Adelaide Metcalfe (Twp.) v. Strathroy-Caradoc (Mun.), 2022 CanLII 60856

Ontario Land Tribunal

Tribunal ontarien de l’aménagement du territoire

ISSUE DATE:

July 04, 2022

CASE NO(S).:

OLT-22-003877

PROCEEDING COMMENCED UNDER subsection 474.10.3 (1)(j) of the Municipal Act, 2021, S.O. 2021, c. 25

Claimant:

Township of Adelaide Metcalfe

Respondent:

Municipality of Strathroy-Caradoc

Subject:

Servicing Agreement

OLT Case No.:

OLT-22-003788

OLT Lead Case No.:

OLT-22-003788

OLT Case Name:

Adelaide Metcalfe (Twp.) v. Strathroy-Caradoc (Mun.)

Heard:

June 28, 2022 by video hearing

APPEARANCES:

Parties

Counsel

The Corporation of the Township of

Paula Lombardi

Adelaide Metcalfe (“Adelaide Metcalfe”)

Michael Polvere

The Corporation of the Municipality of

Carolyn Brandow

Strathroy-Caradoc (“Strathroy-Caradoc”)

DECISION DELIVERED BY DAVID L. LANTHIER AND ORDER OF THE TRIBUNAL

INTRODUCTION AND BACKGROUND TO THIS MOTION

1This Motion, for a determination of the Tribunal’s jurisdiction, comes before this Panel through a somewhat unusual path. At the heart of the matter is a dispute between these two abutting lower tier municipalities relating to a Servicing Agreement between them first executed in October 2003, and later renewed and extended. While the dispute is between two municipal corporations, it clearly has farther reaching effects as it directly impacts access to water and wastewater services by property owners within the municipal boundary of Adelaide Metcalfe, from Strathroy-Caradoc, in the defined Service Area of the Centre Road corridor. The spillover effect of the dispute is readily apparent as there is a planning appeal before the Tribunal on July 13, 2022 initiated by one such property owner directly affected by the dispute.

2To the extent necessary to determine the Motion, the background to the dispute, and the Servicing Agreement, and the subsequent Renewal Agreement, which form the basis for the Notice of Request for Arbitration in this Case File, will be addressed in detail below.

3As to procedural matters and the course of the litigation, the chronology of most events is not disputed and there is a voluminous paper trail to reflect the sequence of communications and exchanged drafts of proposed agreements to continue the sharing arrangements as the parties originally intended. At a point in the breakdown of discussions between the two Municipalities as to the terms of a new Servicing Agreement, Adelaide Metcalfe filed a Notice of Request for Arbitration (the “Request For Arbitration”) with the Tribunal on April 29, 2022, pursuant to the Municipal Act, 2001 (“Municipal Act”) based upon the terms of the Servicing Agreement as extended and the assertion that the dispute relates to the failure of Strathroy-Caradoc to continue to provide access to public utilities under the agreed upon terms.

4In response to the Request for Arbitration, Strathroy-Caradoc advised Adelaide Metcalfe on May 10, 2022 that it did not agree to proceed to Arbitration. No Response was filed with the Tribunal. Instead, in or about the week of May 9, 2022, Strathroy-Caradoc filed an Application before the Ontario Superior Court of Justice for certain declaratory relief. The entirety of the pleadings relating to this Application have not been provided to the Tribunal by either party. Strathroy-Caradoc included in its materials (Tranquilli Exs. X, Y) the Notice of Application, which indicates that the relief sought from the Court is a declaration that the Servicing Agreement, as it was renewed, has expired and that no owner within the Adelaide Metcalfe Service Area is entitled to make any new connections to its water supply or sewer systems.

5The Endorsement of His Honour Justice Garson dated May 27, 2022, confirms that upon the appearance of the parties on that date, Adelaide Metcalfe requested an adjournment to allow for it to determine whether the Tribunal would assume jurisdiction. Strathroy-Caradoc sought an order to prevent any further service connections. The following excerpt from the Endorsement sets out the Court’s observations and directions:

…I see merits to both positions. I also pause to observe that this application potentially impacts a number of residents and has broader implications then just effecting [sic] the parties before me.

Notwithstanding very able and somewhat persuasive submissions, I believe it is just in these circumstances to grant the adjournment requested as I believe a presiding justice will want to know whether OLT would assume jurisdiction. I accept that OLT’s position is not determinative but is certainly a factor to take into account.

Accordingly, matter will adjourn to July 8th 2022 10:00 am to deal with the interim relief sought and on the following terms:

(i) between today and July 8, 2022 no new connections to Strathroy's water supply or sewer systems shall be made by the new 90 room Holiday Inn Express, the A-Z Storage Facility or the Cuddy property or lands;

(ii) the [Respondent Adelaide Metcalfe] shall take immediate steps to secure an expedited jurisdiction hearing date before the OLT and shall notify them of the next date in this matter and the primary reason for the granting of this adjournment.

6In accordance with the directions of Justice Garson, the Tribunal was subsequently advised that a motion date was required, and on June 3, 2022, counsel for Adelaide Metcalfe forwarded the Court’s Endorsement. On June 6, 2022, the Tribunal issued the Appointment for this hearing event on June 28, 2022. The directions of His Honour pointedly have required the Tribunal to hear this Motion and issue a decision prior to the return date before the Court on July 8, 2022.

MATERIALS FILED

7The following pleadings and materials have been filed with the Tribunal for the purposes of this Motion:

(a) The Request for Arbitration pursuant to s. 20 of the Municipal Act, 2001, dated April 19, 2022, filed with the Tribunal by Adelaide Metcalfe as the Claimant, and Strathroy-Caradoc as the Respondent;

(b) The Endorsement of the Ontario Superior Court of Justice dated May 27, 2022;

(c) The two-volume Motion Record of Adelaide Metcalfe dated June 13, 2022 supported by the Affidavit of Morgan Calvert sworn June 10, 2022, with Exhibits A to Z and AA to KK;

(d) The Responding Motion Record of Strathroy-Caradoc dated June 21, 2022 supported by the Affidavit of Fred Tranquilli sworn June 20, 2022, with Exhibits A to Z;

(e) The Reply Motion Record of Adelaide Metcalfe containing the Affidavit of Morgan Calvert sworn June 24, 2022;

(f) The Brief of Authorities of Adelaide Metcalfe, together with additional materials subsequently provided, inclusive of other excerpts of the Municipal Act, the Planning Act and one additional decision of the Ontario Court of Appeal;

(g) The Brief of Authorities of Strathroy-Caradoc, together with additional materials subsequently provided, inclusive of excerpts of the Ontario Municipal Board Act and three additional cases;

8For the purposes of this Decision, and expediency, only some exhibits are referenced, although the Tribunal has reviewed and relies upon the substantial record filed in support of the Motion. References to: exhibits to the Affidavit of Morgan Calvert sworn June 10, 2022 shall be referenced as “Calvert 1 Ex.”; exhibits to the Affidavit of Morgan Calvert sworn June 24, 2022 shall be referenced as “Calvert 2 Ex.” and exhibits to the Affidavit of Fred Tranquilli shall be referenced as “Tranquilli Ex.*”.

THE MOTION, THE POSITION OF THE PARTIES AND THE ISSUES

9The Motion brought by Adelaide Metcalfe, as confirmed during submissions, requests the following:

(a) An order confirming that the Ontario Land Tribunal has jurisdiction under the provisions of the Municipal Act, the Ontario Land Tribunal Act, 2021 (“OLT Act”) and/or the Servicing Agreement to hear and resolve the issues raised in the Request for Arbitration dated April 19, 2022;

(b) An interim order requiring the Corporation of Strathroy-Caradoc to continue to provide and allocate the services in the identified Service Area to Adelaide Metcalfe as set out in the Servicing Agreement until the full hearing of the arbitration and a final decision on the matter rendered with no further right of appeal.

