CITATION: 1386146 Ont. Inc. v. 2520650 Ont. Inc. et al., 2022 ONSC 5277
DIVISIONAL COURT FILE NO.: DC-21-1271-00
DATE: 2022-09-23
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Backhouse, Varpio, King, JJ.
BETWEEN:
1386146 ONTARIO INC.
Appellant
– and –
2520650 ONTARIO INC., MINISTRY OF NATURAL RESOURCES AND FORESTRY AND ONTARIO STONE, SAND & GRAVEL ASSOCIATION
Respondents
Christopher R. Lee/Ryan J. Wilson, for the Appellant
Christopher Statham, for the Respondent 2520650 Ontario Inc.
Zachary D’Onofrio, Heather Mackay and John Buhlman for the Respondent Ministry of Natural Resources and Forestry
Alyssa Armstrong, for the Respondent Ontario Stone, Sand & Gravel Association
HEARD: June 29, 2022
Varpio J.:
REASONS FOR DECISION
[1] The appellant, 1386146 Ontario Inc. (the “Licence Holder”), holds a Class “A” Aggregate Licence issued by the Ministry of Natural Resources and Forestry (“MNRF”). The licence gives the Licence Holder the right to extract aggregate from a property owned by 2520650 Ontario Inc. (the “Property Owner”). The Licence Holder has not extracted aggregate from the property since at least 2003. On August 30, 2017, the MNRF wrote to the Licence Holder advising the latter that the MNRF had decided that it would transfer the licence to the Property Holder.
[2] Pursuant to the governing legislation, the Licence Holder challenged this decision at the Local Planning Appeal Tribunal (the “Tribunal”). Prior to hearing the case on its merits, the Tribunal asked for submissions regarding the Tribunal’s jurisdiction to consider financial compensation to the Licence Holder as a result of the loss of the licence. After hearing those submissions, including submissions from the Ontario Stone, Sand & Gravel Association (“OSSGA”), the Tribunal determined that it did not have jurisdiction to consider financial compensation as a condition of approving the transfer, with reasons reported at 2020 97259. The Licence Holder appealed this decision prior to the completion of the hearing. Leave was granted by the Divisional Court.
[3] Several parties made submissions before this court. The OSSGA sided with the appellant. The MNRF and the Tribunal both sided with the respondent. The appellant also sought to adduce evidence at this appeal regarding the value of the licences in question.
[4] For the following reasons, I find that the instant appeal is premature. This court has previously held that the Tribunal’s function is to balance policy and factual considerations within the rubric of planning issues. Without a fulsome set of reasons concerning the factual basis for its ultimate decision and the policies considered when arriving at same, it is impossible to determine whether the Tribunal was correct when it held that it had no authority to consider the financial impact of the transfer upon the Licence Holder. This is especially so given the Tribunal’s apparent change in policy in that regard.
FACTS
[5] The Property Owner owns an aggregate pit located at Lot 9, Concession 4 in the Township of Whitchurch, Ontario. The Licence Holder possesses a licence pursuant to the Aggregate Resources Act, R.S.O. 1990, c. A.8 (the “Aggregate Act”) which enables it to extract aggregate from that property. There has been no extraction agreement in place between the Property Owner and the Licence Holder since 2003. The Property Owner submitted an application to the MNRF seeking to transfer the licence from the Licence Holder to the Property Owner. The MNRF agreed to transfer the licence.
[6] The Licence Holder referred the matter to the Tribunal pursuant to subsection 18(5) of the Aggregate Act. On February 19, 2019, the Tribunal raised three questions to be determined prior to hearing the matter on the merits:
Can the Tribunal order the respondent to pay the appellant financial compensation as a condition precedent for approving the Minister’s proposal to transfer the aggregate licence?
Can the Tribunal preclude a licence transfer on the basis of financial compensation concerns? and
Can the Tribunal impose conditions upon the Minister’s proposal pursuant to section 18(5) of the Aggregate Act?
[7] The Tribunal heard submissions on these points. No evidence was called.[^1] On December 1, 2020, the Tribunal issued a decision. At para. 80 of its decision, the Tribunal defined its policy scope:
The Tribunal’s consideration of the Minister’s proposal is within the context of the land use planning policies of the Province. Here, the relevant planning policy objective is found in the Provincial Policy Statement, 2014 and 2020 (“PPS”): “Mineral aggregate resources shall be protected for long term use” (s. 2.5.1). [Emphasis in original.]
