Court File and Parties

Court: COURT OF APPEAL FOR ONTARIO Date: 2021-10-01 Docket: C68540

Before: Strathy C.J.O., Pepall and Pardu JJ.A.

Between: LMC 477R Corp. and Newstead Inc., Applicants (Appellant) And: Metropolitan Toronto Condominium Corporation No. 1046, Respondent (Respondent)

Counsel: Allan Sternberg and Emily Hives, for the appellant LMC 477R Corp. Mark H. Arnold, for the respondent

Heard: September 13, 2021 by videoconference

On appeal from the judgment of Justice Janet Leiper of the Superior Court of Justice, dated July 7, 2020, with reasons reported at 2020 ONSC 4165.

Reasons for Decision

Introduction

[1] This appeal involves a dismissal of an application for oppression under the Condominium Act, 1998, S.O. 1998, c. 19.

Factual Background

[2] The appellant, LMC 477R Corp. (“LMC”), operates a commercial parking facility in a condominium building located in the entertainment district on Richmond Street West in Toronto. It owns 131 of 136 parking units and 16 of 94 commercial/residential units in the building. The respondent, Metropolitan Toronto Condominium Corporation No. 1046 (“MTCC”), is a condominium corporation and manages and administers the complex, including the garage.

[3] The parties entered into a lease for the parking garage in 2000. Monthly parking lot users had access to the building all hours of the day, every day, while community hourly parking lot users only had access during business hours on weekdays.

[4] In May 2017, after the lease had expired, the appellant proposed a new agreement to expand the hours of parking for community customers from business hours weekdays to 24 hours a day, seven days a week.

[5] The parties entered into negotiations.

[6] On June 6, 2018, the appellant commenced an application under s. 135 of the Condominium Act, seeking a declaration that the respondent acted oppressively in interfering with the appellant’s ability to operate the parking facility and in refusing to engage in good faith negotiations for a new parking agreement. It also sought oppression relief relating to roof and garage repairs, but this relief is not in issue on the appeal.

[7] On July 31, 2018, the respondent sent the appellant a letter containing what it described as preconditions to facilitating the appellant’s commercial exploitation of its parking units. The so-called preconditions included payment of the respondent’s legal costs. The appellant did not respond to that letter. In November 2018, the appellant unilaterally installed a parking booth in the garage while negotiations were ongoing and asked the City of Toronto to ticket unitholders parking in the garage. In December 2018, the respondent approved an extension to the opening hours of the parking facility, although not to the extent requested by the appellant. The respondent cited security concerns surrounding 24/7 access to the parking garage. By correspondence dated February 25, 2019, the respondent expanded its preconditions to include priority for residents’ parking.

[8] The application came on for hearing on January 31, 2020.

Application Judge’s Reasons

[9] The application judge gave detailed reasons for decision.

[10] In first addressing the claim for oppression relating to the roof repairs, the application judge identified the components required to anchor a claim for oppression under the Condominium Act: (i) a breach of the appellant’s reasonable expectations, and (ii) conduct that amounted to oppression, unfair prejudice, or unfair disregard of the appellant’s interests. In addressing whether the respondent was oppressive in its conduct of the parking garage negotiations, she described the background facts and the parties’ positions, noting the appellant’s position that the respondent had not acted reasonably and had unreasonably delayed negotiations. She also noted the appellant’s argument that granting priority and preferred rates for residents’ parking amounted to unfair enrichment for the other unitholders. She applied this court’s decision in 3716724 Canada Inc. v. Carleton Condominium Corporation No. 375, 2016 ONCA 650, 61 B.L.R. (5th) 173, noting that she was guided by deference to the decisions of boards and the law around the business judgment rule.

[11] She concluded that the respondent had not acted oppressively in its negotiations. It had engaged counsel, communicated with the appellant, made adjustments to the parking hours, consulted with unitholders, proposed mediation and a final decision had not been taken. She described the July 31, 2018 letter as putting “issues on the table”. Although the respondent had conducted assertive negotiations, there was no evidence of bad faith or oppressive conduct. She accordingly dismissed the oppression application.

Analysis of Grounds of Appeal

[12] The appellant raises three grounds of appeal.

(a) Application of the Test for Oppression

[13] First, the appellant asserts that the application judge applied the wrong legal test for the oppression remedy under the Condominium Act by focusing on whether the respondent’s conduct was reasonable and whether the business judgment rule applied.

[14] We do not accept that the application judge applied the wrong test. As conceded by the appellant, she correctly identified the appropriate two-pronged test for oppression earlier in her reasons. In that regard, see Metropolitan Toronto Condominium Corporation No. 1272 v. Beach Development (Phase II) Corporation, 2011 ONCA 667, 285 O.A.C. 372, at para. 6. She headed her analysis of the parking garage negotiations: “Was MTCC Oppressive in Its Conduct of the Parking Garage Negotiations with LMC?” indicating that she knew to apply the same oppression analysis to the issue of the negotiations.

