COURT OF APPEAL FOR ONTARIO

CITATION: Balmoral Developments Hilda Inc. v. Orillia (City), 2020 ONCA 443

DATE: 20200707

DOCKET: C67140 & C67159

Doherty, MacPherson and Benotto JJ.A.

BETWEEN

Balmoral Developments Hilda Inc.

Plaintiff (Respondent/Appellant)

and

The Corporation of the City of Orillia, Ian Sugden and Kelly Smith

Defendants (Appellants/Respondents)

David G. Boghosian and Mai T. Nguyen, for the appellants (C67140) and respondents (C67159)

Christopher D. Salazar, for the respondent (C67140) and appellant (C67159)

Heard: in writing

On appeal from the judgment of Justice Gregory M. Mulligan of the Superior Court of Justice, dated May 29, 2019, with reasons reported at 2019 ONSC 3292.

REASONS FOR DECISION

[1] Balmoral Developments Hilda Inc. (‘Balmoral’) built stacked townhouses consisting of 24 rental units in two buildings in the City of Orillia (‘City’). Originally, the development was to be for affordable senior housing. However, when the funding for that project was no longer available, Balmoral modified the project to develop residential housing for students and other tenants.

[2] The City advised Balmoral that the project was subject to the barrier-free accessibility requirements under Ontario’s Building Code, O. Reg. 350/06. Balmoral did not appeal this decision. Balmoral complied with the City’s requirements with respect to the internal construction of two units in the development. Balmoral did not comply with the City’s requirements respecting exterior ramps, guards and handrails.

[3] When construction was complete in 2011, Balmoral sought a ruling form the Superior Court of Justice that the development was not a boarding, lodging or rooming house pursuant to the City’s zoning by-law, thereby enabling it to rent each unit to up to seven students attending a local community college or university. A Superior Court justice ruled in Balmoral’s favour in 2012. This court overturned that decision, concluding that occupancy by more than four persons per unit would constitute a boarding, lodging or rooming house: see Balmoral Developments Hilda Inc. v. Orillia (City), 2013 ONCA 212.

[4] While this litigation was unfolding, Balmoral submitted an application to the City for a Condominium Exemption pursuant to ss. 9(6) and (7) of the Condominium Act, 1998, S.O. 1998, c. 19:

9(6) Before making an application under subsection 51 (16) of the Planning Act, the owner of a property or a person authorized in writing by the owner of the property may apply to the approval authority to have the description or any part of the description exempted from those provisions of sections 51 and 51.1 of the Planning Act that would normally apply to it under subsection (2).

9(7) The approval authority may grant an exemption if it believes the exemption is appropriate in the circumstances.

[5] The permissible effect of invoking this process was to bypass the requirements for notice and draft approval set out in the Planning Act, R.S.O. 1990, c. P. 13.

[6] Two years later, the City, the ‘approval authority’ in the above subsection, passed By-law 2014-75, granting the Exemption Application subject to one condition: “Each unit or any group of units shall not be occupied and used as a ‘boarding, lodging or rooming house’…”.

[7] Balmoral commenced an action against the City; it made two claims: (1) the City lacked the power to include a condition when granting the Exemption Application; and (2) the City unlawfully imposed barrier-free requirements on its development project.

[8] Balmoral’s Amended Statement of Claim, the City’s Statement of Defence and Balmoral’s Reply were all filed within a twelve-day period in December 2014. Nothing happened until July 2018 when the City brought a motion for summary judgment. The City’s position was that it had authority to impose a condition when granting an Exemption Application and could impose barrier-free requirements on the development project.

[9] The motion for summary judgment was heard in February 2019. The motion judge released his Reasons for Decision in May 2019. Success was divided between the two parties.

