COURT FILE NO. 548/06

DATE: 20070718

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

BETWEEN:

KRAFT CANADA INC.

Moving Party

• and -

MENKES LAKESHORE LTD., AMEXON HOLDINGS INC., PETRO J. DEVELOPMENTS LIMITED, 36 PARK LAWN ROAD INC., CITY OF TORONTO, PROUDFOOT MOTELS LTD. and SOUTH ETOBICOKE INDUSTRIAL EMPLOYERS ASSOCIATION

Responding Parties

BEFORE: HIMEL J.

COUNSEL: Timothy M. Lowman for Kraft Canada Mary Flynn-Guglietti and Gina Rogakos for Amexon Holdings Alan B. Dryer and Adam Brown for Menkes Lakeshore Ltd. Eileen P. Costello for Petro J. Developments Limited Mark R. Flowers for 36 Park Lawn Road Inc.

HEARD: June 27 and 28, 2007

REASONS ON MOTION FOR LEAVE TO APPEAL

[1] Kraft Canada Inc. (“Kraft”) seeks leave to appeal a decision of the Ontario Municipal Board issued on October 18, 2006. That decision approved applications by Menkes Lakeshore Ltd. and Amexon Holdings Inc. to amend the Official Plans and zoning by-laws to permit a mixed residential and commercial use designation of lands owned by each of the companies on Park Lawn Road in Toronto. The project consists of a ten storey office building, three residential towers with 1,200 units and a commercial podium on the Menkes lands and two residential towers with 588 units and a commercial podium on the Amexon lands. Kraft takes the position that the decision of the OMB is incorrect in law, that the Board breached principles of natural justice and that Kraft was denied a fair hearing.

FACTUAL BACKGROUND:

[2] Kraft has operated a large bakery adjacent to the Park Lawn Block in Toronto since 1948. The entire block comprises the land on the west side of Park Lawn Road between Lakeshore Boulevard West and the CN Railway lines. The Park Lawn Block lies within the South Etobicoke area, which is characterized by a mix of industrial and residential uses.

[3] Menkes Lakeshore Ltd. (“Menkes”) applied to the City of Toronto on May 2, 2002 and Amexon Holdings Inc. (“Amexon”) applied to the City on October 28, 2002 proposing amendments to the Official Plans and zoning by-laws to permit the development of a number of residential buildings in a mixed use concept. The City deferred consideration of the amendments being sought on the basis that a comprehensive assessment of the area should be done.

[4] The parties appealed to the OMB. During that proceeding, two parties were added: Petro J. Developments, which owns 42 Park Lawn Road, and 36 Park Lawn Road Inc., which owns 36 Park Lawn Road. Petro J. and 36 Park Lawn did not file applications with the City and had not appealed the City’s designation. However, on October 20, 2005, the OMB agreed to consider extending the same Official Plan treatment sought by Menkes and Amexon to the two “Intervening Properties”. The Board accepted the opinions of the market and planning experts who testified that it would be most appropriate for all properties on the Park Lawn Block to have the same designation. Petro J. and 36 Park Lawn each support the changes sought by Menkes and Amexon and ask that the decision of the OMB stand, extending those changes to their properties as well.

[5] Kraft, which owns a neighbouring property located on the east side of Park Lawn Road, used primarily for the bakery operation, received party status for the hearing before the OMB. Kraft opposed the development claiming that residential use was not compatible with its bakery operation.

[6] The hearing before the Board took place over fifty days. The evidence called addressed matters concerning land use planning including potential fiscal, traffic, noise and odour impacts. On April 28, 2005, the Board heard submissions from the parties and issued a procedural order requiring that experts have the opportunity to review each other’s reports by delivering them prior to May 31, 2005, and reply and meet prior to the hearing so that the parties would know the case they had to meet. Kraft attempted to introduce evidence concerning the noise issue after the experts of Menkes and Amexon produced their reports and without following that procedure. The Board did not allow Kraft to proceed in this fashion. Kraft did not seek to appeal or have that order reviewed at that time.

