



COURT OF APPEAL FOR ONTARIO

CITATION: O'Brien v. Blue Heron Co-operative Homes Inc., 2015
    ONCA 858

DATE: 20151208

DOCKET: C60575

Sharpe, Cronk and Miller JJ.A.

BETWEEN

Stephen OBrien

Applicant (Appellant)

and

Blue Heron Co-operative Homes Inc.

Respondent (Respondent on appeal)

Stephen OBrien, acting in person

Joseph Jebreen, for the respondent

Heard: December 3, 2015

On appeal from the judgment of Justice Douglas Rutherford
    of the Superior Court of Justice, dated May 5, 2015.

By the
    Court:

[1]

The appellant is a member of the respondent Blue Heron Co-operative
    Homes Inc. (Blue Heron), a not-for-profit housing corporation incorporated
    under the
Co-operative Corporations Act
, R.S.O. 1990, c. C.35 (the 
CCA
)
    and situated in the City of Ottawa.  The appellant brought an application against
    Blue Heron for: i) an order under s. 146 of the
CCA
appointing an
    inspector to investigate and conduct a forensic audit of Blue Herons business
    and affairs; and ii) an order under s. 178 of the
CCA
compelling Blue
    Heron, its directors, officers and employees to comply with Blue Herons
    by-laws and the
CCA
.  By order of the Superior Court dated May 5,
    2015, the appellants application was dismissed.

[2]

The appellant now appeals to this court.  He argues, principally, that
    the application judge erred:

1)

by
    failing to apply the civil standard of proof to the determination of the matters
    raised by the appellant;

2)

by

ignoring

the

appellants

evidence

and submissions, instead preferring those of the respondent without
    appropriate scrutiny;

3)

by
    misapprehending or ignoring relevant evidence;

4)

by
    misinterpreting ss. 14648 of the
CCA
;

5)

by
    failing to apply or misapplying s. 135 of the
Condominium Act, 1998
, S.O.
    1998, c. 19; and

6)

by
    failing to deliver reasons that accord with
R. v. Sheppard
, 2002 SCC
    26, [2002] S.C.J. No. 30.

[3]

We conclude that this appeal must be dismissed.

A.      Overarching Ground of Appeal

[4]

As argued at the appeal hearing, the appellants main complaint concerns
    an alleged pattern of mismanagement of Blue Heron, over an extensive period of
    time and by successive boards of directors.  The appellant says that this
    mismanagement is reflected, for example, in Blue Herons failure to retain
    election ballots for the requisite time set out in its by-laws; its failure to
    enact by-laws of the type urged by the appellant; its alleged failure to adopt
    proper business practices; and its alleged sanctioning of unauthorized entries
    into members units to investigate fire alarms.

[5]

The evidence before the application judge bearing on these issues
    included the following.  First, similar complaints by the appellant to the
    Financial Services Commission of Ontario (FSCO) had been investigated by that
    agency and it had declined to appoint an inspector to investigate Blue Herons
    affairs.  FSCO also concluded that any by-law infraction or inadequacy by Blue
    Heron had been remedied by corrective measures.

[6]

Second, the City of Ottawa, which acts as Service Manager to Blue Heron
    under the applicable co-operative housing programs in Ottawa, confirmed that
    Blue Heron had met its reporting requirements since it opened in 2006.

[7]

Third, Blue Herons independent third party auditors, in a letter
    accompanying Blue Herons 2013 financial statements, indicated:

Testing during our audit did not reveal any illegal, improper
    or questionable payments or acts, nor any acts committed with the intent to
    deceive, involving either misappropriation of assets or misrepresentation of
    assets or misrepresentation of financial information.

[8]

The application judge considered the appellants complaints in the light
    of this evidence and concluded, on the record before him, that the appellant
    had not met his burden to proffer satisfactory evidence of any specific
    instance of mismanagement or malfeasance by Blue Herons management or of any
    on-going non-compliance by Blue Heron with applicable statutory or by-law requirements.

