Court Information

Court: Ontario Court of Justice Region: Central West Region Location: City of Hamilton Date: January 31, 2018

Proceedings Commenced: 27 and 28 September, 2017 Decision Issued: 31 January, 2018

Parties

Prosecution: City of Hamilton

Defence: Glacier Trading Corporation

Appearances

For the Prosecution: G. Tennant

For the Defence: M. V. MacLean

Decision

Charge

[1] Glacier Trading Corporation is charged that on the 21st day of May, 2013, at the City of Hamilton, while being the owner of a property, municipally known as 520 James Street North, City of Hamilton, zoned D (Urban Protected Residential – 1 and 2 family dwelling, et cetera) did use or permit to be used the said building as a commercial business, contrary to City of Hamilton Zoning By-law 6593, as amended, contrary to s. 20(4)(a).

Background and Evidence

[2] The building at 520 James Street North, in Hamilton (apparently previously known as 500 James Street North), was first erected in the late 1940s and housed the Brill Shirts manufacturing facility.

[3] Brill Shirts was a manufacturer. In addition, at the subject location, it maintained offices and also sold shirts to the public (apparently on Saturdays).

[4] A building permit for an addition was issued in 1959.

[5] The operation continued for decades and apparently was taken over by other entities whose operations mirrored those of Brill Shirts. There are short, unexplained gaps in the historical records produced by the defendant.

[6] The next owner was Dowser Yachts, owned by Art Sarna. The best evidence is that he used it for storage and retail sales. He also took a tenant, New Horizons, which use constitutes the subject of the current allegation. Mr. Sarna brought an application for a minor variance which did not succeed. It is unclear whether this application bore any connection to the operation of New Horizons.

[7] Subsequently, the building was sold to the defendant corporation.

[8] The real estate listing for that sale described the property as "Industrial. APPROX 12,000 SQ FT. WAREHOUSE W/DOCK & 2 LARGE DRIVE IN DOORS – APPROX. 2,000 SQ FT OF OFFICE/RETAIL SPACE – APPROX. 2500 SQ FT RENTABLE LOWER LEVEL AT FRONT & SAME AT REAR OF BLDG."

[9] At the time that the building was made available for sale, Lori James, owner of a clothing design and manufacturing operation in Toronto was interested in additional space. She learned that the property was available and inspected it. It turned out that she knew the vendor, with whom she met and spoke. She expressed enthusiasm at the prospect of being neighbours (since Mr. Sarna also owns the neighbouring building).

[10] She acquired the property and building in 2000. As part of the purchase process, Ms. James requested and received a Zoning Verification Report that declared the building to be in a "D" Zone, that is, permitting single and multi-residential uses.

[11] At the time of the closing of the purchase and sale, the building had the tenant mentioned above, operating a thrift store under the banner of New Horizons. The store sold used goods and, on occasion, clear out lots of merchandise. Its operation has remained substantially unchanged from when the original lease was established with Dowser Yachts.

[12] Ms. James occupied some if not most of the remainder of the building. She used the building for warehousing, and, apparently, for some periods of time, for manufacture of clothing lines.

[13] There is no evidence as to whether Dowser Yachts maintained any manufacturing operations in the building, although there is some suggestion that Dowser Yachts may have conducted some sales activities from the site.

Zoning History

[14] The By-law governing the construction of this building was City of Hamilton By-law 4797. This By-law, enacted in 1936, governed the construction of the building. This By-law addressed the possibility of "unsafe conditions as regards danger from fire and risk of accident" and enacted regulations "concerning erection, alteration, repair, removal and demolition of buildings and structures, their design, equipment, their occupancy, maintenance and use, and concerning other sundry related matters." There are schedules incorporated into the By-law, described as "SCHEDULE OF FIRE LIMITS". In the portions tendered as evidence, there does not appear to be anything in the By-law that constrains use of properties[1].

[15] The building's anticipated use for manufacture and (ancillary) sale of shirts and ties was consistent with Zoning By-law 6593, enacted 25 July, 1950. This By-law was amended by City of Hamilton By-law 9349, passed on 29 August, 1961[2].

[16] Pursuant to the 1950 By-law, the property fell in a "J" zone, which permitted light and limited heavy industrial uses. According to the By-law, it also permitted all uses authorized in zones "A" through "I". This included both Industrial Uses (including Textile and Textile Products) as well as commercial Uses. There is no evidence as to whether the retail use of the building was understood to be permitted as part of the broader authorization for "commercial uses" as permitted under other provisions of the By-law or as accessory to the manufacturing operation specifically contemplated by the "J" zoning.

[17] The By-law enacted in 1961 resulted in a change in zoning to "D", which permits single and multi-residential uses.

