



COURT OF APPEAL FOR ONTARIO

CITATION: Maple Ridge Community Management Ltd. v. Peel
    Condominium Corporation No. 231, 2015 ONCA 520

DATE: 20150709

DOCKET: C59661

Laskin, Lauwers and Hourigan JJ.A.

BETWEEN

Maple Ridge Community
    Management Ltd.

Plaintiff

(Respondent)

and

Peel Condominium
    Corporation No. 231

Defendant

(Appellant)

Michael A. Spears, for the appellant

Timothy Duggan, for the respondent

Heard: April 10, 2015

On appeal from the order of Justice David L. Edwards of
    the Divisional Court, dated June 16, 2014, with reasons reported at 2014 ONSC
    3660, and cost award dated August 1, 2014, with reasons reported at 2014 ONSC
    4524.

Hourigan J.A.:

Overview

[1]

At issue in this appeal is the sufficiency of the reasons for judgment
    delivered by a Small Claims Court deputy judge after a trial. On appeal to a
    single judge of the Divisional Court, the appeal court ruled that the trial
    judges reasons were insufficient to permit meaningful appellate review and
    ordered that the case be remitted to the Small Claims Court for a new trial
    before a different deputy judge.

[2]

For the reasons that follow, I would allow the appeal.

Background

[3]

The appellant, Peel Condominium Corporation No. 231 (PCC 231), and the
    respondent, Maple Ridge Community Management Ltd., entered into a condominium
    management agreement for a term of three years commencing on December 1, 2009.
    Under its terms, either party could terminate the agreement on 60 days notice
    or pay in lieu of notice (art. 16.1) or, alternatively, immediately for cause (art.
    16.5(c)).

[4]

On September 30, 2010, the PCC 231 board of directors terminated the
    agreement with Maple Ridge pursuant to art. 16.5(c), which permits immediate
    termination where [t]he Manager is insubordinate, reckless, or grossly
    negligent in performing its duties.

[5]

In a letter to Maple Ridge, PCC 231 relied on the following grounds to
    justify termination for cause:

1)

Maple Ridge engaged in
    a roof replacement project without contracting an engineering professional to
    oversee the project;

2)

Maple Ridge accepted
    the roofing contractors contract without submitting it for legal review to
    ensure that PCC 231s interests were protected;

3)

Maple Ridge provided inconclusive
    information to the roofing contractor regarding the specific units to be
    replaced, resulting in an incorrect replacement that voided the associated
    warranty;

4)

Maple Ridge provided
    erroneous information to the PCC 231 board of directors regarding the potential
    impact of deferring roof replacement in three blocks;

5)

Maple Ridge issued
    incorrect status certificates even after the PCC 231 board of directors identified
    specific errors and provided corrected wording;

6)

Maple Ridge delayed in
    providing banking documents for signature at a time when payables were overdue
    and late charges were being incurred; and

7)

Maple Ridge failed to
    provide PCC 231 with requested reports related to the roofing contract.

[6]

In response to the termination, Maple Ridge commenced an action in Small
    Claims Court. Maple Ridge argued it had not been insubordinate, reckless or
    grossly negligent and was, therefore, entitled to 60 days notice or pay in
    lieu of notice. Maple Ridge sought $8,303.24 in damages for breach of contract.

Small Claims Court Judgment

[7]

The trial judge began by reviewing the background facts, then set out
    definitions of insubordination, recklessness and gross negligence, drawn
    from
Black's Law Dictionary
,
The Dictionary of Canadian Law
, John
    G. Fleming's
Law of Torts
, 6th ed. (Sydney: Law Book Company, 1983)

and
Holland v. Toronto (City)
, [1927] S.C.R. 242. He instructed himself,
    based on Allen M. Linden and Bruce Feldthusen's
Canadian Tort Law
, 8th
    ed. (Markham: LexisNexis, 2006), to "consider the cumulative effect of all
    of the factors or conduct and not fall into the error, where there are several
    factors, of considering [the factors] individually" in determining whether
    gross negligence was established.

