COURT FILE NO.: CV-21-00655704-0000
DATE: 20210823
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Yorkville East Developments Inc.
AND:
York Condominium Corporation No. 194
BEFORE: Vermette J.
COUNSEL: Tom Curry, for the Applicant
Emilio Bisceglia and Battista Frino, for the Respondent
HEARD: June 24, 2021
ENDORSEMENT
[1] The Respondent, York Condominium Corporation No. 194 (“YCC 194”), brings a motion to convert this Application to an action, and to consolidate this “new action” with the action in Court File No. CV-18-00597234-0000 (“2018 Action”).
Factual background
[2] The Applicant, Yorkville East Developments Inc. (“YED”), is a developer. YED is the registered owner of a property located on Bloor Street East and Selby Street in Toronto (“YED Property”). The YED Property abuts property located on Sherbourne Street owned by YCC 194 (“YCC Property”). The YCC Property houses medical clinics and other businesses.
[3] There is a portion of the YCC Property (3.03 m x 6.70 m) that juts out into the YED Property at the north western tip of the YCC Property (“Subject Lands”). The Subject Lands are surrounded on three sides (north, west and south) by the YED Property and are subject to an access easement in favour of the YED Property (“Easement”).
[4] YED is in the process of constructing a large multi-building, mixed-use hotel and residential condominium project on the YED Property (“Project”). The Project relies on the Easement over the Subject Lands to be used as part of the driveway leading to the underground parking for the Project.
[5] The parties have been involved in various litigation since 2018.
a. The original pleadings in the 2018 Action and the First Settlement Agreement
[6] YED commenced the 2018 Action on May 4, 2018 asking for the following relief: (a) $4 million in damages for nuisance, trespass, dangerous non-natural use of land and/or negligence; (b) a permanent injunction restraining any trespass, nuisance, negligence and dangerous non-natural use of land on the part of YCC 194; and (c) compensation for the spill of a pollutant pursuant to section 99 of the Environmental Protection Act, R.S.O. 1990, c. E.19.
[7] In the 2018 Action, YED alleges, among other things, that:
a. the pilings, foundation wall and hydro wires on the west side of the YCC Property encroach on and intrude onto the YED Property; and
b. there is water running off the west side of the YCC Property onto the YED Property that is contaminated.
[8] On June 4, 2018, YCC 194 served a Statement of Defence and Counterclaim. YCC alleges that it bears no responsibility for construction means or methods employed during the erection of the building on the YCC Property over 40 years ago. It also alleges that any encroachment on the YED Property is de minimis. With respect to the issue of contaminated water, its position is that any water backcharging from YCC 194’s drainage system into the YED Property resulted from its system being overloaded by YED’s water build-up during construction operations, and that if any nuisance exists with respect to water drainage, it is emanating from the YED Property.
[9] YCC 194’s original Counterclaim in the 2018 Action was for:
a. a mandatory injunction compelling YED to complete a purchase of the Subject Lands for a price to be determined by the Court, in an amount no less than $1.6 million;
b. in the alternative, damages in the amount of $3 million for trespass, interference with YCC 194’s quiet enjoyment of the YCC Property, unlawful misappropriation and wrongful wasting and removal of the Subject Lands; and
c. damages in the amount of $1 million for damages to property and trespass during YED’s construction activities, including crane swings, damage to the entrance of the underground parking garage on the YCC Property, obstruction of parking area, and injury to YCC 194’s underground drainage system.
[10] YCC 194’s Counterclaim alleges, among other things, that YED has altered, excavated, laid waste and physically removed the Subject Lands from YCC 194’s ownership and control, and that YED has incorporated the Subject Lands into its construction site without entering into an agreement of purchase and sale.
[11] In a Settlement Agreement made as of July 25, 2018 (“First Settlement Agreement”) and a Tieback and Construction Procedures Agreement made as of the same date (“TCP Agreement”), YED and YCC 194 agreed to resolve certain matters in dispute in the 2018 Action. Among other things, the parties agreed that the Subject Lands would be sold to YED subject to approval from the unit owners of YCC 194. The First Settlement Agreement provides that, in the event that the requisite majority of unit owners (80%) did not vote in favour of YED’s offer to purchase the Subject Lands: (a) YED’s offer would become null and void as of the time of the vote; (b) the parties would be at liberty to continue with the 2018 Action, except for certain claims advanced in YCC 194’s Counterclaim which were settled; and (c) YED would construct replacement foundation walls located entirely on the YED Property (“Replacement Walls”). The First Settlement Agreement also provides for the granting of access rights to YED by YCC 194 during the period of time required to undertake such work.