[8] The Tribunal then rejected the appellant’s and the OSSGA’s submissions. At paras. 81 to 83, the Tribunal stated:
The position being taken by 1386146 and OSSGA is essentially that because a licence has economic value a licensee is entitled to be compensated when the licence is being transferred.
In taking this position, 138646 and OSSGA are fundamentally relying on the findings of the OMB[^2] in the Schneider and Maniplex decisions. Principally, Schneider [Schneider Sand & Gravel Ltd. v. Siep (1995), 32 O.M.B.R. 343] and Maniplex [Maniplex Investments West Carleton (Township) Pit Application (Re), [1997] O.M.B.D. No. 1166] are distinguishable from the current case in that at the time of those decisions (1995 and 1997, respectively) the [Aggregate Act] permitted the OMB to make a recommendation to the Minister, which is precisely what the OMB did in those cases. In Schneider:
… the Board recommends as follows: [emphasis added by the Tribunal]
… 2. That the Minister consent to the transfer of the licence in this case, but that as a matter of principle, the transfer of the licence be accompanied by a financial consideration nominally set at $3,00.00 to be paid to Mr. Schneider by Mr. Siep upon transfer of the licence as a condition of the licence;
In Maniplex, the OMB recommended that:
The Minister consent to transfer of the licence… and that the transfer of the licence be accompanied by financial compensation…
[9] The Tribunal then found that the Aggregate Act did not confer any express authority to make recommendations to the Minister regarding the transfer of licences. Accordingly, the Tribunal found that any power to impose conditions had to flow from the doctrine of necessary implication. At para. 87, the Tribunal considered the doctrine of necessary implication, as well as the policies supporting the Aggregate Act and stated:
In that same vein, the Tribunal cannot agree that the powers of the Tribunal to consider and order financial compensation is either necessary to achieve the objects of the [Aggregate Act] or essential to the Tribunal fulfilling its mandate. The mandate of the Minister, and the Tribunal on appeal, is to manage the supply of aggregate resources in a manner that protects the public interest. The public interest matters that the Minister and the Tribunal must have regard to do not include the financial interests of the landowner or the licensee. [Emphasis added.]
[10] At para. 95 of its decision, the Tribunal noted that the legislation did not allow the Tribunal to make recommendations regarding a licence transfer:
… The fact that the [Aggregate Act] allows the Tribunal to impose conditions, or to vary the Minister’s proposal, in some licencing scenarios but [not] others [sic], reinforces the argument that the Legislature did not intend for the Tribunal [to] have [sic] the power to impose conditions and more specifically, to order financial compensation in the case of a licence transfer…
[11] Finally, at para. 101, the Tribunal found that it did not have the authority to impose conditions on a licence transfer as a result of the doctrine of necessary implication:
The question then becomes does the Tribunal have implicit powers to make such an order. In that regard, the Tribunal is satisfied that s. 18(8) of the [Aggregate Act] is a true and accurate representation of the intention of the Legislature. In my view, the removal of the provision that previously permitted the Tribunal to make a recommendation, and given that s. 18(8) of the [Aggregate Act] does not permit the Tribunal to impose conditions, demonstrates that the Legislature did not intend for the Tribunal to have that power. It is also noteworthy that the iteration of the [Aggregate Act] currently being considered by the Legislature does not propose to change the language in s. 18(8).
[12] The appellant appealed this decision prior to the hearing on the merits.
POSITION OF THE PARTIES
[13] The appellants and the OSSGA submit that the Tribunal erred in finding that it could not consider financial consideration to the Licence Holder. The appellants and the OSSGA submit that failure to consider the financial impact would create a manifest unfairness and that the Tribunal’s interpretation of its own powers was incorrect given the power afforded to it by section 12 of the Local Planning Appeal Tribunal Act, S.O. 2017, c. 23, Sched. 1 (the “LPAT Act”).
[14] The respondents, the MNRF and the Tribunal all submit that the Tribunal’s interpretation of its authority was correct.
ANALYSIS
Standard of Review
[15] Given that the issue in question is a question of law, the parties agree – and this court accepts – that the applicable standard is one of correctness.
Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653, at paras. 36 and 37.
