Court File and Parties

CITATION: Kuchar v. Midland (Town – Chief Building Official), 2016 ONSC 6777

COURT FILE NO.: CV-16-548555

DATE: 20161104

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: MICHAL KUCHAR and 1646551 ONTARIO INC., Applicants

AND:

THE CHIEF BUILDING OFFICIAL OF THE CORPORATION OF THE TOWN OF MIDLAND, TERRY PAQUETTE and LORNE WITTS, Respondents

BEFORE: Stinson J.

COUNSEL: S. Dale Denis, for the applicants, moving parties Leo F. Longo, for the respondent Terry Paquette, Chief Building Official of the Town of Midland Alfred Schorr, for the respondent Lorne Witts

HEARD at Toronto: October 27, 2016

ENDORSEMENT

[1] This is a motion under s. 25(7) of the Building Code Act, 1992, S.O. 1992, c. 23. It seeks a stay of an Order to Comply issued pursuant to s. 12 of the Building Code Act by the respondent, the Chief Building Official of the Town of Midland, in respect of a house owned by the respondent Lorne Witts and his wife Franca Witts. The house was constructed in 2011 under contract with the applicant, 1646551 Ontario Inc. ("164"). The applicant Michal Kuchar is the principal of 164; for ease of reference I will refer to Kuchar and 164 jointly as the “Builder”.

[2] As a newly built house, the house was subject to a warranty under the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31. After they took possession, the Witts made a number of complaints to Tarion Warranty Corporation, the administrator of the new home warranty plan, regarding alleged deficiencies in the construction. They asserted these deficiencies were covered by the warranty. One complaint, in particular, has given rise to a multiplicity of proceedings, including the present one. Specifically, the Witts assert that all exterior insulation and finishes on the house (“Stucco”) were not installed in compliance with the Ontario Building Code. As a consequence, they claim, the warranty was breached and all Stucco should be removed and replaced.

[3] Tarion did not agree with the complaint regarding the Stucco and took the position that there was no breach of warranty and no basis for the Witts’ claim. As a result, on September 30, 2014, the Witts initiated a proceeding before the Licence Appeal Tribunal (the “LAT Appeal”) in which they sought to appeal the determination of Tarion that there were no warrantable defects with the Stucco. The parties to the LAT Appeal are the Witts, Tarion and 164.

[4] Although the LAT Appeal was initiated by the Witts more than two years ago, it has not yet come to a hearing. Three hearing dates have been scheduled, but so far the appeal hearing has not proceeded: April 15, 2005 (adjourned at the Witts' request); October 26, 2015 (also adjourned at the Witts' request); and March 7, 2016. In advance of the March 7, 2016 date, 164 brought a motion for production. The Witts' representative was unable to respond to it on a timely basis. As a result, the March 7, 2016 hearing date was vacated and the hearing of the production motion was scheduled for that date, but not heard. Ultimately, some eight months later, the Witts consented to the production order. (I note that, if the Witts had consented to the production order in the first place, the adjournment of the hearing set for March 7, 2016 would likely have been unnecessary.)

[5] In due course, in late June 2016, new hearing dates were fixed for the LAT Appeal: a full week has been set aside, starting December 5, 2016, less than six weeks from now. The parties have been working towards that event. The central issue at that hearing will be whether the Stucco is or is not subject to a warranty claim under the new home warranty plan – specifically, whether this aspect of the house was constructed in accordance with the Ontario Building Code.

[6] Despite having commenced the LAT Appeal, the Witts decided to pursue other avenues to obtain a remedy in respect of their complaints regarding the Stucco. One such avenue was a complaint to the Chief Building Official of the Town of Midland (“CBO”) concerning the adequacy of the construction. Initially, the CBO went no further than to require inspections and reports in respect of the Stucco. Ultimately, on February 23, 2016, the CBO issued an Order to Comply (“OTC”) which required all the Stucco to be removed and replaced. The OTC was directed to Lorne Witts and to Kuchar.

[7] In response to the OTC, on March 11, 2016, the Builder commenced this application: it is an appeal to a single judge of the Superior Court of Justice of the OTC under s. 25(1) of the Building Code Act (the “OTC Appeal”). In the OTC Appeal, the Builder seeks to set aside the OTC on the ground that it should not have been issued because the construction did comply with the Building Code. In addition, the Builder asserts that the decision-making process of the CBO was tainted by reason of certain information improperly supplied to it by the Witts, as described below.

[8] In addition to their LAT Appeal and their complaint to the CBO, the Witts decided to pursue criminal charges against Kuchar. Specifically, by means of the procedure under the Criminal Code for commencing a private prosecution, they sought to initiate a prosecution for fraud, asserting that Kuchar had forged a letter from a supplier purporting to attest to the qualities of the materials used for the Stucco. A Justice of the Peace conducted an in camera pre-enquete hearing, but declined to authorize the prosecution.

