CITATION: First Ontario Realty Corporation             Ltd. v. Deng, 2011 ONCA 54

DATE: 20110121

DOCKET: C51723

COURT OF APPEAL FOR ONTARIO

Weiler, Watt and Karakatsanis JJ.A.

BETWEEN

First Ontario Realty Corporation Ltd.

Landlord/Respondent

and

Liangrui Deng, Guizhi He, Dustin Yang, Jenny Yang and
          Yi Yang

Tenants/Appellants

Richard A. Fink, for the tenants/appellants

Chris G. Paliare and Michael Fenrick, for the
          landlord/respondent

Heard:  December 16, 2010

On appeal from the order of Associate Chief Justice
          Cunningham, and Justices Swinton and Smith of the Superior Court of Justice (Divisional
          Court), dated October 29, 2009.

Karakatsanis J.A.:

[1]

This is an appeal from the decision of the Divisional Court, reversing
    the decision of the Landlord and Tenant Board that the tenants were entitled to
    a 2.5% reduction in rent due to the reduction of facilities provided in respect
    of the rental unit in a residential complex.

[2]

This appeal involves the interpretation of facilities and common
    recreational facilities within the meaning of the
Tenant Protection Act,
    1997
, S.O. 1997, c. 24 (the Act) and the proper method of calculating rent
    reduction prescribed under s. 30 of
Tenant Protection Act, 1997
,

O.
    Reg. 194/98 (the Regulation).

[3]

The Board found that the landlords removal of fenced-in gardens, lawns
    and walkways from the apartment complex was a reduction in common
    recreational facilities within the definition of services and facilities
    under ss. 1(1) and 142(1) of the Act (now ss. 2(1) and 130(1) of the
Residential
    Tenancies Act, 2006
, S.O. 2006, c. 17).  In determining the rent reduction
    prescribed under s. 30 of the Regulation, the Board based the quantum of its
    order upon the amount claimed by the tenants, discounted to reflect partial
    success.

[4]

Applying a standard of review of correctness, the Divisional Court held
    that the Board erred in finding that the former landscaped areas of the
    apartment complex were common recreational facilities under the Act. The
    Divisional Court further stated that the Board erred in its approach to
    calculating the amount of rent reduction under s. 30 of the Regulation.

[5]

This appeal raises the following issues:

i)
What
      standard of review applies to the Boards decision?

ii)
Was
      the Boards decision that the former landscaped areas were a  common
      recreational facility reasonable?

iii)
Was
      the Boards decision that there was a reduction in the recreational
      facility reasonable?

iv)
Was
      the Boards calculation of the rent reduction reasonable?

[6]

I have concluded that the Divisional Court erred in reviewing the
    Boards decision on a standard of correctness. For the reasons that follow, I
    conclude that the Boards decision that the former landscaped areas were
    common recreational facilities was reasonable. However, the Boards failure
    to determine the extent to which the tenants loss was a reduction in the
    common recreational facilities and the Boards determination of the amount of
    the rent reduction were unreasonable. I have concluded, however, that there was
    no reduction in the facilities. Therefore, I agree with the result and would dismiss
    the appeal.

Background facts

[7]

The appellants are family members renting a unit in a large apartment
    complex at 50 Rosehill Avenue in Toronto. The appellants have leased a unit in
    this building since December 13, 2003.

[8]

In 2005, the landlord entered into an agreement with the City of Toronto
    to amend the Citys Official Plan in order to permit the construction of 32 townhouses
    on the same property as the residential complex. This required a severance of a
    portion of the landscaped land at the rear of the complex. That land was
    formerly fenced in for the tenants use and included two lawns, approximately
    20 mature trees, pedestrian pathways, a garden and a stone bench.

[9]

There was a public consultation process initiated as a result of the
    proposed construction. It provided the tenants, as well as the broader
    community, with the opportunity to express their concerns.

As part of
    the agreement reached with the City, the landlord was required to make improvements
    on the remaining grounds of the complex at 50 Rosehill Avenue and to contribute
    over $250,000 to improve the community facilities. The landlord further agreed
    not to seek an above-guideline rent increase from the tenants to recover the
    cost of such improvements.

[10]

As a result of the ongoing construction of the new townhouses, the
    appellants applied for a 10% reduction of their rent pursuant to s. 142(1) of
    the Act on the basis of a reduction or discontinuance of the following services
    or facilities: a quiet and clean living environment; visitor and tenant
    parking; and building safety.

[11]

The Board found that the tenants had failed to establish a reduction in
    services or facilities on the three grounds set out in their application. However,
    the Board assessed a fourth and separate ground for a rent reduction and found
    that the loss of the fenced-in garden, lawns and walkways constituted a reduction
    in common recreational facilities, within the definition of services and
    facilities in s. 1 of the Act. The Board ordered that the rent be reduced by
    2.5%.

[12]

The landlord filed a request to review the Boards decision, pursuant
    to rule 29 of the Boards Rules of Practice and s. 21.2 of the
Statutory
    Powers Procedure Act
, R.S.O. 1990, c. S.22. Upon review, the Board upheld
    the rent reduction.

[13]

On appeal to the Divisional Court, the court determined that the former
    landscaped areas did not constitute a service or facility within the meaning
    of the Act and set aside the rent reduction. The Divisional Court further noted
    that the Board had erred in its calculation of the reduction in rent under s.
    30 of the Regulation.

Standard
    of Review

[14]

The Divisional Court found that the appropriate standard of review was
    correctness.

[15]

Counsel for the respondent quite fairly submitted that the Divisional
    Court erred in applying a standard of correctness to the issue of whether the
    severed land constituted a service or facility under the Act. The respondent
    submits, however, that the court did not err in applying a correctness standard
    to the issue of the quantum of rent reduction because that issue involved a
    pure question of law; the Board was asked to apply general principles of
    statutory interpretation and consider mandatory language in the Regulation.

[16]

The standards of review established by the Supreme Court of Canada in
Dunsmuir
    v. New Brunswick
, [2008] 1 S.C.R. 190 apply not only to judicial review but
    also to statutory appeals from tribunals: see
Coffey v. College of Licensed
    Practical Nurses (Manitoba)
(2008), 291 D.L.R. (4th) 723 (C.A.), at para.
    34;
Salway v. Assn. of Professional Engineers & Geoscientists (British
    Columbia)
(2010), 3 B.C.L.R. (5th) 213 (C.A.), at para 22; and
Flora v.
    Ontario Health Insurance Plan
(2008), 238 O.A.C. 319 (C.A.), at paras.
    36-37. Indeed, prior to
Dunsmuir
, the Supreme Court noted that
[t]he term judicial review embraces review of
    administrative decisions by way of
both application for judicial review and
    statutory rights of appeal
.:
Dr. Q. v. College of Physicians &
    Surgeons of British Columbia
, [2003] 1 S.C.R. 226, at para. 21 (emphasis
    added).

[17]

As noted in
Dunsmuir
at paras. 54-55 and para. 60, the standard
    of review for questions of law may depend upon the nature of the legal question
    in issue. Where the question is one of true jurisdiction or one of general law
    that is of central importance to the legal system as a whole and outside the
    adjudicators specialized area of expertise, a standard of correctness will
    apply. However, deference will usually be afforded where a tribunal is interpreting
    its own statute or statutes closely connected to its function, with which it
    will have particular familiarity (see
Canadian Broadcasting Corp. v. Canada
    (Labour Relations Board)
, [1995] 1 S.C.R. 157, at para. 48).

Deference
    may also be warranted where an administrative tribunal has developed particular
    expertise in the application of a general common law or civil law rule in
    relation to a specific statutory context. Finally, deference applies to
    questions of fact, discretion or policy and where the legal and factual issues
    are intertwined and cannot be readily separated:
Dunsmuir
, at para. 53.

