Orr v. Metropolitan Toronto Condominium Corporation No. 1056, 2014 ONCA 855

• Judge: Feldman, Tulloch and Lauwers JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: December 02, 2014
• Jurisdiction: Ontario
• Citations: 2014 ONCA 855

Orr v. Toronto Condo. (2014), 327 O.A.C. 228 (CA)

MLB headnote and full text

Temp. Cite: [2014] O.A.C. TBEd. DE.012

Kelly-Jean Marie Orr also known as Kelly-Jean Rainville (plaintiff/appellant) v. Metropolitan Toronto Condominium Corporation No. 1056, Gowling, Strathy & Henderson, Brookfield LePage Residential Management Services a division of Brookfield Management Services Ltd., Patrick Post, Pamela Cawthorn, Bruce Ward, Larry Boland, Francine Metzger, Michael Kosich and Richard Dorman (defendants/respondents) and Richard Weldon (third party/respondent)

(C54309)

Kelly-Jean Marie Orr (applicant/appellant) v. Metropolitan Toronto Condominium Corporation No. 1056 (respondent/respondent)

(C54310)

Metropolitan Toronto Condominium Corporation No. 1056 (plaintiff/respondent) v. Kelly-Jean Marie Orr (defendant/appellant)

(C54311)

Kelly-Jean Marie Orr also known as Kelly-Jean Rainville (plaintiff/respondent) v. Metropolitan Toronto Condominium Corporation No. 1056, Gowling, Strathy & Henderson , Brookfield LePage Residential Management Services a division of Brookfield Management Services Ltd., Patrick Post, Pamela Cawthorn, Bruce Ward, Larry Boland, Francine Metzger, Michael Kosich and Richard Dorman (defendants/ appellant /respondents) and Richard Weldon (third party/respondent)

(C54315)

Kelly-Jean Marie Orr also known as Kelly-Jean Rainville (plaintiff/respondent) v. Metropolitan Toronto Condominium Corporation No. 1056 , Gowling, Strathy & Henderson, Brookfield LePage Residential Management Services a division of Brookfield Management Services Ltd., Patrick Post, Pamela Cawthorn, Bruce Ward, Larry Boland, Francine Metzger, Michael Kosich and Richard Dorman (defendants/respondent) and Richard Weldon (third party/appellant)

(C54320; 2014 ONCA 855)

Indexed As: Orr v. Metropolitan Toronto Condominium Corp. No. 1056 et al.

Ontario Court of Appeal

Feldman, Tulloch and Lauwers, JJ.A.

December 2, 2014.

Summary:

Rainville (formerly Orr) bought what she believed was a three-storey condominium townhouse unit from Weldon in the Grand Harbour development in Etobicoke, Ontario. The condominium documentation, however, revealed that the unit was only two storeys. The third floor was illegally built into the common element attic space. Rainville's building was governed by Metropolitan Toronto Condominium Corporation No. 1056 (MTCC 1056). Rainville and her real estate lawyer at Gowlings did not know that the third floor of the townhouse was illegally constructed when she purchased the unit. When Rainville found out, she brought claims against MTCC 1056, Gowlings, Brookfield LePage Residential Management Services (the property manager for MTCC 1056), and several individual defendants. MTCC 1056 cross-claimed against Rainville and added Weldon as a third party.

The Ontario Superior Court, in a decision reported [2011] O.T.C. Uned. 4876, dismissed Rainville's claims against Brookfield and the individual defendants, but found Gowlings, MTCC 1056, and Weldon liable and ordered damages against them. The court ordered Rainville to close up the third floor and to pay MTCC 1056 occupation rent for the third floor. Rainville appealed. The various other parties filed appeals and/or cross-appeals.

The Ontario Court of Appeal allowed Rainville's appeal. The court held that MTCC 1056 was liable for negligent misstatement in relation to the estoppel certificate. The court set damages for negligence and negligent misstatement, for which Gowlings and MTCC 1056 were jointly and severally liable, as the difference between the value of townhouse 113 as a two-storey unit and a three-storey unit with the valuation date set as the date this decision was released. The court dismissed Rainville's appeal against Brookfield. The court allowed Rainville's appeal against MTCC 1056 regarding reimbursement for common element repairs and substituted judgment for $41,681. It followed that MTCC 1056's related cross-appeal against Rainville was dismissed. The court also allowed Rainville's appeal against Gowlings regarding legal fees and substituted an award of $28,379.02. The court dismissed Gowlings' appeal, and its cross-appeal against MTCC 1056 for indemnity. The court allowed MTCC 1056's claim against Brookfield under the management agreement for indemnity for the damages MTCC 1056 owed Rainville as a result of negligent misrepresentation. The court also dismissed Weldon's appeal and MTCC 1056's related cross-appeal. The trial judge's damage awards that were not consistent with the appeal court's reasons were set aside. The appeal court sought supplementary submissions on costs.

