CITATION: Metro Ontario Real Estate Limited v. Corporation of the City of Orillia, 2020 ONSC 7002
DIVISIONAL COURT FILE NO.: 19-691-JR DATE: 20201118
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
Swinton, Pattillo and Bloom JJ.
BETWEEN:
METRO ONTARIO REAL ESTATE LIMITED Applicant
– and –
THE CORPORATION OF THE CITY OF ORILLIA Respondent
Counsel: Shane Rayman and Conner Harris, for the Applicant Robert Wood, for the Respondent
HEARD by videoconference: October 27, 2020
Reasons for Decision
Swinton J.
Overview
[1] Metro Ontario Real Estate Limited (“Metro”) brought an application for judicial review of decisions of the City of Orillia related to the proposed expropriation of certain restrictive covenants in a lease. After oral argument, the Court stated,
We are of the view that there has been no denial of procedural fairness in relation to the issues raised by the applicant. We exercise our discretion not to deal with the validity of the expropriation decision on the grounds of prematurity. Accordingly, the application for judicial review is dismissed with reasons to follow.
These are the reasons for that decision.
Factual Background
The parties
[2] Metro leases land located in a shopping plaza at 70 Front Street North in Orillia. Its parent company operates a Metro grocery store there.
[3] The City acquired ownership of the shopping plaza in January 2016 as part of its plan to transform Orillia’s downtown. The redevelopment plan has been in place since at least 2012, when the City produced its Downtown Tomorrow Plan. As part of the plan, Coldwater Street would be extended, so that it no longer ends at Front Street but continues through the shopping plaza site. This would improve access from the downtown to the waterfront of Lake Couchiching. However, the City would have to demolish part of the shopping plaza and redevelop the southern portion of the site. Metro’s store is on the northern portion of the site and can continue to operate.
[4] When the City acquired the shopping plaza, it assumed the lease that Metro had with the prior owners. The lease, originally made between different parties than Metro and the prior owners, dates from 1978 and contains restrictive covenants. Article 12 prohibits the landlord from permitting the shopping plaza, or other lands it owns within a three mile radius, from being used for the sale, distribution or parking for the sale of food or any food product, as defined in the lease. A second covenant in Article 15(4) prohibits the construction of buildings or structural improvements valued in excess of $25,000 at the shopping plaza that would reduce the parking available for the Metro store or impede accessibility for delivery trucks without the consent of Metro, which cannot be unreasonably withheld.
[5] In July 2017, the City requested Metro’s consent to demolish the shopping plaza south of the Metro store to extend Coldwater Street. Metro took the position that the planned development would reduce its parking and impede deliveries. Negotiations ensued but were unsuccessful, and the City decided to invoke the expropriation process.
The legislative framework
[6] Subsection 4(1) of the Expropriations Act, R.S.O. 1990, c. E.26 (the “Act”) provides that “an expropriating authority shall not expropriate land without the approval of the approving authority.” Pursuant to s. 5(1)(a), the approving authority in the present expropriation is the municipal council of the City.
[7] Upon applying for approval under s. 4, the expropriating authority must serve a notice of its application for approval to expropriate upon each registered owner of the lands to be expropriated and give public notice (s. 6(1)). An affected owner can then request a Hearing of Necessity (“HON”) pursuant to s. 6(2). The HON is conducted by an Inquiry Officer. Such a hearing is designed to “inquire into whether the taking of the lands or any part of the lands … is fair, sound and reasonably necessary in the achievement of the objectives of the expropriating authority” (see s. 6(5)).
[8] After hearing evidence and submissions, the Inquiry Officer prepares a report containing a summary of the evidence and arguments, his or her findings of fact, and an opinion on the merits of the application for approval and the reasons for the opinion (s. 7(6)). After considering the report, the approving authority shall approve or not approve of the proposed expropriation and may impose modifications (s. 8(1)). Written reasons for its decision must be provided (s. 8(2)).
The present expropriation
[9] In the present case, the City served a formal Notice of Application for Approval to Expropriate Land on April 9, 2019. The Notice is broadly worded to include “all right, title and interest” in the identified lands, although with respect to Metro, the City seeks only to expropriate the two restrictive covenants in the lease described above.
[10] On May 13, 2019, Metro requested a HON, which was scheduled to begin August 14, 2019. On August 8, 2019, the City delivered its Notice of Grounds to Metro, in which it set out the objectives on which it intended to rely at the HON. Subsection 7(4) of the Act requires that such notice be delivered at least five days before the hearing date.
