COURT FILE NO.: 745/2000

DATE: 20040112

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

THEN, COSGROVE and THOMAS JJ.

B E T W E E N:

South Etobicoke Residents and Ratepayers Association Inc.

Applicant

Rodney V. Northey, for the South Etobicoke Residents and Ratepayers Association Inc.

• and -

The Ontario Realty Corporation, The Honourable Chris Hodgson (Chair of the Management Board of Cabinet), The Lieutenant Governor in Council, and

The Director, Air Approvals, of the Ministry of the Environment

P. David McCutcheon and Carlton D. Mathias, for the Ontario Realty Corporation

William J. Manuel, for the Director

• and -

1385521 Ontario Limited (“1385521”) and 1177284 Ontario Limited (“1177284”)

Ronald B. Moldaver, for 1385521 and 1177284 Ontario Limited

Respondents

HEARD: September 9 and 10, 2002

THEN J.:

Introduction

[1] The north-east corner of Evans Avenue and Horner Avenue in the City of Toronto is the site of the former Lakeshore Psychiatric Hospital Cemetery. The property, which is owned by the Province, has been used as a cemetery since 1892. In 1998, the Province decided to put the land up for sale. After a tender process, the Province entered into an agreement of purchase and sale with 1177284 Ontario Limited (“1177284” or the “Purchaser”). The agreement contemplates the construction and operation of a crematorium and columbarium on the site.

[2] The South Etobicoke Residents and Ratepayers Association (“SERRA”) – a group of concerned citizens and businesses – opposes the sale. Among other things, they are concerned about the environmental impact of having a crematorium in their neighbourhood.

[3] In this application, SERRA seeks to challenge actions by the Ontario Realty Corporation (the “ORC”) and the Director of Approvals in the Ministry of Environment (the “MOE”) relating to the sale of the property. In particular, it seeks the following orders from this Court:

(1) an order declaring that the environmental assessment conducted by the ORC in February 1998 does not comply with applicable class environmental requirements and thus the Environmental Assessment Act, R.S.O. 1990, c. E-18 (the “EAA”);

(2) an order prohibiting the sale prior to compliance with the EAA;

(3) an order quashing the decision of the MOE Director of Approvals to issue an air approval for the proposed crematorium;

(4) an order for costs.

[4] For the reasons set out below, I would dismiss SERRA’s application.

FACTS

The Parties

[5] As noted above, SERRA is a group of concerned citizens. The not-for-profit corporation has approximately 250 members, including local businesses and ratepayers. Prior to SERRA’s incorporation, many members participated in an unincorporated association known as the Concerned Citizens of South Etobicoke (“CCSE”).

[6] Mr. Steve Klose is MOE’s Director of Approvals. He granted a certificate of air approval, pursuant to s. 9 of the Environmental Protection Act, R.S.O. 1990. c. E19 (the “EPA”), allowing for the operation of a crematorium at the Evans/Horner Ave. site.

[7] The ORC is a Crown corporation. It was established in 1993 with a mandate to manage the Government of Ontario’s real estate assets through facilities management, real estate services, project management of construction activities, and portfolio management. The ORC is an agency of the Management Board Secretariat (“MBS”).

[8] 1177284 is an Ontario corporation controlled by Mr. George Damiani. 1177284 and 1385521 Ontario Limited (“1385521” or the “Purchaser”) are related companies. 1177284 assigned its rights under the agreement of purchase and sale with the Province to 1385521.

Sale of the Property

[9] The sale property consists of 1,512 recorded burial sites with 1,337 vacant burial plots. It became inactive as a cemetery in 1874 when the Lakeshore Psychiatric Hospital closed. MBS has maintained the cemetery since that time.

[10] In January and early February 1998, the Province published a notice offering to sell the property “as is.” In February 1998, the ORC completed a “consultation and documentation record” as required under the “class assessment” process provided for under the EAA.

[11] On April 14, 1998, the Province (technically, Her Majesty the Queen, In right of Ontario, as represented by the Chair of the Management Board of Cabinet) and 1177284 entered into a conditional agreement of purchase and sale (the “Sale Agreement”).

[12] The recitals of the Sale Agreement acknowledge that “the Purchaser has agreed to purchase the Lands from the Vendor for the purpose of operating a cemetery, crematorium and columbarium on the terms and conditions set out in this Agreement.” Clause 2(k) of the Sale Agreement defines “Proposed Use” as “the use of the Lands by the Purchaser as a cemetery, crematorium and columbarium and all ancillary uses including a chapel and parking.”

[13] Clause 8 of the Sale Agreement provides a number of Purchaser’s conditions, which may be waived or fulfilled by the Purchaser within certain time limits. These include:

(1) that the Purchaser obtain all necessary approvals under the Planning Act, R.S.O. 1990,. C.P.13, including official plan and zoning by-law amendments and site plan approval for the “Proposed Use”;

(2) that the Purchaser obtain necessary approvals under the Cemeteries Act (Revised), R.S.O. 1990, c. C., for the “Proposed Use”; and

(3) that the Purchaser obtain all necessary MOE approvals.

[14] In clause 8(2) of the Sale Agreement, the Province agrees to execute all necessary authorizations and documents required for the Purchaser to pursue necessary approvals. Clause 9(a) of the Sale Agreement provides that within 60 days from the date all of the Purchaser’s conditions are waived or fulfilled, the Province shall obtain the approval of the Lieutenant Governor in Council, which is required for the sale of Crown land.

[15] As noted above, the Sale Agreement was assigned from 1177284 to 1385521. The assignment agreement was made as of November 15, 1999 with the consent of the Province.

[16] The date for fulfilling the Purchaser’s conditions was extended a number of times by 1177284 and 1385521. On October 13, 2000, the Purchaser delivered a Notice of Waiver of Purchaser’s Conditions.

[17] In the meantime, the Purchaser submitted a rezoning application to permit the construction of a crematorium, a columbarium, and a chapel on the site. After public consultation (which is detailed below) and consideration by the Etobicoke City Council, the City of Toronto (the “City’) approved the rezoning application in April 2000.

[18] SERRA appealed the City’s rezoning decision to the Ontario Municipal Board (the “OMB”). In reasons for decision issued on January 23, 2001, the OMB denied the appeal. Leave to appeal to the Divisional Court was denied by this Court on June 27, 2001.

