CITATION: Duris v. Prescott (Town), 2015 ONSC 3127
COURT FILE NO.: CV-14-0746-AP
DATE: 2015 May 14
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Jaroslav Duris and J & D Duris Enterpises Inc.
Appellants
– and –
The Corporation of the Town of Prescott
Respondent
Joseph W. L. Griffiths, for the Appellants
William R. Hunter, for the Respondent
HEARD: April 29, 2015 at Brockville
MACLEOD-BELIVEAU, J.
ENDORSEMENT ON SMALL CLAIMS COURT APPEAL
[1] The appellants, Jaroslav Duris and J & D Duris Enterprises Inc., appeal the decision dated June 25, 2014 of Deputy Judge Brooke McNabb sitting in Brockville, Ontario dismissing the appellants’ case. They also appeal his decision dated September 15, 2014 as to costs. The costs awarded to the respondent after the trial included a penalty component in excess of 30% of the claim.
The Issues
[2] The Notice of Appeal of the trial decision lists thirteen grounds of appeal and the Supplementary Notice of Appeal lists eleven grounds of appeal, many of which are duplicitous. In essence, I find that there are three main grounds of appeal:
Did the deputy judge err in law by finding the limitation period commenced on January 27, 2011 and that this action was statute barred by The Limitation Act, 2002?
Did the deputy judge err in law in his interpretation of the respondent’s by-law for water and sewer/wastewater service charges and his finding that the respondent had the statutory authority to levy charges for water consumption, as well as a base service charge per unit?
Did the deputy judge err in law in his assessment and calculation of the total costs awarded to the respondent that were in excess of 30% of the claim as provided for in the Small Claims Court Rules, and the Courts of Justice Act as a penalty to the plaintiff?
[3] I note that the Supplementary Notice of Appeal of the costs decision did not specifically ask for leave of the Court. In the exercise of my discretion, I grant leave to appeal the costs decision to allow all issues between the parties to be determined on the appeal. There is no prejudice to the respondent who has served and filed materials on this ground of appeal.
Standard of Review
[4] There is no issue as between the parties as to the standard of review. A finding of fact is not to be reversed unless the trial judge has made a “palpable and overriding error.” The standard of review for questions of mixed fact and law, if an error with respect to the legal test to be applied, is correctness. The standard of review of a by-law requires the appellants to establish that the respondent’s interpretation of its by-law is “unreasonable, frivolous, vexatious, or done in bad faith.”
Background
[5] The appellant corporation purchased a three story building in the Town of Prescott in 2004. There were two commercial units on the ground floor, four residential units on the second floor and three residential units on the third floor. Each of the seven residential units had a water meter. From 2004 until 2008, the appellants paid the water bills for all of these units. The water bills included a consumption charge as well as a base fee service charge per unit for water and sewer.
[6] In May of 2008, the appellant Duris unilaterally removed three of the water meters on the second floor and two of the water meters on the third floor without the permission of the respondent. Duris gutted the third floor to be one residential unit instead of three to lower his overall realty tax assessment to save money. The respondent accepted that the third floor was one unit and closed out the remaining accounts for the other two water meters on the third floor that had been removed.
[7] After the fact, the appellant Duris became aware that he needed specific authority to remove the water meters and he advised the respondent in writing about their removal. Since that time he has endeavoured to get these charges stopped without success. The respondent told him he would have to go to MPAC and have his property reassessed and that the respondent would make a final adjustment to his taxes. The MPAC decision was in 2012. Then the respondent told the appellants that it had make a mistake, and that there would be no reduction in his taxes as the by-law provides for consumption charges as well as a base service fee per residential unit.
[8] The appellants then had remaining 4 water meters in the building, one for each commercial unit and one for the second floor and one for the third floor. The second floor continues to have four separate residential units which are used by the appellant Duris’ family, by his daughter, and by overnight customers for short term rentals in a type of B & B business. There is no issue that the appellants have paid for all of their water and wastewater consumption for the entire building which is going through the four meters that remain. The dispute centres on the fact that the appellants are still being billed and charged by the respondent, for the base service fee for the additional three residential units on the second floor for which there are no meters.
[9] Since 2008, the appellants have objected to and have not paid any base service fee for these three units. The appellants’ position is that the respondent’s charges for these additional three units on the second floor are contrary to a reasonable interpretation of its by-law for water and sewer charges which is based only on consumption. At the time of trial, the water and sewer arrears on these units totalled $24,375.13 including interest. The interest portion alone is approximately $10,000.00 of the arrears.
[10] The deputy judge dismissed the claim on the ground that the claim was issued more than seven months after the expiration of the limitation period, because of the wording in a letter from the appellants’ counsel to the respondent dated January 27, 2011. The deputy judge found that this letter commenced the beginning of the two year limitation period.
