



COURT OF APPEAL FOR ONTARIO

CITATION: Williams v. Toronto (City), 2016 ONCA 666

DATE: 20160912

DOCKET: C61705

Sharpe, Lauwers and Miller JJ.A.

BETWEEN

Terence Williams

Plaintiff (Respondent)

and

The Corporation of the City of Toronto

Defendant (Appellant)

Diana Dimmer and Christopher J. Henderson, for the
    appellant

Brendan van Niejenhuis and Justin Safayeni, for the
    respondent

Heard:  June 23, 2016

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.

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
    Parkdales 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 Citys 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 Citys 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, [2001] 3 S.C.R. 537;
Edwards v. Law
    Society of Upper Canada
, 2001 SCC 80, [2001] 3 S.C.R. 562;
Childs v.
    Desormeaux
, 2006 SCC 18, [2006] 1 S.C.R. 643;
Syl Apps Secure
    Treatment Centre v. B.D.
, 2007 SCC 38, [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] 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).

(1)

The Second
Cooper

Element: Sufficient Proximity

(a)

The Governing
    Principles

[10]

The Supreme Court described the proximity element in
Cooper
, at
    para. 31, and explained the starting point is to determine whether the
    relationship between the parties falls within a recognized category:

The question is what is meant by proximity. Two things may be
    said. The first is that proximity is generally used in the authorities to
    characterize the type of relationship in which a duty of care may arise. The
    second is that sufficiently proximate relationships are identified through the
    use of categories. The categories are not closed and new categories of
    negligence may be introduced. But generally, proximity is established by
    reference to these categories. This provides certainty to the law of
    negligence, while still permitting it to evolve to meet the needs of new
    circumstances.

[11]

In
Cooper
, at paras. 41-42, the Supreme Court prescribed a proximity
    analysis that requires the court to address two questions:

The first question is whether the circumstances disclose
    reasonably foreseeable harm and proximity sufficient to establish a
prima
    facie
duty of care. The first inquiry at this stage is whether the case
    falls within or is analogous to a category of cases in which a duty of care has
    previously been recognized.

[If not,] [t]he next question is whether this is a situation in
    which a new duty of care should be recognized.

[12]

Since, as the motion judge held, at para. 60, there is no category of analogous
    cases in which a duty of care has previously been recognized, the focus of this
    appeal is on the degree of proximity and whether a new duty of care should be
    recognized. If the court finds a sufficient degree of proximity, then a
prima
    facie
duty of care exists, and the court next considers whether there are residual
    policy reasons for declining to impose such a duty on the defendant in the
    plaintiffs favour. This is the third element of the
Cooper
analysis, which
    I address later in these reasons.

[13]

In
Hill v. Wentworth Regional Police Services Board et al
, 2007
    SCC 41, [2007] 3 S.C.R. 129, McLachlin C.J. stated that while proximity
    requires that the actions of the wrongdoer have a sufficiently close and
    direct effect on the victim, this does not require physical proximity (at
    para. 29). The absence of a personal relationship, while an important factor
    to consider, is not necessarily determinative (at para. 30). The court
    specifically invoked the words of Lord Atkin in
Donoghue
to the effect
    that the duty of care could extend to situations in which the defendant would
    know the plaintiff would be directly affected by his careless act.

[14]

The plaintiff must show that the circumstances of the relationship
    inhering between the plaintiff and the defendant are of such a nature that the
    defendant may be said to be under an obligation to be mindful of the
    plaintiff's legitimate interests in conducting his or her affairs:
Hercules
    Managements Ltd. v. Ernst & Young
, [1997] 2 S.C.R. 165, at para. 24,
    cited with approval in
Odhavji Estate v. Woodhouse
, 2003 SCC 69,
    [2003] 3 S.C.R. 263, at para. 49.

[15]

The Supreme Court noted in
Cooper
courts have determined proximity
    in new situations, by looking at expectations, representations, reliance, and
    the property or other interests involved in order to evaluate the closeness
    of the relationship between the plaintiff and the defendant, and by asking whether
    it is just and fair having regard to that relationship to impose a duty of care
    in law upon the defendant (at para. 34). However, [t]here is no definitive
    list of factors:
Syl Apps
, at para. 30.

