Slough Estates Canada Limited et al. v. Regional Assessment Commissioner, Region No. 15 et al.; Regional Municipality of Peel et al., Intervenors [Indexed as: Slough Estates Canada Ltd. v. Ontario (Regional Assessment Commissioner, Region No. 15)]

48 O.R. (3d) 84

[2000] O.J. No. 1076

Docket Nos. C32420 and C32419

Court of Appeal for Ontario

Catzman, Laskin and Rosenberg JJ.A.

April 6, 2000

*Application for leave to appeal to the Supreme Court of Canada was dismissed December 21, 2000 (McLachlin C.J., Iacobucci and Major JJ.). S.C.C. File No. 27951. S.C.C. Bulletin, 2000, p. 2348.

Assessment -- Valuation -- Market value -- Land held for development but used for farm purposes -- Land zoned for industrial and commercial use -- Focus of s. 19(3) of the Assessment Act on actual use of land and not zoning -- Municipal Board reasonably determining that land was "farm lands used only for farm purposes" within s. 19(3) of Act -- Land properly assessed as farm land -- Assessment Act, R.S.O. 1990, c. A.31, s. 19(3).

The appellants purchased lands in the late 1980s with the intention of developing them for industrial and commercial purposes. Historically, the lands had been farmed and assessed as farm lands in accordance with s. 19(3) of the Assessment Act. In 1987 and 1988, the lands were re-zoned to permit industrial and commercial uses. The lands were returned to agricultural use in 1992 when the market for serviced land collapsed. The appellants leased the lands to farmers who farmed the lands. In 1993, the Regional Assessment Commissioner assessed the lands as industrial lands. The appellants appealed the assessments to the Ontario Municipal Board. In 1994 and 1995, the Commissioner assessed the lands as farm lands. The respondent municipality appealed those assessments. The Municipal Board held that the lands were to be assessed as farm lands. The Board held that the determination whether lands are being used for farm purposes within the meaning of s. 19(3) of the Act involved a finding of fact, which de pended upon evidence as to the use of the lands as opposed to zoning considerations. The Board concluded that, as a matter of fact, all of the lands in question were farm lands used only for farm purposes within s. 19(3). On appeal, the Divisional Court held that the lands had to be assessed as industrial land. The court stated that s. 19(3) does not envisage a use that is expressly proscribed by law. The appellants appealed. It was conceded for the purposes of the appeal that farming was not a legal use of the lands in view of the zoning during the relevant years.

Held, the appeal should be allowed.

Section 19(3) of the Act should be given its ordinary meaning. The ordinary meaning of the text of s. 19(3) is that if the lands are "farm lands used only for farm purposes", market value is to be ascertained without regard to sales of lands to persons whose principal occupation is not farming. Rather, the market value is to be determined solely by consideration of the land's value for farming purposes. As the Board noted, s-s. (3) operates as an exception to the general principle in s-s. (2) that market value is to be determined by what the land might be expected to sell for on an open market by a willing seller to a willing buyer. The focus of s. 19(3) is on the use of the land, a factual issue, not its zoning, a legal issue. If the land has the relevant characteristic, its market value must be determined in accordance with the methodology prescribed by s. 19(3). There was a basis upon which the Board could reasonably find that the lands in question fell within "farm lands used only for farm purposes".

APPEAL from a judgment of the Divisional Court allowing an appeal from a decision of the Ontario Municipal Board.

Amoco Canada Petroleum Co. v. Regional Assessment Commissioner, Region No. 27 (1994), 75 O.A.C. 356 (Div. Ct.); North York (City) v. Regional Assessment Commissioner, Region No. 10 (1981), 1981 CanLII 2893 (ON SC), 127 D.L.R. (3d) 637 (Ont. H.C.J.), consd Other cases referred to County Assessor for Ontario County v. Runnymede Investment Corp., 1965 CanLII 297 (ON CA), [1966] 1 O.R. 577, 54 D.L.R. (2d) 410 (C.A.); Dome Petroleum Ltd. v. Ontario (Regional Assessment Commissioner, Region No. 27) (1992), 28 O.M.B.R. 47; Macartney v. Warner (2000), 2000 CanLII 5629 (ON CA), 46 O.R. (3d) 641, 183 D.L.R. (4th) 345, 48 C.C.L.T. (2d) 19, [2000] O.J. No. 30 (C.A.); McLear v. Mason (1988), 1988 CanLII 4567 (ON SC), 65 O.R. (2d) 228, 39 M.P.L.R. 111 (H.C.J.); N.H.D. Developments Ltd. v. Regional Assessment Commissioner, Region 11 (1981), 12 O.M.B.R. 332; R. v. Shirose, 1999 CanLII 676 (SCC), [1999] 1 S.C.R. 565, 42 O.R. (3d) 800n, 171 D.L.R. (4th) 193, 237 N.R. 86, 133 C.C.C. (3d) 257, 24 C.R. (5th) 365 Statutes referred to Assessment Act, R.S.O. 1990, c. A.31 (am. 1997, c. 5, s. 12; c. 29, s. 9; 1998, c. 33, s. 5; 1999, c. 9, s. 11; c. 6, s. 2), s. 19
Expropriations Act, R.S.O. 1990, c. E.26, s. 14 Interpretation Act, R.S.O. 1990, c. I.11, ss. 17, 18

