BRACEBRIDGE COURT FILE NO.: CV-12-00000009-00

DATE: 2012-09-24

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: DEBORAH STEPHENSON and STEPHEN WOODROW, Plaintiffs

AND:

THE CORPORATION OF THE TOWN OF GRAVENHURST and DAVID EIDSNESS, Defendants

BEFORE: THE HON. MADAM JUSTICE S.E. HEALEY

COUNSEL: Applicants Self Represented M. Miller, for the Defendant/Moving Party

HEARD: September 17, 2012

ENDORSEMENT

[1] This is a motion by the Corporation of the Town of Gravenhurst (the “Town”) to dismiss the plaintiffs’ claim pursuant to Rule 20.04 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 14.

Oral Recusal Motion

[2] At the outset of the hearing the plaintiffs brought an oral recusal motion. The primary basis for their motion was that, in a different action, I had previously determined that I should not be the trial judge in order to avoid any appearance of bias. Specifically, on November 17, 2009, in action no. CV-07-0134 involving Thom Win Construction Limited and Webdensco Limited as plaintiffs and Deborah Stephenson and Stephen Woodrow as defendants, I determined that the appearance of bias required that I should not sit as the trial judge. This was due to the fact the law firm of Stewart, Esten had at one point represented Thom Win Construction, although not in that action. At the time of my appointment to the bench I was a partner at Stewart, Esten. As I indicated to Ms. Stephenson and Mr. Woodrow on November 17, 2009, I had not been involved in any file at Stewart, Esten involving Thom Win Construction, and had had no previous involvement with either Ms. Stephenson or Mr. Woodrow. Nonetheless, I withdrew from hearing the trial to ensure that any question of impartiality was absent.

[3] That same prior association caused Ms. Stephenson and Mr. Woodrow to believe that I should not be involved in the present matter.

[4] Additionally, on November 17, 2009, and prior to the issue of bias being raised by them, Ms. Stephenson and Mr. Woodrow brought a motion for an order striking the Thom Win action from the trial list due to late disclosure of documents. I dismissed their motion with written reasons and ordered costs payable against them. Although they have not shown me any appeal documents, Ms. Stephenson and Mr. Woodrow have submitted that that order, or perhaps another order flowing from it, is currently under appeal.

[5] As a result of having made a determination not in their favour on an earlier date, Ms. Stephenson and Mr. Woodrow submit that there is now a reasonable apprehension that the present motion will be decided against them.

[6] When this summary judgment motion was scheduled, trouble had been taken to ensure that the motions judge scheduled to be sitting was not on the lengthy list of judges who these plaintiffs believe should not hear any matter involving them, I being one of them. However, due to last minute rescheduling I was assigned to Bracebridge. The earlier attempt by Mr. Miller and the court’s administration to accommodate the plaintiffs’ request should not be seen by them as any concession to a true conflict of interest on the part of either me or another judge sitting in the Central East Region.

[7] The action for which the Town of Gravenhurst now seek summary judgment has nothing to do with Thom Win Construction. Thom Win Construction Limited is not named as a party nor is that company mentioned in the pleading. As I indicated to Mr. Woodrow and Ms. Stephenson during their submissions, I have no involvement in the action before me today, nor any self-interest in its outcome. However, Mr. Woodrow and Ms. Stephenson seem to believe, I gather from their submissions, that I am allegedly one of the many judges in this region who are complicit in, or sympathetic to, some political agenda of the Town of Gravenhurst. As indicated, they have a lengthy list of judges who they believe should be barred from hearing this matter on the basis of bias.

[8] In R. v. S. (R.D.), 1997 324 (SCC), [1997] 3 S.C.R. 484, Cory, J. wrote at para. 105 that bias denotes a state of mind that is in some way predisposed to a particular result, or that is closed with regard to particular issues. He referred to a similar definition articulated in R. v. Bertram, [1989] O.J. No. 2123 (H.C.), in which Watt J. noted at pp. 51-52:

In common usage bias describes a leaning, inclination, bent or predisposition towards one side or another or a particular result. In its application to legal proceedings, it represents a predisposition to decide an issue or cause in a certain way which does not leave the judicial mind perfectly open to conviction. Bias is a condition or state of mind which sways judgment and renders a judicial officer unable to exercise his or her functions impartially in a particular case.