[8]

The trial judge then examined each ground for termination raised by PCC 231
    in the letter to Maple Ridge and considered whether each ground amounted to
    insubordination, recklessness or gross negligence (i.e. cause for termination
    of the contract). With respect to ground 1, he stated that Maple Ridge's
    "lack of proper management and oversight [had] caused significant damages
    to [PCC 231]." He found there was no evidence to establish that grounds 2,
    3 and 4 had occurred, resulted in damages to PCC 231 or amounted to
    insubordination, recklessness or gross negligence. He found that ground 5 could
    amount to recklessness, ground 6 could amount to recklessness and negligence,
    and ground 7 could amount to insubordination.

[9]

The evidence also established that Maple Ridge had failed to register
    its address in the Land Titles Office, in contravention of the agreement;
    failed to collect funds owed to PCC 231 by unit owners; incurred bank charges
    unnecessarily; failed to transfer funds to correct accounts and made payments
    out of incorrect accounts; and failed to take minutes of board of directors
    meetings as required by the agreement.

[10]

Finally,
    the trial judge held that two additional allegations against Maple Ridge raised
    at trial could not be a basis for termination because they had occurred after
    PCC 231 terminated the agreement.

[11]

The
    trial judge concluded, at p. 7:

Notwithstanding that the grounds relied on by the Defendant in
    terminating the Agreement, may not have been sufficient individually to meet
    the tests outlined above, although in some cases I believe they were, I am
    satisfied that when taken together they are sufficient to constitute
    insubordination, recklessness and/or gross negligence entitling the Defendant
    to terminate the Agreement without notice pursuant to paragraph 16.5(c).

[12]

Accordingly,
    the trial judge dismissed Maple Ridges claim, holding that PCC 231 was
    entitled to terminate the agreement for cause, without notice, pursuant to art.
    16.5(c).

Divisional Court Reasons

[13]

On
    appeal to a single judge of the Divisional Court, the court found that the
    trial judge's reasons were insufficient to allow for meaningful appellate
    review as required by the test set out  in
R. v. R.E.M.
, 2008 SCC 51,
    [2008] 3 S.C.R. 3, at para. 17 While
R.E.M.
was a criminal case, these
    principles apply equally to reasons given in civil cases:
D.M. Drugs (Harris
    Guardian Drugs) v. Barry Edward Bywater (Parkview Hotel)
, 2013 ONCA 356, at
    para. 35;
F.H. v. MacDougall
, 2008 SCC 53, [2008] 3 S.C.R. 41, at paras.
    97-101.

[14]

Specifically,
    the reasons did not say what was decided or why. It was unclear
    "what" was decided because the trial judge did not indicate which of
    Maple Ridges acts or omissions individually amounted to insubordination,
    recklessness or gross negligence; he merely stated that grounds 5, 6 and 7
    "could" meet these standards. Further, the Divisional Court held, at
    para. 22, that it was unclear from the trial judges reasons which acts or
    omissions collectively rose to the level of insubordination, recklessness or
    gross negligence:

Are they the acts or omissions that he found
could
amount to insubordination, recklessness and/or gross negligence individually?
    If so, which? If not, are they the other acts or omissions that the Trial Judge
    concluded individually could not amount to insubordination, recklessness and/or
    gross negligence? If so, which?

[15]

According
    to the Divisional Court, the trial judge also failed to explain why he
    reached his conclusion. He did not specify why acts and omissions that were
    individually insufficient to constitute insubordination, recklessness or gross
    negligence collectively amounted to the same.

[16]

The
    other issues raised by Maple Ridge on appeal to the Divisional Court were:

(i)    What is the applicable standard of review?

(ii) Did the trial judge err in fact and law by misapprehending
    the evidence before him, by failing to consider all of the relevant evidence,
    or by making patently unreasonable findings contrary to the weight of the
    evidence before him?

(iii) Did the trial judge err in fact and law in the
    application of his findings of fact to the legal principles that he enunciated?

The Divisional Court declined to consider these additional
    issues because it found that the insufficiency of the reasons was dispositive
    of the appeal.