[9] Subsequently, and despite an undertaking not to do so, the Witts provided copies of the in camera proceedings before the Justice of the Peace during the course of the pre-enquete to several parties, including the CBO. This is one of the grounds, among others, relied upon by the Builder in the OTC Appeal to assert that the decision-making process by the CBO was tainted, such that the OTC should be set aside.

[10] The decision by the Witts to improperly share the transcripts of the pre-enquete resulted in yet additional litigation. Once the Builder discovered what had been done, it issued a statement of claim against the Witts claiming, among other relief, an interlocutory injunction. That order was granted on consent by Matheson J. on June 1, 2016. The Witts have now delivered a statement of defence and counterclaim in that proceeding in which, among other relief, they claim damages relating to the construction of the house, including complaints regarding the Stucco.

[11] It may thus be seen that the dispute over the Stucco has spawned a multiplicity of proceedings, involving considerable factual overlap. Recognizing this fact, in June 2016, the Builder and the CBO agreed that it would be most efficient to postpone the OTC Appeal until the outcome of the LAT Appeal was known. Their reasoning was that the fundamental issue in both is whether the Stucco did or did not comply with the Building Code. The LAT Appeal will be a detailed inquiry into that subject, before a specialized tribunal. The Witts, Tarion and the Builder will have an opportunity to present evidence. Should the LAT Appeal determine that there was non-compliance with the Building Code, the LAT will order Tarion to respond to the warranty claim. Thus, the OTC and the OTC Appeal would, for all intents and purposes, become moot since Tarion (or the Builder) would be required to perfom the very remedial work that is the subject of the OTC.

[12] Despite the willingness of the Builder and the CBO to, in effect, defer the determination of the principal issue raised on the OTC Appeal to the outcome of the LAT Appeal, the Witts were unwilling to agree. Instead, they instructed their lawyer to attend in Civil Practice Court to obtain a date for the argument of the OTC Appeal. That date has now been fixed for November 29, 2016. In the face of that upcoming return date and the soon-to-follow hearing date for the LAT Appeal, the Builder, supported by the Town, has brought this motion for a stay of the OTC. If the stay is granted, they ask that the hearing of the OTC Appeal be adjourned until the outcome of the LAT Appeal is known.

[13] Witts opposes the stay and any adjournment of the OTC Appeal. Witts argues that the test for a stay prescribed by the Supreme Court of Canada in RJR-MacDonald Inc. v. Canada (Attorney General), 1995 CanLII 64 (SCC), [1995] 3 SCR 199 ("RJR-Macdonald") is applicable to a situation such as this, but is not met. While he concedes that there is a serious issue to be tried, he argues that there is no irreparable harm, and more importantly that the balance of convenience does not favour the granting of the stay.

[14] What the Court was dealing with in RJR-Macdonald was a request by one party to stay the effect of a court order made by the Court of Appeal for Québec, the effect of which was to require the applicants to comply with new regulatory requirements imposed under the Tobacco Products Control Act regarding the packaging of cigarettes. In that case, the dispute concerned regulations passed by the Governor in Council; the availability of interlocutory relief had already been adjudicated. The stay that was sought would, in effect, have suspended the operation of a judicial decision that had been issued following a hearing process in which both sides were represented.

[15] The present case can be distinguished from RJR-Macdonald on several grounds. Firstly, there has been no hearing on the merits, nor any judicial consideration of the validity of the OTC, even on a preliminary or interlocutory basis. Thus, the stay under s. 25(7) of the Building Code Act does not seek to suspend rights that have been previously determined in a judicial process.

[16] Secondly, the CBO - the party who issued the OTC and ordinarily would be expected to uphold it and oppose any attempt to set aside or suspend its operation - supports the request for a stay. Counsel for the CBO noted that the dispute in this case is not a safety issue, but rather a technical compliance issue. Thus, while the CBO acknowledges his obligation to enforce the Building Code and to ensure that builders discharge their responsibilities, the CBO further recognizes that in the exercise of his discretion, he should have the benefit of the best available information. The hearing before the LAT and the decision of that tribunal will provide just that. The two principal adversaries, the Builder and the Witts, will have an opportunity to present a complete record and argument before an expert and independent tribunal.