Peter A. Milligan, J. Bradford Nixon and Prakash G. David, for appellants. Phillip L. Sanford, for respondents. Michael G. Kyne and James A. Easto, for intervenors.

The judgment of the court was delivered by

[1] ROSENBERG J.A.: -- This appeal concerns the interpretation of s. 19(3) of the Assessment Act, R.S.O. 1990, c. A.31 as it stood in the years 1993 to 1995. The narrow issue is whether land that is being held for development but is being used for farm purposes is to be assessed as farm land or is to be assessed as industrial land because it is zoned for industrial use and agricultural use is illegal. The Ontario Municipal Board had held that the lands were to be assessed as farm land. On appeal, the Divisional Court held that the land must be assessed as industrial land. For the reasons that follow, I would allow the appeal and restore the decision of the Ontario Municipal Board.

The Facts

[2] The appeal concerns 14 properties in the City of Mississauga and nine properties in the Town of Oakville. Historically, the lands had been farmed and assessed as farm lands in accordance with s. 19(3) of the Assessment Act. I will set out the applicable provisions of the Act below. However, in effect, s. 19 of the Act provides that, while land is to be assessed at its market value, s-s. (3) sets out a special regime for determining the market value of lands used only for farm purposes.

[3] The appellants purchased the lands in question in the late 1980s with the intention of developing them for industrial and commercial purposes. In 1987 and 1988, the lands were re- zoned to permit industrial and commercial uses. The agricultural use of the lands was terminated after the re- zoning to allow for initial servicing of the lands. Plans of subdivision and servicing agreements were registered on title. In 1992, the lands were returned to agricultural use when the market for serviced land collapsed. The appellants leased the lands to farmers who farmed the lands.

[4] In 1993, the Regional Assessment Commissioner assessed the lands as industrial lands. The appellants appealed these assessments to the Ontario Municipal Board. In 1994 and 1995, the Commissioner assessed the lands as farm lands. Oakville appealed the 1994 and 1995 assessments. Mississauga did not appeal the 1994 assessment but did appeal the 1995 assessment. However, the 1995 assessment was not part of the hearing before the Board.

[5] For the purposes of this appeal, the appellants concede that farming is not a legal use of the lands in view of the zoning during the relevant years.

The Legislation

[6] This appeal turns on the proper interpretation of s. 19(3) of the Assessment Act. However, that section must be read in context with other parts of the section, which provide as follows:

19(1) Subject to this section, land shall be assessed at its market value.

(2) Subject to subsection (3), the market value of land assessed is the amount that the land might be expected to realize if sold in the open market by a willing seller to a willing buyer.

(3) For the purposes of subsection (2), in ascertaining the market value of farm lands used only for farm purposes by the owner thereof or used only for farm purposes by a tenant of such an owner and buildings thereon used solely for farm purposes, including the residence of the owner or tenant and of the owner's or tenant's employees and their families on the farm lands, consideration shall be given to the market value of the lands and buildings for farming purposes only, and in determining the market value, consideration shall not be given to sales of lands and buildings to persons whose principal occupation is other than farming.

(4) Where the owner of farm lands entitled to the benefit of subsection (3) dies or retires, the market value of the lands and buildings in respect of which subsection (3) applies shall be ascertained in the manner provided in subsection (3) in assessing the lands during the period the lands are held by the owner after his or her retirement or held by his or her estate after his or her death, but in no case beyond the two years immediately following the owner's death or retirement unless the lands are occupied by the surviving spouse of the deceased owner or by the retired owner.