[17]

The
    Divisional Court set aside the judgment of the trial judge and returned the
    matter to the Small Claims Court for a new trial before a different deputy
    judge. A costs award was made in favour of Maple Ridge in the amount of $10,000.

Positions of the Parties on Appeal

[18]

PCC
    231 submits that the Divisional Court made the following five errors of law in
    allowing the appeal and ordering a new trial:

(i) Incorrectly concluding that the what and why of the
    trial judges reasons are unclear;

(ii) Failing to consider or even reference the extensive trial
    record in assessing the adequacy of the trial judges reasons;

(iii) Failing to apply a reasonableness standard in reviewing
    the trial judges decision;

(iv) Overlooking the nature of the claim and the Small Claims
    Court context; and

(v) Ordering a new trial without taking into account whether a
    substantial wrong or miscarriage of justice had occurred.

[19]

Maple
    Ridge submits that the Divisional Court did not err in concluding that the
    trial judges reasons were insufficient. Further, the Divisional Court considered
    the trial record, but the trial record could not have saved the trial judges
    reasons. Maple Ridge also argues that the standard of review for the trial
    judges reasons was correctness and not reasonableness. As for the Small Claims
    Court context, Maple Ridge submits that deputy judges of the Small Claims Court
    are not exempt from the obligation to give proper reasons, even though they preside
    over busy courts and deal with claims of relatively modest value. Finally, Maple
    Ridge argues that the referral of the matter back to Small Claims Court for a
    new trial was consistent with Divisional Court jurisprudence.

[20]

Maple
    Ridge also raises an additional issue. It argues that if this court finds the Divisional
    Court erred in granting the appeal, the case must be remitted to the Divisional
    Court. The Divisional Courts decision was based solely on the issue of the
    sufficiency of the reasons. Consequently, the other grounds of appeal raised by
    Maple Ridge in its appeal to the Divisional Court have not been considered.

Analysis

[21]

As
    stated above, I am of the view that the Divisional Court erred in finding that
    the reasons of the trial judge do not permit meaningful appellate review. In
    reaching this conclusion, I have determined that the Divisional Court incorrectly
    applied the standard for assessing the sufficiency of reasons, failed to
    adequately consider the trial record and failed to consider the Small Claims
    Court context in which the decision was rendered. I deal with each of these
    issues below.

[22]

I
    reject PCC 231s position on the remaining alleged errors. I am not satisfied
    that the Divisional Court was required to consider the reasons of the trial
    judge on a reasonableness standard. That standard, as described by the Supreme
    Court of Canada in
Newfoundland and Labrador Nurses Union v. Newfoundland
    and Labrador (Treasury Board)
, 2011 SCC 62, [2011] 3 S.C.R. 708, applies to
    a review of the reasons of an expert tribunal, not a court such as the Small
    Claims Court. The leading case on sufficiency of judicial reasons,
R. v.
    Sheppard
, 2002 SCC 26, [2002] 1 S.C.R. 869, at paras. 43-47 treats
    insufficient reasons as an error of law, reviewable on a correctness standard,
    and makes no mention of a deferential standard of review.

[23]

Further,
    it was not an error for the Divisional Court to remit the case back to the
    Small Claims Court for a new trial if the reasons of the trial judge were so
    insufficient that they were not capable of being reviewed:
Randall
    (Litigation Guardian of) v. Lakeridge Health Oshawa
, 2010 ONCA 537, at
    paras. 76-78.

(a)     The What and the Why

[24]

The
    Divisional Court relied on this courts decision
Law Society of Upper
    Canada v.

Neinstein,
2010 ONCA 193
,
for the principle that in
    order to permit meaningful appellate review, the reasons of a court must
    adequately express what was decided and why it was decided. Although the appeal
    justice correctly cited the standard to permit meaningful appellate review, he
    erred in applying that standard to the facts of this case.

[25]

In
    my view, the reasons of the trial judge clearly met the
R.E.M.
standard.
    After several pages of analysis, the trial judge concluded that although the
    grounds relied on by PCC 231 may not have been sufficient to constitute
    insubordination, recklessness and/or gross negligence when considered on an
    individual basis, collectively they were sufficient.

