DATE: 20060711

DOCKET: C44152

COURT OF APPEAL FOR ONTARIO

LASKIN, CRONK, and LANG JJ.A.

B E T W E E N :

2015429 ONTARIO INC.

Michael M. Miller for the appellant

Applicant (Appellant)

• and -

DYNASTY HOMES (WASAGA HILLS) LTD. and THE CORPORATION OF THE TOWN OF WASAGA BEACH

Robert Riteman for the respondent

Respondents (Respondent in Appeal)

Heard: March 27, 2006

On appeal from the judgment of Justice Margaret P. Eberhard of the Superior Court of Justice, dated August 16, 2005, reported at (2005), 13 M.P.L.R. (4th) 65.

CRONK J.A.:

[1] This appeal concerns the validity of a conveyance of two parcels of land by a municipality to a developer under the Municipal Act, R.S.O. 1990, c. M.45 (the “Act”). At issue is the application of the provisions of the Act pertaining to the sale of municipal surplus land and lands dedicated as a public highway to the conveyance in question.

I. Facts

[2] In mid-February 1998, Dynasty Homes (Wasaga Hills) Ltd. (“Dynasty”) purchased several parcels of land in the Town of Wasaga Beach, in the County of Simcoe from Green-wall Forming Limited (“Green-wall”) for the purpose of building a subdivision (the “Development Lands”). As security for part of the purchase price, Dynasty mortgaged the Development Lands to Green-wall.

[3] The Development Lands were landlocked, meaning that they could not be accessed from a municipal roadway. To overcome this development hurdle, Dynasty acquired two additional parcels of land from the Corporation of the Town of Wasaga Beach (the “Town”) on May 20, 1999, for the stated consideration of $2.00. These parcels provided road access to the Development Lands. They consisted of a one-foot reserve surrounding the Development Lands (Block “D”) and four lots (the “Lots”) that had been dedicated by the Town as a public highway (collectively, the “Access Lands”).

[4] At the time of the transfer of the Access Lands to Dynasty, the Town had neither passed a by-law authorizing the transfer of Block “D” to Dynasty, nor any general by-law establishing the procedures for the sale of the Town’s real property as required by s. 193(2) of the Act.

[5] In contrast, on March 9, 1999, the Town enacted By-law No. 99-21 in respect of the Lots. Under this by-law, the Town purported to assume, close and “stop up” the Lots and to authorize their conveyance to Dynasty under s. 297 of the Act. By-law No. 99-21, in its entirety, read:

A BY-LAW TO ASSUME, CLOSE, STOP UP AND CONVEY CERTAIN LANDS IN THE TOWN OF WASAGA BEACH

WHEREAS the Corporation of the Town of Wasaga Beach has an interest in the lands hereinafter described and all or part of the lands have been dedicated as a public highway.

AND WHEREAS pursuant to Section 297 of [the Act] authority is provided for the assuming, closing and stopping up of the lands or a portion thereof.

AND WHEREAS the said lands are not required for the purposes of the Corporation.

NOW THEREFORE this Council of the Corporation of the Town of Wasaga Beach hereby enacts as follows:

1. THAT the lands described as that Part of Christy Court, Plan M-46, designated as Parts 12, 16, 17, and 22 on Plan 51R-21907, in the Town of Wasaga Beach, County of Simcoe, are hereby assumed as a public highway.

2. THAT the lands described as that Part of Christy Court, Plan M-46, designated as Parts 12, 16, 17 and 22 on Plan 51R-21907, in the Town of Wasaga Beach, County of Simcoe, are hereby closed and stopped up.

3. THAT the said lands be conveyed to the developer Dynasty Homes (Wasaga Hills) Ltd.

4. THAT the Mayor and Clerk-Treasurer of the Cor-poration of the Town of Wasaga Beach be and they are hereby authorized to sign or execute such deeds or other documents as may be necessary to effect the conveyance of the said lands.

5. THAT this By-Law shall come into force and be effective immediately upon the final passing thereof.

[6] Notice of By-law No. 99-21 was registered by the Town in the land titles division of the County of Simcoe on May 20, 1999. The lands described in the registration, as in the by-law itself, concerned only the Lots.

[7] In about May 2000, Dynasty defaulted on its mortgage to Green-wall. Approximately two years later, Green-wall sold the Development Lands to 2015429 Ontario Inc. (“Ontario Inc.”), another developer, under power of sale proceedings. This sale did not include a transfer of the Access Lands, which had not been mortgaged to Green-wall and which Dynasty continued to own.

[8] As a result of these various transactions, by September 2002 Ontario Inc. owned the Development Lands, but Dynasty held title to the Access Lands. Consequently, the Development Lands were again landlocked.

[9] Ontario Inc. attempted on several occasions to purchase the Access Lands from Dynasty. When these attempts proved unsuccessful because the parties were unable to agree upon a purchase price, Ontario Inc. commenced proceedings attacking the validity of the Town’s conveyance of the Access Lands to Dynasty (the “Challenged Conveyance”). On November 12, 2004, it brought an application in the Superior Court of Justice seeking declarations that the transfer/deed of land from the Town to Dynasty concerning the Challenged Conveyance was void; that Dynasty had no right, title or interest in the Access Lands; and that the Town continued to be the legal and beneficial owner of the Access Lands. The Town filed no evidence on this application and did not otherwise participate in it.

[10] By order dated January 18, 2005, Di Tomaso J. of the Superior Court of Justice granted the declaratory relief sought by Ontario Inc. On the record before this court, the procedural steps taken after the date of this order are unclear. It appears, however, that when Dynasty claimed that it did not receive proper notice of the application, the order of Di Tomaso J. was set aside.

