Cunningham et al. v. The Corporation of the Township of Front of Yonge et al. [Indexed as: Cunningham v. Front of Yonge (Township)]

73 O.R. (3d) 721

[2004] O.J. No. 4104

Dockets: C40818 and C40849

Court of Appeal for Ontario,

Weiler, Rosenberg and Blair JJ.A.

October 12, 2004

Municipal law -- Tax sale -- Municipal treasurer having discretion to cancel tax sale at any time up to registration of tax deed -- Municipal Tax Sales Act, R.S.O. 1990, c. M.60, s. 12(6).

In the Township of Front of Yonge ("township"), the Cunninghams owned a family farm which had an assessed value of $188,000. They did not pay their property taxes from 1999 through mid-2003, and the tax arrears and costs totalled $13,833.34. Following all the requisite steps under the Municipal Tax Sales Act, the township put up the farm for tax sale. Although Mrs. Cunningham knew about the sale, Mr. Cuningham initially did not. Mr. Cunningham learned that the farm was up for sale on May 26, 2003 and, on June 1, 2003, he arranged to borrow $20,000 to pay the cancellation price. On June 4, 2003, the township opened the tenders and, on June 17, counsel for the lender contacted the clerk to advise that the Cunninghams were in possession of funds and wished to pay the arrears. The township took the position that once the tenders were opened, the treasurer had no discretion under s. 12(6) of the Municipal Tax Sales Act to grant relief by filing a certificate cancelling the tax sale. Subsectio n 12(6) states:

Where, in the opinion of the treasurer,

(a) it is not in the financial interests of the municipality to continue with proceedings under this Act; or

(b) because of some neglect, error or omission, it is not practical or desirable to continue proceedings under this Act,

the treasurer may register a cancellation certificate in the prescribed form, but this subsection does not apply so as to prevent the treasurer from registering a new tax arrears certificate and proceeding under this Act.

The township refused to accept the Cunninghams' offer of full payment. On June 19, 2003, the Cunninghams applied for relief from forfeiture. On July 3, 2003, the Mallettes and Roths, who had been the second highest bidders at $61,055.43, were awarded the purchase because the highest bidder had not paid the balance owing. On October 20, 2003, Quigley J. cancelled the tax sale and prohibited the township from registering a tax deed. He gave the Cunninghams 30 days to pay the moneys owing to the township. The township and the purchasers appealed.

Held, the appeal should be dismissed.

Quigley J. found as a fact that the treasurer was not aware that she had the discretion to register a cancellation certificate. She therefore did not exercise a discretion she thought she did not have. It was open to Quigley J. to find that the treasurer's attempt in her affidavit to demonstrate an exercise of discretion was an after-the-fact reconstructive effort to justify the township's conduct. The finding was supported by the record, and there was no basis for interfering with it. Further, the language of the Act supported Quigley J.' s conclusion that under s. 12(6) of the Act, a municipal treasurer retains the discretion to cancel a tax sale at any time up to the registration of the tax deed. This conclusion was consistent [page722] with the objects of the legislative scheme regarding tax sales. The continuing existence of the discretion to cancel a tax sale pending registration of the tax deed did not adversely affect the integrity of the tender process. Tenders are submitted subject to the terms o f the Act as a whole, including subsection 12(6), and a municipality has no obligation in law to complete the tax sale. Consequently, the interest of a potential purchaser whose tender has been accepted remains subject to the possibility that a cancellation certificate may be granted under subsection 12(6) at any time before the tax deed is registered. Subsection 12(6) is a self- contained discretion with no express limitation connecting the discretion to neglect, error or omission on the part of the municipality as is the situation with s. 12(3) of the Act. The treasurer's failure to exercise her discretion under s. 12(6) of the Act therefore rendered the tax sale proceedings fatally flawed as Quigley J. noted. Accordingly, the appeal should be dismissed.

