Williams v. Toronto (City), 2016 ONCA

On appeal from the judgment of Justice Paul M. Perell of the Superior Court of Justice, dated January 4, 2016, reported at 2016 ONSC 42 (CanLII).


Lauwers J.A.:

[1]         In 2003, the Province of Ontario changed the classification of rooming houses for assessment purposes and thereby lowered the property tax rates on them. Legislation required the landlords to reduce rents payable by tenants, and also required municipalities, including the City of Toronto, to provide notices of the rent reduction to the affected rooming house landlords and tenants. The City failed to do so. Mr. Williams, the respondent, brought a class action against the City for damages for negligence, alleging that the class members overpaid rent because the City failed to provide timely notice to the tenants.

[2]         Mr. Williams and the other class members are tenants who occupied rooming houses in the Parkdale area of Toronto from 2003 to 2008. Many of Parkdale’s rooming houses did not comply with municipal zoning and by-law requirements.  After negotiations with affected parties, the City implemented the Parkdale Pilot Project (“PPP”), which aimed to regularize and improve illegal housing without leaving tenants homeless. The class members are tenants of buildings involved in the PPP, as defined in the certification order:

All those persons residing in Ward 14 in the City of Toronto who, being tenants in rental apartments having seven or more units in respect of which the municipal property tax was reduced by more than 2.49% at any time between January 1, 2003, and December 31, 2008, as a result of the participation of such apartment buildings’ owners in the Parkdale Pilot Project, did not receive the notices of tax reduction referred to in section 136 of the Residential Tenancies Act, 2006 and/or section 131 of the Tenant Protection Act.

[3]         The tenants moved for summary judgment on the common issues of whether the City owed them a duty of care and whether it had breached the standard of care by failing to notify them of rent reductions. The motion judge found that the tenants’ negligence claim was made out on the facts. He found, at paras. 71-72, that there was foreseeability of harm and a sufficiently proximate relationship between class members and the City for a duty of care to exist, and held, at para. 78, that the City’s failure to send notices breached the standard of care. He granted summary judgment in favour of the class members.  According to the litigation plan, an individual issues process will determine the specific financial entitlements of individual tenants.

[4]         The key issue in this appeal is whether the motion judge was correct in determining that the process leading to the PPP created sufficient relational proximity between the City and the class members to justify imposing on the City a private law duty of care in addition to its public obligations under the Tenant Protection Act, S.O. 1997, c. 24 and Residential Tenancies Act, 2006, S.O. 2006, c. 17 (“RTA”). For the reasons set out below, I would dismiss the City’s appeal.

The Issues

[5]         The certification order certified two common issues:

1. Did the City owe a duty of care to class members to send the notices required by s. 136 of the Tenant Protection Act and s. 131 of the Residential Tenancies Act, 2006?

2. Did the City, by failing to send the notices required by s. 136 of the Tenant Protection Act and s. 131 of the Residential Tenancies Act, 2006, fall below the requisite standard of care?

[6]         It is common ground that the City had a statutory obligation to provide notice to the class members and failed to do so.

A.           Did the City owe a duty of care to class members to send the notices required by s. 136 of the Tenant Protection Act and s. 131 of the Residential Tenancies Act, 2006?

[7]         In order to found a duty of care in negligence, three elements are necessary: (1) The harm complained of must have been reasonably foreseeable; (2) There must have been sufficient proximity between the plaintiff and the defendant that it would be fair and just to impose a duty of care; and (3) There must be no residual policy reasons for declining to impose such a duty: Cooper v. Hobart, 2001 SCC 79 (CanLII), [2001] 3 S.C.R. 537; Edwards v. Law Society of Upper Canada, 2001 SCC 80 (CanLII), [2001] 3 S.C.R. 562; Childs v. Desormeaux, 2006 SCC 18 (CanLII), [2006] 1 S.C.R. 643; Syl Apps Secure Treatment Centre v. B.D., 2007 SCC 38 (CanLII), [2007] 3 S.C.R. 83. See also Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.) and Kamloops (City of) v. Nielsen, 1984 CanLII 21 (SCC), [1984] 2 S.C.R. 2.

[8]         Foreseeability, the first element, is not in dispute. The motion judge held, at para 67: “the City admits it knew that its notices would inform the Class Members of their rights and that the Class Members would likely be adversely affected by the lack of notice.”