[11] The Act also requires the expropriating authority to “make available for inspection by the parties any documents, including maps and plans, that the expropriating authority intends to use at the hearing.” The City delivered copies of its documents to Metro on August 9, 2019.
[12] Metro objected to the timing of the Notice of Grounds and the disclosure. It asserted that the Notice raised issues it could not have anticipated and that the documents could not be adequately reviewed in time for the hearing, given the volume. Metro then asked the City to consent to an adjournment of the HON. The City did not initially consent, but then offered an adjournment to August 16 or 19. Metro’s counsel indicated that he was not available on those dates.
[13] At the hearing of the present application for judicial review, counsel for Metro stated that Metro was looking for an adjournment of the HON for 30 days. However, it did not convey this fact to the City in August 2019. Instead of seeking an adjournment from the Inquiry Officer at the HON, Metro withdrew its request for a HON before the hearing date. Counsel explained that he thought it unlikely that an adjournment would have been granted, and Tim Lawlor, affiant for Metro, expressed concern that the HON would have resulted in findings that could have prejudiced other litigation between the parties concerning the lease. No detail about this possible prejudice has been provided.
The Application for Judicial Review
[14] Metro then launched this application for judicial review, alleging a denial of procedural fairness by the City because of the timing of the service of the Notice of Grounds and the disclosure and because of the refusal of the City to consent to adjourn the HON. It seeks to quash those decisions. The usual remedy for a denial of procedural fairness, were the application for judicial review to succeed, would be to refer the matter back for a proceeding held in accordance with the applicable rules of procedural fairness.
[15] However, Metro goes far beyond this type of remedy, seeking an order quashing the Notice of Application for Approval given by the City in April 2019, an order quashing and/or striking approval by City Council of the expropriation of interests of Metro (an approval that has not yet been given), and a declaration that the expropriation is null and void.
[16] It relies on two broad arguments in support of these claims for relief. First, it argues that the restrictive covenants are not an interest in land within the meaning of s. 1(1) of the Act and cannot be expropriated. Second, it submits that the expropriation is an abuse of process, as it is a collateral attack on the provisions in the lease respecting dispute settlement, and the City is acting for an improper purpose – namely, the maximization of profit in the future sale of the shopping plaza lands.
The Availability of Judicial Review
[17] Pursuant to s. 43 of the Act, a party may bring an application to set aside or quash any proceeding or step taken under the Act within 30 days after the step or proceeding in respect of which the application is made.
[18] Section 43 sets out what is, in effect, a limitation period. However, it does not change the law respecting the availability of judicial review. For example, if the applicant challenges an administrative decision on procedural fairness grounds, it can do so successfully only if the administrative decision-maker owes a duty of procedural fairness and that duty has been breached. Moreover, the availability of judicial review remedies will depend on the application of the common law doctrine of prematurity, including the doctrine of adequate alternative remedies.
The Standard of Review
[19] There is no need to identify the standard of review for an issue of procedural fairness. The role of the reviewing court is to determine whether the appropriate level of procedural fairness was accorded in the circumstances.
There was no denial of procedural fairness
Metro’s position
[20] The City met its statutory obligations pursuant to s. 7(4) of the Act respecting the timing of the Notice of Grounds and disclosure, as it gave the required notice at least five days before the hearing date. Indeed, it went beyond its statutory obligations with respect to disclosure by providing copies of the documentation, and not just access to inspect the documents.
[21] However, Metro relies on Baker v. Canada (Minister of Citizenship and Immigration), 1999 699 (SCC), [1999] 2 S.C.R. 817 and argues that the City owed it a broader common law duty of procedural fairness. It submits that the City breached this duty in two ways. First, the City served the Notice of Grounds and provided disclosure so close to the HON that Metro was unable to properly prepare for participation at the HON. Second, the City refused to consent to an adjournment, beyond the two to five days offered, thus denying Metro a fair hearing before the Inquiry Officer.
There was no breach of the duty of procedural fairness
[22] There is no merit to Metro’s argument, as the “decisions” that it seeks to overturn are not ones where the City owed a duty of procedural fairness. Moreover, Metro is not entitled to any relief from the Court, as it failed to pursue its proper avenue for relief – a request for an adjournment from the Inquiry Officer.
[23] In Baker, the Supreme Court of Canada explained when a duty of procedural fairness will arise at common law: there must be an administrative decision, and that decision must affect “the rights, privileges or interests of an individual” (at para. 20).
