The Regional Municipality of Waterloo v. Grerei Investment Limited, 2020 ONSC 5613

COURT FILE NO.: DC-19-0000006400ML DATE: 2020-09-22

SUPERIOR COURT OF JUSTICE – ONTARIO DIVISIONAL COURT

RE: THE REGIONAL MUNICIPALITY OF WATERLOO, Appellant (Moving Party) AND: GREREI INVESTMENT LIMITED, Respondent (Responding Party)

BEFORE: Mr. Justice D.A. Broad

COUNSEL: Richard A.F. Brooks, Counsel for the Applicant (Moving Party) David Sunday, Counsel for the Respondent (Responding Party)

HEARD: August 19, 2020

ENDORSEMENT

Introduction

[1] The Moving Party (the “Region”) moves for an order for leave to appeal to the Divisional Court from the Order of the Local Planning Appeal Tribunal (the “LPAT”) issued November 20, 2019 (the “Decision”) and the Order of the LPAT issued April 23, 2020 following the Region’s request for a review.

[2] The Decision allowed the appeal of the responding party (“Grerei” or the “Developer”) from the decision of the Region to dismiss Grerei’s complaint filed under the Development Charges Act, 1997, S.O. 1997, c. 27, as amended (the “DC Act”) against the Region’s application of its Development Charge By-Law No. 14-046 (the “DC By-law”).

[3] The Region applied the DC By-law to disentitle Grerei to the benefit of the discounted “non-residential (industrial)” rate (the “industrial rate”) for the development charge to be levied on a new development being undertaken by Grerei on a property in the City of Cambridge (the “Property” or the “Development”). The DC By-law has two types of non-residential development charges: “Non-Residential (industrial)” (the “industrial rate”) and “Non-Residential (excluding industrial)” (the “non-industrial rate”). The industrial rate was set at 50% of the non-industrial rate.

[4] As a result of the decision of the LPAT, upheld following a review, the Region was ordered to apply the industrial rate (and not the non-industrial rate) for the development charge under the DC By-law in respect of the Development and to repay to Grerei the amount of the development charge it paid in excess of the industrial rate.

[5] For the reasons that follow, the Region’s motion for leave to appeal is dismissed.

Exercise of Discretion to Give Reasons

[6] I am cognizant of the general practice of the Divisional Court not to give reasons when granting or refusing leave to appeal.

[7] The reasons behind the practice were recently reviewed by Corbett J. in the case of Westhaver Boutique Residences Inc. v. Toronto, 2020 ONSC 3949, applying his earlier decision in Silver v. Imax, 2011 ONSC 1035, 105 O.R. (3d) 212. (See also Lokhandwala v. Khan, 2019 ONSC 6346, 34 R.F.L. (8th) 139)

[8] Corbett J. noted in Westhaver that the practice in the Divisional Court not to give reasons mirrors the practice in the Court of Appeal and the Supreme Court of Canada on motions for leave and is rooted in sound reasons of principle. The principles apply equally to motions for leave to appeal in the Divisional Court argued before a single judge and motions for leave to appeal heard in writing by a panel of three judges (see para. 2).

[9] Corbett J. offered three reasons supporting the practice not to give reasons:

(a) decisions on motions for leave to appeal before the Ontario Court of Appeal and the Supreme Court of Canada are (almost always) rendered without reasons. The Divisional Court mirrors this common appellate practice;

(b) when leave is not granted, reasons that call into question some aspect of the decision below may increase uncertainty in the law and, in interlocutory matters, cause difficulties for the parties as the case moves forward. In any event, the parties already have reasons from the court below and no purpose is served by giving them a second set of reasons coming to the same conclusion;

(c) where leave is granted, the court granting leave should not constitute itself an additional member of the appeal panel, weighing in, in detail, on the merits of the appeal. Rather, the appeal panel will provide reasons on the appeal itself, and thus, little purpose is served by providing elaborate reasons on leave decisions.

[10] At paragraph 4 of Westhaver Corbett J. confirmed that it is ultimately in the discretion of a Divisional Court judge deciding a motion for leave to appeal to give reasons for her or his decision, but he noted that this discretion ought to be exercised sparingly.

