COURT OF APPEAL FOR ONTARIO

CITATION: 118143 Ontario Inc. (Canamex Promotions) v. Mississauga (City), 2016 ONCA 620

DATE: 20160811

DOCKET: C60721

Doherty, Tulloch and Benotto JJ.A.

BETWEEN

118143 Ontario Inc., carrying on business as Canamex Promotions and Neil Ritchie, carrying on business as Affordable Portables

Plaintiffs (Appellants)

and

The Corporation of the City of Mississauga

Defendant (Respondent)

E. Marshall Green and Christopher Salazar, for the appellants

Ted Frankel and Colin Pendrith, for the respondent

Heard: May 25, 2016

On appeal from the judgment of Justice Emery of the Superior Court of Justice, dated June 25, 2015, with reasons reported at 2015 ONSC 3691.

Doherty J.A.:

I

[1] This is an appeal from a trial judgment dismissing the appellants’ action based on the alleged negligent enforcement of a bylaw.[^1]

[2] The appellants operated businesses that leased mobile signs for advertisement purposes. They claimed that the respondent, The Corporation of the City of Mississauga (“Mississauga” or the “City”), destroyed their businesses by removing, or forcing the appellants to remove numerous mobile signs that were in place between May and August 2002. Mississauga purported to act under the authority of a bylaw that came into force in May 2002 (the “2002 Bylaw”). The appellants’ signs were in fact exempt from that bylaw. The appellants alleged that Mississauga acted negligently in wrongfully enforcing the bylaw against them and, in doing so, caused them millions of dollars in damages.

[3] The trial judge found that the 2002 Bylaw did not apply to the appellants’ signs. He further held, however, that Mississauga did not owe a duty of care to the appellants in its enforcement of the 2002 Bylaw and that in any event the appellants had failed to prove that the enforcement of the bylaw caused any significant damage to them. The trial judge, presumably because he found no duty of care, did not address the standard of care that Mississauga would have owed to the appellants had he found that a duty of care existed, and he did not examine the reasonableness of Mississauga’s conduct in its enforcement of the bylaw.

[4] On appeal, the appellants raise three issues:

• the trial judge erred in holding that Mississauga did not owe a duty of care to the appellants;

• the trial judge erred in failing to identify the applicable standard of care in failing to determine that Mississauga did not meet that standard of care; and

• the trial judge erred in finding there was no causal connection between Mississauga’s negligent enforcement of the bylaw and the substantial damages suffered by the appellants.

[5] I propose to address only the second of the three issues. In my view, the appellants did not allege in their pleadings, and the evidence does not substantiate, any basis upon which a trial judge could have found that Mississauga acted unreasonably in the manner in which it enforced the 2002 Bylaw. In effect, the appellants’ negligence claim comes down to the untenable assertion that because the bylaw did not apply to their signs, Mississauga was a fortiori negligent in enforcing the bylaw against the appellants without first obtaining a judicial determination of its validity. As Justice Laskin (as he then was) observed almost 50 years ago, the invalidity of a bylaw cannot be equated with liability in negligence for enforcing the bylaw: see Welbridge Holdings Ltd. v. Winnipeg (Greater), 1970 CanLII 1 (SCC), [1971] SCR 957, at pp. 967-69.

[6] As I see no evidence of any failure by Mississauga to meet the standard of care alleged by the appellants, questions relating to the existence of a duty of care and causation are academic. I will not consider those issues.

II

sign bylaws in mississauga prior to may 2002

[7] Mississauga, like all municipalities, has the power to regulate the placement of signs, including mobile signs, and the power to regulate businesses engaged in the renting of signs for advertising and other purposes. Mississauga has required permits to erect signs since 1981. Mobile signs have been specifically regulated since 1983. In 1984, Mississauga enacted a bylaw requiring those engaged in the business of leasing out mobile signs to obtain a licence from the City. The 1984 bylaw also placed restrictions on the amount of time that mobile signs could be located in the same place.

[8] In 1988, Mississauga enacted a new, more elaborate, sign bylaw applicable to all signs. The 1988 bylaw prohibited all signs unless a permit was obtained for the sign. The bylaw set out various specific requirements for the obtaining of the necessary permit.