[11] Eventually, the application was heard by Eberhard J. of the Superior Court of Justice in mid-August 2005, in the presence of counsel for Ontario Inc. and Dynasty. Once again, the Town filed no evidence and did not participate in the proceeding.

[12] Ontario Inc. argued before the application judge that the Challenged Conveyance was void because the Town failed to comply with the mandatory provisions of s. 193 of the Act regarding the sale of surplus land by a municipality.

[13] The application judge rejected this argument and, by judgment dated August 16, 2005, dismissed Ontario Inc.’s application. In brief reasons, she held that s. 193 of the Act did not apply to the Town’s transfer of Block “D” to Dynasty and that the Challenged Conveyance was valid under s. 297 of the Act. Ontario Inc. appeals from that decision.

II. Relevant Legislative Provisions

[14] Section 193 appeared in Part XIII of the Act, which was concerned with land dealings by municipalities. Section 193 specifically addressed the “sale” of “surplus” land by a municipality. As germane to this appeal,[^1] it read as follows:

Surplus real property, definitions

193. (1) In this section,

“local board” means a local board as defined in the Municipal Affairs Act, but does not include a school board as defined in section 210.1;

“sale” includes a lease of 21 years or longer.

By-laws establishing procedures

(2) Subject to subsection (3), every council and local board with authority to sell or otherwise dispose of real property shall by by-law establish procedures, including the giving of notice to the public, governing the sale of real property.

Contents

(3) A procedure by-law passed under subsection (2) may,

(a) establish different procedures for different classes of real property; and

(b) incorporate a procedure for the sale of real property of a council or local board required by this or any other Act.

Conditions

(4) Before selling any real property, every council and local board shall,

(a) by by-law or resolution passed at a meeting open to the public declare the real property to be surplus;

(b) obtain at least one appraisal of the fair market value of the real property; and

(c) give notice to the public of the proposed sale.

No review

(5) The manner in which the council or local board carries out the sale of its property, if consistent with the procedures by-law and this section, is not open to question or review by any court if the council may lawfully sell the property, the purchaser may lawfully buy it and the council acted in good faith.

Regulations

(6) The Minister may make regulations,

(a) prescribing classes of real property for which an appraisal under clause (4)(b) or a listing in the public register under subsection (7) is not required;

(b) prescribing public bodies or classes of them for which an appraisal is not required for a sale of real property under this section.

Register

(7) Every council and local board shall establish and maintain a public register listing and describing the real property owned or leased by the municipality or local board.

[15] As well, O. Reg. 815/94,[^2] passed pursuant to s. 193(6) of the Act, stated in part:

Disposal Of Property

1. A municipality or local board may sell the following classes of real property without obtaining an appraisal under subsection 193(4) of the Act:

2. Land 0.3 metres or less in width acquired in connection with an approval or decision under the Planning Act.

3. Highways, roads and road allowances.

4. Land that does not have direct access to a highway if sold to the owner of land abutting that land.

5. A municipality or local board is not required to list the following classes of real property in the public register established under subsection 193(7) of the Act:

6. Land 0.3 metres or less in width acquired in connection with an approval or decision under the Planning Act.

7. All highways, roads and road allow-ances, whether or not opened, unopened, closed or stopped up.

[16] Part XVIII of the Act concerned highways and bridges. Sections 297, 298, 300 and 315 of Part XVIII provided, in part, as follows:

Establishing, widening, stopping up, etc., highways, laying out boulevards, etc.

297. (1) The council of every municipality may pass by-laws,

(c) for stopping up any highway or part of a highway or for stopping up any highway or part of a highway for a specified period or periods of time;

(d) for leasing or selling the soil and freehold of a stopped-up highway or part of a highway;

Limitation of power of county

(5) The powers conferred by clause (1)(c) shall not be exer-cised by the council of a county in respect of a highway or part of a highway within the limits of a city, town or village in or adjoining the county.

Notice to clerk of county

(6) Where the council of a township that forms part of a county for municipal purposes intends to pass a by-law under clause (1)(c), it shall so notify in writing the clerk of the county by registered mail or by personal service.

Objection to by-law

(7) If the council of the county objects to the passing of the proposed by-law in respect of which a notice is given under subsection (6), it shall so notify the clerk of the township, in writing, by registered mail or by personal service within sixty days of the receipt of the notice by the clerk of the county, and thereupon the proposed by-law shall not be passed except by agreement between the council of the county and the council of the township and, failing agreement, the Municipal Board, upon application, may determine the matter and its decision is final.

Passage of by-law

(8) After giving the notice required under subsection (6), the council of the township may pass a by-law under clause (1)(c) where,

(a) the council of the county has by by-law consented to the passing of the by-law by the township; or

(b) the sixty-day period referred to in subsection (7) has elapsed and no notice of objection has been received by the clerk of the township from the council of the county,

and the council of the county shall have no further right of objection.

Registration of by-laws

(11) A by-law passed under subsection (1), or any pre-decessor of subsection (1), for closing any street, road or highway or for opening upon any private property, any street, road or highway does not take effect until it has been registered in the land registry office of the land titles division or registry division in which the land is situate, and the by-law shall be registered without further proof by depositing a copy certified under the hand of the clerk and the seal of the municipality.