10It is the position of Adelaide Metcalfe that based on the terms of the Service Agreement, as it was renewed, and as it has continued to govern the delivery of the water and sewer services to the defined service area, and given the matters within the jurisdiction of the Tribunal, s. 474.10.3(i) and (j), and s. 474.10.16 of the Municipal Act operate to confer jurisdiction over the determination of the dispute relating to the Servicing Agreement as set out in the Request for Arbitration now filed with the Tribunal. Adelaide Metcalfe also relies upon s. 86 of the Municipal Act which imposes a mandatory requirement for the delivery of a water or sewage public utility to buildings meeting the criteria identified in that section.

11Strathroy-Caradoc denies that the Tribunal has the jurisdiction or authority to arbitrate or adjudicate the terms of a new servicing agreement between the two Municipalities and submits that under s. 474.10.3(1)(j) of the Municipal Act, the Tribunal may only have such jurisdiction if a valid and binding contract exists, whereby the parties have agreed to submit to the jurisdiction of the Tribunal. Since the specified term of the Servicing Agreement, as extended, eventually expired on March 31, 2019, and despite continued steps being taken to negotiate a new agreement, those efforts have failed, and Strathroy-Caradoc submits that there is accordingly no longer any valid and binding agreement that exists to invoke s. 474.10.3(1)(j) of the Municipal Act. As a result, no jurisdiction remains vested with the Tribunal under statutory authority. Essentially, Strathroy-Caradoc argues that Adelaide Metcalfe is out of time to request arbitration, and so too is the statutory basis to invoke the Tribunal’s jurisdiction “out of time”.

12As to the additional grounds asserted by Adelaide Metcalfe that the Tribunal retains general authority under s. 474.10.3(1)(i) and s. 474.10.16 of the Municipal Act to inquire into, investigate, and hold hearings in regards to matters which may result in any default on the part of the Tribunal for the purposes of avoiding such failure to meet obligations, or to deal with public utilities, Strathroy-Caradoc submits that such jurisdiction relates only to the municipality obligated to provide services or utilities to its ratepayers. In this case, Strathroy-Caradoc argues that such matters and obligations over which the Tribunal would have jurisdiction thus relate only to Adelaide Metcalfe, as the supplier to its own ratepayers, and not to Strathroy-Caradoc. Other arguments are advanced as to the non-application of the sections of the Municipal Act relied upon by Adelaide Metcalfe.

13The parties are obviously opposed in view as to the ability of the Tribunal to make any such interim order, derivative of such jurisdiction. Adelaide Metcalfe urges the Tribunal to make an interim order to deal with the pressing matter of the filed, and impending litigation before the Tribunal in relation to three development applications: the “Cuddy” Appeal scheduled for July 13, 2022 (Tribunal Case No. OLT-22-002991); two phases of a development including a fast-food restaurant and a hotel development proposed within the Service Area and a development by A to Z Storage Limited.

THE ISSUES

14The issues are straightforward:

(a) on the facts presented, do the terms of the Servicing Agreement, as extended, and the contractual relationship between the parties, trigger the jurisdiction of the Tribunal pursuant to s. 474.10.3(1)(j) of the Municipal Act, 2001;

(b) Alternatively, do the factual and disputed issues, as they have been placed before the Tribunal in the Request for Arbitration, permit the Tribunal to assume jurisdiction under s. 474.10.3(1)(i) and s. 474.10.16 (and relatedly s. 86) of the Municipal Act;

(c) If the Tribunal determines it has jurisdiction, is it appropriate or necessary to make the Interim Order requested by Adelaide Metcalfe.

15As submissions have been advanced in this Motion, references have been made to the “exclusive” jurisdiction of the Tribunal over the issues and matters raised in the Notice of Request for Arbitration pursuant to the Municipal Act. The Tribunal can deal with this point in a summary fashion. It is the view of the Tribunal that it is unnecessary, and in fact outside of its purview, for the Tribunal to determine whether its jurisdiction is “exclusive”. As the Court has rendered its directives on the first attendance on the Application before it, it remains for the Court to decide whether it may also have, and intend to exercise, jurisdiction to the exclusion of the Tribunal.

16In deciding the issues on this Motion, it is notable that Counsel for both parties have referenced the absence of any Tribunal case or judicial authority where the jurisdiction of the Tribunal under the identified sections of the Municipal Act. This may, as suggested, possibly reflect the rare circumstances in which the Tribunal’s jurisdiction under these sections has been brought into play in such a dispute between two Municipalities. However, rare or not, the sections granting the Tribunal the authority to arbitrate, mediate or adjudicate the identified matters nevertheless remain in force in the Province of Ontario and the issue on this Motion is whether the Tribunal can assume jurisdiction.

THE FACTUAL BACKGROUND TO THE REQUEST FOR ARBITRATION

17The parties have provided extensive affidavit and documentary evidence for the purposes of the Motion. Much of this will be more relevant to the matters to be determined by the Tribunal if it has jurisdiction under the Request for Arbitration, or to the Court if it assumes jurisdiction in the Application and need not be addressed in detail by the Tribunal on this Motion. In this Motion, it is not for the Tribunal to make final factual determinations on the disputed matters relating to the Servicing Agreements, or findings as to the issues relating to that contractual relationship. The issue at hand is limited only to that of jurisdiction.

18Certain evidence that is pertinent to the issue of jurisdiction will be reviewed in the analysis below, but the Tribunal considers it necessary to outline certain facts and portions of the documentation relating to the Servicing Agreements.

19The negotiated arrangement for shared public utility services occurred in the context of a boundary adjustment that was approved by the Ontario Municipal Board (“OMB”) in 1980 and which recognized and maintained the Service Area as an area for industrial, commercial and residential uses. The boundary adjustment involved both Municipalities amending their Official Plans to implement use designations in the areas within their respective boundaries in and around the Service Area.

20The terms of the Servicing Agreement (Calvert 1 Ex. J) were first in effect for 10 years from 2003 to 2013. The Renewal Agreement (Calvert 1 Ex. T) was then signed and approved by the parties extending the terms to April 2019 (For the purposes of this Motion and this Decision, except where noted, there is little difference between the Servicing Agreement and the Renewal Agreement, and for convenience references to “Servicing Agreements” in this Decision will be deemed to refer to the common wording of the relevant sections in the two agreements).

21There were ongoing negotiations from 2019 to the present, during which time additional water and sewer connections were made within the Service Area. The perspective of the parties as to what has happened in these past three years differs.

22A condensed summary of the terms and conditions of the Servicing Agreements for the purpose of this Motion is as follows:

(a) The initial Servicing Agreement of 2003 provided for detailed terms relating to such things as the responsibility for connections, funding and responsibility for certain capital works necessary to allow for connections of the Service Area to the services to, and from, the Strathroy-Caradoc infrastructure, billings and payments, inspection and liability. A part of the agreement related to the sharing of storm water management. The storm water management is not the subject of dispute.

(b) There is no dispute as to the Service Area within Adelaide Metcalfe abutting the west boundary of Strathroy-Caradoc and extending along either side of Centre Road (s. 1.1.1 and “Schedule A”).

(c) Although the Servicing Agreements primarily allowed for the Service Area in Adelaide Metcalfe to receive the benefit of water and sewer services, there was a reciprocal benefit to Strathroy-Caradoc. The “very critical” significance to Strathroy-Caradoc of the installation of the watermain under the Agreement that made the watermain works necessary to it in order to maintaining and improve its water system, was plainly communicated to Adelaide Metcalfe (Calvert 2 Ex. B). A large diameter watermain was installed which permitted Strathroy-Caradoc to close the loop of its existing watermains, thus improving water supply and pressure in a defined catchment area. Adelaide Metcalfe covered 82.7% of the cost of the installation of the main.

