COURT OF APPEAL FOR ONTARIO

CITATION: Williams v. Toronto (City), 2012 ONCA 915

DATE: 2012-12-28

DOCKET: C55515

Before: Cronk, Juriansz and Pepall JJ.A.

BETWEEN

Terence Williams

Applicant

(Respondent in Appeal)

and

The City of Toronto

Respondent

(Appellant in Appeal)

PROCEEDING UNDER THE CLASS PROCEEDINGS ACT, 1992

Counsel: Mark Siboni and Christopher J. Henderson, for the appellant Brendan Van Niejenhuis, for the respondent

Heard: December 17, 2012

On appeal from the order of Justices Katherine E. Swinton, Jennifer Mackinnon and Gladys I. Pardu of the Superior Court of Justice, sitting as the Divisional Court, dated December 22, 2011.

By The Court:

I. Background

[1] By order of P. Perell J. of the Superior Court of Justice, dated May 13, 2011, Terence Williams’ motion for an order certifying this proceeding as a class proceeding under the Class Proceedings Act, 1992, S.O. 1992, c. 6 (the “Act”) was dismissed on the basis that Mr. Williams does not have a cause of action for negligence or negligent misrepresentation against the appellant municipality, the City of Toronto (the “City”). In these circumstances, the motion judge held that Mr. Williams did not meet the cause of action criterion for certification, set out in s. 5(1)(a) of the Act.

[2] On appeal, a majority of the Divisional Court, Swinton and Mackinnon JJ., disagreed with the motion judge and reversed his ruling. In their view, it is not plain and obvious that the City owes no duty of care to Mr. Williams. Consequently, they concluded that the statutory cause of action criterion for certification had been met.

[3] Justice G. Pardu dissented. In her view, Mr. Williams has no cause of action against the City either for breach of statutory duty or negligence because neither Mr. Williams nor the other proposed class members stand in a proximate relationship with the City.

[4] In the result, by order dated December 22, 2011, the Divisional Court set aside the motion judge’s order, certified this proceeding as a class proceeding, and referred the matter back to the motion judge to make the necessary order converting Mr. Williams’ application to an action.

[5] The City now appeals to this court. Its principal argument is that the majority of the Divisional Court erred in characterizing the nature of the relationship between Mr. Williams and the City. Contrary to the majority’s holding, the City says, the facts of this case do not show a specific and special relationship between the City and Mr. Williams sufficient to ground a cause of action in negligence against the City.

[6] We conclude that the appeal must be dismissed for the following reasons.

II. Discussion

[7] Mr. Williams is a rooming house and bachelorette apartment tenant in the Parkdale area of Toronto. He is the proposed representative plaintiff in this proceeding, which he brings on his own behalf and on behalf of similarly-situated Parkdale tenants.

[8] The core of Mr. Williams’ claim is that the City was negligent in failing to deliver to him and to other tenants in the proposed class statutorily-mandated notices informing the class members of their entitlement to reduce the rents paid to their landlords in accordance with a rent reduction scheme set out in the Residential Tenancies Act, 2006, S.O. 2006, c. 17 (the “RTA”) and predecessor legislation. Mr. Williams alleges that because of the City’s negligent failure to deliver the requisite notices, the class members failed to receive reductions in their rent during a five-year period and cannot now claim relief elsewhere.

[9] The motion judge held that the City owed no duty of care to Mr. Williams or the other class members. He recognized that to determine whether a duty of care exists in tort, the relationship between the parties must be examined to ascertain whether there is sufficient foreseeability and proximity to establish a prima facie duty of care. Further, if such a duty arises, it must still be determined whether policy considerations exist that would negate or limit the duty of care.

[10] The motion judge held that the foreseeability requirement was met in this case. The occurrence of harm if the City failed to deliver the requisite rent reduction notices was foreseeable. However, the motion judge also held that the relationship between the parties was not sufficiently close to satisfy the proximity requirement for the imposition of a duty of care. Further, in his view, several policy considerations negated any prima facie duty of care that might otherwise be said to exist.

[11] There are two main difficulties with the motion judge’s proximity analysis. First, the motion judge examined the applicable statutory regime established by the RTA and its predecessor statute and the City’s obligations thereunder. This was certainly the correct starting point for analysis of the relationship between the parties. But the motion judge failed to also consider the facts pleaded by Mr. Williams regarding the relationship between the parties. As counsel for the City candidly acknowledged before this court, the necessary proximity analysis to determine whether the City owed Mr. Williams a duty of care required consideration of both the applicable statutory scheme and the facts pleaded by Mr. Williams.