(5) When an appeal has been taken in respect of the assessment of farm lands mentioned in subsection (3) from the decision of the Assessment Review Board, the assessment as finally determined on appeal shall remain fixed in respect of the same lands and buildings for a period of two years after the year in respect of which the appeal was taken so long as the lands and buildings are owned by a person whose principal occupation is farming, but this subsection does not apply to prevent a different assessment of any farm lands in any year in which a different assessment generally is made of lands in the municipality in which the farm lands are situated.

(Emphasis added)

[7] The appellants also placed some emphasis on a subsequent amendment to s. 19. In 1997, the Fair Municipal Finance Act, 1997, S.O. 1997, c. 5, s. 12 changed the basis of assessment from "market value" to "current value". Section 19(3) became s. 19(5) as a result of those amendments but was essentially unchanged. A further amendment was made to s. 19 by the Fair Municipal Finance Act, 1997 (No. 2), S.O. 1997, c. 29, s. 9. This amendment came into force on January 1, 1998 and added s- ss. (5.3) and (5.4), which provide as follows:

19(5.3) It is not necessary, for subsection (5) to apply to farm land used only for farm purposes, that the use be permitted under municipal zoning by-laws.

(5.4) Subsection (5) does not apply in the circumstances prescribed by the Minister.

(Emphasis added)

The Decision of the Ontario Municipal Board

[8] The Board gave extensive reasons in which it reviewed the history of the assessment of farm land in Ontario. It noted that s. 19(3) creates a distinct regime for valuation of such lands. In summary, the Board concluded that the provision:

. . . specifically directs that in ascertaining the market value of such lands, consideration is to be given only to the market value of such lands "for farming purposes only", and explicitly indicates that no consideration is to be given to the sales of such to persons "whose principal occupation is other than farming". As such, the provision creates a distinct and unique regime for the valuation of such lands, taking them out of the realm of determining market value as "the amount that the land might be expected to realize if sold in the open market by a willing seller to a willing buyer" (as per the text of s. 19(2)), which is the valuation regime that applies to all other lands.

[9] The Board held that the determination whether lands are "being used for farm purposes" involved a finding of fact. That finding depended upon evidence as to the use of the lands as opposed to what the Board referred to as the "juridical", i.e., zoning, considerations. This finding of fact required a consideration of the "functional use as well as the physical attributes of the lands" based on evidence as to the types of activities carried out on the lands, the physical characteristics of the land, the characteristics of the tenant or owner, the purpose of the activities and the timing of the activities. It recognized that a "peripheral" use of land only tenuously associated with farming was not sufficient to satisfy the use requirement.

[10] The Board traced the history of the special regime for assessment of farm lands in the province and the treatment of the various legislative provisions by the courts and the Board. The Board concluded that until the decision of the Divisional Court in Amoco Canada Petroleum Co. v. Regional Assessment Commissioner, Region No. 27 (1994), 75 O.A.C. 356, the courts had consistently refused to take zoning into consideration. I will discuss the Amoco decision below.

[11] Finally, the Board concluded that as a matter of fact, all of the lands in question were farm lands used only for farm purposes within the meaning of s. 19(3). The Board based this decision on evidence that included the following:

(i) the lands were cleared of debris, ploughed, seeded, cultivated and crops removed;

(ii) the lands displayed the physical characteristic of land used for agricultural purposes at different stages of the farming cycle, the presence of certain roads, curbs and lighting notwithstanding; and

(iii) the tenant farmers were bona fide farmers running a farming operation and effectively farming numerous parcels of land.

The Decision of the Divisional Court

[12] The reasons of the Divisional Court were based upon application of the earlier Amoco decision. In its brief endorsement, the court held as follows:

As stated by the board and confirmed before us, the parties agreed that the zoning by-laws do not permit farm use and there was no non-conforming use. Accordingly, in our view, the Amoco decision is on point. We adopt the reasoning of Adams J. when he states, "We do not accept that s. 19(3) of the Assessment Act envisages a use that is expressly proscribed by law".