(d) The initial Servicing Agreement was conditional upon Adelaide Metcalfe securing approval of a debenture to fund the works required to permit the connections by the OMB.

(e) Strathroy-Caradoc agreed to supply water to the Service Area within the boundary of Adelaide Metcalfe (s. 2.2.1).

(f) Subject to conditions, Strathroy-Caradoc also agreed to receive sanitary sewage from the Service Area (s. 1.2.1) and committed to allocating and maintain a specific treatment capacity for the exclusive benefit of the Service Area (s. 1.6.1).

(g) In the Renewal Agreement, the allocated sewage treatment capacity exclusively set aside for Adelaide Metcalfe was 1,285 m³ per day, (s. 1.6.1) increased from 1,100 m³ per day under the first Servicing Agreement. This represented a 12.85% proportionate share of Strathroy-Caradoc’s Sewage Treatment Facility Capacity. (s. 1.8.1)

(h) The Servicing Agreements confirm that Adelaide Metcalfe paid the up-front lump sum of $1.1 million as consideration for the allocated sewage treatment capacity. Adelaide Metcalfe was also to pay the 12.85% proportionate share of any future capital expenditures for improving or upgrading the sewer system (s. 1.8.1)

(i) Additional payments by Adelaide Metcalfe to Strathroy Caradoc were paid and the Agreement provides for the assumption by Adelaide Metcalfe of these various costs and responsibilities. Owners connecting to the public utility services paid for such services in the ordinary course at going rates.

(j) Strathroy-Caradoc retained authority for the approval of connections and the issuance of permits and inspection of Adelaide Metcalfe’s systems. (s. 2.4.3 and 2.6.2).

RECENT EVENTS AND CURRENT STATUS – ACCESS TO PUBLIC UTILITIES

23Both parties have provided evidence through the two witnesses as to the manner in which the parties have communicated with each other in the time period that has elapsed since the term of the formal extension of the Servicing Agreements ran its course.

24As indicated, the perspectives of the parties as to the nature of this ongoing dialogue differs in many respects. Much of this may be relevant within the arbitration/adjudication of the issues between the parties, and only limited facts are pertinent to allow for the Tribunal to decide the jurisdictional issue and the request for Interim Relief.

25For now, for the purposes of this Motion, the Tribunal has gleaned the following:

(a) In 2019 discussions and negotiations continued between the parties in furtherance of the goal of executing a new Servicing Agreement. The extent to which the discussions and negotiations resulted in an oral agreement to extend the operation of the Servicing Agreement or reflect the original expressed intent of the parties to take reasonable steps to negotiate a new Servicing Agreement, remains to be decided by the trier of fact.

(b) Throughout the period between April 2019 and earlier this year, permits continued to be issued and the parties continued to operate in a manner more or less consistent with the procedures by which connections had occurred and public utility services were provided to properties in the Service Area. Adelaide Metcalfe describes this continuing process of permitting connections as maintaining the status quo under the Servicing Agreements. Strathroy-Caradoc does not concede this and Mr. Tranquilli’s evidence is that despite the fact that it had not terminated access to services, it has not meant that Strathroy-Caradoc believes that it remains obligated under the Servicing Agreement to continue access to services.

(c) The framework for a new agreement for the shared public utility services continued to be the subject of ongoing discussions and exchanged drafts.

(d) One subject of discussion was the fact that despite the substantial amount debentured and paid by Adelaide Metcalfe to Strathroy-Caradoc at the beginning of the Servicing Agreement to acquire the allocated percentage of sewage services, development did not occur at the expected pace and Adelaide Metcalfe utilized only a small portion of the allocated capacity by the time the renewal and extension had run their course. Adelaide Metcalfe perceives this overpayment as a factor to consider in requesting that connections continue pending a resolution of the dispute. There is, in its view, no hardship to Strathroy-Caradoc since Strathroy-Caradoc has received far less sewage volume into its capacity than was anticipated, allocated and paid for by Adelaide Metcalfe when the Servicing Agreement was first signed.

(e) It is not contested that through 2019 and 2020, connection permits continued to be issued to property owners with the approval of Strathroy-Caradoc.

(f) In November of 2021, the request was made by Holiday Inn to connect to the services. After an exchange of communication, there was a continued impasse and communications regarding the absence of a new agreement and intended opposition by Strathroy-Caradoc to any further connections.

(g) In January 2022, Adelaide Metcalfe advised that they would authorize connections to the system despite the opposition of Strathroy-Caradoc, and Strathroy-Caradoc in turn advised that it would commence an application to secure an order to prevent any unauthorized connections to the system.

(h) The opposed views reached a head on February 24, 2022 when a letter was forwarded from the Mayor of Strathroy-Caradoc to Adelaide Metcalfe. The correspondence sheds light on some of the issues between the parties, but the letter can fairly be characterized as the “final line in the sand” for Strathroy-Caradoc as it asked that its final proposed draft be signed.

(i) Thereafter the Request for Arbitration and the Application to the Court were filed by each of the two Municipalities. This has led the parties to this current point in time.

ANALYSIS OF THE EVIDENCE AND DISPOSITION

26The fundamental “creature of statute” principle of administrative law provides that the powers and jurisdiction of a Tribunal are derived from, and strictly limited to, those powers and jurisdiction over matters which are expressly provided by statute.

27The Tribunal’s home statute is the OLT Act. Section 8(1) of the OLT Act provides that the Tribunal has “exclusive jurisdiction in respect of all matters in which jurisdiction is conferred on it by this or any other Act” and s. 8.2 states that the Tribunal has “authority to hear and determine all questions of law and fact with respect to all matters within its jurisdiction, unless limited by this or any other Act.”

28For the Tribunal to conclude that it has jurisdiction over the issues raised in the Request for Arbitration, it must accordingly determine that the sections of the Municipal Act confer such authority.

Section 20 of the Municipal Act – Sharing Services across Municipal Boundaries

29Section 20(1) of the Municipal Act expressly provides for the sharing of services across boundaries and that “A municipality may enter into an agreement with one or more municipalities…to jointly provide, for their joint benefit, any matter which all of them have the power to provide within their own boundaries.” Prior to the repeal of much of the Act, s. 11 of the Public Utilities Act also provided, in 2003, that a municipal corporation could contract to supply water for period not exceeding 20 years to a neighbouring municipality.

30As a starting point, the Tribunal must first acknowledge that the circumstances in which two Municipalities might avail themselves of this section of the Municipal Act, in 2002 and 2003, to explore and implement a contractual arrangement for the sharing of public utilities, would be relevant consideration within a variety of planning appeals before the Tribunal and its predecessors, under the Planning Act when considering matters of good planning in the public interest.

31There is also little doubt, in the Tribunal’s view that the subject matter of servicing agreements such as those provided for in s. 20(1) of the Municipal Act, and entered into between these two municipalities in 2003, is that of “public utility” services as defined in s. 1(1). The Servicing Agreements plainly deal with both “water” and “sewage” services and are thus included in the definition of public utilities.

32It is not disputed that in the process of finalizing the 2003 Servicing Agreement, the OMB was required to exercise its authority to approve the debenture required by Adelaide Metcalfe to fund the works. Adelaide Metcalfe refers to the steps taken in 2003 to implement the Servicing Agreement as the “attornment” by the parties to the jurisdiction of the Tribunal, which it considers to be indicative of the Tribunal’s authority over the subject matter of the Request for Arbitration.

33There is no question that the original Servicing Agreement, under the legislation as it then was, required the OMB to approve the issuance of the debenture necessary to permit Adelaide Metcalfe to fund the works required under the terms. The parties agreed that if the OMB did not provide the necessary Order, or Adelaide Metcalfe could not finance its obligations under any amendments that might be directed, the agreement was null and void, and the agreement was deemed to be frustrated.