[19] The Purchaser also sought necessary MOE air approvals. The Purchaser submitted an application to the MOE on February 21, 2000. The Director approved the application in May 2000.

[20] In summary, necessary approvals have now been obtained from the City, and the MOE and the Purchaser has delivered a Notice of Waiver of Purchaser’s Conditions. However, the closing of the sale has been delayed by this litigation.

ANALYSIS – DIRECTOR OF AIR APPROVALS

Director’s Air Approval

[21] Section 9 of the EPA provides as follows:

9. (1) No person shall, except under and in accordance with a certificate of approval issued by the Director,

(a) construct, alter, extend or replace any plant, structure, equipment, apparatus, mechanism or thing that may discharge or from which may be discharged a contaminant into any part of the natural environment other than water; or

(b) alter a process or rate of production with the result that a contaminant may be discharged into any part of the natural environment other than water or the rate or manner of discharge of a contaminant into any part of the natural environment other than water may be altered.

(2) The Director may require an applicant for a certificate of approval under subsection (1) to submit any plans, specifications and other information and to carry out and report on any tests or experiments relating to the plant, structure, equipment, apparatus, mechanism or thing or to the methods and devices to be employed to control or prevent the discharge of any contaminant into any part of the natural environment other than water and, subject to subsection (4), the Director may issue a certificate of approval.

(4) The Director may refuse to issue a certificate of approval or may issue a certificate of approval on such terms and conditions as the Director considers necessary,

(a) to ensure that any construction, alteration, extension, replacement, use or operation of a plant, structure, equipment, apparatus, mechanism or thing referred to in clause (1) (a) or that any alteration of a process or rate of production referred to in clause (1) (b) will result in compliance with this Act and the regulations and any order or approval hereunder; or

(b) on probable grounds, to prevent or alleviate an adverse effect.

(7) No person shall use or operate a plant, structure, equipment, apparatus, mechanism or thing for which a certificate of approval is required under clause (1) (a) unless the required certificate of approval has been issued and complied with.

[22] The Director issued an air approval, dated May 29, 2000. It approved the Purchaser’s application to operate two cremators, to perform a total maximum of 12 cremations per day, subject to certain conditions.

[23] SERRA argues that the Director erred in a number of respects in issuing the approval. Its main concerns are (1) that the Director failed to address the issue of PM10 and PM2.5 (or fine particulate) emissions; (2) that the Director failed to consider Canada-wide standards for the emission of dioxins and furans; (3) that the Director failed to assess the “quality of the data” used to identify the maximum emission scenario; (4) that the Director failed to restrict the operation of the crematorium on smog alert days; and (5) that the Director failed to consider requiring pollution control equipment to reduce harmful air emissions.

[24] SERRA also contends that the Director failed to meet applicable notice requirements under the Environmental Bill of Right, 1993, S.O. 1993, Ch. 28 (the “EBR”). I will first consider the Director’s decision to issue an air approval pursuant to s. 9 of the EPA, and will then examine the EBR notice issue.

Decision to Issue Air Approval

[25] The standard of review applicable to the Director’s s. 9 decision on this issue must be based on a functional and pragmatic approach with a consideration of four factors: any privative clause, the expertise of the decision maker, the purpose of the provision and the legislation, and the nature of the question: Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982.

[26] SERRA contends that the appropriate standard of review is correctness because the Director failed to exercise his jurisdiction by ignoring the contaminants PM10 and PM2.5. In contrast, the MOE contends that a functional and pragmatic analysis points to a patent unreasonableness standard.

[27] Considering the four factors from Pushpanathan, I agree that the Director’s decision whether or not to grant an air approval pursuant to s. 9 of the EPA is entitled to considerable deference.

[28] Examining the legislative context, the purpose of the EPA is “to provide for the protection and conservation of the natural environment”: EPA, s. 2.

[29] Section 9 of the EPA establishes an approval process for the discharge of contaminants into the natural environment by the Director.

[30] In conducting the approval process, the Director relies upon the technical expertise of the Air and Noise Unit (“ANU”) of the Certificate of Approval Review Section of the Environment Assessment and Approvals Branch. The ANU reviews and processes applications prior to submitting them for the Director’s approval pursuant to s. 9 of the EPA. Section 9 applicants are expected to provide documentary support in the form of technical studies or reports demonstrating that the proposed equipment, as designed, would be capable of consistent compliance with existing MOE legislative, regulatory, policy and procedural requirements. The recommendations of the ANU engineering staff to approve or deny the application, along with a draft certificate of approval, are passed on to the Director for a final decision on approval.

[31] Section 9 gives the Director broad powers to (1) grant a certificate of approval, (2) refuse a certificate of approval, or (3) issue a certificate with conditions to ensure compliance with the EPA and applicable regulations, or to prevent or alleviate an “adverse effect” on the environment.

[32] In making a decision under s. 9, the Director is therefore required to decide questions of mixed fact and law. These are questions routinely encountered and applied by the Director.

[33] The EPA permits an applicant for a certificate of approval to seek a review of the Director’s decision by the Environmental Review Tribunal (the “ERT”), which is an expert tribunal:

139. (1) When the Director,

(a) refuses to give his or her approval of plans and specifications;

(b) requires a condition precedent to the giving of his or her approval;

(c) refuses to issue a certificate of approval or a provisional certificate of approval;

(d) refuses to renew a certificate of approval or a provisional certificate of approval; or

(e) suspends or revokes a certificate of approval or a provisional certificate of approval,

the Director shall serve notice upon the applicant or holder, as the case may be, together with written reasons therefor, and the applicant or holder may, by written notice served upon the Director and the Tribunal within fifteen days after the service of the notice, require a hearing by the Tribunal.

(2) When the Director,

(a) refuses to issue or renew or cancels or suspends a licence or permit;

(b) imposes terms and conditions in issuing a licence or permit or certificate of approval or provisional certificate of approval;

(c) alters the terms and conditions of a certificate of approval, provisional certificate of approval, a licence or permit after it is issued; or

(d) imposes new terms and conditions to a certificate of approval,

the Director shall serve notice together with written reasons therefor upon the applicant or the person to whom the licence or permit or certificate of approval or provisional certificate of approval is issued, as the case may be, and the applicant or person may, by written notice served upon the Director and the Tribunal within fifteen days after the service of the notice, require a hearing by the Tribunal.