Barristers and Solicitors - Topic 2598.3

Negligence - Particular negligent acts - Re purchase of property by client - Rainville bought what she believed was a three-storey condominium townhouse unit in a building governed by Metropolitan Toronto Condominium Corp. No. 1056 - When Rainville later discovered that the third floor was illegally built into the common element attic space she sued her real estate law firm (Gowlings), alleging negligence - The trial judge found that the law firm was negligent because it failed to show Rainville the plans on closing - Gowlings appealed, arguing that the trial judge erred in finding that the firm fell below the standard of care - The Ontario Court of Appeal dismissed Gowlings' appeal - See paragraphs 77 to 83.

Barristers and Solicitors - Topic 2598.3

Negligence - Particular negligent acts - Re purchase of property by client - Rainville bought what she believed was a three-storey condominium townhouse unit in a building governed by Metropolitan Toronto Condominium Corp. No. 1056 - When Rainville later discovered that the third floor was illegally built into the common element attic space she sued her real estate law firm (Gowlings), alleging negligence - The trial judge found that the law firm was negligent - Gowlings appealed, arguing that as a matter of law Rainville obtained title to the third floor of the unit and that the third floor was never a condominium common element because the controlling document with respect to title was not the declaration or survey sheets but the actual physical features of the unit - The Ontario Court of Appeal rejected Gowlings' argument - The argument respecting the survey sheets would not be entertained as it was never put to the trial judge - Further, it was not clear that accepting the validity of that argument would eliminate Gowlings' liability - See paragraphs 77 to 89.

Barristers and Solicitors - Topic 2663

Negligence - Damages - Measure of (incl. nominal damages) - [See Damages - Topic 4389 ].

Barristers and Solicitors - Topic 2668

Negligence - Damages - Re failure to secure title to property - Rainville bought what she believed was a three-storey condominium townhouse unit in a building governed by Metropolitan Toronto Condominium Corp. No. 1056 - When Rainville later discovered that the third floor was illegally built into the common element attic space she sued her real estate law firm (Gowlings), alleging negligence - The trial judge found that the law firm was negligent because it failed to show Rainville the plans on closing - The trial judge held that Rainville was entitled to reimbursement for her legal fees related to both the purchase of the townhouse and the dispute regarding the third floor - However, the trial judge denied her any recovery for legal fees stemming from the dispute regarding the common element repairs for want of foreseeability - Rainville appealed - The Ontario Court of Appeal held that the trial judge's conclusion ignored the guiding principle for assessing damages in negligence (i.e., that Rainville be returned to the position she would have been in had the negligence not occurred) - On that basis Rainville was entitled to reimbursement for all fees paid to Gowlings - See paragraphs 105 to 107.

Damage Awards - Topic 2027.4

Exemplary or punitive damages - Deceit or misrepresentation - Rainville bought what she believed was a three-storey condominium townhouse unit from Weldon in a building governed by Metropolitan Toronto Condominium Corp. No. 1056 (MTCC 1056) - When Rainville later discovered that the third floor was illegally built into the common element attic space, she sued MTCC 1056 - MTCC 1056 third partied Weldon - The trial judge found Weldon liable and ordered him to pay punitive damages of $50,000 to MTCC 1056 for intentionally failing to advise Rainville and the condominium board of the illegal status of the third floor - His culpability was enhanced by the fact that this failure breached his fiduciary duties as a director of MTCC 1056 - Weldon appealed and MTCC 1056 cross-appealed - The Ontario Court of Appeal dismissed the appeal - The trial judge made no palpable and overriding error in her award of punitive damages - See paragraphs 128 to 137.

Damage Awards - Topic 2030.5

Exemplary or punitive damages - Breach of fiduciary duty - [See Damage Awards - Topic 2027.4 ].

Damages - Topic 3630

Deceit and misrepresentation - Negligent misrepresentation - [See Damages - Topic 4389 ].