[12] In the TCP Agreement, YCC 194 agrees, among other things, to permit YED to install tiebacks into the YCC Property and to construct a caisson wall over the Subject Lands in an agreed-upon location (“Caisson Wall”). The Caisson Wall had to be constructed in accordance with plans that were made a schedule to the TCP Agreement.
b. The Second Action and amendments to the pleadings in the 2018 Action
[13] It is alleged that the sale of the Subject Lands contemplated by the First Settlement Agreement was not approved by the requisite majority of YCC 194’s unit owners because the meeting that was held did not have the requisite quorum to proceed.
[14] On November 23, 2018, YED commenced another action against YCC 194 and the members of its board of directors alleging various breaches of the First Settlement Agreement and the general duty of honesty in contractual performance (“Second Action”). YED alleged, among other things, that YCC 194 and its directors failed to take reasonable steps to ensure that all unit owners of YCC 194 and applicable mortgagees were present in person or by proxy at the owners’ meeting to vote on YED’s offer to purchase the Subject Lands.
[15] On December 3, 2018, YCC 194 amended its Statement of Defence and Counterclaim in the 2018 Action. The amendments to the Defence included: (a) an allegation of adverse possession with respect to the alleged encroachment of the foundation wall of the YCC Property onto the YED Property; and (b) the removal of the allegations regarding the underground parking garage on the YCC Property. The amendments to the Counterclaim included: (a) the removal of the request for a mandatory injunction compelling YED to complete a purchase of the Subject Lands; (b) the addition of a claim for injunctive relief requiring YED to immediately cease any trespass, interference or control over the Subject Lands and restraining YED from any further trespass or unlawful or improper use of the Seized Lands; (c) the deletion of the claim for damages in the amount of $1 million for damages to property and trespass; (d) a request for various declarations regarding the Easement, including that YED had lost the benefit of the use of the grants of easement; and (e) a request for an order requiring YED to restore the Subject Lands to its original condition.
[16] In its Reply and Defence to Counterclaim dated January 25, 2019, YED pleads that it has complied with the provisions of the First Settlement Agreement and the TCP Agreement in the course of constructing the Project, including the provisions regarding the construction of the Caisson Wall and the Replacement Walls. It states that it was necessary to excavate the soil that comprises the Subject Lands down to the base of the Caisson Wall in order to construct the Caisson Wall in accordance with the TCP Agreement and the Replacement Walls in accordance with the First Settlement Agreement.
[17] In its Reply to YED’s Defence to Counterclaim, YCC 194 denies that YED acted in accordance with the First Settlement Agreement and the TCP Agreement regarding the Subject Lands. It alleges that YED took possession of the Subject Lands and began to excavate nearly six months prior to entering into the First Settlement Agreement and the TCP Agreement.
[18] In early 2019, the parties exchanged affidavits of documents in the 2018 Action. Examinations for discovery have not taken place.
c. The Second Settlement Agreement
[19] The parties subsequently entered into a further settlement agreement dated September 30, 2019 (“Second Settlement Agreement” and, together with the First Settlement Agreement, the “Settlement Agreements”) for the purpose of settling the matters in dispute in both the 2018 Action and the Second Action. Pursuant to the Second Settlement Agreement, YED was to make a further offer to purchase the Subject Lands, conditional on approval from YCC 194’s unit owners. The parties also entered into a Crane Swing and Temporary Easement Agreement (“CSTE Agreement”), which was to remain in force even if YED’s offer was not approved by the unit owners. The CSTE Agreement grants a temporary easement to YED to swing a crane through the airspace above the YCC Property and to enter upon and perform certain work on the YCC Property.
[20] The requisite majority of unit owners did not vote in favour of YED’s offer to purchase the Subject Lands contained in the Second Settlement Agreement.
d. The Application herein
[21] The Notice of Application herein was issued in January 2021. YED seeks declarations that:
a. YED is entitled to construct the Project in accordance with the plans and specifications set out in the First Settlement Agreement;
b. YED is entitled to construct the underground parking structure, including maintaining concrete slabs on the Subject Lands;
c. in the alternative, YCC 194 is not entitled to a mandatory injunction in relation to the work completed on and around the Subject Lands.
[22] The Application is brought pursuant to various subparagraphs of Rule 14.05(3) of the Rules of Civil Procedure, including subparagraph (d), i.e. the determination of rights that depend on the interpretation of a contract.