[18]

Although the Divisional Court relied upon the fact that previous courts
    had consistently applied the standard of correctness to decisions of the Board
    on questions of law, decisions prior to
Dunsmuir
may be of limited
    assistance. Prior to
Dunsmuir
, questions of law generally attracted a
    correctness standard of review. As noted by this court in
Investment Dealers
    Assn. of Canada v. Taub
(2009), 255 O.A.C. 126, at para. 27, the Supreme
    Court in
Dunsmuir
recognized the difficulty that courts may have in
    applying the reasonableness standard of review to a question of law, since
    traditionally courts are used to deciding questions of law and statutory
    interpretation on the basis that the interpretation must be correct.
    Furthermore, while it is clear under a
Dunsmuir
analysis that the
    exercise of statutorily-mandated discretion attracts a standard of review of
    reasonableness, it does not necessarily follow that where the language of a
    statutory provision is mandatory, the standard of review is correctness.

[19]

It is important to identify the category of question under review. A
    tribunal may attract different standards of review, depending on the issue
    involved.

[20]

In
Dunsmuir
, the Supreme Court noted at paras. 55, 62 and 64 that
    the process of determining the standard of review involves two steps. It may be
    that the jurisprudence has already satisfactorily examined the standard of
    review in light of the factors set out in
Dunsmuir
. A post-
Dunsmuir
analysis that has determined the degree of deference to be accorded with regard
    to a particular category of question will end the inquiry. If not, the court
    should assess: (1) the presence or absence of a privative clause; (2) the purpose
    of the tribunal under the enabling legislation; (3) the nature of the question
    at issue; and (4) the expertise of the tribunal relating to the issue. At para.
    55, the Supreme Court in
Dunsmuir
observed that the court should
    determine whether the legislation establishes a discrete and special
    administrative regime in which the decision maker has special expertise.

[21]

In this case, the Board was required to interpret its home statute and
    Regulation in determining a tenant application for a rent reduction. The Boards
    governing statute provides for a specialized adjudicative regime for resolving
    disputes. Under the Act, the determination of whether services or facilities to
    tenants have been reduced by the landlord and the determination of the
    corresponding rent reduction are core functions of the Board. It applied
    statutory and regulatory provisions with which it has particular familiarity.
    As well, with respect to whether the facts established a common recreational
    facility, the legal and factual issues are intertwined and cannot be readily
    separated. Although there is no privative clause, appeals are limited to
    questions of law. The interpretation of service and facility as it relates to
    the former landscaped areas or the calculation of the value of that service
    or facility is not one of central importance to the legal system. In these
    circumstances, I am satisfied that the deferential standard of reasonableness
    applies to these determinations. While the use of mandatory language in the Regulation
    prescribes the Boards approach to its calculation of the appropriate rent
    reduction, it does not, in these circumstances, convert the standard of review
    from one of deference to one of correctness.

[22]

As a result, I conclude that the Divisional Court erred in applying a
    standard of review of correctness. The Boards decision in this case should be
    reviewed on the basis of reasonableness. As explained in
Dunsmuir
at
    para 47, reasonableness is concerned mostly with the existence of
    justification, transparency and intelligibility within the decision-making
    process. But it is also concerned with whether the decision falls within a
    range of possible, acceptable outcomes which are defensible in respect of the
    facts and law.

Relevant Legislation

[23]

The Act permits tenants to seek a rent reduction if a service or
    facility that was provided for the unit or residential complex is reduced or
    discontinued. This is achieved by way of application to the Board.

[24]

Section 142(1) of the Act provides:

142.
(1)  A tenant of a
    rental unit may apply to the Tribunal for an order for a reduction of the rent
    charged for the rental unit due to a reduction or discontinuance in services or
    facilities provided in respect of the rental unit or the residential complex.

[25]

Services and facilities is defined in s. 1(1) of the Act to include
    common recreational facilities:

services and facilities includes,

(a) furniture, appliances and furnishings,

(b) parking and related facilities,

(c) laundry facilities,

(d) elevator facilities,

(e) common recreational facilities,

(f) garbage facilities and related services,

(g) cleaning and maintenance services,

(h) storage facilities,

(i) intercom systems,

(j) cable television facilities,

(k) heating facilities and services,

(l) air-conditioning facilities,

(m) utilities and related services, and

(n) security services and facilities;

[26]

Residential complex is also defined in s. 1(1) of the Act to include
    all common areas and services and facilities:

residential complex means,

(a) a building or related group of buildings in
    which one or more rental units are located,

and,

includes all common areas and services and
    facilities available for the use of its residents;

[27]

Finally, s. 30 of the Regulation provides the remedy for a finding that
    services and facilities have been reduced or discontinued:

30.
(1)  The provisions
    of this section are prescribed as rules for making findings relating to a
    reduction of the rent charged under section 142 of the Act, based on a
    discontinuance or reduction in services or facilities. O. Reg. 194/98,
    s. 30 (1).

(2)  If a service or facility is
    discontinued, the rent shall be reduced by an amount that is equal to what
    would be a reasonable charge for the service or facility based on the cost of
    the service or facility to the landlord or, if the cost cannot be determined or
    if there is no cost, on the value of the service or facility. O. Reg.
    194/98, s. 30 (2).

(4)  If a service or facility is reduced,
    the amount of the reduction of rent shall be a reasonable proportion, based on
    the degree of the reduction of the service or facility, of the amount
    determined under subsection (2) or (3). O. Reg. 194/98,
    s. 30 (4).

(5)  If the discontinuance or reduction
    is temporary and its duration is reasonable, taking into account the effect on
    the tenant, there shall be no reduction of rent. O. Reg. 194/98,
    s. 30 (5).

Was the Boards decision that the former landscaped
    areas constituted common recreational facilities reasonable?

[28]

The evidence before the Board was that the sizable former landscaped areas
    were severed from the residential complex to create 32 new townhouses. The
    tenant Deng described the landscaped areas as two large pieces of lawn with
    approximately 20 mature trees, small pedestrian paths and a stone bench. She
    testified that the area was fenced in so that all the tenants had full access
    to that land. She also testified that in the summer they probably used the landscaped
    areas every day and that her young son would run and play on the grass. After
    construction started, if the appellants son wanted to play, she would take him
    to a nearby public park.

[29]

Although the respondent suggested that the only evidence of the tenants
    use of those landscaped areas was incidental to their use of the pathway as
    access to the street and that there was no evidence that other tenants used the
    area for recreational purposes, the tenants evidence was un-contradicted. In
    any event, an appeal from the Boards decision is restricted to questions of
    law.

[30]

The Board concluded:

The definition of services and facilities set out
    in the Act is not an exhaustive list but explicitly includes common
    recreational facilities. A facility is generally speaking, something that is
    built or installed to perform some particular function. Clearly the gardens,
    lawns and walkways around the residential complex were installed to perform
    particular functions. One of the common functions of a lawn is for recreational
    purposes  for children to run across and play on.  The lawn herein was part of
    the common areas formerly enjoyed by the Tenants and it is uncontested it was
    used by them for recreational purposes. Therefore, I find that the grass,
    garden and walkways around the residential complex are a service and facility
    as defined in the Act with respect to these Tenants.

[31]

Applying the standard of correctness, the Divisional Court found at
    para. 21 that the Board had erred in its finding that the severed areas constituted
    a recreational facility within the meaning of services and facilities defined
    in s. 1 of the Act:

Read in its ordinary sense, common recreational
    facility would entail something that is built or installed to serve a
    recreational function. The lands surrounding a building, while they may be used
    for recreation, do not meet the requirement of being built or installed to
    fulfill that particular function. We accept the Landlords submission that
    these lands are a necessary incident to the construction of the building
    itself. Unless the lands surrounding a building have been specifically landscaped
    to serve a recreational purpose, by adding a playground, for instance, they
    will not meet the definition of common recreational facility.