Damages - Topic 4389

Torts affecting land and buildings - Occupation and use - Loss of opportunity - Rainville bought what she believed was a three-storey condominium townhouse unit in a building governed by Metropolitan Toronto Condominium Corp. No. 1056 (MTCC 1056) - When Rainville later discovered that the third floor was illegally built into the common element attic space she sued MTCC 1056 and her real estate law firm (Gowlings) - The Ontario Court of Appeal found that MTCC 1056 was liable for negligent misstatement and Gowlings was negligent - MTCC and Gowlings' liability was joint and several - In calculating damages, the court used the approach appropriate for negligent misstatement - That is, damages were to be measured by the loss she would suffer from losing the opportunity to sell her property as if it had been a renovated three-storey townhouse (i.e., damages for lost opportunity) - Therefore, Gowlings and MTCC 1056 were liable for the difference between the value of the townhouse as a renovated three-storey unit and as a two-storey unit, the valuation date being the date of the court's decision - See paragraphs 108 to 116.

Fraud and Misrepresentation - Topic 2512

Misrepresentation - Action for economic loss arising from misstatement - Rainville bought what she believed was a three-storey condominium townhouse unit in a building governed by Metropolitan Toronto Condominium Corp. No. 1056 (MTCC 1056) - When Rainville later discovered that the third floor was illegally built into the common element attic space she sued MTCC 1056 and its property manager, Brookfield, which had prepared the estoppel certificate - The certificate indicated that there were no continuing violations of the declaration, bylaws or rules of the corporation - The Ontario Court of Appeal allowed Rainville's claim for negligent misstatement against MTCC 1056 - Brookfield was acting as MTCC 1056's agent in preparing the estoppel certificate; however, Brookfield's work was not reasonable and prudent - MTCC 1056 owed Rainville a duty of care in the preparation of the certificate - MTCC 1056 had a common law obligation to take reasonable steps to ensure that the information in the estoppel certificate was correct, even if the information was not statutorily mandated - The failure to do so amounted to a breach of any reasonable standard of care - Rainville relied on the certificate, and as a result of that reliance suffered harm - See paragraphs 39 to 64.

Practice - Topic 8802

Appeals - General principles - Duty of appellate court regarding damage awards by a trial judge - [See first Practice - Topic 9012 ].

Practice - Topic 9012

Appeals - Restrictions on argument on appeal - Issues or points not previously raised - On appeal, an appellant altered her damages claim (i.e., her counsel proposed a new approach to damages given the absence of evidence on damages at trial) - The Ontario Court of Appeal declined to grant the relief requested - The court stated that it generally would not allow an appellant a second opportunity to prove damages that should have been shown at trial as an essential element of the cause of action - There were some exceptions to that rule, such as where the nature of the damages rendered proof and quantification inherently complex or where the significance of the loss merited more than nominal damages despite evidentiary deficiencies - Neither of the exceptions applied to this case - See paragraphs 91 to 96.

Practice - Topic 9012

Appeals - Restrictions on argument on appeal - Issues or points not previously raised - [See second Barristers and Solicitors - Topic 2598.3 ].

Real Property - Topic 8803

Condominiums - General - Application of common law - [See Fraud and Misrepresentation - Topic 2512 ].

Real Property - Topic 8803.1

Condominiums - General - Application of home protection legislation - Rainville bought what she believed was a three-storey condominium townhouse unit in a building governed by Metropolitan Toronto Condominium Corp. No. 1056 (MTCC 1056) - When Rainville later discovered that the third floor was illegally built into the common element attic space she sued MTCC 1056, seeking to recover what she paid to remedy the common element defects - The trial judge allowed her claim and accepted MTCC 1056's calculation of damages ($41,681) - However, the trial judge awarded Rainville only half that amount - Rainville appealed - The Ontario Court of Appeal held that there was no legal basis for apportioning damages in this manner - MTCC 1056 had a statutory obligation to repair the common elements - The court also rejected MTCC 1056's argument that Rainville should have applied to the Ontario New Home Warranties Plan for reimbursement for her repair - See paragraphs 99 to 104.

Real Property - Topic 8819

Condominiums - Purchase and sale agreements - Breach - Measure of damages - [See Real Property - Topic 8803.1 ].

Real Property - Topic 8903

Condominiums - Estoppel certificates - Condominium corporations duty re - [See Fraud and Misrepresentation - Topic 2512 ].

Real Property - Topic 8921

Condominiums - Declarations - General - [See second Barristers and Solicitors - Topic 2598.3 ].

Cases Noticed:

Queen (D.J.) v. Cognos Inc., [1993] 1 S.C.R. 87; 147 N.R. 169; 60 O.A.C. 1, refd to. [para. 42].

Fisher v. Metropolitan Toronto Condominium Corp. No. 596 (2004), 31 R.P.R.(4th) 273 (Ont. Div. Ct.), refd to. [para. 47].