Analysis

Application of the principles of statutory interpretation

[13] As I stated at the outset, this case is concerned with statutory interpretation. In the recent judgment of this court in Macartney v. Warner (2000), 2000 CanLII 5629 (ON CA), 46 O.R. (3d) 641, [2000] O.J. No. 30, at para. 47 [p. 658 O.R.], Laskin J.A. described the task of a court in approaching an issue of statutory interpretation:

A basic principle of statutory interpretation is that the ordinary meaning of a legislative provision should prevail absent a good reason to reject it. The ordinary meaning is presumed to be the intended or most appropriate meaning unless the context or the purpose and scheme of the legislation, or the consequences of adopting the ordinary meaning suggest otherwise. Professor Ruth Sullivan, who edited the third edition of Driedger on the Construction of Statutes, sets out the presumption in favour of the ordinary meaning at p. 7:

(1) It is presumed that the ordinary meaning of a legislative text is the intended or most appropriate meaning. In the absence of a reason to reject it, the ordinary meaning prevails.

(2) Even where the ordinary meaning of a legislative text appears to be clear, the courts must consider the purpose and scheme of the legislation, and the consequences of adopting this meaning. They must take into account all relevant indicators of legislative meaning.

(3) In light of these additional considerations, the court may adopt an interpretation in which the ordinary meaning is modified or rejected. That interpretation, however, must be plausible; that is, it must be one the words are reasonably capable of bearing.

[14] The ordinary meaning of the text of s. 19(3) is that if the lands are "farm lands used only for farm purposes", market value is to be ascertained without regard to sales of lands to persons whose principal occupation is not farming. Rather, the market value is to be determined solely by consideration of the land's value for farming purposes. As the Board noted, s-s. (3) operates as an exception to the general principle in s-s. (2) that market value is to be determined by what the land might be expected to sell for on an open market by a willing seller to a willing buyer. In my view, the focus of s-s. (3) is on the use of the land, a factual issue, not its zoning, a legal issue. If the land has the relevant characteristic, its market value must be determined in accordance with the methodology prescribed by s-s. (3).

[15] Unless there is some reason to adopt a different meaning, this meaning should prevail. This requires a consideration of the purpose and scheme of the legislation, and the consequences of adopting this interpretation. In making this determination, all relevant indicators of legislative meaning must be taken into account.

[16] There are a number of relevant indicators as to the legislative intent that, in my view, point to adopting the ordinary meaning of the legislation. Section 19(3) refers to "used", rather than "lawfully used". In other legislation dealing with related subjects, where the legislature has intended that the lawful use be considered, it has done so expressly. For example, s. 14 of the Expropriations Act, R.S.O. 1990, c. E.26 provides that the "market value of land expropriated is the amount that the land might be expected to realize if sold in the open market by a willing seller to a willing buyer", which is the same language used in s. 19(2) of the Assessment Act. However, s. 14 goes on to provide that in determining the market value of land "no account shall be taken of . . . (c) any increase in the value of the land resulting from the land being put to a use that could be restrained by any court or is contrary to law . . .". No such language appears in s. 19.

[17] In this respect, I agree with the views of Sutherland J. in McLear v. Mason (1988), 1988 CanLII 4567 (ON SC), 65 O.R. (2d) 228 at p. 243, 39 M.P.L.R. 111 (H.C.J.). That case concerned the interpretation of a part of a zoning by-law dealing with non-conforming uses and whether the applicable provisions should be confined to previous legal non-conforming uses. Sutherland J. held that the term "lawfully" should not be read into the provision and that the by-law should be given its plain meaning especially given the general approach to non-conforming uses under the Planning Act, 1983, S.O. 1983, c. 1. As he said, terms should not be implied into legislation except for compelling reasons as where it may be necessary to avoid impossibility, absurdity or gross conflict with other provisions or enactments.

[18] There is nothing in the legislative scheme of assessments that suggests "lawfully" should be added to s. 19(3). The scheme of the Act is that the initial assessment is performed by assessors who have no legal training or expertise. The evidence before the Board was that assessors determine the value of farm lands without regard to the lawfulness or legality of the land use, in part because they are not qualified to do so. While the assessors may be able to ascertain the zoning of a particular piece of land, whether the use of the land as farm land is legal or illegal involves different and more complex considerations. As the Board pointed out, "the issue of the 'legality' or the 'lawfulness' of a use is not necessarily one that can be ascertained from a reading of the relevant Zoning By-law provisions". The Board pointed out that even the exercise of its own jurisdiction does not lead to a declaration that a certain use is legal or illegal.

