Court of Appeal for Ontario

Date: 2019-01-21 Docket: C65443 Judges: Brown, Paciocco and Zarnett JJ.A.

Between

Rock Solid Holdings Inc., 1103546 Ontario Ltd. and AK Aggregates Limited Applicants (Appellants)

and

The Corporation of the Municipality of Shuniah Respondent (Respondent)

Counsel

Morris Holervich, for the appellants

R. W. Johansen, for the respondent

Heard: January 16, 2019

On appeal from the judgment of Justice John S. Fregeau of the Superior Court of Justice, dated April 20, 2018.

Reasons for Decision

Overview

[1] The appellants, Rock Solid Holdings Inc., 1103546 Ontario Ltd., and AK Aggregates Limited, own or operate two gravel pits in the Municipality of Shuniah – the Mount Baldy Road Pit and the Mackenzie/Otte Road pit. In 2008, the appellants commenced an application to declare illegal a series of by-laws under which the Municipality sought to control the weight of vehicles travelling on municipal roads.

[2] The road weight by-laws date back to the mid-1990s. In their most recent incarnations enacted in 2007, the by-laws prohibit the operation of vehicles with a Registered Gross Weight in excess of 6,000 Kg on 65 municipal streets (By-law 2279-07), but provide for the issuance of single trip, seasonal and annual permits for any vehicle in excess of 6,000 Kg to travel on municipal roads (By-law 2281-07).

[3] In support of their challenge to the validity of the by-laws, the appellants advanced two main arguments before the application judge. First, they submitted that the by-laws were enacted in bad faith because the appellants (or the previous owners of the gravel pit) were not given actual, personal notice of the Municipality's intention to pass them and an opportunity to be heard. Second, they contended the by-laws were discriminatory and passed in bad faith because the effect was to prevent the appellants from carrying on their aggregate extraction businesses in a commercially viable manner.

[4] The application judge did not accept their submissions and dismissed the application. The appellants appeal. At the hearing we dismissed the appeal, with reasons to follow. These are those reasons.

First Ground of Appeal

[5] The appellants advance two main grounds of appeal.

[6] First, they submit the application judge misapprehended their lack of notice argument. The application judge held, at para. 11, that it was not in dispute that the Municipal Act, 2001, S.O. 2011, c. 25 did not require the Municipality to give notice to particular landowners or users regarding its intention to pass the road weight by-laws. Indeed, there is no suggestion that the Municipality failed to comply with its own notice requirements – By-law 2114-03 – when passing the 2007 road weight by-laws. However, the appellants do not rest their lack of notice argument on any failure to comply with the Act or the Municipality's notice by-law. Instead, they submit that the Municipality's failure to give them actual, personal notice of the intention to pass the by-laws was a "badge" or indicator of bad faith.

[7] The application judge's reasons do not disclose any misapprehension of the appellants' notice argument. At para. 23 of his reasons, the application judge accurately described the appellants' notice submission: "The applicants suggest that the failure to notify persons known by council to have an interest in a by-law and the failure to hold a hearing are factors indicative of bad faith." The application judge returned to this submission, at paras. 52 and 53, and did not accept the appellants' submission that the lack of specific notice to them, in and of itself, amounted to bad faith on the part of the Municipality.

[8] Although in certain circumstances a municipality may have to give a form of notice of its intention to pass a by-law beyond that required by statute or its notice by-law, the cases relied upon by the appellants disclose that such circumstances generally involve attempts by municipalities to enact by-laws that seek to frustrate a specific landowner's use of its property or regulate a particular industry: Pedwell et al. v. Pelham (Town), 174 O.A.C. 147 (C.A.), leave to appeal refused, [2003] S.C.C.A. No. 355, at para. 61; Langille v. City of Toronto, at para. 55; Airport Taxicab (Pearson Airport) Association v. City of Toronto, leave to appeal refused, at para. 20.

[9] Those circumstances do not exist in the present case. As the application judge noted, the Municipality's road weight by-laws dated back to the mid-1990s: at para. 47. As the record disclosed, the overwhelming majority of the municipal roads subject to the by-laws' control were not ones used by aggregate extraction businesses. The by-laws did not target the appellants' operations or the aggregate extraction business; they focused more generally on roads within the Municipality. As well, Mr. Eric Collingwood, the Municipality's Chief Administrative Officer, deposed that the majority of the licensed gravel pits in the Municipality utilize private roads to haul materials to provincial highways – neither the private roads nor provincial highways are subject to the by-laws.

[10] Accordingly, we give no effect to the appellants' submission that in the circumstances of this case the Municipality was required to give actual, personal notice to them of its intention to pass the by-laws.

Second Ground of Appeal

[11] As their second ground of appeal, the appellants submit the application judge's rejection of their argument that the by-laws were passed in bad faith rested on his erroneous finding that the by-laws did not preclude the commercial operation of the two gravel pits. They supplemented this in oral argument with a submission that their failure to secure a permit for overweight vehicles in connection with the Mackenzie/Otte Road pit demonstrated the arbitrary nature of the bylaws themselves.