[9] Justice Cory then went on to articulate the test for finding a reasonable apprehension of bias. He stated at para. 111:

[T]he apprehension of bias must be a reasonable one, held by reasonable and right-minded persons, applying themselves to the question and obtaining thereon the required information. ... [The] test is “what would an informed person, viewing the matter realistically and practically -- and having thought the matter through -- conclude. ...”

[10] Cory, J. continued at paras. 113 and 114 as follows:

Regardless of the precise words used to describe the test, the object of the different formulations is to emphasize that the threshold for a finding of real or perceived bias is high. It is a finding that must be carefully considered since it calls into question an element of judicial integrity. Indeed an allegation of reasonable apprehension of bias calls into question not simply the personal integrity of the judge, but the integrity of the entire administration of justice. See Stark, supra, at paras. 19-20. Where reasonable grounds to make such an allegation arise, counsel must be free to fearlessly raise such allegations. Yet, this is a serious step that should not be undertaken lightly.

The onus of demonstrating bias lies with the person who is alleging its existence: Bertram, supra, at p. 28; Lin, supra, at para. 30. Further, whether a reasonable apprehension of bias arises will depend entirely on the facts of the case.

[11] It is well recognized in the case law that there is a presumption that judges will carry out their oath of office by conducting themselves impartially. Compelling evidence must be led by the person alleging bias, who bears the onus, that the judge has conducted him or herself in such a way as to raise a real or perceived apprehension of bias.

[12] Mr. Woodrow and Ms. Stephenson failed to meet that test. They did not raised any facts that would lead a reasonable and right minded person, being apprised of all the circumstances of the case, to the conclusion that I should not hear the motion for summary judgment due to a reasonable apprehension of bias. There is no former association by this judicial officer with any of the parties to this action that would give rise to any real or perceived apprehension of bias. There is no evidence that remotely suggests that I have any stake or interest in any decisions or actions on the part of the Town of Gravenhurst, either in this litigation or generally. The fact that I made a decision almost four years ago in a different action to deny their request for an adjournment of a trial is likewise not a compelling reason for arguing apprehension of bias. I had no independent recollection of either of these parties or the fact of the previous ruling, as was made clear to Mr. Woodrow and Ms. Stephenson during their submissions. Had Ms. Stephenson and Mr. Woodrow not brought that ruling to my attention, and had the transcript from that date not been available in the court file for me to read, that prior appearance before me would have remained forgotten. In short, there is not the faintest likelihood of bias, or that the test has been satisfied by these plaintiffs. For these reasons and the reasons given orally, their motion was dismissed.

Request by the Plaintiffs for an Adjournment to Conduct Cross-Examinations

[13] The motion for summary judgment was originally returnable on March 26, 2012. It was adjourned on consent and a notice of return of motion for September 17, 2012 was served on the plaintiffs on May 30, 2012. The Town’s factum and book of authorities had been served earlier in March.

[14] The plaintiffs insisted at the outset of the motion that they should have an adjournment to cross-examine witnesses under Rule 31.10 or 39.03.

[15] In the elapsed time since being served with this motion, they neither sought leave under Rule 31.10 nor served a summons to witness pursuant to Rule 39.03(5). Yet the concept of examining witnesses was one previously contemplated by the plaintiffs in an earlier action; at the outset of a summary judgment motion heard by Eberhard J. they requested an adjournment to examine witnesses and explore documentation . She, like me, found it unwarranted to grant the adjournment request given the length of time between service and the hearing, and given the lack of evidence regarding the misfeasance alleged against the Town.

Request by the Plaintiffs to Present Oral Evidence on the Motion

[16] The plaintiffs filed no responding affidavits.

[17] They insisted that they should be permitted to give oral evidence at the motion and were denied that request. They feel that they have been denied procedural justice.