[18] As mentioned above, an application for site specific zoning was commenced in 1997 and denied in 1998.

[19] Finally, By-law 05-200 was enacted, consolidating and supplanting By-laws from various municipalities that were amalgamated into a new City of Hamilton in 1999.

[20] Of note, included in the recitations in the preamble to the By-law is the following: "the said new comprehensive Zoning By-law will be enacted and come into force and effect in several stages". Further, it states "this By-law is the first stage and is applicable to the Downtown area of the City, as hereinafter described and depicted".

[21] Notwithstanding that, s1.2 states "This By-law 05-200 shall be deemed to have come into effect on the date of the passing thereof by the Council of the City of Hamilton, subject to Final Approval of Official Plan Amendment No. 200."

[22] Final Approval was granted in 2012, and the City has, according to the evidence, has only been applying the By-law in stages. According to a prosecution witness, the provisions that would apply to the subject property have not been given effect as of the date of trial. Prosecution lead evidence to suggest that Council has enacted "downtown zones, parks and open spaces, institutional zones,…" Further, Council was scheduled to consider enacting implementation for "institutional zones, rural zones and commercial uses for only certain parts of the City" the month following the trial.

[23] That said, the witness advised it is her understanding that By-law 05-200 is not a zoning By-law and as such is outside of her area of expertise, and since she is Supervisor of Zoning, she is not familiar with it, nor how it conforms to the City's Official Plan[3].

[24] While it is clear that By-law 05-200 would apply to the subject property, it is not clear in which "zone" it would fall.

[25] The unsuccessful application for site specific zoning in 1997, was brought by Mr. Sarna. There is no evidence as to the content or intent of that application. However, Ed Fischer, a long time resident in the area and former councillor, confirmed that Dowser Yachts conducted retail sales, among other activities, from the subject property. The zoning application may have been related to a 1997/98 complaint regarding impermissible use of the building for "sorting and material handling". There is a suggestion that an order to comply was issued however, there is no evidence concerning the outcome of this action.

[26] At various times, zoning verification reports were prepared, including one issued to counsel for the defendant at the time of the purchase. That zoning verification report indicated that the building is situated in a zone for single and multi-residential uses. There was at least one zoning verification report issued that indicated "Commercial". The City's Supervisor of Zoning gave evidence that she believed this was in error. All Zoning Verification Reports admonish the person reviewing the Report that continuing, legal non-conforming use may have been lost and to take reasonable efforts to "satisfy himself" of the available use(s).

[27] After conveying the property to Glacier Trading Corp., Mr. Sarna complained to the City that the building was not being used in accordance with the zoning. City Inspectors attended the property in at least 2004, 2008 and 2012, and issued violation notices. After efforts on behalf of Ms. James, no further steps were ever taken by the City to enforce those notices and the files were closed. The reasons for the files being closed are not clear. There is some suggestion that compliance may have been achieved, and/or that the applicable zoning was ambiguous.

[28] A later investigation was commenced, again as a result of a complaint. This time, the present charge was laid.

Issues to be Decided

[29] The defence argues:

a. The City has not established the applicable zoning that applies to the property beyond a reasonable doubt;

b. In the event that the zoning issue resolves in favour of the City, the defendant has established a defence of due diligence.

[30] The Prosecution submits it has established the zoning applicable to the property beyond a reasonable doubt and that the defendant's actions fall short of what is required to established due diligence.

[31] Further, in spite of the fact that the defendant has not raised the issue, the City takes the view that the defendant cannot rely on the principle of issue estoppel, as case law clearly stands for the proposition that the City cannot waive enforcement of its zoning by-laws through lack of enforcement.

[32] The defence position is multifaceted:

a. Whether the Prosecution has proven beyond a reasonable doubt that the relevant zoning is "D", pursuant to the 1961 Bylaw?

b. In the event that the Court finds the Prosecution has met the burden in point (a), whether the defence has established a defence of legal non-conforming use?

[33] The defence position traces the zoning history. Based on the building permit issued at the time the building was constructed, the building was to be used for a factory. The sales activity may have been permissible as an accessory use or pursuant to the original By-law which permitted commercial activities. It is the defence position that the original zoning, which permitted textile manufacture as well as other commercial activities, justifies the use (presuming it was continued).

[34] Further, the defence points to the tax treatment (commercial) of the property. The President of the defendant corporation had brought an application to change the tax classification from commercial to residential (consistent with the recognized zoning) which was declined.

[35] As a further element of reasonable doubt, the defence asserts that the evidence of the conduct of retail is insufficient, since the Municipal By-law Enforcement Officer who laid the charge never actually set foot in the store to confirm that nature of activities taking place. Rather, he made observations of signage (name of business, "Open") along with prior municipal records to base his conclusion that impermissible retail activity was taking place.