[19] The respondents did not point to any obvious conflict with other legislation that would require "lawfully" to be added to s. 19(3). As pointed out by Henry J. in North York (City) v. Regional Assessment Commissioner, Region No. 10 (1981), 1981 CanLII 2893 (ON SC), 127 D.L.R. (3d) 637 (Ont. H.C.J.), the municipality has other means of enforcing compliance with its zoning regime. In that case, Henry J. was considering s. 27(3) of the Assessment Act, R.S.O. 1970, c. 32, which is virtually identical to s. 19(3). He rejected the claim of the municipality that the lands in question were not farm lands because they were zoned for industrial use. He wrote as follows at pp. 640-41:

In my opinion, the position taken by the respondent companies is right. In the first place, the lands are under commercial cultivation over a substantial acreage as I find. By any reasonable test of lexicography or common sense, these are farm lands and that is all that need be said.

Second, s. 27(3) of the Assessment Act has nothing to do with zoning; it is concerned with use: see Re County Assessor for Ontario County and Runnymede Investment Corp. Ltd., 1965 CanLII 297 (ON CA), [1966] 1 O.R. 577, 54 D.L.R. (2d) 410 (Ont. C.A.); Roman Catholic Episcopal Corp. of Hamilton & Stoney Creek (Re), 1970 CanLII 282 (ON SC), [1970] 2 O.R. 304 (Co. Ct.).

Third, s. 27 is neutral in its application, in the sense that it takes no account of the lawfulness or otherwise of the use to which the land is put, whether the user is breaching a contract, is a trespasser or as alleged here is contravening the zoning by-law. I find support for this conclusion in the judgment of Bowen J. in Norab Development Ltd. v. Alberta Assessment Appeal Board et al. (1977), 1977 CanLII 2815 (AB SCTD), 3 A.R. 358.

Assuming, therefore, without deciding, that the use of the lands contravenes By-law 7625 that is not a factor to be taken into account in assessing the lands for tax.

. . . In effect, the city has elected to allow the breach, as it sees it, to continue and to seek a higher tax revenue by asserting that the respondent companies cannot take advantage of the alleged unlawful use of the lands by their tenants to reap a tax benefit. I say simply, that the Assessment Act is not a vehicle for enforcement of the by-law; the machinery of enforcement lies elsewhere if the city chooses to use it.

(Emphasis added)

[20] Finally, the ordinary meaning of s. 19(3) appears to be consistent with the policy of the legislature. In several decisions, the Board has recognized that the policy underlying s. 19(3) is to maintain farm land in production as long as possible, and to assist farmers as owners or tenants in this regard although the lands undergo a change of ownership and change of land use controls. The intent also appears to be to encourage developers and persons purchasing land with the intent of ultimately developing it to maintain land in agricultural production as long as possible. The respondents conceded that this was the policy behind the legislation. In N.H.D. Developments Ltd. v. Regional Assessment Commissioner, Region 11 (1981), 12 O.M.B.R. 332 at pp. 337-38, the Board stated:

The Board agrees that the sole intent of the Legislature is to assist farmers in continuing to farm land despite the pressures to sell the land which would be particularly aggravated if their taxes were raised to the rate which would be paid if the lands were not being utilized for farm purposes. It is the belief of this panel of the Board that those purchasing lands with the intent of subdividing are thereby also encouraged to keep land in food production as long as possible.

(Emphasis added)

[21] As I have indicated, the appellants also rely upon a subsequent amendment to s. 19 as further evidence of the legislature's intent. The new provision provides expressly that it is not necessary for the successor to s-s. (3) "to apply to farm land used only for farm purposes that the use be permitted under municipal zoning by-laws". Sections 17 and 18 of the Interpretation Act, R.S.O. 1990, c. I.11 provide that amendment of an Act shall be deemed not to be a declaration as to the previous state of the law or that the law under the Act was considered by the legislature to have been different from the law as amended. Thus, the legislature's view at the relevant time is embodied in its then existing enactments and it may be that little weight can be attached to this expression of legislative intent: see R. v. Shirose, 1999 CanLII 676 (SCC), [1999] 1 S.C.R. 565 at p. 597, 133 C.C.C. (3d) 257 at p. 285. At most the new provision indicates that the legislature does not consider that it is inconsistent with prope r assessment policy that the particular land use may be illegal, thus confirming the views of Henry J. in North York (City).