[11] For the following two reasons, I have determined that it is desirable under the present circumstances to give reasons for dismissing the motion for leave to appeal:

(a) the Decision from which leave to appeal is sought is a final decision. Thus, unlike in the case of the dismissal of a motion for leave from an interlocutory order, there is little or no potential for reasons to cause difficulty for the parties moving forward;

(b) The Decision concerns a question involving the collection of public revenue and is not a private dispute. The ratepayers and residents of the Region, through their elected Council, would benefit from an understanding of the reasons for denial of the opportunity to take the issue involving the applicable development charge rate to an appeal before the Divisional Court.

Background

[12] The DC By-law requires the payment of prescribed development charges upon the issuance of a building permit for a development.

[13] In order to qualify for the industrial rate, a development is required to satisfy the definition of “Industrial” set forth in the DC By-law as follows:

(v) “Industrial” means a building or buildings or portion of a building that are to be used for and in connection with:

(i) the production, compounding, processing, packing, crating, bottling, packing or assembly of raw or semi-processed goods or materials (“manufacturing”) or Warehousing;

(ii) research or development activities in connection with the manufacturing;

(iii) retail sales by a manufacturer, if retail sales are an Accessory Use at the Site where manufacturing is carried out; or,

(iv) office or administrative purposes if they are:

1. carried out as an Accessory Use to the manufacturing or Warehousing; and

2. in or attached to the building or structure used for such manufacturing or Warehousing.

[14] “Warehousing” is defined in the DC By-law as meaning “a building in which the main use is box storage and/or wholesale distribution of manufactured goods or materials.”

[15] As will be seen, the issue before the LPAT in determining whether the Development qualified for the industrial rate centred on the application of the phrase “that are to be used for” in the definition of “Industrial” in the DC By-law.

[16] Grerei does not carry on an industrial business. At the time of application for a building permit it was not proposing to operate an industrial enterprise in any part of the Development. Grerei is in the business of building and leasing non-residential buildings. Thus, it was not possible for the Region or for the LPAT to make a determination, based upon the nature of Grerei’s business alone, of whether the building or buildings comprising the Development “are to be used for” one or more of the uses falling within the definition of “industrial.”

[17] The Industrial M-3 zoning on the Property permits uses that fall within the definition of “industrial” in the DC By-law as well as certain uses falling outside that definition.

[18] At the time of its application for a building permit, Grerei had not entered into a lease with a tenant or tenants in respect of the Development but had listed it for lease with a real estate broker. The real estate listing stated that the Development was,

“IDEAL FOR:

• Manufacturing/Packaging

• Distribution/Warehousing

• Wholesaling plus other industrial related uses

• Data/Technology services

• Marketing, Media, Printing Services”

[19] Grerei’s representative acknowledged at the hearing that the latter two uses promoted in the listing were not “industrial” uses pursuant to the DC By-law.

[20] Grerei led the following evidence at the hearing:

(a) the design characteristics of the building making it specifically suited to light industrial and warehouse use;

(b) the existing industrial uses at Grerei’s nearly identical building located on a nearby property;

(c) the overall site plan called for a development concept for the subject lands as an “Industrial Mall” with the total anticipated buildout of six industrial buildings;

(d) the previous leasing interest from a furniture manufacturer;

(e) Grerei’s ongoing efforts to market the building to industrial users;

(f) the leasing of Grerei’s other buildings on the subject lands and other nearby properties to industrial users;

(g) the industrial character of the neighbourhood and neighbouring uses;

(h) the “Business Industrial” designation of the subject lands in the local Official Plan;

(i) the industrial “M-3” zoning;

(j) the “Industrial Mall” zoning classification of the building and other existing and proposed buildings on the subject lands;

(k) the construction of the building having been authorized pursuant to an Industrial Building Permit; and

(l) Grerei’s expectation, based on its then current and past experience at other Cambridge properties, that the building would be tenanted by industrial users.

