Court File and Parties
COURT FILE NO.: CV-15-534007 DATE: 20160510 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
LIXO INVESTMENTS LIMITED Applicant – and – FCHT HOLDINGS (ONTARIO) CORPORATION, PRIESTLY DEMOLITION INC., TRAUGOTT BUILDING CONTRACTORS INC., CITY OF TORONTO and ANN BOROOAH, IN HER CAPACITY AS CHIEF BUILDING OFFICIAL Respondents
Counsel: Peter-Paul E. Du Vernet for the Applicant Molly M. Reynolds and Eliot Che for FCHT Holdings (Ontario) Corporation
HEARD: May 3, 2016
Endorsement
DIAMOND J.:
Overview
[1] When necessary, good fences can make good neighbours. The issue driving this application is whether a shared common wall between semi-detached properties can serve the same function.
[2] The applicant Lixo Investments Limited (“Lixo”) is the owner of 86 Yorkville Avenue, Toronto (the “Lixo property”). The neighbouring, semi-detached property (84 Yorkville Avenue, Toronto) is owned by the respondent FCHT Holdings (Ontario) Corporation (“FCHT”).
[3] FCHT purchased its property from First Max Financial Corporation (“First Max”) in September 2014. Nine months earlier, the FCHT property experienced a significant fire which caused substantive damage. While the Lixo property was also damaged, it remains essentially structurally sound to this day.
[4] After receiving, inter alia, (a) an Order to Remedy Unsafe Building from the City of Toronto, and (b) a structural engineering report (both after the fire), FCHT concluded that the best course of action was to demolish the FCHT property for eventual reconstruction.
[5] During the early stages of demolition, Lixo expressed concerns with respect to the impact of such demolition efforts upon the shared common wall between the two properties (the “party wall”). On August 10, 2015, Lixo commenced this application which initially sought mandatory relief requiring FCHT to cease and refrain from any further demolition activity. I heard this application on the original return date of September 17, 2015, and granted an interim order in favour of Lixo upon certain terms. Lixo failed to comply with those terms, and the interim injunction was thereafter vacated.
[6] Since then, this application has been adjourned several times (mostly, if not all, at Lixo’s request,) and has been further amended to seek additional relief. Over the course of those various adjournments, FCHT’s demolition efforts have continued.
[7] This application finally proceeded before me on May 3, 2016.
Disposition of Applications
[8] I am being asked to determine matters advanced by Lixo by way of an application. The disposition of an application is governed by Rule 38.10 of the Rules of Civil Procedure which empowers the presiding judge to:
(a) grant the relief sought, or dismiss or adjourn the application, in whole or in part and with or without terms; or
(b) order that the whole application or any issue proceed to trial and give such directions as are just.
[9] As recently held by the Court of Appeal for Ontario in Maurice v. Alles, 2016 ONCA 287 (C.A.), an application is a summary process restricted to situations permitted under the Rules of Civil Procedure or in cases where certain enumerated relief is claimed. The presence of conflicting evidence that requires credibility determinations on central issues will result in the application being converted to an action.
[10] As found in Moyle v. Palmerston Police Services Board, when faced with a dispute in the record about a fact(s) material to an issue that is essential to the resolution of the subject matter of an application, the Court must either direct a trial of an issue in respect of the fact(s) in dispute, or convert the application into an action.
[11] In Pereira v. Quatsch, [2013] O.J. No. 95 (S.C.J.), the Court found that a judge presiding on an application is entitled to finally decide the rights of the parties on the merits so long as the principles which inform and define the parameters of a properly constituted application have otherwise been met.
[12] In determining whether it is possible to finally decide the rights of parties to an application on the merits, the Court must consider the following factors:
a) whether there are material facts in dispute; b) whether there are complex issues requiring expert evidence or a weighing of that evidence; c) whether there is a need for the exchange of pleadings and for discoveries; and, d) the importance and impact of the application and the relief sought.
[13] I agree with FCHT’s characterization of the outstanding issues in this application, which are as follows:
- Is FCHT responsible for the effects of the fire that originated prior to its acquisition of the property?
- Has Lixo established that FCHT’s demolition work has infringed Lixo’s rights or caused any damages to Lixo’s property thereby entitling Lixo to some or all of the relief claimed in its Amended Notice of Application?
Issue #1 Is FCHT responsible for the effects of the fire that originated prior to its acquisition of the property?
