City of Mississauga v. Erin Mills Corporation Limited et al. Guglietti Brothers Investments Limited et al. v. The Regional Municipality of Halton et al. Paletta International Corporation et al. v. The Corporation of the City of Burlington et al. [Indexed as: Mississauga (City) v. Erin Mills Corp.]
71 O.R. (3d) 397
[2004] O.J. No. 2690
Docket Nos. C40101, C40165 and C40170
Court of Appeal for Ontario,
O'Connor, A.C.J.O., Weiler and Goudge JJ.A.
June 25, 2004
Planning -- Development charges -- Credit for payments made under subdivision agreement -- Regulation providing that if there is conflict between development charge by-law and subdivision agreement, provisions of agreement prevail over by- law -- Ontario Municipal Board erring in determining test for conflict -- No conflict unless subdivision agreement precludes charges imposed by by-law -- Development Charges Act, R.S.O. 1990, c. D.9 -- Development Charges Act, 1997, S.O. 1997, c. 27.
Before the enactment of the Development Charges Act ("old DCA") and its replacement the Development Charges Act, 1997 ("1997 DCA") land developers contributed to a municipality's infrastructure costs by entering into a subdivision agreement with the municipality. The development charges legislation replaced this regime with one that allowed municipalities to pass development charges by-laws. The old DCA provided developers with a credit against development charges for payments made under a subdivision agreement. The 1997 DCA continued the approach and provided that rules for credits could be set out by regulation, and O. Reg. 82/98 imposed rules with respect to credits given or required to be given under the old DCA. The regulation provided that if there is a conflict between a development charge by-law and a subdivision agreement, the provisions of the agreement prevailed over the by-law. The regulation further provided that if the municipality refuses to recognize a credit, the applicant could appeal to the Ontario Municipal Board ("OMB").
Several developers, led by the appellant Erin Mills Corporation Ltd., appealed to the OMB with respect to charges imposed by the City of Mississauga. In a decision dated September 19, 2001, the OMB held that the development charges under the new Mississauga by-law constituted a form of lot levy requiring the developers to again pay virtually the same charge relating to development that they had already paid under their subdivision agreements, and that this constituted a conflict between the new by-law and the subdivision agreements for the purposes of s. 17(2) of O. Reg. 82/98. Using this definition of conflict, the OMB allowed the developers' appeals and ordered that they be given full credit for the charges required by the development charge by-law.
In a second proceeding, another group of developers, led by Guglietti Brothers Investments Limited and Paletta International Corporation, appealed to the OMB with respect to charges imposed by the City of Burlington and the Regional Municipality of Halton. In its decision of June 7, 2002, the OMB applied a slightly different definition of conflict. It found a conflict to arise when the owner has met the full obligation of its subdivision agreement to pay the amount established at the time established, but the municipality then seeks through its development charge by-law to [page398] "contradict, reverse, amend, modify or override" the provisions of the agreement. The OMB applied that definition to find a conflict in many, but not all, of the specific instances before it. Where a conflict was found, the developer was accorded a credit for all charges that the development charge by-law would otherwise impose.
After obtaining leave, the municipalities appealed both decisions to the Divisional Court. Applying a standard of correctness to its review of the OMB's decisions, the Divisional Court concluded that the OMB had erred and that the correct approach was to see if the subdivision agreement and the development charge by-law can stand together. If so, there is no conflict. The Divisional Court applied this meaning to the various instances in the two cases, reversing most, but not all, of the conclusions reached by the OMB. The developers appealed.
Held, the appeals and the cross-appeal should be dismissed.
Contrary to the submission of the respondent City of Mississauga, the appeal process under O. Reg. 82/98 was available to resolve the disputes in this case. The appeal process was not limited to disputes over the amount of the credit. It was available to resolve the question of whether there was a conflict between a subdivision agreement and the applicable development charge by-law that would relieve the developer from paying infrastructure charges beyond those already paid under the subdivision agreement.
The OMB's role in the process was to sit in appeal of a municipality's decision concerning a developer's claim for credit towards a charge imposed under a development charge by- law. In the cases at bar, the OMB's fundamental task was to determine the test to be used to decide if there was a "conflict" between the various subdivision agreements and the relevant development charge by-law. Upon appeal to the Divisional Court, that court was correct in concluding that the OMB's decision should be reviewed to a standard of correctness. Applying the standard of correctness, the question then was whether the OMB's decisions, and particularly the meaning it gave to "conflict", can withstand scrutiny. That question was addressed in OMERS Realty Management Corp. v. Peel (Regional Municipality), which on appeal was reported as Hammerson Canada Inc. v. Peel (Regional Municipality). That case concerned the interpretation of the same language in the old DCA, and the court found that unless the subdivision agreement precluded the charges imposed by the by-law, there was no conflict. What matters is whether there is anything in the subdivision agreement, properly interpreted, that precludes the further infrastructure charges under the development charge by-law. This test for conflict was consistent with the ordinary dictionary meaning of the term. It was also consistent with the central theme of the legislative regime, which was best served by curtailing the new legislative authority to pass development charge by-laws only where the pre-existing contract clearly requires it.