[12] We are not persuaded by these submissions for several reasons.

[13] First, the application judge's finding that the Municipality had not acted unreasonably, arbitrarily or unfairly in passing the challenged road weight by-laws was based on several factors: (i) the evidence of the Municipality's conduct over the course of two decades in extensively reviewing and analyzing the issue of resource extraction, public roads and highways, and residential development within the municipality "in an attempt to balance competing interests, including commercial interests, residential use and development, public safety and noise/disturbance concerns" (para. 48); (ii) the Municipality enacting and amending legislation "in an effort to address all concerns" (para. 51); together with (iii) his conclusion that the by-laws did not preclude the commercial operation of the two gravel pits (para. 53).

[14] Second, we see no palpable and overriding error in the application judge's conclusion that the by-laws do not preclude the viable operation of the two gravel pits. The application judge noted, at para. 54, that one of the appellants, 1103546 Ontario Ltd., had reached an agreement with the Municipality under the by-laws' permitting process to use Mount Baldy Road for the purposes of the operation of the Mount Baldy Road pit.

[15] As to the Mackenzie/Otte Road pit, the appellant Rock Solid purchased the pit property in 2008, after the challenged 2007 by-laws had been enacted. Mr. Ryan Jones, the President of Rock Solid, testified that when it purchased the pit the company was aware of the road weight restrictions, the history of the property, and the issues associated with the property. After an extensive due diligence process, Rock Solid went into the pit purchase with "eyes wide open".

[16] The record contains extensive materials detailing the discussions between Rock Solid and the Municipality between 2009 and 2012 to reach some resolution. Those discussions considered the construction by the appellants of a private road to the gravel pit or the negotiation of a Road Agreement within the parameters of the by-laws' permit process. During those discussions, the Municipality made clear that its consideration of an application for a permit to use municipal roads for the Mackenzie/Otte Road pit could include requiring the appellants to post financial security for road repairs and maintenance, regulating the time of day for hauling gravel, and speed restrictions. The Municipality also made clear that it was not prepared to fund the construction of a private road to support the appellants' Mackenzie/Otte Road pit; the appellants would have to bear that cost.

[17] At a meeting in April 2012, the appellants submitted to the Municipality permit applications for both gravel pits, together with draft Road Agreements. At a meeting of the Municipality's Committee of the Whole Council on May 14, 2012, a resident distributed an information package to Council concerning the Mackenzie/Otte Road pit and "explained that the safety of the community was the most important issue and that this road was not suitable for hauling gravel." At its meeting on June 25, 2012, Council approved the permit application for the Mount Baldy Road pit, but denied that for the Mackenzie/Otte Road pit. In a June 26, 2012 email to the appellants, Mr. Collingwood advised that the "decision of Council to approve or not to approve was based on Health and Safety issues brought forward to Council by the residents."

[18] In 2015, the appellants provided the Municipality with an engineer's report, which stated that upgrades would be required to the Mackenzie Station and Otte Roads in order to provide dependable access to the gravel pit. To address safety concerns, the report recommended widening the roads, enhancing visibility, and posting appropriate signage. The report estimated the construction of a private access road to the pit would cost between $3 million to $4.5 million.

[19] Shortly after providing the report to the Municipality, the appellants filed a new permit application identical to the one filed in 2012. The attached draft Road Agreement did not include any offer by the appellants to contribute to the costs of the road upgrades recommended by its engineers to deal with safety concerns. According to Mr. Paul Greenwood, Mr. Collingwood's successor as the Municipality's Chief Administrative Officer, the new application still failed to address the safety concerns along the McKenzie Station Road/Otte Road corridor and was declined by Council.

[20] Although Mr. Jones deposed in his 2010 affidavit that the by-laws' permit process was "practically useless to anyone seeking to use the mineral aggregate resources" located at the two pits, he did not update his evidence: (i) to explain how he reconciled that broad assertion with the permit and Road Agreement reached in 2012 that enabled the commercial operation of the Mount Baldy Road pit; or (ii) to detail how the cost of the recommended road upgrades or of constructing a private road would prevent the commercial operation of the Mackenzie/Otte Road pit.

[21] Given that state of the record, we are not persuaded that the application judge erred in finding the by-laws did not preclude the commercial operation of the Mackenzie/Otte Road pit. Moreover, the record fully supports the application judge's conclusion that the Municipality did not act in bad faith in passing the by-laws. The record discloses the Municipality acted with the degree of fairness, openness, impartiality and focus on the public interest required of a municipal government: Grosvenor v. East Luther Grand Valley (Township), 2007 ONCA 55, 84 O.R. (3d) 346, at paras. 43-45.

Disposition

[22] For these reasons, the appeal is dismissed.

[23] The appellants shall pay the Municipality its costs of the appeal fixed in the amount of $15,000, inclusive of disbursements and all applicable taxes.

"David Brown J.A." "David M. Paciocco J.A." "B. Zarnett J.A."