[9] In 1994, Mississauga passed a new bylaw regulating mobile signs (the “1994 Bylaw”). Under the 1994 Bylaw, all classes of mobile signs required a permit and those leasing mobile signs had to be licensed by Mississauga. A person seeking to display a mobile sign had to complete the necessary application which included a fee and an indication of where the sign would be placed. Under that Bylaw, mobile signs could remain in place only for a specified time and there were limits placed on the number of signs that could be placed on a commercial or industrial complex. The appellants were subject to the 1994 Bylaw when they began to lease signs in Mississauga in the late 1990s.

[10] In about August 2000, Mississauga undertook a review of its bylaws, including its sign bylaws. A report prepared as part of that review opined that the proliferation of mobile signs had created aesthetic and safety issues within the City.

The 2002 Bylaw

[11] On January 31, 2002, Mississauga passed a new sign bylaw (the “2002 Bylaw”). That bylaw was to come into effect on May 1, 2002 and was applicable to all signs, including mobile signs. The 2002 Bylaw repealed the 1988 and 1994 sign Bylaws. The 2002 Bylaw was intended to consolidate and replace those earlier bylaws.

[12] In late January 2002, in anticipation of the 2002 Bylaw coming into force on May 1, Mississauga launched a publicity campaign that included a news release and other related material explaining the operation of, and the requirements of, the 2002 Bylaw. The material stressed that the 2002 Bylaw would be enforced as of May 1, 2002, pointing out that enforcement would include the immediate removal and confiscation of any non-compliant sign and the possibility that the owners of those signs would be fined up to $5,000.

[13] In April 2002, counsel for the appellants wrote to the Mississauga legal department advising that the appellants took the position that the 2002 Bylaw did not apply to their signs which the appellants claimed were “grandfathered”. In subsequent correspondence, counsel for the appellants also referred to the City’s inconsistent enforcement of the 1994 Bylaw and further contended that the appellants’ signs were not subject to the 1994 Bylaw. Nothing said by counsel for the appellants in his correspondence with the Mississauga legal department prior to May 1, 2002 suggested that the appellants took the position that the 1994 Bylaw had expired at some time prior to May 1, 2002. As of May 1, 2002, the appellants and Mississauga assumed that the 1994 bylaw remained operative until repealed by the 2002 Bylaw.

[14] In his letters to the Mississauga legal department in late April 2002, counsel for the appellants suggested that Mississauga allow the appellants’ signs to remain in place while the appellants pursued a court challenge to the validity of the 2002 Bylaw. Counsel advised that if the appellants’ challenge to the bylaw was unsuccessful, they would reimburse the City for any outstanding permit fees owed under the terms of the 2002 Bylaw. In his letter of April 25, 2002, counsel for the appellants referred to the proposed non-enforcement of the bylaw pending litigation as “special consideration” for his clients.

[15] Mr. Beaman, legal counsel for Mississauga, wrote three letters to the appellants’ lawyer, all dated April 26, 2002. He confirmed that he had already advised the appellants’ lawyer that his instructions were to defend the bylaw as it was written. Mr. Beaman further indicated that he had not undertaken to delay enforcement of the bylaw against the appellants, or to give the appellants prior notice of any confiscation of signs that contravened the bylaw. Mr. Beaman advised counsel for the appellants that the enforcement officers had been instructed to proceed with the enforcement of the bylaw against everyone on May 1, 2002. In one of the letters, Mr. Beaman pointed out that any agreement by Mississauga to hold off enforcing the bylaw pending litigation would be seen as giving the appellants a competitive advantage over other companies who also leased mobile signs and who were subject to the 2002 Bylaw.

[16] On May 3, 2002, counsel for the appellants again wrote to the City’s solicitor restating the claim that the appellants’ signs were “grandfathered” and not subject to the 2002 Bylaw. Counsel advised that any permit fees paid by the appellants would be paid under protest.

[17] The appellants commenced a lawsuit against Mississauga on May 29, 2002. The Statement of Claim contained, for the first time, the allegation that the 1994 Bylaw had expired in January 2001, and that any mobile sign in place as of May 1, 2002 was lawfully in place and therefore not subject to the requirements of the 2002 Bylaw. That argument would eventually carry the day.

[18] Mr. Robert Irwin, the principal of the appellant, Canamex, testified that discussions between his lawyer and the City’s lawyer continued after the lawsuit was started. Mr. Irwin’s lawyer told him that the City disagreed with the position that the 1994 Bylaw had expired. His lawyer also told him that the lawyer for the City had advised that the bylaw would be enforced against the appellants in the same manner that it was enforced against other portable sign companies. The City would neither grant special privileges to the appellants, nor make the appellants the target of especially vigorous enforcement.

