COURT OF APPEAL FOR ONTARIO

CITATION: Carson v. Kearney (Town), 2016 ONCA 975

DATE: 20161222

DOCKET: C62031

Doherty, Gillese and Huscroft JJ.A.

BETWEEN

Robin Carson and Chris Forde

Plaintiffs (Respondents)

and

The Corporation of the Town of Kearney

Defendant (Appellant)

M. John Ewart, for the appellant

David A. Morin, for the respondents

Heard and released orally: December 19, 2016

On appeal from the judgment of Justice Edward J. Koke of the Superior Court of Justice, dated March 22, 2016.

ENDORSEMENT

[1] In June 2010, the respondents purchased a residence, intending to convert it into an outdoor adventure store with some overnight accommodation and an apartment on the second floor. The respondents needed a building permit to do the renovations and a permit rezoning the property so it could be used for commercial purposes. Their interactions with the various officials employed by the appellant began in the summer of 2010. The issues relating to the permits were finally resolved almost five years later.

[2] The respondents sued, alleging negligence and negligent misrepresentation. The respondents alleged that the conduct of the appellant led to delays in obtaining the necessary permits and that those delays resulted in substantial business losses for them.

[3] The trial judge held that the appellant was liable in negligence and he assessed damages as follows: $266,247 for business losses, $6,306 for special damages and $20,000 in general damages. The trial judge awarded costs in the amount of $235,418.99.

[4] The trial judge was satisfied that the appellant owed a duty of care to the respondents in respect of the applications for the necessary permits. The appellant does not challenge that holding on appeal.

[5] The trial judge recognized that many of the duties imposed on the Chief Building Officer (“CBO”) involved the exercise of a discretion. The question to be answered on the negligence claim was not did the CBO have the authority to act as he did, but rather, assuming he had the authority, did he exercise that authority reasonably in all of the circumstances?

[6] The trial judge found that the appellant acted unreasonably. He based that finding, not on a single isolated act, but on a course of conduct that began on June 1, 2012 with the hiring of Henry Hess as the CBO, and continued until early 2015. The trial judge’s findings in support of his determination that the appellant acted unreasonably include the following:

• Mr. Hess’ failure to consult with Mr. Schaefer, his predecessor. Mr. Schaefer had taken a very different view of the requirements the respondents had to meet to proceed with their project. The respondents had relied on Mr. Schaefer’s representations in proceeding with the project. Mr. Hess, as it turns out, not only did not consult with Mr. Schaefer, but in fact materially misunderstood the position that Mr. Schaefer had taken with the respondents.
• The Town Council failed to exercise any control over the conduct of Mr. Hess. The trial judge recognized that the CBO has significant independence in the exercise of his authority. However, the trial judge found, correctly in our view, that the Town Council maintained an obligation to oversee the CBO’s conduct. They failed to do so in this case.
• Mr. Hess acted unreasonably throughout his dealings with the respondents. The trial judge sets out his findings in this regard, at paras. 159-67. We will not attempt to summarize those findings. In our view, they are all supported by the evidence. The trial judge properly focussed on the reasonableness of Mr. Hess’ conduct and not on whether his demands fell within the scope of the relevant legislation.
• The appellant acted unreasonably in insisting that Mr. Horsman, Mr. Hess’ successor, not assist the respondents in their efforts to obtain the necessary permits in the latter part of 2013 and 2014.

[7] In our view, the trial judge’s findings amply support his ultimate conclusion that the appellant acted negligently in its dealings with the respondents. We would not interfere with that finding.

[8] The appellant also makes one argument in respect of the damage award. The appellant claims that the respondents failed to mitigate their damages and should not have been compensated for 2015 business losses.

[9] We cannot agree. First of all, it should be recalled that the respondents could do nothing to mitigate their business losses until early 2015 because the appellant had told Mr. Horsman that he should not cooperate with the respondents in their efforts to obtain the necessary permits. The appellant lifted this embargo only in January 2015. After 2015, the respondents simply did not have the money to carry forward with the project. They had exhausted their funds in efforts to meet the many and ever-changing demands of the appellant and, especially Mr. Hess.

[10] The duty to mitigate required that the respondents take reasonable steps to mitigate their damages. The duty to mitigate, however, does not require the injured party to spend money that it does not have, especially when it is the conduct of the tortfeasor that has left the injured party without funds. We would not interfere with the damages award.

[11] The appellant seeks leave to appeal the costs order. Counsel concedes, quite properly in our view, that the respondents were entitled to costs on a substantial indemnity basis for almost the entire proceeding. The respondents made several offers to settle, all of which were well below the amount awarded at trial. Counsel submits, however, that even assuming substantial indemnity was the proper standard, the quantum of damages was so excessive as to require intervention in this court.

[12] This court, for sound policy reasons, grants leave to appeal costs sparingly. In our view, once one accepts, as we do, that costs on the substantial indemnity basis were properly awarded, we see no reason to interfere with the quantum awarded. We would not grant leave to appeal from the costs order.

[13] The appeal is dismissed. Leave to appeal costs is refused. Costs of the appeal to the respondents fixed at $23,000, inclusive of disbursements and relevant taxes.

“Doherty J.A.”

“E.E. Gillese J.A.”

“Grant Huscroft J.A.”