[26]

The
    Divisional Courts finding that the trial judge did not specify which grounds
    individually amounted to insubordination, recklessness or gross negligence was based
    on the trial judges statements that the allegations could meet these
    standards rather than that they actually did. The Divisional Courts interpretation
    is incorrect when read in the context of the entire trial decision. The trial
    judge reviewed each ground and stated whether it could individually meet the tests
    for insubordination, recklessness or gross negligence. He then stated that in
    some cases  presumably those where he earlier indicated that the ground
    could individually constitute insubordination, recklessness or gross
    negligence  the grounds
were
, as a matter of fact, sufficient to meet
    those tests on an individual basis.

[27]

In
    any event, this was not the sole basis for the trial judges conclusion. He
    explicitly recognized, based on an authoritative Canadian tort law treatise,
    that in assessing whether Maple Ridges conduct constituted gross negligence he
    was required to determine the cumulative effect of the acts and omissions
    rather than assess them individually. Thus, the trial judge's ground-by-ground analysis
    constituted an extra step that was not strictly required but was used to inform
    his ultimate conclusion.

[28]

In
    addition, the Divisional Courts finding that the trial judge did not
    demonstrate how he reached his conclusion because he did not state why acts and
    omissions that were individually insufficient to constitute insubordination,
    recklessness or gross negligence could collectively constitute the same is similarly
    unfounded when the trial judges reasons are read in context. As submitted by PCC
    231, it is self-evident, as a matter of logic and common sense, that multiple
    acts or omissions can rise to a level that one alone cannot reach. The trial
    judge explicitly and correctly stated that he was required to consider the
    cumulative effect of all the impugned conduct rather than to consider each
    allegation individually.

[29]

In
    summary, the what and why are clear in the trial judges seven pages of
    reasons, which comprised of a thorough analysis of the relevant evidence, legal
    definitions, and legal authorities. In terms of the "what", the trial
    judge found that the grounds relied on by PCC 231 cumulatively constituted
    insubordination, recklessness or gross negligence. In terms of the
    "why", notwithstanding that it is self-explanatory why two or more
    grounds that may not be individually sufficient may cumulatively be so, the
    trial judge cited supportive legal commentary requiring him to consider the aggregate
    effect of all the factors or conduct and not fall into the error of only considering
    them individually.

(b)     The Record

[30]

Having
    concluded that the reasons of the Small Claims Court were facially incapable of
    appellate review, the Divisional Court was obliged to consider the record
    before the trial judge to determine if the reasons were more comprehensible
    when read in the context of this record.

[31]

The
    level of requisite detail in reasons will be lessened "[w]here the record
    discloses all that is required to be known to permit appellate review:
Hill
    v. Hamilton-Wentworth Police Services Board
, 2007 SCC 41, [2007] 3 S.C.R.
    129, at para. 101. If a detailed record is available, the appellate court should
    not intervene simply because it thinks the trial court did a poor job
    expressing itself:
R. v. Sheppard
, 2002 SCC 26, [2002] 1 S.C.R. 869, at
    para. 26.

[32]

There
    was ample evidence in the trial record that established that Maple Ridge was
    insubordinate, grossly negligent and/or reckless. The appeal justice was
    required to consider that evidence before concluding that the reasons of the
    trial judge were inadequate. He did not do so. Instead, he appears to have
    restricted his analysis to a review of the text of the reasons without regard
    to the trial record. In my view, in failing to conduct a contextual analysis, the
    Divisional Court erred in law.

(c)    The Small Claims Court Context

[33]

The
    Supreme Court of Canada has recognized that access to justice is a significant
    and ongoing challenge to the justice system with the potential to threaten the
    rule of law. In
Hryniak v. Mauldin
,
2014
    SCC 7, [2014] 1 S.C.R. 87,
at para. 1, the court held:

Ensuring access to justice is the greatest challenge to the
    rule of law in Canada today. Trials have become increasingly expensive and
    protracted. Most Canadians cannot afford to sue when they are wronged or defend
    themselves when they are sued, and cannot afford to go to trial. Without an
    effective and accessible means of enforcing rights, the rule of law is
    threatened. Without public adjudication of civil cases, the development of the
    common law is stunted.

