COURT OF APPEAL FOR ONTARIO

CITATION: Maple Ridge Community Management Ltd. v. Peel Condominium Corporation No. 231, 2015 ONCA 520

DATE: 20150709

DOCKET: C59661

Laskin, Lauwers and Hourigan JJ.A.

BETWEEN

Maple Ridge Community Management Ltd.

Plaintiff

(Respondent)

and

Peel Condominium Corporation No. 231

Defendant

(Appellant)

Michael A. Spears, for the appellant

Timothy Duggan, for the respondent

Heard: April 10, 2015

On appeal from the order of Justice David L. Edwards of the Divisional Court, dated June 16, 2014, with reasons reported at 2014 ONSC 3660, and cost award dated August 1, 2014, with reasons reported at 2014 ONSC 4524.

Hourigan J.A.:

Overview

[1] At issue in this appeal is the sufficiency of the reasons for judgment delivered by a Small Claims Court deputy judge after a trial. On appeal to a single judge of the Divisional Court, the appeal court ruled that the trial judge’s reasons were insufficient to permit meaningful appellate review and ordered that the case be remitted to the Small Claims Court for a new trial before a different deputy judge.

[2] For the reasons that follow, I would allow the appeal.

Background

[3] The appellant, Peel Condominium Corporation No. 231 (“PCC 231”), and the respondent, Maple Ridge Community Management Ltd., entered into a condominium management agreement for a term of three years commencing on December 1, 2009. Under its terms, either party could terminate the agreement on 60 days’ notice or pay in lieu of notice (art. 16.1) or, alternatively, immediately for cause (art. 16.5(c)).

[4] On September 30, 2010, the PCC 231 board of directors terminated the agreement with Maple Ridge pursuant to art. 16.5(c), which permits immediate termination where “[t]he Manager is insubordinate, reckless, or grossly negligent in performing its duties”.

[5] In a letter to Maple Ridge, PCC 231 relied on the following grounds to justify termination for cause:

1. Maple Ridge engaged in a roof replacement project without contracting an engineering professional to oversee the project;

2. Maple Ridge accepted the roofing contractor’s contract without submitting it for legal review to ensure that PCC 231’s interests were protected;

3. Maple Ridge provided “inconclusive” information to the roofing contractor regarding the specific units to be replaced, resulting in an incorrect replacement that voided the associated warranty;

4. Maple Ridge provided erroneous information to the PCC 231 board of directors regarding the potential impact of deferring roof replacement in three blocks;

5. Maple Ridge issued incorrect status certificates even after the PCC 231 board of directors identified specific errors and provided corrected wording;

6. Maple Ridge delayed in providing banking documents for signature at a time when payables were overdue and late charges were being incurred; and

7. Maple Ridge failed to provide PCC 231 with requested reports related to the roofing contract.

[6] In response to the termination, Maple Ridge commenced an action in Small Claims Court. Maple Ridge argued it had not been insubordinate, reckless or grossly negligent and was, therefore, entitled to 60 days’ notice or pay in lieu of notice. Maple Ridge sought $8,303.24 in damages for breach of contract.

Small Claims Court Judgment

[7] The trial judge began by reviewing the background facts, then set out definitions of “insubordination”, “recklessness” and “gross negligence”, drawn from Black's Law Dictionary, The Dictionary of Canadian Law, John G. Fleming's Law of Torts, 6th ed. (Sydney: Law Book Company, 1983) and Holland v. Toronto (City), 1926 CanLII 10 (SCC), [1927] S.C.R. 242. He instructed himself, based on Allen M. Linden and Bruce Feldthusen's Canadian Tort Law, 8th ed. (Markham: LexisNexis, 2006), to "consider the cumulative effect of all of the factors or conduct and not fall into the error, where there are several factors, of considering [the factors] individually" in determining whether gross negligence was established.

[8] The trial judge then examined each ground for termination raised by PCC 231 in the letter to Maple Ridge and considered whether each ground amounted to insubordination, recklessness or gross negligence (i.e. cause for termination of the contract). With respect to ground 1, he stated that Maple Ridge's "lack of proper management and oversight [had] caused significant damages to [PCC 231]." He found there was no evidence to establish that grounds 2, 3 and 4 had occurred, resulted in damages to PCC 231 or amounted to insubordination, recklessness or gross negligence. He found that ground 5 could amount to recklessness, ground 6 could amount to recklessness and negligence, and ground 7 could amount to insubordination.

[9] The evidence also established that Maple Ridge had failed to register its address in the Land Titles Office, in contravention of the agreement; failed to collect funds owed to PCC 231 by unit owners; incurred bank charges unnecessarily; failed to transfer funds to correct accounts and made payments out of incorrect accounts; and failed to take minutes of board of directors meetings as required by the agreement.

