ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CR-12-00000091-00AP
DATE: 20130110

BETWEEN:

City of Toronto

Appellant

– and –

Rexlington Heights Ltd.

Respondent

Amanda Ross, for the Appellant
David C.K. Tang, for the Respondent

HEARD: December 20, 2012

REASONS FOR JUDGMENT

Morgan J.

[1] Can the City of Toronto re-litigate the question of compliance with a property standards by-law where the identical question was tried several years ago under a former version of the same by-law?

I. The Procedural Background

[2] In a 2005 judgment, Rexlington Heights Ltd. v Ontario, [2005] OJ No 4223 (“Rexlington 2005”), this court addressed the merits of the City’s compliance action under section 19.C of § 629 of the Municipal Code and found the Respondent’s property to be in substantial compliance with then-current property standards. That finding on the merits, however, was not the sole ground of the Rexlington 2005 judgment; indeed, the trial judge, Cummings J., labeled it the “alternative basis for rescission of the [compliance] Order.”

[3] In its primary ground, the court in Rexlington 2005 allowed the Respondent’s appeal and dismissed the compliance action on the basis that the City lacked jurisdiction over the Respondent’s property. It found that the building in issue was exempt from the Municipal Code provision, which applied only to newly constructed buildings.

[4] In 2008, the City plugged the jurisdictional loophole by enacting By-law No. 349-2008, amending the relevant section of the Municipal Code. It now seeks to re-visit its previous action, the substance of which has not otherwise changed.

[5] On May 14, 2012, a City inspector ordered a series of compliance measures against the Respondent (the “2012 Order”). A number of the measures specified in the 2012 Order – in particular, those relating to stairwell guards and handrails – are identical to those considered in the Rexlington 2005 judgment.

[6] The Respondent appealed the 2012 Order to the City’s Property Standards Committee (the “Committee”). On July 4, 2012, the Committee rescinded the stairwell guard and handrail items contained in the 2012 Order, thereby eliminating those compliance measures that repeated the matters at issue in Rexlington 2005. The City has appealed the Committee’s decision of July 4, 2012 to this court.

[7] In the present motion, the Respondent seeks to have the City’s appeal dismissed in order to avoid a new trial of the merits. It argues that the matter is res judicata, and that re-litigation is barred by the doctrines of issue estoppel and/or abuse of process.

[8] For its part, the City contends that the 2008 by-law amendment changes everything. It seeks to advance its appeal of the Committee’s ruling and to conduct a trial de novo of the substantive issues raised by the 2012 Order.

II. The Property

[9] In terms of property standards compliance, the most noteworthy thing about the Respondent’s property is that there is absolutely nothing noteworthy about it.

[10] The property in issue is an apartment building located at 25 Bergamot Avenue, Toronto (the “Property”). It was built prior to the introduction of the specific standards for stairwell guards and handrails currently contained in the Ontario Building Code, 1997 O. Reg. 403/97, being a regulation to the Building Code Act, 1992, S.O. 1992, c/ 23 (the “Building Code”).

[11] The building that stands on the Property was built in 1958 in what was at the time the City of Etobicoke. Since January 1, 1997, the Property has been within the amalgamated City of Toronto. As Cummings J. noted in Rexlington 2005, the building was built in compliance with then applicable standards for staircases, handrails, stairwell guards and the like (which were effectively the same for the cities of Etobicoke and Toronto). Since that time, however, those standards have been slightly revised.

[12] Cummings J. summarized the discrepancies between the stairwell items found at the Property and those now contained in the Municipal Code at para 21 of the Rexlington 2005 decision. They amount to a matter of inches:

[T]he stairways are generally 43 inches in width from the wall or one inch more than the maximum width allowable for only one handrail. The handrails are generally one and a half inches shorter than required (about 32.5 inches rather than the standard of 34 inches). The openings within the ornamental ironworks between the guards are between four and ten inches rather than the maximum of four inches.