[23] YED states that it brought this Application in response to inquiries made by YCC 194 at the end of 2020 with respect to the underground construction work performed by YED and whether it was in accordance with the Settlement Agreements. YED further states that YCC 194 has alleged that remedial construction is required, including potentially removing the concrete slabs and foundation walls on the Subject Lands and backfilling the land to grade.
[24] YCC 194 brought this motion before serving its responding materials in respect of the Application.
e. Current status of the litigation and the Project
[25] On May 26, 2021, Justice Sharma scheduled the hearing of the Application for November 9 and 10, 2021. In his endorsement, he stated the following, in part:
The application appears to involve a narrow issue of the interpretation of a settlement agreement reached by the parties. The applicant argued that it was not until November of 2020 that the respondent advised the applicant it had concerns with respect to a 4-level underground parking lot that is now complete. The applicant then started this application in January of 2021. The Court’s interpretation of the settlement agreement will dictate whether or not the applicant will have to re-build some of the work that is already complete. If re-construction must occur, it will delay completion of the overall construction project that is underway. Unit owners of the building that the applicant is constructing are expected to occupy units in 2022.
For these reasons, I am satisfied that this matter requires an urgent hearing. Moreover, in my view, the hearing of this application may help resolve some of the issues within the outstanding action and it is in the parties’ interest to have this discrete issue resolved as soon as possible.
[26] In June 2021, YED amended its Statement of Claim in the 2018 Action, principally to increase the amount of damages sought from $4 million to $15 million.
[27] The construction of the Project is well advanced. The underground parking garage is complete, including finishes and building systems. The above-grade levels of the Project have been constructed up to the 21st floor. Exterior cladding is being installed and the building is expected to be closed in by January 2022. The hotel portion of the Project is scheduled to be turned over to the hotel operator in December 2021 or January 2022. The current estimated date for final completion of the Project and transfer of condominium units to purchasers is the third quarter of 2022.
[28] Given the stage at which the 2018 Action is, a final determination of the issues in the action will very likely not take place until well after the Project is complete.
Position of the parties
[29] YCC 194’s position is that “there are several issues involving YED’s unauthorized use of the YCC Property which ought to be resolved in its entirety and not in the limited manner sought by YED in the within Application.”
[30] In the responding materials filed on this motion, YCC 194’s affiant states, among other things, that: (a) she does not believe that YED’s construction methods comply with the First Settlement Agreement; (b) YCC 194 believes that the Replacement Walls should have been constructed in concrete; (c) YCC 194 would like to independently confirm whether the Replacement Walls are built within the YED Property; (d) YCC 194 would require expert evidence to advise as to the construction of a replacement foundation wall and to determine whether the Replacement Walls are built on the YED Property; and (e) it is YCC 194’s position that YED did not have the right to construct concrete slabs across each parking level on the Subject Lands and the TCP Agreement does not directly speak to this issue. YCC 194 also complains about above-ground trespass on the YCC Property by YED during the course of the construction of the Project. In particular, YCC 194 complains that YED has completely taken over the Subject Lands on the street level.
[31] YCC 194 argues that even though YED is trying in the Application to limit the issue to the manner in which the Replacement Wall was constructed and the construction of the concrete slabs, the Application and the 2018 Action seek a determination of the same issues – i.e. the parties’ rights under the First Settlement Agreement, the TCPA Agreement and the construction of the Project – and findings made in the Application will affect any determination in the 2018 Action. As a result, YCC 194 requests that the Application be converted into an action to be heard with the 2018 Action so that the parties can have all matters resolved once and on a final basis.
[32] YCC 194 further argues that YED is effectively seeking an order for partial summary judgment with respect to part of an issue in the 2018 Action, and that this is inappropriate in light of the case law dealing with partial summary judgment.
[33] YED’s position is that ordering that the Application be converted to an action or consolidated with the 2018 Action will unduly delay the Application and result in undue prejudice and financial losses to the Applicant. It states that a delay in adjudicating this matter threatens delaying completion of the Project, significant financial loss, and upsetting hundreds of condominium purchasers. YED submits that it requires a determination of its rights in respect of the construction carried out on the Subject Lands immediately and well in advance of the completion of the Project, and argues that any delay in adjudicating the Application could render correcting construction on the Subject Lands impossible. As stated by YED’s affiant:
A final determination of all the issues in [the 2018 Action] will likely not take place until after the Project is complete. At that time, the site will cease being an active construction project and will become a residence, hotel and commercial complex. YED will have no ability to remedy or repair the work done around the Subject Lands.
