ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE COURT OF THE DRAINAGE REFEREE

GRCA v. Wellington (Township)

2010 ONDR 1

DATE OF DECISION:

2010-06-10

2010-01

STATUTE:

Drainage Act

HEARING:

BETWEEN:

GRAND RIVER CONSERVATION AUTHORITY

APPELLANT

• and -

THE CORPORATION OF THE TOWNSHIP OF WELLINGTON NORTH, ALFRED WILSON

RESPONDENTS

ORDER

As a result of an Order dated the 16^th day of April, 2009 an environmental appraisal was ordered by the Referee at the request of the Grand River Conservation Authority.

And whereas the said Order required that on or before May 29th, 2009 K. Smart Associates Limited provide to the Appellant, the Respondents and the Referee draft Terms of Reference, having regard to the proposals submitted to it for such environmental appraisal.

And whereas the parties attended at a Hearing on June 16th, 2009 to review the Terms of Reference. As a result of such Hearing, amendments were made to the Terms of Reference.

And whereas upon review of such amended Terms of Reference, the parties commenced negotiations with regard to incorporating the said amended Terms of Reference and/or a variation thereof into the Report on the West Luther Drain 63, Branches A & A1 Township of Wellington North dated August 20th, 2008 by K. Smart Associates Limited in the form of a Technical Memorandum and to be adopted by further Order.

And whereas all parties are desirous of moving forward with the amendment to the said Report.

On consent, this Court orders that:

1. The Engineering Report prepared by K. Smart Associates Limited (File No. 08-034) for West Luther Drain 63, Branches A & A1, Township of Wellington North, is amended to include as part thereof the Technical Memorandum Agreed Upon by Representatives of Mr. Alfred Wilson and The Grand River Conservation Authority dated October 9, 2009.

2. The Technical memorandum dated October 9th, 2009 is attached as Schedule "D" to the Report of K.A. Smart P.Eng. Dated August 20th, 2008 in the form attached to this Order.

3. The Report of K.A. Smart P.Eng. dated August 20th, 2008, as amended by this Order, is hereby approved and adopted by this Court.

4. Counsel for the Grand River Conservation Authority is granted until January 29th, 2010 to make submissions regarding the responsibility for the accounts rendered by K. Smart Associates Limited in the amount of $18,079.50.

5. Counsel for the Corporation of the Township of Wellington North and Alfred Wilson be given until February 19th, 2010 to provide reply submissions with regard to the responsibility of the Grand River Conservation Authority for payment of the said account.

6. Counsel for Grand River Conservation Authority be granted until March 5th, 2010 to provide further submissions in response to the reply submissions of the Counsel for the Corporation of the Township of Wellington North and Alfred Wilson.

7. The time limit for appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal pursuant to section 6(3) shall commence upon the Order and Reasons for Decision of the Referee as to the responsibility of the Grand River Conservation Authority for payment of the account of K. Smart Associates Limited.

Dated at Strathory, Ontario this 19^th day of January, 2010.

ROBERT G. WATERS

ONTARIO DRAINAGE REFEREE

DECISION

The Ontario Drainage Referee has received written submissions arising from the Order of the Referee dated the 19^th day of January, 2010 which incorporated a Technical Memorandum Agreed upon by Representatives of Alfred Wilson (“Wilson”) and the Grand River Conservation Authority dated October 9^th, 2009. This Order of the Referee granted Counsel the right to make submissions regarding responsibility for the accounts rendered by K. Smart and Associates Limited (“Smart”), the final submissions to be tendered by March 5^th, 2010. Submissions have now been received from all parties.

At the outset, the Referee wishes to clarify that the amount which the Referee included in his Order of January 19^th, 2010 on the advice of Counsel for the Corporation of the Township of Wellington North (the “Township”) is incorrect. The total cost of the work of Smart for the matter is $19,079.50 as it pertains to the establishment of the environmental appraisal process. The Referee relies on the information supplied by the Township as to the amount of costs of Smart, which are subject to the submissions and the decision of the Referee.

BACKGROUND

The background relating to the matter of costs of the environmental appraisal can be found in the Reasons for Decision of the Referee dated June 16^th, 2009. Prior to that time the Referee had received a number of motions and cross motions from Counsel. The first of such motions was made by the Solicitors for the Petitioners Wilson and requested direction as to the procedures to be used in preparation of a trial of the issues. The Grand River Conservation Authority (“GRCA”) brought two further motions.