The determination of whether a particular subdivision agreement precludes the developer from having to pay some or all of the charges imposed by a development charge by-law requires no more than the application of the normal rules of contractual interpretation. No express term precluding the development charge is necessary if such a term can be properly implied. Nor is it necessary that the agreement expressly contemplate a future development charge by-law. However, where the developer says that the conflict protects it against all infrastructure charges beyond those required by the subdivision agreement itself, the subdivision agreement must be found on proper interpretation to preclude future infrastructure payments by the developer, whether sought pursuant to the subdivision agreement or assessed against the developer in some other way such as a development charge by-law. [page399]
In the cases at bar, the OMB failed to apply the correct test for conflict, and its decisions could not stand. It was proper in these circumstances that the Divisional Court exercised its remedial discretion to apply the correct test to each circumstance before it, rather than remitting the matter back to the OMB. The Divisional Court made no error in the particular cases before it. Accordingly, the appeals and the cross-appeal from the Divisional Court's decision should be dismissed.
APPEAL from a judgment of the Divisional Court (Then, Forestell and Pardu JJ.) dated April 15, 2003.
Cases referred to OMERS Realty Management Corp. v. Peel (Regional Municipality), [2001] O.J. No. 2468, 21 M.P.L.R. (3d) 14 (C.A.), affg (2000), 13 M.P.L.R. (3d) 259 (Ont. S.C.J.), supp. reasons (2000), 13 M.P.L.R. (3d) 259n (Ont. S.C.J.) (sub nom. Hammerson Canada Inc. v. Peel (Regional Municipality)); Pushpanathan v. Canada (Minister of Citizenship and Immigration), 1998 778 (SCC), [1998] 1 S.C.R. 1222, [1998] 1 S.C.R. 982, 160 D.L.R. (4th) 193, 226 N.R. 201 Statutes referred to Development Charges Act, 1997, S.O. 1997, c. 27 Development Charges Act, R.S.O. 1990, c. D.9, s. 14 Ontario Municipal Board Act, R.S.O. 1990, c. O.28, s. 96(1) Planning Act, 1983, S.O. 1983, c. 1 Rules and regulations referred to O. Reg. 82/98 ("Development Charges Act, 1997"), s. 17
Paul Bates, Lynda Townsend Renaud and Robyn Campbell, for appellant C40101. Mark Noskiewicz and David Bronskill, for appellants C40165. Scott A. Snider and Shelley Kaufman, for appellants C40170. Thomas R. Lederer and Susan E. Friedman, for respondent City of Mississauga. Robert G. Doumani and Patricia A. Foran, for respondent Regional Municipality of Halton and the Corporation of the City of Burlington.
The judgment of the court was delivered by
GOUDGE J.A.: --
Introduction
[1] For many years, developers in this province were required to contribute to the infrastructure costs necessitated by their developments by entering into subdivision agreements with the municipalities in which their lands were situated.
[2] In 1989, Ontario replaced this regime with one that allowed municipalities to pass development charge by-laws that required [page400] developers to contribute to growth-related infrastructure costs. The legislation which effected this change was the Development Charges Act, R.S.O. 1990, c. D.9 (the "old DCA"). It was replaced in 1998 by the Development Charges Act, 1997, S.O. 1997, c. 27 (the "1997 DCA"). However, the 1997 DCA maintained the same fundamental concept, namely that contributions to the infrastructure costs entailed by development would be obtained from developers by way of development charge by-laws, rather than by way of subdivision agreements.
[3] Through its regulations, the 1997 DCA also continued the corollary concept in the old DCA that is at the heart of this appeal, namely that if there is a conflict between a development charge by-law and a prior subdivision agreement, the latter prevails over the former to the extent of the conflict.
[4] A number of developers commenced proceedings before the Ontario Municipal Board ("the Board") claiming conflicts between their subdivision agreements and the development charge by-laws that apply to their lands.
[5] In the two decisions under scrutiny here, the Board took a generous approach to defining conflict and found as a result that most of the subdivision agreements precluded the developers from having to pay any charges imposed by development charge by-laws.
[6] On appeal, the Divisional Court applied a standard of correctness to these two Board decisions. It found that a stricter test for conflict was required and concluded that most of the developers were obliged by the applicable by-laws to pay development charges despite their subdivision agreements.
[7] For the reasons that follow, I agree with the conclusions reached by [the] Divisional Court and would therefore dismiss the appeal.
Background
[8] It has long been true that new development brings with it the need for additional roads, sewers, police and fire protection and many other common services. All of this must be paid for. That responsibility rests with the municipality in which the new development takes place with whatever help it can get from others.
[9] Prior to 1989, the Planning Act, 1983, S.O. 1983, c. 1, entitled the municipality to obtain the financial assistance of the developer in bearing these additional infrastructure costs by requiring the developer to enter into a subdivision agreement with it as a condition of municipal approval of the development. Typically, such an agreement would compel the developer to pay [page401] a levy per lot as its contribution to the additional infrastructure costs necessitated by the development.
