COURT FILE NO.: 114/09

DATE: 20090707

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

B E T W E E N:

AON INC.

Applicant

• and -

TOWERHILL DEVELOPMENTS INC. and the ONTARIO MUNICIPAL BOARD

Respondents

Gordon Petch, for the Applicant

Warren S. Rapoport, for the Respondent

HEARD at Toronto: July 7, 2009

JENNINGS J.: (Orally)

1This is a motion for leave to appeal from the decision of the Ontario Municipal Board (the “Board”) dated March 4, 2009, striking out certain material filed in support of a motion for costs on a full indemnity basis brought by the appellant against the respondent.

2The motion for costs material included the affidavits of Brad Smith, Ross Smith and Patricia Tomasio, which contained evidence of prior business dealings between the appellant and the respondent and the principals of those companies, that the appellant alleges proves that the respondents’ motives and conduct in bringing the appeal were improper and justify the Board’s awarding costs on a full indemnity basis.

3An appeal lies from the Board to the Divisional Court with leave only on a question of law.

4Proper interpretation of the Ontario Municipal Board Act (the “Act”), the Board’s enabling statute, and the Board’s Rules and of the admissibility of evidence raise questions of law.

5The test for leave is that there must be a reason to doubt the correctness of the decision and that there is a question of law of sufficient importance to warrant the attention of the Divisional Court.

6The appellant succeeded in a motion to dismiss without a hearing the respondent’s appeal from an approval of the appellant’s application for a zoning by-law amendment.

7Section 103 of the Board’s Rules permit the Board to order costs against a party, “If the conduct or course of conduct of a party has been unreasonable, frivolous or vexatious or if the party has acted in bad faith.”

8The affidavit evidence excluded by the Board alleges conduct of the respondent which, if accepted, would suggest it filed the appeal for improper bad faith motives.

9Having found that costs issues need not be pleaded for purposes of the original hearing, thereby rejecting the respondent’s objection to admissibility, the Board held that the conduct alleged in the affidavits was irrelevant to the costs issue.

10The Board did not explain why it was irrelevant, other than to say, “The alleged conduct not only preceded the hearing but is also unrelated to any proceeding on the subject matter that is now before the Board.” (See page 6 of the Reasons).

11In support of its position that pre-proceeding conduct was irrelevant, the Board distinguished its own decision in Trilea Centres Inc. v. Ottawa-Carleton (Regional Municipality) [1994] O.M.B.D. No. 1356, where pre-proceeding conduct was considered as a factor in adjudicating a cost claim. The grounds for distinguishing Trilea were that the actions complained of were not characterized as misconduct. That distinction is suspect as in Trilea, at page 6, the Board held that the conduct “was clearly unreasonable and unfair”. I would have thought that amounted to misconduct.

12The Board imposed a time limit stating that the misconduct must occur in the course of the Board’s proceedings. I have reason to doubt the correctness of that conclusion. No time frame for misconduct is covered in the Rules to which the Board referred. Further, if it is alleged that a party has brought the appeal for improper motives as is the case here, denying the opportunity to review conduct that occurred prior to launching the appeal makes a mockery of the power to award costs. The conduct relied upon to prove improper motive must necessarily have occurred prior to filing the appeal.

13Accordingly, I doubt the correctness of the decision. I am not required to find that it is wrong. The first part of the test is satisfied.

14The respondent submits that how the Board in this case interpreted its own rules raises no issue of general legal importance. I disagree. In my opinion, the question of what conduct can give rise to an award of costs is a matter of importance to all parties coming before the Board. The second part of the test is satisfied.

15The last issue is that of prematurity.

16The appeal is from a procedural finding made prior to any hearing on the merits of the application for costs. Leave to appeal such an order would not normally be granted, because this Court abhors a piecemeal approach to reviewing administrative actions.

17However, in Ontario v. Lifford Wine Agencies, 76 O.R. (3d) 401, the Ontario Court of Appeal held at paragraphs 43 – 52 of that decision that the rule against fragmentation is not absolute if it involves a breach of natural justice.

18In my opinion, denying the appellant the right to lead evidence concerning improper motive for launching the appeal arising out of prior dealings between the parties might well involve a denial of natural justice and is a question that should be considered by the full panel.

19Accordingly, leave to appeal is granted on the question of whether the Board erred in excluding the affidavit material referred to in the Notice of Appeal.

20Costs of this motion are reserved to the panel.

JENNINGS J.

Date of Reasons for Judgment: July 7, 2009

Date of Release: July 10, 2009

COURT FILE NO.: 114/09

DATE: 20090707

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT