Agriculture, Food and Rural Affairs
Appeal Tribunal
1Stone Road West
Tribunal d’appel de l’agriculture, de l’alimentation et des affaires rurales
1 Stone Road West
Guelph, (Ontario) N1G 4Y2
Tel: (519) 826-3433, Fax: (519) 826-4232
Email: appeals.tribunal.omafra@ontario.ca
Guelph (Ontario) N1G 4Y2
Tél. : (519) 826-3433, Téléc. : (519) 826-4232
Courriel : appeals.tribunal.omafra@ontario.ca
AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL
APPEAL:
Rosene Spillway / Deer Lake Project
Municipality of West Nipissing
Rosene Spillway/Deer Lake Project (RE) 2014 ONAFRAAT 8
STATUTE:
Drainage Act
HEARING:
March 4 and 5, 2014
DATE OF DECISION:
April 10, 2014
2014-08
NEUTRAL CITATION:
2014 ONAFRAAT 8
ROSENE SPILLWAY/DEER LAKE PROJECT
MUNICIPALITY OF WEST NIPISSING
IN THE MATTER OF THE DRAINAGE ACT, R.S.O. 1990, CHAPTER D.17, AS AMENDED.
AND IN THE MATTER OF: An appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal by the Ministry of Natural Resources under Section 48(1)(d) of the Drainage Act from the Engineer’s Section 40 Report with respect to the Rosene Spillway/Deer Lake Project in the Municipality of West Nipissing.
Before:
John O’Kane, Vice-Chair; Ed Dries, Member; John Rudics, Member
Appearances:
Sunny Zhai, Counsel for the Ministry of Natural Resources - Appellant
Rob Schryburt – Witness for Appellant
Ken Smart, P. Eng., K. Smart Associates Limited – Engineer who prepared the Report
Paul Courey, Counsel for the Municipality
Jean Johnson – Witness for the Municipality
DECISION OF THE TRIBUNAL
This hearing was held in the Municipality of West Nipissing, (the “Municipality”) in Sturgeon Falls, Ontario on March 4 and 5, 2014. The Ministry of Natural Resources appealed to the Agriculture, Food and Rural Affairs Appeal Tribunal (the “Tribunal”) from the Engineer’s Section 40 Report dated July 31, 2013 prepared by Ken Smart, P. Eng. with respect to the Rosene Spillway/Deer Lake Project.
Melanie Ducharme, Clerk for the Municipality, performed the duties of the Clerk of the Tribunal.
Background
For almost a century, the water level in Deer Lake had been primarily controlled by a beaver dam located in an outlet channel created by early settlers who had blasted a rock channel outlet.
However, over the years, the beaver dam had been subject to human tampering, resulting in fluctuating water levels in Deer Lake.
In November 1992, Ernest Rosene bequeathed $95,000 in favour of the Deer Lake residents to fund construction of an outlet control structure. For almost two decades thereafter, the Deer Lake residents had been seeking some resolution to the fluctuating water levels.
On October 25, 2004, at the recommendation of a drainage engineer hired by the Municipality, many of the residents living on Deer Lake (also known as Hugel Lake) signed a petition under the Drainage Act (the “Act”) to achieve through drainage works a mechanism to control the water level in Deer Lake. On December 7, 2004 the Municipality appointed K. Smart Associates Limited (the “Engineer”) to act on the drainage petition.
The Engineer developed a proposal to clean the outlet channel and remove all beaver dams, and to construct a permanent concrete spillway to be located in the outlet channel where the beaver dam had been located. The spillway would have been owned and maintained by the Municipality. The spillway would have created a stable water level in Deer Lake. However, constructing the proposed spillway would have required approval from the Ministry of Natural Resources under the Lakes and Rivers Improvement Act (the “LRIA”).
On July 31, 2013, the Engineer delivered a report to the Municipality under section 40 of the Act. The section 40 report concluded that the proposed drainage works were impractical due to the Engineer’s view that the project would not receive the required approval from the Ministry of Natural Resources.
