Court of Appeal for Ontario

Date: February 22, 2019

Docket: C65608

Judges: Pepall, Trotter and Harvison Young JJ.A.

Between

Town of Cobalt Applicant (Appellant)

and

Township of Coleman Respondent (Respondent)

Counsel

Michael F. Sirdevan, for the appellant

Raivo Uukkivi and Adrianna Pilkington, for the respondent

Heard: February 8, 2019

On appeal from: The judgment of Justice James A.S. Wilcox of the Superior Court of Justice, dated June 14, 2018, with reasons reported at 2018 ONSC 3713, 76 M.P.L.R. (5th) 166, and the order dated September 10, 2018, with reasons reported at 2018 ONSC 5297.

Trotter J.A.:

A. Introduction

[1] This appeal concerns a tract of land ("the property") situated in the Township of Coleman ("Coleman"), in the District of Timiskaming. The property is owned by the nearby Town of Cobalt ("Cobalt"). Recently, Cobalt has been using the property to conduct a large-scale aggregate extraction operation. Coleman objects to this use, alleging that it is not compliant with its current zoning by-law.

[2] Cobalt brought an application seeking a declaration that its use of the property for aggregate extraction is a permitted use. The application was dismissed. The application judge found that the extraction operation is not a permitted use under Coleman's zoning by-law and is not a legal non-conforming use pursuant to s. 34(9) of the Planning Act, R.S.O. 1990, c. P.13. In a separate ruling, he awarded Coleman costs, on a partial indemnity scale, in the amount of $85,000 (inclusive of fees, disbursements and taxes).

[3] Cobalt appeals from both orders.

B. Background

(1) The Property and its Historical Use

[4] The property is 114.67 acres in size. A road runs through the property, cutting it into west and east portions, which are zoned differently. The property was transferred by the Province of Ontario to Cobalt on July 4, 1972 by Letters Patent. The Letters contained the following restriction: "IT IS A CONDITION of these Letters Patent that the Land shall be used only as a municipal park." This restriction was removed in 2002.

[5] From 1972 to 1997, Cobalt used the property as a municipal park and campground, known as Sharpe Lake Park. While there may have been some quarrying on the property prior to it being acquired by Cobalt, the extent of this activity was unclear. Nevertheless, it had ceased by 1970. As discussed below, any aggregate extraction after 1970 was secondary and incidental to the primary use of the property as a park. The aggregate was used to service the needs of the park, such as creating an entrance road, parking areas, internal roads and camp sites, and for other municipal uses in Cobalt outside of the park (i.e., winter sand).

[6] Following the closure of the park in 1997, Cobalt was unsure about what it wanted to do with the property. At one point, it considered selling it. In 2013, Cobalt entered into an agreement with Miller Paving Ltd. ("Miller") for Miller to extract aggregate from the property. A large-scale aggregate extraction operation is currently ongoing.

(2) Applicable Zoning By-Laws

[7] Coleman passed its first zoning by-law in 1985 (85-9). Under this by-law, the entirety of the property was zoned as "Open Space", with specified residential and non-residential uses. Coleman passed another zoning by-law in 2006 (06-01), replacing the 1985 by-law. Under the 2006 by-law, the western part of the property is zoned as "Development" and only permitted "existing non-residential uses" in the Development zone. The eastern part of the property is zoned "Shoreline Residential". The only permitted non-residential use is "a marine facility". This is the portion of the property where commercial aggregate extraction currently takes place.

(3) The Application Judge's Reasons

[8] The application judge provided detailed reasons for his decision. I review only those parts of his decision that are necessary to dispose of this appeal.

[9] The application judge held that the 2006 by-law does not permit the operation of a pit or quarry on either of the zoned parts of the property.

[10] After conducting a thorough review of the historical use of the property, the application judge explained why Cobalt failed to establish that its current use of the property is a legal non-conforming use. In 1970, before the property was acquired by Cobalt, there was some indication of quarrying having taken place at an earlier time, but this activity had ceased. Referring to the meagre evidence concerning "unworked and terminated" gravel pits, the application judge said, at para. 33: "When they were used, by whom, to what extent they were used, and for what purpose are unknown."