Cases referred to

Bay Colony Ltd. v. Wasaga Beach (Town) (1997), 1997 4466 (ON CA), 33 O.R. (3d) 637, [1997] O.J. No. 1686, 39 M.P.L.R. (2d) 58 (C.A.) [Leave to appeal to S.C.C. refused (1998), 227 N.R. 153n]; Deverell v. Anson, Hindon and Minden (Townships), 1998 1437 (ON CA), [1998] O.J. No. 2675, 110 O.A.C. 372; Elliott v. Toronto (City) (1999), 1999 1073 (ON CA), 43 O.R. (3d) 392, 171 D.L.R. (4th) 64, 1 M.P.L.R. (3d) 163 (C.A.); Gordon Glaves Holdings Ltd. v. Care Corp. of Canada Ltd. (2000), 2000 3913 (ON CA), 48 O.R. (3d) 737, 186 D.L.R. (4th) 577, 46 C.P.C. (4th) 204, 7 B.L.R. (3d) 1 (C.A.); Inter-Fund Mortgage Corp. v. Welland (City), [2003] O.J. No. 1738, 37 M.P.L.R. (3d) 198 (C.A.); Martinoff v. R., 1993 3030 (FCA), [1994] 2 F.C. 33, 88 C.C.C. (3d) 341 (C.A.); Morton v. Cowan (2003), 2003 52163 (ON CA), 66 O.R. (3d) 321, 229 D.L.R. (4th) 193, [2003] O.J. No. 3204 (C.A.); Toronto Newspaper Guild, Local 87 v. Globe Printing Co., 1953 10 (SCC), [1953] 2 S.C.R. 18, [1953] 3 D.L.R. 561; Zeitel v. Ellscheid, 1994 82 (SCC), [1994] 2 S.C.R. 142, 17 O.R. (3d) 782[cf 2]n, 113 D.L.R. (4th) 609, 165 N.R. 214, 21 M.P.L.R. (2d) 247

Statutes referred to

Municipal Sales Tax Act, R.S.O. 1990, c. M.60 [repealed S.O. 2001, c. 25, s. 484(2)], ss. 4, 9(1), 12, 13 Municipal Act, 2001, S.O. 2001, c. 25

Rules and regulations referred to

Municipal Sales Tax Rules, R.R.O. 1990, Reg. 824 [revoked O. Reg. 181/03, s. 28]

Authorities referred to

Tansley, L., "Municipal Tax Sales" (1995), 105 Municipal World 3

APPEAL from an order of Quigley J of the Superior Court of Justice, dated October 20, 2003, cancelling a tax sale under the Municipal Tax Sales Act, R.S.O. 1990, c. M.60.

Sean G. Foran, for respondents.

Paull N. Leamen and Neville Johnston, for appellant township.

Clint H. Culic, for personal appellants.

The judgment of the court was delivered by

BLAIR J.A.: -- [page723]

Background

[1] At stake on this appeal is the Cunningham family farm, which has been the source of the respondents' livelihood since 1983.

[2] The farm has been targeted for sale by the Township of Front of Yonge in order to recover $13,833.34 in tax arrears and costs. It has an assessed value of approximately $188,000 and has been free and clear of any mortgages since 1996. If the township's sale to the Roths and the Mallettes for their bid price of $61,055.43 is approved, however, the Cunninghams -- who are now in funds to pay all arrears owing -- will lose their farm and will only receive about $47,000, after the tax arrears and costs are deducted.

[3] The Cunninghams did not pay their property taxes from 1999 through mid-2003. As a result, and after following all of the requisite steps under the Municipal Tax Sales Act [See Note 1 at the end of the document] (the "Act") and the rules made under that statute (including the giving of proper notices and a public tendering process), the Township of Front of Yonge agreed to sell the farm to the individual appellants.

[4] After the public tenders were opened, but before the township had accepted the appellants' tender, the Cunninghams notified the township that they were able to, and wished to pay the cancellation price of $13,833.34 in full. [See Note 2 at the end of the document] The township refused to cancel the sale, taking the position that it was too late because the tenders had been opened. The Cunninghams applied for relief from forfeiture.