[15] We are satisfied that the application judge clearly understood and applied the correct test. Although it would have been preferable for her to have used the term “reasonable expectations” in her discussion of the parking negotiations, she was responding to the terminology used by the parties and to the arguments as framed by them. In addition, in relying on the business judgment rule, she correctly applied this court’s decision in 3716724 Canada Inc. v. Carleton Condominium Corporation No. 375 and examined the context of the respondent’s decision-making. As stated by Hoy A.C.J.O (as she then was) at para. 53 of that decision:

Therefore, to summarize, the first question for a court reviewing a condominium board’s decision is whether the directors acted honestly and in good faith and exercised the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. If they did, then the board’s balancing of the interests of a complainant under s. 135 of the Act against competing concerns should be accorded deference. The question in such circumstances is not whether a reviewing court would have reached the same decision as the board. Rather, it is whether the board reached a decision that was within a range of reasonable choices. If it did, then it cannot be said to have unfairly disregarded the interests of a complainant.

[16] In this case, the application judge concluded that there was no evidence of bad faith or oppressive conduct and that the respondent had acted reasonably. She accordingly applied deference to the respondent’s balancing of the interests of the appellant with those of the other unitholders. We see no error.

(b) Allegation of Palpable and Overriding Errors

[17] Second, the appellant challenges the application judge’s conclusion that the respondent’s conduct did not amount to oppression, unfair prejudice or unfair disregard. In this regard, the appellant argues that the application judge erred by finding that the negotiations between the parties were ongoing, as the negotiations had ceased in the fall of 2017. In addition, the appellant complains that the application judge failed to consider relevant evidence and make essential findings of fact relating to the establishment of the preconditions to negotiations, the respondent’s inconsistent conduct of locking the garage doors when the building itself was unlocked, and of maintaining a higher security standard for the appellant than for other unit holders who offered their premises for rental to Airbnb.

[18] The application judge found that at the time of the hearing before her, the parties had not yet arrived at a final decision, and the respondent’s July 31, 2018 letter was still on the table. At para. 90 of her reasons, the application judge stated:

LMC seeks a finding of oppression for conduct by MTCC in the middle of ongoing negotiations. I conclude that restraint should be shown in such circumstances. A final decision has not been taken. The offers of mediation are reasonable. Counsel’s letter of July 31, 2018 put issues “on the table.” There have been assertive negotiations conducted by MTCC, but no evidence of bad faith or oppressive conduct. The fact that LMC does not like the positions taken by MTCC does not render the conduct oppressive.

[19] There was evidence before the application judge that the appellant had never responded to the July 31, 2018 letter. Moreover, the parties continued to have discussions and to exchange communications well after the July 31, 2018 letter. This included correspondence from the respondent in which it suggested mediation to resolve the parties’ dispute. In addition, in its affidavit filed in the proceeding, the respondent noted that it remained willing and able to talk with the appellant about its parking proposal. The evidence supported the application judge’s finding that a final decision had not been taken. There was no palpable and overriding error.

[20] We do acknowledge that some of the pre-conditions appear to be overreaching. One would not expect that, prior to negotiations, the appellant would be obliged to provide the respondent with a blank cheque for legal fees or that it would be required to provide the unitholders with a proprietary interest in parking facilities that they did not otherwise have as a condition precedent to negotiations. However, as counsel for the respondent candidly conceded, the preconditions represented the respondent’s position, and all were open to negotiation.

[21] As for the appellant’s submissions that the application judge failed to make certain factual findings, she was not obliged to address every argument raised: Welton v. United Lands Corporation Limited, 2020 ONCA 322, 64 C.C.E.L. (4th) 265, at para. 60; Manastersky v. Royal Bank of Canada, 2019 ONCA 609, 146 O.R. (3d) 647, at para. 125; R. v. R.E.M., 2008 SCC 51, [2008] 3 S.C.R. 3, at para. 18. Most fundamentally, she considered the competing interests of the parties, recognized that the negotiations were ongoing, and found that as of the date of the hearing, the appellant had not established oppression under the Act. We would not give effect to this ground of appeal.

(c) Insufficiency of Reasons

[22] Third, the appellant submits that the application judge’s reasons were insufficient and appellate intervention is therefore justified.

[23] We disagree. The application judge gave detailed reasons for decision. She identified the key issues, made the necessary findings of fact, and set out her chain of reasoning: Welton v. United Lands Corporation Limited, at paras. 57-58. Read as a whole, it is clear how and why the application judge decided as she did. We see no basis on which to interfere.

Conclusion

[24] For these reasons, the appeal is dismissed. We agree with the application judge that the proposal to attend mediation is a reasonable one and the parties should seriously consider that alternative. Even though the respondent has been successful on the appeal, there was obvious confusion relating to its position as it related to the preconditions. In the circumstances, there will be no order of costs of the appeal.

“G.R. Strathy C.J.O.” “S.E. Pepall J.A.” “G. Pardu J.A.”