[34]

The
    Small Claims Court is mandated under s. 25 of the
Courts of Justice Act
,
R.S.O. 1990, c. C.43,
to 
hear and determine in a summary way all questions of
    law and fact and may make such order as is considered just and agreeable to
    good conscience. The Small Claims Court plays a vital role in the
    administration of justice in the province by ensuring meaningful and cost
    effective access to justice for cases involving relatively modest claims for
    damages. In order to meet its mandate, the Small Claims Courts process and
    procedures are designed to ensure that it can handle a large volume of cases in
    an efficient and economical manner.

[35]

Reasons from the Small Claims Court must be sufficiently
    clear to permit judicial review on appeal. They must explain to the litigants
    what has been decided and why:
Doerr v. Sterling Paralegal
, 2014
    ONSC 2335, at paras. 17-19.
However, appellate
    consideration of Small Claims Court reasons must recognize the informal nature
    of that court, as well as the volume of cases it handles and its statutory
    mandate to deal with these cases efficiently.
In short, in assessing the adequacy of the reasons, context matters:
Massoudinia
    v. Volfson
, 2013 ONCA 29, at para. 9.

Just as oral reasons will not necessarily be
    as detailed as written reasons, reasons from the Small Claims Court will not
    always be as thorough as those in Superior Court decisions. Failing to take the
    Small Claims Court context into account
only
    serves to restrict access to justice by unnecessarily imparting formality and
    delay into a legal process that is designed to be informal and efficient.

[36]

In
    the present case, the Divisional Court decision overlooks the clear reasoning
    in the trial judges judgment and demands a level of detail that is
    significantly higher than generally required, particularly in Small Claims
    Court decisions.

Further Proceedings in the Divisional Court

[37]

I would not accede to the submission advanced by Maple Ridge that
    this case should be remitted back to the Divisional Court for a determination
    of the issues not considered by the appeal judge.

[38]

Pursuant to s.134 of the
Courts of Justice
    Act
, on appeal this court may
make any order or
    decision that ought to or could have been made by the court or tribunal
    appealed from and may make any other order or decision that is just.
If Maple Ridge wanted to uphold the judgment of the Divisional
    Court on grounds other than the inadequacy of the reasons, it should have made
    those arguments before this court.
"In both civil and criminal
    matters it is open to a respondent to advance any argument to sustain the
    judgment below, and he is not limited to appellants points of law" (
Perka
v.
The Queen,
[1984] 2 S.C.R. 232 at 240).
It is hardly
    proportionate or practical to suggest that this modest claim should be sent
    back to the Divisional Court for its third appeal.

[39]

In any event, the other grounds of appeal advanced by Maple Ridge
    are weak. It argues that the trial judge misapprehended the evidence by failing
    to consider all the evidence and making patently unreasonable findings. In
    addition, it submits that the trial judge erred in fact and law in his application
    of the facts to the legal principles he enunciated. The trial judges factual
    findings are entitled to considerable deference. There is nothing on the record
    before us that suggests that he made any palpable and overriding error in any
    of those findings. I am also of the view that those factual determinations
    amply supported his legal conclusion that the actions of Maple Ridge
    constituted insubordination, recklessness and/or gross negligence.

[40]

For these reasons, I would decline to remit the case back to the
    Divisional Court.

Disposition

[41]

I
    would allow the appeal, set aside the order of the justice of the Divisional
    Court and reinstate the judgment of the Small Claims Court.

[42]

With
    respect to the costs of the appeal in the Divisional Court, I would reverse the
    order of the Divisional Court and award $10,000 to PCC 231 as the successful
    party. PCC 231 is also entitled to its costs in this court, which I would fix
    at $7,500.

Released: July 9, 2015 JL

C.
    W. Hourigan J.A.

I
    agree John Laskin J.A.

I
    agree P. Lauwers J.A.