[5] Quigley J. granted the application, cancelled the tax sale, prohibited the township from registering a tax deed in favour of the appellant purchasers and gave the Cunninghams 30 days to pay the moneys owing to the township. He also required the township to register a tax arrears cancellation certificate on title immediately upon receipt of payment.

[6] The township and the tax purchasers contest this decision. For the reasons that follow, I would dismiss the appeal.

Facts

[7] In November 2001, the township first sent the Cunninghams a notice of arrears (which then totalled $4,879.06) and advised [page724] that their property would become liable for tax sale proceedings as of January 1, 2002. On March 14, 2002, the municipal treasurer caused a Tax Arrears Certificate to be registered against the property and, on March 18, notice of registration of that certificate was sent to the respondents by registered mail. On January 8, 2003, final notices were sent to the respondents by registered mail. On April 28, 2003, the municipal treasurer wrote to the Cunninghams advising that commencing May 10, 2003, the property would be advertised for sale for four consecutive weeks.

[8] Mr. Cunningham did not receive any of these notices. Mrs. Cunningham did, however. She looked after the family finances at the time. She withheld the notices and information about the tax arrears and pending tax sale from her husband because of a misguided but understandable human concern over the effect the information might have on his high blood pressure and poor health, and also to shield herself from his knowledge of her personal overspending.

[9] Mr. Cunningham learned that his farm was for sale from a neighbour, who showed him a sales ad in a newspaper on May 26, 2003. He acted immediately, contacting his lawyer the next day and meeting with the lawyer on May 29, 2003. Also on May 29, he attended at the municipal offices and met with the treasurer, Ms. Sherry Reed. He was advised that the township would not accept payment of the arrears in instalments. There is a dispute in the evidence as to what he was told next. Mr. Cunningham says that he was told he would have to pay the full amount of arrears and costs in order to have the tax sale proceedings cancelled, but that he was not given any time limit for doing so. Ms. Reed's evidence is that she told him the full payment had to be made by June 4, 2003, the day when the tenders were to be opened and made public.

[10] The application judge resolved this conflict in Mr. Cunningham's favour, finding that he could reasonably have expected to have the tax sale cancelled by the treasurer if he acted expeditiously, as he did, in obtaining the money to pay the taxes in full.

[11] Mr. Cunningham spoke with Chase Financial, a brokerage firm in Kingston, on June 1, and arranged to borrow $20,000 to pay the cancellation price. The necessary documentation was signed the next day, after which it was sent to the solicitors of the brokerage firm for processing. On June 17, counsel for Chase Financial contacted the clerk of the township to advise that the Cunninghams were in funds and wished to pay the arrears, and to inquire as to the exact amount required. But the request came too late. [page725]

[12] On June 4, 2003, the township had opened the tenders. On June 17, when contacted by counsel for Chase Financial, it took the position that once the tenders were opened the treasurer had no discretion to grant relief by filing a certificate cancelling the tax sale, pursuant to subsection 12(6) of the Act, and it refused to accept the Cunninghams' offer of full payment. This position was reported to the Cunninghams, whose lawyer faxed a formal letter to the township on June 18, indicating that his clients were in possession of funds and wished to pay the arrears immediately.

[13] When the tenders were opened on June 4, Leonard and Casey Roth were declared to be the successful tenderers, for a price of $80,000. They were advised that they had 14 days to pay the balance of the purchase price owing after being credited with their deposit. Leonard and Casey Roth did not pay the balance owing, however. Instead, on July 3, 2003 -- 14 days after the Cunninghams' application had been commenced, and 13 days after a certificate of pending litigation had been registered against the property -- the Mallettes and Cory and Elisabeth Roth, who had been the second highest bidders at $61,055.43, were awarded the successful purchase. The record does not indicate whether there is any relationship between the two Roth groups. The application judge noted that the township had not made any effort to forfeit the $16,000 deposit of the first group, as it is obliged to do under the Act.