[10] Finally, the trial judge held that two additional allegations against Maple Ridge raised at trial could not be a basis for termination because they had occurred after PCC 231 terminated the agreement.

[11] The trial judge concluded, at p. 7:

Notwithstanding that the grounds relied on by the Defendant in terminating the Agreement, may not have been sufficient individually to meet the tests outlined above, although in some cases I believe they were, I am satisfied that when taken together they are sufficient to constitute insubordination, recklessness and/or gross negligence entitling the Defendant to terminate the Agreement without notice pursuant to paragraph 16.5(c).

[12] Accordingly, the trial judge dismissed Maple Ridge’s claim, holding that PCC 231 was entitled to terminate the agreement for cause, without notice, pursuant to art. 16.5(c).

Divisional Court Reasons

[13] On appeal to a single judge of the Divisional Court, the court found that the trial judge's reasons were insufficient to allow for meaningful appellate review as required by the test set out in R. v. R.E.M., 2008 SCC 51, [2008] 3 S.C.R. 3, at para. 17 While R.E.M. was a criminal case, these principles apply equally to reasons given in civil cases: D.M. Drugs (Harris Guardian Drugs) v. Barry Edward Bywater (Parkview Hotel), 2013 ONCA 356, at para. 35; F.H. v. MacDougall, 2008 SCC 53, [2008] 3 S.C.R. 41, at paras. 97-101.

[14] Specifically, the reasons did not say “what” was decided or “why”. It was unclear "what" was decided because the trial judge did not indicate which of Maple Ridge’s acts or omissions individually amounted to insubordination, recklessness or gross negligence; he merely stated that grounds 5, 6 and 7 "could" meet these standards. Further, the Divisional Court held, at para. 22, that it was unclear from the trial judge’s reasons which acts or omissions collectively rose to the level of insubordination, recklessness or gross negligence:

Are they the acts or omissions that he found could amount to insubordination, recklessness and/or gross negligence individually? If so, which? If not, are they the other acts or omissions that the Trial Judge concluded individually could not amount to insubordination, recklessness and/or gross negligence? If so, which?

[15] According to the Divisional Court, the trial judge also failed to explain “why” he reached his conclusion. He did not specify why acts and omissions that were individually insufficient to constitute insubordination, recklessness or gross negligence collectively amounted to the same.

[16] The other issues raised by Maple Ridge on appeal to the Divisional Court were:

(i) What is the applicable standard of review?

(ii) Did the trial judge err in fact and law by misapprehending the evidence before him, by failing to consider all of the relevant evidence, or by making patently unreasonable findings contrary to the weight of the evidence before him?

(iii) Did the trial judge err in fact and law in the application of his findings of fact to the legal principles that he enunciated?

The Divisional Court declined to consider these additional issues because it found that the insufficiency of the reasons was dispositive of the appeal.

[17] The Divisional Court set aside the judgment of the trial judge and returned the matter to the Small Claims Court for a new trial before a different deputy judge. A costs award was made in favour of Maple Ridge in the amount of $10,000.

Positions of the Parties on Appeal

[18] PCC 231 submits that the Divisional Court made the following five errors of law in allowing the appeal and ordering a new trial:

(i) Incorrectly concluding that the “what” and “why” of the trial judge’s reasons are unclear;

(ii) Failing to consider or even reference the extensive trial record in assessing the adequacy of the trial judge’s reasons;

(iii) Failing to apply a reasonableness standard in reviewing the trial judge’s decision;

(iv) Overlooking the nature of the claim and the Small Claims Court context; and

(v) Ordering a new trial without taking into account whether a substantial wrong or miscarriage of justice had occurred.

[19] Maple Ridge submits that the Divisional Court did not err in concluding that the trial judge’s reasons were insufficient. Further, the Divisional Court considered the trial record, but the trial record could not have saved the trial judge’s reasons. Maple Ridge also argues that the standard of review for the trial judge’s reasons was correctness and not reasonableness. As for the Small Claims Court context, Maple Ridge submits that deputy judges of the Small Claims Court are not exempt from the obligation to give proper reasons, even though they preside over busy courts and deal with claims of relatively modest value. Finally, Maple Ridge argues that the referral of the matter back to Small Claims Court for a new trial was consistent with Divisional Court jurisprudence.

[20] Maple Ridge also raises an additional issue. It argues that if this court finds the Divisional Court erred in granting the appeal, the case must be remitted to the Divisional Court. The Divisional Court’s decision was based solely on the issue of the sufficiency of the reasons. Consequently, the other grounds of appeal raised by Maple Ridge in its appeal to the Divisional Court have not been considered.