[32]

The appellants submit that the Divisional Court erred in substituting
    its own interpretation for that of the Board and in holding that additional
    facilities, such as a playground, were required before fenced-in gardens with
    lawns, trees, pathways and a bench could be considered a common recreational
    facility.

[33]

The respondents position is that the Divisional Courts decision was
    correct and that when viewed objectively, the fence, lawns, pathways and bench
    were not built or installed for a recreational function. The respondent submits
    that the Boards decision was unreasonable for the following reasons: the set-back
    areas were a necessary incident to the construction of the building; the Board
    failed to view the functionality of the landscaped areas from an objective
    basis and instead permitted the tenants use of the areas to unilaterally
    convert the areas to a recreational facility; the Board equated common areas
    with common recreational facilities; and common recreational facilities
    encompass purpose built amenities such as pools, spas or exercise rooms.

[34]

As noted by the Divisional Court, the accepted approach to statutory
    interpretation is that the words of an Act are to be read in their entire
    context and in their grammatical and ordinary sense harmoniously with the
    scheme of the Act, the object of the Act, and the intention of Parliament:
Bell
    ExpressVu Ltd. Partnership v. Rex
, [2002] 2 S.C.R. 559, at para 26.

[35]

The Act permits tenants to seek a rent reduction from the Board if
    services or facilities provided for the unit or residential complex are reduced
    or discontinued. Conversely, the Act permits the landlord to seek a rent
    increase for capital expenditures made with respect to the creation of new and
    additional services or facilities. The definition of services and facilities
    is not exhaustive and enumerates a wide range of residential benefits to
    tenants that are maintained and paid for by the landlord. In the context of
    this legislative scheme, it is presumed that a reasonable charge for the
    services and facilities is included in the rental value of the units and that
    the rent reduction is equal to a reasonable charge for the reduction or
    discontinuance of those services or facilities. The Regulation provides that
    the reasonable charge is determined, if possible, by the cost of that service
    or facility to the landlord. In other words, the Act and Regulation seek to
    ensure that if tenants lose some part of the services or facilities that were
    provided to them as part of their rent, any cost savings by the landlord is
    passed on to the tenants. However, the Regulation also provides for a rent
    reduction even where there are no cost savings to the landlord, or where they
    cannot be determined. In these circumstances, the tenant is still entitled to a
    rent reduction that is equal to what would be a reasonable charge for the
    service or facility based on their value.

[36]

The definition of facility is not in dispute. Both the Board and the
    Divisional Court accepted that in the context of the Act and in accordance with
    dictionary definitions, a facility is something that is built or installed
    upon to perform some particular function and, therefore, that recreational
    facility would entail something that is built or installed to serve a
    recreational function.

[37]

While the parties agree on the definition of facility, they disagree
    as to whether the facts of this case meet that definition, and specifically
    whether the facts are capable of meeting the definition of common recreational
    facilities.

[38]

The Divisional Court accepted the landlords submission that the lands,
    as a required set-back, were a necessary incident to the construction of the
    residential complex. However, the fact that a set-back was required did not
    preclude the landlord from building or installing features on the lands to
    serve a recreational function.

[39]

Further, the Divisional Court accepted the landlords submission that
    the tenants unilateral choice to use the common area for recreational purposes
    did not convert it into a facility within the meaning of the Act. I would also
    agree with this submission. However, the key issue of whether the common area
    included facilities which were built or installed for a recreational use or
    function remains.

[40]

In this case, the Board found that the lawns, trees, walkways and the
    fence that excluded the public had been built or installed to fulfill a
    recreational function. The Board noted that a common function of a lawn is for
    children to run across and play on  an observation of the objective
    functionality of lawns. The installation of a bench made the area more than a
    means of egress and ingress to the street but a place that was meant for people
    to enjoy. The Board also relied upon its factual finding that the tenants
    previously enjoyed the lawn area.

[41]

I do not agree with the respondents submission that the Board equated
    or conflated the concepts of common areas and common recreational facilities.
    The respondent argues that the distinction drawn between common areas and
    services and facilities in the definition of residential complex in s. 1 of
    the Act, supports the conclusion that common areas are separate and distinct
    from services and facilities.  A common area is not necessarily a facility or a
    recreational facility; however, there is no reason why a common area cannot
    also constitute or include services or facilities available to the rental units
    or residential complex. Indeed, common recreational facilities, by their very
    nature, would be common areas for the tenants.

[42]

In effect, the Divisional Court disagreed with the Boards factual
    characterizations and its conclusion that fenced-in areas with landscaped
    lawns, walkways and mature trees constituted a common recreational facility. The
    court held at para. 21 that [u]nless the lands surrounding a building have
    been specifically landscaped to serve a recreational purpose, by adding a
    playground, for instance, they will not meet the definition of common
    recreational facility. Implicit in this reasoning is that the fences, lawns,
    bench and pathways were not specifically built or installed by the landlord for
    the particular purpose of recreation.

[43]

The Divisional Court observed that its conclusion was supported by reference
    to the list of other services and facilities found in s. 1(1) of the Act. The
    court emphasized at para. 22: All of the items on the list are features of
    residential complexes that are installed or built to perform a particular
    function, such as security, laundry, elevators, garbage, and parking
    facilities.

[44]

The respondent argues that the Divisional Court was correct because the
    evidence could not reasonably support the conclusion that the areas were built
    or installed to perform a recreational function. The respondent submits that
    the enumerated list of services and facilities as defined in the Act all have
    operating costs associated with them which, upon discontinuance, would result
    in a cost savings to the landlord and a corresponding loss of rental value to
    tenants, which can be measured on an objective basis. Thus, it argues, when
    read in the immediate context of the features listed under the definition of
    services and facilities, the term common recreational facilities encompasses
    purpose built amenities such as pools, spas or exercise rooms that have
    operating costs associated with them.

[45]

The appellants submit that the Boards finding that the tenants
    enjoyment of the areas represented recreational functions, including the fact that
    their son ran on and played on the lawns and that their infant daughter could
    be expected to do so in the future, is supported by the ordinary definition of
    the word recreation.

[46]

Websters defines recreation as: 1. Refreshment in body or mind, as
    after work, by some form of play, amusement or relaxation. 2. Any form of play
    amusement, or relaxation used for this purpose, as games, sports, hobbies,
    reading, walking, etc. (Websters New Twentieth Century Dictionary, 2d ed.,
s.v.
recreation). The Concise Oxford English Dictionary definition of
    recreation is enjoyable leisure activity (Concise Oxford English Dictionary,
    11th ed.,
s.v.
recreation).

[47]

The Board was entitled to find as a fact that the sizable landscaped
    lands, fenced in for the use of the tenants, with the lawns, pathways and
    trees, were built and installed for a recreational function. The Boards
    findings of fact are not subject to appeal. Whether these facts, as found, are
    reasonably capable of meeting the definition of recreational facilities within
    the meaning of the Act is the question of law to be determined.

[48]

The Boards determination that the landscaped areas were a common
    recreational facility was reasonable. The Board was entitled to, and did,
    consider the objective nature and function of what was built or installed on
    the landscaped areas as well as evidence of its actual use. As counsel for the
    appellants submitted, residential gardens and lawns provide space for
    relaxation and leisure activity. Residential landscaped areas available to tenants
    require installation and upkeep and thus have costs to the landlord and corresponding
    value to the residents as recreational facilities.

[49]

The Boards determination is entitled to deference. The Board
    articulated its decision-making process with reasons which were justified,
    transparent and intelligible. Its legal conclusion was within the range of
    reasonable outcomes defensible upon the facts and the law. I conclude that the
    Divisional court erred in holding that the Boards conclusion that the severed landscaped
    areas constituted common recreational facilities was incorrect. The Boards decision
    on that issue was reasonable.