Discussion
a. Conversion to an action
[34] Where the legislature has stipulated that a proceeding may be brought by application, there is a prima facie right to proceed by application and the matter should not be converted into an action without good reason: Seabrook v. Pantrust, 2018 ONSC 5471 at para. 4. However, under Rule 38.10 of the Rules of Civil Procedure, a judge may order that the whole application or any issue proceed to trial and give such directions as are just.
[35] The following factors are relevant to the determination of whether an application should proceed as an action: (1) whether there are material facts in dispute; (2) the presence of complex issues requiring expert evidence and/or a weighing of the evidence; (3) whether there is a need for the exchange of pleadings and for discoveries; and (4) the importance and impact of the application and of the relief sought. See Collins v. Canada (Attorney General) (2005), 76 O.R. (3d) 228, 2005 CanLII 19819 at para. 5 (S.C.J.) (“Collins”) and Family and Children’s Services of Lanark, Leeds and Grenville v. Co-operators General Insurance Company, 2021 ONCA 159 at para. 48.
[36] When considering the factors set out above, the following general principles set out in Collins at paras. 28-32 should also be taken into account:
[28] As a general principle, it is well established that an application should be used when there is no matter in dispute and when the issues to be determined do not go beyond the interpretation of a document. […]
[29] An application proceeding will not be converted into an action unless there is a good reason to do so, such as when the judge who will hear the matter cannot make a proper determination of the issues on the application record.
[30] When issues of credibility are involved or when viva voce evidence is required, a matter should proceed as an action […].
[31] When a factual dispute simpliciter is involved, this by itself is not sufficient to convert an application into an action. The fact(s) in dispute must be material to the issues before the court. […]
[32] The legislature has clearly designed the rules to allow for certain cases to proceed expeditiously by way of application. Whenever this can be accomplished without jeopardizing the hearing of the matter, a proceeding should not be converted into an action.
[37] With respect to the factor of whether there are material facts in dispute, given the disjunctive wording of Rule 14.05(3) of the Rules of Civil Procedure, the court has the power to hear an application under subparagraphs (a) to (g.1) even if there are material facts in dispute. However, it is not in the interests of justice to do so if the presiding judge is not confident that they can make the necessary findings of fact required in order to resolve the dispute on the basis of the record filed, including cross-examination transcripts, and without hearing viva voce testimony: see Hazelton Homes Corporation v. Katebian, 2019 ONSC 4015 at para. 13 and Jansari v. Jansari, 2020 ONSC 2473 at paras. 36-39.
[38] In my view, and subject to the views of the judge who will hear the Application, the discrete issues in the Application can be resolved based on a written record, without hearing viva voce evidence. Disputes regarding the interpretation of agreements are regularly determined by way of application. While YCC 194 states that it expects to adduce expert evidence with respect to certain issues, this is insufficient, in my opinion, to justify the conversion to an action as the issues raised in the Application are discrete and not overly complex.
[39] I disagree with YCC 194’s submission that discoveries and witness examinations “are required in order to determine the intention of the parties at the time the First Settlement Agreement was entered into.” The intention of the parties is to be ascertained objectively, not subjectively: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 at paras. 57-59. Aside from making the bald statement that witness examinations are required to determine the intention of the parties, YCC 194 has not identified any credibility or other issue requiring a trial.
[40] While the determination of the Application may well have an impact on some of the issues raised in the 2018 Action, I find that it is in the interests of justice that the issues raised in the Application be determined as soon as possible. Not deciding these issues until a trial takes place in the 2018 Action could be very disruptive and destructive, affect the rights of innocent third parties, including numerous unit owners, and make some of the relief sought (including some of the relief sought by YCC 194) impossible or very difficult to order. Aside from raising some general and ill-defined concerns about having all the issues of trespass determined at the same time, YCC 194 has not shown any prejudice in having the Application determined this fall. Its objection to such timely determination is puzzling given that delay could have a serious impact on the availability of some of the relief that it is seeking in the 2018 Action, including its request that YED restore the Subject Lands to its original condition. It is in the interests of both parties that the issues raised in the Application be determined in a timely and expeditious fashion, in light of the current state of the Project.