[11] The application judge reviewed Cobalt's plans to develop the property after the park closed in 1997. Initially, at least, commercial aggregate extraction was not on Cobalt's radar. By way of example, in its 2001 "Sharpe Lake Proposal", the Cobalt Economic Development and Planning Committee made no mention of a pit or quarry being on site. A subsequent appraisal obtained by Cobalt for the purpose of potentially selling the property did not mention workable gravel pits or extractive activity. Affidavits from long-time residents, some of whom were involved in municipal affairs, were collectively equivocal. As the application judge said, at para. 42:

… the affidavits were contradictory as to whether there had been a pit on or extraction from the property. What they reveal is that, if any extraction took place, it was small scale, such that some people were not aware of it, and [it] was done for purposes related to the park or for other municipal purposes. Furthermore, I find that the evidence shows that the extraction was done … in what is now the R4 [Shoreline Residential] zone.

[12] In reviewing correspondence between Cobalt and Coleman about the proposed use of the land, which included Coleman's opposition to aggregate extraction, the application judge referred to an August 23, 2005 letter from Cobalt asserting that there was an existing aggregate pit on the property, and that it appeared to be a legal non-conforming use. The application judge observed, at para. 53: "This appears to be the first time that Cobalt alleged there was an existing pit and that it qualified as a non-conforming use."

[13] Ultimately, the application judge found that there was no evidence of prior aggregate extraction in the Development zone. With respect to the Shoreline Residential zone, he held that there was evidence of "at least a minimal amount of historical extraction": at para. 55. This was sufficient to require an assessment to determine whether the current operation is a legal non-conforming use under s. 34(9) of the Planning Act.

[14] In undertaking the legal non-conforming use analysis, the application judge applied the relevant authorities, including the leading case of Saint-Romuald (City) v. Olivier, 2001 SCC 57, [2001] 2 S.C.R. 898. He concluded that Cobalt failed to discharge its onus of proving that the commercial extraction operation is a legal non-conforming use.

[15] The application judge found that historically there was "limited and small scale" extraction for "municipal purposes" that was conducted on "a small part of the whole property, leaving the rest essentially untouched and available for uses such as the park": at para. 66. He concluded that: "The use of the property for extraction was secondary and incidental. The essential character of the property was preserved."

[16] The application judge contrasted this historical use with the current commercial operation, which he characterized as "consuming the property". Importantly, applying Saint-Romuald, he found, at para. 67, that the present use extends beyond a mere intensification of a pre-existing use: "It is a use of a different kind. It is not just a reasonable evolution of a prior activity."

[17] Lastly, he concluded that the affidavit evidence established "the diminution of people's enjoyment of the property and of Sharpe Lake itself": at para. 68.

[18] As the successful party, Coleman sought costs on a full indemnity scale, in the amount of $199,329.84. The application judge accepted Cobalt's submission that Coleman was attempting to recoup fees over the full course of the long-standing dispute between the parties. Based on the costs associated only with the application, he awarded costs of $85,000, on a partial indemnity scale.

C. Analysis

(1) The Legality of the Aggregate Extraction Operation

[19] The appellant accepts that the application judge properly identified the legal principles concerning legal non-conforming uses. However, it alleges that the application judge failed to properly apply those principles to the facts of this case. I disagree.

[20] The appellant contends that the application judge erred by failing to first determine whether the activity presently conducted on the property is permitted by the 2006 by-law before moving to the question of whether the activity is a legal non-conforming use. He made no such error. As noted in para. 7 of these reasons, the only permitted non-residential use in the Shoreline Residential zone is "a marine facility". In the Development zone, the by-law permits only "existing non-residential uses". Thus, interpreting the by-law leads directly to an examination of the historical use of the property. The application judge's reasons at paras. 25 and 69 directly conclude that the current extraction activity is not permitted by the 2006 by-law based on his findings regarding the historical use of the property, and the language of the by-law.

[21] On the issue of whether the extraction activity is permitted as a legal non-conforming use, this case involves a straightforward application of Saint-Romuald. Cobalt had the onus of establishing the requirements for a legal non-conforming use: see Feather v. Bradford (Town), 2010 ONCA 440, 268 O.A.C. 239, at paras. 26-27; and Lee v. 1435375 Ontario Ltd., 2013 ONCA 516, 310 O.A.C. 187, at para. 46. The application judge found that Cobalt failed to do so.

[22] As the application judge recognized, the historical record was far from clear. There were many uncertainties and unanswered questions. There was an evidentiary basis for the application judge to find that, when the 1985 by-law was passed, the essential purpose of the property was its use as a municipal park. Any aggregate extraction was ancillary to this purpose.