[50]

The appellants submitted before this court that a breach of the covenant
    for quiet enjoyment in the demised premises under the common law and pursuant
    to s. 23 of the
Conveyancing and Law of Property Act
, R.S.O. 1990, c.
    C.34 (as distinct from the reasonable enjoyment under s. 26 of the Act)
    entitled the tenants to a rent reduction. They submitted that the right to
    quiet enjoyment was a service or facility in an application under s. 142(1)
    of the Act. This argument was not made before the Board or before the
    Divisional Court. Accordingly, it is not open to the appellants to raise this
    additional ground on appeal.

Was the Boards decision that there was a reduction in
    the recreational facility reasonable?

[51]

The Divisional Court stated that even if the land in question was a
    common recreational facility, it was questionable whether the facility had been
    reduced. It noted at para. 25: Reduction can refer to a reduction of the
    quality, quantity, or both of a service or facility. The court observed that
    although the quantity of the land had clearly been reduced, the landlord had an
    obligation by its agreement with the City to improve the remaining land.

[52]

On this issue, the Board held:

Furthermore, I do not agree that the permanent loss
    of a significant portion of the garden, lawn and walkways behind the
    residential complex is not a reduction. It may well be that the loss of this
    recreational area is not a discontinuance as landscaped areas around the
    building continue to exist and will in fact be improved, but as a matter of
    logic, the significant decrease in recreational space available to the Tenants
    is clearly a reduction.

[53]

Having noted that the remaining common landscaped lands would be
    improved following the construction, the Board did not consider the effect of
    the landlords obligation to improve those lands. The Board did not consider
    the extent of the reduction in the common recreational facility, even though it
    was required to do so in order to determine the rent reduction under s. 30(4)
    of the Regulation.

[54]

While the size of the recreational facility is clearly relevant in
    determining the extent of any reduction in the facility, it cannot reasonably
    be the only factor in these circumstances. Not every change in a service or
    facility or in common recreational facilities, viewed objectively, will
    necessarily be a reduction of the common recreational facility, even if some
    aspect of it is removed or changed. Thus, the Board was required to consider
    not only the reduction in the metes and bounds of the recreational facility but
    also the nature of the changes in the remaining landscaped areas in order to
    determine the extent of the reduction of the common recreational facilities.

[55]

Given the Boards failure to consider the relevance of the landlords
    obligation to improve the remaining lands, and to consider the extent, if any,
    of the reduction in the common recreational facilities, the Boards decision on
    this issue does not meet the criteria of a reasonable decision-making process; it
    is not an outcome that is within the range of reasonable possible outcomes.

[56]

In this case, there was a negotiated process, between the landlord and
    the City of which the tenants were given notice and in which they were entitled
    to participate. This process bears upon the issue of whether and to what extent
    a reduction in rent was warranted because the size of the common recreational
    facility was reduced. The agreement between the landlord and the City
    ultimately required that in return for the severance and the loss of the land
    to the residential complex, the landlord was required to invest significant
    funds on improvements to the complex, including the remaining landscaped areas.
    The agreement also provided that the landlord would not seek to recoup those
    expenditures from its tenants by seeking an above-guideline rent increase
    before the Board.

[57]

In these circumstances, the negotiated settlement is evidence that the loss
    of the landscaped area to the tenants was compensated for by the investment in
    the remaining landscaped areas. The amenities, including the common
    recreational facilities have been changed, rather than reduced. The process
    reflects the interests of the tenants of the apartment complex as a whole and
    is therefore a better reflection of the value and compensation for the lost
    common recreational lands, rather than the evidence of the impact upon
    individual use by the tenants of one unit.

[58]

The Divisional Court opined that it was questionable whether the lands
    in this case should be considered reduced based on a reduction in quantity
    alone, given the fact that the landlord was obliged to spend a significant
    amount on improving the remaining land. In these circumstances, there is ample
    evidence in the record to find that the common recreational facility was not
    reduced but was replaced with other upgrades. As a result, the Board erred in
    ordering a rent reduction.

Was the Boards calculation of the rent reduction reasonable?

[59]

Although it is not necessary to the appeal, it is nonetheless
    appropriate to provide some guidance with respect to the Boards calculation of
    the rent reduction.

[60]

Section 30 of the Regulation sets out a mandatory approach to
    determining the amount of rent reduction. The Board is directed to determine
    the reasonable charge for the service or facility based on the cost of the
    service or facility to the landlord. If the cost cannot be determined or if
    there is no cost, then the Board is directed to determine the reasonable charge
    for the service or facility based on the value of the service or facility. If
    the service or facility is reduced, the amount of the rent reduction will be a
    reasonable proportion of that reasonable charge, depending on the degree to
    which the service or facility was reduced.

[61]

The evidence at the hearing was that the annual costs of operating the
    green space had consisted of property taxes, insurance and landscaping costs,
    and that the costs for each of these did not change as a consequence of the
    severance. The tenants led no evidence on the value of the facility in the
    context of their monthly rent payment nor did this claim form part of the
    original application before the Board.

[62]

The Board found that because the evidence of the landlord was that there
    was no reduction in its costs once the landscaped area was reduced, the cost to
    the landlord of the reduced portion of the service or facility was zero, or
    could not be determined. Based upon the limited evidence before it, it was
    reasonable for the Board to conclude in these circumstances that the cost to
    the landlord was zero, or could not be determined.

[63]

However, upon making that determination, the Regulation required the
    Board to determine the reasonable charge for the service or facility based on
    the value of the service or facility. Instead, the Board concluded:

The only evidence of the value of the reduced
    common recreational area to the Tenants was the statement that they believed
    they were entitled to a 10% reduction in the rent because of
all
of
    their claims. It seems to me from the evidence before me that the claim with
    respect to the reduction in the common recreational area constituted was
    one-quarter of the Tenants total claims. Therefore, I find that an appropriate
    reduction in the rent for the reduction in the common recreational area is 2.5%
    of the rent charged. [Emphasis in original.]

[64]

The respondent submits that in the context of the language of s. 30 of
    the Regulation, the value of the facility must be determined in relation to
    the cost savings or resulting benefit to the landlord rather than on the value
    of the service to the tenants. It argues that if there was no cost savings to
    pass on to the tenants, there should be no rent reduction.

[65]

However, such an interpretation ignores the plain language of s. 30. By
    prescribing an alternative approach where there are no cost savings to pass on
    to the tenants, the Regulation clearly contemplates a rent reduction even where
    there is no resulting benefit to the landlord. Thus, the value of the service
    or facility must be based upon the rental value of such service or facility. In
    any event, the landlord benefited from the construction and sale of 32
    townhouses upon the former recreational lands.

[66]

The appellants submit that the Board acted reasonably and in accordance
    with the Regulation when it relied on the tenants perceived value of the loss
    of the former landscaped area in arriving at a figure of 2.5% for rent
    reduction. They referenced other decisions in which the Board has assessed the
    value of the rebate without a formula. Counsel submitted that over time, the
    decisions of the Board have established a tariff based upon the nature and
    extent of the reduction in services or facilities. It was submitted that the
    Boards assessment in this case represented a type of rough justice based upon
    its expertise.

[67]

However, this is not such a case. The Board did not purport to rely upon
    past precedent or upon its expertise. Nor did the appellants provide any
    evidence of their perceived value of a reasonable charge for the lost
    landscaped lands. Instead, the Boards reasoning related entirely to the
    initial amount of the claim made by the tenants, for grounds that were not
    successful. In doing so, the reasoning of the Board was deeply flawed.

[68]

The appellants further submit that the result itself was reasonable
    given the value of the severed land. On the review hearing, the appellants filed
    a valuation opinion that the severed land had a value of $3.84 million,
    representing almost 12% of the total value of the apartment complex.

[69]

The appellants submission that the Boards outcome was reasonable based
    on the valuation of the land, or the best and highest value of the land, must
    also fail. The Regulation mandates an inquiry into a reasonable charge for the
    service or facility based upon its cost to the landlord or the value of the
    service or facility. The Board does not have discretion to adopt an alternative
    method of calculating the quantum of rent reduction, regardless of whether the
    amount arrived at is reasonable.