[17] Thirdly, and most importantly, the principal basis for the OTC Appeal is the very same issue that is pending in another proceeding initiated by the Witts, namely, the LAT Appeal. Thus, the underlying basis for the request for the stay is not the assertion by the Builder that that the operation of the OTC should be suspended while it prosecutes its own appeal to this court, but rather that the process originally initiated by the Witts (the LAT Appeal) should be permitted to run its course, and a decision rendered, before the parties are put to the time, trouble and expense of arguing the OTC Appeal. In other words, the Builder submits, it would be duplicative, inefficient and inappropriate to force it to proceed with this application while the fundamental underlying issues are in the process of being litigated in another proceeding previously commenced by the Witts. Thus, what the Builder is seeking – supported by the CBO - is a temporary stay of the OTC along with an adjournment of the OTC Appeal, pending the outcome of the LAT Appeal.

[18] In Mylan Pharmaceuticals ULC v. AstraZeneca Canada, Inc., 2011 FCA 312, [2011] F.C.J. No. 1607 (F.C.A.) Stratas J.A. contrasted a request for a stay that amounted to a court enjoining another body from exercising its jurisdiction, with the situation where a court is asked not to exercise its jurisdiction until some time later. He observed (at para. 5) as follows:

There is a material difference between these two things and different considerations apply:

This Court enjoining another body from exercising its jurisdiction. When we do this, we are forbidding another body from going ahead and exercising the powers granted by Parliament that it normally exercises. In short, we are forbidding that body from doing what Parliament says it can do. As the Supreme Court recognized in RJR-MacDonald Inc., this is unusual relief that requires satisfaction of a demanding test. Two parts of that test are particularly demanding. First, there must be persuasive, detailed and concrete evidence of irreparable harm: Stoney First Nation v. Shotclose, 2011 FCA 232 (F.C.A.) at paragraphs 47-49; Canada (Superintendent of Bankruptcy) v. MacLeod, 2010 FCA 84 (F.C.A.) at paragraphs 14-22. Second, there must be a demonstration, through evidence, of inconvenience that outweighs public interest considerations, such as the right of the other body to discharge the mandate given to it by Parliament: RJR-MacDonald, supra at pages 343-347.

This Court deciding not to exercise its jurisdiction until some time later. When we do this, we are exercising a jurisdiction that is not unlike scheduling or adjourning a matter. Broad discretionary considerations come to bear in decisions such as these. There is a public interest consideration - the need for proceedings to move fairly and with due dispatch - but this is qualitatively different from the public interest considerations that apply when we forbid another body from doing what Parliament says it can do. As a result, the demanding tests prescribed in RJR-MacDonald do not apply here. This is not to say that this Court will lightly delay a matter. It all depends on the factual circumstances presented to the Court. In some cases, it will take much to convince the Court, for example where a long period of delay is requested or where the requested delay will cause harsh effects upon a party or the public. In other cases, it may take less. [Italicized emphasis in original; underlining for emphasis added.]

[19] I agree with those comments and consider them applicable to the motion before me. What I am being asked to do is, in effect, decide not to exercise jurisdiction to hear the OTC Appeal until a later time. I therefore conclude that the tests prescribed in RJR-MacDonald are inapplicable.

[20] In Hollinger International Inc. v. Hollinger Inc., [2004] O.J. No. 3464 at para. 5 (S.C.J.), Farley J. summarized the relevant factors a court will consider when deciding whether to issue a temporary stay pending the resolution of another proceeding:

(a) whether there is substantial overlap of issues in the two proceedings;

(b) whether the two cases share the same factual background;

(c) whether issuing a temporary stay will prevent unnecessary and costly duplication of judicial and legal resources; and

(d) whether the temporary stay will result in an injustice to the party resisting the stay.

See, more recently, Catalyst Fund Limited Partnership II v. IMAX Corp., [2008] O.J. No. 3776 (S.C.J.) and Dadouch v. Bielak, 2011 ONSC 1583, [2011] O.J. No. 1095 (S.C.J.).

[21] Courts will also be reluctant to grant a stay if the result of the stay is to deny the plaintiff access to the courts or to substantially delay or impair the plaintiff’s right to have his or her case heard: Campeau v. Olympia & York Developments Ltd., [1992] O.J. No. 1946 (Gen. Div.).

[22] Against the foregoing legal backdrop, I turn to a consideration of the factors relevant to the granting of a temporary stay in the present case.

(a) Whether there is substantial overlap of issues in the two proceedings

[23] As outlined above, the principal issue in the LAT Appeal initiated by the Witts is whether the Stucco was or was not compliant with the Building Code. Both factual and expert evidence will be adduced before the LAT in relation to that issue. The very same question will arise in the course of the OTC Appeal. This means that the LAT and this court will be asked to review and reach conclusions in respect of the same evidence and same issue.

[24] In my view, there is a substantial overlap of the issues in the two proceedings.