[21] It was the Region’s position at the LPAT hearing that the phrase “are to be used” in the DC By-law, by its nature, requires certainty. It argued that the evidence clearly indicated that no such certainty existed at the time of the building permit or at the time of the hearing based upon a number of factors including,

(a) Grerei is a developer and landlord and does not engage in activities that would meet the definition of “industrial” at the development;

(b) the development was not leased and accordingly no one knows with certainty what the end tenants will be;

(c) The M3 zoning allows numerous uses for the development that would not meet the definition of “industrial” in the DC By-law;

(d) Grerei’s real estate listing promoted uses for potential tenancies which do not meet the definition of “industrial”;

(e) Grerei leases space in its other developments to tenants that do not meet the definition of “industrial”;

(f) the development is vacant and can be modified to the end user’s needs; and

(g) a “finishing” commercial building permit could be obtained for all or part of the development once the actual tenant(s) are secured.

The LPAT Decision

[22] The LPAT member, in her Reasons, found as follows:

(a) the onus is on Grerei to prove that the building satisfies the definition of “industrial”;

(b) the standard of proof is the civil standard: proof on the balance of probability;

(c) the evidence was that the design of the building is intended for light industrial and warehousing uses. The building comprising approximately 50,000 ft.² is classified as an Industrial Mall and is so configured that it may be partitioned into five units;

(d) the building is constructed to the “F2” standard (Medium Risk Industrial) under the Building Code;

(e) although the building is currently vacant it is Grerei’s expectation, based on its current and past experience, that it will be occupied by light industrial and warehousing users. Grerei has made repeated ongoing efforts to market the building to industrial users;

(f) the Region denied the application of the reduced Industrial rate for the development charge on the basis that there could be permitted uses in the building that would not meet the DC By-law’s definition of “industrial”, such as a caterer’s establishment or a heating and cooling business, which would also want access to a large space and loading doors. This was based upon speculation. There was no evidence that at the time the permit was issued Grerei intended any of those uses for the Development; and

(g) the fact that the building was not leased, either at the time of the application for building permit or on the date of the hearing, is irrelevant. There are no rules in the DC By-law that require a lease to meet the definition of Industrial.

Review Decision

[23] Following its release, the Region requested that the Decision be reviewed, as permitted by the LPAT procedural rules. As part of its request for review, the Region sought to introduce “fresh evidence” that, as a result of an internet search, it was discovered that three tenants then operated the following types of businesses at the Development:

i. wireless testing/certification;

ii. party/wedding supply rentals; and

iii. health products.

[24] The Associate Chair of the LPAT concluded that the Request for review failed to establish a convincing and compelling case that there was an error of fact or law in the Decision that was sufficient to warrant the exercise of the review powers authorized by the LPAT procedural rules.

[25] The Associate Chair was not satisfied that the Tribunal failed to weigh the evidence of Grerei’s real estate listing. She was not prepared to conclusively accept that two of the uses identified in the listing, which the Region pointed to as falling outside the definition of “industrial”, do not include manufacturing or warehousing uses. The description of those uses is to be read in the context of the heading to the listing which reads “Industrial Space for Lease.”

[26] The Associate Chair noted that the Tribunal ultimately decided that the incorporation of typical industrial and warehousing specifications in the design and construction of the building was central to the interpretive analysis of the DC By-law. The Associate Chair found that this evidence and the findings related to the building design and its actual construction outweighed the evidence of a real estate broker listing offering to lease industrial space.

[27] Moreover, she concluded that the Request failed to establish that there was “fresh evidence” that was not available at the time of the hearing “that is credible and could have affected the result.” The plain wording of the DC By-law does not appear to require that the entire building be used for industrial purposes and the Request does not satisfactorily explain what uses are in the remainder of the Development. She was not prepared to accept that the “fresh evidence” of apparent non-industrial uses in the Development after the hearing is either credible or could have affected the result in the Decision, given that she found no error in the Tribunal’s interpretive analysis of the DC-By-law.