[14] There is no dispute that FCHT did not own 84 Yorkville at the time of the fire. There is no evidence in the record before me as to the cause of the fire.
[15] In its Amended Notice of Application, Lixo is seeking damages for (a) the loss of use of its property due to, inter alia, the fire, demolition and delay in reconstruction, (b) repair and reconstruction costs and (c) the loss of use and benefit of the interior space, party wall and foundation of the Lixo property.
[16] Part of the relief claimed against FCHT relates to events (i.e. acts and/or omissions) which pre-date FCHT’s purchase of the property. In other words, as a result of FCHT purchasing the property on an “as is, where is” basis from First Max, FCHT has thus inherited in law the tortious conduct of First Max which, based upon the submissions of Lixo’s counsel, I understood to be trespass and nuisance.
[17] To begin, a review of Lixo’s original Notice of Application and Amended Notice of Application discloses that no causes of action for trespass or nuisance have been advanced. Lixo complains that at some point, FCHT and/or its representatives erected hoarding outside of Lixo’s property. However, that hoarding was authorized by the City of Toronto and necessary due to the Lixo property having been made subject to its own Order to Remedy Unsafe Building.
[18] Lixo further complains that FCHT and/or its representatives removed an awning from the front facing of the Lixo property. In support of this submission, Lixo relies upon photographs of a tarp covering where the awning used to be in the front of the Lixo property. However, those photographs are dated (on their face) in April 2014 which was prior to FCHT’s purchase of 84 Yorkville.
[19] Throughout this application, Lixo has tendered sworn affidavit evidence stating that all of the loss, damages and expenses incurred and to be incurred were “entirely and exclusively attributable to the fire”. As an example, in an affidavit sworn December 18, 2015 by Lixo’s director Adel Kirloss, Mr. Kirloss stated as follows:
“Entirely and exclusively as a result of the fire at 84 Yorkville, Lixo has had to strip the interior of the 86 Yorkville premises and has lost all of the fixtures in and improvements to its premises. It now has nothing but a shell, and will have to entirely reconstruct and refinish the interior and parts of the exterior including the roof”.
[20] Even though Lixo has not specifically advanced a claim of nuisance in its application materials, I do not find the presence of any evidence to support a claim of nuisance against First Max in any event. Even viewing First Max’s conduct through the eyes of a prudent neighbour, as owner of FCHT’s property at the time, it was faced with a substantially damaged building deemed unsafe by the City of Toronto and structurally unsound. I do not find that First Max failed to make reasonable use of its property, nor do I find that First Max committed any unreasonable interference with Lixo’s enjoyment of its own property.
[21] In any event, I fail to see how FCHT could “inherit” any such alleged tortious conduct on the part of First Max by way of an Agreement of Purchase and Sale, even one on an “as is, where is” basis. Given that the FCHT property was structurally unsound and deemed unsafe, what other course of action could have been undertaken other than demolition and reconstruction? There is nothing in the Agreement of Purchase and Sale between FCHT and First Max which evidences an agreement on the part of FCHT to assume any liabilities from First Max or the property (even if they existed). On the contrary, clauses 4 and 5 of the Agreement of Purchase and Sale state as follows:
The Buyer acknowledges and agrees that the Property was the subject of the fire which destroyed most of the original building structure and that tenancy which existed prior to the fire have now been terminated. The Seller acknowledges that there are no outstanding financial or tenancy issues outstanding which would affect the future re-development of the Property and Land (purchasing Land only).
The Buyer subject to the Buyer’s conditions herein, expressly agrees and understands that the Property is being sold ‘as is, where is’ and that the Seller makes no representations or warranties of any nature or kind whatsoever affecting the existing or future ownership or development potential of the Property. The Buyer is to have access to the property three times to completely satisfy itself of the Property’s suitability for the Buyer’s use.”
[22] As such, I find that the answer to Issue No. 1 is “No” and the relief sought in this application relating to the time of First Max’s ownership is dismissed.
Issue #2 Has Lixo established that FCHT’s demolition work has infringed Lixo’s rights or caused any damages to Lixo’s property thereby entitling Lixo to some or all of the relief claimed in its Amended Notice of Application?
[23] Lixo advances claims relating to what it alleges to be a failure on the part of FCHT to carry out the demolition work in a reasonable and prudent manner, and in particular FCHT’s failure to protect the exposed party wall for many months (including the winter months) during the demolition process.