Right of ingress and egress not to be taken away by closing road

298. (1) A by-law shall not be passed for stopping up, altering or diverting any highway or part of a highway if the effect of the by-law will be to deprive any person of the means of ingress and egress to and from the person’s land or place of residence over such highway or part of it unless such person consents to the passing of the by-law or unless in addition to making compensation to such person, as provided by this Act, another convenient road or way of access to the land or place of residence is provided.

By-law, when to take effect

(2) The by-law does not take effect until the sufficiency of such road or way of access has been agreed upon or until, if not agreed upon, its sufficiency has been determined by arbitration as hereinafter mentioned.

Publication of by-law, etc.

300. (1) Before passing a by-law for stopping up, altering, widening, diverting, selling or leasing a highway or for establishing or laying out a highway,

(a) notice of the proposed by-law shall be published at least once a week for four successive weeks, and in the case of a village or of a township with a population of less than 40,000, shall be posted up for at least one month in six of the most public places in the immediate neighbourhood of the highway or proposed highway; and

(b) the council shall hear any person who claims that the person’s land will be prejudicially affected by the by-law and who applies to be heard.

Notices

(2) The clerk shall give the notices upon payment by the applicant, if any, for the by-law, of the reasonable expenses to be incurred in so doing.

Sale of closed highway

315. (1) Subject to sections 316 and 317, where a highway or any part of a highway over which a municipality has jurisdiction has been closed under this Act, the Registry Act or the Land Titles Act and the council of the municipality determines to sell the land forming the highway or the part of the highway so closed, the land shall be sold in accordance with this section.

Sale to abutting owners

(2) The council shall by by-law set the sale price of the land to be sold and shall offer to sell it to the owner of the land abutting the land to be sold and where,

(a) there are parcels of land abutting on opposite sides of the land to be sold, the owner of each parcel has the right of first refusal to purchase the land to its middle line;

(c) the land to be sold does not include the whole width of the former highway, the owner whose land abuts on the land to be sold has the right of first refusal to purchase the land.

Sale to other persons

(3) If a person entitled under subsection (2) to purchase the land does not exercise the right to purchase within such period as may be fixed by by-law, the municipality may sell the land that the person had the right to purchase to any other person at the price set under subsection (2) or at a greater price.

Sale at lower price

(4) Where the municipality is unable to sell the land at or above the sale price set under subsection (2), the council may set a lower price under that subsection and this section applies to a sale at the lower price.

[17] Finally, ss. 101(1) and 191(1) of the Act stated:

Jurisdiction of councils

101. (1) Except where otherwise provided, the jurisdiction of every council is confined to the municipality that it represents and its powers shall be exercised by by-law.

Power to acquire or expropriate land

191. (1) The council of every corporation may pass by-laws for acquiring or expropriating any land required for the purposes of the corporation, and for erecting and repairing buildings thereon, and for making additions to or alterations of such buildings, and may sell or otherwise dispose of the same when no longer so required.

III. Positions of the Parties

[18] Ontario Inc. argues that s. 193 applied to the Challenged Conveyance, that the Town failed to comply with the mandatory requirements of s. 193 and that, as a result, the Challenged Conveyance is void. Dynasty, in turn, submits that s. 193 had no application in the circumstances of this case because the Challenged Conveyance did not involve the “sale” of “surplus” land, so as to engage s. 193. Dynasty maintains that the Challenged Conveyance was validly effected by the Town under By-law No. 99-21, passed pursuant to s. 297.

IV. Issues

[19] There are three issues:

(1) Did s. 193 apply to the Challenged Conveyance?

(2) If s. 193 applied to the Challenged Conveyance, were the requirements of s. 193 satisfied by the Town?

(3) Did s. 297 of the Act apply to the Challenged Conveyance?

V. Analysis

(1) Application of Section 193

[20] As I have said, the application judge held that s. 193 did not apply to the Town’s transfer of Block “D” to Dynasty. More generally, she appears to have held that the entirety of the Challenged Conveyance was governed by s. 297, rather than s. 193, and that the Town had complied with the requirements of s. 297. She stated:

Section 193, and its procedural requirements are concerned with surplus property and hardly designed for the transfer of one foot strips of land separating building lots from their access roadway.

I find the intended purpose [of the Challenged Conveyance] falls within s. 297 and not s. 193.

It was, parenthetically, certainly never intended that the conveyance, part of a series of covenants to facilitate the development of lands dependent on it for access to the road-way, would remain in the hands of a defaulting mortgagor, no longer for the benefit of those who acquire the building lots in Block B.

Counsel for the Applicant has not tied the provisions of s. 297 to the procedural requirements of s. 193. Nor have I been persuaded that there are other procedures, necessary to the integrity of a by-law passed for purposes addressed by s. 297, with which the municipality failed to comply.

[21] I conclude, with respect, that the application judge erred in law by holding that s. 193 was inapplicable to the Town’s conveyance of Block “D” to Dynasty and that the Challenged Conveyance was valid under s. 297. I reach this conclusion for the following reasons.

[22] The core of the application judge’s analysis concerned the Town’s intention in making the Challenged Conveyance, rather than the character of the transaction itself and the purpose and scope of s. 193. This is evident from her conclusion regarding the Town’s intent:

I find that there is no doubt as to the intention of the municipality. It was to facilitate access between the roadway and the building lots. To accomplish this intention, in the context of the subdivision negotiations, the strip and lots were conveyed to the then owner, Dynasty [emphasis added].

[23] This is also demonstrated by the application judge’s comments, quoted-above, concerning the “intended purpose [of the Challenged Conveyance]”, her observation that “it was … certainly never intended that the conveyance … would remain in the hands of a defaulting mortgagor”, and her finding that the Challenged Conveyance was “part of a series of covenants to facilitate the development of lands dependent on [the Access Lands] for access to the roadway”.