[70]

As a result, the Boards decision on quantum is not reasonable.

Conclusion

[71]

In conclusion, I agree with the decision of the Divisional Court,
    although for different reasons. I would dismiss the appeal.

RELEASED:  January 21, 2011 KMW

Karakatsanis
    J.A.

I
    agree K. M. Weiler J.A.

I
    agree David Watt J.A.


CITATION:
Fountas Holdings Corporation v. J.S. Melo
          Inc., 2011 ONCA 61

DATE: 20110121

DOCKET: C52511

COURT OF APPEAL FOR ONTARIO

Laskin, Lang and LaForme JJ.A.

BETWEEN

Fountas Holdings Corporation

Plaintiff/Defendant to the Counterclaim
          (Appellant)

and

J.S. Melo Inc.

Defendant/Plaintiff by Counterclaim (Respondent)

A. Irvin Schein, for the appellant

John R. Crouchman, for the respondent

Heard: January 20, 2011

On appeal from the order of Justice
          Michael J. Quigley of the Superior Court of Justice, dated July 26, 2010.

APPEAL BOOK ENDORSEMENT

[1]

In our view, the interests of justice require setting aside the
    dismissal order.  The motion judge erred by failing to give effect to three
    important factors:  first, that the plaintiff did not receive the status notice
    or later dismissal order; second, that after learning of the dismissal order the
    plaintiff moved promptly to set it aside; and third, that the plaintiff learned
    of the dismissal order less than three months after it was made, when it tried
    to set the action down for trial.

[2]

Had the plaintiff received the status notice and moved within 90 days it
    would have had the right under rule 48.14 to set the action down for trial.  In
    that case, the plaintiffs failure to move the action along earlier, and any
    prejudice suffered by the defendant in the intervening years would have been
    irrelevant.  From the record before us, we can assume that the plaintiff would
    have set the action down for trial within the 90 day period in rule 48.14.
    Accordingly, it is just that the plaintiff be permitted to do so.

[3]

The appeal is allowed and the registrars order dated January 29, 2010
    is set aside.  The plaintiff shall have 30 days from todays date to set this
    action down for trial.

[4]

We think this is an appropriate case to order no costs of either the
    motion or the appeal.


CITATION:
Grover v. Hodgins, 2011 ONCA 72

DATE: 20110127

DOCKET: C51812

COURT OF APPEAL FOR ONTARIO

Doherty, Watt and Epstein JJ.A.

BETWEEN

Chander Grover and Tabassum Grover

Defendants (Appellants/
Respondents by way of cross-appeal)

and

John Hodgins and Ann Dorans

Plaintiffs (Respondents/
Appellants by way of cross-appeal)

Yavar Hameed, for the appellants/respondents by way of
          cross-appeal

Kellie Stewart, for the respondents/appellants by way of
          cross-appeal

Heard: November 19, 2010

On appeal from the order of Justice James McNamara of the
          Superior Court of Justice, sitting as a single judge of the Divisional Court,
          dated July 20, 2009.

Epstein J.A.:

[1]

This appeal and cross-appeal involve a decision of a deputy judge of the
    Small Claims Court granting judgment in favour of the respondents (the appellants
    in the cross-appeal). The deputy judges order was for a portion of the legal
    fees that the respondents and other plaintiffs in a law suit in British
    Columbia paid to prosecute an action relating to a condominium complex in which
    they were all owners.  The Small Claims Court action was based in contract or,
    in the alternative, unjust enrichment.  The claim in contract failed as the
    trial judge held that the appellants had not agreed to contribute to the legal
    costs of the British Columbia law suit.  However, he did find the appellants (the
    respondents in the cross-appeal) liable to the respondents for a share in the
    legal fees, based on unjust enrichment.

[2]

In this appeal, the appellants challenge the trial judges unjust
    enrichment analysis.  The respondents cross-appeal on the basis that the trial
    judge erred in finding that the appellants were not contractually bound to
    contribute to the costs of the British Columbia action.

[3]

A further, and arguably more important, issue is also raised in this
    matter:  namely, the jurisdiction of a deputy judge of the Small Claims Court
    to grant equitable relief.  Before this court, the parties addressed their
    arguments only to the issues involving the respondents claims in contract and
    unjust enrichment.  However, during oral argument, counsel were asked to make
    written submissions on the extent, if any, of the jurisdiction of the Small
    Claims Court to grant equitable relief.  The court was concerned with the issue
    of whether the trial judge had the power to grant relief based on unjust
    enrichment.

[4]

In their submissions, both parties took the position that the Small
    Claims Court has jurisdiction to grant such relief when the order involves the
    return of personal property or a monetary payment within the limit of the Small
    Claims Court.

[5]

For the reasons that follow, I agree with this position.  As for the
    substantive issues, in my view the respondents claims both in contract and in
    unjust enrichment must fail.  I would therefore allow the appeal and dismiss
    the cross-appeal.

I.

Background

1.

The British Columbia action

[6]

At the relevant time, the appellants, Chander Grover and Tabassum
    Grover, and the respondents, John Hodgins and Ann Dorans, lived in Ontario and
    owned condominium units in a complex located in British Columbia.  Concerns
    arose over the majority owners management of the condominium complex.  The
    Ontario owners believed that the value of their units was depressed due to the
    poor management of the complex.  As a result, a group of 12 Ontario-based
    owners, including the respondents, retained a British Columbia lawyer.  The
    lawyer was asked to initiate an action for, among other relief, damages arising
    out of the mismanagement of the condominium complex.

[7]

On July 5, 2004, the lawyer sent a letter to the Ontario-based
    condominium owners, including the appellants and the respondents, explaining
    the potential conflicts of interest involved in a joint retainer agreement.
    The closing sentence of the letter read as follows:  If you are satisfied that
    you wish us to continue to act for you on the basis outlined above, please sign
    the enclosed duplicate copy of this letter and return it to us.

[8]

The appellants did not sign the letter.  The other 12 condominium owners
    in the Ontario group, including the respondents, agreed to share the legal
    costs of the British Columbia action and each ultimately contributed his or her
    share, which amounted to $7,550 each.

[9]

In August 2005, the Supreme Court of British Columbia appointed an
    administrator to exercise the powers of the council of condominium owners and
    to prepare an expert report to the court on the financial management of the
    complex.  Subsequently, the majority investors sold most of their units and
    ceased their management of the complex.  The litigation effectively came to an
    end.

2.

The Ontario proceedings

[10]

In April 2006, the respondents brought this action against the
    appellants in the Ontario Small Claims Court, claiming $7,550 as damages
    arising from the breach of an alleged agreement to contribute to the legal
    costs incurred in prosecuting the British Columbia action.  In the alternative,
    the respondents claimed they were entitled to the money on the basis of unjust
    enrichment.

[11]

The trial judge dismissed the claim in contract.  Although he found that
    the appellants were aware of the litigation and interested in its result, there
    was no meeting of the minds that would have formed a contract whereby they
    agreed to share legal costs.  With respect to the claim in unjust enrichment,
    the trial judge found that the appellants had been enriched by the efforts of
    the respondents, as, following the removal of the management under which the
    problems had developed, they had sold their condominium unit at a significantly
    higher value.  He also found that the respondents had suffered a corresponding
    deprivation by paying their $7,550 share of the legal costs.  Finding no
    juristic reason for the enrichment, he granted judgment in favour of the
    respondents.

[12]

The appellants appeal to the Divisional Court was dismissed on July 20,
    2009, by way of a brief endorsement, as follows:

This is an appeal and cross-appeal from the
    decision of Deputy Judge Stauffer of the Small Claims Court at Ottawa dated
    June 22/07 and released July 10/07.