[14] On June 18 -- the day after the Cunninghams were advised of the township's position -- their son Chris discovered the eight notices of tax sale that Mrs. Cunningham had received and hidden from her husband in the kitchen cupboard. The next day, June 19, 2003, the application for relief was commenced.

Analysis

The Treasurer's discretion under subsection 12(6) of the Act

[15] The central issue on this appeal is whether a municipal treasurer retains the discretion to cancel a tax sale pursuant to subsection 12(6) of the Act once tenders have been opened and a successful purchaser chosen.

[16] Subsection 12(6) states:

Where, in the opinion of the treasurer,

(a) it is not in the financial interests of the municipality to continue with proceedings under this Act; or

(b) because of some neglect, error or omission, it is not practical or desirable to continue proceedings under this Act, [page726] the treasurer may register a cancellation certificate in the prescribed form, but this subsection does not apply so as to prevent the treasurer from registering a new tax arrears certificate and proceeding under this Act.

[17] The parties agree the application judge based his decision primarily on this point. He found that the treasurer was not aware she had the discretion under the foregoing provision to register a cancellation certificate once the tenders had been opened in the tax sale process. She therefore could not -- and did not -- exercise a discretion she thought she did not have. In paras. 35 and 36 of his reasons the application judge said:

It is clear from the evidence that the treasurer, Sherry Reed, was not aware that she had the discretion to cancel the tax sale after the tenders were opened on June 4th, 2003. This is clearly an error on her part as she had such discretion to cancel the tax sale any time up to the registration of the tax deed.

In response to this application, Sherry Reed stated in her July 17th, 2003 affidavit, that the cancellation of the tax sale would undermine the integrity of the tax sale and bidding process. I reject that evidence and find it reconstructive and after the fact, to explain her conduct and actions during the tax sale process. The discretion accorded to the municipal treasurer under Section 12(6)(b)(1)[sic] of the MTSA is clear. She ought to have realized that she had such discretion. I find as a fact that she did not realize that she had such discretion on June 18th, 2003, when the request was made to her on behalf of the applicants and, therefore, could not and did not exercise her discretion as she is required to do under the Act. Therefore, the tax sale process was fatally flawed in this case.

(Emphasis added)

[18] The appellant township submits that Ms. Reed did exercise her discretion in accordance with the principles outlined in subsection 12(6). She states, in para. 10 of a second affidavit filed, that:

Upon receipt of the letter of June 18, 2003 from Wilson/Evely [the Cunningham's lawyer] . . . I considered the merits of the request for redemption and I decided that there was no basis for exercising my discretion to permit cancellation of the tax sale. In reviewing the matter, I concluded that there was no evidence that it was not in the financial interests of the Municipality to continue the sale proceedings; and further to the best of my knowledge, information and belief, there had been no neglect, error or omission that rendered it not practical or not desirable to continue the tax sale proceedings. Factors which influenced my decision in not registering a cancellation certificate are set forth in paragraphs 11, 12, 13, 14, 15, 16 and 17 of this my Affidavit.

[19] As noted above, the application judge rejected this evidence, finding it to be "reconstructive and after the fact, to explain her conduct and actions during the tax sale process". The appellants argue he erred in doing so because the finding was not founded on the evidence and because a court should not make credibility findings on the basis of conflicting affidavit evidence without the trial of an issue. [page727]

[20] Counsel concede that no one asked the application judge to order the trial of an issue, even though there were conflicting factual issues in play before him. In any event, as this court noted in Gordon Glaves Holdings Ltd. v. Care Corp. of Canada Ltd. (2000), 2000 3913 (ON CA), 48 O.R. (3d) 737, 186 D.L.R. (4th) 577 (C.A.), at para. 30, "the court will require the trial of an issue only if there is good reason to do so and no determination can properly be made on the application record." The court went on to cite a credibility conflict as an example of such a situation. In my opinion, however, any credibility conflict on this point is more illusory than real in this case. The determination of the issue could properly be made on the record, which in my view supports the application judge's finding referred to above.

