COURT FILE NO.: 259/09

DATE: 20091027

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

B E T W E E N:

RIZMI HOLDINGS LIMITED and LUCIA MILANI

Michael Miller and Sam De Caprio, for the Plaintiffs/Respondents

Plaintiffs/Respondents

• and -

THE CORPORATION OF THE CITY OF VAUGHAN

Andrew J. Heal and Bradley M. Phillips, for the Defendants/Moving Party

Defendant/Moving Party

HEARD at Toronto: October 6, 2009

M. DAMBROT J.

1The plaintiffs in the main action are Rizmi Holdings Ltd., a development corporation, and its principal, Lucia Milani (collectively, “Rizmi”). The plaintiffs brought an action against the City of Vaughan for damages for misfeasance and abuse of power, or, in the alternative, for negligence in connection with the closing of two zoning applications. The defendant brought a motion for summary judgment under rule 20.04 of the Rules of Civil Procedure and a motion for a determination before trial of a question of law under rule 21.01(1)(a). The defendant claims that the plaintiffs’ action is precluded by the immunity provision in s. 20 of the Oak Ridges Moraine Conservation Act (“ORMCA”), and that, in the alternative, it is statute-barred by the Limitations Act, 2002.

2The motion judge dismissed both motions. In the motion before me, the defendant seeks leave to appeal to the Divisional Court.

3Only a brief recitation of the background is necessary to appreciate the issues.

Background

4On October 12, 1989, the plaintiff Rizmi filed two zoning applications with the City of Vaughan for the redesignation of a one hundred-acre parcel of land in the City of Vaughan from agricultural to rural residential. These parcels are situated in the Oak Ridges Moraine, an environmentally sensitive area. Prior to this date, Rizmi had commenced an application for a pit licence to extract aggregate material from adjacent lands that Rizmi owned.

5In 2001, the ORMCA and the Oak Ridges Moraine Conservation Plan came into effect. They established rules and regulations intended to preserve and protect the Oak Ridges Moraine, including a ban on development. Section 15 of the ORMCA, however, provided an exception to the ban where applications for rezoning had been commenced prior to November 17, 2001.

6On February 11, 2003, the Director of Community Planning for the City notified the plaintiffs that their two zoning applications had been noted “closed” due to inactivity. The plaintiffs contested this decision, claiming that it was unjustified.

7The decision close the applications violated the City’s long standing policy enacted by City resolution that required notice and an application for the applicant to be heard prior to closing a land use application (Policy No. 04.2.04).

8By resolution of City council on March 8, 2004, the applications were declared open immediately.

9In June 2004, the transitional provisions of ORMCA were amended retroactive to December 16, 2003, a date when Rizmi’s application remained closed. The effect of the amendment was to exclude Rizmi’s applications from the exception to the ban on development in the Moraine.

10In their action, the plaintiffs allege – and the defendant denies – that Rizmi’s zoning applications were closed in bad faith, on the advice of their planning lawyers and others, and that the defendant intended to pressure the plaintiffs to abandon their pursuit of the pit licence. The plaintiffs seek general and punitive damages in the amount of $151 million.

11The motion judge described the core position of the plaintiff at para. 21 of his judgment, as follows:

It is the position of the plaintiffs that the closing of the applications on February 11, 2003 denied them an opportunity to obtain a decision which would have granted them transitional rights under the amended s. 17. Moreover, they contend they would have had sufficient time to complete their application and obtain a decision prior to the effective date of the amendment, December 16, 2003 had it not been for the City closing their applications on February 11, 2003. Nine months would have been sufficient time to do so.

The Motions

12In its original motions, the defendant raised two issues of law that are worthy of consideration on this application for leave to appeal. One involves immunity; the other involves the application of a limitation period. I will describe each of them briefly, and summarize the motion judge’s conclusion about each of them.

The immunity issue

13The immunity issue turns on s. 20 (1)(a) of the ORMCA. Section 20 provides:

(1) No cause of action arises as a direct or indirect result of,

(a) the enactment or repeal of any provision of this Act;

(b) the making or revocation of any provision of the regulations; or

(c) anything done or not done in accordance with this Act or the regulations.

(2) No costs, compensation or damages are owing or payable to any person and no remedy, including but not limited to a remedy in contract, restitution, tort or trust, is available to any person in connection with anything referred to in clause (1) (a), (b) or (c).

(3) No proceeding, including but not limited to any proceeding in contract, restitution, tort or trust, that is directly or indirectly based on or related to anything referred to in clause (1) (a), (b) or (c) may be brought or maintained against any person.

(4) Subsection (3) applies regardless of whether the cause of action on which the proceeding is purportedly based arose before or after the coming into force of this Act.

