ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-10-413863
DATE: 20120308
B E T W E E N:
METROPOLITAN TORONTO CONDOMINIUM CORPORATION NO. 1067
Plaintiff
- and -
L. CHUNG DEVELOPMENT CO. LTD., YIU W. CHUNG a.k.a. ANDREW Y. W. CHUNG, YIU C. CHUNG a.k.a. TONY Y. C. CHUNG, TONY YIU-CHEUNG CHUNG, YIU H. CHUNG a.k.a. STEPHEN Y. H. CHUNG, GEORGE WOO, DOLORES LAWRENCE, TORCHIN GROUP INC. and CUSHMAN & WAKEFIELD LTD.
Defendants
AND BETWEEN:
L. CHUNG DEVELOPMENT CO. LTD.
Plaintiff by Counterclaim
- and -
METROPOLITAN TORONTO CONDOMINIUM CORPORATION NO. 1067
D efendant by Counterclaim
Carol A. Dirks, for the Plaintiff/Defendant by Counterclaim
Milton A. Davis, for the Defendants Yiu W. Chung a.k.a. Andrew Y. W. Chung, Yiu C. Chung a.k.a. Tony Y. C. Chung, Tony Yiu-Cheung Chung, Yiu H. Chung a.k.a. Stephen Y. H. Chung, George Woo, Dolores Lawrence, Torchin Group Inc. and the Defendant/Plaintiff by Counterclaim L. Chung Development Co. Ltd.
HEARD: November 30 and December 15, 2011 and January 12, 2012
SPENCE J.
REASONS FOR DECISION
Overview
[1] This is a Motion brought by the Defendant L. Chung Development Co. Ltd. ("Chung"), and the individual Defendants pursuant to Rule 20.01(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for Summary Judgment dismissing all of the Plaintiff's Claims on the basis that there is no genuine issue requiring a trial.
[2] Chung is the declarant of Metropolitan Toronto Condominium Corporation No. 1067 (“MTCC”). Chung owned a majority of the units in MTCC until August 1, 2008. Up to that time, a majority of the board of directors of MTCC consisted of members of the Chung family. Chung family members also appear to have held the controlling interest in Chung.
[3] On August 1, 2008, Chung sold its units in MTCC to 2174112 Ontario Inc. (“217”), a corporation controlled by H. Kuang (the “Condominium Sale”). At that time, the previous members of the board of MTCC were removed and a new board of directors was elected.
[4] In November of 2010 MTCC initiated this action against the Defendants with respect to transactions relating to MTCC parking units which occurred in 2005. In those transactions, Chung sold the surface rights to the MTCC parking units to MTCC (the “2005 Purchase”) and MTCC mortgaged them back to Chung to secure part of the unpaid purchase price (the “Chung Mortgages”) HSBC made a first mortgage loan to MTCC for $1.25 million. Chung took a second and a third mortgage for $1.25 million and $100,000, respectively. The individual Defendants (the “Individual Defendants”) were members of the board of MTCC at the time these transactions arose.
[5] The matters in respect of which the action is brought all concern the dealings between MTCC and Chung. MTCC alleges that in these dealings the Defendants acted negligently and in breach of their duties and in breach of contract as a result of which MTCC has suffered harm for which MTCC is entitled to relief by way of damages and a declaration that the two mortgages given by MTCC to Chung in 2005 are invalid.
[6] MTCC initiated the action after it went into default on the Chung Mortgages and Chung initiated steps to exercise its power of sale. That proceeding by Chung awaits the outcome of this action.
Background Facts
[7] Chung built MTCC No. 1067, a commercial condominium project, in 1987 at Kennedy Road and Sheppard Avenue East, Toronto.
[8] The project comprises two buildings with about 160 office or commercial condominium units. The parking garage sits between the two buildings. Until MTCC completed the 2005 Purchase, Chung owned the surface rights to the parking units in the parking garage.
[9] From the condominium project's construction until 2008, the Defendant The Torchin Group Ltd. (“Torchin”), managed it. Torchin is the Chung brothers’ management company.
[10] MTCC’s condominium Declaration was registered in 1993. It sets out MTCC’s and the unit owners' obligations to repair and maintain the common elements and units. Section 15 requires MTCC to repair and maintain the surface areas of the parking units:
…In addition, the Declarant or owner of such Parking Units shall continue to be responsible for the repair and maintenance of the surface areas of each parking Unit only, and the Corporation shall be responsible for maintaining, repairing and replacing the balance of the parking structure….
[11] Until the Condominium Sale in 2008, MTCC’s board of directors consisted of two unit owners, the Defendants Delores Lawrence ("Lawrence") and Dr. George Woo ("Woo") who are not members of the Chung family, and the three Chung brothers who are also Individual Defendants.
[12] In 1999, the parking garage driveway was widened. This was done to allow for better traffic flow and safety. The widening eliminated a number of parking units.
[13] In September 2005, MTCC completed the 2005 Purchase from Chung. The price that was agreed upon was $2.6 million.