The standard of review in an appeal from such a
    judgment requires, if I am to overturn it, a finding that the Deputy Judge made
    an overriding & palpable error, that he misapplied the law, or that he
    misapprehended the evidence.

I have carefully considered the materials, the
    submissions of counsel & the decision of the Trial Judge.  I am not
    [persuaded], based on that review, that Judge Stauffer made either an error in
    law nor a palpable & overriding error in coming to the factual conclusions.

A Trial Judge is only required to give sufficient
    reasons to permit appellate review and to allow the parties to know why the
    decision was as it is.  He or she is not required to comment on all issues at
    the trial, nor on each and every argument presented to him or her.  It is also
    not required that the Judge explain their entire thought process in arriving at
    their decision as long as there is a logical connection between the decision
    and the grounds for reaching that decision.

In this case I had no difficulty in terms of the
    logical connection between the Trial Judges decision & his grounds for
    reaching same.

In the circumstances the Appeal and cross-appeal
    are both dismissed.

As success was divided, each side will bear its own
    costs.

[13]

By order dated February 22, 2010, this court granted leave to appeal.

II.

THE ISSUES

1.

Does
      a deputy judge of the small claims court have jurisdiction to grant equitable
      relief?

2.

Did
      the deputy judge err in granting judgment on the basis of unjust enrichment in
      this case?

3.

Did
      the deputy judge err in finding that the appellants were not bound by contract
      to contribute to the legal costs of the British Columbia action?

III.

ANALYSIS

[14]

I will first deal with the decision of the Divisional Court.  The
    reasons, set out above in their totality, contain no reference to the case
    being decided.  As such, they do not permit any meaningful appellate review and
    therefore constitute legal error:  see
R. v. Brown
(2002), 61 O.R. (3d)
    619 (C.A.), at para. 30.  I must therefore approach my analysis on the basis of
    its being a review of the decision of the trial judge.

[15]

It is logical to start with the issue raised by this court concerning
    the scope of the equitable jurisdiction of the Small Claims Court.

1.

Does the Small Claims Court have jurisdiction to grant equitable
    relief?

a.

The legislation

[16]

The Small Claims Court is a statutory court that derives its
    jurisdiction solely through the
Courts of Justice Act
, R.S.O. 1990, c.
    C.43.  Section 23 is of primary relevance in this appeal, while section 96 is
    also informative to the analysis.
[1]

[17]

Section 23 is the section of the Act that sets out the jurisdiction of
    the Small Claims Court:

23. (1) The Small Claims Court,

(a) has jurisdiction in any action for the payment
    of money where the amount claimed does not exceed the prescribed amount
    exclusive of interest and costs; and

(b) has jurisdiction in any action for the recovery
    of possession of personal property where the value of the property does not
    exceed the prescribed amount.

[18]

Section 96, in dealing with the equitable jurisdiction of all courts,
    provides as follows:

96. (1) Courts shall administer concurrently all
    rules of equity and the common law.

(2) Where a rule of equity conflicts with a rule of
    the common law, the rule of equity prevails.

(3) Only the Court of Appeal and the Superior Court
    of Justice, exclusive of the Small Claims Court, may grant equitable relief,
    unless otherwise provided.

b.

The jurisprudence

(i)

The Superior Court

[19]

The case most often cited in support of the proposition that the Small
    Claims Court has jurisdiction to grant equitable relief is the decision of the
    Divisional Court in
936464 Ontario Ltd. v. Mungo Bear Ltd.
(2003), 74
    O.R. (3d) 45 (Div. Ct.), in which a remedy based on quantum meruit was in
    issue.  Heeney J., at paras. 12-15, concluded that notwithstanding that quantum
    meruit is part of the restitutionary group of remedies, its origins can be
    found in the common law and therefore the court does not need equitable
    jurisdiction to award it.

[20]

However, in extensive
obiter dicta
, Heeney J. went on, in paras.
    20-40, to canvass the equitable jurisdiction of the Small Claims Court.

[21]

Heeney J. noted that while s. 96(3) specifically excludes the Small
    Claims Court from the list of courts able to grant equitable relief, it does so
    with the proviso found in the words unless otherwise provided.  He reasoned
    that s. 23(1)(a) provides otherwise in the words any action  wording sufficiently
    broad so as to encompass both common law claims and equitable claims.  He
    therefore concluded that the only meaningful restriction on the jurisdiction of
    the Small Claims Court was that the relief claimed must be for the payment of
    money or the return of property, the value of which falls within the monetary
    limit prescribed by regulation.

[22]

Two subsequent decisions adopted the reasoning of Heeney J. in relation
    to the jurisdiction of the Small Claims Court to grant equitable relief, although,
    as in the case of
Mungo Bear
, the analysis was not necessary for either decision:
311874 Ontario Ltd. (c.o.b. Grossi Plumbing & Heating) v. 1461763
    Ontario Ltd. (c.o.b. Per Bacco Ristorante)
, [2006] O.J. No. 2779 (S.C.) and
Tang v. Jarrett
(2009), 251 O.A.C. 123 (Div. Ct.).

[23]

While a number of other decisions of the Superior Court have implicitly
    and explicitly held that the Small Claims Court has jurisdiction to consider
    equitable claims for relief, there appears to be no binding authority for that
    proposition.
[2]

The Small Claims
    Court

[24]

A review of Small Claims Court decisions suggests that the court has
    been operating on the basis that it has jurisdiction to consider claims for equitable
    relief and, in appropriate cases, to grant it.

[25]

In
Szeib v. Team Truck Centres  Freightliner
, [2001] O.J. No.
    2208 (Sm. Cl. Ct.), Searle Deputy J. specifically considered the jurisdictional
    issue and held that the Small

Claims Court has jurisdiction to grant relief from forfeiture,
    a form of equitable relief.  In a myriad of other cases, the Small Claims Court
    has, without any analysis of jurisdiction, considered and awarded (or rejected
    after consideration) remedies in equity, particularly based on unjust
    enrichment.  See, for example,
P & G Electronics Ltd. v. Scottish and
    York Insurance Co.
, [1992] O.J. No. 2707 (Sm. Cl. Ct.);
Gula v. Ontario
    Hydro
, [1995] O.J. No. 2392 (Sm. Cl. Ct.);
Michael Davies Plymouth
    Chrysler Ltd. v. Shabsove
, [1995] O.J. No. 5017 (Sm. Cl. Ct.);
Bell,
    Baker v. Wong
, [1996] O.J. No. 5443 (Sm. Cl. Ct.);
Canada Post Corp. v.
    Asquith
, [1999] O.J. No. 5583 (Sm. Cl. Ct.);
1346597 Ontario Ltd. v.
    Riddiford
, [2007] O.J. No. 5502 (Sm. Cl. Ct.);
Causeway View Road South
    Assn. v. Foster
(2009), 91 R.P.R. (4
th
) 314 (Sm. Cl. Ct.).

c.

Analysis of the equitable jurisdiction of the
    Small Claims Court

[26]

Strictly speaking, my determination set out below that the respondents
    claims in contract and in unjust enrichment must fail is sufficient to dispose
    of the matter.  However, the law concerning the jurisdiction of the Small
    Claims Court to grant equitable relief is unsettled is a matter of some importance.
    Furthermore, decisions of the Small Claims Court infrequently reach our court.
    Therefore, in my view, it is appropriate to provide an analysis of the issue.

[27]

The resolution of whether the Small Claims Court has
    jurisdiction to grant equitable relief involves basic statutory
    interpretation.  According to the well-known case of
Rizzo & Rizzo Shoes
    Ltd. (Re)
, [1998] 1 S.C.R. 27, at para. 21, the analysis must focus on the
    words of the relevant statutory provisions, read in their entire context and in
    their grammatical and ordinary sense and interpreted harmoniously with the
    scheme and the object of the Act and with the legislatures intention.

[28]

I start with the wording of the relevant statutory provisions, taken in
    context.