[24] If there is such a decision, the Supreme Court held that the content of the duty of procedural fairness would vary and depend on the statutory context and the rights affected (at para. 22). The Court set out a number of factors to consider in determining the content of the duty in a particular case that I need not set out here. Notably, for purposes of the present application, the Court emphasized that the purpose of the duty of procedural fairness is to ensure participatory rights in the process leading to a decision. As the Court stated (at para. 22),
I emphasize that underlying all these factors is the notion that the purpose of the participatory rights contained within the duty of procedural fairness is to ensure that administrative decisions are made using a fair and open procedure, appropriate to the decision being made and its statutory, institutional and social context, with an opportunity for those affected by the decision to put forward their views and evidence fully and have them considered by the decision-maker.
In other words, the duty of procedural fairness is designed to give a party who will be affected by a decision notice and an opportunity to provide its position on the issues with appropriate supporting material before the decision is made.
[25] The actions of the City that Metro seeks to overturn are not “decisions” with respect to the rights, privileges or interests of Metro that give rise to a common law duty of procedural fairness. In serving the Notice of Grounds and in providing disclosure when it did, the City was not making a decision affecting the rights and interests of Metro. Rather, it was acting in the course of preparation for the HON.
[26] I agree with the City’s submission that “the scheme of the Expropriations Act is that the HON is effectively an adversarial legal proceeding” (City’s Factum at para. 40). At the HON, Metro and the City would be parties (s. 7(8)), and they have different roles and interests. The Inquiry Officer is required by the Act to give every party an opportunity to present evidence and argument and to examine and cross-examine witnesses (s. 7(9)(b)). After hearing the evidence and argument, the Inquiry Officer will make findings of fact and give an opinion on the merits of the application for approval. The onus of proof is on the expropriating authority to prove the expropriation is fair, sound and reasonably necessary to meet its objectives.
[27] Metro clearly had a right to a fair process before the Inquiry Officer, given the Inquiry Officer’s role to find facts and to render an opinion about the proposed expropriation (Bezic Construction Ltd. v. Ontario (Ministry of Transportation), 2006 85159 (Ont. Div. Ct.) at para. 6). However, the City had no duty of procedural fairness with respect to the delivery of the Notice of Grounds and the disclosure other than that set out in the Act, with which it complied.
[28] As well, given the nature of the HON process, the City made no reviewable decision when it refused to consent to an adjournment of the hearing. It reasonably refused the adjournment, given its conclusion that Metro had proper notice of the issues and an ability to respond and its concerns about the delay that would come with an adjournment.
[29] Finally, there is no merit to Metro’s argument that it had a legitimate expectation with respect to the delivery of the Notice and disclosure or a consent to an adjournment. There were no representations by the City with respect to process that could give rise to a legitimate expectation here.
This application for judicial review is premature
[30] Judicial review is a discretionary remedy. There is a principle of administrative law that an application for judicial review is premature and relief should be denied if the applicant has an adequate alternative remedy to address the issues (Volochay v. College of Massage Therapists of Ontario, 2012 ONCA 541 at paras. 68, 70 and 73; C.B. Powell Ltd. v. Canada (Agence des services frontaliers), 2010 FCA 61 at paras. 30-33).
[31] Metro had an adequate alternative remedy to this application for judicial review. It could have proceeded to the HON and requested an adjournment on the basis that it had had inadequate time to prepare and to participate in the hearing because of the timing of the Notice of Grounds and the timing of the disclosure. No doubt the City would have argued that there was adequate notice, and there was no element of surprise given that the Downtown Tomorrow Plan had been adopted in 2012 and the parties had been in extensive negotiations over the years with respect to the Coldwater Street extension and the redevelopment plan for the downtown. It would then have been up to the Inquiry Officer to determine whether an adjournment was warranted in the interests of a fair hearing.
[32] Counsel stated that he did not think Metro would have been successful, citing Bezic, above. In that case, the Divisional Court dismissed an application for judicial review of a decision of an Inquiry Officer that denied an adjournment request.
[33] It is impossible to know if Metro would have been successful, had it requested an adjournment. That would have depended in part on the Inquiry Officer’s review of the disclosure and a weighing of the competing interests, including the length of the proposed adjournment and the prejudice to both parties if an adjournment was granted or not. By withdrawing from the HON, Metro precluded a review by the Inquiry Officer, who would have been in a better position than this Court to assess whether there was need for an adjournment.