34In the Tribunal’s view, the parties did indeed attorn to the authority of the Tribunal’s predecessor as to an integral requirement of the contractual arrangements under s. 20(1) of the Municipal Act. In that respect, the parties recognized the authority of the Board over one aspect of the Servicing Agreements. However, this initial recognition of the jurisdiction of the Board to approve the debenture required to facilitate the sharing of public utility is not, as Adelaide Metcalfe suggests, itself sufficient to establish the jurisdiction of the Tribunal over the issues raised in the Request for Arbitration. For that, the Tribunal must look to other sections of the Municipal Act.

The Municipal Act Sections to Be Considered

35Upon the legislated ability of two municipalities to enter into an agreement, whereby one will supply services to the other, the Municipal Act then contains sections which Adelaide Metcalfe submit serve to grant the Tribunal the authority to determine disputes between municipalities in relation to issues arising with respect to the delivery of water and sewer public utility services, which are the subject of the Servicing Agreements.

36Adelaide Metcalfe has directed the Tribunal to four sections of the Municipal Act, which provide the bases upon which the Tribunal has jurisdiction to adjudicate the dispute and issues in the Notice of Request for Arbitration: s. 86(1); s. 474.10.3(1)(i); s. 474.10.3(1)(j); and s. 474.10.16. These sections read as follows:

Mandatory supply

86 (1) Despite section 19, a municipality shall supply a building with a water or sewage public utility if,

(a) the building lies along a supply line of the municipality for the public utility;

(b) in the case of a water public utility, there is a sufficient supply of water for the building;

(c) in the case of a sewage public utility, there is sufficient capacity for handling sewage from the building; and

(d) the owner, occupant or other person in charge of the building requests the supply in writing.

MUNICIPAL AFFAIRS

Jurisdiction and powers

474.10.3 (1) The Ontario Land Tribunal has jurisdiction and power in relation to municipal affairs,

(i) to inquire at any time into any or all of the affairs, financial and otherwise, of a municipality and hold hearings and make investigations respecting those affairs as may appear necessary to be made in the interest of the municipality, its ratepayers, inhabitants and creditors and particularly to make and hold inquiries, hearings and investigations for the purpose of avoiding any default or recurrence of a default by any municipality in meeting its obligations;

(j) when authorized by an agreement entered into by two or more municipalities in which the municipalities agree to be bound by the decision of the Tribunal, to hear and determine disputes in relation to the agreement;

PUBLIC UTILITIES

Jurisdiction and powers

474.10.16 (1) The Ontario Land Tribunal has jurisdiction and power,

(a) to hear and determine any application with respect to any public utility, its construction, maintenance or operation by reason of the contravening of or failure to comply on the part of any person, firm, company, corporation or municipality with the requirements of any Act, or of any regulation, rule, by-law or order made under any Act, or of any agreement entered into in relation to such public utility, its construction, maintenance or operation;…

An Agreement to Be Bound by the Tribunal’s Decision – s. 474.10.3(1)(j)

37Clearly the Tribunal has been granted the statutory jurisdiction under s. 474.10.3(1)(j) to decide disputes relating to agreements between municipalities, including agreements regarding the sharing or delivery of services across municipal boundaries, if the municipalities have agreed to be bound by the decision.

38Whether the Tribunal has jurisdiction under this section necessitates a determination as whether there is, or may be, such an agreement between Adelaide Metcalfe and Strathroy-Caradoc to be bound by the Tribunal’s Decision.

39The parties do not dispute that the section of the Servicing Agreements that is applicable is section 4.2.4. As the Motion gives rise to arguments relating to the application of this section, it is necessary to refer to the wording (emphasis added):

4.2.4 Termination of Services at End of Term.

Unless this Agreement is terminated earlier in accordance with the terms of this Agreement, S-C and A-M hereby agree to enter into negotiations and make all reasonable efforts to negotiate a new agreement relating to the subject matter herein. These negotiations shall commence no later than six (6) months before the end of the Term, or any renewal thereof, by notice from A-M. If the parties have not reached a new agreement by the end of the Term (or Renewal Term), either party may within one (1) year of the notice from A-M, request arbitration by the Ontario Municipal Board to settle the terms under which the servicing arrangements shall be continued. If no agreement to continue has been reached and neither party requests arbitration within one (1) year after the notice from A-M, S-C shall be a liberty to terminate the services provided under this Agreement. ln the event that the terms of a new agreement are arbitrated by the Ontario Municipal Board under this Article 4.2.4, A-M and S-C hereby agree to be bound by the decision of the Ontario Municipal Board.

40The process of negotiating a “new agreement”, in the view of the Tribunal, was clearly intended by the parties and both Municipalities contractually committed to “make all reasonable efforts” to do that. If negotiation failed and no new agreement was reached, after Adelaide Metcalfe provided notice, either party could request arbitration by the OMB within one year of the notice. If “the terms of a new agreement [were] arbitrated”, the parties agreed that they would be bound by the Tribunal’s Decision. If the request was not made within one year of the notice, Strathroy-Caradoc could then terminate the Servicing Agreement.

41Strathroy-Caradoc’s position is that the terms of this section clearly stipulate the options that were available to Adelaide Metcalfe – and since Adelaide Metcalfe did not exercise the option, essentially Adelaide Metcalfe is now “out of time”. The submission of Strathroy-Caradoc is: there is no longer an agreement between the parties and if there is no agreement, then s. 474.10.3(1)(j) of the Municipal Act, which is based upon the existence of an agreement, cannot operate to allow the Tribunal jurisdiction.

42The Tribunal cannot agree with this restrictive approach.

43First, there clearly was an agreement that provided a means for the parties to submit to the jurisdiction of the Tribunal under s. 474.10.3(1)(j), which included the agreement to be bound by the decision of the Tribunal. In the Tribunal’s view, the intent of the parties was to first make all reasonable efforts to negotiate a new servicing agreement and failing such agreement they agreed to proceed to obtain a binding decision from the Tribunal, which represents the basis upon which the Tribunal’s jurisdiction is triggered under this section.

44The Tribunal is unable to summarily conclude from section 4.2.4, and the evidence presented on this Motion. that the complex and polarized negotiation that continued up to the point of unilateral termination of additional access to the public utility services provided by Strathroy-Caradoc fully nullifies the effect and validity of the agreement of the Municipalities to be bound by a decision of the Tribunal, as argued by Strathroy-Caradoc.

45The evidence from the parties indicates a path of negotiations to work out the terms of a new Servicing Agreement undertaken by both Municipalities. That shared focus to negotiate the terms of a new agreement was both intensive in form and extensive in duration after the Servicing Agreement was first formalized in 2003, which was obviously successful to the extent that the formal renewal and extension took the parties to 2019. Thereafter, the attempts to reach a resolution were less productive and has now culminated in rather entrenched positions of the two Municipalities.

46Discussions and negotiations, in some form, have continued through to February of 2022. There may be disagreement as to the relevance or form of the negotiations and discussions that have continued, or the precise length of time and manner that the parties continued to operate under the spirit of the original Servicing Agreements. These matters may eventually have to be determined by the trier of fact on the issues to be decided, but there is little doubt that the parties have continued to attempt to negotiate a new agreement as provided for in section 4.2.4 of the Servicing Agreements some time after the papered renewal and extension ended.

47For this reason, it is the view of the Tribunal that it is somewhat disingenuous of Strathroy-Caradoc to dismiss the jurisdiction of the Tribunal under s. 474.10.3(1)(j) because it asserts the Servicing Agreements and the process of entering into a new agreement are terminated. The manner in which the contractual relationship continued may inform the arbitration or adjudication of the very issues in dispute, and to be determined by the Tribunal or the Court remains to be decided on the merits. To predetermine that the Agreement has no effect is to pre-empt the issues to be decided by the body having jurisdiction.

