DATE: 20051128

DOCKET: C43109

COURT OF APPEAL FOR ONTARIO

LABROSSE, ROSENBERG and GILLESE JJ.A.

APPLICATION UNDER s. 273(1) of the Municipal Act 2001, S.O. 2001, c. 25

B E T W E E N :

RSJ HOLDINGS INC.

Alan R. Patton and Analee Fernandez

for the appellant

(Applicant/Appellant)

• and -

THE CORPORATION OF THE CITY OF LONDON

Lisa D. Pasternak for the respondent

(Respondent)

Heard: November 14, 2005

On appeal from the judgment of Justice Helen A. Rady of the Superior Court of Justice dated January 26, 2005.

BY THE COURT:

[1] In November 2003, RSJ Holdings Inc. bought property in London, Ontario that was situated in a residential area. A small one-story dwelling was on the property. Before buying the property, RSJ determined that, under the existing zoning, it could construct a fourplex on the property without the need for any variances to the existing zoning. It also determined that all municipal services were available to service a fourplex on the property.

[2] In September 2003, in an open, public meeting of the City’s Planning Committee, a public delegation of residents in the area of the subject property had expressed concern about student housing and its effect on their community. The delegation asked the Planning Committee to consider limiting the number of bedrooms in residences in the area.

[3] On November 24, 2003, RSJ submitted a site plan application to the City of London. The City did not respond. It did not refuse the site plan, it simply failed to make any decision in respect of the site plan.

[4] On December 1, 2003, RSJ applied to the City’s Chief Building Official for a demolition permit to allow it to demolish the small dwelling on the property. The Chief Building Official failed to respond.

[5] On January 2, 2004, RSJ applied to the Chief Building Official for a building permit to construct the proposed fourplex. Again, there was no response.

[6] The City’s Planning Committee met on January 12, 2004, and discussed interim control by-law C.P. 1438-33 in a closed meeting. RSJ’s property falls within the area subject to the interim control by-law. The interim control by-law had the effect of “freezing” development along Richmond Street between Huron and Grosvenor Streets for one year.

[7] On January 19, 2004, the Committee of the Whole, a committee of City Council that is comprised of all nineteen members of City Council, also discussed the interim control by-law in a closed meeting. The Committee of the Whole passed recommendation #5, that City Council approve the interim control by-law, and recommendation #6, that a land use study be undertaken over the area governed by the interim control by-law.

[8] At 10:22 pm that same evening, City Council resumed in regular session. Along with 31 other by-laws, the interim control by-law was introduced and given three readings in public session. As the motion judge noted, the interim control by-law was passed without any public debate or discussion. The City Council meeting was adjourned at 10:30 pm. The entire public portion of the process by which the interim control by-law, along with the 31 other by-laws, was passed, took 8 minutes.

[9] RSJ moved to quash the interim control by-law, claiming that the City had failed to comply with the requirements of the Municipal Act, 2001, S.O. 2001, c. 25 (“the Act”), thereby rendering the by-law illegal. By order dated January 26, 2005, the motion judge dismissed the motion. RSJ appeals that order.

[10] For the reasons that follow, we would allow the appeal.

Section 239 of the Act

[11] The motion judge observed that an interim control by-law is a powerful legislative tool, one that is fairly and accurately characterized as draconian. It can be passed without public notice to affected parties so long as there is compliance with a single statutory precondition and that is a land use study.

[12] The motion judge found that there was no doubt that the City had held closed meetings. During these closed meetings, she states that the committees considered “the report prepared by Mr. Panzer concerning the interim control bylaw and related land use study”. R. Panzer, the author of the report, was the acting general manager of planning and development for the City. His report recommended that a land use study over the area governed by the interim control by-law be undertaken and completed within the one-year period in which the interim control by-law was effective. The report states: “This planning report has been prepared to supplement the report of the City Solicitor dated January 12, 2004, and should be considered with that report”.

[13] The motion judge concluded that, in the circumstances, there was a real potential for litigation and therefore the closed meetings fell within the exception created by s. 239(2)(e) of the Act. The circumstances included the fact that RSJ had purchased the property in order to construct a fourplex, a permitted use, on the property; that RSJ had submitted applications for a site plan approval, demolition permit and building permit; and, that the City had failed to respond to any of RSJ’s applications. In her view, there could be no doubt that RSJ would litigate the interim control by-law in view of its investment.

[14] In our view, the motion judge erred in concluding that the closed meetings were permissible because the interim control by-law fell within the “potential litigation” exception in s. 239(2)(e) of the Act.

[15] Section 239 (1) and (2)(e) read as follows:

239. (1) Except as provided in this section, all meetings shall be open to the public.

(2) A meeting or part of a meeting may be closed to the public if the subject matter being considered is,

(e) litigation or potential litigation, including matters before administrative tribunals, affecting the municipality or local board;

[16] Section 239(1) of the Act requires that all meetings shall be open to the public unless the subject matter being considered comes within an exception listed in subsection (2). In light of the increased powers of municipalities, the mandatory wording of s. 239 that meetings “shall” be open to the public except in narrowly defined situations, and the specificity of the exceptions, it seems clear that the purpose of these provisions is to ensure that, in general, municipal authority is exercised openly.