144. (1) A hearing by the Tribunal shall be a new hearing and the Tribunal may confirm, alter or revoke the action of the Director that is the subject-matter of the hearing and may by order direct the Director to take such action as the Tribunal considers the Director should take in accordance with this Act and the regulations, and, for such purposes, the Tribunal may substitute its opinion for that of the Director.

[34] From there, a party may appeal a decision of the ERT to the Divisional Court on a question of law, or to the Minister on any matter other than a question of law:

144. (2) Any party to a hearing before the Tribunal under this section may appeal from its decision or order on a question of law to the Divisional Court in accordance with the rules of court.

(3) A party to a hearing before the Tribunal may, within thirty days after receipt of the decision of the Tribunal or within thirty days after final disposition of an appeal, if any, under subsection (2), appeal in writing to the Minister on any matter other than a question of law and the Minister shall confirm, alter or revoke the decision of the Tribunal as to the matter in appeal as the Minister considers in the public interest.

[35] Appeal rights for non-applicants (i.e., interested members of the public) are provided for by the EBR. Section 38 of the EBR permits any resident of Ontario to seek leave to appeal from a decision whether or not to implement a proposal for a Class I Instrument of which notice is required under s. 22 of the EBR (which is the situation in question):

38. (1) Any person resident in Ontario may seek leave to appeal from a decision whether or not to implement a proposal for a Class I or II instrument of which notice is required to be given under section 22, if the following two conditions are met:

39. The person seeking leave to appeal has an interest in the decision.

40. Another person has a right under another Act to appeal from a decision whether or not to implement the proposal.

(3) For the purposes of subsection (1), the fact that a person has exercised a right given by this Act to comment on a proposal is evidence that the person has an interest in the decision on the proposal. ….

41.Leave to appeal a decision shall not be granted unless it appears to the appellate body that,

(a) there is good reason to believe that no reasonable person, having regard to the relevant law and to any government policies developed to guide decisions of that kind, could have made the decision; and

(b) the decision in respect of which an appeal is sought could result in significant harm to the environment.

43. There is no appeal from a decision whether or not to grant an application for leave to appeal.

44. (1) Except as provided in section 84 and subsection (2) of this section, no action, decision, failure to take action or failure to make a decision by a minister or his or her delegate under this Act shall be reviewed in any court.

Exception

(2) Any person resident in Ontario may make an application for judicial review under the Judicial Review Procedure Act on the grounds that a minister or his or her delegate failed in a fundamental way to comply with the requirements of Part II respecting a proposal for an instrument.

[emphasis added]

[36] Taking into account the general scheme of the EPA, the Director’s broad powers under s. 9, applicable appeal provisions under the EPA and EBR, the Director’s expertise with respect to the matter at issue, and the nature of the decision under review, the Director’s decision to issue the air approval is entitled to considerable deference by this Court. In my view, the appropriate standard of review is patent unreasonableness. Having considered the detailed submissions made by the applicant, I am not convinced that the Director acted patently unreasonably or even unreasonably if that were the standard of review.

[37] The applicant submits that the Director ignored a number of pertinent considerations in approving the Purchaser’s air approval application. In support of this contention, the applicant tendered an affidavit by Dr. George D. Thurston, an Associate Professor of the New York University School of Medicine and its Department of Environmental Medicine. Dr. Thurston’s affidavit details a number of technical requirements that he says were not taken into account by the Director and ANU staff.

[38] A considerable amount of the evidence tendered by Dr. Thurston deals with concerns about the emission of fine particulate matter, PM2.5 and PM10. Dr. Thurston’s concerns may be legitimate from a scientific perspective and, indeed, it may be desirable for the Province to impose standards regarding particulate emissions. However, the issue in this case is not what might be desirable from an environmental perspective but, rather, whether the Director properly applied existing legislative, regulatory or policy concerns. In this regard, I affirm the approach taken by the ERT in Burton v. Ontario (Ministry of the Environment), [2001] O.E.R.T.D. No. 23 at para 20-22.

The Applicant submits that the regulations in American states where similar generating plants are operating are more restrictive than in Ontario. Provincially-authorized activities that take place in Ontario are governed by Ontario legislation. This C of A is for a facility located in Ontario. The C of A has been granted by a Director who is responsible for acting under the current legislation in Ontario. While the Applicant may feel that regulations from other jurisdictions are better or more effective than those currently in place in Ontario, such legislation does not apply here.

My experience has been that technology is constantly changing. Similarly, government regulations have changed in an attempt to keep pace with technological changes.

If the Applicant believes the regulations used in other jurisdictions should be adopted here, he should make such proposals to those who establish the regulations, not to those who are charged with enforcing them.

[emphasis added]

[39] In my view, the Director’s failure to consider PM2.5 and PM10 emissions was not patently unreasonable since, at the time, the MOE had yet to implement standards governing fine particulate emissions as part of its s. 9 approval process.

[40] Dr. Thurston also asserts that there is a need to assess the predicted emission of contaminants from a proposed facility in combination with the background concentration of those contaminants in the atmosphere during the technical review process. Again, Dr. Thurston’s recommendations may be desirable from an environmental perspective. However, I accept the Director’s evidence that, at the time in question, Ontario had proposed, but not yet adopted, a new dispersion model that could make the assessment of background concentration a requirement of the s. 9 approval process. Accordingly, it was not patently unreasonable for the Director not to consider background air contaminants in conducting his s. 9 review.

[41] Dr. Thurston states that it is desirable to require pollution control devices to be installed on cremators similar to those required to meet the MOE requirements for biomedical waste incinerators or hazardous waste incinerators. Once again, Dr. Thurston may be right from a scientific perspective and such devices may be desirable from an environmental policy standpoint. However, in my view, the Director was not unreasonable in failing to consider requirements for biomedical waste or hazardous waste incinerators, since this was an application for a cremator and the MOE had separate requirements for cremators.

[42] Dr. Thurston put forward an interpretation of the supplied emission estimates that would predict a higher emission rate than the interpretation employed by ANU staff. To address this issue, the Director imposed a condition requiring source testing so that if the equipment fails to meet applicable requirements, appropriate regulatory action will be taken. Again, I find the Director was not patently unreasonable in his approach.

[43] Finally, I turn to the applicant’s submission that the Director erred in not imposing a condition prohibiting the operation of the crematorium on smog alert days. In my view, the Director was not patently unreasonable in refusing to impose such a condition. There is evidence that the Director specifically averted to the smog alert issue and exercised his discretion not to impose specific conditions, given the Purchaser’s voluntary agreement not to operate the cremators on smog alert days and out of concerns regarding setting new precedents.