Cooper v. Registrar of Mortgage Brokers (B.C.) et al., [2001] 3 S.C.R. 537; 277 N.R. 113; 160 B.C.A.C. 268; 261 W.A.C. 268; 2001 SCC 79, refd to. [para. 47].

Lexington on the Green Inc. v. Toronto Standard Condominium Corp. No. 1930 (2010), 270 O.A.C. 130; 102 O.R.(3d) 737; 2010 ONCA 751, refd to. [para. 48].

Ryan v. Victoria (City) et al., [1999] 1 S.C.R. 201; 234 N.R. 201; 117 B.C.A.C. 103; 191 W.A.C. 103, refd to. [para. 54].

Durham Condominium Corp. No. 63 v. On-Cite Solutions Ltd., [2010] O.T.C. Uned. 6342; 99 R.P.R.(4th) 68; 2010 ONSC 6342, refd to. [para. 55].

767269 Ontario Ltd. v. Ontario Energy Savings L.P. et al., [2008] O.A.C. Uned. 234; 2008 ONCA 350, refd to. [para. 87].

Pirani v. Esmail et al. (2014), 320 O.A.C. 356; 94 E.T.R.(3d) 1; 2014 ONCA 145, refd to. [para. 87].

Kaiman Estate v. Graham Estate (2009), 245 O.A.C. 130; 75 R.P.R.(4th) 157; 2009 ONCA 77, refd to. [para. 87].

Lombardo v. Caiazzo et al. (2006), 211 O.A.C. 270 (C.A.), refd to. [para. 96].

Eastern Power Ltd. v. Ontario Electricity Financial Corp. (2010), 266 O.A.C. 277; 101 O.R.(3d) 81; 2010 ONCA 467, refd to. [para. 96].

Martin v. Goldfarb et al. (1998), 112 O.A.C. 138; 41 O.R.(3d) 161 (C.A.), refd to. [para. 96].

Rosenhek v. Windsor Regional Hospital (2010), 257 O.A.C. 283; 2010 ONCA 13, refd to. [para. 96].

de Montigny v. Brossard (Succession), [2010] 3 S.C.R. 64; 408 N.R. 80; 2010 SCC 51, refd to. [para. 97].

Athey v. Leonati et al., [1996] 3 S.C.R. 458; 203 N.R. 36; 81 B.C.A.C. 243; 132 W.A.C. 243, refd to. [para. 106].

BG Checo International Ltd. v. British Columbia Hydro and Power Authority, [1993] 1 S.C.R. 12; 147 N.R. 81; 20 B.C.A.C. 241; 35 W.A.C. 241, refd to. [para. 109].

Mason (V.K.) Construction Ltd. v. Bank of Nova Scotia and Courtot Investments Ltd., [1985] 1 S.C.R. 271; 58 N.R. 195; 8 O.A.C. 381, refd to. [para. 111].

Whiten v. Pilot Insurance Co. et al., [2002] 1 S.C.R. 595; 283 N.R. 1; 156 O.A.C. 201; 2002 SCC 18, refd to. [para. 130].

Pate v. Galway-Cavendish (Township) et al. (2013), 312 O.A.C. 244; 2013 ONCA 669, refd to. [para. 135].

Hryniak v. Mauldin (2014), 453 N.R. 51; 314 O.A.C. 1; 2014 SCC 7, refd to. [para. 149].

Authors and Works Noticed:

Feldthusen, B., Economic Negligence (3rd Ed. 1994), p. 27 [para. 63].

Loeb, Audrey, Condominium Law and Administration (1995) (Looseleaf), p. 9-4 [para. 69].

Counsel:

Geoffrey D.E. Adair, Q.C., for Kelly-Jean Marie Orr, also known as Kelly-Jean Rainville;

Barry A. Percival, Q.C., and Theodore B. Rotenberg, for Metropolitan Toronto Condominium Corporation No. 1056, Bruce Ward, Larry Boland and Richard Dorman;

Robert J. Clayton, for Brookfield LePage Residential Management Services, a division of Brookfield Management Services Ltd., Patrick Post and Pamela Cawthorn;

David Gadsden, J. Brian Casey and Matt Saunders, for Gowling, Strathy & Henderson;

Thomas W. Arndt, for Richard Weldon.

This appeal was heard on February 19 and 20, 2014, before Feldman, Tulloch and Lauwers, JJ.A., of the Ontario Court of Appeal. The following decision was delivered for the court by Lauwers, J.A., on December 2, 2014.