[24] Lixo takes the position that as the party wall was an interior common wall never exposed to the elements for over 100 years, Lixo’s recent discovery of cracks and moisture within the party wall are entirely attributable to FCHT’s demolition work.
[25] Regrettably, for the reasons which follow I find that I am unable to decide Issue #2 on the paper record before me. I believe that viva voce evidence and cross-examinations of both the parties and any experts (who have not sworn any affidavits to date) are necessary.
[26] The cause of the cracks and moisture in the party wall is unknown at this time. While I appreciate that it is Lixo’s onus to prove that any such damage to the party wall was caused by the acts and/or omissions of FCHT, even FCHT has produced evidence that such damage could be attributable to the party wall being exposed to the elements for an extended period of time. A memorandum dated May 26, 2015 from FCHT’s structural engineer states, inter alia, as follows:
“We are very concern (sic) that the same has occurred to the 86 Yorkville Building. The partial removal of 84 Yorkville Building due to the fire damage has created an unsafe condition in which the design Rakers were designed to address.
In addition to the above, the once interior walls that were shared are now exposed to the elements.
These shared wall components were not designed to be exposed and are subject to water infiltration with the associated damage to 86 Yorkville Building.”
[27] FCHT takes the position that there were no “baseline readings” of the party wall for the purpose of assessing the current cracks or moisture levels, and as such, such cracks and moisture levels cannot be linked to any work performed by FCHT. Indeed, those cracks and moisture levels may have been caused by the firefighting activities or Lixo’s failure to take any steps to repair its own building.
[28] While Lixo has yet to take substantive steps to remediate its property (and has commenced another legal proceeding against its insurer which is still outstanding), I am nevertheless unable to decide on this paper record whether the cracks and moisture levels are potentially related to the party wall being exposed to the elements.
[29] FCHT placed great reliance upon the decision of Justice O’Leary in Pantev v. Dominelli, [1996] O.J. No. 459 (Gen. Div.). In Pantev, Justice O’Leary was asked to assess the obligations of property owners who share a common wall. He “assumed” that the common wall was divided “vertically in halves, each being subject to a cross-easement in favour of the owner of the other half…such a wall is subject to such reciprocal rights as may be necessary to carry out the common intention of the parties as to the user of the wall, the nature of the rights varying in each case but usually involving a right of support”.
[30] At paragraph 28 of the Pantev decision, Justice O’Leary stated as follows:
“By Dominelli demolishing his building, he turned what had been a common interior wall into an exterior wall to Pantev’s building. Pantev was entitled to a wall as appropriate to its new function as it had been to its old. That means that the wall had to be made not only proof against rain and ground water but also it had to be insulated. Dominelli knew or ought to have known that unless he so protected the common wall Pantev would suffer the damages he had suffered. By not providing such a wall, Dominelli created a nuisance for which nuisance he is liable in law.”
[31] I note that the Pantev decision was rendered after a trial of that action which lasted seven days, and with the benefit of viva voce evidence from the parties and experts.
[32] Accordingly, pursuant to Rule 38.10(1)(b), I hereby convert the balance of this application into an action for the purpose of the disposition of Issue #2 by way of a trial.
[33] Given the fact that it took approximately eight months for this application to be heard on its merits, the trial of the converted action shall proceed on an expedited basis. Counsel for the parties are to contact the Civil Trial Office forthwith to obtain the earliest available trial date.
[34] Lixo shall have 21 days from the release of this Endorsement to serve and file a fresh Statement of Claim setting out the issues to be tried and the material facts in support of its claims. FCHT shall thereafter have 30 days to serve and file its statement of defence.
[35] The cross-examination transcripts shall stand as examinations for discovery in the converted action. The parties may conduct further discoveries, if necessary, within 90 days of the release of this Endorsement in order to complete the discovery process. Prior to any scheduled examination of discovery, the parties shall exchange sworn affidavit of documents.
Costs
[36] At the conclusion of the hearing of this application, both Lixo and FCHT exchanged and filed Costs Outline together with Bills of Costs. Given my disposition of this application, I believe it prudent to allow both Lixo and FCHT to serve and file additional written costs submissions, totaling no more than three pages, pursuant to the following schedule:
(a) FCHT shall serve and file its cost submissions within 10 business days of the release of this Endorsement; and
(b) Lixo shall serve and file its responding costs submissions within 10 business days thereafter.
Diamond J.
Released: May 10, 2016