CITATION: Goetz et al. v. The Corp. of the Municipality of South Bruce, 2022 ONSC 4388
DIVISIONAL COURT FILE NO.: 225/21
DATE: 2022/07/28
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Sachs, Stewart and Newton JJ.
B E T W E E N:
Mark Goetz, Dawn Kennedy and Patricia Goetz
J. Goudy, for the Respondents
Applicants
(Respondents in Appeal)
- and -
The Corporation of the Municipality of South Bruce
P. Courey and N. Miller, for the Appellant
Respondent
(Appellant)
HEARD at London : April 27, 2022, via Zoom
Mr. Justice W.D. Newton
Reasons On Appeal
Overview
[1] The Corporation of South Bruce (“South Bruce”) appeals the Order of the Acting Drainage Referee dated March 10, 2021, denying it costs of a hearing under the Drainage Act[^1] (“Act”) and seeks a declaration that a Referee under the Act may not preside over both the prehearing conference and the trial.
[2] The respondents, Mark Goetz, Dawn Kennedy, and Patricia Goetz (“Goetz”) cross appeal the order of the Acting Referee dismissing their application to prevent South Bruce proceeding with the changes to the Filsinger Municipal Drain on the grounds that the engineer’s report on the drain is not authorized by s. 78 of the Act.
[3] For the reasons that follow:
a) South Bruce’s appeal of the costs award is dismissed;
b) South Bruce’s request for a declaration is denied; and
c) The Goetz’s cross appeal is dismissed.
Background to Filsinger Municipal Drain
[4] The drain was established in 1970 under the authority of the report on the Filsinger Municipal Drain. This report was in response to a petition by landowners that included Mr. Filsinger.
[5] Much of the land drained is agricultural. The original drain was a closed, field tiled system with two culvert road crossings, outletting into a natural watercourse in the town of Mildmay.
[6] The respondents own the lands immediately “upstream” of the (formerly) Filsinger lands. In 2014, Mr. Spence, the current owner of the Filsinger lands for approximately 45 years, requested improvements to the drain because the drain was insufficient. An engineer’s report recommended that the drain be replaced. This led to the present dispute.
The Statutory Framework
[7] The Act provides a comprehensive scheme for dealing with drainage of surface water and the allocation of costs to the landowners of the properties that receive benefit from the drainage works. A distinction is made between a new drainage works and an improvement to an existing drainage works.
New Drainage Works
[8] Drainage works may be initiated by the Director appointed under the Act if the drainage work is required for agricultural purposes, an engineer or road superintendent on behalf of municipality, the majority of owners of lands in the area, or the owners of lands representing 60% of the land in an area (“Petition Drains”)[^2].
[9] In response to the petition, the Council of the municipality must decide whether to proceed. Where the municipality elects not to proceed with the drainage works there is a right of appeal to the Tribunal[^3].
[10] If the municipality decides to proceed with the drainage works the Council shall, by by-law, appoint an engineer to examine the area requiring drainage and to prepare a report which is to include:
(a) plans, profiles and specifications of the drainage works, including a description of the area requiring drainage;
(b) an estimate of the total cost thereof;
(c) an assessment of the amount or proportion of the cost of the works to be assessed against every parcel of land and road for benefit, outlet liability and injuring liability;
(d) allowances, if any, to be paid to the owners of land affected by the drainage works; and
(e) such other matters as are prescribed or provided for under this Act[^4].
[11] There are several appeals that an affected landowner may take once the report is either adopted or rejected by the municipality.
[12] If dissatisfied with the report of the engineer on the grounds that it does not comply with the requirements of the Act any owner of land affected by the drainage works may appeal to the Referee[^5].
[13] Another route of appeal is to the Tribunal where an owner of land is dissatisfied with the report of the engineer on the grounds that:
(a) the benefits to be derived from the drainage works are not commensurate with the estimated cost thereof;
(b) the drainage works should be modified on grounds to be stated;
(c) the compensation or allowances provided by the engineer are inadequate or excessive;
(d) the engineer has reported that the drainage works is not required, or is impractical, or cannot be constructed.[^6]
[14] An owner of land assessed for the drainage work may also appeal to the Court of Revision[^7] on any of the following grounds:
(a) any land or road has been assessed an amount that is too high or too low;
(b) any land or road that should have been assessed has not been assessed; or
(c) due consideration has not been given to the use being made of the land[^8].
[15] A further appeal from the Court of Revision can be made to the Tribunal[^9].
[16] Broad appeal powers are granted to the Referee who has original jurisdiction:
(a) to entertain any appeal with respect to the report of the engineer under section 47;
(b) to determine the validity of, or to confirm, set aside or amend any petition, resolution of a council, provisional by-law or by-law relating to a drainage works under this Act or a predecessor of this Act;
(c) to determine claims and disputes arising under this Act, including, subject to section 120, claims for damages with respect to anything done or purporting to have been done under this Act or a predecessor of this Act or consequent thereon;
(d) to entertain applications for orders directing to be done anything required to be done under this Act;
(e) to entertain applications for orders restraining anything proposed or purporting to be done under this Act or a predecessor of this Act; and
(f) over any other matter or thing in relation to which application may be made to him or her under this Act[^10].
[17] The Referee also has jurisdiction to hear appeals from the Tribunal[^11]. The Referee may dispose of any interlocutory application within the Referee’s jurisdiction and that order is final[^12]. The Referee may give directions relating to the conduct of proceedings before the Referee[^13]. The Referee has power to determine all questions of fact or law necessary to determine any matter within the Referee’s jurisdiction[^14]. The costs of any proceedings before the Referee are in the discretion of the Referee[^15] and the Referee may also assess costs or direct an assessment.[^16]
[18] A decision of the Referee may be appealed to the Divisional Court[^17].
Improvement of Existing Drainage Works
[19] Improvement is defined as “any modification of or addition to a drainage works intended to increase the effectiveness of the system[^18].”
[20] When the council of the municipality considers it appropriate to undertake a “major improvement project” “for the better use, maintenance or repair of the drainage works” the municipality may undertake and complete the project in accordance with report of an engineer without the petition required by s. 4[^19].
[21] The major improvement projects are defined as:
Changing the course of the drainage works.
Making a new outlet for the whole or any part of the drainage works.
Constructing a tile drain under the bed of the whole or any part of the drainage works.
Constructing, reconstructing or extending embankments, walls, dykes, dams, reservoirs, bridges, pumping stations or other protective works in connection with the drainage works.
Extending the drainage works to an outlet.
Covering all or part of the drainage works.
Consolidating two or more drainage works[^20].
[22] The same proceedings and appeal rights applicable to new drains apply to improvements of existing drain works[^21].
The Proceedings to Date
[23] South Bruce appointed the engineer by resolution dated June 27, 2016, to prepare the report in response to Mr. Spence’s Notice of Request for Drain Improvements dated September 2014. On-site and informational meetings were held.
[24] In the Report dated September 12, 2018, the engineer found that the Filsinger Drain was in a poor state of repair and not of sufficient capacity to drain the lands within the watershed at “today’s standards of drainage,” consequently allowing rainfall to collect on the Spence property causing crop losses and impairing the ability to conduct normal farming practices. Capacity issues had been identified since 2003. The engineer recommended constructing a new drainage system and the abandonment of the existing drain. The engineer assessed allowances, outlet liability and benefit to the affected landowners. The proposed outlet modification also provided an outlet for the town storm sewer system.
[25] Appeals by Goetz and other landowners to the Court of Revision were dismissed on March 5, 2019.
[26] Goetz and some of the affected landowners appealed to the Tribunal and at a hearing, held November 12 -14, 2019, the assessments to the Goetz properties were reduced.
[27] Goetz alone appealed to the Court of Drainage Referee in March 2020.
[28] Pre-hearing conferences were held on September 18, 2020, and on November 13, 2020, to settle the issues and the exhibits. At the November pre-hearing, South Bruce raised the issue of the recusal of the Referee from the hearing given that the Referee had conducted the prehearing conferences. Referee Wright declined to recuse himself given that he had not engaged in mediation or any other form of settlement or negotiation discussions with the parties.
[29] The hearing before the Referee proceeded for three days commencing February 1, 2021. By reasons dated February 12, 2021, the Referee dismissed the application and ordered that the expenses of the municipality should be levied upon the lands assessed for construction of the drain. Four witnesses testified: Stephen Brickman, one of the authors of the Engineer’s Report; Mark Goetz, one of the applicants and a farmer and landowner in the watershed; Sid Vander Veen, an engineer with expertise in drainage; and George Spence, a farmer and landowner in the watershed who had made the request for improvement of the Filsinger Drain.
[30] The Referee summarized the similarities and differences of the existing drain and the proposed improvements as follows:
- In this case, the Existing Drain and the Proposed New Drain have similar drainage areas. The Proposed New Drain follows substantially the same alignment as the Existing Drain except for the deviation around the Forman property was requested by that property owner to facilitate possible future development. The difference is largely in significantly increased capacity of the Proposed New Drain. The design of the Existing Drain is based on 7.2 mm of rainfall in 24 hours. The Proposed New Drain is based on 25 mm of rainfall in 24 hours in the agricultural areas to the south until the drain reaches the Urban Boundary of Mildmay where it steps up to an urban design standard for storm water management in urban areas, being the peak flow from a two-year rainfall event; based on pipe size this is a third more capacity than for the rural part of the drainage works. The type of pipe used also changes to reflect the urban setting, as compared to the rural parts of the drainage works.
[31] The issue before Referee Wright was whether what was recommended by the engineer was a new drainage works or an improvement of an existing drainage works. Central to his determination was consideration of the earlier decision of Referee Turville in Kilberg v. Wallace (Township)[^22]. In declining to follow the approach taken in Kilberg, Referee Wright noted:
With great respect to Referee Turville, I am satisfied that he was wrong in not taking into account that increasing the effectiveness of a drainage works as contemplated in the definition of “improvement” implies increasing capacity when warranted by current engineering standards and the circumstances of and around drainage works. I am satisfied that he did not have regard for the full suite of appeal rights available under section 78 which are comparable to those available for a section 4 petition when he expressed concern about assessed owners not having recourse under section 78. To the extent that Referee Turville’s ratio decidendi is influenced by his obiter dicta about section 19 of the Act applying only in the case of a petition drain, again, in my view, he is incorrect for the reasons indicated from paragraphs 60 to 86 above in these reasons.
Having regard for the comments of Laskin J.A. about weighing the advantages and disadvantages of correcting the error in the previous decision, and the effect and future impact of either correcting or maintaining it and considering the effect and impact on the parties and future litigants as well as the integrity and administration of our Drainage Act system, I am satisfied that I should not follow the No-Increase-In-Capacity principle and paradigm derived from the Kilberg v Wallace (Township) decision. That part of the decision is at odds with good professional engineering practise in Ontario, it is inconsistent with the Provincial funding regime for agricultural drainage under the Drainage Act and it is something which has been ignored as an aberration by the engineering profession since the decision was rendered in 1988. It does not represent the current state of the law under the Drainage Act.
On that basis, I am satisfied that section 78 of the Act authorizes that which is proposed by the 2018 Engineer’s Report, including the abandonment, pursuant to section 19, of those parts of the Filsinger Drain drainage works infrastructure which will be no longer useful or that will be supplanted by new, replacement drainage works infrastructure.
[32] After receiving cost submissions, the Referee, noting that he had broad discretion when dealing with costs, ordered that each party was to bear their own costs. He stated:
In this case the applicants raised and relied upon a case called Kilberg v. Wallace (Township) reported at 1988 ONRD 1. It is a 33-year-old decision rendered by Referee William Turville, Q.C. on March 17, 1988. That decision is at odds with the practise of Ontario drainage engineers as it pertains to the Capacity Issue, as that term is used in the reasons for my decision issued February 12, 2021.
The Appeal of the Costs Order
Positions of the Parties
[33] South Bruce seeks substantial indemnity costs arguing that tactics taken by the respondent’s unnecessarily caused increased costs municipality.
[34] Relying upon the decision of this Court in Dell v. Zeifman Partners Inc.,[^23] the respondents state that an award of costs is discretionary and appellate courts do not interfere with costs orders unless there has been an error of principle, or the award of costs is plainly wrong[^24]. The respondents submit that there is no error of principle the order is not plainly wrong.
Analysis and Disposition
[35] The decision to deny costs to South Bruce and have each party bear their own costs was based on the respondents relying upon authority that the Referee declined to follow. There is no error in principle in the exercise of the Referee’s discretion nor is the failure to award costs plainly wrong. The costs appeal is dismissed.
Conducting the Pre-Hearing Conference and Presiding at the Hearing
Positions of the Parties
[36] South Bruce seeks a declaration that a referee who conducts a pre-hearing shall not preside at the hearing. South Bruce raised the issue at the November 13, 2020, pre-hearing conference and Referee Wright declined to recuse himself since he not engaged in any settlement discussions with the parties.
[37] The respondents submit that, as no appeal from the procedural order was taken, South Bruce cannot challenge that ruling. The respondents also note that declaration is unnecessary as the prohibition is already stated in the applicable Rules.
Analysis and Disposition
[38] Section 8(3) of the Rules of Practice and Procedure in Proceedings before the Referee[^25] provides that a referee who conducts a pre-hearing shall not preside at the hearing. However, as noted by the respondents, the Rules also provide:
Non-compliance with rules
- (1) Non-compliance with these rules does not nullify a notice or proceeding, but the referee may set aside a notice or proceeding in whole or in part for the non-compliance.
(2) A motion to set aside a proceeding because of non-compliance with these rules shall be made within 30 days after the moving party discovers the non-compliance.
[39] No motion was brought to set aside the proceeding for non-compliance with s. 8(3).
[40] We agree with the respondents that a declaration is unnecessary given that an express Rule already exists. The application for a declaration is dismissed.
The Cross- Appeal – Is this an Improvement under s. 78 or a new Drainage Works?
Positions of the Parties
[41] The respondents argue that the proposed drainage works is not an improvement but rather the construction of a new drain which requires a s. 4(1) petition. They asked this court to reverse the decision of the Referee.
[42] They argue that had the Referee correctly interpreted the Kilberg decision the Referee would have reached the conclusion that the proposed drain was not an improvement but a new drain. The respondents submit that the Referee erred in law in interpreting s. 78(1) to include the abandonment of an existing drainage works and its replacement with a new drainage works. Further, the respondents submit that the Referee made a palpable and overriding error in the application of s. 78(1) in finding that the proposed drain is the continuation and improvement of the existing drainage works rather than a new drainage works requiring a petition. With respect to the Referee’s finding that the landowner’s appeal rights are the same in the case of a new drain or an improvement, the respondents argue that there is a significant limitation of the nature of an appeal of an improvement in that a landowner assessed on the existing drain is unable to contend that the cost of the work is out of proportion to the benefits that will arise.
[43] South Bruce argues that the Referee was correct in not following Kilberg. In Kilberg, the drain originated in the town, with capacity increasing fifteenfold, and the improvement included the extension of the drainage works upstream, not downstream.
[44] South Bruce submits the appeal rights of any affected landowner are identical whether a new - petition -drain or an improvement to an existing drain and notes that s. 48(1)(a) grants to a dissatisfied landowner an appeal on the grounds that the “benefits to be derived from the drainage works are not commensurate with the estimated cost thereof.”
Analysis and Disposition
[45] As this is a statutory appeal the standard of review on a question of law is correctness and the standard of review on findings of fact and of mixed law and fact is palpable and overriding error.[^26]
[46] Central to the respondents’ appeal is whether the Referee was wrong in not following Kilberg.
[47] Kilberg was an appeal pursuant to s. 47(1) to set aside an engineer’s report concerning Mayberry Drain. There, as here, the challenge was that the engineer had no authority to create the proposed drainage works as an improvement and that the proposed works should have proceeded as a new – petition - drain.
[48] The Mayberry Drain originated in the Town of Listowel and consisted of 3000 feet of drain with three branches. The Referee in that case noted:
It appears from the evidence there was little dispute that the course of the now Mayberry Drain 1985 followed generally that of the original one constructed under Colonel Archibald's report in 1952. It is as well quite evident from the exhibits filed that the drainage area in the 1985 report was similar to that drainage area in 1952, 125 acres to about 120 acres. Also, the changes in lands assessed were very minimal, approximately 3-4%. The evidence of the engineers established clearly that the old drain was out of repair and is presently in need of repair and improvement, and I so find. It was as well, established by the evidence that the change in land use from rural to urban in certain areas to commercial, caused a greater volume of water and requires a larger capacity to handle it.[Emphasis added.]
[49] The drainage engineer in that case gave expert evidence that the proposed drain “was no longer an agricultural drain, but was in essence, a storm sewer system having an increased capacity of some 15 times the original concept constructed in 1952.”