48The Tribunal considers the practical and logical approach adopted by the Tribunal in Ontario Northland Transportation Commission v. Evanturel (Township), 2021 LNONLT to be instructive. The dispute as to the existence or non-existence of an agreement, and the determination of issues arising from a contractual relationship are questions of fact that should be determined by the Tribunal after a full hearing of the issues in dispute. Upon the evidence in this Motion, this is more so the case when the parties proceeded to negotiate after the formal end of the renewal and extension. Adelaide Metcalfe’s submission that the Municipalities have continued to operate in accordance with the terms, intent and spirit of the Servicing Agreements may have merit, and the component of that Agreement that confirmed the parties would be bound by a decision of the Tribunal, in arbitration processes, should not be so easily dismissed.

49For the purposes of considering jurisdiction, the Tribunal can, upon the facts presented on the Motion, conclude that the parties, under the Agreement, intended to settle the terms under which the servicing arrangements shall be continued and agreed to be bound by the Decision of the OMB if arbitration was the process followed. On a prima facie basis, there is sufficient statutory authority to accept jurisdiction under s. 474.10.3(1)(j). Findings of fact in relation to the Servicing Agreements, and the extent to which the agreement for the provision of shared services between these two Municipalities may be terminated, or “shall be continued” remain to be decided.

50Although Strathroy-Caradoc has argued that the Decision of the Court of Appeal, in Rampton v. Eyre, 2007 ONCA 331 (“Rampton”) should be distinguished because of the different form of the wording of the arbitration clause, the Tribunal cannot agree. The manner in which the trier of fact will determine how the dispute as to the continued access of owners in the Service Area to public utility services cannot be decided on this Motion without a full hearing on the merits. Nevertheless, the distinct and pointed agreement of the two Municipalities to have included an arbitration clause in their Servicing Agreements, providing for binding arbitration by the Tribunal, is sufficient to allow the Tribunal to conclude that it may assume jurisdiction under s. 474.10.3(1)(j) of the Municipal Act. As in Rampton, where the arbitration clause exists, the parties should be obliged to submit to the agreed-upon arbitration in accordance with its terms “...despite the contract’s expiration or termination”, if that has indeed occurred.

51Further, the Tribunal would utilize a common-sense approach to the examination of section 4.2.4 of the Servicing Agreements, in deciding whether it represents an agreement to be bound by arbitration before the Tribunal. This requires a consideration of the meaning of the section in the context of what the two Municipalities would reasonably have understood them to mean. As the Court indicated in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53,

The meaning of words is often derived from a number of contextual factors, including the purpose of the agreement and the nature of the relationship created by the agreement.

52In concluding that section 4.2.4 of the Servicing Agreements should be considered as obligating the two Municipalities to binding decision on the existence or form of continued servicing arrangements, under s. 474.10.3(1)(j), the Tribunal is mindful of the expressed intent of the Municipalities to find some path to a continued working arrangement for the continued sharing of services between the Municipalities. Although the section speaks to the possibility of an end to the contractual relationship, it is a scenario that is inexplicable without a workable means of extricating the Adelaide Metcalfe Service Area from its tethering to the Strathroy-Caradoc public utilities and finding a solution that recognizes the planning and development in the Township that has occurred under the Agreement, and what is necessary for continued orderly development and good planning.

53The Tribunal must conclude that section 4.2.4 represents the intended attornment of the Municipalities to the jurisdiction of the Tribunal, and its binding decision to determine how both parties move forward, mindful of the impact upon the owners of property in the Service Area. The Tribunal prefers this approach to the question of the jurisdiction of the Tribunal over that of the dispute resolution suggested by Strathroy-Caradoc – which is the summary termination of a municipal shared servicing arrangement and litigation seeking declaratory relief to allow it to terminate continued access to services which the receiving municipality requires for its ratepayers. Upon the whole of the evidence in this Motion this litigation before the Court was, in the view of the Tribunal, not what the parties intended.

54The termination also fails to recognize the broader public interest at stake here beyond a mere contractual dispute between two litigants and the statutory role that the Tribunal may be called upon to serve in arbitrating and adjudicating municipal and planning issues. In that regard: (a) the subject matter of the dispute is comfortably within the subject expertise and adjudicative procedures of the Tribunal in respect of planning and municipal matters; and (b) the resolution of public interest issues which transcend a contractual dispute is consistent with the Tribunal’s long-standing and recognized public interest mandate that the Tribunal has recognized as being of significance in matters which transcend the interests of the litigants. This is addressed further below.

Tribunal’s Jurisdiction over Public Utility matters – s. 474.10.16(1)(a) and s. 86

55Although the Tribunal need only determine that it has jurisdiction under one of the sections of the Municipal Act, and one of the bases advanced by Adelaide Metcalfe, if the analysis above is incorrect, for the reasons that follow, the Tribunal is equally satisfied that due to factual circumstances presented, it also has jurisdiction to adjudicate the subject matter of the Request to Arbitrate under s. 474.10.16(1) of the Municipal Act.

56There are basic facts which the Tribunal finds are not in dispute and of significance in deciding whether the Tribunal might have jurisdiction in contentious matters relating to the water and sewage public utility services under these sections of the Municipal Act.

57The evidence as presented on this Motion includes the following:

1. The practical result of the Servicing Agreements is that water and sewage services were to be delivered to owners within the agreed-upon Service Area of Adelaide Metcalfe from another municipality.

2. The dispute which is the subject of the Request for Arbitration relates to the Servicing Agreements and the delivery of, and access to, water and sewage public utilities within the Service Area.

3. The only reason that such public utilities are delivered to the select class of owners in the defined area by an abutting municipality rather than the municipality in which the lands are located and ordinarily responsible for such delivery, is because Adelaide Metcalfe entered into this special contractual relationship with Strathroy-Caradoc for the sharing of services back in 2002/2003.

4. Those Service Area owners within Adelaide Metcalfe currently have no other option for access to these public utility services other than those supplied via Strathroy-Caradoc.

5. Adelaide Metcalfe is responsible for planning and development within the boundary of the Service Area. Practically speaking, such planning and development is inextricably intertwined with access to public utilities within that Service Area. The development of lands cannot occur without orderly access to public utilities.

6. Adelaide Metcalfe, as the municipality having jurisdiction over the Service Area, is obligated to provide water and sewer public utility services to the owners of lands within the Service Area.

7. Notwithstanding the municipal responsibility of Adelaide Metcalfe to provide public utility services to the owners and developers in the Adelaide Metcalfe Service Area, they are effectively tethered to the water and sewer infrastructure constructed and operated under the Servicing Agreement and provided by Strathroy-Caradoc.

8. Thus, while Adelaide Metcalfe is the municipal entity responsible for the delivery of public utility services to property owners in the Service area, it is Strathroy-Caradoc that is currently the de facto provider of access to water and sewage public utility services.

9. Until such time as there is a determination of the disputed issues resulting in the termination of the servicing arrangements with an orderly transition, or alternatively the continuation of the contractual servicing of the Service Area through the terms of a new servicing agreement, the parties are at an impasse.

10. Under the current dispute, Strathroy-Caradoc is requesting an Order that will effectively prevent owners in the Service Area from making new connections to its water supply or sewer systems.

11. Under the current dispute, Adelaide Metcalfe is requesting an Order that will specifically permit owners in the Service Area to have continued access to new connections to Strathroy-Caradoc’s public utility systems until the issues are resolved.