[36] Evidence of the zoning verification report which reported a zoning other than single and multi-residential uses give rise to further doubt, in the defence view.

[37] Although not clearly articulated in this fashion, as a final element of this defence, the defendant may seek to rely on the amended By-law, enacted in 2005. In spite of the City's decision to give effect to the By-law in stages, the By-law seems to contemplate it coming into force when given final approval (which would predate the offence date alleged).

[38] In relation to legal, non-conforming use, the defence argues that the business has continued unabated since the initial construction. It relies on the original use for textile manufacture, as permitted under the aegis of light and heavy industrial, as well as the commercial (retail) activity, as contemplated by the commercial zoning. This stands in contradistinction to the Prosecution argument that the retail sales were permitted as accessory to the manufacturing operation, and not a separately established use.

[39] In the defence view, it has tracked continuous use from inception, or at least from the time that the By-law designating the area as single and multi-residential took effect.

[40] In any event, even if the defendant is not able to establish legal, non-conforming use, it seeks to establish that it has acted with due diligence in order to avoid the delict alleged. In this regard, it asserts that by having faced and responded to numerous prior violation notices, with none of those coming to any meaningful enforcement, it has acted diligently. It had relied on agents to assist in addressing prior complaints, and has enlisted the assistance of the local Councillor.

Analysis and Reasoning

[41] In my view, some of the defence submissions are immaterial. While it may be that the property has been taxed as "commercial", that cannot be determinative. I have no information before me to indicate that there are different "commercial" tax rates which may apply, or whether that is a generic designation that effectively stands for "not residential". It is clear that the property is not "residential", and its classification as "commercial" sheds no light on the issues before me, a point conceded by the defence.

[42] The ambiguity arising from the City's issuance of a single zoning verification report which differed from virtually all the others cannot be persuasive either. I am particularly mindful that on acquisition of the property, the defendant corporation obtained a zoning verification report that identified the zoning as "residential".

[43] It is troubling that the seller was the subject of a zoning violation notice, sought but did not obtain a minor variance, advertised the property as including "retail", and then brought repeated complaints to the City for what is most likely the same impugned activity. The documents produced by the defence (from the purchase and sale) provide no hint that the vendor had communicated any information about the lease giving rise to a complaint or that a zoning application to regularize its operation was denied.

[44] In respect of the argument that the current use of the building has not been sufficiently established by the prosecution, I would agree that were that the only evidence for me to consider, it may be a viable issue. However, the evidence of several witnesses clearly establishes how the building is being used (ie for retail sales by the tenant New Horizons). Indeed, in submissions before the court in support of motions to have the proceeding quashed as it failed to establish a prima facie basis for a successful operation, the President and owner of the building argued that the operation of New Horizons generates only a nominal rental income to the owner and would have to close down were its operation found to be impermissible. Similarly, other defence witnesses gave extensive evidence about the sales activity conducted by New Horizons. It is therefore somewhat disingenuous to then argue that the evidence before me fails to establish the nature of that use.

[45] In my view, there are two primary issues to be determined. First, what is the applicable zoning. If I find that the appropriate zoning is single and multi-residential, has the defendant established a legal, non-conforming use?

[46] It is clear that when the building was first constructed, there were in place no by-laws regarding use. When the first use by-law came into effect in 1950, the building use qualified for the manufacturing operation under the aegis of the specific "J" zone, and with respect to the retail and office uses, either as an accessory use within the "J" zone, or more broadly under "commercial" uses contemplated by other zones that were incorporated into the "J" zone by virtue of the by-law itself.

[47] When a new By-law was adopted in the early 1960s, the original use(s) continued and was or were permitting as legal, non-conforming uses pursuant to the By-law.

[48] It appears that the uses as a manufacturing facility, including materials storage and handling (most likely associated with manufacturing), as well as retail and office uses, continued unabated through to at least the early 1990s. I rely on the evidence of Mr. Fisher, a former City Councillor and long-time area resident, who is able to say that he was unaware of any periods during which such uses were discontinued. Reference to various business directories is supportive of this evidence, although not dispositive.

[49] Accordingly, I accept that the defendant has made out, on reasonable and probable grounds, that the commercial-retail use has been on-going.

[50] In making this finding, I am also mindful that the City provided specific Notices of Zoning Violations on at least three occasions. The defendant responded to these by asserting its claim of legal non-conforming use. None of those prior Notices lead to prosecution and appeared to have been abandoned by the City. This is consistent with the defendant's view that it had successfully established a status of legal, non-conforming use.