[11] The deputy judge further held that even if the claim had been issued within the limitation period, the respondent acted reasonably in its interpretation of the by-law by billing for water and sewer charges for both consumption and a base monthly fee for the infrastructure charge on a per unit basis. He held that the respondent was entitled to charge for four residential units on the second floor, and one on the third floor, for a total of 5 residential units. The two commercial units have never been in dispute. There is also no dispute that the third floor was altered to become one residential unit, and that only one meter was required. Fees for the other two units on the third floor were properly terminated by the respondent.
[12] The deputy judge found as a fact that there were four residential units on the second floor. The appellant Duris used two of the units and the other two units were operating as Piccolo Café B & B.
[13] The respondent notified the appellants by letter on August 18, 2009 that its water and sewer bills were not issued on the number of meters in the building, but on the number of registered units in the building. Further, there was no exemption for vacancies and owners were not permitted to remove water meters themselves.
Analysis
1. Did the deputy judge err in law by finding the limitation period commenced on January 27, 2011 and that this action was statute barred by The Limitation Act, 2002?
[14] On January 27, 2011, counsel for the appellants wrote to the respondent and again complained about the additional charges for the three extra units on the third floor where the water meters had been removed. Counsel stated, that “Before our client pursues alternative means to address this issue,” we thought it appropriate to reach out to you and request a meeting to discuss the situation.
[15] The respondent’s position in its letter of August 18, 2009 has never changed. Deputy Judge McNabb found that the appellants knew or ought to have known on January 27, 2011, that commencing a court action was an appropriate remedy. The claim was issued seven months later on September 9, 2013 which is beyond the two year limitation period.
[16] This finding is reasonable and is supported by the evidence. The January 27, 2011 letter is clear, and suggests that the appellants were contemplating litigation. The appellant Duris confirmed in his cross-examination evidence at trial that he would have instructed his lawyer to take additional steps if they were unable to resolve the situation. I find no error made by the trial judge in finding that this date was the commencement of the limitation period beginning to run as it is clear that the claim was discoverable by January 27, 2011.
[17] The trial judge’s findings were reasonable and supported by the evidence. I can find no error on the part of the trial judge on this issue. I find no merit in this ground of appeal.
2. Did the deputy judge err in law in his interpretation of the respondent’s by-law for water and sewer service charges and his finding that the respondent had the statutory authority to levy charges for water consumption, as well as a base service charge per unit?
[18] The appellants argue that the respondent does not have the statutory authority to charge a base service fee for water and sewer on a per unit basis. They argue that the by-law is not ambiguous, in that it totally lacks reference to a “per unit” charge.
[19] Deputy Judge McNabb found that the respondent’s policy and practice of billing water charges for a base service on a per unit basis was a proper exercise of its statutory authority to pass and interpret its by-laws as provided for in the Municipal Act, 2001.
[20] Section 8(1) of the Municipal Act provides for a broad interpretation to be given, to enable a municipality to govern its affairs. Subsection 8(4) provides that a by-law may be general or specific. Read broadly as a whole, I agree that this by-law provides a plan for water and wastewater consumption charges and in addition, for a monthly base fee for water and wastewater charges.
[21] In Part III, paragraph 2 of the By-law under the heading Water and Waste Water Rates and Charges it states that:
The water consumed on all premises in the Town shall be charged for as indicated by the meter for each respective property at rates, including the base monthly charges, as shown in Schedule A to this By-law. Wastewater charges for all premises in the Town shall be charged for based on the quantity of water consumed as indicated by the meter for each respective property at rates, including the base monthly charges, as shown on Schedule A to this By-law. (Emphasis added).
[22] In Part VI, paragraph 2, of the by-law under the heading Water Meters, it states that the owner shall pay the base and monthly water service charge and wastewater service charge shown in Schedule A of the by-law, or such other flat rate charges as are set out in Schedule A.
[23] Schedule A, paragraph 2, under the heading Base Monthly Charges sets out the monthly charge for metered water and for metered waste in two categories, general and residential. Paragraph 11 provides for a flat rate for non-metered accounts in a higher amount than the base monthly charge as a type of penalty for not having a meter.
[24] The Supreme Court of Canada held in Montreal (Ville) v. 2952-1366 Quebec Inc., 2005 SCC 62, [2005] 3 S.C.R. 141 that the proper approach to the interpretation of a municipal by-law is one that takes into account the words used, the intent of council, and the purpose and schemes of the by-law as a whole.
[25] While the by-law could be more specific and expressly provide for a per unit base fee charge, I find the by-law to be clear in having two aspects to the charge for water and wastewater. A per unit base fee charge is the only reasonable inference and interpretation that can be drawn from the reading of the by-law as a whole. I do not find the by-law to be ambiguous. A reasonable interpretation of the by-law is that water and sewer or wastewater charges have two components: firstly a charge based on consumption, and secondly a charge for a base service fee whether or not the water and sewer is used at all. If the unit is vacant, only the base monthly charge applies. This interpretation is consistent with the respondent’s long term practice, and has been applied to all ratepayers for several years. I reject the appellants’ argument that the by-law only authorizes charges on a per meter basis for consumption.