[19] Mississauga began to enforce the 2002 Bylaw sometime in May 2002. In May, June and again at the end of July 2002, officials, as part of an enforcement “blitz”, removed many mobile signs belonging to various owners, including the appellants. About 20 signs belonging to the appellants were confiscated during the “blitz”. Mississauga took the position that all of the signs were on City property and therefore properly removed by Mississauga, apart entirely from any authority it had under the 2002 Bylaw. The appellants claimed that some of the 20 signs were not on City property. In August 2002, the appellants decided to remove the remainder of their signs to avoid having those signs confiscated by enforcement officials.

The Applicability of the 2002 Bylaw to the Appellants’ Signs

[20] Although the appellants claimed injunctive relief in their Statement of Claim, they did not pursue that claim. In November 2003, some 18 months after the appellants had commenced the lawsuit, and long after the appellants had removed their signs, they moved under Rule 21.01(1)(a) for a determination of a question of law raised in the pleadings. The appellants sought an order declaring that the 1994 Bylaw had expired as of January 30, 2001. This claim was important to the litigation because if the 1994 bylaw had expired before the May 2002 bylaw was enacted, it was arguable that the appellants’ signs were lawfully in place at the time the 2002 Bylaw came into effect. If the signs were lawfully in place, s. 210.146(i) of the Municipal Act, R.S.O. 1990 c. M.45, dictated that the bylaw did not apply to those signs.

[21] The argument advanced on the motion turned in large measure on s. 24(3) of Schedule M of the Savings and Restructuring Act, 1996, S.O. 1996, c. 1 (the “SRA”). That section reads:

A bylaw of a local municipality … licensing a business under any Act passed before this section comes into force expires the earlier of five years after the date this section comes into force and the day it is repealed by the local municipality.[^2]

[22] The SRA came into force on January 30, 1996. If the 1994 Bylaw was a bylaw “licensing a business under any Act”, it expired on January 30, 2001 by operation of the sunset provision in s. 24(3) of the SRA.

[23] On the Rule 21 motion, Mississauga argued that the 1994 Bylaw had two discrete and severable parts. The first part addressed the regulatory scheme governing the erection, display and use of portable signs. The second part targeted the regulation of the business of leasing portable signs. The City argued that s. 24(3) of the SRA sunsetted only the part of the bylaw that addressed the regulation of the business of leasing mobile signs. On this interpretation, the part of the bylaw regulating the display and use of the signs remained in force until it was repealed by the 2002 Bylaw.

[24] The motion judge rejected Mississauga’s interpretation of the 1994 Bylaw. He held that the different parts of the 1994 Bylaw could not be severed from each other and that the Bylaw had to be considered as a whole. The sunset provision in the SRA applied to the entirety of the Bylaw meaning that it expired as of January 30, 2001: see 118143 Ontario Inc. v. Mississauga (City) (2003), M.P.L.R. (3rd) 130 (Ont. Sup. Ct.).

[25] Mississauga appealed that judgment. This court dismissed the appeal: (2004), 2 M.P.L.R. 4227. Blair J.A. said, at para. 13:

I would therefore uphold the motion judge’s finding that By-law 301-94, taken as a whole, is a by-law licensing a business, and that it therefore expired on January 30, 2001. There being no other city by-law in its place until May 1, 2002, there was no operative by-law regulating and governing the respondents’ portable signs in the city of Mississauga during the intervening fifteen-month period.

[26] Although neither the motion judge, nor this court commented directly on the applicability of the 2002 Bylaw to the appellants’ signs, s. 210.146(i) of the Municipal Act declared that no bylaw regulating or prohibiting signs would apply “to a sign … that is lawfully erected or displayed on the day the bylaw comes into force”.

[27] After the motion judge and this court had held that the 1994 Bylaw had expired, Mississauga amended its Statement of Defence to argue that the 1988 Bylaw applied to the appellants’ signs as of May 1, 2002, meaning that those signs were not legally in place when the 1988 bylaw was repealed by the 2002 Bylaw. The trial judge considered and rejected this argument: see reasons, paras. 175-202. Mississauga does not challenge that ruling and I need not address it.

[28] The appellants’ negligence claim must be assessed on the basis that the appellants’ signs were lawfully in place as of May 1, 2002. They were not subject to the 2002 Bylaw. Mississauga could not rely on that bylaw as its authority for confiscating the appellants’ signs.