The Referee completed an Order dated April 16^th, 2009, with Reasons for Decision dated June 16^th, 2009 in which it was ordered that there be an environmental appraisal undertaken on the West Luther Drain 63, Branches A and A1.

In response to the request of the GRCA, the Referee ordered that an environmental appraisal be undertaken that required certain time frames within which there would be an exchange of documentation and the supply of proposals for draft terms of reference on the environmental appraisal.

As stated in my Reasons for Decision of June 16^th, 2009 at page 3:

In ordering this course of action, the Referee is mindful of the formal procedural requirements of the legislation, but in the exercise of the powers of the Referee, pursuant to s. 106(1) (d) and (f), I am of the opinion that the purpose of the process of the Drainage Act would be thwarted if such order were not granted while the appeal of the Grand River Conservation Authority under Section 49 of the Drainage Act is held in abeyance at the Agriculture, Food and Rural Affairs Appeal Tribunal, hereafter the “Tribunal”. The scope and intent of the legislation is such that the lack of environmental appraisal would impede the decision making of the Referee and might further limit the information before the Tribunal, were it to eventually hear the appeal of the Grand River Conservation Authority under Section 49 of the Drainage Act.

After completing draft terms of reference the Referee was approached by all parties during the summer and autumn of 2009. They indicated that they were making progress in arriving at a technical memorandum which I could incorporate in the report of K.A. Smart P.Eng. dated August 20^th, 2008. Considerable time and costs were saved by the parties arriving at this settlement.

It appears, however, that parties to the settlement were unable or did not negotiate the issue of the cost of the environmental appraisal in arriving at their settlement of issues. As a result, the submissions that I have received by the parties relate to the question of payment for the environmental appraisal.

ISSUES

1. Does the Referee have the discretion to allocate the cost of an environmental appraisal to a party, other than the party who requested it?

2. Additionally, does the Referee have the discretion to award the costs of the environmental appraisal to the costs of the drainage works?

3. Does the party who requested the environmental appraisal, if ordered to pay the costs, have a right of set off for its costs in the legal proceeding?

SUBMISSIONS OF COUNSEL FOR THE GRAND RIVER CONSERVATION AUTHORITY

Mr. Izaak de Rijcke provided written submissions to the Referee dated January 28^th, 2010. In his submissions he provided a copy of the original account which was in the total amount of $19,997.73 and was attached as Tab 2 to the submissions. This account has since been clarified by Counsel for the Township.

Mr. de Rijcke reviewed Section 6 in its entirety. For purposes of this decision I reproduce section 6 of the Drainage Act R.S.O. 1990, c.D.17 (the “Act”):

Notice that environmental appraisal is required

6.(1) Upon receipt of a notice from the initiating municipality under subsection 5(1), a local municipality, conservation authority or the Minister of Natural Resources, as the case may be, may send to the council of the initiating municipality within thirty days a notice that an environmental appraisal of the effects of the drainage works on the area is required, and the cost thereof shall be paid by the party who requested it. R.S.O. 1990, c.D.17, s.6(1).

Authorization for environmental appraisal

(2) The Council of the initiating municipality may obtain an environmental appraisal of its own initiative, the cost of which shall be paid by the municipality from its general funds. R.S.O. 1990, c.D. 17, s. 6(2).

Appeal

(3) The party requesting the environmental appraisal or the council of the initiating municipality, as the case may be, within forty days of receiving the account therefore, may appeal to the Tribunal, and the Tribunal may confirm or vary the account as it considers proper. R.S.O. 1990, c.D.17, s.6(3); 2006, c. 19, Sched. A, s. 6(2).

Mr. de Rijcke’s submission is that the Act is silent or the criteria or guidelines to be applied by the Agriculture, Food and Rural Affairs Tribunal (the “Tribunal”) under s. 6(3). He further submits that the Act is silent on how to treat any appeal on this issue. He does note that the Act also deals with the question of cost in other sections in regarding other proceedings under the Act. In relation to this, Counsel quotes sections 70, 73, 108 and 109 of the Act in acknowledging that s. 70 and 73 deal with the costs of the drainage work while s. 108 and 109 speak of costs in the legal sense of costs.