[18] Rule 39 speaks to how evidence is to be given on a motion. Evidence is to be given by affidavit on a motion unless the Rules or a statute provides otherwise: Rule 39.01(1). Evidence may also be taken prior to the motion, for use at the motion, by cross-examination on affidavits. Under Rule 39.03(4), a person may be examined at the hearing of a motion, with leave of the presiding judge. This rule does not mean that a party may give oral evidence at the motion, but only that a party may be given an opportunity, with leave, to examine a witness.

[19] No explanation was given by the plaintiffs as to why they filed no responding affidavits. They suggested that they were still awaiting the process under the Freedom of Information and Privacy Act, R.S.O. 1990, c. F.31 to obtain other documentation from the Town, but filed no affidavit to set out the steps taken, any explanation for the delay, or what types of documents they expected to receive and how those documents might be relevant to the action.

Motion for Summary Judgment

[20] The claim in question is the third action commenced by Mr. Woodrow and Ms. Stephenson against the Town of Gravenhurst within the span of 29 months. These claims were and are, respectively, court file numbers CV-141-09-00, CV-10-77, and CV-12-9-00. They will hereafter be referred to as the first action, the second action and the third action.

[21] Both the first and the second action have been dismissed.

[22] The moving party seeks summary judgment on the third action on the basis of res judicata, and on the basis that the action is statute-barred.

[23] A review of the first and second actions is necessary in order to evaluate whether the doctrine of res judicata applies.

The First Action

[24] In the first action Mr. Woodrow and Ms. Stephenson sought an interim and permanent injunction against the Town of Gravenhurst to prevent work being done by the Town on their commercial waterfront building ("the Plaintiffs’ property"). They also sought a declaration that an Order to Remedy Violation of the Standards of Maintenance and Occupancy issued by the Town on February 9, 2009 be declared null and void (the “Order to Remedy”).

[25] The Order to Remedy indicated that the plaintiffs’ property did not conform to the standards prescribed by the Town's Property Standards By-law No. 2004-18. The statement of claim in the first action alleges that there is no provision within By-law 2004-18 that supports the violation as stated in the Order to Remedy, which refers to section 2.12.1 of the By-law. In the result, the plaintiffs alleged that the Order to Remedy was null and void.

[26] The Order to Remedy is the basis for the first action. The statement of claim alleges that the plaintiffs began construction of a commercial building in the fall of 2006, but construction stopped in March 2007 due to a contractual dispute involving a contractor and the construction mortgage lender of the project. According to the claim, the project was thereby rendered to a state of incompletion while the contractual dispute was being litigated. After the Town issued its Order to Remedy in February 2009, the plaintiffs appealed to the Town's Property Standards Committee. The appeal was heard in March 2009 and was denied. The Town completed the work required to comply with the Order to Remedy and added its costs to the tax account for the plaintiffs’ property. Instead of exercising their right under the Building Code Act, S.O. 1992, c. 23 to appeal the decision of the Property Standards Committee to the Superior Court of Justice, the plaintiffs commenced the first action.

[27] The Town brought a motion for summary judgment, which was heard by Quinlan J. on July 9, 2010. The issue before her was whether there was a genuine issue for trial in respect of whether the Order to Remedy should be declared null and void, and whether the decision rendered by the Property Standards Committee should be rescinded. Mr. Woodrow and Ms. Stephenson argued, just as they did before me, that there was no violation of the By-law. Quinlan J. found that there was no genuine issue for trial, because the plaintiffs’ remedy was to appeal the decision of the Property Standards Committee within the 14 day appeal period set out in the Building Code Act. Even if there was no violation of any by-law, she made clear in her decision that their remedy was to follow the route outlined in the Building Code Act. In the result, Quinlan J. dismissed the first action.

[28] While the judgment of Quinlan J. was under reserve, the plaintiffs commenced the second action.

[29] The plaintiffs appealed Quinlan J.'s order. They did not perfect their appeal in time and brought a motion for an extension of time in which to perfect their appeal. The motion was unopposed, and an order was made granting an extension to January 4, 2011. The plaintiffs abandoned the appeal before perfecting it.