[21] The language of Ms. Reed's affidavit simply parrots the language of subsection 12(6). Moreover, one of the key factors that she lists as influencing her decision completely contradicts her evidence that she was exercising any discretion: in para. 16 of her affidavit she states unequivocally that "the Municipality could not accept payment in light of the fact that there had been successful tenderers in the sale of the property." Finally, this is entirely consistent with her evidence on cross-examination as to the basis for refusing to accept the respondents' payment, and upon which the application judge also relied (at para. 22):

17. Q. Did you have a policy on when you will accept payments?

A. No. We go strictly by the Municipal Act. We don't --

18. Q. Well, you have a personal policy that says there's a particular time when it's too late to accept payment?

A. Uh . . . The rule is you can accept payment until the tenders are opened.

19. Q. So in your mind you can't under any circumstances accept payment after that?

A. I don't know how I would go about doing that once I advised somebody that they were a successful purchaser of a piece of property

21. Q. Is that the date that you find is relevant, the date that you advise the successful purchaser?

A. No, the date the tenders are opened.

22. Q. The date the tenders are opened?

A. Because once they're opened right then it is decided who the successful tenderer is.

. . . . . [page728]

25. Q. Can you envisage any situation where after the opening of the tenders the landowner is going to get his property back?

A. I don't know how I would do that.

[22] In light of that evidence it was open to the application judge to find, as he did, that the treasurer's attempt -- in a second affidavit -- to demonstrate an exercise of discretion on the basis of the criteria set out in subsection 12(6) was simply a reconstructive effort to justify the township's conduct after the fact, and that the treasurer had in reality not exercised a discretion at all because she did not believe she had a discretion to exercise in the circumstances. An application judge's findings of fact or of mixed fact and law are entitled to deference even where the entire record is in writing and there is no viva voce evidence: Morton v. Cowan (2003), 2003 52163 (ON CA), 66 O.R. (3d) 321, [2003] O.J. No. 3204 (C.A.). Here, the finding of the application judge is supported by the record. There is no basis for interfering with it.

[23] Was the application judge correct in his legal conclusion that a municipal treasurer retains discretion under subsection 12(6) to cancel a tax sale at any time up to the registration of the tax deed? In my opinion he was.

[24] There is nothing in the language of s. 12, or in the language of the Act itself, that requires a contrary conclusion. Indeed the language supports the conclusion of the application judge. For instance, in relation to the types of failure, errors or omissions that may render proceedings under the Act voidable pursuant to subsection 12(2), the treasurer has a duty under subsection 12(3) to register a tax arrears cancellation certificate where "before the registration of a tax deed or notice of vesting, the treasurer becomes aware of a failure, error or omission referred to in subsection (2)" (emphasis added). There is no similar timing stipulated in subsection 12(6); however, subsection (6) is itself a broader relief provision than subsection (2), and the reference in subsection (6) to the municipality not continuing with the "proceedings" suggests that the discretion referred to continues to exist until the tax sale "proceedings" are concluded. The effect of s. 13 of the Act -- which states that in the absence of fraud, every tax deed and notice of vesting, when registered, is final, binding and conclusive -- is that the tax proceedings are concluded upon registration of the tax deed or notice of vesting.

[25] Such a conclusion is also consistent with the objects of the legislative scheme regarding tax sales. The purpose of the municipal tax sales mechanism set up under the Act and the rules [page729] established by the regulations, [See Note 3 at the end of the document] is to facilitate the recovery of unpaid property taxes, penalties, interests and other expenses a municipality has incurred in attempting to enforce payment in order "to assure that the tax burden is distributed fairly among municipal taxpayers": Bay Colony Ltd. v. Wasaga Beach (Town) (1997), 1997 4466 (ON CA), 33 O.R. (3d) 637, [1997] O.J. No. 1686 (C.A.), at p. 639 O.R.