[44] In summary, the Director’s decision to issue the air approval was not patently unreasonable. However, that is not the end of the issue. SERRA raises a second issue: did the Director provide adequate notice under the EBR?

EBR Notice Requirements

[45] SERRA contends that, as a result of inadequate notice, it was deprived of the opportunity to either comment on the air application or seek leave to appeal the Director’s decision to the Environmental Review Tribunal (“ERT”) within the 15-day appeal period. It also reiterates its notice argument to counter the Director’s argument that SERRA’s application for judicial review constitutes a collateral attack on the Director’s decision and that SERRA ought to have brought an appeal under the EBR.

[46] The EBR provides a formal framework for the Government of Ontario to notify residents of Ontario about proposed legislation, policies, regulations and instruments that could have a significant environmental effect. Part II of the Act provides:

3. (1) This Part sets out minimum levels of public participation that must be met before the Government of Ontario makes decisions on certain kinds of environmentally significant proposals for policies, Acts, regulations and instruments.

(2) This Part shall not be interpreted to limit any rights of public participation otherwise available.

[47] Section 6 of the EBR establishes an environmental registry. Sections 22 and 27 require the Government to post notices of proposal and notices of decision on the registry:

22. (1) The minister shall do everything in his or her power to give notice to the public of a Class I…. proposal for an instrument under consideration in his or her ministry at least thirty days before a decision is made whether or not to implement the proposal.

(4) Notice under this section shall be given in accordance with section 27.

27. (1) Notice of a proposal under section…. 22 shall be given in the registry and by any other means the minister giving the notice considers appropriate.

(2) Notice of a proposal given under section…22 in the registry shall include the following:

1. A brief description of the proposal.

2. A statement of the manner by which and time within which members of the public may participate in decision-making on the proposal.

3. A statement of where and when members of the public may review written information about the proposal.

4. An address to which members of the public may direct,

i. written comments on the proposal, and

ii. written questions about the rights of members of the public to participate in decision-making on the proposal.

5. Any information prescribed by the regulations under this Act.

6. Any other information that the minister giving the notice considers appropriate.

Rights of participation

(3) A statement under paragraph 2 of subsection (2) shall include a description of the following rights of public participation in decision-making on the proposal:

1. The right to submit written comments in the manner and within the time specified in the notice.

2. Any additional rights of public participation provided under section 24.

3. Any additional rights of public participation prescribed by the regulations under this Act.

4. Any additional rights of public participation that the minister giving the notice considers appropriate.

[emphasis added]

[48] Section 35 and s. 36 of the EBR further require the Minister to take into account comments received from the public and to provide notice of any decision.

35. (1) A minister who gives notice of a proposal under section 15, 16 or 22 shall take every reasonable step to ensure that all comments relevant to the proposal that are received as part of the public participation process described in the notice of the proposal are considered when decisions about the proposal are made in the ministry.

36(2) As soon as reasonably possible after a decision is made whether or not to implement a proposal for an instrument in respect of which notice was given under section 22, the minister shall give notice to the public of the decision.

[49] Subsection 36(3) of the EBR specifies that notice of any decision is to be given in the registry or as the Minister considers appropriate, while s. 36(4) stiputes the information to be included in the notice:

(3) Notice under this section shall be given in the registry and by any other means the minister considers appropriate.

(4) The notice shall include a brief explanation of the effect, if any, of public participation on decision-making on the proposal and any other information that the minister considers appropriate.

[50] As I understand the applicant’s submission, SERRA does not take issue with the contents of the notice. Rather, it makes much of the fact that its members had difficulty utilizing the EBR registry and therefore did not have access to the notice of the application or the Director’s decision until after the appeal period expired. In support of its submission, SERRA tendered evidence that two of its members searched the EBR registry for notice of the air application, but could not find it despite using various search terms.

[51] The registry is Internet-based and has the same search capabilities as standard Internet search sites so that notices can be found by a number of search criteria such as dates, types of proposals or decisions, or ministry names. There is also the ability to search every word in every notice.

[52] As noted above, the Company filed its air application on February 21, 2000. The evidence shows that a MOE employee posted a notice of the application on the EBR’s electronic registry on February 23, 2000. The February 23rd notice stated that the 30-day comment period expired on March 24, 2000.

[53] The evidence also confirms that a MOE employee posted the appropriate notice of decision on the EBR registry on May 30, 2000. The notice of decision stated that a resident could seek leave to appeal the decision to the ERT within 15 days of the notice. It also stated that one comment was received from a member of the public during the comment period, and it explained how the Ministry considered the comment.

[54] In this case, SERRA had the same opportunity as every other member of the public to make submissions to the Director prior to his decision and to apply for leave to appeal the Director’s decision to the ERT. The MOE properly posted the notice on the electronic registry in accordance with s. 27 of the EBR. That SERRA members failed to, or were unable to, locate the notice because they were unfamiliar with the ERT search features or because they searched during the wrong period of time was not due to any fault of the Director or the MOE. In this regard, I note that one member of the public successfully found the February 23rd notice on the electronic registry using information that was publicly available at the time.

[55] In summary, I find that the Director’s approval of the Purchaser’s application was not patently unreasonable. Further, I find that there was no failure on the MOE’s or the Director’s part to provide adequate notice as required under the EBR. In light of these conclusions, it is unnecessary for this Court to deal with the Director’s submissions that SERRA’s application constitutes an impermissible collateral attack on the Director’s decision and should therefore be dismissed on that basis.

ANALYSIS OF ORC/MBS ACTIONS

The EAA and class environmental assessments

[56] I now turn to SERRA’s application to review the ORC’s actions relating to the sale of the cemetery. SERRA submits that the ORC did not meet applicable EAA requirements, including those under the class environmental assessment guidelines governing ORC undertakings.

[57] The purpose of the EAA, according to s. 2 of the Act, is the “betterment of the people of the whole or any part of Ontario by providing for the protection, conservation and wise management in Ontario of the environment.”