III

the negligence claim

(i) The applicable law

[29] To make out a claim in negligence, a plaintiff must establish three things. First, that the defendant owed a duty of care to the plaintiff. Second, that the defendants’ conduct fell below what could be expected of the ordinary, reasonable and prudent person in the circumstances. Third, that the plaintiff suffered damages as a consequence of the defendant’s breach of the standard of care: see Ryan v. Victoria (City), 1999 CanLII 706 (SCC), [1999] 1 S.C.R. 201, at paras. 21-28; Hill v. Hamilton-Wentworth (Regional Municipality) Police Services Board, 2007 SCC 41, [2007] 3 S.C.R. 129, at para. 93.

[30] I am concerned only with the second of the three requirements. In Ryan, at para. 28, Major J. observed:

The measure of what is reasonable depends on the facts of each case, including the likelihood of a known or foreseeable harm, the gravity of that harm, and the burden or cost which would be incurred to prevent the injury. In addition, one may look to external indicators of reasonable conduct, such as custom, industry practice, and statutory or regulatory standards.

[31] This court applied the general language in Ryan to a claim of negligent enforcement of a bylaw in Rausch v. Pickering (City), 2013 ONCA 740, 369 D.L.R. (4th) 691, at paras. 87-88:

The approach to determining the standard of care in these circumstances would be assess what a reasonable by-law enforcement officer would have done in considering whether to enforce the By-law against Mr. Rausch. It is at this stage of the analysis that the court must define the conduct required to satisfy this standard, bearing in mind that the FFPPA imposes no obligation on the City to apply to the Board for a determination as to whether a targeted farming operation is a “normal farm practice”.

Municipalities are presumed to know the law. Further, this court has held that enforcement officers are obliged to (i) act in good faith in relation to their decisions as to how a by-law will be enforced, and (ii) act with reasonable care in any steps they take to enforce a bylaw. The combination of these two factors – presumed knowledge of the law and an obligation to act reasonably and in good faith in enforcing it – and the wording of s. 444 of the Municipal Act mentioned above, may be relevant to the determination of the standard of care. Specifically, it may permit a finding that when attending at Mr. Rausch’s premises and observing livestock in circumstances that appeared farm-like, the by-law enforcement officer ought to have considered the implications of the FFPPA before proceeding with enforcement steps.[^3] [Citations omitted]

The appellants’ rely on Rausch and argue that the same factors identified by Epstein J.A. are relevant to the determination of the standard of care in this case.

(ii) The appellants’ pleading

[32] The appellants’ Statement of Claim contains only one paragraph that touches on the basis for its allegation that Mississauga failed to meet the requisite standard of care when it proceeded to enforce the 2002 Bylaw in the face of the appellants’ lawsuit claiming that the bylaw did not apply to their signs. Paragraph 41 of the Fresh as Amended Statement of Claim reads:

The Plaintiffs state that the Defendant owed them a duty of care to ensure that it had proper legislative authority to force the removal of the signs. In the absence of that authority, the Plaintiffs submit the Defendant breached its duty of care and the Plaintiffs have suffered damages as a result.[^4]

[33] Paragraph 41 goes no further than to allege that Mississauga did not have the legislative authority to force the removal of the signs. The absence of that authority, standing alone, cannot in law support a finding that Mississauga “breached its duty of care” to the appellants: see Welbridge Holdings Ltd., at pp. 967-69.

(iii) The appellants’ argument

[34] In their factum, the appellants submit that the applicable standard of care required Mississauga “to carefully and reasonably consider the position of the Appellants prior to enforcing the 2002 By-law against the Appellants’ signs”, and further required Mississauga “to cooperate in the application for judicial determination of the legality of enforcing the 2002 By-law against the Appellants’ signs.”

[35] In oral argument, when asked by the court to point to evidence demonstrating that Mississauga did not “carefully and reasonably” consider the appellants’ position as set out in its Statement of Claim, or did not “cooperate” in bringing an application for a judicial determination of the legality of the bylaw, counsel submitted that Mississauga had the onus to demonstrate that it had acted reasonably in the circumstances. Counsel argues that it was for the appellants to establish that Mississauga owed the appellants a duty of care, but that once the duty was established, the onus fell on Mississauga to demonstrate that it met the requisite standard of care imposed by that duty.