[10] On the condition attached to the Exemption Application approval, the motion judge decided in favour of Balmoral. He said:

I am satisfied that, the City having proceeded on the Exemption Certificate track, lacked the right to impose conditions on Balmoral’s Exemption Certificate Application. The bad faith that I attribute to the City, through the actions of its staff, does not imply wrongdoing or personal advantage, but does rise to the level of unreasonableness and unfairness; conduct which is not expected of a municipal government. I am satisfied that a Declaration should issue. The City did not have authority to impose conditions. I further order that the conditions in By-Law 2014-75, set out in paragraphs 2 and 3 of the said by-law, be struck.

[11] On the barrier-free access requirements imposed on Balmoral’s development project, the motion judge decided in favour of the City. He said:

In my view, the issue is moot. Balmoral constructed the two units as barrier-free units in accordance with the by-law and building permit. It declined to appeal the City’s requirements for barrier-free units. In my view, Balmoral cannot use its request for a declaration now to mount a collateral attack on a by-law which it did not appeal.

I, therefore, find that the barrier-free accessibility requirements imposed by the City were lawful. It follows that the City has the continuing right to impose the ramp, guard and handrail requirements pursuant to that by-law.

[12] The City appeals from the motion judge’s decision on the Exemption Application issue. Balmoral appeals from the motion judge’s decision on the barrier-free accessibility requirements issue.

A. The City’s appeal

[13] On the Exemption Application issue, the City advances two grounds of appeal: (1) the motion judge erred by determining that the City was not authorized by s. 9(7) of the Condominium Act to impose a condition on its approval of Balmoral’s application; and (2) the motion judge erred by finding that Ian Sugden, the City’s Director of Development Services and Engineering, acted in bad faith in processing Balmoral’s Exemption Application.

[14] On the bad faith issue, Balmoral concedes that the motion judge erred in finding that Mr. Sugden acted in bad faith in his dealings with Balmoral. In its factum, Balmoral says:

47. The Respondent did not seek any findings of bad faith against Mr. Sugden at the Motion nor did the Respondent seek any finding which required a finding of bad faith against Mr. Sugden.

48. The Respondent does not oppose the Appellants’ appeal regarding these findings by the Motion Judge.

[15] In our view, this is an appropriate and fair concession. We accept it. The motion judge’s conclusion that Mr. Sugden acted in bad faith in his dealings with Balmoral is set aside.

[16] That leaves the City’s statutory interpretation ground of appeal. We set out again ss. 9(6) and (7) of the Condominium Act:

9(6) Before making an application under subsection 51 (16) of the Planning Act, the owner of a property or a person authorized in writing by the owner of the property may apply to the approval authority to have the description or any part of the description exempted from those provisions of sections 51 and 51.1 of the Planning Act that would normally apply to it under subsection (2).

9(7) The approval authority may grant an exemption if it believes the exemption is appropriate in the circumstances.

[17] The motion judge’s entire analysis on this issue was:

However, s. 9(6) of the Condominium Act does not make any provisions for conditions when Certificates for Exemption are sought. The Ministry makes this clear in its Guideline to Municipalities by stating, “No conditions of draft approval are required”.

[18] Balmoral agrees with the motion judge’s conclusion. It submits that s. 9(6) of the Condominium Act, by its terms, explicitly permits a property owner to apply for an exemption from the provisions of ss. 51 and 51.1 of the Planning Act. Those provisions, says Balmoral, constitute a complete code for subdivision control. In s. 51(25), approval authorities are authorized to “impose such conditions to the approval of a plan of subdivision as in the opinion of the approval authority are reasonable, having regard to the nature of the development proposed for the subdivision….” Following this general statement, there is a long list of categories where, potentially, conditions on development could be imposed. Balmoral’s position is that since ss. 9(6) and (7) of the Condominium Act establish an alternative approval route to the one set out in the Planning Act, the potential conditions under that Act cannot be introduced through the back door of ss. 9(6) and (7) of the Condominium Act. Accordingly, a property owner that makes an Exemption Application is entitled to a simple ‘Yes’ or ‘No’ answer from the approval authority; the authority cannot impose conditions on its potential ‘Yes’ answer.