(5) Any proceeding referred to in subsection (3) commenced before the day this Act comes into force shall be deemed to have been dismissed, without costs, on the day this Act comes into force and any decision in a proceeding referred to in subsection (3) made on or after November 16, 2001 is of no effect.

14It is the position of the defendant that the plaintiffs’ cause of action arises directly or indirectly as a result of the enactment or repeal of a provision of the ORMCA. Specifically, the defendant argues that the claim stems from the repeal of the original exception to the ban on development in the Moraine in s. 15 and the enactment of a new, narrower, and retroactive exception in the amended s. 15. But, the defendant says, as a result of s. 20 (1)(a), no such cause of action can arise, and this claim must be struck.

15The motion judge was of the view that the determination of the s. 20 immunity issue required a complete evidentiary record. He stated, at para. 56:

In my view, it is not plain and obvious that s. 20 of the OMRCA [sic] is a bar to the actions as framed in negligent conduct independent of the Act or male fides, whether or not in accordance with the Act.

16He continued, at para. 58:

The provision has never been judicially considered. The plaintiffs' claim of malfeasance and abuse of public office and the defendant's claim of immunity raises a novel legal issue that requires a complete evidentiary record …

17Unfortunately, it seems clear to me that the motion judge reached this conclusion upon a consideration of s. 20 (1)(c), and not s. 20 (1)(a). In his careful and detailed reasons, he stated, at para. 47:

The prohibition against any legal action in s. 20 of the ORMCA extends to anything done or not done in accordance with the Act. The limitation on remedies found in s. 20 specifically applies in the words “no cause of action arises” against any “person”, which includes “municipalities and their employees and agents”.

18He continued, at para. 51:

On its face s. 20 of the ORMCA provides comprehensive immunity to the defendants with respect to anything done or not done in accordance with the Act or its regulations. However, the plaintiffs’ submit that their cause of action in negligence and malfeasance in public office is not based on the actions of the defendant with respect to anything done or not done in accordance with the Act or its regulations. Rather, its action arises as a result of the defendant's conduct independent of any requirements of the legislation. The closing of the applications and delay in re-opening them by the defendant occurred either as a result of negligence or for the oblique purpose of exerting pressure on them with respect to the pit license application. Simply put, the ORMCA did not require the defendant to close the applications.

19Finally, he stated, at para. 54:

Section 20 of the Act does not apply to acts of negligence, malfeasance or bad faith conduct alleged to have been committed for reasons or purposes unrelated to the Act. If it can be established that the acts or conduct of the defendant or its staff that gives rise to the plaintiffs’ claim had nothing to do with the ORMCA then s. 20 provides no protection.

20But whether or not it could arise, the defendant’s raise a subsection 20(1)(a) immunity claim, which does not hinge on whether or not something was done or not done in accordance with ORMCA. Rather, the focus of a subsection 20(1)(a) immunity claim is on whether or not the cause of action arises as a direct or indirect result of the enactment or repeal of an ORMCA provision.

The limitation issue

21The defendant argues that the grounds for the plaintiffs’ cause of action arose on June 24, 2004, when the transitional provision of the Oak Ridges Moraine Conservation Act, 2001 was amended. If this is correct, then the plaintiffs’ action, which was commenced April 25, 2008, falls outside the two year limitation period in the Limitations Act, 2002 and is statute barred.

22The plaintiffs argue that they discovered their claim in March 2003, when the City advised them that the applications had been closed. If this is correct, then by virtue of s. 24(5) of the Limitations Act, 2002, the repealed six year limitation period would apply, and the action would not be statute barred.

23The motion judge concluded that in this case, the question of when the cause of action was discovered is a factual determination that should not be determined on the motions before him.

Should Leave Be Granted?

The immunity issue

24The defendant (now applicant) moves for leave to appeal the motion judge’s interlocutory order pursuant to rule 62.04 (b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Under rule 62.04, the applicant must show that there is good reason to doubt the correctness of the decision in question and that that the issues are of general importance, beyond the interests of the parties, such that it is desirable that leave be granted.

25As I have already stated, it is the position of the defendant that the plaintiffs’ cause of action arises as a result of the enactment or repeal of a provision of the ORMCA, specifically the repeal of the original exception of the ban on development in the Moraine in s.15, and the enactment of a new, narrower, and retroactive exception in the amended s. 15. But, as a result of s. 20 (1)(a), no such cause of action can arise, and this claim must be struck.

