Law Times

Law Times • June 23, 2014 Page 7 www.lawtimesnews.com COMMENT Is there too much judicial intervention in civil litigation? By KeiTh lAndy And AnnA WOnG For Law Times ave you received a status notice recently? Rumour has it the Ontario Superior Court may be considering doing away with status no- tices due in part to its inconsistent implemen- tation throughout the province. For non-litigators, a sta- tus notice is a form issued by the court advising that it will dismiss the matter unless the parties do one of following within 90 days: set the action down for trial or terminate the action; request a status hearing; or consent to an order establishing a timetable. A status hearing essentially en- tails the parties — typically the plaintiff — trying to per- suade the presiding judge or master as to why the court should not dismiss the action. If the party takes no steps, the court will dismiss the action with costs. A status hear- ing is in essence a way for the court to supervise the par- ties to ensure that the proceeding does not fall dormant. The last two decades have witnessed important re- forms to the Ontario Rules of Civil Procedure to aug- ment judicial oversight of proceedings in the name of improving efficiency. The changes, including the introduction of simplified procedure, case manage- ment, and discovery plans, were ostensibly an effort to alleviate the substantial court backlogs and make the litigation process more efficient and effective. The irony is that both costs and delays have swelled in the interim. Access to justice has become unafford- able for the middle class and working poor who are not eligible for legal aid in Ontario as evidenced by the in- creasing number of unrepresented litigants navigating the court system on their own. The court system does not publish official statistics on the number of unrep- resented litigants, but by some estimates, 40 per cent of litigants in Canada and as many as 80 per cent of the parties in Ontario's family court do not have counsel. One such measure of judicial oversight is judicial management of civil cases. Case management under Rule 77 came into force on Feb. 3, 1997, in Toronto and Ottawa and expanded to Windsor, Ont., on Dec. 31, 2002. The rule had been designed so the court would aggressively manage virtually all civil cases through prefixed timetables, conferences with case manage- ment judges or masters, and judicial intervention if the parties do not adhere to tight timelines. The court sus- pended universal case management in 2004 for Toronto and in 2010 for Ottawa and Windsor and replaced it with a model on the lines of "case management where necessary, not necessarily case management." It became apparent it was unfeasible for the court to micromanage every case that comes through its doors, particularly in Toronto with about 31,000 new claims filed each year. The approach contrasts starkly with the long-standing way in which our courts have operated. For many years, the parties largely dictated the pace and correspond- ing expense of litigation. An action would begin with a statement of claim filed by the plaintiff and it proceeded through the various steps at a pace driven by the parties. There might be a short or lengthy interval between plead- ings and disclosure, for example, or any other stage of the process as the historical approach offered litigants con- siderable f lexibility. Parties could rely on the doctrine of laches and bring motions to dismiss an action if the other side unreasonably delays the case from moving forward. From the perspective of the courts, the introduc- tion of case management fundamentally altered the role of judges. In the adversarial tradition that is the hallmark of common law, the judge is a passive, impar- tial adjudicator whose only role is to decide at the end of the proceedings. Since the 1990s, however, judges started assuming a more active, interventionist role beyond the confines of the formal courtroom in supervising the steps leading to trial. Litigation is in essence a public process of dis- pute resolution. Parties launch lawsuits for a num- ber of reasons with some actions simply a bid to guard against the limitation period running out in case the parties cannot resolve their dispute and decide to pur- sue the court route more seriously later on. Not every action is ripe to move along at the same pace and by the same standard order of litigation steps. Accord- ingly, a judicial interventionist approach may present more encumbrance than assistance. This is consistent with the sentiments captured in former Ontario asso- ciate chief justice Coulter Osborne's report on the civil justice reform project: "Lawyers expressed general support for limited case management, that is, for case- tailored management where required — not a one size fits all approach to the management of cases. . . . One obvious feature of case management is that, although it is helpful in some cases, it is not needed in all cases, on any reasonable assessment. In those cases where counsel can effectively move the case forward, case management adds layers of cost that some convinc- ingly say are unnecessary." At the end of the day, unsolicited judicial intervention can unduly impose up on litigants' resources and take away judges' attention from performing their chief role as passive, impartial adjudicators in our adversarial system. If litigants require the court's assistance in managing opposing parties who are unco-operative, unresponsive or looking to cause strategic delay, they can bring a motion or request case management. The court should refrain from dictating a one- size-fits-all pace of litigation by way of status notices, status hearings, and other unilateral moves. LT Keith Landy and Anna Wong practise civil litigation at Landy Marr Kats LLP. u SPEAKER'S CORNER Rental housing stock lags as rules, economics favour condos n interesting conf luence of trends is affecting an almost- forgotten segment of the Toronto real estate market. For the longest time, Toronto enjoyed a vibrant and robust pure rental market of apartment buildings purposely built to lease for residential uses. Most of these apartment buildings date back to the 1960s and '70s and most still stand today. While quite a number of pure rental apartment buildings remain in the city, there are very few of them under construc- tion today. Morguard Corp. recently made the news with the opening of its 600-unit pure rental apartment complex in Forest Hill village in Toronto, but it was news par- ticularly because it was the first purpose- built rental apartment building in that neighbourhood in almost four decades. Even if we disregard the fact that new apartment buildings are legally being or- ganized as condominium corporations for realty tax purposes, it seems as if new projects purposely built for residential rental by a single landlord are becoming quite rare with rental condominium units gradually cannibalizing the province's available rental stock. There are probably a number of reasons for this trend away from apartment build- ings towards rental condominium units. A part of it has to be Ontario's condominium legislation itself as it doesn't restrict the number of units in any given condomini- um building that may be rented out. While the legislation certainly facilitates such a transformation, it hardly explains why there has been a trend away from apartments to- wards condominiums. A part of this trend is attributable to the recent attractiveness of Canadian real estate as an investment asset class generally and how much easier and more liquid it is for investors to purchase individ- ual condominium units than buy whole apartment buildings alone or in groups. Furthermore, almost all con- dominiums in the province are de facto exempt from rent control. Legally, condominiums are no different than rental apartments for the purposes of rent control, but the determinant is chronolog- ical with 1991 being the cutoff date as rental stock first introduced before 1991 is subject to rent control and units first brought onto the rental market thereafter are exempt from it. It just so happens an overwhelming majority of the apartment buildings in the province date back to before 1991 and most of the condominiums in the province came after that date. This makes condominiums far more attractive to investors. Finally, it's the renters themselves who want to live in condos for reasons such as the prime locations of new buildings or the ever-improving and more exotic ame- nities included in modern projects. Regardless of the causes, the irrefutable trend has been for condominiums to be- come the principal source of rental stock in the province, especially in and around Toronto. It's not clear when exactly this trend changed from a trickle to a torrent, but according to Odysseas Papadimitriou, a condominium lawyer at Miller Thomson LLP, it's here to stay with many of the con- dominiums under construction today be- ing well over 50-per-cent rental right from the start and some reaching 80 per cent. Somewhat lost in the hoopla of the recent start to the City of Toronto mayoral race are a couple of Toronto city council decisions relating to the Resi- dential Tenancies Act that might take a serious bite out of condo- minium rentals. In a decision ad- opted in 2013 by a 30-1 vote with 14 abstentions, the city asked the province to cancel the exemption from rent control currently avail- able for units constructed after 1991. Since most of Ontario's condominium buildings came after 1991, it means that, if imple- mented, all condominium rental units will become subject to rent control. In a similar motion adopted in early 2014 by council in a 31-10 vote with four abstentions, the city asked the province to cancel the provisions in the Residential Tenancies Act that permit a residential landlord to recoup necessary capital ex- penditures from tenants through above- the-guideline rent increases and instead require all landlords to maintain a 10-per- cent reserve out of their own rent revenues for future capital expenditures. Currently, even where a rental unit is subject to rent control, a landlord can, with approval, charge rent up to three per cent above the statutory cap in order to gradually recoup the costs of capital improvements. According to Daryl Chong, president and chief executive officer of the Greater Toronto Apartment Association, if the province actually acts upon these propos- als from Toronto, "this would seriously hurt condo investors." Chong further predicts that if rent con- trols limit rental revenues even more and landlords can no longer recover capital ex- penditures through above-the-guideline rent increases, condominium investment might feel the crunch, depressing demand and possibly even causing a selloff of exist- ing condominium investments. While it's fairly obvious why the condominium de- velopment industry and investors would oppose the city's proposals, Chong notes the issue goes much further, explaining that if investors "divest their units, the entire market will lose value, so even condo own- ers that occupy their units will feel a huge devaluation of their homes' value." In one of the more ironic twists of fate, the city resolutions come at the same time Toronto council is contemplating almost doubling the development charges it cur- rently imposes on new building permits. The overwhelming share of the revenue from these development charges would come from new condominium develop- ment in the city since there's very little buildable low-rise infill development left in Toronto and pressures for urban inten- sification will continue to fuel high-rise condominium projects. This is the same condominium development industry that might suffer as a result of the changes to the Residential Tenancies Act also re- quested by the city. Of course, the Toronto resolutions are merely recommendations and in and of themselves have no legal weight, even within the city (and there's no suggestion it's proposing a rent control regime at the municipal level). That said, politics makes strange bedfellows and with a municipal election this fall, it stands to reason that anything can happen when it comes to re- form of the Residential Tenancies Act. LT Jeffrey W. Lem is a partner in the real estate group at Miller Thomson LLP. His e- mail address is jlem@millerthomson.com. 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