(b) Whether the two cases share the same factual background

[25] The answer to this question is self-evident. The only additional factual issue raised in the OTC Appeal is the assertion that the decision making process of the CBO was somehow tainted by the conduct of the Witts. That issue would become moot if the Stucco is found to be compliant with the Ontario Building Code.

(c) Whether issuing a temporary stay will prevent unnecessary and costly duplication of judicial and legal resources.

[26] As I have noted, the LAT Appeal will decide the question whether the Stucco was or was not compliant with the Building Code. As such, having the court examine the same issue would amount to a duplication of resources. Significantly, the LAT is a specialized tribunal, whose members have expertise in these matters. To date, the parties have exchanged considerable documentation and information as well as expert reports and a further expert report is due to be forthcoming shortly from Tarion. Extensive efforts have been expended to date in scheduling, managing and preparing for the conduct of that hearing.

[27] To require and expect the parties to go through, in effect, the same exercise before the court in relation to the issue of whether the Stucco was compliant with the Building Code would plainly be a duplication of effort. It is also conceivable that different conclusions could be reached by the court and by the LAT, a result that should be avoided.

(d) Whether the temporary stay will result in an injustice to the party resisting the stay

[28] The Witts oppose the stay on the ground that, if it is granted, they will be forced to proceed with the LAT Appeal. They argue that, absent the stay, they would be able to rely on the OTC to support their case that the Stucco does not meet the requirements of the Building Code. They also argue that, in the OTC Appeal and the motion for a stay, the onus is on the Builder, whereas in the LAT Appeal they have the burden. This is a juridical advantage and it would be unfair to deprive them of it.

[29] I do not accept the Witts’ submissions on this point. First of all, I do not accept that the existence of the OTC will, in any way, be determinative of the issues to be decided by the LAT. Put another way, this is not a situation in which the principles of res judicata would apply, given that Tarion is not a party to the present proceedings. Additionally, there are other bases upon which the Builder disputes the propriety of the OTC, which have as their origin the improper conduct of the Witts in releasing the confidential transcripts of the pre-enquete hearing. (I pause to observe that, given their past conduct, it seems incongruous for the Witts to complain about unfairness.)

[30] More importantly, the Witts are the ones who have delayed, repeatedly, the hearing of the LAT Appeal. But for their requests for adjournments and their unwillingness to produce documents voluntarily, the LAT Appeal would have been conducted and the decision on that appeal received long ago, quite possibly before the issuance of the OTC. It therefore does not lie in their mouth to complain that it is unfair to them for the very process which they initiated over two years ago, the LAT Appeal, to be determined before forcing the other parties to proceed with the OTC Appeal.

Conclusion and Disposition

[31] The foregoing analysis supports the conclusion that a temporary stay of the OTC is warranted in this case. To hold otherwise would result in unnecessary and costly duplication of judicial and legal resources in relation to litigation of the same issues. As I have mentioned, the LAT is a specialized tribunal that is far more familiar with the technical features of the Building Code and related complex topics and thus is a tribunal more suited for the resolution of this dispute.

[32] For these reasons, I conclude that a temporary stay should be granted of the OTC pursuant to s. 25(7) of the Building Code Act, and I so order. As well, I direct that the hearing of the OTC Appeal be adjourned until the outcome of the LAT Appeal and any appeals therefrom is known. The OTC will be stayed until the outcome of the OTC Appeal or such other time as a judge of the Superior Court of Justice may direct.

Costs

[33] The Builder submitted a bill of costs seeking partial indemnity costs of $51,253.16. In submissions, counsel sought $20,000. The Town seeks no costs. The costs outline prepared on behalf of the Witts sought costs of $8,738 inclusive of disbursements and tax. It may thus be seen that there is a wide divergence between the parties' positions.

[34] There is no question that this was a hard fought motion. The material was extensive. Detailed factums were exchanged. The argument consumed well over a half day. The Builder achieved success in obtaining the stay.

[35] Counsel for the Builder noted that considerable effort was expended on its behalf, given the need to address assertions of impropriety previously made by the Witts. That said, a considerable portion of the material filed in support of the stay motion was comprised of material previously filed on the interlocutory injunction motion. In that proceeding, the order was ordered to pay costs of $30,000.

[36] Recognizing that the Builder bore the onus on the motion today and therefore was responsible for framing and advancing the arguments in support, I acknowledge that it is reasonable to anticipate that its costs would be greater than those incurred by the Witts. Taking into account the amount of time spent, the results obtained, the importance of the issues and the reasonable expectations of the losing party, I would fix the Builder’s costs at the all-inclusive sum of $14,000. I order that sum to be paid within 30 days.

Stinson J.

Date: November 4, 2016