The Referee was then referred to Rule 58.06(1) of the Rules of Civil Procedure R.R.O. 1990, Reg. 194, as amended, as to “costs of a proceeding”.

Counsel suggests that because of the complexity of the proceedings and the importance of the issues, the Referee should be able to deal with the Engineers’ costs. In the larger context, Counsel for GRCA indicated that repeated requests were made of the Petitioner, Wilson and his consultants for full disclosure of studies, investigations, etc. Counsel also suggested that through the process, further information should have been provided and that the onus was on the petitioner, Wilson to provide such information and data.

Counsel for GRCA acknowledges that the Referee in allowing it to make a belated request for an environmental appraisal under s. 6 of the Act in order to resolve the concurrent appeal before the Tribunal and to allow the restart of the Ontario Municipal Board, was a process that met with success. However, the GRCA submits that it is inappropriate to shift the financial burden for an Environmental Assessment (“EA”) to the GRCA:

It is submitted to this very day it remains inappropriate to shift the financial burden for an EA which was Wilson’s obligation all along in the larger context of all proceedings. Without the core data this was impossible to do.

Counsel laments Wilson’s lack of disclosure to the GRCA until the matter was well under way with appeals under this the Act and only after the EA was ordered by the Referee (paragraph 19).

Counsel has requested by analogy to the Rules of Civil Procedure that the Referee consider the complexity of the proceeding to date, the importance of the issues, the conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceeding, whether any step in the proceeding was unnecessary, and whether a party’s denial or refusal to admit anything that should have been admitted. In all of these categories, Counsel for GRCA suggests that the EA helped the process to go forward for the petitioner, Wilson, and that Wilson received the benefit of the settlement without the cost. Counsel argues that the EA would have been completely unnecessary had Wilson agreed to resolution on a timely basis and that, in essence, the EA was forced upon the GRCA because of the position taken by Wilson.

SUBMISSIONS OF COUNSEL FOR THE CORPORATION OF THE TOWNSHIP OF WELLINGTON NORTH

Counsel for the Township, Guildford Deverell, in submissions dated February 16^th, 2010 initially clarified the issue with regard to the amount of the account of Smart. The Township supplied an account to the GRCA dated September 25^th, 2009 for $19,997.73. Counsel for the Township acknowledged that that account included charges from services preformed by Smart in connection with the West Luther Drain apart from services preformed with respect to the EA.

In addition to this clarification the Counsel for the Township submitted that s. 6 of the Act stands alone and that there is a distinction between the word “cost” and the word “costs” throughout the Act.

Mr. Deverell further states that s. 6 provides for an EA and the payment of the cost in a manner that differs from the overall approach of the Act. According to Mr. Deverell, this difference indicates that rather than allocating this expense to the cost of the drain, the Act provides that cost adheres to the entity responsible for it. Counsel submitted that under s. 6 there were three entities available to bear the expense; another local municipality, a Conservation Authority, or the Township. It was submitted that if another municipality or the GRCA were to request an EA, the cost of the EA would be paid by the requestor under s. 6.(1). If a municipality were to decide to obtain an EA, “on its own initiative” the cost would be paid by the municipality from its general funds.

Counsel submits that the combined effect of section 6 (1) and 6(2) are to make it clear that the responsibility for expenses under s. 6 is not “in flux and is determined by s. 6”. Counsel then provided an analysis of who requested the EA, noting that the Drainage Referee’s Order of March 3^rd, 2009 had listed as a purpose: “to establish whether Grand River Conservation Authority will be requesting an environmental appraisal pursuant to s. 6 of the Drainage Act”. Counsel also confirmed the intent of the Notice of Prehearing Motion No. 2 dated April 7^th, 2009 made by GRCA was to request an EA. And finally, Counsel verified paragraph 1 of the Referee’s Order of April 16^th, 2009; “there shall be an environmental appraisal undertaken on the West Luther Drain on proposed Branches A and A1 at the request of the Grand River Conservation Authority.” The Township requested an order from the Referee confirming that the responsibility for payment of the Smart accounts totaling $19,079.57 lay upon the GRCA.