[24] This focus on the Town’s intention in transferring the Access Lands to Dynasty diverted the application judge’s attention away from the purpose and scope of the scheme established by s. 193 and the meaning of the words “sale” and “surplus” real property, as used in s. 193. These issues, which were key to determining whether s. 193 applied to the Challenged Conveyance, were not mentioned by the application judge in her reasons. Accordingly, I address these matters next.

(i) Purpose and Scope of Section 193

[25] Prior to the mid-1990s, municipalities were free to sell their surplus land as they deemed appropriate, subject to judicial review in some circumstances. However, effective January 1, 1995, s. 193 was revised by the Planning and Municipal Law Amendment Act, 1994, S.O. 1994, c.23, s. 55 “to provide a more transparent and accountable procedure respecting the sale of municipal real property by requiring that a municipality pass a land sale procedure by-law, provide public notices and hold meetings prior to the sale of municipal real estate”: see Stephen Auerback and John Mascarin, The Annotated Municipal Act, 2d Ed., looseleaf vol. 1 (Toronto: Thomson Carswell, 2004) at 6-75 - 6-76.

[26] As Auerback and Mascarin suggest, the purpose of s. 193 was to provide the public with an open process for the sale of municipal land, disclosure of the procedures applicable to such sales, and an opportunity for discussion – including potential objection – regarding contemplated sales.

[27] In this context, s. 193 established a scheme for the “sale” by a municipal council or local board (a “municipality”) of “surplus” real property. The cornerstone of this scheme was the requirement under s. 193(2) that every municipality “with authority to sell or otherwise dispose of real property” enact a by-law establishing “procedures, including the giving of notice to the public, governing the sale of real property” (a “procedure by-law”).

[28] While the passing of a procedure by-law was mandatory, s. 193(3) provided a municipality with a discretion regarding the procedures to be established for the sale of “different classes of real property” and to incorporate a procedure for the sale of a municipality’s real property “required by this or any other Act”.

[29] Importantly, s. 193(4) provided that before “selling any real property”, a municipality was required to do the following: (i) by by-law or resolution passed at a public meeting, declare the real property to be “surplus” (s. 193(4)(a)); (ii) obtain at least one appraisal of the fair market value of the real property at issue (s. 193(4)(b)); and (iii) give notice to the public of the proposed sale (s. 193(4)(c)).

[30] These requirements reflected the legislature’s intention that the sale of real property by a municipality be conducted in accordance with an open and publicly disclosed process, based on a fair market valuation of the applicable property and opportunity for public participation.

[31] At the same time, the scheme established by s. 193 also envisaged that the sale of some municipal properties need not be subject to an elaborate disposition process. This was recognized under s. 193 in two ways.

[32] First, as I have mentioned, s. 193(3)(a) afforded a municipality the discretion to establish “different procedures for different classes of real property”. Under this section, therefore, a municipality could chose to streamline the procedures governing the sale of defined classes of municipal land including, for example, parcels of a particularly small size or land comprising a highway or a road allowance. Second, s. 193(6)(a) authorized the Minister,[^3] by regulation, to exempt prescribed classes of real property from the appraisal and public register listing requirements otherwise established by ss. 193(4)(b) and 193(7).

[33] In this case, at the time of the Challenged Conveyance, the Town had not acted under the authority of s. 193(3)(a) to introduce different procedures for different classes of real property. In contrast, O. Reg. 815/94, passed by the Minister under s. 193(6)(a), established a series of exemptions from the appraisal and public register listing requirements. For example, under s. 1 of O. Reg. 815/94, an appraisal need not be obtained by a municipality in relation to the sale of: (i) land 0.3 metres or less in width “acquired in connection with an approval or decision under the Planning Act”; (ii) highways, roads and road allowances; or (iii) land that did not have direct access to a highway, if sold to an abutting landowner.

[34] However, neither s. 193(3)(a) nor s. 193(6)(a) envisaged the avoidance of the core requirements of the s. 193 scheme, namely, the requirement for a procedure by-law that made provision for notice to the public of a proposed sale of municipal land (s. 193(2)) and actual notice to the public of the sale (s. 193(4)(c)).

(ii) Meaning of “Sale” Under Section 193

[35] Dynasty submits that the Challenged Conveyance was not subject to the procedural scheme of s. 193 because the Access Lands were not “purchased by a sale or sales transaction” and were not “surplus” lands. It relies on the affidavit evidence of Richard Rupp, the principal of Dynasty. In an affidavit sworn on July 27, 2005, Mr. Rupp claimed that, “[T]he entire subject of the Transfer, being both [Block “D”] and the [Lots] were [sic] in fulfillment of various agreements between the Town and [Dynasty]” and that the Access Lands were never “surplus land” or “purchased via a sale or sales transaction”. According to Mr. Rupp, conveyance of Block “D” in particular, was not a “sale” but, rather, was “a Transfer of land that arose out of negotiations surrounding the proposed subdivision agreement”.

[36] Since Mr. Rupp was not cross-examined on his affidavit materials and Ontario Inc. did not proffer any evidence from the Town to contradict or respond to his evidence, Dynasty argues that Mr. Rupp’s uncontradicted evidence conclusively established that the Challenged Conveyance “was not a sale and was not surplus land”. In supplementary written submissions dated June 15, 2006 and filed with this court, Dynasty elaborated:

[T]he uncontradicted evidence of [Dynasty] … was that the land was transferred not pursuant to a sale but was a transfer contemplated for no monetary consideration but as part of the development process that had already received endorsement and approval.