[26] It is important, of course, for actual and potential bidders to have faith in the integrity of the tax sale process. However, I do not see the continuing existence of the discretion to cancel a tax sale pending registration of the tax deed, in circumstances that comply with subsection 12(6), as adversely affecting the integrity of the tender process. Policy reasons preclude the discretion from being exercised after the tax deed is registered, because, as indicated, once a tax deed is registered it is final and binding: the Act, s. 13; Zeitel v. Ellscheid, 1994 82 (SCC), [1994] 2 S.C.R. 142, 113 D.L.R. (4th) 609, at para. 20; Elliott v. Toronto (City) (1999), 1999 1073 (ON CA), 43 O.R. (3d) 392, 171 D.L.R. (4th) 64 (C.A.). Tenders are submitted subject to the terms of the Act as a whole, including subsection 12(6). A municipality has no obligation in law to complete the tax sale: Deverell v. Anson, Hindon and Minden (Townships), 1998 1437 (ON CA), [1998] O.J. No. 2675, 110 O.A.C. 372, at para. 3. Consequently, the interest of a potential purchaser whose tender has been accepted remains subject to the possibility that a cancellation certificate may be granted under subsection 12(6) at any time before the tax deed is registered.

[27] I am aware of the concern expressed by this court in Elliott, at para. 24, about the importance of not impairing the integrity of the tax sale process and of risking fewer potential bidders and lower bids. That comment was made in the context of there being no right to redeem the property after the expiration of one year from the registration of the tax arrears certificate, however. [See Note 4 at the end of the document] It was not made with reference to the continued exercise of discretion under subsection 12(6).

[28] In Deverell, this court approved an order issuing a certificate of cancellation when full payment had been tendered after a proposed sale had been entered into but before the sale had [page730] closed. A five-member panel of the court was convened in Elliott because one of the appellants in that matter had indicated she wished to argue that Deverell had been wrongly decided. However, on argument of her appeal, counsel made it clear she was not seeking relief under subsection 12(6). Therefore, neither the correctness of Deverell nor the issue of the exercise of a subsection 12(6) discretion was in issue in Elliott.

[29] In Elliott, Morden A.C.J.O. alluded to the ability of municipalities to allow a redemption after the one-year period (as opposed to the taxpayer having the right to redeem at that time). In doing so, he cited the following passage from Tansley, "Municipal Tax Sales" (September 1995), 105 Municipal World 3 at 4 with approval:

Many municipalities take the path of least resistance and exercise discretion under subsection 12(6) whenever someone wants to redeem the property and a sale has not yet occurred. Other municipalities may take a different approach and refuse to permit the taxes to be paid after the statutory redemption period has expired and forge ahead with the tax sale.

The most prudent position is a compromise between these two strategies. The municipality should allow redemption by anyone entitled to do so, even though the statutory period for redemption has passed, but only until advertising has begun. After that time, there is a bidding process in place, which must be completed in a fair manner. Potential bidders may have a legitimate complaint if they have spent time and money investigating a property and submitting a bid, including a 20% deposit, only to find that the property has been redeemed on the date of the auction or the date when the tenders are opened.

[30] In relying on this passage, Morden A.C.J.O. acknowledged that there were good policy reasons why there should be no right to redeem after the expiration of the one-year period. For the reasons expressed above, however, I think there is a difference between submitting a bid in the face of a right to redeem and submitting a bid in an environment where the municipality simply has the discretion to cancel the tax proceedings on the basis of certain statutory criteria. Potential bidders know the rules and their tenders are subject to those rules. They engage in the tax sale process because they hope to acquire a property at an acceptably low price. The risks and factors referred to in the Tansley article are built in to the bidder's assessment of the situation. While preserving the integrity of the tax sale process is an important policy objective, I am not persuaded that the number of bidders or the level of the bids would be substantially affected by the continuing existence of the s ubsection 12(6) discretion to the point where a tax deed or notice of vesting is registered. In any event, the language of the legislation clearly supports such a continued discretion. [page731]

[31] Two further points were raised in argument that deserve some comment.