[10] This regime left it to each municipality to implement its own lot levy policy with a resulting diversity that caused confusion and dissatisfaction across the province. In 1989, the legislature responded by passing the old DCA. It came into force on November 23, 1989, and was designed to replace the patchwork system of subdivision agreements with a fair and consistent regime for the obtaining of financial contributions by developers to growth related infrastructure costs.
[11] Under the new regime, the municipality obtained these contributions not by contracting with each developer but by passing a development charge by-law. Thus, the new regime was designed to operate through newly accorded municipal legislative authority rather than by contract.
[12] The old DCA also provided for the transition to the new regime by addressing the effect to be given to pre-existing subdivision agreements. It did so in ss. 14(1), 14(2) and 14(4) which read as follows:
14(1) If an owner or former owner has, before the coming into force of a development charge by-law, paid all or any portion of a charge related to development pursuant to an agreement under section 51 or 53 of the Planning Act or a predecessor thereof with respect to land within the area to which the by-law applies, the municipality shall give a credit for the amount of the charge paid.
(2) If an owner or a former owner has, before the coming into force of a development charge by-law, provided services in lieu of the payment of all or any portion of a charge related to development pursuant to an agreement under section 51 or 53 of the Planning Act or a predecessor thereof with respect to land within the area to which the by-law applies, the municipality shall give a credit for an amount equal to the reasonable cost to the owner or to the former owner of providing the services.
(4) If a conflict exists between the provisions of a development charge by-law and an agreement referred to in subsection (1) or (2), the provisions of the agreement prevail to the extent of the conflict.
[13] On March 1, 1998, the 1997 DCA was proclaimed. Although it makes certain changes in the province-wide standards for development charge by-laws, it does not change the fundamental concept. The 1997 DCA also provided that transitional rules for credits given under s. 14 of the old DCA could be set out by regulation. This was done in Regulation 82/98 ("O. Reg. 82/98"), s. 17 of which reads in part:
The following rules apply with respect to credits given or required to be given under section 14 of the old Act: [page402]
The owner or former owner of land is entitled to the recognition of a credit towards a development charge imposed under a development charge by-law passed under the new Act by the council of the municipality that gave the credit.
If there is a conflict between a development charge by-law passed under the new Act and an agreement referred to in paragraph 3, the provisions of the agreement prevail over the by-law to the extent of the conflict.
Paragraph 2 applies with respect to an agreement made between a municipality and the owner or former owner of land if, before the coming into force of a development charge by-law under the old Act,
i. the owner or former owner of the land paid all or a portion of a charge related to development under the agreement with respect to the land and the land is within the area to which a development charge by-law passed under the new Act may apply, or
ii. the owner or former owner of the land provided services in lieu of the payment referred to in subparagraph i.
- An application for the recognition of a credit under paragraph 1 must be made,
i. on or after March 1, 1998 and on or before March 1, 1999, or
ii. on or after September 27, 1999 and on or before October 31, 1999.
An application for the recognition of a credit shall set out the amount of the credit that is sought and the services to which the applicant claims the credit should be applied.
The municipality shall give each applicant written notice of whether the municipality agrees or refuses to recognize the credit in accordance with the application. The notice must be given,
i. on or before September 1, 1999 for an application made during the period described in subparagraph 5 i, . . .
If the municipality refuses to recognize a credit in accordance with an application, the applicant may appeal the municipality's decision to the Ontario Municipal Board by filing with the clerk of the municipality, within 30 days after the applicant receives the notice of the municipality's refusal, a notice of appeal.
The Ontario Municipal Board shall hold a hearing to deal with the notice of appeal.
The parties to the appeal are the appellant and the municipality. [page403]
The Ontario Municipal Board shall give notice of the hearing to the parties.
After the hearing, the Ontario Municipal Board shall determine whether the appellant is entitled to the recognition of a credit and, if so, shall determine the amount of the credit to be recognized and the services to which it relates.
[14] Where a developer contests the municipality's decision concerning the credit to be given under s. 14 of the old DCA and appeals to the Board, its decision can be appealed on a question of law to the Divisional Court pursuant to s. 96(1) of the Ontario Municipal Board Act, R.S.O. 1990, c. O.28, which reads:
96(1) Subject to the provisions of Part IV, an appeal lies from the Board to the Divisional Court, with leave of the Divisional Court, on a question of law.
[15] The two Board proceedings that lead to this appeal concern disputed credit claims brought by developers pursuant to s. 17 of O. Reg. 82/98.
[16] The first involved a group of developers led by Erin Mills Corporation Limited on one side and the City of Mississauga on the other side. The developers all had subdivision agreements with Mississauga for lands within the city which they proposed to develop. In each case, the developer had paid the infrastructure costs required by its subdivision agreement prior to Mississauga enacting its development charge by-law. The essence of the developer's case was that having paid 100 per cent of the infrastructure charges required by their subdivision agreements, they could not be required to pay any further infrastructure costs that were required by Mississauga's development charge by-law.