SUBMISSIONS OF COUNSEL FOR ALFRED WILSON

Peter Fallis, Counsel for Wilson, provided submissions on February 16^th, 2010. It is the submission of Counsel for Wilson that the GRCA failed to appreciate the difference between an assessment of costs under the provisions of s. 108 of the Act and the discretion the Referee has to award costs in proceedings before the Referee under s. 109 of the Act, as opposed to the payment of the cost of an EA under s. 6 of the Act. Wilson submits through Counsel that neither the Township nor he had made a request that either be awarded costs pursuant to s. 109 of the Act.

Counsel for Wilson commented on responsibility under s. 6 of the Act, noting in paragraph 9 of his submissions that the original request was beyond the notice period required by s. 6 of the Act. According to Counsel for Wilson, as “GRCA only made formal request through the Drainage Referee on April 7^th, 2009 requesting leave to allow GRCA to give notice to the Counsel of the Respondent Township requesting an environment appraisal under s. 6(1) of the Drainage Act”. It is the submission of the Respondent that the cost of the Drainage Engineer only arose out of the EA request and that the Order of the Referee dated April 16^th, 2009 resulted from such request by the GRCA. Counsel maintained that the services provided by the Drainage Engineer were requested by the Court as a preliminary requisite step necessary to be undertaken in order to organize the EA to be carried out under s. 6(1) of the Act.

Mr. Fallis contended that such services were ordered by this Court on April 16^th, 2009 and that such services were an “expense” rather than a cost. As an expense, they should continue to be attributed to the account of the GRCA as the party who requested the EA.

He further submitted that when the Township paid the two accounts of the Drainage Engineer, “this does not in any way derogate from the statutory obligation of the GRCA to pay that account. Effectively the Township now owns the “account receivable” of the Drainage Engineer and is entitled to stand in the shoes of the Drainage Engineer to recover from the GRCA the expense that the GRCA is otherwise statutorily required to pay.” Counsel requested that this Court make a written determination that the steps taken by the Drainage Engineer were proper and necessary first steps to be taken for the initiation of an EA.

Finally, the Respondent Wilson submitted that the compromise resolution achieved between the parties “came out of an awareness of the financial realities of an additional extreme cost and delay that would be incurred if the environmental appraisal were commissioned and undertaken in both of its anticipated two phases”.

REPLY

In reply, GRCA, through Counsel, stated that it did not make a request to the Council of the Township under s. 6(1) for an EA.

It is submitted that it only became clear to all parties, as well as the Referee, in April 2009, the environmental issues were a key part of the Wilson Drain Petition and that the Referee had no jurisdiction to deal with it, unless someone took a step to invoke jurisdiction. Grand River Conservation Authority took that step, but as submitted initially, the settlement in the Consent Order by Technical Memorandum accomplishes a result to benefit all parties, but on the basis which Grand River Conservation Authority has sought for the last 10 years.

Grand River Conservation submits in further reply that, in substance the Technical Memorandum still leaves Respondent Wilson with the cost, burden and duty of collecting and submitting information which can amount to an EA. So too, the cost incurred for the initial work of Mr. Smart are submitted to belong to Mr. Wilson and not to Grand River Conservation Authority.

FINDINGS OF LAW AND FACT

Having read the submissions of Counsel, I find as follows:

ISSUE #1 – DOES THE REFEREE HAVE THE DISCRETION TO ALLOCATE THE COST OF AN ENVIRONMENTAL APPRAISAL TO A PARTY, OTHER THAN THE PARTY WHO REQUESTED IT?

It is acknowledged that Counsel for the GRCA is concerned regarding the silence of the Act on criteria or guidelines to be applied by a Tribunal under an appeal pursuant to s. 6(3); in fact, however, the expertise that the Ontario Drainage Tribunal brings to such matters arises from its composition, which includes a solicitor, and in most situations of this type of appeal, a drainage engineer and a lay person from the general public, all with expertise in technical questions pertaining to a drain.

The analogy made by Counsel to the Rules of Civil Procedure, more specifically Rule 58.06(1) must be tempered by the scope of the Rules of Civil Procedure which states under Rule 1.02 (1)(3) Application of Rules: “these rules apply to all civil proceedings in the Court of Appeal and in the Superior Court of Justice subject to the following exceptions: . . . 3. they do not apply if the statute provides for a different procedure.”

While the Referee is often guided by the Rules of Civil Procedure in areas where the Act is silent, in the situation before me we have a procedure that builds a process which offers numerous opportunities for appeal. For example, an appeal in a similar situation under s. 72 (2), where a Council refers an Engineer’s Account to the Tribunal, there is a right of a further appeal to the Referee.

