Court File and Parties
Citation: Vaughan v. Rizmi Holdings, 2010 ONSC 1563 Court File No.: 259/09 Date: 2010-03-15 Superior Court of Justice – Ontario – Divisional Court
Re: The Corporation of the City of Vaughan, Appellant (Defendant) And: Rizmi Holdings Limited and Lucia Milani, Respondents (Plaintiffs)
Before: Jennings, McCombs and Molloy JJ.
Counsel: Andrew Heal and Bradley Phillips for the Appellant Michael Miller and Michael Arbutina, for the Respondents
Heard: March 11, 2010
Endorsement
[1] This is an appeal by the City of Vaughan (“the City”) from the decision of O’Marra J. dated May 20, 2009. The City had brought a motion under Rules 20 and 21 seeking summary judgment and an order dismissing all claims of the plaintiffs. O’Marra J. dismissed that motion and, in a later decision based on written submissions, awarded costs against the City in the amount of $169,156.30 all inclusive.
[2] The decision of the motion judge is interlocutory and required leave to appeal. Leave to appeal was granted by Dambrot J. on one narrow issue: whether s. 20(1)(a) of the Oak Ridges Moraine Conservation Act[^1] (“ORMCA”) provided the City with complete immunity to the plaintiffs’ claim.
[3] The plaintiffs own a 100-acre piece of property in Vaughan within the Oak Ridges Moraine. In 1989, the plaintiffs filed two zoning applications with the City seeking amendments to the Official Plan and zoning by-laws. Ultimately, the plaintiffs intended to develop the land into a residential subdivision. In February 2003, without notice to the plaintiffs, the City closed the two applications, allegedly for inactivity. The plaintiffs took immediate steps to object to this, and ultimately the City acceded to their demands and re-opened the applications in March 2004.
[4] In June 2004 amendments were made to s. 17 of the ORMCA, retroactive to December 13, 2003. There was evidence before the motion judge that this amendment made it completely impossible for the plaintiffs to develop their land as intended. There was also evidence filed by the plaintiffs that but for the City’s actions in closing their applications and not re-opening them for 13 months, the plaintiffs could have been in a position to do what was required in the subdivision approval process prior to the effective date of the amendments in December 2003; and as a result, the new legislative regime, which made approval of their planned subdivision impossible, would not have applied to their lands.
[5] The plaintiffs commenced an action against the City for $151 million alleging negligence as well as malfeasance and abuse of public office. The plaintiffs allege that City officials deliberately closed the applications to exert pressure on them in connection with an extraneous matter, and therefore for an improper purpose. The plaintiffs claim that as a result of the City’s improper conduct they lost the opportunity to develop the lands.
[6] The appeal before us is based on the operation of s. 20(1)(a) of the ORMCA, which the City asserts is a complete bar to the plaintiffs’ claim and about which it asserts there are no disputed facts.
[7] It is useful at this point to consider the whole of s. 20, which states as follows:
- (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.
[8] The decision of O’Marra J. focused entirely on s. 20(1)(c) of the ORMCA. He determined that there were disputed facts and a genuine issue for trial as to whether the actions of the City were independent of the legislation and mala fides, such that the provisions of s. 20(1)(c) would not provide immunity.
[9] Before Dambrot J. on the leave application, and before us on this appeal, the City argued that the plaintiffs’ cause of action stems from the repeal and enactment of more stringent transitional provisions in the ORMCA, effective December 13, 2003. The City argued that the plaintiffs’ cause of action did not arise until all elements of their cause of action had accrued, including that damages had been sustained. Further, it argued that the damages claimed by the plaintiffs related to their inability to develop the property as planned and resulted from the amendment to the legislation. The City submitted that the plaintiffs’ claim only arose as a result of the amendments which prevented the development of the property; and therefore this situation falls squarely within the immunity of a cause of action that “arises as a direct or indirect result of the enactment or repeal” of a provision of the ORMCA.
[10] We accept that the plaintiffs’ cause of action did not arise until damage had been sustained. However, it is at least arguable that not all of the damages sought by the plaintiffs flow solely from the amendment of the legislation. A cause of action accrues at the point in time when the plaintiff realizes it has sustained harm. It is not necessary that the full extent of the damages be known at that time, nor is it necessary that all of the damages have even been sustained: Peixeiro v. Haberman (1997), 1997 325 (SCC), 151 D.L.R. (4th) 429, 103 O.A.C. 161, 3 S.C.R. 549 at para 18.
[11] Some of the damages claimed by the plaintiffs clearly arose independently of the amendments to the ORMCA. The plaintiffs allege malfeasance and breach of public office against the City and claim punitive damages. To establish entitlement to punitive damages for malfeasance, it is not necessary for the plaintiffs to prove that the delay by the City resulted in their inability to develop the property because of the intervening amendments to the legislation. Punitive damages could be awarded independently of any other harm sustained by the plaintiffs, and in theory could even be awarded if the amendment had never been enacted and the subdivision project had gone ahead, or conversely, if it is established that the subdivision could never have gotten off the ground for reasons completely unrelated to the amendment.
[12] Further, the plaintiffs submit that they sustained economic harm due to the 13-month delay caused by the City and incurred out-of-pocket expenses as a result of the City’s wrongdoing prior to the amendment coming into force. While there is no specific evidence filed by the plaintiffs to substantiate this claim, it is apparent from the statement of claim and follows as a matter of logic from the specific financial harm alleged in the affidavit material.