[17] In its decision of September 19, 2001, the Board agreed, finding that the development charges under the new Mississauga by-law constituted a form of lot levy requiring the developers to again pay virtually the same charge relating to development that they had already paid under their subdivision agreements, and that this constituted a conflict between the new by-law and the subdivision agreements for the purposes of s. 17(2) of O. Reg. 82/98. Using this definition of conflict, the Board allowed the developers' appeals and ordered that they be given full credit for the charges required by the development charge by-law.
[18] The second Board proceeding involved another group of developers led by Guglietti Brothers Investments Limited and Paletta International Corporation. The municipalities involved were the City of Burlington and the Regional Municipality of Halton. The essence of the case was the same as that put forward by the developers in the first Board proceeding. [page404]
[19] In its decision of June 7, 2002, the Board, differently constituted, applied a slightly different definition of conflict. It found a conflict to arise when the owner has met the full obligation of its subdivision agreement to pay the amount established at the time established, but the municipality then seeks through its development charge by-law to "contradict, reverse, amend, modify or override" the provisions of the agreement (at p. 29). The Board applied that definition to find a conflict in many but not all of the specific instances before it. Where a conflict was found, the developer was accorded a credit for all charges that the development charge by-law would otherwise impose.
[20] After obtaining leave, the municipalities appealed both decisions to the Divisional Court which dealt with them together. That court applied a standard of correctness to its review of the Board's decisions and particularly to the definition of conflict used. The Divisional Court concluded that the Board had erred in this regard and that the correct approach was to see if the subdivision agreement and the development charge by-law can stand together. If so, there is no conflict. That is, if the payment of a development charge is not forbidden by the subdivision agreement, there is no conflict. The Divisional Court then applied this meaning to the various instances in the two cases, reversing most but not all of the conclusions reached by the Board.
[21] With leave, the decision of the Divisional Court comes to this court.
Analysis
[22] Four issues are raised in this appeal.
[23] The first, raised only by the respondent Mississauga, is whether the process set up by s. 17 of O. Reg. 82/98 can be used at all where developers claim that their subdivision agreements free them from any further contribution to infrastructure costs which would otherwise be required of them by development charge by-laws.
[24] The second, raised by the appellant developers, is whether the Divisional Court erred in reviewing the Board decisions against a standard of correctness rather than a standard of reasonableness.
[25] The third is whether the Board's decisions, and particularly the meanings it gave to "conflict", can withstand scrutiny when the proper standard of review is applied to them.
[26] The fourth is the result that should follow, if the Board erred. [page405]
The first issue
[27] Mississauga argues that the s. 17 process is designed to deal with contested claims for credits under s. 14 of the old DCA. Section 14(1) describes the credit as the amount paid under a subdivision agreement. Mississauga says that the s. 17 process is limited to disputes over the amount of that credit, to be determined by reference to the payments which have already been made by the developers. The process is not intended to deal with the charges to be claimed in the future from developers pursuant to development charge by-laws.
[28] I do not agree. The opening words of s. 17 of O. Reg. 82/98 make clear that the process described in that section applies "with respect to credits given or required to be given" (emphasis added). Such prospective language clearly suggests a process that encompasses future charges claimed of a developer by a development charge by-law, not a process that is confined to a dispute over how much the developer has paid pursuant to its subdivision agreement. To limit the s. 17 process as Mississauga suggests would render the conflict provision meaningless because in determining the amount that was properly paid under the subdivision agreement, no comparison of the agreement with the development charge by-law -- which s. 17(2) clearly contemplates -- would be necessary. Only the subdivision agreement would have to be scrutinized.
[29] Moreover, the reading of s. 17 advanced by Mississauga carries adverse policy consequences. Where a developer claims that its subdivision agreement gives it a credit not just for amounts paid, but also for future charges to be assessed against it pursuant to the development charge by-law, the developer would have to invoke two processes. For the former claim, it would have to appeal to the Board under s. 17. For the latter, it would have to utilize the courts. Such an inefficiency cannot have been the intention when s. 17 was drafted.
[30] In my view, s. 17 contemplates a single process which can, if required, resolve both questions. In both these proceedings before the Board it was the second question that was central. That is, was there a conflict between the subdivision agreements and the applicable development charge by-law that relieved the developers from paying any infrastructure charges beyond those already paid under their agreements.
The second issue
[31] The Divisional Court determined that the appropriate standard of review to apply to the Board's decisions was that of [page406] correctness. The appellant developers challenge this and argue for the more deferential standard of reasonableness. In my view, the Divisional Court was right. It was reviewing the Board's decision about the meaning of a regulation.
[32] The Board's role in the process is set up by s. 17 of O. Reg. 82/98. It is to sit in appeal of a municipality's decision concerning a developer's claim for credit towards a charge imposed under a development charge by-law. In the two cases under scrutiny here, the developers claimed that the conflict between their subdivision agreements and the relevant development charge by-laws extended to relieving the developers from all development charges imposed by those by-laws. This claim engaged s. 17(2) which says:
The following rules apply with respect to credits given or required to be given under section 14 of the old Act:
If there is a conflict between a development charge by-law passed under the new Act and an agreement referred to in paragraph 3, the provisions of the agreement prevail over the by-law to the extent of the conflict.