[19] For several reasons, we are not persuaded by this submission.

[20] First, there is nothing in ss. 9(6) and (7) of the Condominium Act that prohibits the imposition of conditions as part of an Exemption order. These provisions simply establish an alternate route for a property owner to seek approval of its development project. In many cases, this is probably a desirable route for property owners because it has the potential to be simpler, faster and less expensive. That is probably why Balmoral invoked this route in this case. However, there is nothing in this context, let alone the actual words of ss. 9(6) and (7), to suggest that in addition to these virtues, the property owner is entitled to a straight-up ‘Yes’ or ‘No’ answer to its Exemption Application.

[21] Second, and related, the actual wording of s. 9(7) suggests the opposite of Balmoral’s position. Section 9(7) provides that the approval authority may grant an exemption “if it believes the exemption is appropriate in the circumstances.” In our view, there are probably many cases where an approval authority would welcome, along with the land owner, invocation of the Exemption Application process. As mentioned above, it is probably an attractive alternative to the formal Planning Act process. The broad wording of s. 9(7) set out above gives the approval authority the opportunity to balance the interests and submissions of the municipality and the land owner and achieve a disposition that is more nuanced, and potentially fairer, than a simple ‘Yes’ or ‘No’ result. That is what happened in this case; the City granted the Exemption Application, but with a single condition central to the City’s view of the appropriate use of the proposed residential units.

[22] Third, we observe that the City’s position is supported by ss. 8(1) and 10(2) of the Municipal Act, 2001, S.O. 2001, c. 25:

8(1) The powers of a municipality under this or any other Act shall be interpreted broadly so as to confer broad authority on the municipality to enable the municipality to govern its affairs as it considers appropriate and to enhance the municipality’s ability to respond to municipal issues.

10(2) A single-tier municipality may pass by-laws respecting the following matters:

6. Health, safety and well-being of persons.

[23] We agree with the City that the purpose of By-law 2014-75 was to protect the health, safety and well-being of prospective tenants and occupants of the townhouse units as well as protecting purchasers of the units. The stacked townhouses were built as single residential unit dwellings; they were not built to meet the additional safety requirements imposed on developments for a boarding, lodging or rooming house. The purpose of the condition attached to the Exemption Application was to notify all future unit owners and occupants that use of the units as boarding, lodging or rooming houses was not permitted due to health and safety hazards.

[24] Fourth, the motion judge erred by relying on the sentence “No conditions of draft approval are required” in a Government of Ontario booklet entitled Understanding the Subdivision & Condominium Application Process. This sentence has no application to this case because there is no draft plan of condominium approval in the case of a ss. 9(6) and (7) Exemption Application.

[25] For these reasons, we would allow the City’s appeal from the motion judge’s decision that the City did not have the authority to impose a condition on its approval of Balmoral’s Exemption Application.

B. Balmoral’s appeal

[26] Balmoral contends that the motion judge erred by determining the barrier-free accessibility requirements issue against it on the basis of mootness.

[27] We do not accept this submission. We agree with the motion judge that, in light of Balmoral’s own conduct, namely compliance with the City’s requirements with respect to the internal construction of the two units and failure to appeal the City’s decision, it was too late in the day for Balmoral to challenge the lawfulness of the accessibility component of the by-law.

[28] Accordingly, we would dismiss Balmoral’s appeal.

Disposition

[29] The City’s appeal is allowed and Balmoral’s action is dismissed. Balmoral’s appeal is dismissed.

[30] The issue of costs of Balmoral’s action and the motion for summary judgment is remitted to the motion judge. The City has been successful on both appeals. If the City seeks costs of the appeals, it should file its costs submissions (up to five pages) within 21 days of the release of this decision. Balmoral could then file its response (up to five pages) within an additional 21 days.

“Doherty J.A.”

“J.C. MacPherson J.A.”

“M.L. Benotto J.A.”