[16]

When the contact underlying the relationship arises through the
    operation of a statutory scheme, the statute provides the relevant context for
    assessing the sufficiency of proximity between the parties:
Cooper
, at
    para. 43,
Edwards
, at para. 9,
Syl Apps
, at para. 27-29,
Fullowka
    v. Pinkerton's of Canada Ltd
., 2010 SCC 5, [2010] 1 S.C.R. 132, at para.
    39.

[17]

Chief Justice McLachlin identified three types of situation where
    legislation could play a role in determining whether the governmental actor
    owes the plaintiff a
prima facie
duty of care in
R. v. Imperial
    Tobacco
, 2011 SCC 42, [2011] 3 S.C.R. 45, at paras. 43-46. The first is
    where the legislation gives rise to a duty of care explicitly or by
    implication. The second is where the proximity essential to the private duty
    of care is alleged to arise from
a series of specific
    interactions between the government and the claimant
. The argument in
    these cases is that the government has,
through its
    conduct, entered into a special relationship
with the plaintiff
    sufficient to establish the necessary proximity for a duty of care (emphasis added).
    In the third type of situation proximity arises from the combination of the
    legislative scheme and the governments interactions with the claimant.

[18]

Stated summarily: [T]he proximity inquiry will focus initially on the
    applicable legislative scheme and secondly, on the interactions, if any,
    between the regulator or governmental authority and the putative plaintiff:
Taylor
    v. Canada
, 2012 ONCA 479, [2012] 111 O.R. (3d) 161, at para. 75.

(b)

The Motion Judges
    Assessment

[19]

The motion judge instructed himself appropriately on the legal test for
    finding a duty of care in negligence. He stated the issue for determination at
    para. 70:

In the case at bar, this legislation does establish a
    relationship between the City and tenants in the City and imposes
    responsibilities on the City to give the required statutory notice to the Class
    Members and other tenants in Toronto who come within the prerequisites for
    notice; i.e. a rent reduction of 2.49 percent in a rooming house with seven or
    more units. However, just having a proximate relationship, once again, is not
    enough to establish the special relationship; i.e. a relationship of such
    proximity that it is just and fair to impose a duty of care. Is the
    relationship one where the imposition of a duty of care is appropriate?

[20]

The motion judge found himself in a delicate position. He had originally
    refused certification of the class action in
Williams v. Toronto (City)
,
    2011 ONSC 2832, at para. 83, on the basis that:

[T]here is not a close or direct relationship between the
    tenants and the local municipality that would make it fair to impose on a local
    municipality a duty of care to tenants who should receive notices with
    attendant liability for any failure by the local municipality to comply with
    the statute.

He had added that there were policy reasons that would
    negate sufficient proximity and therefore a
prima facie
duty of care:
    the prospect of indeterminate liability, and his doubt about the social
    utility of shifting the burden of liability from landlords to the
    municipalities (at paras. 84-87).  He had concluded, at para. 88: [I]t is
    plain and obvious that Mr. Williams does not have a cause of action for
    negligence or for negligent misrepresentation against the City because the City
    does not have a duty of care to the tenants to send out the statutory notices.

[21]

However, neither the Divisional Court (
Williams v. Toronto (City)
,
    2011 ONSC 6987, 346 D.L.R. (4th) 173) nor this court (
Williams v. Toronto
    (City)
, 2012 ONCA 915, 358 D.L.R. (4th) 69) agreed with the motion judges
    original conclusion that it was plain and obvious that no duty of care exists
    on the facts as pleaded in this case.  This court, at paras. 18-19, adopted the
    Divisional Courts conclusion:

We agree with the majority of the Divisional Court that it is
    not plain and obvious that these pleaded facts, if proven, are insufficient to
    establish that the City owed Mr. Williams and other class members a private law
    duty of care as a result of a specific and special relationship between the
    parties arising from the Parkdale Pilot Project. As the majority of the
    Divisional Court put it, at paras. 43 and 46, on the facts pleaded:
[Mr. Williams] and the class members fell within a specific
    group of tenants targeted by the City in the Parkdale Pilot Project
 and,
    [I]t is arguable that there is sufficient proximity to found a
prima facie
duty of care when the statutory duty to give notice is considered in light of
    the facts as pleaded showing
the relationship between the
    City and the Parkdale tenants arising as a result of the Parkdale Pilot Project
.
    [Emphasis added.]