[30] The plaintiffs explained during argument that they abandoned their appeal to pursue their second action, because documents received from the Town pursuant to a Freedom of Information and Protection of Privacy Act request suggested to them that the first action had even more merit than they had originally thought, and proved that fraud was involved in the decisions made by the Town, its employees and agents surrounding the Order to Remedy. These documents are copies of email correspondence that will be referred to later in this decision.

[31] The plaintiffs then brought a motion pursuant to Rule 59.06 (2) seeking to set aside the order of Quinlan J. based on the fresh evidence found in the emails. That motion was heard by DiTomaso J., and was dismissed. DiTomaso J. reviewed the emails in question and determined that they would not have changed the ultimate result, had they been presented to Quinlan J. He found that the emails did not support the allegation made by Mr. Woodrow and Ms. Stephenson that the Town had targeted them in bad faith.

[32] The plaintiffs appealed DiTomaso J.'s order. Again they failed to perfect their appeal in accordance with the Rules, and brought a motion in the Court of Appeal seeking to extend the time within which to perfect the appeal. The motion came before Watt, J.A., and was dismissed. In his reasons Watt J.A. noted that the plaintiffs seemed to believe that it would be an inevitability that the emails would be admitted as evidence on the appeal. His reasons state "it is by no means clear that the appellants are likely to meet the threshold required" for the admission of fresh evidence. He concluded that the merits of the appeal did not appear to be substantial.

The Second Action

[33] In the second action the plaintiffs again sought a declaration that the Order to Remedy is null and void. They also brought an interim and permanent injunction enjoining the sale of the property, a rescission of all amounts levied against the property tax roll, and damages. The Town filed a statement of defence in which it pled and relied upon the doctrine of res judicata. The Town also pled s. 15.4(3) of the Building Code Act, which states that "despite subsection 31(2), a municipal corporation or person acting on its behalf is not liable to compensate the owner, occupant or any other person by reason of anything done by or on behalf of the municipality in the reasonable exercise of its powers under subsection (1)."

[34] The Town brought a motion for summary judgment, which was granted by Eberhard J. on September 16, 2011. She determined that the status of the Order to Remedy could not be re-litigated, and that any claim to have it declared null and void was res judicata [para. 11]. She also determined that once it is determined that the Order to Remedy is valid, there is no triable issue as to whether the cost of remedial work can be added to the tax roll [para. 15]. She also considered the parties’ damage claim, which was based on an allegation of ulterior motive on the part of the Town amounting to bad faith misfeasance. Again the supporting evidence for this claim was the emails that had been considered by DiTomaso J.. Eberhard J. considered those same emails in the context of her determination as to whether there was a triable issue remaining in the second action. Her evaluation of the importance of those emails is found at para. 41 of her decision as follows:

The matter has a long history and the Plaintiffs have raised their suspicions at many points. Although the e-mails are only recently produced following protracted Freedom of Information Act procedures, I find that their content has really added nothing to the plaintiffs' suspicions. In all this time, no meat has been put on the bones of their suspicion. Now they seek to fish. I am not inclined to grant the opportunity, by delaying my decision, for them to attempt to find evidence that there has nothing more to suggest bad faith, malice or abuse of power then the meagre reference to the dispute between themselves and the lender in an e-mail to a person in the municipal economic development department. Awareness of a dispute between others concerning a property does not equate with bad faith, malice or abuse of power when the municipality moves, properly it has been so found, to enforce its by-laws.

[35] She concluded that, having considered the plaintiffs’ best available evidence, there was no triable issue.

[36] The plaintiffs filed an appeal from the decision of Eberhard J.. A motion was again brought to extend the time within which to perfect their appeal, and to seek an order compelling the Town to produce additional documents. The motion was dismissed by Sharpe J.A.. In his endorsement he noted that the Eberhard J. had carefully reviewed the entire course of the litigation and explained why the present claim is barred by res judicata. He wrote : "I see no error in her reasons and conclude that this appeal has no prospect of success."