[7] The Board did not sit during the period November 2005 to April 2006. It issued a procedural order that new evidence or new studies would not be admissible when the hearing resumed. Following the hiatus, the Board refused to admit new reports adduced and refused to allow Kraft to cross-examine using new measurements from the expert. No challenge was taken at the time. No evidence was led regarding any study supporting City Council’s decision to identify the area as an “employment district”.

[8] The OMB issued a decision allowing the appeals in part and permitting the redevelopment with a mixed use concept consisting of residential and commercial uses over the entire Park Lawn Block including the Intervening Properties.

POSITIONS OF THE PARTIES:

[9] Kraft takes the position that the proposed redevelopment threatens the viability of the bakery operation. Kraft submits that the OMB erred in law in interpreting, and failing to apply the relevant legislation, regulations, policies, guidelines, and by-laws concerning mixed use designation. Between the time of the original applications and the hearing, the 2005 Provincial Policy Statement had come into force and the City of Toronto adopted the proposed new Official Plan. Kraft says the Board failed to consider and apply these documents. Furthermore, the Board violated principles of natural justice and denied Kraft a fair hearing. Kraft says the result is that it will face operating the Christie Bakery directly across the street from a large number of new residential units. Kraft filed a notice of appeal but then failed to perfect it in time. The parties moved to dismiss for delay but Ferrier J. granted an extension and set a timetable.

[10] Menkes and Amexon take a joint position that there is no reason to doubt the correctness of the decision of the OMB and that this matter is simply a dispute between neighbouring landowners as to the appropriateness of certain land uses to be permitted on private properties. The matter is not one of sufficient importance to merit the attention of the Divisional Court. They say that Kraft has not met the test for leave and the motion for leave to appeal should be dismissed. The two Intervening Properties support the decision of the OMB to amend the Official Plan and zoning by-laws to permit mixed commercial and residential uses. They ask that the approved changes apply to them as well. The remaining parties to the OMB hearing did not call a case or participate in the hearing and did not participate in the motion for leave to appeal to the Divisional Court.

ANALYSIS AND THE LAW:

Applicable General Principles:

[11] The standard to be applied on a motion for leave to appeal a decision of the OMB to the Divisional Court is that leave should only be granted where: (1) there is some reason to doubt the correctness of the Board’s decision on a point of law and (2) the point of law is of sufficient importance to merit the attention of the Divisional Court: see Toronto (City) v. Avro Quay Ltd., [2002] O.J. No. 1470 (Div.Ct.) at para. 22; Concerned Citizens of King Township Inc. v. King (Township), [2000] O.J. No. 3517 (Div.Ct.) at para. 10; Zellers Inc. v. Royal Cobourg Centres Ltd., [2001] O.J. No. 3792 (Div.Ct) at para. 9.

[12] On a leave application, the onus is on the party seeking leave: see Neebing (Municipality) v. Dale, [2003] O.J. 3793 (Sup. Ct.) at para. 12, 43 M.P.L.R. (3d) 263 (Sup.Ct.) at 6. Appeals are on questions of law alone and the court must give deference to the Board’s decision in keeping with the degree of independence and expertise of the Board and its members.

[13] Good reason to doubt the correctness of the decision does not mean that the decision is wrong or probably wrong. It is sufficient to show that the correctness of the order is open to very serious debate: see Ash v. Corp. of Lloyd’s (1992), 1992 7652 (ON SC), 8 O.R. (3d) 282 (Ont. Div. Ct.); Sunnybrae Farms Ltd. v. Ontario Egg Producers’ Marketing Board (1977), 3 C.P.C. 348 (Ont. H.C.) at 350. Furthermore, good reason to doubt the correctness of a decision means there is good reason to doubt the correctness of the entire order.

[14] In addressing the issue of sufficient importance, the court must be mindful that matters of importance must be general and relate to matters of public rather than private importance or matters must be relevant to the development of the law and administration of justice: see Rankin v. McLeod, Young, Weir Ltd. (1986), 1986 2749 (ON SC), 57 O.R. (2d) 569 (H.C.) at 575. For example, disputes about the use of specific properties may not be of sufficient importance to merit the attention of the court: see Central Park Lodges Ltd. v. Caregard Group (2000) 13 M.P.L.R. (3d) 204 (Div. Ct.) at para. 18.