[50] The Referee in Kilberg concluded:
Section 78 or its predecessors was never intended to authorize as initiating municipality to
improve an existing municipal drain as designed in this report. The extent and ramifications are beyond that which the legislation could have intended when it was first implemented over 100 years ago. I do not subscribe to the view, that could otherwise prevail, that a municipality may do an improvement as proposed here and impose their will upon an unsuspecting public who is required to pay for it, without recourse. Many municipalities are guided by their engineers and it must not be seen that this section is self-serving. It is interesting to note that the first resolution of the Respondent dated September 10, 1981, was merely a request to vary the assessment under Sec. 76. Further, by resolution dated March7, 1983, the Respondent had again instructed the engineer to prepare a preliminary report under Sec. 10 of the statute. Council appears to have proceeded under this section believing there to be a Sec. 4 petition or gave little thought to the matter. In any event, the engineer should assist Council with the
knowledge he possesses, or as I indicated earlier, seek directions from the Referee (Sec. 106(4)).
To allow this report to stand as being authorized under Sec.78 could unleash a flood of new
drainage works under the pretext of an improvement to an existing drain. An owner assessed for benefit in need of improvement could in the final result under Sec. 78, trigger a totally new design and course as an improvement to existing scheme, and all other owners assessed key to the decision for benefit would have no recourse. This cannot be permitted.
[51] However, as argued by South Bruce, key to the decision in Kilberg was the fact that the improvement was that the existing drain was to be extended upstream. The Kilberg Referee noted that “any extension upstream of any size is beyond the scope of s. 78”.
[52] As found by the Referee in this case, the existing drain and the proposed new drain have similar drainage areas and substantially the same alignment. The difference is an increase in capacity by threefold in the agricultural lands to conform to current standards and address the long-standing problems as complained of by landowner Spence and the tie-in of the municipal storm sewer system at the outlet. The increase in capacity in Kilberg was fifteenfold on account of the upstream municipal storm sewers and change in land use from rural to urban. Here, there is no upstream extension of the drainage system, only the tie-in at the outlet. Accordingly, Referee Wright made no error in law in refusing to follow Kilberg which dealt with similar, but different, circumstances.
[53] Similarly, we find no palpable and overriding error in the application of s. 78(1) to the facts as before the Referee as outlined in his comprehensive and considered reasons. We agree with the Referee that improvement can include abandonment of a no longer sufficient drainage system. The respondents have not demonstrated that there is a difference in appeal rights between a petition drain and an improvement.
[54] The cross-appeal is dismissed.
Costs
[55] Since neither the appeal nor cross-appeal were successful, there will be no award of costs as agreed by the parties.
Newton J.
I agree _____________________________
Sachs J.
I agree______________________________
Stewart J.
Released: July 28, 2022
CITATION: Goetz et al. v. The Corp. of the Municipality of South Bruce, 2022 ONSC 4388
DIVISIONAL COURT FILE NO.: 225/21
DATE: 2022/07/28
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
Mark Goetz, Dawn Kennedy and Patricia Goetz
Applicants
(Respondents in Appeal)
- and –
The Corporation of the Municipality of South Bruce
Respondent
(Appellant)
REASONS ON APPEAL
Newton J.
Released: July 28, 2022
/cjj
[^1]: Drainage Act, R.S.O. 1990, c. D-17. [Act]. [^2]: S. 4(1). [^3]: "Tribunal" means the Agriculture, Food and Rural Affairs Tribunal. s. 1. [^4]: S. 8(1). [^5]: S. 47. [^6]: S. 48. [^7]: The Court of Revision consists of 3 to 5 members appointed by the municipality. S. 97. [^8]: S. 52(1) [^9]: S. 54. [^10]: S. 106(1). [^11]: S. 106(2). [^12]: S. 106(3). [^13]: S. 107(2). [^14]: S. 106(4). [^15]: S. 109. [^16]: S. 108. [^17]: S. 121. [^18]: S. 1. [^19]: S. 78(1). [^20]: S. 78(1) has since been amended to include “8. Any other activity to improve the drainage works, other than activity prescribed by the Minister as a minor improvement.” [^21]: S. 78(4). [^22]: 1998 ONDR 1. [Kilberg]. [^23]: 2020 ONSC 3881. [^24]: 2020 ONSC 3881 at para. 42. [^25]: O Reg 232/15. [^26]: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 at para. 37.[Vavilov].