[13] It is important to note that there is no allegation that the stairwell guards and handrails at the Property are in a state of disrepair or have caused injury to any person using the building’s stairways. Indeed, there appears to be neither a specific concern about the Property and its stairwell facilities nor a generalized, pressing concern about the stairwells of older structures built to previously applicable standards. Cummings J. indicated at para 38 of his 2005 decision that even after a full trial, including testimony from professional engineers and the City’s property standards enforcement officers, “no evidence was presented as to a particular concern that all old buildings not in strict compliance with the standards [of the Building Code and, now, the Municipal Code] are a hazard to public safety.”

[14] The Respondent has not applied for a permit to do new construction or to renovate the building which would have triggered a requirement to comply with Building Code standards for new construction. Rather, it appears that the Respondent has now twice been caught in a property standards audit and by-law compliance action with respect to the Property.

III. The By-law

[15] As already indicated, the 2005 Rexlington decision was based on the then-current version of section 19.C of § 629 of the Municipal Code. That section was amended in 2008, but it continues to provide standards for, as stated in the title of § 629, “Stairs, guards, handrails and other structures”.

[16] The specific standards put in place by § 629-19.C did not actually change with the 2008 amendment. What changed was the method used in drafting the provision, which was designed to eliminate the jurisdictional exemption for older buildings found by Cummings J. in 2005 Rexlington.

[17] The previous version of this section incorporated into the Municipal Code the standards for new construction contained in the Building Code: “All required guards and handrails shall be installed in accordance with and maintained to comply with the Ontario Building Code.” As discussed below, that language was held by Cummings J. to incorporate not only the Building Code’s construction standards, but its specific exemptions for pre-existing structures.

[18] The amended § 629-19.C, instead of incorporating the Building Code standards by reference, does so expressly. That is, the 2008 by-law erased all reference to the Building Code from § 629, and essentially cut and pasted the specific Building Code standards into the Municipal Code provision. The current § 629-19.C is in all other respects identical to its predecessor.

[19] The detailed standards themselves have not changed since 2004-2005 when 2005 Rexlington was litigated. These standards apply to, among other things, the height and structure of stairwell guards and handrails.

IV. The 2005 Rexlington Judgment

[20] As indicated, the 2005 decision rescinding the compliance order against the Respondent contained two separate grounds. One ground – the jurisdictional issue – is identified by Cummings J. as the primary ground of the decision, while the other ground – the property standards issue itself – is introduced by Cummings J. at para 42 of his decision as the “alternative basis” for his conclusion.

[21] The jurisdictional ground on which Cummings J. allowed the Respondent’s appeal rested on an interpretation of the incorporation-by-reference of the Building Code into § 629-19.C of the Municipal Code as it was then drafted. He held that the requirement of compliance with the Building Code contained in § 629-19.C did not simply require conformance with the stairwell guard and handrail standards, but rather mandated “compliance with the [Building] Code as an entirety.” 2005 Rexlington, at para 24.

[22] Turning to the specifics of the Respondent’s Property, Cummings J. reasoned, at para 29, that when one considers the Building Code in its entirety one can see that its provisions are intended “to apply only in respect of new building construction, building extensions, and material alteration or repair.” Since there was no new construction, extensions, or alterations proposed for the Property, the Building Code standards – and, by reference, the Municipal Code standards – did not apply.

[23] Ms. Ross, for the City, submits that the jurisdictional ground is the actual ground of the 2005 Rexlington decision. She argues that any consideration of the merits, regardless of whether the phrase “alternative basis” was used by the trial judge to describe it, was not fundamental to the decision and is, effectively, obiter dictum. In fact, Ms. Ross contends that the fact that the merits were considered by Cummings J. as an “alternative basis” for the decision demonstrates that this was not a ground that was necessary for him to consider in reaching his conclusion.

[24] Mr. Tang, for the Respondent, submits that the two grounds relied upon by Cummings J. were distinct but equally cogent. More to the point, he submits that Cummings J. heard an entire trial on the question of whether the specific stairwell guard and handrail standards were complied with by the Respondent, and that he specifically found in the Respondent’s favour on the merits of that question.

[25] Mr. Tang also emphasizes that Cummings J. determined that “the Court is not obliged to require absolute compliance with the Order… [and that] given the minimal risk associated with the non-conforming variances of the subject buildings…I would exercise my discretion to rescind the order to repair.” According to Mr. Tang, this exercise of discretion after hearing all of the relevant evidence was a final determination of the property standards issue and cannot now be re-visited.