The Engineer’s statutory duty under section 40 of the Act includes reporting the amount of the Engineer’s “fees and other charges and by whom they shall be paid”. The Engineer reported that the total costs were $90,427.39. The Engineer reported that the costs should be paid in equal portions by (1) the Hugel Township Lakeside Property Owners’ Association; (2) the Ministry of Natural Resources; and (3) the Municipality.
The Ministry of Natural Resources appealed to the Tribunal asserting that the Engineer had no jurisdiction to apportion “fees and charges” to the Ministry, and, in the alternative, if the Engineer had such jurisdiction, the amount apportioned to the Ministry should be reduced to zero.
Issues
- Does the Engineer have jurisdiction under Section 40 of the Act to impose charges
against the Ministry of Natural Resources?
- If the answer to issue #1 is yes, should the Engineer be ordered to reduce the cost
apportioned to the Ministry of Natural Resources to zero?
The Engineer’s Role Under the Act
The Act has been a feature of Ontario legislation since the 19th century.
The purpose of the Act is simple. It is intended to give property owners a means of controlling drainage through structures that are constructed, owned and maintained by municipal governments but paid for by the landowners who benefit from the drainage controls.
In this case, sufficient landowners from around Deer Lake signed a petition requiring drainage works that was filed with the Municipality.
In response to the petition, the Municipality passed a by-law appointing the Engineer and requiring that the Engineer examine the area requiring the drainage works and prepare a report that would include1:
(a) plans, profiles and specifications of the drainage works, including a description of the area requiring drainage;
(b) an estimate of the total cost thereof;
(c) an assessment of the amount or proportion of the cost of the works to be assessed against every parcel of land and road for benefit, outlet liability and injuring liability;
(d) allowances, if any, to be paid to the owners of land affected by the drainage works; and
(e) such other matters as are provided for under this Act.
In discharging those duties under the Act, the Engineer is guided by section 11 that directs that,
The engineer shall, to the best of the engineer’s skill, knowledge, judgment and ability, honestly and faithfully, and without fear of, favour to or prejudice against any person, perform the duty assigned to the engineer in connection with any drainage works and make a true report thereon.
It is apparent from sections 8 and 11 of the Act that the Engineer is afforded considerable responsibility and authority with respect to assessing the cost of the drainage works against parcels of land and roads for benefit, outlet liability and injuring liability and determining allowances to the owners of land affected by the drainage works.
Sections 21 to 28 of the Act go into some detail about the Engineer’s responsibilities in respect of assessments. The word “assessment” is not defined in the Act but its meaning is clear from the context. An assessment in this context is an apportionment in money attributed to a “parcel of land”.
Sections 29 to 33 of the Act go into similar detail about the Engineer’s responsibilities in respect of allowances. The word “allowances” is not defined in the Act but its meaning is also clear from the context. Allowances in this context are an amount of money to be paid to an “owner of land”.
Therefore, as part of the statutory duties, the Engineer is required to impose assessments against parcels of land and make allowances in favour of landowners.
However, where an Engineer determines that a drainage project cannot proceed, the Engineer’s duties are specified in section 40 of the Act.
- Where the engineer finds that a drainage works is not required or is impractical, or cannot be constructed under this Act, the engineer shall forthwith file with the clerk of the initiating municipality a report to that effect, stating the reasons therefor, the amount of the engineer’s fees and other charges and by whom they shall be paid, and the clerk shall forthwith send a notice of the filing of such report to all persons who signed the petition and the matter shall not be further proceeded with unless the decision of the engineer is reversed on appeal.
Section 40 requires the Engineer to determine the total “engineer’s fees and other charges” and further, to determine “by whom they shall be paid”.
The Engineer “Fees and Other Charges” Determination - Generally
On consent, the Engineer was qualified to give expert evidence in drainage matters under the Act. The Engineer testified that during his thirty-five year career he was responsible for almost 1,000 drainage reports.
The Engineer testified that he determined that the “fees and other charges” totalled $90,427.39.