[41] While the case law applicable to motions for partial summary judgment is not strictly applicable, some of the concerns raised in relation to motions for partial summary judgment are legitimate considerations in this case. However, I am of the view that the issues raised in the Application may be readily bifurcated from those in the 2018 Action, as they deal with the interpretation of the Settlement Agreements, and they can be dealt with expeditiously and in a cost effective manner. I agree with Justice Sharma that the hearing of the Application and the determination of the interpretation issues may help resolve or narrow some of the issues within the 2018 Action. In any event, having the Application heard in November is the approach that is the most consistent with the direction that the Rules of Civil Procedure be liberally construed to secure the just, most expeditious, and least expensive determination of every civil proceeding on its merits. See Butera v. Chown, Cairns LLP, 2017 ONCA 783 at para. 34.
[42] Ultimately, I see no unfairness resulting from determining the dispute set out in the Notice of Application by way of application instead of directing a trial. If a proceeding is capable of being resolved as an application, it should be, as that is the most expeditious and least expensive determination of the proceeding on its merits: see Maurice v. Alles, 2016 ONCA 287 at para. 32 and Parc Downsview Park Inc. v. Penguin Properties Inc., 2018 ONCA 666 at para. 27.
[43] YCC 194’s evidence on this motion was vague and general and failed to establish that there was any need for a trial. Accordingly, YCC 194’s request that the Application be converted to an action is denied.
b. Hearing together
[44] Rule 6.01(1) of the Rules of Civil Procedure provides as follows:
Where two or more proceedings are pending in the court and it appears to the court that,
(a) they have a question of law or fact in common;
(b) the relief claimed in them arises out of the same transaction or occurrence or series of transactions or occurrences; or
(c) for any other reason an order ought to be made under this rule,
the court may order that,
(d) the proceedings be consolidated, or heard at the same time or one immediately after the other; or
(e) any of the proceedings be,
(i) stayed until the determination of any other of them, or
(ii) asserted by way of counterclaim in any other of them.
[45] The underlying purpose of this rule is to avoid multiplicity of proceedings, to promote expeditious and inexpensive determination of disputes, and to avoid inconsistent judicial findings. The threshold question is to determine whether any of the criteria under Rule 6.01(1) have been met. If so, the court must still consider whether the balance of convenience requires the order. See Coulls v. Pinto, 2007 CanLII 46242 at paras. 18-20 (Ont. S.C.J.) and Abdulrahim v. Air France, 2010 ONSC 5542 at para. 53.
[46] As a result of the amendments made to the pleadings in the 2018 Action and, in particular, the allegations contained in YED’s Reply and Defence to Counterclaim, it cannot be disputed that the 2018 Action and the Application have questions of law and fact in common, and they arise out of the same series of occurrences. Given that at least one criterion under Rule 6.01(1) has been met, the question to determine is whether the balance of convenience requires an order that the Application be heard together with the 2018 Action.
[47] As noted by Justice Brown (as he then was) in CN v. Holmes, 2011 ONSC 4837 at para. 1, while a multiplicity of legal proceedings should be avoided as far as possible, multiple proceedings might be required in some circumstances to secure the just, most expeditious and least expensive determination of disputes, in accordance with Rule 1.04 of the Rules of Civil Procedure. Whether there should be one proceeding or two “turns on the particular facts of any case and the various litigation-related considerations attaching to any case.”
[48] In 1014864 Ontario Ltd. v. 1721789 Ontario Inc., 2010 ONSC 3306 at para. 18, Master Dash set out a non-exhaustive list of seventeen factors that the court may consider when determining whether to order that two matters be tried together. While I have considered these factors, I find it unnecessary to conduct a detailed analysis of each of them because I have reached the conclusion that, in light of the “litigation-related considerations” particular to this case and in order to secure the just, most expeditious and least expensive determination of the dispute raised in the Application, the Application should not be delayed and should not be required to be heard at the same time as the trial of the 2018 Action. Some of the considerations discussed above regarding the denial of the conversion of the Application to an action also apply here, including the litigation status of each proceeding, the discrete nature of the issues raised in the Application, and the questions of delay and prejudice. The balance of convenience does not favour an order that the Application and the 2018 Action be heard together: Heliotrope v. 1324789 Ontario Inc., 2020 ONSC 808 at para. 20.
Conclusion
[49] YCC 194’s motion is dismissed.
[50] If costs cannot be agreed upon, YED shall deliver submissions of not more than three pages (double-spaced), excluding the costs outline, within 14 days of the date of this endorsement. YCC 194 shall deliver its submissions (with the same page limit) within 10 days of its receipt of YED’s submissions.
VERMETTE J.
Date: August 23, 2021