58Strathroy-Caradoc argues that it owes no obligation to provide any public utility to owners in the Service Area within the Township of Adelaide Metcalfe pursuant to s. 86 of the Municipal Act and thus is not answerable in the adjudication of any issues relating to the supply of water and sewer services arising from this obligation. This position, in the Tribunal’s view, is premised on the assumption that the application of s. 86 is interpreted as being exclusive to the “municipality” in which the building is located and not to a “municipality” that may otherwise have become responsible for the supply of a water or sewage public utility under contractual obligation.

59As to jurisdiction, Strathroy-Caradoc argues that the Tribunal has no authority to adjudicate the issues raised in the Request for Arbitration under s. 474.10.16(1)(a) of the Municipal Act in relation to it because it is Adelaide Metcalfe that has the statutory obligation to provide public utilities to the owners of lands within its boundaries.

60Upon the materials presented in this Motion, and for the reasons that follow, the Tribunal concludes that the issues raised by Adelaide Metcalfe in the Request for Arbitration, and the “failure to negotiate a new agreement” with respect to the sharing of public utility services, which the parties acknowledged in section 4.2.4 of the Servicing Agreements, might require a decision of the Tribunal, are squarely within the types of applications and contentious disputes provided for in s. 474.10.16(1)(a) of the Municipal Act. As such, the Tribunal concludes that it has jurisdiction.

61Strathroy-Caradoc’s expressed position is that there is no agreement, that it has no obligations to Adelaide Metcalfe, that it may freely terminate the receipt of wastewater flows or the provision of drinking water upon its election and has only gratuitously chosen to continue such services (while terminating the right to any new connections) while accepting payment for the value of the services being provided in the materials in this Motion.

62Strathroy-Caradoc submits that nothing obligates a municipality to provide connections to services to an adjacent municipality. The position advanced in this Motion is that any impacts arising from the termination of the Servicing Agreements are upon the ratepayers of Adelaide Metcalfe and not of Strathroy-Caradoc. Further, any obligations of Adelaide Metcalfe to its own ratepayers under the Municipal Act, or upon its own promises made to its own ratepayers, have nothing to do with Strathroy-Caradoc. Strathroy-Caradoc position is that s. 86 requires Adelaide Metcalfe to supply the buildings from the water distribution and sanitary sewer system in the Service Area and Strathroy-Caradoc bears no responsibility.

63While it presents as more of a legal opinion than anything, Mr. Tranquilli’s comments, in paragraph 71 of his Affidavit, indicate that Strathroy-Caradoc is not aware of any court decision or statute “…mandating either connections or provisions of services from a neighbouring municipality to the ratepayers of another municipality”. From this, Strathroy-Caradoc submits that it has no obligations under s. 86 of the Municipal Act, and it is not subject to the jurisdiction of the Tribunal to determine any application pursuant to s. 474.10.16(1)(a) of the Municipal Act with respect to a public utility, or the construction, maintenance or operation of a public utility, and a failure of any municipality to comply with the requirements of the Municipal Act, or any agreement entered into in relation to such public utility (emphasis added).

64Mr. Tranquilli’s view, is entirely dismissive of the very basis upon which Strathroy-Caradoc might be obligated to allow connections and provide public utility services to its neighbouring municipality, and those ratepayers in the Service Area – which is the Servicing Agreements, as they may be the subject matter of arbitration by the Tribunal or consideration by the Court.

65Much of the position advanced by Strathroy-Caradoc in this Motion adopts this predetermined and entrenched denial of: the validity of the Servicing Agreements; any ongoing obligations under the Servicing Agreements as they might be interpreted and determined to continue to apply; the relevancy and impact of the its conduct and the conduct of Adelaide Metcalfe demonstrating an express or implied intention to continue the rights and obligations under the Servicing Agreements pending adjudication or determination by the Courts; and any decision that might be made by the Tribunal and the Court requiring Strathroy-Caradoc to continue to “make all reasonable efforts to negotiate a new agreement relating to the subject matter” based upon the determined intent of the parties, the Agreement of the parties, or other evidence that might be presented in a hearing of the merits.

66It is the Tribunal’s view that while Strathroy-Caradoc certainly may advance such a position, make such arguments and present evidence on the merits of such a position, its success on a hearing of the merits is ultimately to be determined by this Tribunal, or the Court, as jurisdiction in deciding those issues is accepted. This Motion is to determine the forum for the hearing, the evidence, and receiving the arguments of the parties and deciding the manner in which the contentious issues between the parties are to be determined.

67The Tribunal finds that the circumstances arising from the Servicing Agreements, the chronology of events that has unfolded since 2002, the discussions and negotiations of the parties, the decision by Strathroy-Caradoc to terminate any further connections by owners in the Service Area to the water and sewer public utility services, and the contentious issues that now must be determined with respect to the existing framework for the provision of such public utilities by Strathroy-Caradoc created by the Servicing Agreements fall squarely within the matters identified in s. 474.10.16(1)(a) of the Municipal Act.

68For the Tribunal to possess jurisdiction and power, s. 474.10.16(1)(a) of the Municipal Act requires the following:

(a) an application or proceeding that relates to any public utility as defined in the Municipal Act or its construction, maintenance or operation;

(b) the matter of the public utility to be placed before the Tribunal must arise by reason of the contravention of, or failure to comply with, the requirements of any Act, or regulation, rule, by-law or Order made under any Act, or any agreement entered into in relation to such public utility; and

(c) such contravention or failure to comply must lie with any person, firm, company, corporation or municipality.

69It is the view of the Tribunal that in all respects, the criteria for the Tribunal’s jurisdiction under s. 474.10.16(1)(a) are met.

70First, the Request for Arbitration, and contentious issues identified in this Motion, are directly related to water and sewage services, both public utilities as defined in the Municipal Act.

71The subject matter of the dispute as identified by Adelaide Metcalfe is two-fold and both fall within the context of the section. First, the subject matter relates to the alleged failure of Strathroy-Caradoc to satisfy the mandatory requirements of a municipality under s. 86 of the Municipal Act to supply a building with water or sewage public utility that is located along a supply line of the municipality; where there is a sufficient supply of water; a sufficient capacity for handling the building’s sewage; and the request has been made in writing. Whether Strathroy-Caradoc is “a municipality” possessing such a mandatory obligation because it is a contracting municipality under a s. 20(1) shared services agreement instead of the “home” municipality will be determined by the Tribunal. This is within the scope of the section.

72The additional subject matter of the dispute is the alleged failure of Strathroy-Caradoc to comply and the terms of the Servicing Agreements as they may have been extended or renewed, and the intent of the parties to enter into negotiations and make all reasonable efforts to negotiate a new agreement relating to the public utilities. This also is within the scope of the section.

73The Request for Arbitration identifies the municipality of Strathroy-Caradoc, one of the entities identified in the section, as the necessary party to the proceeding as the alleged party having contravened, or failed to comply with, the terms of the Agreement.

74Based upon the evidence presented on this Motion, it is accordingly the Tribunal’s conclusion that it has the jurisdiction in the matters raised within the Request for Arbitration under s. 474.10.16(1)(a) of the Municipal Act, and such issues as may be ultimately identified by the parties once all pleadings have been filed. How these issues may ultimately be determined, and whether the Arbitration process will allow for a resolution through a workable new shared service agreement, or alternatively the orderly termination of the Service Agreements under the directions of the Tribunal remains to be decided upon the merits.

THE BROADER PUBLIC INTEREST AND THE TRIBUNAL’S PUBLIC INTEREST MANDATE

75In considering the jurisdiction of the Tribunal as raised in this Motion, the Panel has been mindful of the broader public interest and impacts arising from this dispute. The Court has also noted briefly, in its Endorsement, the potential impact this dispute has upon a number of residents and the broader implications extending beyond the parties.