[37] I would reject this argument for several reasons. First, whether the Challenged Conveyance was a “sale” of “surplus” land within the meaning of s. 193 is not determined by the bald assertions of a litigant as to the nature of the transaction in issue and as to the legal status of the lands forming the subject matter of the transaction. Dynasty has failed to show how the Challenged Conveyance was something other than a “sale”. Neither Mr. Rupp’s affidavit evidence nor the record as a whole disclose the nature or content of the alleged negotiations and agreements between the Town and Dynasty that are said to have precipitated the Challenged Conveyance. Nor were copies of any documents evidencing such dealings between the Town and Dynasty filed with the application judge.

[38] In addition, even if the Challenged Conveyance arose in “the context of… subdivision negotiations” and the transfer was “part of a series of covenants to facilitate the development of [the Development Lands]”, as found by the application judge, this falls short of a demonstration that the Challenged Conveyance was something other than a “sale” of real property by the Town.

[39] In Liberatore v. St. Thomas (City), [1995] O.J. No. 1570 (Gen. Div.), the conveyance by a municipality of parking lands to a developer for the stated consideration of $1.00 was held to be a sale of land within the meaning of s. 193, rather than an illegal gift or donation of land by the municipality as contended by the applicant in that case. In Liberatore at para. 63, Killeen J. held that the entire course of dealings between the municipality and the developer compelled the conclusion that the conveyance of the parking lands was part of “a package sale or disposition” by the municipality of both hospital and parking lands for a total negotiated price of $85,000.

[40] On this reasoning, even if the Challenged Conveyance was part of a larger, related series of transactions between the Town and Dynasty pertaining to a proposed subdivision agreement, as claimed by Dynasty, the conveyance was a “sale” of land within the meaning of s. 193.

[41] Second, and importantly, Dynasty’s claim that the Challenged Conveyance did not involve a “sale” runs counter to the meaning of the term “sale” under s. 193 and with the purpose and scope of the scheme established under that section for the sale of municipal real estate.

[42] Section 193(1) provided limited guidance concerning the meaning of the word “sale” as it is used in s. 193. It stated only that a “sale includes a lease of 21 years or longer”. Under this inclusionary definition, many forms of transactions involving the disposition of municipal real property could constitute a “sale” for the purpose of s.193.

[43] “Sale” is defined in the Oxford English Reference Dictionary, 2d ed. s.v. “sale” as “n. 1. the exchange of a commodity for money etc; an act or instance of selling”. Similarly, in Daphne Dukelow, Dictionary of Canadian Law (Scarborough: Thomson Canada Limited, 2004) s.v. “sale”, the word is defined in expansive terms: “4. Includes (a) exchange, barter, sale on credit, conditional sale, sale where the price is payable by installments, transfer of title, conditional or otherwise, and any other contract whereby for a consideration a person delivers goods to another; (b) a transfer of possession, conditional or otherwise, or a lease or a rental, determined to be in lieu of a transfer of title, exchange or barter”. See also Black’s Law Dictionary, 7th ed. s.v. “sale”, where it is defined as: “n. 1. The transfer of property or title for a price. 2. The agreement by which such a transfer takes place. The four elements are (1) parties competent to contract, (2) mutual assent, (3) a thing capable of being transferred, and (4) a price in money paid or promised”.

[44] These definitions suggest that, according to both its ordinary and usual legal meaning, the word “sale” enjoys a wide ambit unless the context in which it is used indicates a contrary intention. See also H.W. Liebig & Co. v. Leading Investments Ltd., 1986 45 (SCC), [1986] 1 S.C.R. 70. Section 193 contained no words of limitation constraining the meaning of the word “sale” as employed in that section.

[45] Moreover, the purpose of the scheme established by s. 193 for the sale of real property militates in favour of a broad construction of the concept of a “sale”. That scheme, in my opinion, was intended to bind municipalities to an open and participatory public process concerning the disposition of municipal lands, regardless of the purpose of the transaction in question. No doubt for that reason, the legislature chose not to define the word “sale” in exhaustive terms but, rather, to rely on the ordinary expansive meaning of the word “sale”.

[46] Third, I would reject any suggestion that the Challenged Conveyance was unsupported by consideration. In his affidavits, Mr. Rupp acknowledged that the transfer/deed of land between the Town and Dynasty concerning the Access Lands provided for the payment of nominal consideration ($2.00) by Dynasty to the Town. He claimed, however, that this consideration was “strictly for registration purposes” and that Dynasty was never required to actually pay the stated amount to the Town.

[47] But Mr. Rupp also said in an affidavit sworn on March 18, 2005 that the Challenged Conveyance was “an exchange of land rights” and that Dynasty “provided consideration for the exchange of lands”. As I have indicated, in a later affidavit sworn by him on July 27, 2005, Mr. Rupp claimed that the transfer to Dynasty of Block “D”, “arose out of negotiations surrounding the proposed subdivision agreement”. He also stated that, in respect of this transfer, Dynasty “fulfilled its conditions”. The alleged “conditions” were not described. Finally, in his affidavit sworn on February 14, 2005, Mr. Rupp stated that “consideration was provided by Dynasty” for the Access Lands and that “the transfer was bona fide”. In my view, it is not open to Dynasty to resile from these admissions in order to resist the relief claimed by Ontario Inc. on the basis that no monetary consideration was paid for the Access Lands.