Analysis

[21] As stated above, I am of the view that the Divisional Court erred in finding that the reasons of the trial judge do not permit meaningful appellate review. In reaching this conclusion, I have determined that the Divisional Court incorrectly applied the standard for assessing the sufficiency of reasons, failed to adequately consider the trial record and failed to consider the Small Claims Court context in which the decision was rendered. I deal with each of these issues below.

[22] I reject PCC 231’s position on the remaining alleged errors. I am not satisfied that the Divisional Court was required to consider the reasons of the trial judge on a reasonableness standard. That standard, as described by the Supreme Court of Canada in Newfoundland and Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board), 2011 SCC 62, [2011] 3 S.C.R. 708, applies to a review of the reasons of an expert tribunal, not a court such as the Small Claims Court. The leading case on sufficiency of judicial reasons, R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869, at paras. 43-47 treats insufficient reasons as an error of law, reviewable on a correctness standard, and makes no mention of a deferential standard of review.

[23] Further, it was not an error for the Divisional Court to remit the case back to the Small Claims Court for a new trial if the reasons of the trial judge were so insufficient that they were not capable of being reviewed: Randall (Litigation Guardian of) v. Lakeridge Health Oshawa, 2010 ONCA 537, at paras. 76-78.

(a) The “What” and the “Why”

[24] The Divisional Court relied on this court’s decision Law Society of Upper Canada v. Neinstein, 2010 ONCA 193, for the principle that in order to permit meaningful appellate review, the reasons of a court must adequately express “what” was decided and “why” it was decided. Although the appeal justice correctly cited the standard to permit meaningful appellate review, he erred in applying that standard to the facts of this case.

[25] In my view, the reasons of the trial judge clearly met the R.E.M. standard. After several pages of analysis, the trial judge concluded that although the grounds relied on by PCC 231 may not have been sufficient to constitute insubordination, recklessness and/or gross negligence when considered on an individual basis, collectively they were sufficient.

[26] The Divisional Court’s finding that the trial judge did not specify which grounds individually amounted to insubordination, recklessness or gross negligence was based on the trial judge’s statements that the allegations “could” meet these standards rather than that they actually did. The Divisional Court’s interpretation is incorrect when read in the context of the entire trial decision. The trial judge reviewed each ground and stated whether it could individually meet the tests for insubordination, recklessness or gross negligence. He then stated that “in some cases” – presumably those where he earlier indicated that the ground “could” individually constitute insubordination, recklessness or gross negligence – the grounds were, as a matter of fact, sufficient to meet those tests on an individual basis.

[27] In any event, this was not the sole basis for the trial judge’s conclusion. He explicitly recognized, based on an authoritative Canadian tort law treatise, that in assessing whether Maple Ridge’s conduct constituted gross negligence he was required to determine the cumulative effect of the acts and omissions rather than assess them individually. Thus, the trial judge's ground-by-ground analysis constituted an extra step that was not strictly required but was used to inform his ultimate conclusion.

[28] In addition, the Divisional Court’s finding that the trial judge did not demonstrate how he reached his conclusion because he did not state why acts and omissions that were individually insufficient to constitute insubordination, recklessness or gross negligence could collectively constitute the same is similarly unfounded when the trial judge’s reasons are read in context. As submitted by PCC 231, it is self-evident, as a matter of logic and common sense, that multiple acts or omissions can rise to a level that one alone cannot reach. The trial judge explicitly and correctly stated that he was required to consider the cumulative effect of all the impugned conduct rather than to consider each allegation individually.

[29] In summary, the “what” and “why” are clear in the trial judge’s seven pages of reasons, which comprised of a thorough analysis of the relevant evidence, legal definitions, and legal authorities. In terms of the "what", the trial judge found that the grounds relied on by PCC 231 cumulatively constituted insubordination, recklessness or gross negligence. In terms of the "why", notwithstanding that it is self-explanatory why two or more grounds that may not be individually sufficient may cumulatively be so, the trial judge cited supportive legal commentary requiring him to consider the aggregate effect of all the factors or conduct and not fall into the error of only considering them individually.

(b) The Record

[30] Having concluded that the reasons of the Small Claims Court were facially incapable of appellate review, the Divisional Court was obliged to consider the record before the trial judge to determine if the reasons were more comprehensible when read in the context of this record.

[31] The level of requisite detail in reasons will be lessened "[w]here the record discloses all that is required to be known to permit appellate review”: Hill v. Hamilton-Wentworth Police Services Board, 2007 SCC 41, [2007] 3 S.C.R. 129, at para. 101. If a detailed record is available, the appellate court should not intervene “simply because it thinks the trial court did a poor job expressing itself”: R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869, at para. 26.