[14] MTCC has since obtained an appraisal report for the parking units as at September 29, 2005 from GSI Real Estate (the "GSI Report"). The GSI Report appraises the value of the Parking Units to be only $1.75 million, over $1 million less than the appraisal reported by Royal Lepage (“RL”) which is described below in connection with the 2005 Purchase.
[15] Prior to the 2005 Purchase, in January of 2005 MTCC had received a report from a professional engineer (the “Davroc Report”) reporting that the wearcourse and waterproofing in the parking units was in need of repairs estimated between $80,000.00 to $130,000.00.
Law and Analysis
[16] Chung seeks summary judgment dismissing the action. MTCC is moving for an injunction. MTCC has also brought a motion to amend its pleading to allege fraud.
Summary Judgment ‑ Test
[17] Rule 20 governs summary judgments. It was amended in 2010. The key part of the amended rule states:
20.04 (2) The court shall grant summary judgment if,
(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or
(b) the parties agree to have all or part of the claimdetermined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.
(2.1) In determining under clause (2) (a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:
- Weighing the evidence.
- Evaluating the credibility of a deponent.
- Drawing any reasonable inference from the evidence.
(2.2) A judge may, for the purposes of exercising any of the powers set out in subrule (2.1), order that oral evidence be presented by one or more parties, with or without time limits on its presentation.
[18] The Court of Appeal for Ontario has recently pronounced definitively and comprehensively on Rule 20: Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764. The Court said that its decision "marks a new departure and a fresh approach to the interpretation and application of the amended Rule 20."
[19] Combined Air Mechanical Services Inc. makes it clear that the pre-2010 Rule 20 authorities precluding a Judge on a summary judgment motion from weighing evidence, assessing credibility, or drawing inferences of fact now no longer apply: [1]
The 2010 amendments to Rule 20 [...] specifically authoriz[e] judges to use these powers on a motion for summary judgment the judge is of the view that it is in the interest of justice for such powers to be exercised only at a trial.
[T]he amended rule permits the motion judge to decide the action where he or she is satisfied that by exercising the powers that are now available on a motion for summary judgment, there is no factual or legal issue raised by the parties that requires a trial for its fair and just resolution.
[20] Judges deciding whether to use the new powers [2] to weigh evidence, assess credibility, or draw inferences of fact now must follow the “full appreciation” test: "can the full appreciation of the evidence and issues that is required to make dispositive findings be achieved by way of summary judgment, or can this full appreciation only be achieved by way of a trial?" [3]
[21] The Court elaborated on the full appreciation test in these paragraphs [4]:
We think this “full appreciation test” provides a useful benchmark for deciding whether or not a trial is required in the interest of justice. In cases that call for multiple findings of fact on the basis of conflicting evidence emanating from a number of witnesses and found in a voluminous record, a summary judgment motion cannot serve as an adequate substitute for the trial process. Generally speaking, in those cases, the motion judge simply cannot achieve the full appreciation of the evidence and issues that required to make dispositive findings. Accordingly, the full appreciation test is not met and the “interest of justice” requires a trial.
In contrast, in document-driven cases with limited testimonial evidence, a motion judge would be able to achieve the full appreciation of the evidence and issues that required to make dispositive findings. Similarly, the full appreciation test may be met cases with limited contentious factual issues. The full appreciation test may also be met in cases where the record can be supplemented to the requisite degree at the motion judge’s direction by hearing oral evidence on discrete issues.
We wish to emphasize the very important distinction between “full appreciation” in the sense we intend here, and achieving familiarity with the total body of evidence the motion record. Simply being knowledgeable about the entire content of the motion record is not the same as fully appreciating the evidence and issues in a way that permits a fair and just adjudication of the dispute. The full appreciation test requires motion judges to do more than simply assess if they are capable of reading and interpreting all the evidence that has been put before them.
The point we are making is that a motion judge is required to assess whether the attributes of the trial process are necessary to enable him or her to fully appreciate the evidence and the issues posed by the case. In making this determination, the motion judge is to consider, for example, whether he or she can accurately weigh and draw inferences from the evidence without the benefit of the trial narrative, without the ability to hear the witnesses speak in their own words, and without the assistance of counsel as the judge examines the record in chambers.
Thus, in deciding whether to use the powers in rule 20.04(2.1), the motion judge must consider if this is a case where meeting the full appreciation test requires an opportunity to hear and observe witnesses, to have the evidence presented by way of trial narrative, and to experience the fact-finding process first-hand. Unless full appreciation of the evidence and issues that is required to make dispositive findings is attainable on the motion record – as may be supplemented by the presentation of oral evidence under rule 20.04(2.2) – the judge cannot be “satisfied” that the issues are appropriately resolved on a motion for summary judgment.
The important element of the analysis under the amended Rule 20 is that, before using the powers in rule 20.04(2.1) to weigh evidence, evaluate credibility, and draw reasonable inferences, the motion judge must apply the full appreciation test in order to be satisfied that the interest of justice does not require that these powers be exercised only at a trial.
[22] Not everything has changed. The established evidentiary obligations remain. Each side must put its best foot forward. No party may sit back and rely on the possibility more favourable facts may develop at trial. [5]
(Decision continues with full original text exactly as provided.)
Spence J.
Released: March 8, 2012