76The immediacy of the farther-reaching effects of the dispute is readily apparent as an appeal is now before the Tribunal (Tribunal Case No. OLT-22-002991) brought by 2789234 Ontario Inc. (through its principal, Mr. Doug Cuddy), a commercial developer in the affected service area, with respect to a consent application. The Appeal is currently scheduled to be heard on its merits, on July 13, 2022. The Appeal relates to a condition imposed by the approval authority granting provisional consent to sever and create a total of four development lots which requires the owner to provide “provide confirmation that adequate municipal servicing is available to the satisfaction of the Township in consultation with the Municipality of Strathroy-Caradoc”. The entirety of the issues before the Tribunal in that Appeal have not been canvased in this Motion, but the Appellant owner in that imminent appeal submits that the imposed condition is unreasonable. The Appellant, who is not privy to the contract between the two Municipalities, raises concerns regarding the imposition of a condition to the consent approval to secure access to water and sewer services, when it is technically Adelaide Metcalfe that is liable to provide water and sewer services under s. 86(1) of the Municipal Act, 2001 to the Appellant. The problematic imposition of a condition requiring approvals from the Municipality of Strathroy-Caradoc, required in accordance with the Servicing Agreement, is now being withheld due to this dispute over the public utilities.

77The Motion materials indicate that further appeals or litigation are expected as two other property owners in the Service Area are currently encountering similar obstacles to moving forward with planning approvals because of the position of Strathroy-Caradoc that it will not permit further connections to the water or sewage systems. Counsel for a numbered company moving forward with a development of a restaurant has communicated with Adelaide Metcalfe that this municipal dispute between the parties is creating significant difficulties and potential losses for the owner/developer. A third owner, “A-Z Storage Facility” is in a similar situation. The Court has obviously been informed of these urgent planning and development matters, one of which will shortly be before the Tribunal.

78In the Tribunal’s view, these three owner/developers within the Service Area, now caught up within the unresolved issues between the parties, are real-time examples of the extent to which the issues to be resolved in this proceeding go beyond that of a contractual dispute between two Municipalities focused on narrowed issues as to the existence and form of an agreement. The very fact that the Agreement is one entered into between two Municipalities under s. 20 of the Municipal Act itself speaks to the fact that the interests of residents and property owners in each of the Municipalities are at play.

79A fundamental aspect of the Tribunal’s adjudicative role, as it has been addressed by the Courts at various times, is the Tribunal’s public interest mandate. This public interest mandate has more often been highlighted in the context of appeals under the Planning Act. However, the expressed reasons for the existence of the mandate, which requires the Tribunal to safeguard that public interest in the exercise of other powers conferred by statute, applies in equal measure to certain of those matters, which are directed to the Tribunal, under the Municipal Act.

80The Court has, on multiple occasions confirmed the administrative character of the function of the Tribunal and that its decisions often extend beyond the interests of the immediate parties. This has been expressed as a recognition that the Tribunal is not deciding a lis between the parties in the sense that the issues are confined to those for or against a proposal and that the Tribunal must consider the safety, welfare, conveniences and interests of the public in the municipalities affected. The Court has observed that the adjudication of a planning matter by the Tribunal thus requires the Tribunal to exercise its public interest mandate and ensure that its decisions transcend the interests of the immediate parties, charged as it is with the responsibility to determine whether a land planning proposal is in the public interest. In doing so, the Tribunal is noted to bring its own expertise to bear as a specialty tribunal.

81In the Tribunal’s view, it is not unreasonable to consider the jurisdiction and powers granted to it by the Legislature under s. 474.10.3(1)(j), in conjunction with s. 20 of the Municipal Act, and s. 474.10.16(1)(a), as consistent with the public interest mandate of the Tribunal and supportive of the parameters of the decision-making powers granted to the Tribunal under these two sections.

82The proceeding now pending before this Tribunal, which is the subject matter of this Motion, is not brought under the Planning Act, but nevertheless, as the Municipal Act may apply to determine issues under an agreement between two lower tier municipalities, or issues relating to access to public utilities by residents of a municipality, the decision to be made similarly transcends the interests of the municipal corporate entities. For the reasons indicated, the issues to be addressed, and the resolution of the dispute between these two Municipalities practically extends to the residents and ratepayers within each Municipality directly affected by the dispute, including those within the Service Area.

83Further, this proceeding, which the Tribunal concludes is within the jurisdiction of the Tribunal, may impact specific owners of land who have brought the planning appeal before the Tribunal to deal with a condition directly connected to the matter servicing of water and sewer. The fact that this owner, and other property owners that may follow, have a direct interest in the subject matter of this Municipal Act proceeding suggests, on a prima facie basis, that the public at large has a definite interest in the subject matter of the within proceeding if it is to be determined by the Tribunal, and if so, it must be alert to the interests of the public in this proceeding.

84In summary, in considering this Motion, it is the view of the Tribunal that the exercise of the Tribunal’s public interest mandate, in its adjudication of the issues placed before the Tribunal by Adelaide Metcalfe pursuant to the Municipal Act, will be necessary.

SECTION 474.10.3(1)(i) – POWER OF INQUIRY INTO THE AFFAIRS OF A MUNCIPALITY

85Having determined that the Tribunal has jurisdiction to decide those issues raised by Adelaide Metcalfe in the Request for Arbitration under the first two sections of the Municipal Act, it is unnecessary to address this third basis asserted by Adelaide Metcalfe as supporting the jurisdiction of the Tribunal.

THE REQUESTED INTERIM ORDER

86Having determined that the Tribunal has jurisdiction, the second issue is whether it is appropriate to grant the requested Interim Order.

87The Tribunal has raised with counsel, the concerns relating to the request for the Interim Relief given the return of the Application before the Court on July 8, 2022. The Tribunal recognizes that the Interim Endorsement of the Ontario Superior Court of Justice of May 27, 2022, has directed that the matter of the interim relief sought in the Application before it, is adjourned to July 2022. The additional dictum of the Court is that the position of the Tribunal on the matter of jurisdiction “is not determinative but is certainly a factor to take into account”. It now remains for the Ontario Superior Court of Justice to decide whether it may exercise its jurisdiction in respect of the Application before it, notwithstanding this Decision of the Tribunal, and the issues that it might decide. Obviously, duplicitous proceedings and the risk of inconsistent findings is a concern until the Court determines its position in light of the determination made in this Motion.

88The Tribunal is inclined to make an Interim Order, as requested by Adelaide Metcalfe. The Tribunal is persuaded upon the whole of the evidence presented that in balancing the interests of the respective Municipalities, and the objections voiced by Strathroy-Caradoc, the substantial prejudice caused to appellant/applicant/owners who have received the benefit of approvals, but are barred from access to water services and sewage services because Strathroy-Caradoc has refused to approve any further connections, substantially outweighs any possible negative impact upon Strathroy-Caradoc. The Tribunal considers the reference by Mr. Calvert to this limited group as “those invested in the system” to be apt. Allowing those owners/developers who have sought and obtained approvals to continue the permitting and connection processes is fair and reasonable, and in fact rather urgently required in some cases.

89As is often the case, in the absence of complete and fulsome evidence, received within the rigours of a full hearing and the provision of viva voce evidence, tested under cross-examination, the Tribunal is faced with a request for urgent interim relief which must be balanced with the need for a full and complete adjudicative process to test the strength and veracity of the argued positions of the parties.

90In this case, based on the evidence presented, on the balance of probabilities, the Tribunal is not persuaded that the issuance of permits for the three identified parties, properties and developments will result in any prejudice, risk of harm or adverse impact upon the integrity of Strathroy-Caradoc’s water systems or sewage systems. Upon the materials presented, and the unchallenged disclosures and admission by Strathroy-Caradoc that permits have been issued and connections continued to be approved to early 2022, despite generalized apprehensions expressed by Mr. Tranquilli in his Affidavit, there are no risks of irreparable harm or loss to Strathroy-Caradoc.