Test for Leave to Appeal

[28] Pursuant to the Local Planning Appeal Tribunal Act, 2017, S.O. 2017 c. 23 Sched. 1, s. 37(1), an appeal from the Tribunal may be brought only with leave and on a question of law.

[29] A moving party seeking leave to appeal from a decision of the LPAT must demonstrate that,

(a) the proposed appeal raises a question of law;

(b) there is good reason to doubt the correctness of the LPAT decision appealed from with respect to the question of law raised; and

(c) the question of law is of sufficient general or public importance to merit the attention of the Divisional Court.

(See CAMPP Windsor Essex Residents Association v. Windsor (City), 2020 ONSC 4612 at para. 31 and My Rosedale Neighbourhood v. Dale Inc., 2019 ONSC 6631, 94 M.P.L.R. (5th) 151, at para. 4)

Is There Good Reason to Doubt the Correctness of the LPAT Decision?

[30] There is no dispute between the parties that the standard of review applicable to questions of law on a statutory appeal is correctness, which applies even if leave to appeal is required. (See Bell Canada v. Canada (Attorney General), 2019 SCC 66, 441 D.L.R. (4th) 155 at para. 4)

[31] The Region submits that the LPAT erred in law in three respects:

1. in applying a standard of proof of a balance of probabilities rather than a standard of certainty in determining whether the Developer had shown that the development or developments “are to be used for or in connection with” one or more of the listed uses within the definition of “Industrial” in order to qualify for the industrial rate;

2. in disregarding or failing to consider the real estate listing of the Developer which included uses falling outside the definition of “industrial” as evidence of its actual intentions at the time of the building permit application; and

3. the Associate Chair of the LPAT, in the Review Decision, failed to admit and consider the “fresh evidence” of what the Region alleged to be non-industrial uses carried on by certain tenants in the Development commencing after the date of the LPAT hearing.

[32] For there to be a “reason to doubt” the correctness of the Tribunal’s decision on a question of law raised by the proposed appeal, it is sufficient that the moving party be able to show that the legal issues are open to “very serious debate.” It is not necessary that the Tribunal’s decision be shown to be “wrong” or “unreasonable” or even that it is “probably wrong.”

(see CAMPP Windsor Essex at para. 35, and the cases cited therein)

[33] Addressing the “fresh evidence” issue first, the well-known test for admission of fresh evidence on an appeal derived from the case of R. v. Palmer (1979), 1979 8 (SCC), [1980] 1 S.C.R. 759 is as follows:

(1) the evidence should generally not be admitted if, by due diligence, it could have been adduced at trial;

(2) the evidence must be relevant in the sense that it bears upon a decisive or potentially decisive issue in the trial;

(3) the evidence must be credible in the sense that it is reasonably capable of belief; and

(4) it must be such that if believed it could reasonably, when taken with the other evidence adduced at trial, be expected to have affected the result.

[34] In my view, the proposed “fresh evidence” (the results of an internet search indicating that sometime after the LPAT hearing portions of the Development became occupied by tenants who appeared to be carrying on non-industrial businesses) does not satisfy the requirement of relevancy, as bearing upon a decisive or potentially decisive issue at the hearing.

[35] Paciocco and Stuesser, at page 30 of The Law of Evidence (rev. 5th ed.), state that “[e]vidence is relevant where it has some tendency as a matter of logic and human experience to make the proposition for which it is advanced more likely than the proposition would appear to be in the absence of that evidence.”

[36] The building permit for the Development was issued on August 12, 2016. Pursuant to the DC By-law the applicable development charge was payable at the time of issuance of the building permit. The determination of the applicable rate of the development charge was required to be carried out at that time.

[37] The Request for review of the Decision was made on December 12, 2019. At that time, the Region submitted that, at some time after the hearing, the Developer was able to lease the Development to third party tenants – one of which carries on business of renting out party and wedding supplies, which the Region stated is obviously a non-industrial use.

[38] In my view, this evidence does not meet the Palmer test. A use carried on by a tenant more than three years after the date when the determination of the applicable rate was made is not relevant to the validity of that determination. Moreover, when taken with the other evidence, it could not reasonably be expected to have affected the result. As observed by the Associate Chair on the Review, the characteristics of the design of the Development - which incorporated industrial and warehousing characteristics - were central to the outcome.