Did the Board fail to apply the 2005 Provincial Policy Statement or the new Official Plan in reaching its decision and, thereby, commit an error of law?

[15] Kraft argues that the OMB erred in law by failing to apply to these applications the 2005 Provincial Policy Statement (PPS) which came into effect between the time of the original applications and the first hearing before the Board. The Policy Statement had been issued under section 3 of the Planning Act, R.S.O. 1990, c. P. 13, and, according to the moving party, the statement and amendments introduced fundamental changes. In particular, the 2005 PPS provided that the OMB must promote economic development and competitiveness by “…planning for, protecting and preserving employment areas for current and future use.” The Board determined that the 2005 PPS did not apply to the proceeding because the applications were brought before it came into force. Instead, it applied the 1996-7 PPS.

[16] Kraft argued that, by considering the related applications of the Intervening Properties and consolidating their requests with the earlier applications in order to treat the Park Lawn Block as a whole, the Board was required to apply the new Policy Statement. Policy 4.1 of the 2005 PPS stated that it applies to “all applications, matters or proceedings commenced on or after March 1, 2005.”

[17] In my view, the Board was correct in its interpretation that the applications before the Board were those submitted by Amexon and Menkes in 2002. The Board based its decision upon the principle outlined in the case of Clergy Properties Ltd. v. City of Mississauga, [1996] O.M.B.D. No. 1840, which held that the decision should be based upon relevant policies and legislation in place at the time of the application. The Board also based its decision on the clear language of the 2005 PPS.

[18] In counsel’s argument on this motion for leave, counsel relied upon Section 3(5) of the Planning Act, which states as follows:

A decision of the council of a municipality, a local board, a planning board, a minister of the Crown and a ministry, board, commission or agency of the government, including the Municipal Board, in respect of the exercise of any authority that affects a planning matter,

(a) shall be consistent with the policy statements issued under subsection (1) that are in effect on the date of the decision; and

(b) shall conform with the provincial plans that are in effect on that date, or shall not conflict with them, as the case may be.

[19] This provision, however, came into effect on January 1, 2007. I note the earlier provision used the words “having regard to”. In any event, a proper interpretation of the use of a Policy Statement is that the OMB is required to consider and take into account a policy statement but is not required to adopt it. The Board is also entitled to deference on planning matters.

[20] I do not see any basis to find that the Board erred in its consideration of the 1996-7 PPS and not the 2005 document. It did not err in finding that the 2005 PPS did not apply and that the Board’s jurisdiction was triggered by the appeals filed by Menkes and Amexon, which pre-dated the 2005 document. Adding the two Intervening Properties and modifying the Plan did not trigger the application of the 2005 PPS.

[21] Kraft takes the position that the Board erred in not considering the new proposed City of Toronto Official Plan. The Board, in its decision, considered the application of the MetroPlan, the City of Etobicoke Official Plan and the Park Lawn Road/Lakeshore Boulevard Secondary Plan and found that there was appropriate compliance with these documents. It stated that it was also considering the new Official Plan because the City was in the process of developing it at the time. It applied the principle enunciated in Boothman v. Newcastle (Town), [1993] O.M.B.D. No. 442, that the new Plan is “admissible, relevant but not determinative.” It considered the new Plan concerning the Park Lawn Block “as part of the Board’s practice to have regard to the decisions of Council.”

[22] Kraft also argues that the OMB erred by not giving weight to the City’s decision to identify the Park Lawn Block as an “Employment District” and designate it as an “Employment area”. Kraft says that that designation is strong evidence of its decision to protect the long-term future of the Park Lawn Block for employment purposes. The Board held that the fact that City Council designated the Park Lawn Block as an Employment Area in the new City of Toronto Official Plan was not a relevant consideration in that there was no evidence led supporting that designation nor any comprehensive review or analysis that set out the planning merits of that designation. Rather, it was Kraft that had sought the designation of the Park Lawn Block as an employments area and a decision was made without supporting planning analysis.