[36] Ordinarily, and absent a statutory provision to the contrary, the plaintiff must plead and prove the essential elements of a negligence claim, including the applicable standard of proof and the defendant’s failure to meet that standard: see Allen M. Linden & Bruce Feldthusen, Canadian Tort Law, 10th ed. (Toronto: LexisNexis Canada, 2015), at pp. 267-68; see also Snell v. Farrell, 1990 CanLII 70 (SCC), [1990] 2 S.C.R. 311.

[37] There is no statutory provision shifting the burden of proof as it applies to the standard of care from the appellants to Mississauga. Nor have the appellants offered any policy-based reason justifying a departure from a rule as fundamental as the rule which dictates that a party making an allegation must prove the allegation.

[38] The appellants were in a position to lead evidence as to what steps a reasonable municipality should have taken before enforcing its bylaw in the circumstances that existed in May 2002. The appellants were equally in a position to lead evidence as to what steps Mississauga did or not take, and the reasons for those steps. The appellants had access to their own lawyer, who had negotiated with Mississauga, and to witnesses for Mississauga, both through the discovery and the trial process. The appellants had more than an ample opportunity to put evidentiary flesh on the bare bones of their negligence pleading. In the end, even if this court were to accept the appellants’ articulation of the applicable standard of care, there was simply no evidence from which it could be inferred that Mississauga acted unreasonably in the enforcement of the 2002 Bylaw.

[39] In oral argument, counsel submitted that Mississauga acted unreasonably after the appellants commenced their lawsuit on May 29 by failing to withhold enforcement against the appellants while seeking an expeditious determination of the legality of the enforcement of the bylaw against the appellants.

[40] This submission is untenable. The appellants had commenced an action in which, among other prime things, they sought interim injunctive relief against Mississauga. The appellants could have moved as quickly as they saw fit to obtain injunctive relief. They chose not to do so.

[41] Mississauga cannot be said to have acted unreasonably because, as the defendant in the action, it did not seek a remedy that was equally available to, and indeed more appropriately sought by the appellants. It is also noteworthy that counsel for the appellants never suggested to Mississauga that it was under any duty to the appellants to refrain from enforcing the bylaw and to seek an expeditious determination of the applicability of the bylaw to the appellants before the lawsuit was launched. When counsel first asked Mississauga to refrain from enforcing the bylaw until it could be challenged in court, he did not suggest that Mississauga had a duty to refrain from enforcing the bylaw, but instead suggested that Mississauga would be extending “a special consideration” to his clients. Mississauga’s lawyer, in his letter, explained why that special consideration could not be given.

[42] I make one additional observation. It is clear from the arguments advanced as to the applicability of the 2002 Bylaw to the appellants that this was not a case in which the unenforceability of the bylaw against the appellants could be described as obvious or readily apparent. Mississauga had a viable argument that part of the 1994 Bylaw survived. Had that argument succeeded, the 2002 Bylaw would have been enforceable against the appellants. Surely, Mississauga cannot be said to have acted unreasonably when it defended its bylaw with a reasonable argument in favour of its enforceability even though that argument ultimately failed.

IV

conclusion

[43] For the reasons set out above, I would dismiss the appeal. If the parties cannot agree on the costs of the appeal, they should exchange and file costs submissions of less than five pages in 30 days of the release of these reasons.

Released: “DD” “AUG 11 2016”

“Doherty J.A.”

“I agree M. Tulloch J.A.”

“I agree M.L. Benotto J.A.”

[^1]: The appellants advanced other claims in their Statement of Claim, however, those claims were not pursued at trial and are not relevant to this appeal.

[^2]: The SRA also added a five-year sunset provision to the Municipal Act: s. 257.2(5). A similar provision was included in the Municipal Act, 2001, S.O. 2001, c. 25: s. 150(13). The five-year sunset provision was repealed in 2006: see Municipal Law Amendment Act, S.O. 2006, c. 32, s. 82.

[^3]: “FFPPA” refers to the Farming and Food Production Protection Act, 1998, S.O. 1998, c. 1, which prevents a municipal bylaw from restricting a normal farm practice that is part of an agricultural operation.

[^4]: Paragraph 41(a) of the claim makes a further allegation of negligence, however, that claim is based on Mississauga’s reliance on the 1988 bylaw. Mississauga did not rely on that bylaw until after the Court of Appeal dismissed its appeal in 2004.