[33] The Board's fundamental task in each case was to determine the test to be used to decide if there was "a conflict" between the various subdivision agreements and the relevant development charge by-law. In other words, what meaning should be given to that term in s. 17(2)? Having settled on a definition of conflict, the Board's task was to go on to apply it to each instance where the developer alleged that a conflict existed.
[34] In my view, the Board's interpretation of "conflict" in s. 17(2) is properly reviewed using a standard of correctness. The considerations relevant to the pragmatic and functional approach to determining the proper standard of review all point in this direction. Those considerations are well known: see Pushpanathan v. Canada (Minister of Citizenship and Immigration), 1998 778 (SCC), [1998] 1 S.C.R. 982, 160 D.L.R. (4th) 193.
[35] There is no privative clause protecting the Board's decisions when they come before the Divisional Court on appeal with leave pursuant to s. 96(1) of the Ontario Municipal Board Act. This suggests a less differential standard of review.
[36] The appeal to the Divisional Court can only be on a question of law. Thus, what is reviewed by the court is a finding of law, not one of fact. In this case the legal question is the interpretation to be given to the term "conflict" in a regulation to the 1997 DCA. This is not the Board's home statute nor is there [page407] any other reason to presume that the Board has unique experience in interpreting it. Neither is it apparent that the Board's general expertise in matters of planning and land use is engaged in defining this term. The Board would seem to have no greater expertise than the court in giving meaning to the concept of "conflict" between a contract and a by-law. This points to closer scrutiny of the Board's decision.
[37] In addressing the question of statutory interpretation, the Board is not providing regulation of a polycentric problem where a number of interests are at stake. Rather, it is hearing an appeal between two parties, a developer claiming a conflict and a municipality resisting that claim. This too points to correctness as the appropriate standard of review.
[38] Finally, according to the Divisional Court an appellate role in reviewing the Board's decision on this question of law suggests that the legislature saw value in achieving uniformity whenever the Board is called on to answer such a question. A conflict in one municipality should be a conflict in another. If the appellate function is to achieve uniformity in the Board's answers, this too favours correctness as the appropriate standard of review.
[39] The appellate developers rely heavily on the Board's detailed findings of fact to assert that its decisions must be reviewed against a more deferential standard of reasonableness. However, the Board used this factual matrix not to establish the test for "conflict", but in addressing the meaning to be given to the various subdivision agreements to which the test was then applied. Thus, the Board's fact finding in these two decisions is not inconsistent with applying a correctness standard to its interpretation of "conflict" in s. 17(2) of O. Reg. 82/98.
[40] I conclude, therefore, that the Divisional Court was right in its choice of standard of review, and that this ground of appeal must fail.
The third issue
[41] Next, the appellant developers argue that the Board applied the correct test for "conflict" and that the Divisional Court erred in finding otherwise.
[42] Consideration of this argument must begin with a determination of the proper meaning to be given to this term in s. 17(2) of O. Reg. 82/98. When is it that a conflict will be found to exist between a development charge by-law and a subdivision agreement?
[43] That question was squarely addressed in OMERS Realty Management Corp. v. Peel (Regional Municipality) (2000), 13 M.P.L.R. (3d) 259 (Ont. S.C.J.). [page408]
[44] Although this case arose under s. 14 of the old DCA, the statutory language used is exactly the same as the counterpart language in s. 17(2) of O. Reg. 82/98 under the 1997 Act. The issue in OMERS was whether there was a conflict between the development charge by-law passed by the Regional Municipality of Peel in 1991 under the old DCA and the 1987 subdivision agreement between the developer and Peel. The question arose because Peel sought to impose charges by way of an industrial/ commercial lot levy through its 1991 development charge by- law when the 1987 agreement contained no such lot levies.
[45] At first instance, Nordheimer J. concluded that there was no conflict. At para. 30 he indicated that he did not agree with the developers' contention that the proper interpretation of the subdivision agreement was that Peel gave up its right to impose industrial/commercial lot levies. He spelled out a number of reasons for this and then concluded about the developer at para. 49:
If its intention, as it asserts it was, was to ensure that it had absolute certainty as to the charges that the various municipal authorities would impose on the City Centre lands, then it ought to have ensured that there was a clear and unequivocal clause to that effect placed in the Financing Agreement [i.e. the subdivision agreement].
[46] In short, he concluded that unless the subdivision agreement, properly interpreted, precluded the charges imposed by the development charge by-law, there was no conflict.
[47] The appeal to this court is reported as Hammerson Canada Inc. v. Peel (Regional Municipality), [2001] O.J. No. 2468, 21 M.P.L.R. (3d) 14 (C.A.). This court expressed its "substantial agreement" with the reasons of Nordheimer J. It found that unless the subdivision agreement precluded the charges imposed by the by-law there was no conflict. At para. 4, this court said this:
The appellant can point to no provision of the Financing Agreement [i.e. the subdivision agreement] that presents any such conflict. The Agreement and the By-law can stand together. The former does not address development charges on non-residential development. The latter does. There is no conflict.