[22]

This court added, at para. 19:

We are also not persuaded, at this early stage, that it is
    plain and obvious that policy considerations would inevitably operate to negate
    any private law duty of care otherwise found to attach to the City.

[23]

Since neither the Divisional Court nor this court found definitively
    that the City owed a duty of care to the class members (the issue was only
    whether it was plain and obvious that there was no such duty), this question
    was left for future determination, after the anticipated exchange of pleadings
    and the development of a full evidentiary record. However, there has been no significant
    development of the evidence by either party. The class representative instead
    brought a motion for judgment on the record more or less as it existed at the
    certification hearing, as he was entitled to do.

[24]

The motion judge reconsidered the duty of care issue in light of the
    comments of the Divisional Court and this court. He found, at para. 72, that the
    City did have a duty of care to the class members, reversing his earlier
    holding. He expressly adopted the reasons of Swinton J. in the Divisional
    Court, who had said, at para. 45:

On the facts pleaded, read generously as one is required to do
    in a case such as this, the appellant and the class members are particularly
    vulnerable and would not know of their rights without the information in the
    notices. Indeed, the City had already taken action to protect them with the
    Parkdale Pilot Project.

[25]

The motion judge explained, at para. 71, that he was now giving legal
    significance to the distinctive circumstances of the Parkdale Pilot Project
    that placed the class members in a closer relationship than other tenants in
    Toronto who are also entitled to receive notices from the City.

(c)

The Citys
    interactions with the class members

[26]

In this section I discuss the conflict resolution process leading to the
    PPP, which grounded the motion judges finding of proximity between the City
    and the class members. The motion judge set out the context for the PPP in his
    2016 decision, at paras. 24, 25:

In the late 1990s, to deal with the high number of illegal
    rooming houses in the Parkdale area (Ward 14) of the City of Toronto, the City
    engaged in a series of community consultations for possible solutions to what
    was a serious and complex social problem. Rooming houses are an important
    source of housing for many persons who cannot otherwise afford accommodation in
    Toronto, Ontario, but unlicensed rooming houses escaped the City's regulation
    of fire and safety standards. In 1998, Toronto Community Council endorsed the
    creation of a process to achieve consensus on the approach the City should take
    to the illegal rooming house situation in the Parkdale area. The City invited
    landlords, representatives of tenants' associations, and representatives of
    community agencies, to participate in a mediation process. Staff from various City
    departments provided input into the discussions. In 1998 and 1999, there were
    15 meetings.

These consultation efforts culminated in a report authored by
    City staff, and in February 2000, City Council adopted 18 recommendations,
    including the creation of the Parkdale Pilot Project. The Project's primary
    purpose was to address the problem of illegal housing by ensuring tenants would
    be provided with safe, quality housing through regular municipal inspections
    and the enforcement of appropriate standards. The Project was designed to bring
    eligible properties in Ward 14 within the City's existing licensing regime, so
    they would be inspected and their state of repair and safety would be
    monitored.

[27]

The evidence about the interactions between the City and the class
    members comes from material filed by the City of Toronto.  Lynda MacDonald,
    then Manager of Community Planning, provided an affidavit including two reports
    describing the PPP.  The first was a copy of the report and action taken by
    City Council for the City of Toronto on October 28, 29 and 30, 1998. It
    describes the background by which the Toronto Community Council endorsed the
    creation of a conflict resolution process to achieve a consensus on the
    appropriate approach the City should take to the existing bachelorettes and
    illegal rooming houses in Parkdale, such process to include the appointment of
    a facilitator who is acceptable to all groups. This document described a
    public meeting held on October 14, 1998, attended by representatives of a wide
    variety of associations, including the Parkdale Tenants Association.

[28]

The second, more significant City document was the report and action
    taken by Council for the City of Toronto on February 1, 2, and 3, 2000 (the
    2000 Report). The Report stated that it was a joint report involving a
    number of high level City officials: the Executive Director/Chief Building
    Official, South District; Executive Director/Chief Planner; Executive Director,
    Municipal Licensing and Standards; and the General Manager, Shelter, Housing
    and Support Division.