The Ministry of Natural Resources did not lead any evidence or make any argument to contest the Engineer’s determination of the “fees and other charges” of $90,427.39.
The Engineer determined that 1/3 of those “fees and other charges” should be paid by the Deer Lake residents’ association known as the “Hugel Township Lakeside Property Owners’ Association”. The Engineer’s reasons supporting that apportionment included the Association had been an original petitioner seeking the drainage works, the members of the Association made up a majority of the land owners on Deer Lake, the Association had agreed to assist with the costs and, any future similar project would benefit from the work the Engineer had undertaken.
The Ministry of Natural Resources did not lead any evidence or make any argument to contest the Engineer’s determination that the Association should pay 1/3 of the “fees and other charges”.
The Engineer determined that 1/3 of those “fees and other charges” should be paid by the Municipality. The Engineer’s reasons supporting that apportionment included considerable engineering undertaken about improving the drainage on municipal roads, considerable road maintenance costs could be saved by the drainage, the Engineer’s work will assist with future road improvements, and any future similar project would benefit from the work the Engineer had undertaken.
The Ministry of Natural Resources did not lead any evidence or make any argument to contest the Engineer’s determination that the Municipality should pay 1/3 of the “fees and other charges”.
The Engineer “Fees and Other Charges” Determination Against the Ministry
The Engineer determined that 1/3 of those “fees and other charges” should be paid by the Ministry of Natural Resources.
The Engineer’s reasons supporting that apportionment included conflicting statements from the Ministry regarding requirements for location approval; the Ministry’s conflicting positions about riparian owners’ rights; the Ministry’s requirement for plans and specifications at location approval stage; the Ministry’s tying location approval to potential assessments; the Ministry’s advice that only power generating dams get approval.
A. Jurisdiction
The Ministry challenged that the Act did not grant the Engineer jurisdiction to apportion “fees and other charges” against the Ministry.
The Ministry argued that it was not a petitioner for drainage in this matter and that its role was as a regulatory agency considering the municipality’s request to approve the construction of a dam (spillway) under the LRIA.
The purpose of the LRIA is set out in section 2:
(a) the management, protection, preservation and use of the waters of the lakes and rivers of Ontario and the land under them;
(b) the protection and equitable exercise of public rights in or over the waters of the lakes and rivers of Ontario;
(c) the protection of the interests of riparian owners;
(d) the management, perpetuation and use of the fish, wildlife and other natural resources dependent on the lakes and rivers;
(e) the protection of the natural amenities of the lakes and rivers and their shores and banks; and
(f) the protection of persons and of property by ensuring that dams are suitably located, constructed, operated and maintained and are of an appropriate nature with regard to the purposes of clauses (a) to (e).
The approval process for a dam (spillway) under section 14 of the LRIA involves a discretionary location approval and approval of the plans and specifications.
The Ministry argued that location approval is not guaranteed under the LRIA and any applicant might incur costs that are not recoverable.
The Ministry argued that section 40 of the Act is about the costs of the proponents for drainage under the Act. In support of that argument the Ministry referred to the words of the section “the amount of the engineer’s fee and other charges and by whom they shall be paid, and the clerk shall forthwith send a notice of the filing of such report to all persons who signed the petition . . .”. The Ministry argued that the petitioner under the Act is able to control the process and stop the process. The Ministry argued that someone like the Ministry who is not a petitioner and not privy to the reports and the costs has no control over the process and, therefore, should not be liable for such costs.
The Engineer argued that there is no limitation on the words in section 40 of the Act “by whom they shall be paid”. The Engineer argued that if the Legislature had intended a narrower application, it could have done so but, rather, used language that granted broad discretion to the Engineer. The Engineer also made the distinction that the “fees and other charges” under section 40 were different than the amounts assessed by an engineer in the context of assessments made under the Act. The Engineer also made the point that under section 10(4) of the Act, where a petition for drainage fails because of insufficient statutory signatories, the costs to date are chargeable in equal shares to all signatories.
The modern approach to statutory interpretation requires the Tribunal to interpret the words 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 the Legislature.