[48] Finally, I note that in Liberatore, supra, Killeen J. placed reliance on s. 191 of the Act, which authorized the council of every municipal corporation to dispose of land acquired or expropriated by the corporation when the land was no longer required for the purposes of the corporation. He commented at para. 59:

As it seems to me, the key words in s. 191 are those which say “may sell or otherwise dispose of the same. …” The word “sell” in this phrase clearly denotes a sale or transaction having a commercial character. It must mean an exchange for value and excludes a clear gift. The balance of the phrase “or otherwise dispose of the same” allows, in my view, for flexible commercial exchanges of precisely the kind that occurred here.

As the relevant provisions of s. 191 of the Act considered in Liberatore were identical to those in force at the time of the Challenged Conveyance, Killeen J.’s comments are apposite here.

[49] Given these considerations, I conclude that the Challenged Conveyance was a “sale” of real property within the meaning of s. 193 of the Act.

(iii) Meaning of “Surplus” Land under Section 193

[50] I also do not agree with Dynasty’s contention that the Challenged Conveyance did not involve the transfer of “surplus” lands.

[51] This claim rests on the following assertions by Mr. Rupp in his affidavits: that the Access Lands were “never surplus lands”; that the fact that By-law No. 99-21 referenced s. 297 of the Act (which dealt with the “stopping up” of highways or road allowances), evidenced that the Challenged Conveyance did not deal with “surplus land or a sale”; that the Town’s failure to seek the return to it of the Access Lands (by expropriation or otherwise) was indicative of the Town’s knowledge that the Challenged Conveyance was not “the sale of surplus land”; and that the nominal monetary consideration promised by Dynasty for the Access Lands demonstrated that the Access Lands were not “surplus” lands. In my opinion, the assertion that the Access Lands were not “surplus” is misconceived.

[52] I have already indicated that a bare claim by Dynasty as to the nature of the Challenged Conveyance is not determinative of its legal character; nor is it dispositive of the legal status of the Access Lands for the purpose of s. 193.

[53] Similarly, the fact that the Town did not seek the return of the Access Lands is irrelevant to the question whether s. 193 applied to the Challenged Conveyance. In any event, the record is silent regarding the Town’s position concerning the status of the Access Lands and as to the Town’s knowledge of its legal rights in relation to those properties.

[54] As well, for the reasons already given, I do not accept that the nominal monetary consideration cited in the transfer/deed between the Town and Dynasty concerning the Access Lands supports the conclusion that the Access Lands were not “surplus” in the Town’s hands. On Dynasty’s own evidence, the Challenged Conveyance was supported by other valid consideration, the receipt and sufficiency of which Dynasty has not contested.

[55] Nor does By-law No. 99-21 bolster the assertion that the Access Lands were not “surplus” lands. The third recital of By-law No. 99-21 expressly states, “AND WHEREAS the said lands are not required for the purposes of the [Town].” This suggests that the lands dealt with under this by-law were “surplus” to the Town’s needs.

[56] Finally, although s. 193 (and s. 193(4) in particular) contained no definition of the word “surplus”, based on a reading of s. 193 as a whole, there is no reason to conclude that the term “surplus” as used in s. 193 was intended to have a special, rather than its ordinary and plain meaning.

[57] In my view, the references to “surplus” land contained in the heading to s. 193 and in s. 193(4)(a) simply mean land that is no longer required for the use of the relevant municipality. This interpretation conforms to the ordinary meaning of the word “surplus” – something that is left over when requirements have been met. It also accords with s. 191(1), which authorizes the sale or other disposition of land acquired or expropriated by a municipality when such land is “no longer … required”.

(iv) Conclusion

[58] I conclude, therefore, that the Challenged Conveyance was a sale of surplus real property by the Town. Accordingly, unless s. 297 operated to oust s. 193 in the circumstances of this case – an issue that I discuss later in these reasons – s. 193 applied to the Challenged Conveyance and the Town was required to satisfy its procedural requirements. I turn now to the question whether those requirements were met.

(2) Requirements of Section 193

[59] As I understood its original submissions to this court, Dynasty did not argue that the Town met the procedural requirements of s. 193 in respect of the Challenged Conveyance. Instead, it took the position that s. 193 did not apply in this case. However, in its supplementary written submissions dated June 15, 2006, Dynasty asserted that there was “absolutely no evidence that the [Town] did not do an appraisal of any of [the] two separate parcels of land” and that a similar evidential ‘gap’ existed as to whether the Town provided public notice of the proposed Challenged Conveyance.

[60] This shift in position is inconsistent with the following factual findings by the application judge:

[The Town] had no such by-law of procedures [as required by s. 193(2) of the Act]. By s. 193(4) any sale required a by-law or resolution at an open meeting to declare the property surplus, obtain an appraisal and give notice to the public of the sale. This was not done.

[61] Dynasty maintains, however, that “it is impossible to determine that there was no publication” by the Town in respect of the Challenged Conveyance because the evidence established that the Town did not keep records of public notices at the relevant time. It also argues that Ontario Inc. bore the burden of demonstrating that the Town failed to comply with s. 193.

[62] While I agree that Ontario Inc. was obliged to show that the Challenged Conveyance triggered s. 193 of the Act and that the Town did not satisfy the requirements of s. 193, to displace the factual findings of the application judge it is incumbent on Dynasty to demonstrate that the impugned findings are tainted by palpable and overriding error. Dynasty did not cross-appeal from the application judge’s decision; nor did it otherwise expressly challenge her findings before this court.