[29]

The PPP emerged from the Parkdale conflict resolution process. The name
    suggests conflicts among various stakeholders. The Parkdale Tenants
    Association, representing many of the class members, eventually withdrew from the
    conflict resolution process. The 2000 Report stated, at p. 106:

The Parkdale Tenants Association withdrew from the mediation
    process, but made their views clear. They take the position that zoning should
    not discriminate against certain types of housing.  Areas that are zoned for
    residential use should permit all forms of rental housing.  They believe that
    housing standards should be based upon standards such as structural integrity,
    fire safety and public health; standards should not be used as a means of
    restricting housing forms. ... Parkdale tenants believe that there should be no
    evictions, and the City should do repairs as needed to ensure safe living
    conditions and then bill or tax the property accordingly.

[30]

The basic tension in the 2000 Report was between the City, which wanted
    to regularize illegal housing and improve its quality and safety, and the
    tenants, who believed the Citys efforts to do so would add expense and would make
    their housing unaffordable. The Report stated, at p. 117:

During the mediation process a number of groups expressed
    concern that the normalization and enforcement processes not lead to de-housing
    of existing tenants. The review and assessment process outlined above is
    intended to provide enough latitude that work necessary to achieve compliance
    can be completed during the normal turnover of units.

Ideally, units would be vacated through natural turnover, and
    any displaced tenants would be resettled within the same building. This
    assumption must be carefully monitored.  Overall, there must be a balance
    between improving the housing quality of these units, and minimizing the impact
    on tenants in terms of loss of affordable housing.

[31]

At pp. 118-119, the 2000 Report advocated a resettlement or
    relocation protocol, and set out a number of detailed elements to be
    considered, including imposing an obligation to report on relocation issues as
    they arise and recommending strategies to support vulnerable tenants.

[32]

The 2000 Report noted that in order to maintain the affordability of
    housing, some financial assistance for capital rehabilitation costs might be
    necessary from senior levels of government (at p. 117). In relation to the
    affordability issue, the Report noted, at p. 120:

The mediation process only began to consider the issue of
    affordability.  All the participants were concerned with the protection of
    affordable housing within Parkdale.   With the loss of rent control, the City
    does not have the ability to impose affordability. However, a number of ideas were
    discussed which merit further consideration.

Among them was approaching the Province to secure a reduced
    tax rate for bachelorette buildings which will further assist affordability.

The tax issue

[33]

The tax issue was addressed at p. 116 of the 2000 Report, as a method
    for providing a further incentive for property owners to come forward and
    retain these buildings as a form of affordable housing.  The fear expressed in
    the 2000 Report was that, as a result of the advent of market value assessment
    coupled with the improvement of the buildings:

[T]he tax rate will escalate further. The BOA [Bachelorette
    Owners Association] stated that the increase in taxes will probably be passed
    on to their tenants, reducing their ability to provide affordable housing. They
    believe they should qualify for the residential rate that applies to rooming
    houses.

The Report recommended that Council pursue the lower tax
    rate, and explained, at p. 116:

The City should advocate to the Province a reassessment to
    reduce the level of taxation. A lower tax rate would provide a further
    incentive for property owners to come forward and retain these buildings as a
    form of affordable housing.

...

The issue of whether bachelorettes should have a separate tax
    class requires further discussion with the Province. The creation of a new
    property class for rooming houses and bachelorettes is possible under current
    legislation, but does require the Minister to specify the new class in a
    Provincial regulation. Even if a separate class is supported, the tax rate
    applied is not within the City's jurisdiction to determine, but must fall
    within provincially defined "ranges of fairness" that were introduced
    when CVA was implemented in 1998. Further review is required not only with
    respect to the applicable tax rates, but also to the financial impact that the
    creation of a new class would have on the City. We therefore recommend that
    Council pursue the lower tax rate.

(d)  Is the proximity test
    satisfied?

[34]

The proximity assessment focuses on the relational proximity of the
    parties, to use the Supreme Courts evocative expression in
Cooper
, at
    para 39. Was there sufficient relational proximity between the class members
    and the City to attract a duty of care? Was the relationship between the class
    members and the City of such a nature that the City may be said to have been
    under an obligation to be mindful of the class members legitimate interests in
    conducting its affairs?