[9]          This case turns on the second and third elements of the Cooper analysis: whether a duty of care arises from proximity; and whether there are residual policy reasons to decline to impose a duty of care on the City. A tension is in play in considering these elements. It is between the principle, best articulated in Donoghue v. Stevenson, [1932] A.C. 562 (H.L.), that victims of negligence ought to be compensated, on the one hand, and, on the other hand, the need to limit the duty of care to avoid the “spectre of unlimited liability to an unlimited class” (Cooper, at para. 37). The Supreme Court observed: “The quest for the right balance is in reality a quest for prudent policy” (Cooper, at para. 29).


The City’s relationship with the class members went beyond the notification role

[48]      In my view the motion judge was correct to locate the duty of care in the confluence of the City’s statutory obligations and its involvement in the PPP.

[49]      The evidence about the lengthy PPP, summarized above, shows that at a high staff level the City recognized the particular economic and psychological vulnerability of the class members to increases in housing costs. The City knew its efforts to upgrade the rooming house and bachelorette housing stock in Parkdale would negatively affect the affordability of rental housing there. “De-housing” of class members was a real prospect the City proposed to address through a “relocation” protocol, which was to require reports “on relocation issues as they arise and recommending strategies to support vulnerable tenants,” City monitoring, and approaches to senior levels of government to provide capital funding and tax relief to counter upward pressure on rents. From its contacts with the Parkdale Tenants’ Association and through the conflict resolution process leading to the PPP, the City knew intimately the situations of the class members and the nature and extent of their particular vulnerabilities, knew the City’s actions would exacerbate those vulnerabilities, knew that even modest rent relief would be especially meaningful to the class members, and ought to have known that this vulnerable group would be especially hard hit by the City’s failure to perform its statutory notification duties.

[50]      The scenario fits well within Lord Atkin’s seminal words in Donoghue, emphasized by McLachlin C.J. in Hill, that the relevant proximity “was intended, to extend to such close and direct relations that the act complained of directly affects a person whom the person alleged to be bound to take care would know would be directly affected by his careless act.”

 (d)  Conclusion on the second Cooper element: the sufficiency of proximity

[51]      I conclude that the motion judge was correct to find sufficient relational proximity between the class members and the City to attach to the City a prima facie duty of care.

(2)         The Third Cooper Element: Are there residual policy reasons to decline to impose a duty of care on the City?

[52]      In addressing the third Cooper element, the court focuses on “residual policy considerations”. These “are not concerned with the relationship between the parties, but with the effect of recognizing a duty of care on other legal obligations, the legal system and society more generally”: Cooper, at para. 37. See Hill, at para. 31, Syl Apps, at para. 32, and Fullowka, at para. 57.

[53]      As Cromwell J. explained in Fullowka, at para. 57, in order to oust a prima facie duty of care once the first two Cooper elements have been established, the “residual policy considerations must be more than speculative.” He stated: “They must be compelling; a real potential for negative consequences of imposing the duty of care must be apparent”.


(b) Is the Authority Engaged in Policy-Making?

[63]      The second significant policy consideration recognizes the undesirability of inhibiting the policy-making functions of public authorities. This has given rise to a distinction between policy-making, for which public authorities are not liable, and operational decisions, where liability might attach. The Supreme Court noted in Cooper, at para. 38:

It is established that government actors are not liable in negligence for policy decisions, but only operational decisions. The basis of this immunity is that policy is the prerogative of the elected Legislature. It is inappropriate for courts to impose liability for the consequences of a particular policy decision. On the other hand, a government actor may be liable in negligence for the manner in which it executes or carries out the policy.

See also Imperial Tobacco, at paras. 61-62.

[64]      The City submits it is a “mere notifier” in respect of property tax reductions and associated rent reductions, like other municipalities, and points out it had no policy-making function in providing notice to landlords and tenants. I agree. There was no call on the City to make any policy decisions around the provision of notice or the content of notice. Accordingly, this policy consideration does not weigh in favour of denying liability.

(c) Would the Imposition of Liability on the City Lead to a Conflict with its Public Duty?

[65]      The third significant policy consideration is whether the imposition of liability for negligence would trigger a conflict with the City’s public duty. The negative policy consequences of such a conflict could provide a compelling reason for refusing to find proximity: Syl Apps, at para. 28; Fullowka, at para. 72. The court declined to impose liability in Cooper, where the regulation of mortgage brokers was in issue; in Edwards, respecting the Law Society’s regulation of lawyers’ trust accounts; and in Syl Apps, which concerned the duties of children’s aid societies under child protection legislation.

[66]      There is a related argument that imposing liability on a statutory authority could have a chilling effect on an authority’s prudent conduct as a regulator, although this argument was rejected by the Supreme Court on the specific facts in Fullowka, at para. 72, concerning the activities of mining inspectors, and in Hill, at para. 56, in relation to police officers.