V. Issue Estoppel

[26] It is the Respondent’s position that since the merits have already been decided in a previous case, the matter is res judicata. In his factum, Mr. Tang reiterates the general statement of policy put forward by Binnie J. in Danyluk v Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 SCR 460, at para 18, that “the law rightly seeks a finality to litigation”.

[27] Specifically, Mr. Tang argues that the doctrine of issue estoppel applies even though the present appeal of the 2012 Order, which raises the interpretation and application of the current version of § 629-19.C, is formally a different cause of action than the cause of action in 2005 Rexlington. That case, of course, presented for the court’s consideration the former version of § 629-19.C, not the current post-2008 version.

[28] In support of its position, the Respondent cites the Court of Appeal’s decision in McIntosh v Parent, 1924 401 (ON CA), [1924] 4 DLR 420, at para 13, for the proposition that, “Any right, question, or fact distinctly put in issue and directly determined by a Court of competent jurisdiction as a ground of recovery, or as an answer to a claim set up, cannot be re-tried in a subsequent suit between the same parties or their privies, though for a different cause of action.” Mr. Tang argues that the difference in cause of action is, in its legal effect, a distinction without a difference, and that it does not undermine the fact that the issue has already been decided.

[29] Ms. Ross’ answer to this is quite straightforward. She cites the Court of Appeal’s decision in Re Bagaric and Juric (1984), 1984 2133 (ON CA), 44 OR 2d 638 for the proposition that, “Being new legislation incorporating a new right, no question of issue estoppel or cause of action estoppel can arise…” She puts the matter in much the same way as Donald J. Lange puts it in his text, The Doctrine of Res Judicata in Canada, 3rd edn. (Markham: LexisNexis Canada, 2010), at p. 56: “[a] question raised in an earlier proceeding cannot give rise to estoppel in a later proceeding where the same question is raised on the basis of new legislation creating a new right.”

[30] The 2008 by-law amendment certainly created a new legislative basis for the present appeal that did not exist at the time of the 2005 Rexlington decision. It is a precondition for issue estoppel to apply that the same question be presented to the court in the earlier and the later actions. Danyluk, supra at para 25.

[31] There is no doubt that the City was entitled to amend § 629-19.C in 2008; indeed, it was invited to do so by Cummings J., who admonished that application of the Municipal Code to older buildings should be done by City Council rather than by the courts through a tenuous by-law interpretation. That legislative exercise, he said, would more appropriately cover off the jurisdictional question “in accordance with the normative standards of a democratic society.” Rexlington 2005, at para 44.

[32] Given the 2008 legislative change, the Respondent has not satisfied the burden of establishing all of the constituent elements of issue estoppel. Schweneke v Ontario, 2000 5655 (ON CA), [2000] OJ 298, at para 38 (Ont CA). Cummings J. posited two distinct grounds for his decision, either of which would have been sufficient on its own to dispose of the 2005 case. Given that type of prior decision, it cannot be said that “the resolution of the issue is an essential element of the logic or reasoning behind [the earlier decision].” Apotex Inc. v Merck and Co., [2002] FCA 201, at para 27. The same conclusion could have been reached on jurisdictional grounds, without any consideration of the merits.

[33] Application of the new version of § 629-19.C is therefore not entirely the same issue as application of the pre-2008 version of § 629-19.C. The by-law amendment has intervened to change the issue enough that issue estoppel does not, strictly speaking, apply.

VI. Abuse of Process

[34] That said, it must also be kept in mind that “duplicative litigation, potential inconsistent results, undue costs, and inconclusive proceedings are to be avoided.” Danyluk, supra at para 34. Courts generally have an inherent discretion to ensure that this policy is taken seriously and to prevent any abuse of process that might arise from unnecessary duplication. City of Toronto v Canadian Union of Public Employees, Local 79, 2003 SCC 63, [2003] 3 SCR 77, at para 35.