The Third Action

[37] The third action was commenced on January 20, 2012.

[38] In argument Mr. Woodrow submitted that the third action differs from the previous two actions in that the third action is based on fraud. Also, the third action names Mr. David Eidsness as a party. Mr. Eidsness is an employee of the Town and was at all material times the Chief Building Official and Chief Fire Prevention Officer for the Town of Gravenhurst.

[39] In the third action the plaintiffs make the following claims:

1. As against David Eidsness, for fraud, misfeasance in public office, breach of duty of good faith and negligence.
2. As against the Town, for fraud, obstruction of justice, malfeasance in public office, breach of duty of good faith, interference in economic relations and negligence.
3. As against both defendants, general and punitive damages.
4. As against the Town, a declaration that the Notice of Tax Sale is null and void, that all remedial amounts levied against the property be rescinded, and an interim and permanent injunction for a stay of any municipal tax sale proceeding.

[40] Additional requests are made in the prayer for relief, including a declaration by the court that all orders for costs in the first action and the second action are stayed, "consequential damages" in the amount of $800,000, costs and interest.

[41] Dealing first with the claims made against the Town, the pith and substance of the allegations boils down to the same conspiracy theory that had been alleged throughout the lives of the first action and the second action, pivoting around the issuance by the Town of the Order to Remedy. The third action differs only in that the statement of claim is more comprehensive in detailing the nature of the alleged allegations. It is so comprehensive as to likely offend the rules of pleading by containing alleged evidence as opposed to material facts, but that issue is not before me. It is alleged throughout the claim that the Town, its employees and agents acted fraudulently, deceptively and negligently by knowingly issuing and acting upon the unlawful Order to Remedy, all in order to meet the political agenda of expediting the completion of the exterior of the building in time for the G8 summit held in Muskoka. The two emails that were considered by DiTomaso J. and Eberhard, J. are referenced in the claim. There is nothing new in this claim in regard to these allegations.

[42] At paragraphs 95 and 96 of the claim the plaintiffs allege that it was not until September 14, 2010, when the Town finally released redacted documents to them pursuant to a Freedom of Information appeal, that they became aware that the Town had "deceptively manipulated the circumstances and information involving the fraudulent violation against the Subject Property". Yet in the second action the plaintiffs alleged that the Town, the Property Standards Committee, and/or its agents failed to act in a fair and open manner during the appeal process. They alleged that those individuals interfered with the plaintiffs’ right to due process by not providing them with the information required and requested. They alleged that the Town was in a conflict of interest due to its own vested political and financial interest in the overall development of the waterfront project. They alleged that the Town and its agents misrepresented and manipulated the property standards by-law and the Building Code Act in order to take advantage of the plaintiffs’ pre-existing legal dilemma, to its own benefit. Finally, they alleged that the Town had acted without justification against their property and had failed to act in good faith in its dealings with the plaintiffs. I surmise from these allegations, in the absence of any evidence filed by the plaintiffs on this motion, that these allegations involve the same actions on the part of the Town that now lead the plaintiffs, in the third action, to allege that it "deceptively manipulated the circumstances and information involving the fraudulent violation against the Subject Property".

[43] I agree with the Town's submission that res judicata bars a party from bringing issues before the court or from seeking relief that was dealt with, or should have been dealt with, in another proceeding before the courts. As determined in Henderson v. Henderson (1843), 67 E.R. 313 [“Henderson”] at p.319:

… where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.

[44] The above quote exactly describes the circumstances present in this case. Even the two emails on which the plaintiffs place much emphasis, and which now form the springboard for broader allegations of negligence, breach of duty of good faith, and misfeasance in public office in the third action, have received judicial consideration and determination. The parties’ damage claims were put forward in the second action. The exact same subject matter forms the basis of the third action as it did in the first and second actions. Accordingly, all claims made against the Town are barred by res judicata and accordingly there is no basis for a trial.