[39] With respect to the Region’s position that the Tribunal should have applied a standard of “certainty,” it argues that the broader context of the DC By-law supports what it submits is a plain reading of the provision of the By-law governing the application of the discounted industrial rate. It says that this reading of the By-law requires certainty respecting the use to be made of the Development and that requiring certainty on the future use of the Development assists in avoiding potential misuse of the discounted rate.

[40] The Region says that the LPAT erred in utilizing “circumstantial evidence,” such as the “character of the neighbourhood” and “the design which incorporates typical industrial and warehousing specifications” in concluding that the most probable use intended is “Industrial.”

[41] In my view, there is no reason to doubt the correctness of the LPAT in applying the standard of a balance of probabilities to the question of whether the Developer has shown that the Development or Developments “are to be used for” uses falling within the definition of “industrial.”

[42] Because the determination of entitlement to the discounted industrial rate is made by the decision-maker (the Region or the LPAT) at the time of issuance of the building permit and before the building is occupied, it cannot be based on an existing fact; it can only be based on a prediction of a future occurrence.

[43] The DC By-law does not set forth any factors to be considered in making the determination of whether the Development or Developments “are to be used for” industrial uses. Specifically, in the case of a development undertaken by a proposed lessor rather than by an industrial enterprise, the DC By-law does not require the existence of an executed lease for a proposed industrial use to satisfy the test.

[44] I do not accept the submission that the decision-maker is precluded from considering circumstantial evidence in making the determination. Indeed, as the determination relates to a future event, the only evidence that would be of assistance would be circumstantial – i.e. evidence from which an inference may be drawn that the future event (the use of the Development for an industrial use) will occur. Furthermore, the existence of a lease does not offer absolute certainty of the implementation of an industrial use when the Development is completed. The tenant may become insolvent before taking possession, may decide not to take possession in breach of the lease, or the lease may be terminated by agreement between the landlord and the tenant. The existence of a lease is only a piece of circumstantial evidence from which an inference of the future use of the development may be drawn. There is nothing in the DC By-law which precludes a finding of entitlement to the industrial rate in the absence of a signed lease. I am unable to accept the assertion in oral submissions of counsel for the Region that, in a case where the applicable zoning By-law permits non-industrial uses and the Developer is not itself an industrial enterprise, a signed lease is a pre-condition to the application of the discounted industrial rate.

[45] The criteria to be used by the decision-maker in making the determination of the applicable rate is not identified in the DC By-law. The decision-maker is therefore to be guided by the totality of available relevant evidence in deciding whether the Development or Developments “are to be used for” industrial uses.

[46] In Stetler v. Ontario Flue-Cured Tobacco Growers’ Marketing Board (2005), 2005 24217 (ON CA), 76 O.R. (3d) 321 (CA), the Ontario Court of Appeal confirmed at para. 79 that the normal civil standard of proof on a balance of probabilities applies in administrative proceedings, as follows:

There are only two standards of proof used in legal proceedings. In civil and administrative matters, absent an express statutory provision to the contrary, the standard of proof is on a balance of probabilities, while in criminal matters it is proof beyond a reasonable doubt. The well-established standard articulated in Bernstein and numerous subsequent cases is an evidential standard that speaks to the quality of evidence required to prove allegations of misconduct or incompetence against a professional. Thus, within the administrative context, it is accepted that strong and unequivocal evidence within the civil standard of proof is required where either the issues, or the consequences for the individual, are very serious. See for example, Brown & Evans, Judicial Review of Administrative Action in Canada, vol. 3 at 12:3200; Blake, Administrative Law in Canada at 66-67.

[47] The wording of the provision in the DC By-law does not import a requirement of certainty so as to modify the normal civil-administrative standard.

[48] The Region cited no authority in support of the proposition that a standard of proof requiring certainty may be applied in administrative proceedings, at least in the absence of clear language in the enactment requiring it.