[58] Section 3 defines the application of the EAA:

3. This Act applies to,

(a) enterprises or activities or proposals, plans or programs in respect of enterprises or activities by or on behalf of Her Majesty in right of Ontario or by a public body or public bodies or by a municipality or municipalities;

(b) major commercial or business enterprises or activities or proposals, plans or programs in respect of major commercial or business enterprises or activities of a person or persons, other than a person referred to in clause (a), designated by the regulations;

(c) an enterprise or activity or a proposal, plan or program in respect of an enterprise or activity of a person or persons, other than a person or persons referred to in clause (a), if an agreement is entered into under section 3.0.1 in respect of the enterprise, activity, proposal, plan or program.

[emphasis added]

[59] The EAA therefore applies to undertakings “by or on behalf of Her Majesty in Right of Ontario” and other public bodies, major commercial enterprises designated by the regulations, and enterprises covered by special agreement.

[60] Part II.1 of the EAA provides for class environmental assessment (as opposed to individual environmental assessments, which are provided for in Part II of the Act).

[61] Subsection 13(3) of Part II.1 of the EAA states:

(3) No person shall proceed with an undertaking with respect to which an approved class environmental assessment applies,

(a) unless the person does so in accordance with the class environmental assessment; or

(b) unless the Minister gives his or her approval to proceed under section 9 or the Tribunal gives its approval under section 9.1.

[emphasis added]

[62] The term “undertaking” is defined in s.1 of the EAA:

"undertaking" means,

(a) an enterprise or activity or a proposal, plan or program in respect of an enterprise or activity by or on behalf of Her Majesty in right of Ontario, by a public body or public bodies or by a municipality or municipalities,

(b) a major commercial or business enterprise or activity or a proposal, plan or program in respect of a major commercial or business enterprise or activity of a person or persons other than a person or persons referred to in clause (a) that is designated by the regulations, or

(c) an enterprise or activity or a proposal, plan or program in respect of an enterprise or activity of a person or persons, other than a person or persons referred to in clause (a), if an agreement is entered into under section 3.0.1 in respect of the enterprise, activity, proposal, plan or program; ("entreprise")

[63] The parties agree that the sale of the property by the ORC was “an undertaking with respect to which an approved class environmental assessment applies.” More specifically, the sale was governed by the ORC class environmental assessment, which dates back to 1992.

[64] In December of 1992, the MOE accepted a class environmental assessment for realty group activities. The Cabinet approved the class assessment by an Order in Council dated December 9, 1992 (the “Class EA”). The ORC subsequently issued a memorandum to its staff describing the Class EA process, which reads in part as follows:

The ORC Class EA is a self-policing process. This means that it is not necessary for ORC to send individual notifications of capital projects and land use change applications to the Ministry of the Environment and Energy. At the same time, ORC must carry out certain early checks on the feasibility of its project in compliance with the Class process.

The ORC Class EA is essentially a planning tool which addresses project-site issues at an early stage in an efficient, systematic and documented manner.

ORC staff are major land stewards in Ontario. From that basis fact, it follows that ORC should have one of the most environmentally sound approaches to real property planning, management and development in Ontario. With this Class EA, I believe ORC has such an approach and the staff to implement it.

[65] Section 1.3.2 of the Class EA, “Definition of MBS Undertakings”, lists those matters governed by the ORC Class EA process:

The Class EA applies to the following MBS undertaking “groups”:

1. Land Related Activities

2. Administrative Facilities

3. Storage Facilities

4. Custodial Facilities

5. Transportation Facilities

6. Research Facilities

7. Utility Development

8. Infrastructure Development

9. Heritage Properties

10. Waste Facilities and Contaminated Properties

and their associated “actions”, such as: acquisition, planning, design, leasing, letting, maintenance, repair, addition, construction, demolition, marketing and sale. The 10 groups listed above are in turn divided into “subgroups”, which consist of individual undertaking types…

In this document, an undertaking is defined as an “action” (or actions) applied to a “subgroup” (or subgroups).

[66] “Land Related Activities” is the only group which does not have any sub-groups. Instead, the Class EA lists various “actions”, including “planning approvals” and “sale.”

[67] Section 8-3 of the Class EA describes the term “planning approvals”:

When the term “planning approvals” is used in this document, it refers to major approvals under the Planning Act, such as rezoning, official plan amendments (change in designated land use), subdivision and site plan control.

[68] Section 8-3 also distinguishes between two types of sales:

The sale or disposal of a property (not containing or affecting any ESAs), “as-is” or “value-added”, to a public or private sector owner. Value-added refers to sale after any of the following: rezoning; official plan amendment (change in designated land use); and/or subdivision and servicing.

[69] In some cases, a larger project will consist of multiple undertakings or components. Section 1.3.2 of the Class EA provides that when an undertaking is subjected to the Class EA, the entire undertaking must be assessed at one time. To ensure that inappropriate subdivision cannot occur with MBS component type undertakings, the following requirements apply:

1. all foreseeable interdependent actions of an undertaking must be assessed at the same time…. Therefore, even though undertakings may be described in terms of individual actions, they are subjected to EA as one, single entity;

2. where an undertaking consists of several actions and these have different categories, the categories of all actions must be raised to the highest category of any of the individual actions.

[70] Part 4 of the Class EA prescribes the applicable methodology. Essentially, the first step is that the ORC must assign the undertaking to one of four environmental planning categories (Category A, B, C, or D). This determines the level of environmental assessment intensity to which the undertaking is to be subjected with Class A being the least intense and Class D being the most intense.

[71] In this case, after a provisional assessment in early 1998, the ORC proceeded with the Category B methodology for the sale of the property. The Class EA Executive Summary describes Category B as follows:

Category B: Consultation and Document. These are undertakings with some potential for adverse environmental effects. Such technically well understood effects, however, are minor in nature and of a short duration. A majority of the effects are regulated by existing guidelines, approved policies of client ministries and other agencies and provincial legislation. MBS Realty Group completes hundreds of these undertakings annually.

[72] The Executive Summary describes the general methodology for Category B undertakings as follows:

These undertakings are subjected to a six-point provisional site-specific analysis (zoning, soil contamination, ESAs, cultural heritage, infrastructure capacity and distinctive natural features), followed by notification of directly affected parties. If these parties wish to consult, this is arranged and can result in: agreement with the undertaking “as-is”; modification or redesign of the undertaking; or bump-up to Category C or higher.

[73] The ORC undertook the six-point site-specific analysis and consultation process in February 1998. The analysis was summarized in a completed consultation and documentation record dated February 24, 1998 (the “C&DR”).