[63] Ontario Inc. alleged in its affidavit materials that the Town failed to comply with certain of the mandatory requirements of s. 193, including the public notice requirements of that section. Thus, there was some evidence to support the application judge’s finding that no notice was given. In the face of Ontario Inc.’s allegation, if Dynasty wished to resist Ontario Inc.’s application on the basis that there had been no violation of s. 193 by the Town, it was incumbent on Dynasty to adduce evidence of compliance with s. 193. It failed to do so.

[64] This is a contest between competing developers who adopted opposite positions on the legal validity of the Challenged Conveyance. I agree with the application judge’s observation that, “This is a sheer commercial dispute in which the parties argue principles of municipal law in order to gain advantage in their private disputes.” It was open to both parties to adduce evidence from the Town regarding the procedures followed in relation to the Challenged Conveyance. There is no property in a witness. In my opinion, in a case like this one, it cannot be said that the burden fell solely on Ontario Inc. to introduce evidence relevant to the determination of the statutory interpretation questions raised in this proceeding.

[65] In any event, it is clear on this record that the Town did not satisfy at least some of the key procedural requirements of s. 193. Contrary to s. 193(2), at the time of the Challenged Conveyance, the Town had no procedure or other by-law in place that provided for public notice of the proposed sale of municipal land. In addition, in respect of the conveyance of Block “D”, the Town failed to pass a by-law or resolution declaring Block “D” to be surplus land as required by s. 193(4). It also breached s. 101(1), which required that the powers of a municipality be exercised by by-law.

[66] I recognize that a technical failure to comply with the procedural requirements of s. 193 may not always vitiate a sale of surplus real property by a municipality. For example, s. 193(5) provided:

The manner in which the council or local board carries out the sale of its property, if consistent with the procedures by-law and this section, is not open to question or review by any court if the council may lawfully sell the property, the purchaser may lawfully buy it and the council acted in good faith [emphasis added].

[67] But the requirements of s. 193(5) were not satisfied in this case. Consequently, the protection afforded by this limited privative clause was not engaged in connection with the Challenged Conveyance.

[68] I am also aware that it is arguable that the Access Lands were exempt from the appraisal and public register listing requirements of ss. 193(4)(b) and 193(7) by virtue of those provisions of O. Reg. 815/94 that pertained to “highways, roads and road allowances” and “land 0.3 metres or less in width” acquired in connection “with an approval or decision under the Planning Act”. Assuming this to be the case, however, it did not exempt the Challenged Conveyance from the remainder of the s. 193 procedural requirements, particularly the requirements of ss. 193(2) and 193(4)(c).

[69] In upholding a sale of municipal surplus land to which s. 193 applied, this court has held that the required procedures under s. 193 need not take place in any defined order: see Wight Milling Ltd. v. Bloomfield (Village) (2000), 12 M.P.L.R. (3d) 268 (Ont. Sup. Ct. J.), aff’d (2001), 21 M.P.L.R. (3d) 181 (Ont. C.A.) at para. 5. Wight Milling did not suggest, however, that the requirements of ss. 193(2) and 193(4)(c) need not be met at all.

[70] It is also significant that s. 101(1) expressly required that the powers of a municipality be exercised by by-law. This extended to a municipality’s power to sell land. In Re Whitton and City of Ottawa, 1967 217 (ON SC), [1967] 2 O.R. 509 (H.C.J.), when considering a predecessor section to s. 101(1), Lieff J. commented at p. 516:

Section 242(1) of the Municipal Act [R.S.O. 1960, c.249] provides that:

242(1) Except where otherwise provided, the jurisdiction of every council is confined to the municipality that it represents and its powers shall be exercised by by-law.

This means, by implication, that the powers of a municipality, except those which are exercised for only a trivial purpose, shall not be exercised by any means other than by by-law, such as by resolution.

The various statutes of our Province provide for a considerable number of procedural safeguards with respect to the passage of by-laws by municipalities and it is important that these safeguards not be by-passed through the exercise of corporate powers by a municipality by means other than through by-law [emphasis added].

[71] In this case, the Town failed to pass a procedure by-law as required by s. 193(2) or any other form of by-law specifically authorizing the sale of Block “D” to Dynasty, although it did pass By-law No. 99-21 in relation to the Lots.

[72] Finally, the Town’s intention in effecting the Challenged Conveyance did not override the requirements of s. 193. The fact that the Town may have intended the sale of the Access Lands to facilitate the development of the Development Lands did not cure any legal defects in the procedures followed by the Town to accomplish this purpose.

[73] Accordingly, unless the Challenged Conveyance, or part of it, was valid due to the Town’s invocation of s. 297 under By-law No. 99-21, the Challenged Conveyance is void. It remains, therefore, to consider the import of s. 297 and the effect of By-law No. 99-21.

(3) Application of Section 297

[74] The application judge held that the intended purpose of the Challenged Conveyance ‘fell’ within s. 297, rather than s. 193. She also held that the requirements of s. 297 were independent of the requirements of s. 193 and that there was no showing of any irregularity or defect in By-law No. 99-21, passed pursuant to s. 297. As a result, she concluded that the Challenged Conveyance was valid. I disagree.

[75] Sections 297(1)(c) and (d) conferred power upon a municipality to pass by-laws for “stopping up” any highway and for selling the freehold of a stopped-up highway. In this case, the Town passed By-law No. 99-21 under the authority of s. 297. Under the by-law, the Town assumed the Lots as a public highway, declared the Lots “closed and stopped up”, and approved their conveyance to Dynasty. But By-law No. 99-21 pertained only to the Lots and not to Block “D”. Thus, it did not operate to authorize the sale of Block “D” to Dynasty or to avoid the application of s. 193 to that conveyance.