[22] The respondents argue that under the legislation in place at the time of these assessments, zoning was not only relevant, but determinative. They suggest this interpretation of the relevant sections:

Subsection 19(3) does not create a wholly different valuation scheme. Instead, it creates a special rule for the application of Subsection 19(2) to "farm lands used only for farm purposes". In Subsection 19(2) market value is defined as "the amount that the land might be expected to realize if sold in the open market by a willing seller to a willing buyer".

In other words, when Subsection 19(3) applies, the lands are valued as if their highest and best use is for farm purposes and as if they had been purchased by a full-time farmer. No weight is given to the value the lands might have for other uses.

In assessing "farm lands used only for farm purposes", the assessor is to determine the amount that the farm lands -- the very farm lands forming the subject-matter of the appeals -- might be expected to realize if sold in the open market to a person whose principal occupation is farming. If farming may not be carried on legally, the lands cannot have a value to a farmer and must be outside the special valuation rules in Subsection 19(3).

(Emphasis in original)

[23] I cannot accept this interpretation of s. 19(3) since it would require a reversal of the methodology mandated by s. 19 as a whole. Section 19(2) provides that "subject to subsection (3)", the market value of land is assessed by its value in an open market. The assessor therefore turns to s-s. (3) to determine if the rule of market value on the basis of sale on an open market does not apply. By its terms, s-s. (3) sets out a method for ascertaining market value "for farm lands used only for farm purposes". If the lands fall, as a matter of fact, within this description, the method mandated by s-s. (3) must be used. The other problem with the respondents' argument is that it is premised on the notion of a sale in the open market -- the very methodology ousted by the combined operation of s-ss. (2) and (3).

Previous decisions of the courts

[24] As I indicated, until the decision of the Divisional Court in Amoco, the courts have interpreted s. 19(3) and its predecessors as holding that the fact the land is zoned as industrial does not preclude application of the section. The respondents correctly point out that in most of the decisions it is not clear that farming was actually an illegal use, as is alleged to be the case here. It may be that in the earlier cases the farming use was a permitted non-conforming use. An example is the decision of this court in Ontario County Assessor v. Runnymede Investment Corp., 1965 CanLII 297 (ON CA), [1966] 1 O.R. 577, 54 D.L.R. (2d) 410 (C.A.). The appeal in that case was by way of stated case. The facts in the stated case were as follows [at pp. 577-78]:

The respondent is a corporate entity which purchased in 1964 from the Receiver and Manager of Principal Investments Limited, about 365 acres of vacant land in the Township of Pickering, in the County of Ontario zoned "industrial". In the year 1964 the Respondent commenced to farm the whole of the lands and did grow and harvest during the year 1964 a crop of buckwheat. The Respondent is an investment company which acquired these lands for speculative and investment purposes and although it farms other lands which it owns its chief occupation or business is other than farming. The assessment was made against the Respondent without application of Section 35(3) of The Assessment Act.

(Emphasis added)

[25] The County Court Judge who heard the appeal from this assessment held that the lands were not properly assessed and that the lands were farm lands used only for farm purposes by the respondent and therefore entitled to the benefit of s. 35(3) of the former Act, a predecessor to s. 19(3). In brief reasons, this court held that the County Court Judge was right in his construction of the meaning and effect of the provision.

[26] I have already referred to the decision of Henry J. in North York (City). The respondents are again correct in pointing out that there was no express finding that agricultural use was an illegal use. On the other hand, it is also clear from the excerpts set out above that Henry J. decided the case on the basis that such a use was illegal.

The decision in Amoco

[27] The respondents rely heavily upon the decision of the Divisional Court in Amoco. The appellants rightly point out that Amoco can be distinguished on the facts. The facts as disclosed in the decision of the Board, reported as Dome Petroleum Ltd. v. Ontario (Regional Assessment Commissioner, Region No. 27) (1992), 28 O.M.B.R. 47, show that when Dome Petroleum Limited purchased the property in 1978 it was industrially zoned vacant land that was subject to the reservation of a salt-mine operation that was ongoing below the surface. The company decided to farm the land in 1987. The farmer approached by the company to farm the land indicated that the land had not been maintained for years and needed "cleaning up". A 50-foot wide paved road ran through the property to the main section of the Amoco operation. There were a number of drainage ditches on the property as well as active and inactive well-heads, apparently related to the salt-mine operation. As a result, the property was divided into a number of small parcels that were covered by weeds, grasses and scrub and some of the land was marshy. The farmer was only able to farm a little over one-half of the land.