[74] At the time the C&DR was completed, the proposed sale was to be on an “as is” basis. Later, the Province entered into the Sale Agreement, which permits the Purchaser to seek the approvals necessary to operate a crematorium and columbarium on the property.

SERRA’s Position

[75] SERRA contends that the class environmental approval process in this case was deficient. It submits that the ORC failed to comply with the requisite EAA approval process as detailed in the Class EA in five main respects.

[76] First, SERRA submits that the ORC assessed the wrong undertaking: it assessed an “as is” sale, and yet sometime between February and April, 1998, the ORC decided not to sell the property “as is.” SERRA submits that the decision to permit the Purchaser to seek rezoning triggers a requirement for a new assessment. SERRA also contends that the ORC failed to assess the full undertaking subject to rezoning, since Part 2 of Reference Plan 66-R-17908 (a 25 strip adjacent strip of land) was only included as part of the sale by an agreement dated February 15, 2000.

[77] Second, the ORC failed to assess either existing air conditions at the site or the suitability of the site for a crematorium given existing contamination – this, in spite of the existence of an air quality monitoring station across the street on other lands owned by the ORC.

[78] Third, SERRA submits that the ORC failed to undertake the required public consultation process.

[79] Fourth, every ORC categorization is to have regard for the “ultimate use” of the property. SERRA contends that, in completing the CD&R, the ORC was required to consider the ultimate use of the property by the Purchaser.

[80] Fifth, SERRA argues that the ORC conducted a lower level of assessment (Category B) than is required by the Class EA for this undertaking. SERRA submits that correct undertaking, given the proposal to build a crematorium, was Group 10 (“waste facilities and contaminated properties”) and subgroup 10.5 (hazardous and industrial liquid waste management facilities).

[81] In short, SERRA submits that the purchaser’s proposal to build a crematorium triggered the need for a more stringent review by the ORC under the Class EA.

The ORC’s Position

[82] The ORC’s response to SERRA’s submissions is relatively straightforward. It contends that it complied with the ORC Class EA and no further assessment was required, because the Class EA applies only to ORC undertakings – not actions by private parties.

[83] The ORC says that it was the Purchaser - not the ORC - that sought planning approvals so that it could construct and operate a crematorium upon the closing of the sale. In other words, while the sale itself was an undertaking “by or on behalf of” the Province, subsequent planning approvals actions by the Purchaser were not “on behalf of” the Province. As such, they are outside the scope of the Class EA and the EAA.

[84] With regard to the public consultation process, the ORC contends that there was considerable public consultation and that, in any event, it has considerable discretion as to who to consult and how broadly to consult under the Class EA.

[85] The ORC points to the fact that there were five public/community meetings between April 1998 and April 11-13, 2000 to discuss environmental/air emissions issues, ground burial issues and land use/traffic concerns relating to the property. These meetings were held on June 29, 1998, November 30, 1999, February 16, 2000, March 23, 2000, and April 11, 1 and 13, 2000. It was at the last of these that City Council adopted the clause to amend the Etobicoke Zoning Code. SERRA, the CCSE or members of both were involved and had input into all five meetings.

[86] The ORC stresses that SERRA not only participated in the public consultation process but it was also fully involved in the approval process through its appeal of the City’s rezoning decision to the OMB. When the OMB denied SERRA’s appeal, SERRA sought leave to appeal to the Divisional Court, but its application was denied. In short, the ORC takes the position that SERRA had considerable opportunity to have input into the process.

Standard of Review

[87] SERRA submits that the appropriate standard of review is correctness: the Class EA is effective through statutory approval and is therefore subject to the correctness standard.

[88] While there is no privative clause in the EAA or the Class EA, the ORC contends that a high level of deference ought to be shown in this case. In particular, the ORC points to the following factors:

• the ORC has a considerable degree of expertise in matters relating to the Class EA requirements, given that it routinely carries out a large number undertakings governed by the ORC Class EA

• the wording of that part of the Class EA dealing with public consultation leaves broad room for discretion by the ORC; the wording provides general guidelines but does not dictate specific outcomes in each case

• the implementation of the ORC Class EA methodology involves a balancing of a large number of factors

• the classification of the undertaking in this case and the implementation of the applicable methodology falls squarely within the jurisdiction of the ORC.

[89] I agree that the ORC is entitled to considerable deference in terms of how it applied the Class EA based on the factors listed by the ORC. In my view, the correct standard of review is reasonableness simpliciter.

[90] However, less deference is warranted when it comes to the question of whether or not the Class EA applies to actions by the Purchaser, as this is a question that hinges upon the correct interpretation of s. 3 of the EAA and the definition of “undertaking.” For the sake of convenience, I will address this second issue first.

Application of the EAA to the Purchaser

[91] To review, s. 3 of the EAA provides as follows.

3. This Act applies to,

(a) enterprises or activities or proposals, plans or programs in respect of enterprises or activities by or on behalf of Her Majesty in right of Ontario or by a public body or public bodies or by a municipality or municipalities;

(b) major commercial or business enterprises or activities or proposals, plans or programs in respect of major commercial or business enterprises or activities of a person or persons, other than a person referred to in clause (a), designated by the regulations;

(c) an enterprise or activity or a proposal, plan or program in respect of an enterprise or activity of a person or persons, other than a person or persons referred to in clause (a), if an agreement is entered into under section 3.0.1 in respect of the enterprise, activity, proposal, plan or program.

[emphasis added]

[92] The term “undertaking” is defined in s. 1 of the EAA:

"undertaking" means,

(a) an enterprise or activity or a proposal, plan or program in respect of an enterprise or activity by or on behalf of Her Majesty in right of Ontario, by a public body or public bodies or by a municipality or municipalities,

(b) a major commercial or business enterprise or activity or a proposal, plan or program in respect of a major commercial or business enterprise or activity of a person or persons other than a person or persons referred to in clause (a) that is designated by the regulations, or

(c) an enterprise or activity or a proposal, plan or program in respect of an enterprise or activity of a person or persons, other than a person or persons referred to in clause (a), if an agreement is entered into under section 3.0.1 in respect of the enterprise, activity, proposal, plan or program; ("entreprise")

[93] Reading s. 3 and s. 1, the EAA quite clearly applies to both public and private undertakings. However, the EAA is quite specific as to the types of private undertakings caught by the Act: ss. 3(b) and (c) specify that it applies where there has been a designation by regulation (which is not the case here) or there is a special agreement (which, again, is not the case here).