[9]

The trial judge concluded, at para. 18:

I have reviewed the materials filed and the submissions made
    and have reached the conclusion that there is no sufficient basis to warrant my
    ordering the appointment of an inspector to investigate the affairs and
    management of Blue Heron.  There is nothing to indicate that there is any need
    to further audit the accounts and records of the Co-Op.  Failures to abide by
    clear directions in by-laws or written policy appear to have been addressed and
    corrected by the Co-Op.

[10]

We
    see no error in these conclusions or in the application judges reasoning in
    support of them.  In particular, we note that there are two prerequisites to
    the appointment of an inspector under s. 146 of the
CCA
: i) the
    application for the appointment of an inspector must be brought in good faith;
    and ii) the appointment must be in the interests of the co-operative or the
    holders of its securities.  On the findings of the application judge, which
    were open to him on the record, the second prerequisite was clearly not met in
    this case.

[11]

Similarly,
    the application judge did not err in refusing to make an order under s. 178 of
    the
CCA
, as the appellant failed to establish any specific instance of
    non-compliance with the statute or the by-laws that would justify a court order
    for compliance.

[12]

Accordingly,
    this ground of appeal fails.

B.      Other Grounds of Appeal

[13]

We will comment briefly on the other grounds of appeal raised by the
    appellant.

[14]

First,
    the suggestion of the wrong standard of proof.  The application judge referred
    to the need for substantial evidence of intentional malfeasance or serious
    and continued mismanagement by the directors of a
CCA
co-operative in
    order to ground court intervention in the internal affairs of the
    co-operative.  Contrary to the appellants argument, we do not read these comments
    as importing a standard of proof higher than the applicable civil standard of
    proof on a balance of probabilities.  In our view, the application judges
    impugned remarks simply reflected the need for clear evidence, rather than bald
    assertions, to support the serious allegations, including allegations of
    criminal conduct, levied by the appellant against Blue Herons management.

[15]

Second,
    we do not accept the appellants claims that the application judge
    misapprehended the evidence and ignored or discounted the appellants
    evidence.  The first claim appears to relate to the application judges failure
    to refer to case law provided by the appellant.  This does not constitute a
    misapprehension of the evidence.

[16]

Nor,
    in our opinion, do the reasons support the appellants assertion that the
    application judge applied a higher level of scrutiny to his evidence and
    submissions than that applied to those of the respondent.  We view the
    application judges treatment of the evidence as thorough and even-handed.

[17]

Third,
    the appellants submission that the application judges reasons are deficient
    must be rejected.  The reasons easily meet the standard for sufficiency of
    reasons identified in
Sheppard
and related cases.  They provide a
    clear pathway to the application judges decision and, hence, permit meaningful
    appellate review.  No more is required.

[18]

Finally,
    we see no error in law in the application judges interpretation or application
    of ss. 146 and 178 of the
CCA
.  These were the operative statutory
    provisions at issue before the application judge.  The application judge was
    not obliged to accept the appellants construction of these sections or his
    invocation of other, inapplicable statutory provisions.

C.      Fresh Evidence

[19]

The
    appellant seeks to adduce fresh evidence on appeal that he says is relevant to
    the issues that were before the application judge and that was not available at
    the time of the application hearing.

[20]

We
    disagree.  The proposed fresh evidence relates to issues and relief that formed
    no part of the initial application, in particular, the legality of the appellants
    removal from Blue Herons board of directors on June 22, 2015.  The proposed fresh
    evidence is not relevant to the issues raised in the application and the
    appellant cannot expand the application by attempting to introduce fresh
    evidence.

D.      Disposition

[21]

Accordingly,
    the appellants motion for leave to file fresh evidence on appeal is dismissed,
    as is the appeal.  Blue Heron is entitled to its costs of the appeal, fixed in
    the amount of $1,500, inclusive of disbursements and all applicable taxes.

Released:

RJS                                                 Robert
    J. Sharpe J.A.

DEC -8 2015                                    E.A. Cronk
    J.A.

B.W.
    Miller J.A.