[48] The appellant developers seek to distinguish that case from the present one on the basis that the subdivision agreement there did not address non-residential development at all, which was the subject of the proposed development charges. With respect, I do not think that this was material to the test for conflict adopted there. What mattered, both in this court and at first instance, was whether there was anything in the subdivision [page409] agreement, properly interpreted, that precluded the further infrastructure charges which the development charge by-law sought to impose. The fact that the subdivision agreement in that case did not address the subject of the proposed development charge at all simply made the answer to the question easy. The agreement and the by-law could obviously stand together and hence there was no conflict.
[49] This test for conflict is consistent with the ordinary dictionary meaning of the term. For example, the New Oxford Dictionary defines conflict as the clashing or variance of opposed principles. In this context, it is the subdivision agreement and the development charge by-law that must be opposed to create the conflict. The former must prevent the charge which the latter seeks to compel.
[50] This interpretation is also consistent with the central theme of the legislative regime that began with the old DCA and continues with the 1997 DCA. These Acts accord to municipalities new legislative authority to pass development charge by-laws to help pay for the infrastructure costs of new development. The conflict provisions included in the legislative regime necessarily circumscribe that legislative authority to some extent in an effort to preserve existing contractual rights. However, the central legislative theme is best served by curtailing this new legislative authority only where the pre-existing contract clearly requires it.
[51] Following Hammerson Canada Inc., I conclude that for the purposes of s. 17(2) of O. Reg. 82/98 a conflict will be found only where the subdivision agreement, properly interpreted, precludes the infrastructure charge which the development charge by-law seeks to impose on the developer. Where the subdivision agreement does so, the two cannot stand together and the agreement prevails to the extent of the conflict.
[52] The determination of whether a particular subdivision agreement precludes the developer from having to pay some or all of the charges imposed by a development charge by-law requires no more than the application of the normal rules of contractual interpretation. No express term precluding the development charge is necessary if such a term can be properly implied. Nor is it necessary that the agreement expressly contemplate a future development charge by-law.
[53] However, where the developer says that the conflict protects it against all infrastructure charges beyond those required by the subdivision agreement itself, the subdivision agreement must be found on proper interpretation to preclude future infrastructure payments by the developer, whether sought pursuant [page410] to the subdivision agreement or assessed against the developer in some other way such as a development charge by-law. In short, in such a case, the question is whether the subdivision agreement, properly interpreted, protects the developer against any further contribution to infrastructure costs whether required by the agreement or otherwise imposed, for example by a development charge by-law.
[54] Having outlined the proper test for determining whether a "conflict" exists for the purposes of s. 17(2) of O. Reg. 82/ 98, it is possible to assess the appellants' argument that the Divisional Court erred in interpreting the term. They say that that court incorrectly required that a subdivision agreement contain express language precluding the assessment of future development charges in order to find the conflict.
[55] With respect, I disagree. When the reasons are fairly read as a whole, I am of the opinion that the Divisional Court applied the test for conflict that I have described.
[56] The Divisional Court begins its analysis of the proper test for conflict by reciting with approval the passage quoted above from this court's decision in Hammerson Canada Inc. It then went on to address the alleged conflicts before it by analyzing whether in each case the subdivision agreement and the development charge by-law could stand together or not.
[57] It is true that the Divisional Court also described its approach as assessing whether the subdivision agreement "contains provisions which exempt a developer" (para. 40) from further payments related to infrastructure costs or whether payment of a development charge is "forbidden" by the subdivision agreement. However, I take this language to encompass an examination not just of the express terms of the subdivision agreement, but also terms which may properly be implied. For example, in applying its test to the subdivision agreement of Paletta with Halton regarding Plan 20M-232, the Divisional Court found a conflict not from express terms of the agreement but from its "general sense" that the developer would not have to make payments in the future for infrastructure costs (para. 63). Hence, I conclude that the Divisional Court applied the right test for conflict in assessing the Board's two decisions.
[58] However, since the standard of review is correctness, the even more critical question is whether the Board applied the right test for conflict. I agree entirely with the Divisional Court that it did not.
[59] In its first decision, dated September 19, 2001, the Board set out its approach in this language at p. 24 of its decision: [page411]
The Board finds that development charges under the new By-law are a form of lot levy. The application of the new By-law requires the appellants to pay virtually the same charge related to development twice. The Board finds that the reopening of the lot levy agreements and the requirement that the appellants pay additional sums for the same thing, before a building permit will issue, constitutes a conflict between the new By-law and the lot levy agreements, for the purposes of section 17(2) of the Regulation.
[60] The Board tested for conflict by examining whether the development charge by-law required the developer to pay additional sums for the same thing that the subdivision agreement required it to pay for. It did not ask whether the subdivision agreement, properly interpreted, protected the developer against further contributions to additional infrastructure costs, however imposed. Thus, in my view, the Board misinterpreted the fundamentally important term in s. 17(2) of O. Reg. 82/98. Since it applied the wrong test to the conflict alleged by the developers in that case, its decision cannot stand.