[94] The real issue is whether the rezoning and planning approval process undertaken by the Purchaser, as permitted under the Sale Agreement, was an activity “by or on behalf of” the Province within the scope of s. 3(a) of the EAA.

[95] As noted above, the Sale Agreement contained a number of conditions, which could be waived at the sole discretion of the Purchaser. The conditions included that the Purchaser obtain all necessary approvals under the Planning Act (including official plan and zoning by-law amendments and site plan approval for the “Proposed Use”), the Cemeteries Act, and all necessary MOE approvals.

[96] Clause 8(2) of the Sale Agreement provides that the Province shall facilitate the approval process undertaken by the Purchaser:

The Purchaser acknowledges and agrees that from the date of acceptance of this Agreement, provided that this Agreement has not been terminated, the Purchaser shall, it its own expense but at no expense or liability whatsoever to the Vendor, diligently and in good faith make application for and pursue the approvals and undertake the investigations stipulated in the Purchaser’s Conditions and the Vendor agrees to do no act to interfere with or delay these applications, and to provide all assistance and co-operation with respect to same, including, without limiting the generality of the foregoing, hereby consenting to the City releasing to the Purchaser details of all outstanding municipal work orders and deficiency notices affecting the Lands. The Vendor agrees to execute all necessary authorizations and other documents required by the Purchaser to give effect to the foregoing, but at no expense, cost or obligation to the Vendor.

[emphasis added]

[97] The Purchaser did indeed seek and obtain the requisite approvals after the ORC executed the necessary authorizations for it to do so.

[98] In my view, the words “by or on behalf of” in s. 3(a) of the EAA do not encompass the situation before us. The Sale Agreement is clear that in seeking planning approvals the Purchaser was acting in its own discretion, at its own cost, at its own risk, and for its own purposes. While it necessarily had to seek authorization from the Province, as owner of the land, in order to undertake the approval process prior to the closing of the sale, I disagree with the contention that the Purchaser was acting “on behalf of”, at the behest of, or for the benefit of the Crown. That the Province enabled the Purchaser to seek planning approvals on a pre-closing basis does not mean that the Purchaser was acting on behalf of the Province. Accordingly, the Purchaser’s actions do not fall within the ambit of s. 3(b) of the EAA, which means that they are not subject to the Class EA.

[99] Further, SERRA has not pointed to anything in the Class EA itself which would undermine the ORC’s contention that the ORC Class EA is intended to apply strictly to ORC undertakings and not to activities by private parties.

[100] In short, I agree that the ORC was correct in concluding that it was not obliged to undertake a further assessment under the ORC Class EA in respect of planning actions by the Purchaser.

Application of the ORC Class EA

[101] Finally, we turn to the question of whether the ORC erred in its application of the Class EA in the circumstances of this case.

[102] With respect to the scope of consultation undertaken by the ORC, I agree that while the Class EA specifies that broad consultation is generally appropriate, it provides a wide range of discretion as to the exact scope of the consultation process. It also recognizes that there may be parallel consultation processes under both the EAA and the Planning Act in which case the two processes may be coordinated and combined.

[103] In this case, the C&DR indicates that the ORC consulted with the Planning Department of the (then) City of Etobicoke, the Ministry of Natural Resources (Maple Office), the multi-tenancy adjacent to the east side of the property, and the Ministry of Consumer and Commercial Affairs. As detailed above, SERRA members also had the opportunity to and did indeed provide input during subsequent public meetings during the planning approvals process.

[104] With respect to the issue of whether the ORC erred in not conducting an additional assessment or in revisiting the CD&R when the Sale Agreement was amended to add a 25 foot strip of adjacent land, I am of the view that its decision not to undertake an additional assessment was not unreasonable. The ORC specifically considered whether the conveyance consisted a separate undertaking by the ORC from the conveyance of Part 1 of the property and whether this required a separate assessment. It concluded that it was unnecessary in the particular circumstances to modify the conclusions of the CD&R.

[105] Another issue raised by SERRA is whether the ORC conducted a lower level of assessment (Category B) than is required by the Class EA for this undertaking. As noted above, SERRA submits that the correct undertaking, given the proposal to build a crematorium, was Group 10 (waste facilities and contaminated properties) and subgroup 10.5 (hazardous and industrial liquid waste management facilities). Once again, we note that the specific undertaking or activity being examined by the ORC was the sale of the land, and not subsequent planning proposals undertaken by the Purchaser. In any event, the classification of the undertaking at issue in this case and the implementation of the applicable Class EA methodology falls squarely within the jurisdiction of the ORC and is therefore entitled to considerable deference by this Court.

[106] Another technical issue raised by SERRA is whether the ORC ought to have had regard to existing air quality on the site in completing the CD&R. Once again, the manner in which the ORC conducted the CD&R is an issue that falls squarely within the jurisdiction of the ORC and is therefore entitled to considerable deference by this Court.

[107] As noted above, SERRA also contends that the ORC was required to have regard for the “ultimate use” of the property by the Purchaser. Section 8.1 of the Class EA provides:

The Class EA does not permit dividing an undertaking into higher and lower category components, and then proceeding with the lower category components first, if the higher category components are actually the ultimate use. …

In determining the category of an undertaking, it is not feasible to require a proponent to foresee future, unknown uses of the site. Proponents frequently acquire sites larger than their current needs, to allow for future, non-specific program expansion. [emphasis added]

[108] At the time the C&DR was completed, the Province did not know that the land might be used as a crematorium. On the other hand, at the time the Sale Agreement was executed, it quite clearly knew that the construction of a crematorium was at least a possibility, as the Sale Agreement specifically provides for such an eventuality.

[109] However, foreseeability is not the real issue in this case. Rather, the question is whether the ORC was required to have regard to the “ultimate use” by the Purchaser. Given my reading of s. 3 of the EAA, as set out above, it is my view that the ORC was not required to assess possible future uses by the Purchaser. To adopt such an interpretation would essentially mean that private undertakings otherwise outside the scope of the EAA would be caught by the Class EA.

[110] In short, I find that the ORC’s application of the Class EA approval was not unreasonable. In light of this conclusion, it is unnecessary for this Court to address the ORC’s argument that SERRA’s application for judicial review constitutes an abuse of process or a collateral attack on the OMB’s decision and the subsequent decision of the Divisional Court regarding leave.