91Objectively the timing of the cut-off to connections by Strathroy-Caradoc, relative to the deadlock that had been reached when Adelaide Metcalfe elected not to except the final draft agreement provided by Strathroy-Caradoc is, in the Tribunal’s view, related to tactical positioning rather than real concerns as to the integrity of the Strathroy-Caradoc water or sewage infrastructure.

92The Tribunal is also convinced that despite the larger issues relating to the future terms of any new servicing agreements that might be executed, if executed, if the three requested connections to services, of which Strathroy-Caradoc is well aware, are permitted on an interim basis these additional users will easily fit within the allocated capacity long-ago purchased by Adelaide Metcalfe in 2003. The Tribunal is mindful of the fact that Strathroy-Caradoc does not dispute that Adelaide Metcalfe spent monies for sewage capacity that it did not end up requiring, and the Panel was provided with the “math” to demonstrate the limited percentage of the allocated percentage of capacity actually consumed by Adelaide Metcalfe.

93Conversely, the Tribunal finds that the disruption, risks of loss, and delays caused to the planning and development approvals already granted are significant and prejudicial to those owners “invested within the system” in the Service Area immediately caught in the “cross-fire” of this municipal dispute. This is reflected in the Appeal before the Tribunal and the concerns communicated by Bennett Jones with respect to its client, 2414959 Ontario Inc. (Calvert 2 Ex. M).

94It is clear to the Tribunal that both Municipalities, acting reasonably have within the past year, continued to undertake the standard inspections and permitting processes, in compliance with all regulations imposed and enforced by Strathroy-Caradoc for all service connections, without any difficulty. This would continue, as would the ongoing duty of Adelaide Metcalfe to comply with its obligations for water service connections and backflow prevention as they are set out in the Servicing Agreement.

95Subject to the delayed effect of the Interim Order, as provided for below, the Tribunal will accordingly grant, in part, the request for interim relief by directing that connections be facilitated for the three owner/developers for their identified properties in relation to already approved development proposals. They are: (a) 2789234 Ontario Inc. (through its principal, Mr. Doug Cuddy) for the consent application and development (and the subject of the Appeal to the Tribunal under Case No. OLT-22-002991); (b) 2414959 Ontario Inc., for the Phase 1 and Phase 2 development of 28610 Centre Road; and (3) A To Z Storage Limited for the development planned at 28607 Centre Road.

96In the absence of full and complete argument, and further supporting evidence addressing the implications of additional connections before the Tribunal, now that it may acquire jurisdiction of the Request for Arbitration, the broader request for an order that Strathroy-Caradoc continue to provide and allocate the services as agreed upon to Adelaide Metcalfe to the extent that all further requests for connections be processed pending a final determination of the issues raised in the Request for Arbitration, is denied at this time. Subject to the decision of the Court on the Application, if the Tribunal proceeds with case management of this proceeding, following delivery of the Response by Strathroy-Caradoc, the Tribunal can address any request for further interim relief.

97As the Court might possibly determine that it will retain jurisdiction and elect to (a) assume and retain responsibility for the determination of the issues raised in the Notice of Intent to Arbitrate notwithstanding the determination of this Motion as to the Tribunal’s jurisdiction; and (b) decide the matter of the interim relief raised by Adelaide Metcalfe in this Motion, and apparently raised by Strathroy-Caradoc in its Application, the Tribunal will await the further decision of the Ontario Superior Court of Justice under that Application. In order to ensure that there is no inconsistency, given that the Court’s Interim Order continues in effect until July 8, 2022, the Interim Order of the Tribunal that will be made will not take effect until July 9, 2022.

FURTHER STEPS – MEDIATION

98Subject to the decision that will be delivered by the Ontario Superior Court of Justice following the appearance of the parties on July 8, 2022, the Tribunal will require Strathroy-Caradoc to serve and file a Response to the Request for Arbitration on or before July 29, 2022. Thereafter the Tribunal will schedule a Case Management Conference for the purposes of moving forward with the adjudication or mediation of the issues.

99As a final point, the Tribunal would echo the urgings of His Honour Justice Garson in his endorsement that the parties “…embrace the concepts of cooperation, common sense, dialogue and respect in attempting to identify possible resolutions”. To that end, subject to any procedural matters arising from such further order of the Court, the Tribunal would strongly encourage the parties to consider taking advantage of Tribunal-led mediation as part of the Arbitration proceeding in an effort to resolve the outstanding issues and perhaps get the negotiations and discussions that have been ongoing “back on track” with a view to a workable and amicable settlement. The Tribunal’s Mediation Team is comprised of experienced professionals in municipal planning and development issues and may be able to assist the parties in resolving the contentious issues and formulating the new servicing agreement that has been beyond their reach.

100As the Tribunal’s mediation processes are undertaken confidentially, on a without prejudice basis, they are conducted independently of the adjudicative procedures of the Tribunal. A request must be made to the Tribunal Mediation Coordinator which will be reviewed and assessed to determine whether the subject matter of the proceeding is appropriate for mediation. This can be explored in an expedited fashion through the case management of this proceeding following the directions/orders of the Court.

ORDER

101The Motion is granted in part, as follows:

(a) The Tribunal confirms that it has jurisdiction under the provisions of the Municipal Act, 2001 as granted under its home statute the Ontario Land Tribunal Act, 2021, based upon both the terms of the Servicing Agreement and the subject matter of the dispute, to hear and resolve the issues raised in the Request for Arbitration dated April 19, 2022.

(b) Effective only as of July 9, 2022, the Tribunal Orders that the Corporation of Strathroy-Caradoc forthwith facilitate and issue all permits necessary to provide connections to the water and sewage services in the identified Service Area to the following three owner/developers, for their identified properties in relation to already approved development proposals:

i) 2789234 Ontario Inc. (through its principal, Mr. Doug Cuddy), for the consent application and development (and the subject of the Appeal to the Tribunal under Case No. OLT-22-002991);

ii) 2414959 Ontario Inc., for the Phase 1 and Phase 2 development of 28610 Centre Road; and

iii) A To Z Storage Limited for the development planned at 28607 Centre Road.

This limited Interim Order is without prejudice to either Municipality to bring a further motion to revisit the requests for orders relating to further connections to services pending a resolution/determination of the issues raised in the Request for Arbitration. For clarity such requested interim order may be to restrict or allow additional connections to the water and sewer systems pending a final decision of the Tribunal and may be brought once Strathroy-Caradoc files its pleadings in the Request for Arbitration and Case Management is initiated by the Tribunal.

(c) As the Court may determine that it will retain jurisdiction and elect to assume and retain responsibility for the determination of issues raised in the Notice of Application before it, the Tribunal will await the further decision of the Ontario Superior Court of Justice under that Application.

(d) Should the Court direct that the Tribunal is to decide all final and interim matters, and subject to such orders or directions might be made by the Court that may impact the Tribunal’s administration of this proceeding, the Tribunal will schedule a Case Management Conference at the earliest available date to speak to further steps in this proceeding, and to address the option of mediation of the issues in dispute.

(e) Should the Court determine it has, and will retain, jurisdiction over issues between the parties in the Application, the Tribunal’s file will accordingly be reviewed to determine next steps.

“David L. Lanthier”

david l. lanthier

VICE-CHAIR

Ontario Land Tribunal

Website: www.olt.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248

The Conservation Review Board, the Environmental Review Tribunal, the Local Planning Appeal Tribunal and the Mining and Lands Tribunal are amalgamated and continued as the Ontario Land Tribunal (“Tribunal”). Any reference to the preceding tribunals or the former Ontario Municipal Board is deemed to be a reference to the Tribunal.