In order to determine the scope of the Engineer’s jurisdiction under the Act, the Tribunal must consider the words of the Act. In the Tribunal’s view, the words of the LRIA and the scope of the Ministry’s processes and authority do not assist with determining the Engineer’s jurisdiction under the Act.
In section 40 of the Act, unlike sections 21 to 28, the Legislature did not refer to the “parcels of land” and “roads” that the proposed drainage works might benefit. In section 40, unlike sections 29 to 33, the Legislature did not refer to the “owners of land” who might receive allowances. In Section 40, the Legislature used the words “and by whom they shall be paid”. Those words appear in that section without any limitation or restriction. Those words appear in that section in contrast to the provisions of section 10(4) which make it clear that the costs of a failed petition are paid for by the signatory petitioners.
It is the Tribunal’s view that when the Legislature used different words as it did between section 10(4) and section 40, it was sending a clear message that it was intending a different meaning. It is the Tribunal’s view that the words of section 40 do not necessarily mean that only the petitioners could be liable for the “fees and other charges” under section 40.
In the Tribunal’s view, the words “and by whom they shall be paid” could not be broader in scope. That is not to suggest they are without any limitation because in exercising that broad discretionary jurisdiction the Engineer is still bound by the statutory duty set out in section 11 of the Act.
Here, the Ministry lead no evidence to demonstrate to the Tribunal’s satisfaction that the Engineer had not exercised his best “skill, knowledge and judgment and ability, honestly and faithfully, and without fear of, favour to or prejudice against any person” when determining that the Ministry should pay 1/3 of the fees and other charges.
Therefore, the Tribunal ruled that the Engineer does have jurisdiction under section 40 of the Act to determine that the Ministry is liable to pay 1/3 of the fees and other charges as determined.
B. Quantum
The Ministry presented an alternative argument that if the Engineer had jurisdiction to apportion “fees and other charges” against the Ministry, it was unreasonable to do so and, therefore, the quantum should be reduced to zero.
The Ministry challenged the Engineer’s reasons as the basis for the fees and charges being unreasonable.
However, the Ministry presented no evidence that satisfied the Tribunal that the fees and charges as apportioned were unreasonable.
The Engineer testified that Ministry staff advised him that approval for the proposed dam (spillway) would require approval under the LRIA and that the approval process was a “two step process”. The first step was location approval and the second step was plans and specifications approval. The Engineer’s evidence in that regard was supported by documents that included an e-mail from Phil Hall of the Ministry confirming the two step process.
The Engineer testified that in that same e-mail from Phil Hall, he advised that the prospect for location approval would be “slim” unless “all riparian landowners ... can agree on a fixed level”. It was explained that meant that all riparian landowners had to consent to the level of flooding their lands would experience in order to achieve location approval from the Ministry. That requirement, which became known in the hearing as the “100% requirement” does not appear in the legislation. The Ministry witness testified that location approval would not be granted without 100% consent from the riparian landowners. The only legislative or policy basis for that was a 1977 “guideline” used by the Ministry. That document provided that a proposed dam and any area to be flooded had to be entirely on the proponents land or on lands which the applicant has “legal authority to construct a dam and cause flooding, e.g. by easement, flooding rights, lease or purchase.” There was no evidence that satisfied the Tribunal that the 1977 “guideline” was embodied in Ministry policy or in any legislative instrument.
The Ministry witness confirmed that their district office had no previous experience with matters under the Act and that they viewed those four mechanisms listed in the “guideline” (easement, flooding right, lease or purchase) as the only mechanisms to meet the requirement for location approval.
However, the Engineer testified about a telephone conference call that he participated in during June 2006 involving himself, staff from the Ministry District office as well as a senior policy advisor responsible for administering the Act from the Ministry of Agriculture, Food and Rural Affairs and a senior policy advisor from the Ministry. The Engineer testified that on that call the Ministry agreed the dam (spillway) project could proceed by addressing the riparian rights (flooding) issue under the Act. The Engineer produced internal e-mails from his office that confirmed his understanding of the agreement from the Ministry. In addition, he produced an e-mail from Sid Vander Veen of the Ministry of Agriculture, Food and Rural Affairs that confirmed his recollections about the discussions on that telephone conference call.