[111] Accordingly, for these reasons SERRA’s application is dismissed.

Then J.

Thomas J.

DATE:

COURT FILE NO.: 745/2000

DATE: 20040112

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

THEN, COSGROVE and THOMAS JJ.

B E T W E E N :

South Etobicoke Residents and Ratepayers Association

Applicant

• and -

The Ontario Realty Corporation, The Honourable Chris Hodgson (Chair of the Management Board of Cabinet), the Lieutenant Governor in Council, and the Director, Air Approvals, of the Ministry of the Environment

• and -

1385521 Ontario Limited (“1385521”) and 1177284 Ontario Limited (“1177284”)

Respondents

J U D G M E N T

THEN J.

Released: January 12, 2004

COSGROVE, J. (dissenting)

INTRODUCTION

[1] With great respect to the decision of my colleagues, Justices Then and Thomas, I have decided that for reasons, which I will detail, that the application by SERRA should be granted resulting in the following orders:

(i) An order quashing the decision of the MOE Director of Approvals to issue an air approval for the proposed crematorium.

(ii) An order declaring that the environmental assessment conducted by the ORC in February, 1998, does not comply with applicable class environmental requirements and thus the Environmental Assessment Act R.S.O. 1990, CE-18, (the “EAA”).

(iii) An order prohibiting the sale prior to compliance with the EEA.

FACTS

[2] I agree with the facts contained in paragraphs [5] to [19] in the decision of my learned colleagues. I disagree that a valid approval has been obtained from MOE (for reasons to be detailed) and therefore disagree that “necessary approvals” referred to in paragraph [20] and referenced in paragraph 13 have been obtained.

ANALYSIS – DIRECTOR OF AIR APPROVALS

[3] I adopt and agree with the contents of paragraphs [21] to [35] in the decision of my learned colleagues referencing the pertinent provision of the EPA and determining the appropriate standard of review in paragraph [36] as “patent unreasonableness” but I have been persuaded that in all the circumstances the approval of the Director was patently unreasonable.

[4] In my view the Director’s failure to consider PM2.5 and PM10 emissions was patently unreasonable considering the purpose of the EPA and the significance of the release of PM2.5 and PM particles into the air. In view of the evidence by the applicant of Dr. Thurston, the Director should have deferred issuing a certificate of approval until standards governing fine particulate emissions had been implemented.

[5] I believe it is patently reasonable that there is a need to assess the predicated emission of demonstrated contaminants from the proposed facility in combination with the background concentration of these contaminates in the air. To permit anything less is to negate the very purpose of the EPA designed for “the protection and conservation of the natural environment” and the people who inhabit affected environs.

[6] The Director’s failure to consider PM2.5 and PM10 emissions in conjunction with an analysis referencing existing background concentration of these contaminants significantly undermines or diminishes the deference normally due the Director in the application process.

[7] While I agree with my learned colleagues on the “EBR Notice Requirements” in paragraphs [45 to [55], nonetheless, as a result of my comments respecting the Director’s failure to consider PM2.5 and PM10 emissions and background emission, I believe the decision to issue an air approval was fundamentally flawed and in essence a nullity. This failure in effect constituted a loss of jurisdiction.

ANALYSIS OF ORC/MBS ACTIONS

The EAA and class environmental assessments

[8] I adopt the presentation of the EAA and class environmental assessments issue by my learned colleagues in paragraphs [56] to [74] and the respective position of the parties (SERRA paragraphs [75] to [81] and ORC paragraphs [82] to [86]). I accept and adopt, as well, the standard of reviews in paragraphs [87] to [89] as simple “reasonableness”.

Application of the EAA to the Vendor or Purchaser?

[9] In my view, the ORC was incorrect in concluding that it was not obliged to undertake a further assessment under the ORC Class EA in respect of planning processes by the purchaser.

[10] The Province (MBC) in April, 1998, entered into an agreement of sale of the subject lands which then were described not as an “as is” sale, but for the purpose of operating a cemetery crematorium and columbarium. In my view, this notice to the Province triggered the requirement of a new assessment while the property remained in the ownership of the Province. It would be unreasonable, in my view, to hold to the contrary.

[11] The parties agree that the sale of the property was “an undertaking with respect to which an approved class environmental assessment applies” – the ORC class environmental assessment which dates back to 1992. This requirement was independent of and separate from other terms in the sale arrangement between the parties. Clearly, because of the intended use for a cemetery, crematorium and columbarium, the earlier 1998 provisional assessment no longer was valid or useful.

[12] In addition, I am of the view that the earlier designation of a Category “B for environmental planning no longer applied because the intended use for a cemetery, crematorium and columbarium does not match the Category B description of “adverse environmental effects… minor in nature and of a short duration.”

[13] Nor would the designation of a Category “B” apply in the circumstances where the definition of Category B refers to “the effects are regulated by existing guidelines, approved policies…” when as has been agreed there were, for example, no standards governing fine particulate emissions including PM2.5 and PM particles.

[14] I am not able on the condition of the record in these proceedings to decide if the appropriate category should be a C or D but obviously and reasonably the B Category does not encompass the intended use of “cemetery, crematorium and columbarium.”

[15] In view of my conclusion that the property while in the ownership of the Province attracted an appropriate EAA assessment (a re-assessment as a cemetery, crematorium and columbarium Category C or D), it is not necessary to explore the issue of the meaning of the words “by or on behalf of” considered in paragraph [98] by my learned colleagues as the reference therein was to the Sale Agreement. In my view, as I have indicated, the onus for re-assessment by the Province was automatic flowing from the Province’s continued ownership and policies. I would be inclined to believe, however, that in the context of the issue posed in paragraph [98] that the purchaser was acting on behalf of both itself and the Province in order to effect a sale of the property.

[16] The failure of the ORC to update the 1998 provisional assessment and the incorrect classification as a Category B significantly undermines or diminishes the deference normally due the ORC in the approval process.

[17] In this context ORC’s argument that SERRA’s application for judicial review constitutes an abuse of process or a collateral attack on the OMB’s decision and the subsequent decision of the Divisional Court regarding leave is invalid as the issues raised in this application (and the subject of my reasons) were not adjudicated upon by the OMB.

[18] Accordingly, for these reasons I would allow SERRA’s application.

Mr. Justice P. Cosgrove