[32] There was ample evidence in the trial record that established that Maple Ridge was insubordinate, grossly negligent and/or reckless. The appeal justice was required to consider that evidence before concluding that the reasons of the trial judge were inadequate. He did not do so. Instead, he appears to have restricted his analysis to a review of the text of the reasons without regard to the trial record. In my view, in failing to conduct a contextual analysis, the Divisional Court erred in law.

(c) The Small Claims Court Context

[33] The Supreme Court of Canada has recognized that access to justice is a significant and ongoing challenge to the justice system with the potential to threaten the rule of law. In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 1, the court held:

Ensuring access to justice is the greatest challenge to the rule of law in Canada today. Trials have become increasingly expensive and protracted. Most Canadians cannot afford to sue when they are wronged or defend themselves when they are sued, and cannot afford to go to trial. Without an effective and accessible means of enforcing rights, the rule of law is threatened. Without public adjudication of civil cases, the development of the common law is stunted.

[34] The Small Claims Court is mandated under s. 25 of the Courts of Justice Act, R.S.O. 1990, c. C.43, to “hear and determine in a summary way all questions of law and fact and may make such order as is considered just and agreeable to good conscience.” The Small Claims Court plays a vital role in the administration of justice in the province by ensuring meaningful and cost effective access to justice for cases involving relatively modest claims for damages. In order to meet its mandate, the Small Claims Court’s process and procedures are designed to ensure that it can handle a large volume of cases in an efficient and economical manner.

[35] Reasons from the Small Claims Court must be sufficiently clear to permit judicial review on appeal. They must explain to the litigants what has been decided and why: Doerr v. Sterling Paralegal, 2014 ONSC 2335, at paras. 17-19. However, appellate consideration of Small Claims Court reasons must recognize the informal nature of that court, as well as the volume of cases it handles and its statutory mandate to deal with these cases efficiently. In short, in assessing the adequacy of the reasons, context matters: Massoudinia v. Volfson, 2013 ONCA 29, at para. 9. Just as oral reasons will not necessarily be as detailed as written reasons, reasons from the Small Claims Court will not always be as thorough as those in Superior Court decisions. Failing to take the Small Claims Court context into account only serves to restrict access to justice by unnecessarily imparting formality and delay into a legal process that is designed to be informal and efficient.

[36] In the present case, the Divisional Court decision overlooks the clear reasoning in the trial judge’s judgment and demands a level of detail that is significantly higher than generally required, particularly in Small Claims Court decisions.

Further Proceedings in the Divisional Court

[37] I would not accede to the submission advanced by Maple Ridge that this case should be remitted back to the Divisional Court for a determination of the issues not considered by the appeal judge.

[38] Pursuant to s.134 of the Courts of Justice Act, on appeal this court may make any order or decision that ought to or could have been made by the court or tribunal appealed from and may make any other order or decision that is just. If Maple Ridge wanted to uphold the judgment of the Divisional Court on grounds other than the inadequacy of the reasons, it should have made those arguments before this court. "In both civil and criminal matters it is open to a respondent to advance any argument to sustain the judgment below, and he is not limited to appellants’ points of law" (Perka v. The Queen, 1984 CanLII 23 (SCC), [1984] 2 S.C.R. 232 at 240). It is hardly proportionate or practical to suggest that this modest claim should be sent back to the Divisional Court for its third appeal.

[39] In any event, the other grounds of appeal advanced by Maple Ridge are weak. It argues that the trial judge misapprehended the evidence by failing to consider all the evidence and making patently unreasonable findings. In addition, it submits that the trial judge erred in fact and law in his application of the facts to the legal principles he enunciated. The trial judge’s factual findings are entitled to considerable deference. There is nothing on the record before us that suggests that he made any palpable and overriding error in any of those findings. I am also of the view that those factual determinations amply supported his legal conclusion that the actions of Maple Ridge constituted insubordination, recklessness and/or gross negligence.

[40] For these reasons, I would decline to remit the case back to the Divisional Court.

Disposition

[41] I would allow the appeal, set aside the order of the justice of the Divisional Court and reinstate the judgment of the Small Claims Court.

[42] With respect to the costs of the appeal in the Divisional Court, I would reverse the order of the Divisional Court and award $10,000 to PCC 231 as the successful party. PCC 231 is also entitled to its costs in this court, which I would fix at $7,500.

Released: July 9, 2015 “JL”

“C. W. Hourigan J.A.”

“I agree John Laskin J.A.”

“I agree P. Lauwers J.A.”