[28] The Board concluded that the property was not "farm lands used only for farm purposes". It pointed out that the property was in an industrial area in the core of the city, that there were no other agricultural uses in the vicinity, that the lands were designated for what was described as "more intense" industrial use and had been zoned for that purpose since 1948, that the zoning did not permit agricultural uses and it had not been cultivated or farmed from that time until 1987. It also took into account that the property could not legally be developed and used for an agricultural purpose. Based on those facts, it was open to the Board to find that the property did not constitute farm lands used only for farm purposes.

[29] On appeal by the company, Adams J. wrote the reasons for the Divisional Court. He held as follows at p. 357 of the reasons:

We do not find any error in law with the Board's approach. The Board did not find that the industrial zoning was determinative in the sense of holding that land zoned industrial could never qualify as farm land for the purposes of s. 19(3). Rather, the Board took into account all of the circumstances before it.

(Emphasis added)

[30] I agree with that part of the reasons of Adams J. It is consistent with an earlier decision of Sweet Co. Ct. J. in Re Roman Catholic Episcopal Corp. of Hamilton & Stoney Creek, 1970 CanLII 282 (ON SC), [1970] 2 O.R. 304 who held as follows at p. 307:

I am of the opinion that the zoning and permitted use of these lands and the development for residential purposes to the extent that it now exists in their vicinity, are not items to be taken into consideration in determining whether or not these lands come within the category of lands dealt with in s. 35(3).

It would be my view that there could possibly be cases where permitted use, zoning and use of surrounding lands and the general nature of the locality would be factors in determining whether or not a parcel of land is farm land within the meaning of the legislation. Certainly common sense would impel an assessor not to treat as farm lands, a parcel of vacant land at the corner of King and Yonge Sts. in Toronto or at the corner of King and James Sts. in Hamilton, merely because the owner, for whatever reason, may have decided to plant it in tomatoes. However, this is a far cry from the situation existing here.

(Emphasis added)

[31] However, in Amoco Adams J. then went on to hold as follows at p. 358:

In any event, it is our view that the zoning, in this particular case was determinative because an industrial use was the only permitted use on the express wording of the by- law. Therefore, the agricultural activity on this land was in violation of the zoning by-law and was unlawful. We do not accept that s. 19(3) of the Assessment Act envisages a use which is expressly proscribed by law. In Re County Assessor for Ontario County and Runnymede Investment Corp. Ltd., 1965 CanLII 297 (ON CA), [1966] 1 O.R. 577, the Ontario Court of Appeal did not hold that an unlawful use fell within the meaning of the subsection. Similarly, Re City of North York and Regional Assessment Commissioner, Region No. 10 (1981), 127 D.L.R. (3d) 637, does not assist the appellant. In that case, the land had been assessed as farm land since the mid l960's and where, accordingly, the owner was not acting "without colour of right".

(Emphasis in original)

[32] For the reasons set out above, I cannot agree with this part of the decision. Further, it seems to me that Adams J. has misconstrued the reasons of Henry J. in the North York (City) case. Henry J. held that s. 19(3) applied even if the use as farm land was illegal. [See Note 1 at end of document]

Conclusion

[33] In my view the Divisional Court erred in holding that the industrial zoning was determinative of the application of s. 19(3), even if farm use was illegal. Whether lands are "farm lands used only for farm purposes" is a question of fact and there was a basis upon which the Board could reasonably find that the lands in question in this appeal fell within that phrase. On the other hand, as I have indicated, I would not hold that zoning (as opposed to legality or illegality) is entirely irrelevant. It is one circumstance that the assessor or the Board is entitled to consider, as discussed by Sweet Co. Ct. J. in the passage from Re Roman Catholic Episcopal Corp. of Hamilton & Stoney Creek, set out above. It also seems to me that this interpretation is consistent with the recent amendment to the section.

Disposition

[34] Accordingly, I would allow the appeal, set aside the order of the Divisional Court and restore the order of the Ontario Municipal Board. The appellants are entitled to their costs in this court, including the costs of the application for leave, and to their costs in the Divisional Court from the respondents. I would not make any costs order against the intervenors.

Appeal allowed.

Notes

Note 1: The use of the phrase "colour of right" by both Henry J. and Adams J. in this context is therefore somewhat confusing.