The Drainage Act gives the municipality the legal authority to construct drainage works and often such works impact riparian owners and can sometime result in flooding. The Act does not require 100% consent from riparian owners but, rather, the Act creates mechanisms to compensate affected landowners for the impacts arising from drainage works.
Subsequent to that telephone conference call, the Ministry took the position that location approval would not be granted without the consent of 100% of the riparian owners.
At some later time, while the LRIA approval process was still underway, the Ministry advised the Engineer that it required detailed plans and specifications for the dam (spillway). Given that the Ministry had advised the Engineer that the process involved two stages and given that the Municipality’s application was for location approval only, that later advice was confusing and contradictory.
During cross-examination by the Municipality’s lawyer, the Ministry witness confirmed that in the context of power generation dams, the utility companies always seek location approval first and not expend all the time and money associated with detailed plans and specifications. He explained the reason was that it would be a waste of money to do detailed engineering until the location was approved. The Ministry’s witness was unable to provide an answer that satisfied the Tribunal as to why that rationale would not apply equally in the present circumstances. The Ministry witness was unable to provide an answer that satisfied the Tribunal as to why that did not represent an inconsistency in processing the Municipality’s application.
During the summer of 2006, the Engineer attended at a community meeting attended by many landowners on Deer Lake as well as representatives of the Ministry. At that meeting the Engineer gave an overview of the proposed dam (spillway) and his best estimate of the costs associated with construction and how those construction costs would be shared through a proposed assessment schedule. Part of the costs (approximately $30,000) was proposed to be assessed against lands in the upper watershed that were Crown lands.
At some point while the location approval was pending, the Ministry staff engaged the Engineer about his proposed assessment of $30,000 against Crown lands. The Engineer responded to explain that under the Act, all lands in the watershed would have an assessment toward the costs of the project. Ministry staff then replied arguing that the Crown land would receive no benefit from the drainage project and it was a “stretch to use the Drainage Act to fund the project” and that he would recommend that the Ministry object to the project. That same Ministry representative later communicated that “Randy Morrison and I have made it very clear from the outset that MNR will in no way be funding this project, including Drainage Act levies.” These communications appeared in written e-mail form between the Ministry and the Engineer.
The Engineer also testified that he had been advised by Sid Vander Veen of the Ministry of Agriculture, Food and Rural Affairs that the MNR had advised him that they were considering withholding location approval for the dam (spillway) because there was to be an assessment against Crown lands upstream in the watershed. That advice the Engineer received, while hearsay, was confirmed in a memo the Engineer sent to the Municipality on February 19, 2008. The Tribunal can accept hearsay evidence and does so in this case. That hearsay communication is consistent with the tone of the written communications from the Ministry related to the Engineer’s proposed assessments.
While it is not an issue that the Tribunal needs to decide in this case, we do observe that the Ministry focus on proposed assessments may have been misplaced. The Engineer’s statutory duty in a drainage project under the Act includes making the assessments referred to; however, it is ultimately the Municipality pursuant to a by-law that imposes the assessment which then acquires priority lien status just like municipal property taxes2. In addition, subsection 61(5) of the Act confirms that assessments under the Act apply; even to land that is otherwise exempt from taxation under the Assessment Act.
Under the Assessment Act, all the land of the Crown is exempt from municipal taxation.
However, section 61 of the Act sets out who is responsible for paying the assessments (our emphasis added). If the Crown had signed a petition for drainage, then subsection 61(6)(a) confirms that the Crown would be liable to pay any assessment. However, if the Crown had not signed a petition for drainage, section 61(6)(c) suggests that an assessment against Crown land would be paid by “the municipality that imposed the assessment” (our emphasis added).
Most of the communications about the proposed assessments and the position of the Ministry over the assessments took place between Ken Smart and Phil Hall of the Ministry. Ken Smart testified during the hearing.