[35] The Respondent takes the position that even if issue estoppel or other versions of res judicata do not strictly apply, abuse of process can nevertheless be invoked to support a stay of proceedings under the circumstances. Mr. Tang relies on the Supreme Court of Canada’s statement to this effect in British Columbia (Workers’ Compensation Board) v Figliola, 2011 SCC 52, [2011] 3 SCR 422, at para 33: “the doctrine of abuse of process can be triggered where allowing the litigation to proceed would violate principles such as ‘judicial economy, consistency, finality and the integrity of the administration of justice’”.

[36] There is little doubt that a trial de novo of the 2012 Order will be close to a verbatim repeat of the 2004-2005 trial before Cummings J. The specific property standards regarding stairwell guards and handrails have not changed since that time, and neither have the actual stairwell guards and handrails at the Property. The Respondent is still the same inch or two from strict compliance that it was in 2005.

[37] Moreover, one can expect the same testimony about the Property from the City’s inspector, the same engineering evidence regarding structure and safety issues, the same evidence with respect to the cost of compliance, etc. It is difficult to imagine a less productive use of judicial resources.

[38] I am also mindful of the fact that the present case is an appeal by the City, not by the Respondent. It was the City’s own Committee that overrode the decision of the inspector to issue the 2012 Order. The Respondent does not seek the court’s intervention or reversal of a decision by the relevant municipal body; rather, it seeks the court’s support for that decision.

[39] Ordinarily, of course, the Committee would be in a position to surmise, but not to precisely predict, how a court might interpret and apply a given property standards by-law to a specific property. Here, by contrast, the Committee came to its decision operating under no such impediment. It knew exactly how one court has responded to the attempt to apply the § 629-19.C standards to the Property.

[40] Understanding that the 2005 Rexlington decision determined that the small variances in the Property’s stairwell guards and handrails are not significant enough to constitute non-compliance, the Committee wisely rescinded the relevant portions of the 2012 Order. In my view, that decision should be respected.

VII. Conclusion

[41] This is a case where one can confidently say that the “democratic function” of the law – i.e. the fostering of municipal institutions and achievement of property standards and safety policies – goes hand in hand with the “market function” of the law – i.e. the fostering of property rights and the achievement of efficiency. Gillian K. Hadfield, “Privatizing Commercial Law: Lessons from ICANN”, 6 J. Small & Emerging Bus. Law 258, at 263 (2002). There is no compelling reason to interfere with an allocation of resources that has already once been determined to be in both the community’s and the property owner’s interests.

[42] The Supreme Court of Canada has acknowledged this by rejecting the notion that “more adjudication necessarily means more justice.” Figliola, supra, at para 35. Judicial resources were used to positive effect on this Municipal Code compliance question in 2005 Rexlington; to expend them again can only reduce the efficiency and fairness of that result.

[43] It does not always occur, but where the saving rather than the expending of judicial resources results in more rather than less fairness, it is in everyone’s interest to avoid the unnecessary proceeding. As Professor Trevor Farrow points out in Civil Justice, Privatization and Democracy, (Toronto: University of Toronto Press, forthcoming 2013) (copy available at http://ssrn.com\abstract=1795407), at p. 338, “[o]ften when disputes are resolved more efficiently, justice obtains.” The instant case fits squarely into the learned author’s paradigm, as the two guiding stars of procedural law – the efficient and the just resolution of disputes – have aligned.

[44] It would achieve neither efficiency nor justice to re-visit the same issues as were canvassed in the 2005 trial. The Supreme Court addressed a similar situation in Figliola, supra, and commented at para 33 that, “if the same result is reached…the relitigation will prove to have been a waste of judicial resources…[and] if the result… is different from the conclusion reached in the first [proceeding] the inconsistency, in and of itself, will undermine the credibility of the entire judicial process…” That description of a no-win repetition is equally apt here.

[45] Under these circumstances, to allow the City’s appeal to proceed would amount to an abuse of the court’s process. The Respondent’s motion is granted and the City’s appeal of the Committee’s decision is dismissed.

Morgan J.

Released: January 10, 2013

COURT FILE NO.: CR-12-00000091-00AP
DATE: 20130110

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

City of Toronto

Appellant

– and –

Rexlington Heights Ltd.

Respondent

REASONS FOR JUDGMENT

Morgan J.

Released: January 10, 2013