[12] The majority of the Divisional Court was alive to this issue, observing, at paras. 34 and 45, that regard must be had to the governing statute and to the alleged factual relationship between the parties, as pleaded. The majority put it this way, at para. 42:

[T]he statute is only the beginning of the analysis to determine whether there is sufficient proximity to found a prima facie duty of care. It is necessary, as well, to consider whether the relationship between the City and [Mr. Williams], a Parkdale rooming house tenant, would be sufficient to find proximity. In the context of s. 5(1)(a) of the Act, the question is whether it is plain and obvious that there is insufficient proximity to found a prima facie duty of care to [Mr. Williams] and the other Parkdale rooming house tenants.

We agree with this analysis. Moreover, we did not understand counsel for the City to argue otherwise.

[13] Second, and importantly, the ‘plain and obvious’ test is an exacting one. In the context of the cause of action certification criterion under s. 5(1)(a) of the Act, the issue is whether it is plain and obvious, based on the governing statutory regime and the pleadings, that Mr. Williams’ claim against the City cannot succeed. For the purpose of this test, the material facts pleaded are to be accepted as true and the pleading is to be read generously. Moreover, as the majority of the Divisional Court noted, unsettled or novel matters of law should be permitted to proceed, so that they can be determined on the basis of a complete evidentiary record.

[14] We are not satisfied that the high ‘plain and obvious’ threshold is met in this case.

[15] The City acknowledges that it was obliged to deliver the statutory rent reduction notices in question and that it failed to do so. It further accepts the motion judge’s finding that the alleged harm occasioned by its failure to deliver the rent reduction notices was foreseeable.

[16] Importantly, in addition to these admitted facts, Mr. Williams pleaded that he and similarly-situated tenants were part of a specific City project in the Parkdale area of Toronto – the Parkdale Pilot Project – that was intended to regularize illegal and/or unlicensed rooming house apartment buildings to bring them into conformity with the City’s land use by-laws.

[17] As pleaded, one of the significant components of the Parkdale Pilot Project involved statutory amendments to facilitate property tax savings for Parkdale landlords and corresponding rental savings for affected Parkdale rooming house tenants, including Mr. Williams and other proposed class members. Mr. Williams also pleaded that his ability and that of other class members to learn of their entitlement to rent reductions hinged on receipt of the relevant rent reduction notices from the City.

[18] We agree with the majority of the Divisional Court that it is not plain and obvious that these pleaded facts, if proven, are insufficient to establish that the City owed Mr. Williams and other class members a private law duty of care as a result of a specific and special relationship between the parties arising from the Parkdale Pilot Project. As the majority of the Divisional Court put it, at paras. 43 and 46, on the facts pleaded: “[Mr. Williams] and the class members fell within a specific group of tenants targeted by the City in the Parkdale Pilot Project” and, “[I]t is arguable that there is sufficient proximity to found a prima facie duty of care when the statutory duty to give notice is considered in light of the facts as pleaded showing the relationship between the City and the Parkdale tenants arising as a result of the Parkdale Pilot Project.”

[19] We are also not persuaded, at this early stage, that it is plain and obvious that policy considerations would inevitably operate to negate any private law duty of care otherwise found to attach to the City.

[20] On the facts as pleaded by Mr. Williams, there is no suggestion that a private law duty of care attaches generally to the City in respect of all tenants in the City who are entitled to rent reduction notices. The case put against the City is confined to a duty allegedly owed to a discrete subgroup of Toronto tenants – those like Mr. Williams, who were targeted by the City in the Parkdale Pilot Project. Further, in our view, in the absence of a complete exchange of pleadings and a full evidentiary record, it cannot be said that the policy considerations identified by the motion judge (the suggested danger of indeterminate liability for the City and the inappropriateness of allegedly shifting landlords’ financial obligations for rent reductions to the City) would necessarily operate to negate any private law duty of care on the City’s part, arising from the alleged special relationship between the parties.

III. Disposition

[21] For these reasons, the appeal is dismissed. Mr. Williams’ brief written submissions concerning the costs of the appeal shall be delivered to the Registrar of the court by Friday, January 11, 2013. The City’s brief responding costs submissions shall be similarly delivered, within ten days thereafter.

Released: “DEC 28 2012”

“EAC” “E.A. Cronk J.A.”

“R. Juriansz J.A.”

“S. Pepall J.A.”