The Municipality summoned Phil Hall who, by the time of the hearing, was retired from the Ministry. The Municipality faced some challenges trying to serve the summons on Phil Hall. Mr. Hall had actual notice that the Municipality wished to summons him to the hearing. He had been advised of that fact by his former employer. He was aware that a registered letter with the summons awaited him at the post office. He was aware that his presence had been summoned by a telephone call he had from an OPP officer. He also spoke with counsel for the Ministry who advised him that she did not need his presence for her case and that if he had not been formally served he was under no obligation to attend the hearing.
The Tribunal would have been much better positioned to make determinations about those exchanges had Phil Hall been present to explain. In the absence of Phil Hall’s explanations, we accept the Engineer’s evidence on those issues.
We conclude that the Ministry tied its location approval of the proposed dam (spillway) to the Engineer’s proposed assessments under the Act.
The Tribunal finds as a fact that the Ministry’s communications about the LRIA approval with the Engineer were confusing and inconsistent.
The Tribunal finds as a fact that the Ministry’s communications about the LRIA approval mislead the Engineer.
The Tribunal finds as a fact that the Ministry tied its approval location under the LRIA to the Engineer’s proposed assessments under the Act.
The Tribunal finds as a fact that the confusing and inconsistent and misleading communications from the Ministry resulted in additional time and expense by the Engineer.
The Tribunal finds as a fact that the Ministry tying its approval location under the LRIA to the Engineer’s proposed assessments under the Act to have resulted in wasted time and expense by the Engineer.
In all these circumstances, the Tribunal finds that the Engineer did have a good faith basis for his view that he had received conflicting statements from the Ministry about location approval, riparian owners’ rights, the requirement for plans and specifications, and the Ministry’s tying location approval to the proposed assessments.
There was no evidence that satisfied the Tribunal that the Engineer’s determination that the Ministry should pay 1/3 of the “fees and other charges” was rash or motivated by vindictiveness or improper considerations. The Engineer was eminently qualified and the Tribunal was satisfied that he exercised a cautious and reasoned approach to his determination under section 40 of the Act.
It was evident from his section 40 report and his oral evidence that he experienced a high level of frustration pursuing location approval from the Ministry between 2005 and 2013.
That frustration is understandable since the essence of the drainage project was to construct a permanent, publicly owned and maintained spillway in the same location where a beaver dam had existed for more than 50 years and had acted as a spillway outside of public ownership and with no maintenance. The end result of the project according to the Engineer would have been a stable water level for the residents of Deer Lake, improved drainage outlet for the upstream properties and better drainage for municipal roads. The end result according to one witness, a septuagenarian who had resided on Deer Lake her entire life, was the replacement of the beaver dam, improved water levels and quality in the Deer Lake and improved fish habitat.
The Engineer’s evidence convinced the Tribunal that despite his frustration, that did not influence his determination of the apportionment of the “fees and other charges”.
Therefore, in the Tribunal’s view, the Engineer applied his skill, knowledge, judgment and ability, honestly and faithfully, and without fear of, favour to or prejudice against any person when arriving at his determination of the “fees and other charges” under section 40 of the Act and in his determination that 1/3 of that amount should be paid by the Ministry of Natural Resources.
ORDER OF THE TRIBUNAL
The Tribunal orders as follows:
The appeal by the Ministry of Natural Resources is dismissed.
The Engineer’s Section 40 Report is upheld as filed.
The Minister of Natural Resources shall pay to the Municipality the amount of $30,142.46.
The decision of the Tribunal is without prejudice to any future petition for similar work.
This panel will remain seized of this matter until the costs of the appeal have been determined.
In the event the parties are unable to agree on costs of the appeal within 15 days of these reasons, the parties shall exchange and file with the Tribunal written cost submissions within 25 days of these reasons.
Dated at Brampton, Ontario this 10th day of April, 2014
1 Subsection 8(1) of the Act
2 Section 61, Drainage Act