[49] I am unable to find that there is reason to doubt the correctness of the LPAT Decision due to its application of the normal administrative standard of balance of probabilities in considering the phrase “are to be used for” in the DC By-law.

[50] With respect to the evidence of the real estate listing, the Region notes that the Decision, in listing factors that the Region relied upon in its written submissions as pointing away from the existence of certainty, failed to include the factor that the Region characterizes as the key piece of evidence – namely, the inclusion of possible non-industrial uses in Grerei’s real estate listing.

[51] I am not satisfied that the omission which the Region points to gives rise to reason to doubt the correctness of the LPAT Decision. Although the real estate listing was not specifically included in the recitation in the Decision of factors relied upon by the Region, it is evident that the Tribunal member was alert to it by her reference to it earlier in the Decision. Moreover, the fact that two non-industrial uses were referred to in the real estate listing under the heading “Industrial Space for Lease” was but one piece of circumstantial evidence to be considered, if deemed appropriate by the Tribunal member, along with all other relevant evidence in making the determination. As indicated above, the Tribunal Member found that that the incorporation of typical industrial and warehousing specifications in the design and construction of the building was central to the interpretive analysis of the DC By-law.

[52] Moreover, it has been observed that an assessment of whether there is reason to doubt the correctness of an impugned decision must be made by considering the decision as a whole, while remaining mindful that the subject of an appeal is the Tribunal’s decision itself and not its reasons for decision (see Snowden v. The Corporation of the Township of Ashfield-Colborne-Wawanosh, 2017 ONSC 6777, 68 M.P.L.R. (5th) 246 (Div. Ct.), at para. 11 and CAMPP Windsor Essex at para. 37). Doubt as to legal correctness must be based on the totality of the Tribunal’s decision, not on one isolated paragraph or phrase (see Concerned Citizens of King (Township) v. King (Township) (2000), 42 O.M.B.R. 3 (Div. Ct.) at para. 10).

[53] I find that, in considering the Decision in its totality, there is no reason to doubt its correctness.

Are the Questions of Law of Sufficient General or Public Importance to Merit the Attention of the Divisional Court?

[54] Verbeem J. summarized the principles bearing on a determination of whether a question of law is off sufficient importance in CAMPP Windsor Essex at para. 38, as follows:

The determination of whether the question of law raised by a proposed ground of appeal is of “sufficient general or public importance to merit the attention of the Divisional Court”, is a function of the nature of the legal issue engaged by the proposed ground, as opposed to the specific parties or the specific property involved. The identified legal issue, itself, must be of sufficient importance to justify leave. The asserted error of law must concern a matter that it is of general public importance or that is otherwise important to the development of the law and administration of justice. As a result, the determination of whether this analytical criterion is met may engage considerations of the frequency with which the particular legal issue arises and whether the issue has an effect for most municipalities in Ontario.

(see also Snowden at para. 11)

[55] In support of the motion for leave to appeal, the Region led affidavit evidence specifically identifying four other municipalities in the Province which allow discounts or exemptions in their development charge by-laws for certain types of developments, such as industrial. However, there was no indication that any of those municipalities used language in their respective by-laws which may be considered comparable to the language under consideration in the case at bar, or the extent to which those municipalities included rules or factors in their by-laws to be considered by a decision-maker in determining whether such discounts or exemptions apply.

[56] The Region raised the spectre of possible abuse of the discounted rate by other developers within the Region of Waterloo should the LPAT Decision be allowed to stand. I find that this concern does not support a finding that the issue of law relating to the application of the civil-administrative standard of the balance of probabilities to the DC By-law is of sufficient general or public importance to warrant the attention of the Divisional Court. This is particularly so given that it is within the power of the Region, however inconvenient it may be, to amend the DC By-law to address what it perceives to be adverse implications of the Decision in respect of future developments within the Region.

[57] In my view the Region has failed to demonstrate that the questions of law are of sufficient general or public importance to merit the attention of the Divisional Court.

Disposition

[58] The Region’s Motion for Leave to Appeal is therefore dismissed.

D.A. Broad J.

Date: September 22, 2020