[17] Section 239(2)(e) permits a meeting (or part thereof) to be closed to the public where “the subject matter being considered” is litigation or potential litigation. In our view, it is clear that the subject matter being considered by the committees was the interim control by-law and not litigation or potential legislation. Four reasons lead to that conclusion.

[18] First, the motion judge found that the committees were considering the Panzer report “concerning the interim control bylaw and related land use study”.

[19] Second, the Panzer report cannot be said to be litigation or potential litigation simply because it was introduced by the City solicitor at the closed meetings. It will be recalled that the Panzer report recommends that a land use study be undertaken on the area governed by the interim control by-law and that the study be completed within the one-year period during which the interim control by-law was in effect. The Panzer report was not prepared for the purpose of litigation. It was prepared to support the recommendation that a land use study be undertaken over the area governed by the interim control by-law. The only statutory precondition for passing an interim control by-law is such a land use study. In that sense, the land use study is integrally tied to the interim control by-law.

[20] Third, the result of the closed deliberations of the Committee of the Whole was its recommendation to Council that Council approve the interim control by-law. It seems self-evident that, in the circumstances, the Committee of the Whole would not recommend to City Council that it pass the interim control by-law without first discussing the interim control by-law.

[21] Fourth, in the space of 8 minutes, Council passed the interim control by-law and 31 other by-laws. There was a complete absence of public debate or discussion on the interim control by-law, reinforcing the inference that the Committee of the Whole had already discussed it.

[22] We observe that where the subject matter under consideration is an interim control by-law, it cannot be said that the subject matter under consideration is potential litigation simply because there is a statutory right of appeal by a person affected by the interim control by-law or because the interim control by-law may be subject to a motion to quash. The fact that there might be, or even inevitably would be, litigation arising from the interim control by-law does not make the “subject matter under consideration” potential litigation.

[23] The City submitted that it was open to the motion judge to find that the subject matter under consideration fell within s. 239(2)(f) or (g) of the Act. They read as follows:

239(2) (f) advice that is subject to solicitor-client privilege, including communications necessary for that purpose;

(g) a matter in respect of which a council, board, committee or other body may hold a closed meeting under another Act.

[24] We reject this submission.

[25] A by-law, including an interim control by-law, is a type of subordinate legislation. It is not advice protected by privilege. The fact that the City solicitor supplemented the Panzer report with his own report does not change that fact. The solicitor’s report may have been privileged and the Committee of the Whole may have been entitled to have discussed the solicitor’s report in closed session, but appending a solicitor’s report to other documents, such as the Panzer report, does not operate to cloak all of the documents with privilege.

[26] The City’s argument that s. 239(2)(g) applies is based on s. 38(3) of the Planning Act, R.S.O. 1990, c. P.13, which provides:

s. 38(3) No notice or hearing is required prior to the passing of a by-law under subsection (1) or (2) but the clerk of the municipality shall, in the manner and to the persons and public bodies and containing the information prescribed, give notice of a by-law passed under subsection (1) or (2) within thirty days of the passing thereof.

[27] There is nothing in s. 38(3) of the Planning Act to suggest that consideration of an interim control by-law can be done in a closed meeting. The waiver of the requirements of prior notice and a hearing under s. 38(3) of the Planning Act does not lead, by implication, to the conclusion that it was intended that Council or a committee could discuss the interim control by-law in a closed meeting. Section 239(2) of the Act does not list interim control by-laws as one of the exceptions to the requirement that meetings be open to the public. Section 239 of the Act and s. 38(3) of the Planning Act can be read so as to give effect to both. By virtue of s. 38(3) of the Planning Act, a municipality need not give prior notice or hold a public hearing before it passes an interim control by-law. However, the meeting in which Council is to consider and vote on the interim control by-law is to be open. In the face of the “draconian” nature of an interim control by-law and the reduction in rights of affected persons by virtue of s. 38(3) of the Planning Act, there is an even greater need that the meeting in which an interim control by-law is discussed be open to the public as required by s. 239(1) of the Act.

[28] RSJ raised a number of other grounds of appeal. In light of our foregoing conclusion on s. 239, we are of the view that the motion judge ought to have quashed the interim control by-law and thus find it unnecessary to deal with those other grounds of appeal.

DISPOSITION

[29] Accordingly, the appeal is allowed and the interim control by-law No. C.P. 1438-33 is quashed with costs to the appellant fixed at $10,000, inclusive of disbursements and GST. RSJ is also entitled to its costs of the motion to quash, which costs are to be assessed.

RELEASED: November 28, 2005 (“JML”)

“J. M. Labrosse J.A.”

“M. Rosenberg J.A.”

“E. E. Gillese J.A.”