The typical factors are not present

[35]

The City submits, and I agree, many of the typical factors that have led
    courts to find proximity are not present in this case. These factors were
    gathered by this court in
Taylor
,
at para. 69, and include:

[A]ny representations made by the defendant, especially if made
    directly to the plaintiff, reliance by the plaintiff on the defendant's
    representations, the nature of the plaintiff's property or other interest
    engaged, the specific nature of any direct contact between the plaintiff and
    the defendant, and the nature of the overall relationship existing between the
    plaintiff and the defendant.

[36]

But as the City correctly concedes, this is not a closed list. To use
    this courts language in
Taylor
, what must be assessed are the
    interactions between the City and the class members. The issue in this case
    comes down to whether the Citys involvement in conflict resolution process
    leading to the PPP brought the City into relational proximity to the class
    members.

[37]

The City maintains that, although Mr. Williams bore the onus of proving
    that he was owed a duty of care, and although the appellate courts had given
    direction about having a full evidentiary record, there is no evidence Mr.
    Williams was aware of the PPPs creation or relied on, or interacted with the
    City.

[38]

I agree with the City that the statutory obligation imposed upon the
    City by the
RTA
to provide notice of a tax reduction would be
    insufficient, standing alone, to establish a relationship of proximity between
    the City and the class members giving rise to a duty of care. But, as I outline
    below, the actual relationship between the City and the class members was
    considerably more complicated.

[39]

The Parkdale Residents Association, in which the respondent had a role,
    did interact directly with the City, as the motion judge observed, at
    para. 30 of his 2011 decision:

In late April 2008, Warren Sheffer, who was then the treasurer
    of the Parkdale Residents Association, asked City officials about whether
    tenants in Parkdale might have been entitled to a rent reduction because of the
    amendment to the
Assessment Act
in 2003.

[40]

The respondents status as class representative was determined by the
    motion judge in his 2011 decision, at paras. 28 and 29:

Between April 2004 and November 30, 2005, Mr. Williams,
    who is an Executive Member of the Parkdale Residents Association, was a tenant
    of a rooming house on Beaty Avenue in Parkdale. Unknown to Mr. Williams, this
    property enjoyed a tax reduction, which reduction should have, in turn, led to
    an automatic reduction in Mr. Williams rent effective January 1, 2005. Mr.
    Williams did not receive any rent reduction and overpaid his landlord in 2005.

From December 2005 to date, Mr. Williams has resided at a
    rooming house at Laxton Avenue in Parkdale. Unknown to Mr. Williams, this
    property also enjoyed a tax reduction, which reduction should have, in turn,
    led to a reduction in Mr. Williams rent. Mr. Williams did not receive any rent
    reduction and has overpaid his landlord.

[41]

In my view, it is not open to the City to question these findings on the
    summary judgment motion. They establish a sufficient interaction between Mr. Williams
    as an individual involved with and directly affected by the dealings between
    the City and the Parkdale Residents Association.

Finding proximity does not
    require that tax relief be the primary focus of the PPP

[42]

I agree with the City that, as the motion judge found at para. 25, the
    primary purpose [of the PPP] was to address the problem of illegal housing by
    ensuring tenants would be provided with safe, quality housing through regular
    municipal inspections and the enforcement of appropriate standards.  Moreover,
    as the City argues, the PPP was not dependent upon the tax class change
    implemented by the Province. A large number of the applications went through
    the PPP and were processed before the tax change.

[43]

However, I would reject the implied premise of the Citys argument,
    which is that to count in the proximity analysis leading to a duty of care
    regarding notice of rent reductions, tax relief had to be the primary focus of
    the PPP. The relationship between the City and the class members must be
    assessed on a more holistic basis. In my view, the prospect of tax relief and
    rent reductions need be no more than a factor. I agree with the respondents
    submission that while securing rent reductions for the class members may not
    have been the
primary
or
sole
purpose of the PPP, it was
    nevertheless an important purpose, an explicitly contemplated result, and an
    essential component of the consensus reached between various stakeholders
    groups, and ultimately adopted.