[67]      By contrast, the Supreme Court has endorsed the extension of a duty of care where doing so would complement, not contradict statutory duties. In Hill, the court recognized the tort of negligent investigation on the part of police officers. In Fullowka, the court recognized the tort of the negligent provision of security services, although in that case the court found no breach of the standard of care.

[68]      The City submits the statutory scheme militates against finding a relationship of proximity. It argues that, unlike in inspection cases like Fullowka, the City has no safety obligations or cognate duties or powers under the RTA, but is a “mere notifier” in respect of property tax reductions and associated rent reductions.

[69]      I see no basis on which the City’s obligation to provide notice to landlords and tenants could conflict with any of its public duties, since the City had no policy-making function in providing the required notice to landlords and tenants.  The City’s public duty was to do just that – to provide notice. As in Fullowka, the imposition of a duty of care would complement the statutory duty, not conflict with it. This policy consideration supports the imposition of liability on the City.

[70]      The City also argues the existence of remedies in the RTA for an injured party is an indication “the statutory scheme did not intend to create a private law duty of care against municipalities.” The City’s way of expressing the role of a statute in the creation of a private law duty of care reverses the ordinary understanding. Where, as here, the statute does not expressly create a private law remedy, the question is usually whether there is a conflict between the duties imposed by the statute and any private law duty of care. There is no conflict here.  In my view the existence of a statutory remedy by which a tenant or former tenant can apply to the Landlord and Tenant Board under s. 133 of the RTA does not prevent the creation of common law duty of care.

(d) Conclusion on the Third Cooper Element: The Effect of Residual Policy Reasons

[71]      I concluded earlier there was sufficient relational proximity between the class members and the City to attach to the City a prima facie duty of care to the class members to provide notices of the tax reduction to the rooming house landlords and tenants affected by the changes in Parkdale, as it was required to do by legislation. None of the residual policy considerations would prevent the imposition of liability in this case.


[76]      I begin by discussing the general standard of care, and then address the two particular difficulties raised by the City.

[77]      The overarching standard of care is that of a reasonable person in similar circumstances. In this case, as the motion judge stated, the standard is that of a reasonably competent local municipality.

[78]      What did this standard of care require in the circumstances? As the Supreme Court held in Ryan v. Victoria (City), 1999 CanLII 706 (SCC), [1999] 1 S.C.R. 201, at para. 29, statutory obligations are “relevant to the common law standard of care” and a statutory breach is “evidence of negligence”. What is more, “[t]he statutory formulation of the duty may afford a specific, and useful, standard of reasonable conduct”: R. v. Saskatchewan Wheat Pool, 1983 CanLII 21 (SCC), [1983] 1 S.C.R. 205, at p. 228.

[79]      The City correctly points out that failure to comply with a statute is not itself proof of negligence. But this does not preclude a court from treating the statutory requirement as relevant to the standard of care. The motion judge therefore made no error in finding that the City’s failure to send the notices, without excuse, fell below the standard of care.

[80]      Here, the City had a clear statutory obligation under the RTA and precursor legislation to send notices to certain tenants. The statute and regulations specify the content and timing of the notices. Meeting those specifications is what the standard of care required.

Inadequate notice

[81]      The information notices the City sent to affected tenants failed to satisfy the statutory standard in two ways. First, the content of the information notices fell short of the statutory requirement. The statutory notice must tell tenants that their rent is reduced and by what percentage. The information notices only told tenants  by what percentage the property tax for their building was reduced, and that they could discuss possible entitlements to rent reductions with their landlords or the Board. Second, the notices were late. The statutory notice is to be sent within the year of the tax reduction. The information notices were sent in 2009, addressing tax changes that occurred from 2004 to 2006. The information notices were therefore not sufficient to meet the standard of care.


[91]      This rather detailed issue was not fully canvassed in the evidence or in argument. I observe in his 2011 decision in this matter, at paras. 102-104, the motion judge determined that whether the City’s failure caused a loss, and at what point the failure became discoverable to members of the class, were to be individual issues. In my view the individual issues phase would be the preferable forum for assessing the impact of the City’s action as an element of causation.

Disposition

[92]      I would dismiss the appeal, with costs fixed as agreed at $15,000 inclusive of disbursements and taxes, payable by the City to the respondent.

                                                                             “P. Lauwers J.A.”

Released: September 12, 2016 “RJS”           “I agree Robert J. Sharpe J.A.”

                                                                           “I agree B.W. Miller J.A.”


Citation: Williams v. Toronto (City), 2016 ONCA 666 (CanLII), <http://canlii.ca/t/gtnkg>, retrieved on 2016-09-14
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