26The plaintiffs posit that their cause of action arose when the defendant wrongly closed the plaintiffs’ zoning applications, and that their damage claim includes damages that arose prior to the ORMCA amendment. In support of this position, they point to paragraph 37 of their Amended Statement of Claim, which reads:

37. As a result of the improper actions of the Defendant, the Plaintiffs have been prevented from carrying out their business activities and have suffered significant damages including:

38. loss of profits from the development of the Land;

39. losses sustained as a result of the decreased value of the lands; and

40. all out of pocket expenses …

27The plaintiffs say that nothing in this paragraph limits their claim to damages suffered subsequent to and as a result of the amendment of the ORMCA on June 24, 2004. They argue that the damages they seek include damages flowing from the alleged misconduct of the defendant prior to and independent of the amendments.

28I note however, that until the ORMCA was amended, nothing about the defendant’s conduct could have prevented the plaintiff from carrying out their business activities and caused them to suffer “significant damage.” Additionally, the plaintiffs’ claim for damages arising from misfeasance and abuse of public office or, in the alternative, negligence, is in the amount of $150 million. It is hard to see how this enormous figure could arise from anything other than the lost zoning opportunity that resulted from the amendments to the ORMCA.

29The nature of the plaintiffs’ claim becomes even clearer upon a broader examination of their Amended Statement of Claim.

30I note, first of all, in their description of the background of the claim, the plaintiffs say, at paragraphs 24 and 25:

24. Despite the March 8, 2004, resolution to re-open the files, the June 2004 Amendments came into effect eliminating any possibility for approval of a plan of subdivision for the lands.

25. The Plaintiffs maintain the City’s deliberate decision to close the Applications which prevented the development of the Lands from February 11, 2003 to March 8, 2004, caused the Plaintiffs damages. Had the City not closed the Applications, the Plaintiffs would have secured development rights for a draft plan of subdivision before June 24, 2004.

31Again, the plaintiffs seem to be claiming that the amendment of the ORMCA on June 24, 2004 caused their damages.

32I turn next to the specific description of the claim for misfeasance and abuse of power in the Amended Statement of Claim. At paragraph 26 of their amended Statement of Claim, the plaintiffs say that the defendants abused their power “by deliberately and intentionally closing the Applications while knowing the Plaintiffs were likely to be injured as a consequence.” They do not say that they were injured as a result of the alleged abuse of power, but only that the defendants abused their power by acting with the knowledge that consequential damage was likely. The only consequential damage that is mentioned in the pleadings is the damage that flowed from the amendment of the ORMCA.

33In elaborating on the alleged misfeasance in paragraph 26 of their amended Statement of Claim, the plaintiffs claim that city officials deliberately withheld information and closed the applications with ill will. They submit that the “refusal to take immediate steps when City Officials were reminded that the Plaintiffs were pursuing compliance with the prescribed provisions of the Conservation Plan was a deliberate and intentional act designed to harm the Plaintiffs.” In all of these allegations, the damages claimed would not have resulted but for the ORMCA amendments. Again, it appears that the claim alleges that damages flowed only after the amendment to ORMCA.

34Finally, with respect to the claim for negligence, I turn to paragraph 36 of the Amended Statement of Claim, which reads:

36. As a result of the negligent breach of the standard of care, the Plaintiffs have suffered and continue to suffer significant damages arising from the closure of the Applications, following which, the Act was amended prohibiting future development on the Lands.

35Again, it appears that the alleged damages claimed by the plaintiffs arose only after June 24, 2004.

36Nevertheless, to be clear, I neither hold nor express any settled view on the merits of the defendant’s argument that the proper construction of s. 20(1)(a) provides it with immunity from this action. But it seems plain to me that it is open to serious debate. In addition, I see no need for a complete evidentiary record to decide this issue. The motivation for the impugned acts of the moving party is not relevant to this head of immunity in s. 20(1). In my view, the facts necessary to decide this narrow issue are simple, and are not in dispute. Nor does this case raise a novel issue of law. It merely requires the interpretation of a relatively new statutory provision.

37What is more, there can be little doubt that the proper construction of s. 20(1)(a) is a matter of general importance, and not merely of importance to the litigants. Despite this, I have been tempted to refuse leave, since the issue will remain to be determined at trial, and the public will not be deprived of a judicial consideration of the issue. But the fact that the issue was not considered by the motion judge tips the balance for me. Leave to appeal from the decision in respect of both the summary judgment motion and the motion to determine a question of law in respect of this issue is granted.

The limitation issue

38I do not consider the limitation issue to raise a question of general importance, beyond the interests of the parties. In any event, it is likely that the determination of the immunity issue will go a long way towards a determination of the limitation issue. If it does not, then it will remain to be decided at trial if the defendant fails on the immunity issue. I would not grant leave to appeal in relation to this issue.

Disposition

39I grant leave to appeal on the question of whether the proper construction of s. 21(1)(a) of ORMCA provides the defendant with immunity from this action. Costs of the motions before the motions judge, and of the motion for leave to appeal, are reserved to the panel hearing the appeal.

M. Dambrot J.