[44]

The City minimizes the role of tax relief in the PPP, pointing out that
    only one recommendation discussed property taxes specifically, which merely
    saw the City advocating to the Province for tax changes for rooming houses. 
    The City argues there is no evidence that the PPP was created or implemented
    with the express purpose of conferring a financial benefit to tenants in the
    form of rent reductions, or that the PPP was dependent upon or linked to
    regulatory changes to the assessment and classification of rooming houses. As
    it turns out, the City did not in fact advocate for tax changes for rooming
    houses during the process that led to the provincial policy decision.

[45]

According to the evidence of Mr. Sheffer, then Treasurer of the Parkdale
    Residents Association, ensuring tenants received their proportionate share of
    their landlords tax reduction was an essential component of the Citys stated
    plan for the PPP. The respondent states that the City did not challenge or
    contradict this evidence, although the Citys witness did state that the
    potential tax savings ... was not a principal objective of the Parkdale Pilot
    Project and at the time of its creation was uncertain. The respondent relies
    on the wording of the Joint Report that [t]he recommendations in this report
    carefully balanced the needs of the groups involved. Changing or removing any
    of the recommendations will damage the effectiveness of the report and disrupt
    the consensus that has emerged.

[46]

Calling the prospect of tax relief, with the resulting rent reductions,
    an essential component of the PPP goes too far, on the evidence, but I do agree
    with the respondents argument that the Citys commitment to pursuing a lower
    tax rate on rooming houses was directly linked to addressing the concern about
    protecting affordable housing in Parkdale  a recurring theme throughout the
    Joint Report, the 1998 Report, and the stakeholder meetings leading to the
    PPP.

[47]

The motion judge cited both the tax reduction recommendation and the
    explanation for it in the 2000 Report, at paras. 27, 28. While the importance
    of the tax issue should not be overstated, this link between tax reduction and
    affordability of rent was plain to the City, and it must factor into the proximity
    analysis.

The Citys 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 Citys 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 Citys 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 Citys failure to perform its statutory
    notification duties.

[50]

The scenario fits well within Lord Atkins 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.

[54]

The jurisprudence has identified several relevant policy considerations
    that weigh against imposing liability on public authorities. I pick out three
    that are pertinent to this appeal.

(a)

Would liability
    be indeterminate?

[55]

The most significant is the problem of indeterminate liability, which
    Cromwell J. explained in
Fullowka
, at para. 70:

The concern is that the proposed duty of care, if accepted,
    would impose liability in an indeterminate amount for an indeterminate time to
    an indeterminate class, to use the often repeated words of Cardozo C.J. in
Ultramares
    Corp. v. Touche
, 174 N.E. 441 (N.Y. 1931), at p. 444. At the root of the
    concern is that the duty, and therefore the right to sue for its breach, is so
    broad that it extends indeterminately. In this sense, the policy concern about
    indeterminate liability is closely related to proximity;
the
    question is whether there are sufficient special factors arising out of the relationship
    between the plaintiff and the defendant so that indeterminate liability is not
    the result of imposing the proposed duty of care
. What is required is a
    principled basis upon which to draw the line between those to whom the duty is
    owed and those to whom it is not. [Internal citations omitted; emphasis added.]

[56]

The indeterminate liability policy consideration underlies the courts
    reluctance to find liability for pure economic loss, as Cromwell J. explained
    in
Fullowka
, at para. 70, cautioning that even in that context, it
    has not always carried the day to exclude a duty of care.

[57]

A related consideration is the possible impact on the public purse, as
    the Supreme Court noted in
Cooper
, at para. 55. The court declined to
    impose a duty of care for negligent regulation of mortgage brokers, noting that
    taxpayers did not agree to assume the risk of private loss to persons in the
    situation of investors or to underwrite an insurance scheme at great cost to
    the taxpaying public.

The indeterminate liability factor was rejected during
    the certification process

[58]

The motion judge addressed this issue squarely in his 2011 decision, at
    paras. 85-87:

The present modest $1 million class action, which is
    circumscribed by its connection to residences in the Parkdale Pilot Project,
    belies the potential scope and indeterminate liability that would be imposed on
    local municipalities across Ontario if there was a general duty of care imposed
    on local municipalities to tenants who did not receive notices under the
Residential
    Tenancies Act, 2006
.

From a policy perspective, it seems undesirable and unnecessary
    to impose a duty of care on a municipality to be indirectly responsible for a
    financial liability that directly belongs to landlords to their tenants, many
    of whom will not be as poor as the tenants in the thirty-three Parkdale
    residences in the case at bar.

If the law were to impose this duty of care on the local
    municipality, then the attendant cost of paying rent reductions for rich or
    poor tenants would be shifted to the public purse subject to the municipality
    bringing actions against the landlords for contribution and indemnity. The
    social utility of this sharing or shifting of a financial liability arising
    from private contracts to the public purse is doubtful.

[59]

In overturning that decision, Swinton J. of the Divisional Court said,
    at para. 49:

The motions judge focused on two main considerations: the
    danger of indeterminate liability for the City and the inappropriateness of
    shifting the landlords' financial obligation to taxpayers. There are a number
    of problems with his conclusion. First, he had no evidence to support his
    conclusions; second, the City did not make these policy arguments before him;
    and third, this is not a case where the recognition of a duty to the Parkdale
    group of tenants would create indeterminate liability to tenants in general. As
    in
Heaslip
, above (at para. 33), the motions judge failed to consider
    the particular claim before him made on behalf of the appellant and a specific
    group of Parkdale tenants. This is not a case where the appellant was arguing
    there was a duty of care owed by municipalities to all tenants who should
    receive a notice.

[60]

On appeal, this court took the same approach as the Divisional Court (at
    para. 20): The case put against the City is confined to a duty allegedly owed
    to a discrete subgroup of Toronto tenants - those like Mr. Williams, who were
    targeted by the City in the Parkdale Pilot Project.

[61]

In the decision under appeal, the motion judge followed the lead of the
    appellate courts. He stated that fact specific circumstances can respond to
    the policy issues and make it fair and just to impose a duty of care and
    attendant liability on the local municipality, concluding that the Parkdale
    Pilot Project is a fact specific circumstance that justifies the imposition of
    a duty of care on the City.

[62]

In my view, indeterminate liability is not a policy consideration on
    which this claim should founder. The claim is limited to the unique
    circumstances of the PPP and the class members. This serves to limit
    considerably the extent of the Citys liability and confines it to a very
    restricted class.

(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 Citys 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 Societys regulation of
    lawyers trust accounts; and in
Syl Apps,
which concerned the duties
    of childrens 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 authoritys 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 Citys 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 Citys 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 Citys 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.

B.

Did the City fall below the requisite standard of care?

[72]

The second major issue is whether the City fell below the requisite
    standard of care by failing to send the notices required by s. 136 of the
Tenant
    Protection Act
and s. 131 of the
Residential Tenancies Act, 2006
.

[73]

The motion judge required no evidence about the standard of care to
    conclude that the Citys conduct fell below it (at para. 78):

The City admitted it made a mistake in not sending out the
    notices. It cannot be said that the standard of care of the reasonably
    competent local municipality in the giving of notices would be set so low that
    a municipality can be absolved from sending out a statutorily required notice
    without any excuse for its failure to comply with the statute.

[74]

The City submits the motion judge made a conclusory finding, and points
    to two difficulties.  First, the City argues that it sent notices to every
    single building at issue in the claim, albeit late. The City argues that there
    is no evidence from the Plaintiff regarding why these notices were insufficient
    for the Plaintiff or members of the class to obtain relief.

[75]

Second, the City points out that where the property tax reduction occurs
    because of a successful appeal under the
Assessment Act
, R.S.O. 1990,
    c. A.31, it would have been impossible for the City to have complied with its
    duty to deliver a rent reduction notice within the timeframe required by the
RTA
. 
    There are 11 rooming houses that fall into this category. As an example, the
    property taxes for one property were reduced for the 2004 taxation year, but the
    reduction was not posted to the property tax account until November 2005. The
    reduction was to take effect retroactively to 2004, which meant that to comply
    with the legislation, the notice was to have been sent between October 1 and
    December 15 of 2004. Obviously the City could not have provided notice of the
    result of an assessment appeal that was not posted until 11 months later.

[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] 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] 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 Citys 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.