Conflicting evidence

[32] First, the appellants submitted that the application judge erred in rejecting Ms. Reed's evidence that she had explained to Mr. Cunningham during their May 29 meeting that the entire cancellation price had to be paid before June 4 (the date when tenders were to be opened) in order to stop the tax sale proceedings, and in accepting Mr. Cunningham's evidence that he was not given any such time limit but rather was simply told that he could redeem upon payment of the full amount owing. This required a clear credibility finding based on squarely conflicting testimony and ought not to have been made in the absence of a trial, they contend.

[33] There may be some merit in this argument, even though -- as noted above -- no one objected or asked the application judge to direct the trial of an issue. However, although this finding appears to have formed a part of the application judge's analysis, in the end it was not central or necessary to his determination of the application. Nor is it necessary to resolve this issue for purposes of determining the appeal. I would not allow the appeal on this ground.

"Neglect, error or omission" under subsection 12(6)(b) of the Act

[34] Secondly, the appellants argue the application judge erred in holding that the words "some neglect, error or omission" in subsection 12(6)(b) of the Act are not limited to some conduct on the part of the municipality and that there was nothing in the circumstances of this case to bring it within that scope of activity.

[35] This point was not essential to the decision of the application judge either, in my opinion. For one thing, the submission ignores the fact that the treasurer -- if she had exercised her discretion at all -- could have founded her decision on subsection 12(6)(a) of the Act, namely on the basis that it was not in the interests of the municipality to continue with the proceedings. What interest could the township have had in doing so, when it was going to be paid in full? Resort to subsection 12(6)(b) may not have been necessary at all, then.

[36] Nonetheless, I am satisfied that the treasurer would have been entitled to resort to subsection 12(6)(b) for the exercise of her discretion in the circumstances of this case. I do not read the [page732] words "some neglect, error or omission" in that provision as being limited to conduct on the part of the municipality, as the appellants contend. The neglect, error or omission may be on the part of the municipality or the taxpayer, because subsection 12(6) is in the nature of a general provision for relief from forfeiture in the circumstances indicated. It makes no sense to have a relief from forfeiture provision that does not respond to neglect, error or omission on the part of the person seeking the relief.

[37] The scope of the conduct is not unlimited, however. It clearly must relate to "proceedings for the sale of land under [the] Act", as the opening words of s. 12, setting the stage for voidable proceedings, indicate. In Inter-Fund Mortgage Corp. v. Welland (City), [2003] O.J. No. 1738, 37 M.P.L.R. (3d) 198 (C.A.), this court upheld a Superior Court decision concluding that subsection 12(6)(b) pertains to conduct that has occurred "in the tax sale process itself" (emphasis added) (August 24, 2000), 11573/00 (Ont. S.C.J.), at para. 29.

[38] The appellants argued that Elliott stands for the proposition that the neglect, error or omission must be that of the municipality and must involve "a departure from the statutory requirements relating to a tax sale proceeding": see Elliott at para. 35. In that case, however, Morden A.C.J.O. made it very clear that he was not determining the full reach of "'error or omission' in s. 12(2)(b)" and acknowledged that it may not be restricted to an error or omission in which the municipality is implicated. Moreover, he was expressly not dealing with the treasurer's discretion under subsection 12(6).