[76] And, as I have attempted to emphasize, the Town did not comply with the key requirements of s. 193. In relation to Block “D”, the Town failed to pass a procedure by-law that provided for notice to the public of the intended sale of municipal land. It also failed to declare Block “D” to be “surplus” at a meeting open to the public or to give notice to the public of the contemplated conveyance. As a result, the Town’s conveyance of Block “D” is void.

[77] I reach a similar conclusion concerning the Town’s sale of the Lots to Dynasty. The requirements of ss. 193(2) and 193(4) were stated to apply to the “sale of real property”. Highway lands were not exempt from the requirement under s. 193(2) to pass a procedure by-law that provided for the giving of notice to the public, nor from the requirement under s. 193(4)(c) that notice be given to the public of the proposed sale of municipal real property. Thus, if s. 193 applied to the sale of the Lots, this conveyance is also void for non-compliance with that section.

[78] Moreover, even if s. 193 did not apply to the conveyance of the Lots, the regime established by s. 297 and associated provisions of the Act pertaining to the stopping up and the sale of highway lands also imposed public notice requirements. Section 300(1) stipulated that at least four weeks notice of a proposed by-law for the stopping up or selling of a highway be published in accordance with specified procedures. It also preserved the right of affected landowners to object to the passage of the proposed by-law, by requiring the council of the involved municipality to “hear” any person who claimed that his or her land would be prejudicially affected by the by-law.

[79] By-law No. 99-21 made no reference to any public notice having been given in respect of the assumption, closure and stopping up of the Lots or of the sale of the Lots to Dynasty. To the contrary, it provided for the assumption of the Lots as a public highway (para. one) and their closure and stopping up (para. two), and then immediately went on to authorize the conveyance of the Lots to Dynasty (para. three). This suggests that the Lots were assumed, closed and conveyed to Dynasty without any intervening public notice.

[80] In addition, s. 315(1) provided, with certain exceptions, that the sale of land constituting a highway or part of a highway over which a municipality had jurisdiction was to be carried out in accordance with s. 315. The preconditions to such a sale, as set out in s. 315, included the requirement that the council of the relevant municipality set by by-law the sale price of the land to be sold and, further, that the land be offered for sale to the abutting landowner or landowners. Section 315 thus established a right of first refusal in favour of abutting landowners whenever the sale of municipal lands constituting a highway or part of a highway was contemplated. This required that notice of the proposed sale be given to abutting landowners.

[81] There is nothing in By-law No. 99-21 to suggest that the Town set by by-law the sale price for the Lots. To the contrary, By-law No. 99-21 did not mention any consideration for the conveyance of the Lots to Dynasty. While this defect, by itself, may not have been fatal to the validity of the Town’s conveyance of the Lots to Dynasty (see for example, Campitelli v. Ajax (Town) (1999), 9 M.P.L.R. (3d) 35 (Ont. Sup. Ct. J.) at para. 19, aff’d [2000] O.J. No. 2587 (C.A.)), neither By-law No. 99-21 nor the record as a whole indicate that the Lots were offered for sale to any adjacent landowner other than Dynasty.

[82] In the end, I am satisfied that it is unnecessary in this case to decide whether s. 193, rather than s. 297, applied to the Town’s sale of the Lots. It is clear, at least, that ss. 300 and 315 of the Act applied to the conveyance of the Lots to Dynasty. On the record before the application judge and this court, the Town did not comply with the public notice requirements of either s. 193 or ss. 300 and 315. Accordingly, the Town’s sale of the Lots to Dynasty is void.

[83] In reaching this conclusion, I recognize that the application judge stated in her reasons: “Nor have I been persuaded that there are other procedures, necessary to the integrity of a by-law passed for purposes addressed by s. 297, with which the municipality failed to comply.” However, it does not appear that the parties drew ss. 300 and 315 to the attention of the application judge. Her reasons make no mention of these sections. Indeed, even before this court, neither party advanced any argument concerning the import of these sections until supplementary written submissions were invited by the court.

(4) Conclusion

[84] I conclude, therefore, that the Town’s conveyance of Block “D” to Dynasty was void by virtue of the Town’s non-compliance with s. 193 and that this conveyance cannot be ‘sheltered’ under By-law No. 99-21 and s. 297 of the Act. In addition, the Town’s sale of the Lots to Dynasty was void because the Town failed to provide public notice of the sale. As a result, the Challenged Conveyance is void in its entirety.

VI. Disposition

[85] I would allow the appeal, set aside the judgment of the application judge and substitute in its stead a declaration that the Challenged Conveyance is void. In all the circumstances, I do not regard an award of the costs of this appeal as appropriate.

RELEASED:

“JUL 11 2006” “E.A. Cronk J.A.”

“JL” “I agree John Laskin J.A.”

“I agree Susan E. Lang J.A.”

[^1]: In 2001, the Act was repealed and replaced by the Municipal Act, 2001, S.O. 2001, c. 25. The issues on appeal concern only the application of the relevant provisions of the Act.

[^2]: O. Reg. 815/94, as am. by O. Reg. 31/95, was repealed by O. Reg. 389/02, s.1, effective January 10, 2003: see O. Gaz. January 4, 2003.

[^3]: Under s. 1 of the Act, “Minister” was defined to mean the Minister of Municipal Affairs and Housing.