[51] I am alive to the issue raised by the City that the original use was only incidental to the original manufacturing use. The City relies on the cases which stand for the proposition that ancillary or accessory uses need to be "customarily incidental" to the original use.

[52] In my view, the ambiguity that arises from uncertainty about the basis for the use of the building when the amended zoning by-law came into effect in the 1960s (ie, whether the retail was understood to be permitted only as accessory to the primary use or under the broader heading of commercial use), does not denigrate from the defence position that commercial uses were permitted, albeit in various forms.

[53] Alternatively, I am alive to the fact that the most recent zoning By-law, passed in 2005 and coming into force in 2012, introduces a further ambiguity. Section 1.2 of the By-law deems coming into force on the day the By-law is passed, subject to final approval. The By-law does not state whose final approval is required, however, evidence suggests that such final approval reflects approval by the Ontario Municipal Board, which is understood to have been granted in 2012 which predates the date of this alleged offence.

[54] The prosecution lead evidence to confirm that the By-law is being implemented in stages and that amended zoning for the subject property has not yet been put into effect. There was some evidence which I do not find to be determinative, to suggest that phasing is being approved by action of Council. However, there was no specific evidence of which zone the property now falls within, nor by what authority the phasing was being established.

[55] Applying rules of statutory interpretation, I cannot find that the By-law precludes use of the property for retail activities as of its coming into force. For this reason as well, the prosecution case cannot succeed.

[56] Finally, there remains the issue of due diligence.

[57] First of all, I agree and accept that post-offence behaviour of the defendant does not found a defence of due diligence. That Ms. James reached out to the local councillor after receiving the summons in relation to this charge, or that she spoke with City officials about finding a way to resolve any issues, does not assist the defendant.

[58] That said, while the prosecution holds that defence actions in responding to earlier Notices are not sufficient to establish due diligence, and relies, in addition, on the cases which support the view that the City cannot waive enforcement of its By-laws through inaction, I accept that this is not the thrust of the defence position. The defence argues that, taken in context, its actions in responding to the prior complaints, together with the fact that none of the prior complaints led to further enforcement actions or prosecution – the best evidence is that they were abandoned by the City – establishes that they acted with due diligence. I agree.

[59] The prosecution relies on Immeubles Jacques Robitaille Inc. c. Quebec (Ville) for the proposition that the defendant cannot rely on the lack of enforcement efforts by the City as a basis for its defence of due diligence. The Court held "In short, the doctrine of issue estoppel cannot be relied upon as a defence in the case of a regulatory offence". In part, this is founded on the principle that the municipal by-law "does not authorize the municipality to consent to a non-conforming us."

[60] The case before this Court is distinguishable. In Immeubles, the Court was dealing with non-enforcement by the municipality prior to the charge against the defendant. In this case, the municipality initiated multiple enforcement efforts relating to the charge, specifically issuing a number of Notices of Zoning Violation. In each instance, the City would have had grounds to believe that an offence was being committed, and, were that true, would have been able to pursue the matter to prosecution, and on conviction, sought a fine as well as an order of prohibition. The fact is that in each case, the municipality elected not to pursue that route. There is no clear evidence before the Court as to why prosecution did not ensue, following the Notices of Violation. Nor was there any evidence to suggest that the municipality was reserving its rights to pursue prosecution at some later date.

[61] In this sense, the defence is not relying on the principle of issue estoppel as discussed in Immeubles, but rather a passionately held belief that whatever their efforts to rebuff the earlier Notices of Zoning Violation, they must have succeeded and were free of risk for continuing in their use of the property. This was not because they had never been faced with prior enforcement efforts by the municipality, but because those enforcement efforts had been abandoned for whatever reason.

[62] Accordingly, even if the prosecution case were to establish a prima facie case, in spite of the doubt as to the zoning applicable to the subject property on the date of the alleged offence, or the defence established that the use was a legal, non-confirming use, or, in the final alternative, the defence acted with due diligence to avoid acting in a way as to offend the By-law.

[63] As a result, the charge is dismissed.

[64] I wish to thank the counsel on both sides for their able and thorough submissions in this case. The history of these proceeding has been extremely protracted, complicated in no small part by motions which could not have succeeded. It was only by retaining counsel that the defence was finally able to present a cogent case with a result that will no doubt be gratifying to the defence. It is perhaps regrettable that so much effort was directed at anything but simply litigating the issues animating the defence; had this been done, the matter could have been disposed of far more expeditiously.

Conclusion

Issued at Hamilton, Ontario, January 31, 2018

His Worship Donald Dudar Justice of the Peace

Footnotes

[1] Only selected extracts from the By-law were filed with the Court.

[2] As a result of Ontario Municipal Board proceedings, that By-law came into force in 1965.

[3] Which was not put before the Court in evidence.