[39] The language of subsection 12(6), in my view, is broader and less limited than that of subsection 12(2)(b). Subsection 12(2) states:

12(2) Subject to subsection (4) and to section 13, [See Note 5 at the end of the document]

(a) a failure on the part of the treasurer to substantially comply with section 4 or subsection 9(1); or

(b) an error or omission in the registration or sale of the land, other than an error or omission mentioned in subsection (5),

renders the proceedings under this Act voidable. [page733]

[40] Thus, the error or omission contemplated in subsection 12(2)(b) must relate to something in connection with "the registration or sale of the land". In that context, Morden A.C.J.O. held in Elliott that the failure of one of the appellants in that case to read the notices that had been received, and her decision to leave such matters to her husband -- a situation analogous to that of Mr. Cunningham here -- could not fall within the scope of "error" or "omission" in subsection 12(2)(b).

[41] I am fortified in my view of this by the scheme of the legislation in s. 12 of the Act, which distinguishes between the voidability of subsection 12(2) failures, errors or omissions, on the one hand, and the voidability of subsection 12(6) acts of neglect or errors or omissions, on the other. The disposition of subsection 12(2) situations is governed by subsection 12(3), which requires the treasurer to register a tax arrears cancellation certificate if he or she becomes aware of such a failure, error or omission before the registration of a tax deed or notice of vesting. Subsection 12(6) is a self- contained discretion, however, with no express limitation attaching to the "neglect, error or omission" triggering the exercise of that discretion under para. 12(6)(b). Thus, I see no reason for limiting the discretion to some neglect, error or omission on the part of the municipality. I would limit it, as indicated, to some neglect, error or omission on the part of either the municipality or the taxpayer, but within the proceedings for the sale of land themselves, or -- in the language of Inter-Fund -- in the tax sale process itself.

Conclusion and Disposition

[42] The finding of the application judge that the treasurer had failed to exercise her discretion under subsection 12(6) of the Act because she did not realize she had a continuing discretion once tenders had been opened, was supported on the record. A person on whom a discretion is conferred has a duty to exercise that discretion when requested to do so in appropriate circumstances: Toronto Newspaper Guild, Local 87 v. Globe Printing Co., 1953 10 (SCC), [1953] 2 S.C.R. 18, [1953] 3 D.L.R. 561; Martinoff v. R., 1993 3030 (FCA), [1994] F.C. 33, 88 C.C.C. (3d) 341 (C.A.), at paras. 8-9. The failure on the part of the treasurer to exercise her discretion under subsection 12(6) of the Act therefore rendered the tax sale proceedings "fatally flawed", as the application judge noted.

[43] On the record before him, he was entitled to cancel the tax sale and grant the remedies he did.

[44] The appellant township filed a supplementary factum seeking to reverse the costs award made by the application judge, who fixed costs in favour of the Cunninghams in the amount of [page734] $45,000, plus GST. No request was made for leave to appeal the costs order, but in any event I would not interfere with the application judge's discretion in this regard.

[45] The appeal is therefore dismissed.

[46] The respondents in the appeal are entitled to their costs of the appeal, payable jointly and severally by the appellants, and fixed in the amount of $20,000, inclusive of fees, disbursements and GST.

Appeal dismissed with costs.

Notes

Note 1: R.S.O. 1990, c. M.60. The Municipal Tax Sales Act has since been repealed and its provisions now form Part II of the new Municipal Act, 2001, S.O. 2001, c. 25. The provisions remain the same.

Note 2: The "cancellation price" consists of the amount of all arrears of property taxes plus outstanding interest, penalties, costs and disbursements.

Note 3: The Municipal Tax Sales Rules, R.R.O. 1990, Reg 824.

Note 4: Section 4 of the Act requires that a municipality give notice to the taxpayer within 60 days of registration of the initial tax arrears certificate. Subsection 9(1) provides that if the full cancellation price is not paid within 280 days of the registration of that certificate, the treasurer shall send a final notice advising that the land will be sold at public auction if the full cancellation price is not paid within one year of registration of tax arrears certificate.

Note 5: Subsection (4) provides generally that proceedings for the sale of land under the Act "are not voidable unless the person complaining of any neglect, error or ommissions establishes that he or she has suffered actual prejudice" as a result. Section 13 provides for the finality of a tax deed or notice of vesting following registration.