[61] In its second decision, released on June 7, 2002, the Board applied a rather different test for conflict, as I have described earlier. In concluding its discussion of the term, the Board said this at p. 29 of its decision:
In any of the above circumstances a conflict arises when the owner has met the full obligation of the agreement to pay the amount established at the time established, but the municipality by a subsequent by-law or policy would seek to contradict, reverse, amend, modify or override the provisions of the agreement. Similarly, it must be concluded that a conflict exists when the agreement unambiguously exempts the owner from development levies on a class of use, and the municipality would seek to revisit that exemption by requiring payments under a future by-law or policy for the development of such lands.
[62] The Divisional Court assessed the Board's discussion of the interpretation to be given to "conflict" in s. 17(2) in the following way at para. 53:
The Board essentially concluded that where an agreement fixed an amount and time for payment of a lot levy, but did not reserve to the municipality the right to unilaterally demand more money on account of infrastructure costs, the agreement conflicted with the development charges by-law and the developer was therefore exempt from any development charges whenever it applied for a building permit. For the reasons expressed earlier, the Board erred in adopting this definition of conflict.
[63] I agree. The Board did not assess each subdivision agreement to determine if the agreement, properly interpreted, protected the developer against any future contribution to infrastructure costs, however imposed. As with its first decision, I conclude that the Board erred in its second decision by [page412] misinterpreting the fundamental term in s. 17(2). Because it applied the wrong test, its conclusions about whether there were conflicts in each of the cases disposed of in that decision must also be set aside.
The fourth issue
[64] Having determined that the Board erred by applying an incorrect test for conflict, the Divisional Court exercised its remedial discretion to apply the correct test to each circumstance before it, rather than remitting the matter back to the Board to do so. None of the appellants challenge this exercise of discretion and, in my view. it was proper, particularly given that the subdivision agreements were almost entirely standard form agreements where there had been no negotiation of the payment clauses. Hence there was no negotiating history to bring to bear on the task of comparing the language of each agreement to the development charge by-law using the correct definition of conflict.
[65] What remains then is to address the challenges by the appellants to the Divisional Court's findings in the particular cases. The question is whether the Divisional Court erred in determining in each case whether or not, in light of the correct test, there was a conflict between the developer's subdivision agreement and the particular development charge by- law which protected it from having to make further contributions to infrastructure costs.
[66] The first case involves the subdivision agreements between the appellant developers Erin Mills and others on the one hand and Mississauga on the other hand. The Divisional Court found that these agreements do not foreclose the imposition of development charges by Mississauga and that there is therefore no conflict for the purposes of s. 17(2).
[67] I agree. It is true that Mississauga's development charge by-law compels these developers to pay further amounts for infrastructure beyond those required by their subdivision agreements. However, the clauses in those agreements which simply require payments towards the cost of infrastructure cannot reasonably be interpreted to preclude all future contributions to infrastructure costs, such as those now claimed by Mississauga pursuant to its development charge by- law. Those clauses provide nothing either explicitly or by reasonable implication that precludes further infrastructure charges in future, imposed by by-law. No other provisions of these contracts were advanced by these appellants. Thus these subdivision agreements raise no [page413] conflict with the provisions of the development charge by-law relied on by Mississauga to require further contributions to infrastructure costs from these developers.
[68] The Divisional Court then dealt with two subdivision agreements between the appellant developer Guglietti Brothers and Burlington. One dealt with this appellant's lands and Plan 20M-480 and the other with its lands and Plan 20M-525. The relevant provisions of these two agreements are identical.
[69] The Divisional Court concluded that there is no conflict between these agreements and Burlington's development charge by-law.
[70] I agree. Both agreements provide in para. 1(j) that the developer covenants to "Pay the City the capital contributions set out in the Sixth Schedule". That Schedule, after setting out the amount to be paid per hectare of land, said this:
Capital Contributions are payable in full at the time of the execution by the Owner of this Agreement. If, by resolution, the Council of the City of Burlington has changed its general Schedule of Capital Contributions charged on commercial and industrial plans of subdivision and on commercial and industrial blocks in mixed use plans of subdivision prior to the City of Burlington advising the Director of Regional Planning or such other applicable agency that all applicable conditions have been satisfied, the Capital Contributions payable to the City will be in accordance with such changed general Schedule of Capital contributions.
[71] This appellant argues that this clause protects it against Burlington's development charge by-law once it has paid all the capital contributions called for by the clause and only if Burlington changes the schedule of capital contributions payable prior to the developers' payment can it be required to pay more than the amount per hectare set out in the Sixth Schedule.
[72] With respect, this clause addresses only the contributions to infrastructure costs that this appellant was obliged to make pursuant to its subdivision agreements. Nothing in this contractual language either explicitly or implicitly protects the developer against all future payments towards infrastructure costs that may be required by by-law. The contract cannot reasonably be interpreted to say that the developers will not have to pay any further infrastructure costs however they may be imposed. These subdivision agreements do not create a conflict with Burlington's development charge by-law.