[34] By coming to this Court on judicial review rather than proceeding before the Inquiry Officer, Metro has ignored the statutory process in place under the Act. I agree with the submission of the City that Metro has, in effect, engaged in a collateral attack on that process. It is not entitled to a remedy in this Court.
[35] As there has been no breach of the duty of procedural fairness, and no attempt by Metro to use the remedy available to it under the Act, this ground of judicial review fails.
The Validity of the Expropriation
[36] Metro has sought also relief that would, if granted, put an end to the whole expropriation process. It seeks an order in the nature of certiorari to quash the Notice of Application for Approval in April, 2019 or an order quashing and/or striking approval by City Council of the expropriation of the interests of Metro, and a declaration that the expropriation is null and void. As I said above, Metro relies on a number of arguments: that a restrictive covenant is not an interest in land that can be expropriated; that the expropriation is an abuse of process because the City has not resorted to the dispute resolution provisions of the lease; and that the expropriation is an abuse of process because the City is not pursuing a proper public purpose, as it seeks to enhance the value of the land in a future sale by getting rid of the food covenant.
[37] The application is out of time with respect to the Notice of Application for Approval (see s. 43 of the Act). However, in any event, there is no decision respecting the expropriation of the restrictive covenants in the Notice of Application for Approval that is reviewable. The Notice is just that – a notice that the expropriating authority will seek approval for the proposed expropriation.
[38] With respect to the relief sought concerning the ultimate expropriation, this application is premature. There has been no expropriation decision made by the approving authority, and so there is no decision to quash.
[39] Nevertheless, the City asked this Court to deal with the alternative arguments made by Metro, despite the prematurity of the application. It too asks for a declaration - that the City has jurisdiction to expropriate Metro’s leasehold interests from the southern half of the shopping plaza lands notwithstanding that Metro and the City are parties to the lease and the expropriated interests “may” be restrictive covenants.
[40] This Court can grant declaratory relief only with respect to the exercise or proposed exercise of a statutory decision (Judicial Review Procedure Act, R.S.O. 1980, c. J.1, s. 2(1)2). The power to expropriate has yet to be exercised. Expropriation of the interests at issue requires a decision by municipal council, the approving authority, pursuant to s. 8 of the Act.
[41] While this Court can give a declaration with respect to a proposed exercise of a statutory power of decision, courts do not give declarations in the abstract. In the present case, there has been no expropriation and until the expropriation process has run its course, this Court does not know precisely what the ultimate decision will be.
[42] Moreover, it is inappropriate for this Court to enter into a consideration of whether the City is motivated by an improper purpose – that is, the possible enhancement of the purchase price of the shopping plaza site without the food covenant. The determination of the fairness and reasonableness of the expropriation should have been the subject of the HON. Again, Metro chose to withdraw from that process. It is not appropriate for this Court to now engage in the assessment of the City’s purpose and the fairness of the expropriation until the process has run its course.
[43] This aspect of Metro’s application, attacking the expropriation as a whole, is premature, and for that reason, the Court declined to hear argument on these issues.
Conclusion
[44] Accordingly, the application for judicial review is dismissed.
[45] The City sought costs on a substantial indemnity basis in the amount of $107,669.00. While Metro’s application is without merit, I see no basis for a punitive award of costs.
[46] On a partial indemnity basis, Metro sought $91,175.00 and the City $79,522.00. Metro argues that the City should receive about half its costs, as success was divided, given that the Court declined to adjudicate the merits of the expropriation. I disagree. The City has been fully successful on this application, and it is entitled to its partial indemnity costs. The amount sought is reasonable, given the comparison to Metro’s proposed costs. Therefore, costs to the City are awarded in the amount of $79,522.00 all inclusive.
Swinton J.
I agree
Pattillo J.
I agree
Bloom J.
Date of Release: November 18, 2020
CITATION: Metro Ontario Real Estate Limited v. Corporation of the City of Orillia, 2020 ONSC 7002
DIVISIONAL COURT FILE NO.: 19-691-JR DATE: 20201118
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
Swinton, Pattillo and Bloom JJ.
BETWEEN:
METRO ONTARIO REAL ESTATE LIMITED Applicant
– and –
THE CORPORAION OF THE CITY OF ORILLIA Respondent
REASONS FOR JUDGMENT
Swinton J.
Date of Release: November 18, 2020