[13] Assuming the plaintiffs otherwise have a cause of action for malfeasance, it is apparent that some degree of damages was sustained by virtue of the City closing the zoning applications and refusing to re-open them for a period of 13 months. Therefore, the plaintiffs’ cause of action accrued prior to the amendments to the legislation. The fact that further, and more extensive, damages may have been sustained by the plaintiffs as a result of the amendments does not mean that they had no cause of action prior to that date, and it therefore cannot be said conclusively that their cause of action arose as a result of the amendment to the legislation.
[14] It should be noted that the City, needless to say, disputes the plaintiffs’ entitlement to such damages, and indeed disputes the allegations of malfeasance and negligence. Obviously, there are facts in dispute that require a trial. It follows that the appeal must be dismissed.
[15] That is sufficient to dispose of the appeal on the substantive grounds. However, it must also be noted that the City did not argue before O’Marra J. that the plaintiffs’ claim arose as a result of the amendment to the legislation and that s. 20(1)(a) was therefore a bar to the action. The decision of O’Marra J. focused entirely on whether s. 20(1)(c) was a bar to the claim and he gave very detailed and careful reasons for his conclusion that there was a genuine issue for trial on that point. He made no mention of subsection 20(1)(a), save to set it out when quoting the entire section in his reasons. There is a simple explanation for that omission. It was not raised by the City in its written factum on the motion and it was not argued. Therefore, quite understandably, it is not reflected in the reasons of the motion judge.
[16] It is unfortunate that when the City sought leave to appeal based on s. 20(1(a), its counsel did not draw to the attention of Dambrot J. that this specific point was not argued before O’Marra J. It is likewise unfortunate that counsel for the plaintiffs did not think to argue on the leave motion that this point had never been raised before. He was candid in acknowledging on the appeal that this point did not occur to him until two days before the appeal itself was argued. One of the grounds upon which leave was granted was the failure of the motion judge to deal at all with s. 20(1)(a). Indeed, the City’s factum before us is replete with submissions that the motion judge erred by failing to consider the impact of s. 20(1)(a), without ever mentioning that the argument had never been cast in that light before O’Marra J. on the motion.
[17] One of the arguments advanced by the City on the appeal is that the plaintiffs failed to put evidence before the court on the motion to demonstrate that damages had been sustained prior to the amendments to the legislation. We are satisfied that there is a sufficient evidentiary record of damages sustained prior to December 13, 2003 to meet the test under Rule 20. In coming to that conclusion, however, we are mindful of the fact that the plaintiffs could not have fairly appreciated, from the material filed by the moving party, that s. 20(1)(a) would be an issue or that the date upon which damages had first been sustained would be relevant.
[18] Given these circumstances, it would perhaps have been open to this Court to dismiss the appeal on the basis that the issue raised had not previously been argued before the motion judge. However, because that point was never disclosed to the leave judge and was not raised before us by the respondents on the appeal, and because we heard full argument on the merits of the issue, we have decided the substantive issue on the appeal as if it had been properly before us.
[19] The City appeals the costs awarded by O’Marra J. on the basis that costs ought not to have been awarded on a substantial indemnity scale and on the basis that the costs award was so high that it exceeded what could reasonably have been expected by the parties.
[20] In determining that substantial indemnity costs were warranted, O’Marra J. correctly set out and applied the applicable legal principles. He concluded that the defendant’s motion for judgment was not brought reasonably because it was plain and obvious that there would be disputed facts that could only be resolved at trial in a case of this nature. That is a determination that was completely open to him on the record before him, and we see no basis to interfere.
[21] The City argued before us that we should take into account the fact that leave to appeal was granted in determining whether it was reasonable for the City to have brought its motion in the first place. That argument fails to recognize that the issue upon which leave was granted was not before the motion judge. On the argument that was before the motion judge, it was completely reasonable to have awarded costs on a substantial indemnity basis.
[22] We are, however, all of the view that the quantum of costs awarded by the motion judge cannot stand. Even on a substantial indemnity basis, in the circumstances of this case, a fee of $135,000 for what ultimately was a one-day summary judgment motion is clearly excessive. In our opinion a fee of $85,000 is adequate and fair to all parties. We therefore deduct $50,000 from the all-inclusive award of 169,156.30
[23] The plaintiffs have been substantially successful on this appeal and seek costs both on the appeal and the leave application. They claim total costs of approximately $33,000 on the appeal (of which $1229.55 is for disbursements) and costs of approximately $39,500 for the leave application (of which $1615.95 is for disbursements). In our view, those amounts are excessive given the issues involved and the length of the appeal. We note that the costs outline of the appellant reflects a total of approximately $35,000 for both the leave application and the appeal. That seems to be more in accordance with what would be in the reasonable expectation of the parties for an appeal of this nature. However, it is appropriate to reduce the total somewhat with respect to the leave application due to the fact that the plaintiffs failed to alert the leave judge to the fact that the issue upon which leave was being sought had not been argued before the motion judge. Taking all of these factors into account, we are of the view that $25,000 is an adequate and reasonable costs award.
[24] Accordingly, the appeal on the merits is dismissed and the costs award is varied by reducing the amount to $119,156.30 payable forthwith. Costs of this appeal and the leave application are awarded to the respondents (plaintiffs) fixed at $25,000, payable forthwith.
JENNNINGS J.
McCOMBS J.
MOLLOY J.
Date: March 15, 2010
[^1]: 2001 S.O. 2001 c. 31, as amended, ss. 17 & 20