[73] This appellant also had two subdivision agreements with Halton. The first was for lands in Plan 20M-525. Again the Divisional Court concluded that it raised no conflict with the payments claimed by Halton under its development charge by-law. [page414]
[74] Again, I agree. The contract makes clear that it governs only the infrastructure cost contributions required by "this Agreement". It cannot reasonably be interpreted to prevent the developer from being subjected to all future assessments for infrastructure costs, however they may be imposed.
[75] This appellant's second subdivision agreement with Halton was in respect of Plan 20M-480. The Divisional Court reached the same conclusion, namely that it did not create a conflict with the requirements of Halton's development charge by-law.
[76] In my view the Divisional Court was correct in doing so. In contesting this, the appellant developer relies only on the term in the agreement that made capital contributions under this agreement to Halton for lands in this Plan "N/A" or not applicable. This provision cannot be reasonably interpreted to go beyond this agreement to protect the developer from any future charge for infrastructure costs, however imposed.
[77] Next, the Divisional Court examined two subdivision agreements involving the appellant Paletta. The first of these was between it and Burlington relating to Plan 446. As with the two contracts between Burlington and the appellant Guglietti Brothers which I referred to earlier, this contract was in Burlington's standard form. There was no negotiation of the lot levy or the payment clause. The Divisional Court concluded that there was no conflict between this agreement and Burlington's development charge by-law and thus this appellant was not exempted from future development charges under that by-law.
[78] I agree with this conclusion. For the reasons set out above relating to Guglietti Brothers and Burlington, I cannot reasonably interpret this standard form subdivision agreement to explicitly or implicitly preclude this appellant from having to pay such charges.
[79] Paletta also had a subdivision agreement with Halton involving Plan 232. That agreement provided as follows:
23(a) The Owner, its successors and assigns, hereby acknowledges and agrees to the Capital Contribution Policy of the Region set out in Schedule 7 of this Agreement with respect to the provision of services under the jurisdiction of the Region.
Schedule 7
The Regional Municipality of Halton has adopted a policy requiring the payment of capital contributions with respect to the provision of services under the jurisdiction of the Region with respect to essentially redevelopment and new development of lands in the Regional Municipality of Halton. The policy is as follows: [page415]
- Capital Contributions will not be required with respect to the redevelopment and/or new development of commercial and/or industrial lands.
(Emphasis added)
[80] The Divisional Court found that this language focused on the future and did create a conflict which protects the developer against future infrastructure contributions sought by Halton under its development charge by-law. Halton has cross- appealed from this finding.
[81] I agree with the interpretation of the subdivision agreement offered by the Divisional Court and would therefore dismiss the cross-appeal. Particularly given the underlined clause, the contract must reasonably be read as exempting the developer from future infrastructure cost contributions. While this is recited in the contract as a policy of Halton (and therefore perhaps subject to change in future) the policy as it then read was expressly agreed to by the developer and hence became a term of the contract in that form. It clearly conflicts with Halton's development charge by-law and hence protects the developer against future contributions for municipal services.
[82] Finally, the Divisional Court turned to a subdivision agreement made in 1955 between Falgarwood Industrial Estates Limited and the former Township of Trafalgar relating to Plan 608. Section 19 of that agreement provides that it is binding on the parties and their successors.
[83] The appellant By-Ways Construction Inc. has succeeded Falgarwood as the owner of the lands. In 1962, the Township of Trafalgar amalgamated with the Town of Oakville. Then in 1974, Oakville was included within the Regional Municipality of Halton when the latter was created by legislation which inter alia bound Halton to stand in the place of any municipality in its area where the municipality had entered a subdivision agreement like this one.
[84] The Divisional Court found that because Trafalgar had ceased to exist when Halton was created in 1974, Halton does not stand in the place of Trafalgar for the purposes of the subdivision agreement made by Trafalgar in 1955. In essence it concluded that since Halton was not bound by the 1955 agreement, that agreement does not create a conflict with Halton's development charge by-law.
[85] I do not find it necessary to endorse this reasoning. There is nothing in the record to indicate whether the terms of amalgamation of Trafalgar and Oakville in 1962 were sufficient to trigger the successor provisions of the 1955 agreement or whether Oakville could be bound to it on any other basis. If Oakville was bound, then so was Halton. [page416]
[86] However, even if Halton is bound, I conclude that there is no conflict between the 1955 agreement and Halton's development charge by-law. The agreement set out the capital contribution required of the developer and made it a charge on the lands until payment. However, there is nothing in the agreement that either explicitly or implicitly protects the developer from future contributions to such costs. There is therefore no conflict for the purposes of O. Reg. 82/98.
[87] In summary, therefore, I conclude that the Divisional Court correctly determined the proper standard of review to be applied. It then correctly found that the Board was wrong in its interpretation of the test for conflict set up by the legislative regime. It then properly applied the correct test to the subdivision agreements involved in this proceeding. I agree with the conclusions it reached in each case and only in connection with the last subdivision agreement discussed do I do so for somewhat different reasons.
[88] The appeals and the cross-appeal must therefore be dismissed.
[89] In order to determine the issue of costs I invite the parties to exchange their costs submissions within four weeks of this decision and then to file the same with this court together with any reply submissions to those of other parties within a further two weeks.
Orders accordingly.