[23] There was evidence that, once the property was no longer used as a park (post-1997, but prior to the 2006 by-law), Cobalt may have expressed a desire to conduct aggregate extraction. However, it is not the intended use of a property that is important. To prove a legal non-conforming use, it must be shown that the land was actually used for this purpose. As Binnie J. explained in Saint-Romuald, at para. 5: "It does not protect a potential or contemplated use that has never materialized...The acquired right is no more than a right to carry on using the land for the purpose to which it was in fact previously being put" (emphasis in original).

[24] There is no basis to disturb the application judge's findings that, until 2013, any aggregate extraction that had occurred on the property was minor and incidental, being ancillary to the essential character of the property as a municipal park and campground. On the record before him, the application judge was entitled to reach this conclusion. In doing so, he committed no palpable and overriding error.

[25] The central issue in this case is whether the commencement of a large-scale commercial extraction operation was a "mere intensification" of an existing use or use of a different kind. As Binnie J. held in Saint-Romuald, at para. 25: "In general, merely continuing the precise pre-existing activity, even at an intensified level, is clearly protected, but the intensification may be of such a degree as to create a difference in kind." In more general terms, Binnie J. explained, at para. 34:

The Court's objective is to maintain a fair balance between the individual landowner's interest and the community's interest. The landowner overreaches itself if (i) the scale or intensity of the activity can be said to bring about a change in the type of use, as mentioned above, or if (ii) the addition of new activities or the modification of old activities (albeit within the same general land use purpose), is seen by the court as too remote from the earlier activities to be entitled to protection, or if (iii) the new or modified activities can be shown to create undue additional or aggravated problems for the municipality, the local authorities, or the neighbours, as compared with what went before. The factors are balanced against one another. [Emphasis added.]

Binnie J. added that this assessment must be grounded in "objective facts": at para. 39.

[26] The application judge's conclusion that Cobalt had failed to discharge its onus turned on item (i), and to a lesser degree item (iii), in the above-quoted passage from Saint-Romuald. The evidentiary record permitted the application judge to find that the change in use of the property – from a municipal park and campground (with some incidental extraction of sand and gravel) to a large-scale commercial extraction operation – was "a change in the type of use". He also observed that the change impacted on the community in an adverse way. Although the evidentiary foundation for this second finding was not nearly as robust, I am not able to conclude that the application judge erred in the balancing required by Saint-Romuald.

[27] The situation in this case is analogous to the example provided by Binnie J. at para. 25 of Saint-Romuald:

A family farm which has a few pigs on the fringe of a town may continue as a legal non-conforming use, but the result may be otherwise if it is sought to expand its pork operation into a "factory in the country" type intensive pig farming. While in one sense the "use" has continued, in another sense its character has been so altered as to become, in terms of its impact on the community, an altogether different use. [Emphasis in original.]

This example helps to illustrate where the line should be drawn. A determination of whether there is a change in the type of use is not a matter of simply identifying the precise pre-existing use. The character of that use must also be considered. Just as a family pig farm expanded into a pork "factory in the country" becomes a different use, in this case too, the expansion from incidental extraction for municipal purposes to large-scale commercial extraction has altered the character of the use such that it has become a different use altogether.

[28] The application judge did not err in concluding that the extraction operation is not a permitted use under Coleman's zoning by-law and is not a legal non-conforming use under the Planning Act. I would dismiss the appeal from the application judge's refusal of Cobalt's request for a declaration.

(2) Appeal from the Costs Order

[29] As noted above, the application judge awarded Coleman $85,000 in costs, inclusive. Cobalt argues that the proper award is in the range of $40,000.

[30] I am not persuaded that the application judge made any error in principle, or that the costs order is plainly wrong: see Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 27.

[31] Although the award was substantial, approximately $12,000 was consumed by disbursements. The fees claimed, when considered on a partial indemnity scale, were not disproportionate in the circumstances. I note that the decision resolved a long-standing dispute with a great deal at stake, both monetarily for Cobalt and to the community of Coleman. The application judge's findings and conclusions on the issue of costs are entitled to deference on appeal: see Boucher v. Public Accountants Council for the Province of Ontario, 71 O.R. (3d) 291, at para. 19. There is no reason to interfere.

D. Disposition

[32] I would dismiss the appeal. The parties agreed on the quantum of costs payable to the successful party on appeal. Accordingly, I would award costs to Coleman in the amount of $25,000, inclusive of disbursements and applicable taxes.

Released: February 22, 2019

"Gary Trotter J.A."

"I agree. S.E. Pepall J.A."

"I agree. A. Harvison-Young J.A."