[29]

As stated above, s. 23 of the
Courts of Justice Act
is the
    section that delineates the jurisdiction of the Small Claims Court.  It gives
    the court jurisdiction in any action for the payment of money or the recovery
    of possession of personal property with a value within the prescribed limit.
    This is a wide grant of jurisdiction.  I agree with Heeney J. in
Mungo Bear
that the wording any action is sufficiently broad so as to encompass both
    common law and equitable claims.

[30]

But, this observation begs the very question at issue  whether this
    wording is also broad enough to include jurisdiction to grant equitable
    remedies.  In my view, it is.

[31]

I agree with Heeney J. at para. 29 of
Mungo Bear
that s. 23, s.
    96(1) and s. 96(3) are to be read as a coherent package.  As discussed above,
    s. 23 of the Act is broad enough to allow the Small Claims Court to deal with
    claims in common law and equity.  Under s. 96(1), the courts, including the
    Small Claims Court, are authorized to concurrently administer all rules of
    equity and the common law.  It would be irrational for the legislators to give the
    Small Claims Court authorization to administer rules of equity and deal with
    claims in equity and then specifically preclude the court from granting any equitable
    relief.  It only makes sense if the wording where otherwise provided in s.
    96(3) is interpreted to mean that the Small Claims Court is able to grant
    equitable relief within the limits of its jurisdiction set out in s. 23:  namely,
    to order the payment of money or the return of personal property.

[32]

Notwithstanding the availability of this interpretation of the plain
    language of the
Courts of Justice Act
, it is clear from the
    jurisprudence that there has been some uncertainty involving the reconciliation
    of the broad wording in s. 23 of the Act with the apparent limitation expressed
    in s. 96(3).

[33]

This takes me to legislative intent.

[34]

The legislative history of the relevant provisions of the
Courts of
    Justice Act
, particularly ss. 96(3) and 96(1), is available as a tool for
    determining the intention of the legislature:
Re Rizzo
at para. 31.

[35]

In 1984, the
Courts of Justice Act
replaced the
Judicature
    Act
.  In
Ontario Civil Practice, 1996
(Scarborough:  Carswell,
    1995), Watson and McGowan usefully provide Ministry commentary that accompanied
    changes to the
Courts of Justice Act
.  In the commentary accompanying
    the 1984 Act, the Attorney General clarified that the statement in s. 109(1) (now
    s. 96(1)) courts shall administer concurrently all rules of equity and the
    common law was intended to encompass the meaning of the statement in the
Judicature
    Act
that courts shall recognize all claims and defences, whether arising
    under the common law or equity.  This means that all courts, including the
    Small Claims Court, have the ability to consider equitable claims, such as a
    claim based on unjust enrichment.

[36]

Section 96(3) grants the superior court

broad

jurisdiction
    to award equitable relief.  When the
Courts of Justice Act
was enacted
    in 1984, the Small Claims Court was part of the provincial court system.
    Section 109(3) (now s. 96(3)), which granted equitable jurisdiction to the superior
    courts of the province, did not apply to the Small Claims Court.  However, in 1989,
    important changes were made to the organization of the Ontario court system.
    With the passage of Bill 2,
An Act to amend the Courts of Justice Act, 1984
,
    2d Sess., 34
th
Leg., Ontario, 1989 (assented to 15 November 1989),
    S.O. 1989, c. 55, the Small Claims Court became a branch of the newly-created
    Ontario Court (General Division), part of the provinces superior

court.

[37]

Of particular interest in terms of the 1989 legislative changes is that
    the first version of Bill 2 included a provision that the Court of Appeal, the
    Unified Family Court and the Ontario Court (General Division),
excluding the
    Small Claims Court
, may grant equitable relief, unless otherwise provided
    (emphasis added).

[38]

However, the Standing Committee on Administration of Justice approved an
    amendment to Bill 2 striking out the words excluding the Small Claims Court.
    The representative of the Attorney General explained to the Committee that the
    reference to the Small Claims Court was being removed because it was
    unnecessary (Ontario, Legislative Assembly, Standing Committee on
    Administration of Justice, Transcripts of Meetings (31 July 1989) at J-5
    (Steven Offer)):

As members of the committee will be aware, the
    jurisdiction of the Small Claims Court is limited to two aspects:  first, for
    the payment of money and, second, for the return of personal property.

Having said that, we have an amendment before us to
    section 15, which speaks to subsection 109(3) [now s. 96(3)] of the
Courts
    of Justice Act
.  Basically, this amendment talks to the granting of
    equitable relief.  This amendment is saying that we want to exclude the Small
    Claims Courts jurisdiction from subsection 109(3), which talks to the granting
    of equitable relief.  We believe that that is not necessary, because the Small
    Claims Court does not have jurisdiction under that matter.

[39]

The Standing Committee similarly amended the proposed section 110 (now
    s. 97) (declarations of right) and section 114(1) (now s. 101(1)) (interlocutory
    injunctions, mandatory orders and receivers) by removing the words excluding
    the Small Claims Court.  The rationale for these amendments was the same:  the
    Small Claims Court has not been provided the jurisdiction in s. 23(1) to grant
    declarations of right or injunctive relief so it was considered unnecessary to
    specifically exclude the court from these provisions.

[40]

Despite the governments assertion that the words excluding the Small
    Claims Court were unnecessary, the 1989 amendments created some confusion as
    to whether the Small Claims Court had been provided with jurisdiction to grant
    equitable relief.

[41]

This confusion is reflected in
Ontario Civil Practice, 1990
,
    (Toronto: Carswell, 1990), where Watson and McGowan queried whether the Small
    Claims Court had been given equitable jurisdiction by the 1989 changes, in the
    following observations:

Apparently the rationale for the amendment [to Bill
    2] (deleting the specific exclusion with regard to the Small Claims Court) was
    that since the Small Claims Court is a court of limited jurisdiction, it has
    only that jurisdiction which is conferred on it by statute, and the relevant
    statutory provision does not confer general equitable jurisdiction on the Small
    Claims Court:  see s. 22 [now s. 23].  The competing argument is that by s.
    21(1) [now s. 22(1)] the Small Claims Court is made a branch of the General
    Division and as such is now one of the courts enumerated in s. 109(3) [now s.
    96(3)].

[42]

The second change of significance took place in 1994, when Bill 136,
An
    Act to amend the Courts of Justice Act and to make related amendments to the
    Freedom of Information and Protection of Privacy Act and the Justices of the
    Peace Act
, 3rd Sess., 35th Leg., Ontario, 1994 (assented to 23 June 1994),
    S.O. 1994, c. 12, amended both ss. 96(3) and 97 by inserting the words
    exclusive of the Small Claims Court.  There was no discussion of these
    changes in either the legislative or committee debates.

[43]

This insertion appears to have prompted Watson and McGowan to remove
    their earlier comment about the potential ambiguity concerning whether the
    Small Claims Court could grant equitable relief in
Ontario Civil Practice,
    1996
(Scarborough:  Carswell, 1995).  In its place they provided Ministry
    commentary from the 1994 amendments saying that sections 96(3) and 97 of the
    Act were amended to make it clear that the Small Claims Court cannot give
    equitable relief or a declaratory judgment.

[44]

In my opinion, the series of changes to s. 96(3) and s. 97 in which the
    reference to the Small Claims Court was proposed to be included, removed, and
    then later inserted demonstrate that the legislative drafters struggled with how
    to make it clear that the Small Claims Court, once it became part of the superior
    court with the 1989 reorganization, did not acquire that courts broad jurisdiction
    to grant equitable relief.  It follows that the ultimate decision to include
    the words exclusive of the Small Claims Court in ss. 96(3) and 97, was to clarify
    that the Small Claims Courts becoming a part of the superior court did not
    alter the courts jurisdiction.

[45]

This conclusion is reinforced by an examination of the purpose of
    the Small Claims Court itself.