[23] In my view, there is no good reason to doubt that the Board’s application of relevant policy statements, legislation, and the various Official Plans was correct. The Board was satisfied that the proposed amendments conformed to the governing documents, from the perspective of impact upon employment, transit, traffic, density, compatibility with existing industry, noise, air quality, and odour. The Board held that a mixed use designation is an employment generating designation and supports economic development, all of which is consistent with the Provincial Policy Statement. Although the new City of Toronto Official Plan is not determinative in this case, the Board considered elements of the Plan that addressed the Park Lawn Block. The Board considered the issue of land use for employment purposes when considering the proposed amendments, accepted the market evidence and the expert opinion and held that “the proposals to redesignate to, and redevelop as, mixed -use are consistent with the Provincial Policy Statement.”

[24] In summary, the Board considered the applicable documents and attached weight to those which it deemed relevant to the case before it and there is no good reason to doubt the correctness of the Board’s decision in this regard.

Did the Board err in extending the re-designation applications to the two Intervening Properties?

[25] Kraft argues that the OMB erred in law and exceeded its jurisdiction by applying a mixed use (residential and commercial) designation to the Intervening Properties and amending the Official Plan relating to those properties, although Petro and 36 Park Lawn did not file a proposal for future use with the City nor did they make an application to the OMB to redesignate the properties as mixed use, or appeal the designation in the Official Plan. Kraft says that the Board erred in law by making a decision without having a comprehensive planning study available and by expanding Official Plan amendments to the Intervening Properties.

[26] In its decision, the Board noted that all of the expert planning witnesses who appeared before it agreed that the Park Lawn Block should “be considered as a whole” and agreed that the properties had similar characteristics. Kraft opposed the re-designation of the two Intervening Properties for the same reasons that it opposed the re-designation of the Menkes and Amexon properties.

[27] The Board’s decision to modify and approve the proposed Official Plan amendments is permitted under section 17(50) of the Planning Act. The Board had the jurisdiction to modify and approve all or part of the proposed Official Plan amendments before it: see section 22(11). The term “modify” has a broad definition providing a power to vary or amend: see Cloverdale Shopping Centre Limited v. Etobicoke (Township), 1966 205 (ON CA), [1966] 2 O.R. 439 (C.A.) at 454. In that case, the court held that modify included the concept of “extend or enlarge”. Restricting the Board’s power to modify is not limited to the boundaries of the land being considered: see Lawson Estates Ratepayers Assn. (Trustees of) v. Grace Communities Corp., [1993] O.J. No. 1808 (Div. Ct.) at 4. The Board has general jurisdiction to modify Official Plan amendments, which includes expanding boundaries of an Official Plan amendment and a change of use: see Maplehurst Bakeries Inc. v. Brampton (City), [1998] O.J. No. 6092 (Div.Ct.). The Board is not required to undertake a planning study before modifying an Official Plan amendment.

[28] In my view, the Board acted properly on the evidence before it concerning land use planning and accepted that the Park Lawn Block should be considered as a whole. It was sensible and practical to consider the use of the Intervening Properties at the same time as the Amexon and Menkes proposals and to address the question of Official Plan amendments in a comprehensive manner. What the Board did is precisely what is contemplated in the powers provided in the legislation.

Did the Board breach the rules of natural justice?

[29] Kraft says that the OMB violated the rules of natural justice by refusing to allow it to lead evidence showing that its operation would be adversely affected by the residential uses proposed by Menkes and Amexon. In particular, Kraft was not permitted to call further noise expert evidence addressing the sound impact of Kraft truck delivery activities and the question of truck banging.

[30] Under the Statutory Powers Procedure Act, R.S.O. 1990, c. S. 22 (SPPA), s. 25.0.1, the Board, as an administrative tribunal exercising a statutory power of authority, maintains absolute jurisdiction and control over its own procedure. It has the power to determine its own procedures and practices and to make procedural orders: see Ontario Municipal Board Act, R.S.O. 1990, c. O. 28, ss. 37(a) and 91; Ontario Municipal Board Rules of Practice and Procedure. Section 15 of the SPPA gives administrative tribunals the express statutory power to exclude evidence that is unduly repetitious.

[31] The authorities are clear that courts should give deference to procedural orders and rulings and should be reluctant to interfere with procedural orders within a tribunal’s jurisdiction: see Zellers Inc. v. Royal Cobourg Centres Ltd., supra; Lafarge Canada Inc. v. 1341665 Ontario Ltd., [2004] O.J. No. 1572 (Div. Ct.); Clark v. Essa (2007), 156 A.C.W.S. (3d) 516. A party who is dissatisfied with an order of the Board should seek leave to appeal in a timely manner before the Board commences its hearing on the merits: see South Etobicoke Residents Ratepayers Association. Inc. v. Toronto (City), [2001] O.J. No. 3182 (Div. Ct.). Refusing to admit evidence is not an automatic breach of natural justice that justifies intervention of the court. Only where the refusal to admit evidence has a significant impact on the fairness of the proceeding amounting to a clear denial of natural justice should the court interfere: see University du Quebec a Trois-Rivieres v. Larocque, 1993 162 (SCC), [1993] 1 S.C.R. 471 (S.C.C.).

[32] With reference to the procedural orders made by the Board in this case, I note that Kraft did not challenge the OMB rulings at the time they were made. Kraft was aware of the noise reports and witness statements from the noise experts and attended meetings in advance of the hearing as provided by the Procedural Order. Kraft could have attempted to bring a motion to seek to introduce additional evidence, a process which was provided in the Procedural Order. Kraft chose not to do so. Similarly, Kraft attempted to introduce evidence gathered during the hiatus, thus contravening the Procedural Order made on November 9, 2005. The Board ruled that the two new reports that had not been previously disclosed would not be admitted.

[33] There is no reason to interfere with the Board’s decision not to permit Kraft to introduce additional sound level histories and evidence relating to truck banging that it had before the hearing, but chose not to introduce. The Board excluded evidence about noise impact studies collected during the hiatus in the proceeding after other experts had been examined and cross-examined. Kraft chose not to comply with the Procedural Orders and sought to introduce evidence after a significant portion of the hearing had been completed. There was no breach of the rules of natural justice and there is no basis for the Divisional Court to interfere with the Board’s orders concerning the admission of evidence.

DECISION:

[34] In my view, there is no good reason to doubt the correctness of the decision of the OMB. The hearing took place over fifty days and involved evidence from twenty-five experts. The judgment rendered provides a careful analysis with detailed reasons for the decision set out in forty pages. In summary, this is not a case where “the correctness of the decision is open to very serious debate.” Moreover, it cannot be said that the proposed appeal is of sufficient importance to justify granting leave. There are no matters raised of broad significance which transcend the interests of the parties and warrant resolution by a higher level of judicial authority: see Klein v. American Medical Systems Inc., 2006 CarswellOnt. 2306 (Ont. Div. Ct.).

RESULT:

[35] For the reasons outlined, the application for leave to appeal the decision of the Ontario Municipal Board is dismissed. Having heard submissions on costs, I exercise my discretion under section 131 of the Courts of Justice Act and consider the factors outlined in Rule 57.01(1) of the Rules of Civil Procedure and fix costs of this motion for leave to appeal. Kraft, the moving party, shall pay costs in the amount of $61,000 inclusive of disbursements (which I find to be reasonable and necessary) and applicable GST to the responding party Menkes Lakeshore Ltd., costs of $40,783.24 inclusive of disbursements and GST to Amexon, costs of $17,000 inclusive of disbursements and applicable GST to 36 Park Lawn Road Inc. and costs of $ 9,000 inclusive of disbursements and applicable GST to Petro J. All costs are fixed on the partial indemnity scale and are payable within thirty days.

Date: July 18, 2007 ________________________

HIMEL J.