[45] Similarly, the claims made against David Eidsness are barred by the same principle. The factual foundation that forms the allegations against Mr. Eidsness was known to the plaintiffs at the time of the commencement of both earlier actions. Therefore, any claims against Mr. Eidsness fall into the category of relief that could have been contemplated by and pursued by the plaintiffs in the earlier actions, yet was not. As indicated in the above quote from Henderson, res judicata prevents the plaintiffs from raising these claims at this time.

[46] Additionally, I agree with the submissions of counsel for the Town that any claim against Mr. Eidsness would also be barred by one or both of s. 31 of the Building Code Act and s. 74 (1) of the Fire Protection and Prevention Act, 1997, S.O. 1997, c. 4.

[47] Section 31 of the Building Code Act provides that no action or other proceeding for damages shall be initiated against the Chief Building Official for any act done in good faith in the execution or intended execution of any power or duty under that Act.

[48] Section 74 (1) of the Fire Protection and Prevention Act provides that no action or other claim for damages shall be instituted against a firefighter, a fire co-ordinator, a community fire safety officer, a member or employee of the Fire Safety Commission, an assistant to the Fire Marshall, the Deputy Fire Marshall, the Fire Marshall, or a person acting under his or her authority, for any act done in good faith in the execution or intended execution of his or her power or duty or for any alleged neglect or default in the execution in good faith of his or her power of duty.

[49] While the plaintiffs have put forward allegations against Mr. Eidsness, they have provided no evidence that he acted other than in good faith in the exercise of his duties as Chief Building Official or Deputy Fire Chief. On the basis of the statutes cited and the lack of evidence demonstrating bad faith, I conclude that there is no genuine issue for trial.

[50] Finally, I find that the third action is barred pursuant to s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24. That section bars any proceeding from being commenced in respect of a claim after the second anniversary of the day on which the claim was discovered, unless the Limitations Act provides otherwise.

[51] A reading of all three statements of claim reveal that the plaintiffs had knowledge of the actions taken by the Town’s Property Standards and Committee in 2009, on which they base their claims. The statement of claim in the third action alleges that an affidavit sworn by the Property Standards Officer, Mr. Michael Cormier, contained falsehoods and that such affidavit was relied upon by the Town in an injunction application brought by the plaintiffs and heard on August 31, 2009.

[52] It is also alleged at paragraph 77 of the statement of claim that the remedial action against the building, which resulted in the increased levies against the plaintiffs' property, occurred in the fall of 2009. In the following paragraph of the claim, the plaintiffs state that they incurred actual damages to their property when the Town failed to adhere to its own pre-approved site plan agreement for the property or the architectural plans for the building. It is also alleged that improper materials were used by the Town on the building, and that the Town was negligent in its oversight of the remedial work.

[53] It is also alleged at paragraph 85 of the statement of claim that in late 2009, the Town, upon receiving G8 funding approval from Infrastructure Canada, either on its own, or with the approval and knowledge of Industry Minister Tony Clement, misappropriated federal government financing from the G8 Summit legacy fund to pay for the remedial expenditure incurred by the Town on the plaintiffs' property.

[54] Accordingly, the basis for all of the claims, including the claims of fraud, breach of duty of good faith, misfeasance and public office and negligence were known to the plaintiffs by the fall of 2009 at the latest. The third action was commenced in excess of two years after the claims were known to the plaintiffs. In the event that I am incorrect with respect to my determination that there is not a genuine issue for trial on the grounds previously reviewed in this endorsement, I conclude that the third action should be nonetheless dismissed as being statute barred.

[55] This court orders:

1. The Town’s motion for summary judgment dismissing the claim is granted.
2. The Plaintiffs’ approval of the form and content of the draft order is hereby dispensed with.

[56] If either party seeks to address the costs of this motion, they may make brief submissions not exceeding 3 double spaced typewritten pages, plus a Bill of Costs, delivered to the office of the judicial assistants in Barrie. The Town’s submissions are due by October 5, 2012, the plaintiffs’ by October 12, 2012 and any reply by October 16.

HEALEY J.

Date: September 24, 2012