[46]

T
he history of the Small Claims Court is one of
    progressive development toward providing increased access to justice.  The
    origins of the Small Claims Court in Ontario may be found in 1792 when
the
    first provincial Parliament of Upper Canada determined that to contribute to
    the conveniency of the inhabitants of this province, to have an easy and speedy
    method of recovering small debts, a separate court was required (
An act for
    the more easy and speedy recovery of small debts
, 1792 (Upper Canada) 32
    Geo. III, c. 6). Courts of Request were established and empowered to hear and
    determine matters of debt up to forty shillings, and to decree as to them
    should seem just in law and equity.  Thus, right from the inception of the
    Courts of Request, it is clear that the legislature, in establishing the Small
    Claims Court, intended to provide conveniency  increased access to justice.

[47]

In the report by Ontario Civil Justice Review,
First Report of the
    Civil Justice Review
(Toronto:  Ontario
Civil Justice Review
, 1995),
    the authors noted the following. Frequently referred to as the people's
    court, today's Small Claims Court in Ontario is seen as the one place where a
    private citizen can have ready and inexpensive access to civil justice.  The
    Small Claims Court is more hospitable to the ever-increasing number of
    self-represented litigants.  Procedures are simpler in the Small Claims Court;
    matters are decided in a summary way under relaxed rules of evidence. There are
    limits on the costs that may be recovered by a successful party in the Small
    Claims Court.  These features contribute to an increase in the accessibility of
    our system of justice.

[48]

Interpreting the words of the
Courts of Justice Act
in such a way
    as to restrict the jurisdiction of the Small Claims Court in a manner that
    would preclude it from awarding equitable relief in resolving claims properly
    before it would run counter to this important objective.

[49]

It follows that the interpretation of the
Courts of Justice Act
provisions
    relevant to the jurisdiction of the Small Claims Court that is in keeping with
    the wording of the Act and is consistent with the intent of the legislature, apparent
    not only from the legislative amendments but also from the rationale behind
    establishing the Court itself, is that the Small Claims Court has jurisdiction
    to award legal or equitable relief where the relief requested is a monetary
    payment under the limit of $25,000 or the return of personal property valued
    within that limit.

2.

Did the trial judge err in granting judgment
    based on unjust enrichment?

[50]

Having determined that the trial judge had jurisdiction to grant relief
    based on a claim of unjust enrichment, the next question is whether he erred in
    doing so on the facts of this case.

[51]

I now therefore turn to the trial judges conclusion that, based on
    unjust enrichment, the respondents were entitled to judgment in the amount of
    the contribution paid by each member of the Ontario-based group of condominium
    owners to the legal fees of the British Columbia action.

[52]

As the trial judge correctly stated, the cause of action for unjust
    enrichment has three elements:  (1) an enrichment of the defendant; (2) a
    corresponding deprivation of the plaintiff; and (3) an absence of any juristic
    reason for the enrichment:
Pettkus v. Becker
, [1980] 2 S.C.R. 834 at p.
    848.

[53]

The trial judge held that the respondents established each of these
    requirements.  I respectfully disagree.  In my view, the respondents met none
    of the requirements and the claim in unjust enrichment must therefore fail.

[54]

First, the trial judge erred in holding that the appellants were
    enriched through the efforts of the respondents and the expenses they incurred
    to fund the British Columbia litigation.

[55]

The trial judge found that the appellants received a benefit because
    their condominium unit increased in value following the removal of the old
    management through the B.C. litigation.  Thus, he held that the appellants were
    enriched by the respondents litigation that was ultimately to the advantage of
    the appellants.  I disagree.

[56]

What the trial judge overlooked is the difference between unjust
    enrichment through the provision of money and unjust enrichment through the
    provision of services. This difference was explained by Laskin J.A. in
Sharwood
    & Co. v. Municipal Financial Corp.
(2001) 53 O.R. 3d 470 (C.A.), at para.
    26: The receipt of money is always a benefit to the defendant.  The receipt of
    services may not be a benefit because the defendant may not have wanted the
    services or may not have wanted them if it had to pay for them.

[57]

The provision of services will constitute a benefit in two situations:  (a)
    where they were performed at the request of the defendant, or (b) where the
    defendant has been incontrovertibly benefited:  see Maddaugh and McCamus in
    their text
Law of Restitution
, looseleaf (Aurora: Canada Law Book,
    2010), at p. 3-17.

[58]

There is no evidence that the appellants requested that the respondents
    subsidize their contribution to the legal services or that they requested the
    services themselves, so the issue of whether the appellants were enriched comes
    down to whether they were incontrovertibly benefited.

[59]

In
Peel (Regional Municipality) v. Canada; Peel (Regional
    Municipality) v. Ontario
, [1992] 3 S.C.R. 762, McLachlin J. explained the
    basic concept of an incontrovertible benefit at p. 795:

An incontrovertible benefit is an unquestionable
    benefit, a benefit which is demonstrably apparent and not subject to debate and
    conjecture.
Where the benefit is not clear and manifest, it would be wrong
    to make the defendant pay, since

he or she might well have preferred to
    decline the benefit if given the choice
. [Emphasis added.]

[60]

Here, based on the trial judges conclusion that the evidence is far
    from clear to draw a direct link between the departure of the former managers
    [and] an increase in value of the units, it cannot be said the appellants
    received any demonstrably apparent benefit.

[61]

For these reasons, I cannot accept the finding of an enrichment or a
    benefit.

[62]

Nor can I agree with the trial judges finding of a corresponding
    deprivation.  He found the deprivation to be the $7,550 the respondents paid
    toward the legal costs of the British Columbia action.  This finding fails to
    take into account the benefit the respondents received themselves.  They paid
    for legal services.  They received the services.  They suffered no
    deprivation.  Given the trial judges finding that the appellants did not agree
    to share costs, each plaintiff paid no more, and no less, than he or she agreed
    to pay.

[63]

Even if I were to accept that there had been a benefit conferred and a
    corresponding loss, the respondents have not met the third requirement for
    unjust enrichment.  Simply put, it would not be unjust for the appellants to
    retain the benefit given there is nothing in the record to support a conclusion
    that the appellants requested or otherwise indicated that they wanted the
    service.

3.

The cross-appeal  Did the trial judge err in
    holding that the appellants were not bound by contract to contribute to the
    legal costs?

[64]

The respondents submit that the trial judge erred in concluding that the
    appellants had not contractually obligated themselves to contribute to the
    legal costs of the British Columbia action.  This finding was clearly supported
    by the evidence.  I would not interfere.

IV.

DISPOSITION

[65]

For these reasons I would allow the appeal and dismiss the
    cross-appeal.  I would set aside the decision of the Divisional Court and the
    judgment of the deputy judge of the Small Claims Court and dismiss the action.

[66]

The appellants are entitled to their costs of the trial that were fixed
    in the amount of $500, and their costs of the appeal to the Divisional Court
    that I would fix in the amount of $3000, and their costs of this appeal, which
    I would fix at $4000.

RELEASED:

DD                                                  Gloria
    Epstein J.A.

JAN 27 2011                                 I
    agree Doherty J.A.

I
    agree David Watt J.A.

[1]
Section 97, which is briefly referenced in these reasons, addresses the
    jurisdiction of all courts to grant declaratory relief, It contains the
    identical words exclusive of the Small Claims Court that appear in s. 96(3),
    and has undergone similar amendments at the same time as s. 96(3).

[2]
In
Moore v. Canadian Newspapers Co.
(1989), 69 O.R. (2d) 262 (Div. Ct.),
    Rosenberg J. analyzed the jurisdiction of the Small Claims Court to award
    equitable relief and determined that there was none.  However, this case was
    decided before the legislative changes in 1989 and 1994 (discussed below).
    Also, the remedy at issue in
Moore
was injunctive relief, not a monetary
    payment.