The effect of the Assessment Act appeals

[82]

The difficulty with the 11 rooming houses that were subject to
Assessment
    Act
appeals requires further discussion.  The difficulty arises from the
    interaction of several different statutes.

[83]

Under the
Assessment Act
, R.S.O. 1990, c. A.31, s. 40,

(1) Any person, including a municipality, a school
    board or, in the case of land in non-municipal territory, the Minister, may
    appeal in writing to the Assessment Review Board,

(a) on the basis that,

(i) the current value of the persons land or another
    persons land is incorrect, [or]

(iv) the classification of the persons land or
    another persons land is incorrect [].

(20)

If
    the land is located in a municipality, the Board shall forward its decision to
    the clerk of the municipality and the clerk shall forthwith,

(a) alter the assessment roll in accordance with the
    decisions of the Board from which no further appeal is taken;

(b) indicate on the roll that the alteration has been
    made; and

(c) complete the roll by totalling the amounts of the
    assessments in the roll and inserting the total.

[84]

Under the
City of Toronto Act, 2006
, S.O. 2006, c. 11, Sched.
    A, s. 306,

(1) The treasurer shall adjust the tax roll for a
    year to reflect changes to the assessment roll for that year made under the
Assessment
    Act
after the tax roll is prepared.

(2) Taxes for the year shall be collected in
    accordance with the adjusted tax roll as if the adjustments had formed part of
    the original tax roll and the City,

(a) shall refund any overpayment to the owner of the
    land as shown on the tax roll on the date the adjustment is made; or

(b) shall send another tax bill to raise the amount
    of any underpayment.

[85]

The City takes the position that tax changes resulting from assessment
    appeals are deemed retroactive under this section  including for the purposes
    of the
RTA
. Under s. 131(2) of the
RTA
, the rent reduction
    resulting from a particular tax reduction shall take effect on the date
    determined by the prescribed rules. Those rules are given in
Residential
    Tenancies Act
, O. Reg. 516/06, s. 41(4), which states: The prescribed
    date for the purposes of subsection 131(2) of the Act is December 31 of any
    year in which the municipal property tax reduction takes effect. Thus, in the
    Citys view, tax changes resulting from assessment appeals are deemed to take
    effect retroactively, and the consequent rent reductions are to take effect on
    December 31 of the year in which the tax change is deemed to take effect.

[86]

The problem arises with the Citys obligation to send notices within
    the prescribed period (
RTA
s. 131(3)). This prescribed period is set
    out in O. Reg. 516/06, s. 41(6): The period within which notification of a
    rent reduction must be given for the purposes of subsection 131(3) of the Act
    is, (a) between June 1 and September 15 for landlords; and (b) between October
    1 and December 15 for tenants. These dates are meant to be within the year at
    the end of which the rent reduction takes effect. Therefore, the City submits,
    when an assessment appeal is posted, it has retroactive effect. Since the City
    was obliged to send notices between October 1 and December 15 of the year in
    which the rent reduction is deemed to have taken effect, such an obligation
    would be impossible to meet.

[87]

Therefore, the City submits that its failure to send the statutory
    notices to tenants of the 11 rooming houses subject to
Assessment Act
appeals could not have been negligent. It would follow from the Citys position
    that, in general, municipalities could never meet their statutory obligation to
    notify tenants where an appeal is posted deeming a tax reduction to have taken
    place the preceding year. There is a gap in the legislation.

[88]

I am not persuaded by this argument.

[89]

The landlords in question benefited from a retroactive reduction in
    their property taxes. Where they had overpaid taxes, they were entitled to be
    reimbursed by the City. The tenants in question also became retroactively
    entitled to a reduction in their rent. Unless their claims were statute-barred,
    they were entitled to be reimbursed to the extent of the overpayment.

[90]

The purpose of the statutory notices is to alert tenants to the
    reduction in their rent. This purpose could arguably have been achieved by
    sending the notices to tenants at the time when the
Assessment Act
change was posted. In these circumstances sending the notice at that time is arguably
    what a reasonably competent municipality would have done. Indeed, the limited
    evidence is that the City did send late statutory notices to certain other
    rooming houses.

[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 Citys 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 Citys 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.