[26] I reject the appellants’ argument that because the respondent did not object after being notified by the appellants about the unilateral removal of the water meters, that somehow the appellants have been overcharged. There is no such obligation placed on a municipality. The appellants wrongly concluded that as they had unilaterally removed the water meters, that the respondent was not entitled to continue to charge the base monthly fee for the additional three residential units on the third floor. Further, the appellants are not absolved of the charges owing because the respondent did not advise them of how they could stop the charges from being levied.
[27] The trial judge’s findings were reasonable and supported by the evidence. I can find no error on the part of the trial judge on this issue. I find no merit in this ground of appeal.
[28] The appeal on the merits is accordingly dismissed.
3. Did the deputy judge err in law in his assessment and calculation of the total costs awarded to the respondent that were in excess of 30% of the claim as provided for in the Small Claims Court Rules, as a penalty to the plaintiff?
[29] The appellants appeal the award of costs to the respondent of $8,296.50 for fees plus $1,078.55 for H.S.T. plus $ 1,565.76 for disbursements for a total award of $10,940.81. The outstanding issue on the costs decision is in relation to the punitive aspect of the costs awarded.
[30] The appellants concede that the trial judge was entitled to award 30% of the amount of the claim in costs pursuant to Rule 14.07 (2) of the Small Claims Court Rules as a result of the offer to settle made by the respondent on November 28, 2013 which was more favourable to the appellants than the decision at trial. This 30% sum would be $7,500.00 for fees. There is no dispute about the disbursements.
[31] The objection is to the additional $796.50 plus H.S.T. awarded to the respondent to penalize the appellants “unreasonable behaviour” in the proceeding as provided for in Section 29 of the Courts of Justice Act.
[32] The penalty surcharge of $796.50 awarded was based on three reasons:
The lawyer of record was listed as a witness for trial requiring the respondent to bring a motion removing the lawyer of record. Only then did the appellants advise that the lawyer of record would not be a witness;
The appellants failed to let the defendant Rideau St. Lawrence Distribution Inc. out of the action until the commencement of the trial; and
The appellants failed to accept the respondent’s offer to settle which was more favourable to the appellants than the judgment at trial.
[33] The issue of costs is to be considered at each step in the proceeding. The issue about the lawyer of record being a witness was resolved between the parties, and neither side sought or obtained costs on the motion. I find that this is not a proper basis to make a punitive award of costs.
[34] The defendant Rideau St. Lawrence Distribution Inc. was let out of the action at the opening of trial. This defendant sent out the bills and collected funds for the respondent. Mr. Soules, the Chief Financial Officer of the corporation, testified at the opening of trial with the assistance of his counsel Mr. C. Culic.
[35] Counsel had agreed to put Mr. Soules in the witness stand to give his evidence in chief, and then to be cross–examined by counsel for the appellants and the respondent. He had prepared a letter outlining the amount owed and interest in relation to this dispute. After his testimony, it was agreed and the Deputy Judge so ordered that the claim against this defendant would be dismissed.
[36] On the record, Mr. Culic withdrew his claim for costs on behalf of his client, and the action was dismissed as against this defendant on consent without costs. I find that this is not a proper basis to make a punitive award of costs.
[37] The appellants have already paid for their failure to accept the respondent’s offer to settle. They were assessed quite properly to a doubling of the normal costs in this action from 15% of the claim, or $3,750.00 to 30% of the claim or $7,500.00 for this very reason. I find that this is not a proper basis to make a punitive award of costs.
[38] I find these are insufficient grounds for a punitive award of costs to be made in this case and that the trial judge erred in his application of these factors in making a punitive award of costs. The appeal as to costs is allowed. The cost award is reduced to 30% of the amount claimed or $7,500.00 for fees plus H.S.T. of $975.00 plus $1,565.76 for disbursements for a total cost award of $10,040.76. This is a reduction of $900.05, or $96.50 in fees plus H.S.T. of $103.55.
[39] The appeal as to costs is allowed.
Result
[40] An order shall issue that the appeal on the merits is dismissed. The appeal as to costs is allowed and the total costs ordered are varied to be $10,040.76 payable by the appellants to the respondent.
Costs of the Appeal
[41] If counsel are unable to agree on costs of the appeal by May 31st, 2015, I will receive cost submissions including a cost outline on or before June 30, 2015 sent to my attention at the Frontenac County Courthouse, Judges’ Chambers, 5 Court Street, Kingston, Ontario. K7L 2N4. I confirm I have received the respondent’s cost outline in a sealed envelope at the hearing, which shall remain sealed until on or after June 1, 2015.
Honourable Madam Justice H. MacLeod-Beliveau
Released: May 14, 2015
CITATION: Duris v. Prescott (Town), 2015 ONSC 3127
COURT FILE NO.: CV-14-0746-AP
DATE: 2015 May 14
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Jaroslav Duris and J & D Duris Enterpises Inc.
Appellants
– and –
The Corporation of the Town of Prescott
Respondent
ENDORSEMENT ON
SMALL CLAIMS COURT APPEAL
MACLEOD-BELIVEAU, J.
Released: May 14, 2015