleys.
[44] The latter option is appropriate. The Foleys abandoned their cross-appeal on liability and I would dismiss the Shamesses’ appeal. Thus, I would leave untouched the finding of the trial judge on the degree of fault between the owners. To accomplish that, the Town’s 40 per cent must be reapportioned in the same 2:1 ratio as the trial judge’s apportionment.
D. CONCLUSION
[45] I would allow the Town’s appeal. The Town had no duty to partially demolish the building when the owners, individually or collectively, would not agree to do so. Moreover, imposing this duty on the Town is inconsistent with the earlier decision of H. Spiegel J., who found that the Town had acted reasonably throughout. The Town is entitled to its costs of the appeal in the amount of $11,000, inclusive of the Foleys’ abandoned cross-appeal, and of disbursements and G.S.T. The Town is also entitled to its costs of the trial, which I remit for reassessment.
[46] I would dismiss the Shamess’s appeal. The Shamesses had a duty to act reasonably toward their co-owners, the Foleys. They breached that duty by failing to remedy the many serious deficiencies in their units set out in the Town’s November 1994 notice of violation. I would reapportion degrees of fault so that the Shamesses are 66⅔ per cent contributorily negligent and the Foleys are 33⅓ per cent contributorily negligent. The Foleys are entitled to their costs of the appeal against the Shamesses in the amount of $9,000, inclusive of their abandoned cross-appeal and of disbursements and G.S.T.
RELEASED: August 18, 2008 “John Laskin J.A.”
“JL” “I agree M. Moldaver J.A.”
“I agree K. Feldman J.A.”
[^1]: The parties agreed that lost profit amounted to $3,000 per year for seven years from January 1998 to December 2004. The trial judge assessed the value of the Foleys’ unit at $30,000, based on appraisal evidence.