Initially, however, I find the decision is to be made by the Tribunal. If it reduces the cost of the EA, this ultimately will have the effect of reallocating the same as the engineer’s account, which in this particular situation has already been paid by the Township.

I am urged to take a wider view of the situation, expanding beyond the scope of proceedings under the Act to include issues which have arisen before the Ontario Municipal Board in relation to unresolved requests for core data. However, since the Referee only received a request for an Order under the Act regarding procedures to be followed on December 10^th, 2008, with further motions by other parties, disclosure could not have occurred in advance of that request, as the process of the Act and the appeals of the GRCA under s. 47 to the Referee and s. 49 to the Tribunal inevitably leads to some delay. Nevertheless, once the matter came within the jurisdiction of the Court of the Drainage Referee, all parties moved expeditiously to provide the ultimate disclosure which was contained in the Technical Memorandum, agreed upon by the representatives of Wilson and GRCA dated October 9^th, 2009. In essence, the delays which occurred prior to the matter going before the Drainage Referee could not be ascribed to either party, in that once the request was made for the EA, settlement came within a number of months. All parties have agreed that such settlement has been a great saving of time and cost.

ISSUE #2 - ADDITIONALLY, DOES THE REFEREE HAVE THE DISCRETION TO AWARD THE COSTS OF THE ENVIRONMENTAL APPRAISAL TO THE COSTS OF THE DRAINAGE WORKS?

The second issue relates to the discretion of the Referee to award the cost of the EA to the cost of the drainage work. In arriving at their settlement, the parties appear not to have been able to achieve a resolution with regard to such costs, which could have been included as cost of the drainage work under s.73(1) of the Act. To date, no request has been made for costs under s. 73(1) to be included as of this drainage work. However, it is the opinion of the Referee that the participation of Counsel in making application for directions and the various cross motions leading up to the appearance of June 16^th, 2009 are costs of proceedings which could form part of the drain. Upon request of Counsel, the Referee would be favourably disposed to ordering such cost of the parties on a partial indemnity basis to form part of the cost of the drainage work in accordance with s.73(1). Although the Referee can assess these costs, it would be more cost efficient if the parties, on consent, were able to arrive at an amount of costs for the proceedings before the Referee up to and including June 16, 2009, which would be added to the cost of this drain.

ISSUE #3 - DOES THE PARTY WHO REQUESTED THE ENVIRONMENTAL APPRAISAL, IF ORDERED TO PAY THE COSTS, HAVE A RIGHT OF SET OFF FOR ITS COSTS IN THE LEGAL PROCEEDING.

This Court finds that such costs would not be a set off. However, reimbursement of such costs for the GRCA could come from those costs being deemed part of the cost of the drainage works, as described in the previous section.

As I have described previously in this decision, while I was willing to invoke my powers pursuant to Section 106. (1)(d) and (f), if I was of the opinion that the process of the Act would be thwarted if GRCA was not given its right, although out of time, to have an environmental appraisal. The outcome of that process had the desired effect of facilitating a settlement which might not have occurred otherwise. I will not alter the allocation of the cost of the EA. As I have noted in my order of January 19, 2010, the time limit for appeal to the Tribunal, pursuant to s. 6(3), shall commence as of the date of this Decision. I am satisfied that although the Referee may have waived the time frame within which a request for an EA could be made, that such request indeed was made by the GRCA. I am further satisfied that, as a consequence of this request, any alteration of its account will out of necessity have to occur through an appeal under s. 6(3) to the Tribunal in the normal process of the Act.

Finally, I note that no request was made in the submissions of any of the parties to this Motion for costs which again could form part of the cost of the drainage works under s. 73(1) of the Act. Given the success of all parties in resolving the matters without the necessity of a full appeal under s. 47 of the Act, I am also inclined to grant costs for the period subsequent to my Order of January 20^th, 2010 as part of costs of the drainage works, again on a partial indemnity basis. If Counsel are able to agree on such costs, I will complete a Consent Order as to the same, otherwise the Referee can assess costs in absence of an agreement during the initial period of proceedings up to June 16^th, 2009 and for the period described above.

DATED at Strathroy, Ontario this 10th day of June, 2010.

ROBERT G. WATERS

ONTARIO DRAINAGE REFEREE