The Relevant Statutes
The [Aggregate Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a8/latest/rso-1990-c-a8.html)
[16] The object of the Aggregate Act is expressly set out in section 2:
The purposes of this Act are,
(a) to provide for the management of the aggregate resources of Ontario;
(b) to control and regulate aggregate operations on Crown and private lands;
(c) to require the rehabilitation of land from which aggregate has been excavated; and
(d) to minimize adverse impact on the environment in respect of aggregate operations.
[17] It is important to note that, during the 1990’s when Schneider and Maniplex were decided by the OMB, the objectives of the Aggregate Act were identical to those contained in the current legislation.
[18] Section 11 of the Aggregate Act sets out the procedure governing applications for licences. As part of the issuance process, the matter may be referred to the Tribunal for an adjudication. Section 11(8) of the Aggregate Act specifically provides the Tribunal with certain powers during such a hearing, including the power to impose conditions when granting licences:
Powers of Tribunal
(8) The following rules apply if an application is referred to the Tribunal:
The Tribunal may hold a hearing and direct the Minister to issue the licence subject to the prescribed conditions and to any additional conditions specified by the Tribunal, but the Minister may refuse to impose an additional condition specified by the Tribunal if he or she is of the opinion that the condition is not consistent with the purposes of this Act.
The Tribunal may hold a hearing and direct the Minister to refuse to issue the licence.
If the Tribunal is of the opinion that an objection referred to it is not made in good faith, is frivolous or vexatious, or is made only for the purpose of delay, the Tribunal may, without holding a hearing, on its own initiative or on a party’s motion, refuse to consider the objection. If consideration of all the objections referred to the Tribunal in connection with an application is refused in this way, the Tribunal may direct the Minister to issue the licence subject to the prescribed conditions.
If all of the parties to a hearing, other than the applicant, withdraw before the commencement of the hearing, the Tribunal may refer the application back to the Minister and the Minister shall decide whether to issue or refuse to issue the licence. [Emphasis added.]
[19] Section 13 of the Aggregate Act governs amendments to licences. This section also allows for a hearing at the Tribunal. Section 13(9) of the Aggregate Act states that the Tribunal has specific powers to impose conditions in hearings regarding amendments to licences:
Powers of Tribunal
(9) The Tribunal may direct the Minister to carry out, vary or rescind his or her proposal. [Emphasis added.]
[20] Specific to this case, sections 18(1) and (8) of the Aggregate Act govern the transfer of licences. Of note, these sections do not include the power to impose conditions on licence transfers:
Transfer of licence
18 (1) On application, the Minister may transfer a licence.
(8) The Local Planning Appeal Tribunal may direct the Minister to carry out or rescind his or her proposal.
The [LPAT Act](https://www.canlii.org/en/on/laws/stat/so-2017-c-23-sch-1/latest/so-2017-c-23-sch-1.html)
[21] The Tribunal is governed by the LPAT Act which, inter alia, gives the Tribunal certain powers. In this regard, section 12 of the LPAT Act states:
The Tribunal has authority to make orders or give directions as may be necessary or incidental to the exercise of the powers conferred upon the Tribunal under this Act or any other general or special Act.
The Tribunal’s Powers
[22] Statutory bodies may exercise only those powers granted to them expressly, or impliedly, by Parliament or the provincial legislation.
R. v. 974649 Ontario Inc., 2001 SCC 81, [2001] 3 S.C.R. 575, at para. 26.
[23] When reviewing a statute to determine the jurisdiction of the Tribunal, the words of the governing legislation are to be read in their entire context and in their grammatical and ordinary sense. They are to be interpreted harmoniously with the scheme of the legislation, the object of the legislation, and the intention of Parliament.
Rizzo & Rizzo Shoes Ltd. (Re), 1998 837 (SCC), [1998] 1 S.C.R. 27 at para. 21; ATCO Gas & Pipelines Ltd. v. Alberta (Energy & Utilities Board), 2006 SCC 4, [2006] 1 S.C.R. 140, at para. 37.
[24] As noted above, section 18(8) of the Aggregate Act provides only two explicit options to the Tribunal when considering a licence transfer:
(1) The Tribunal may direct the Minister to carry out the proposal; or
(2) The Tribunal may direct that the Minister rescind the proposal.
Given the foregoing jurisprudence and given the absence of an explicit power to impose conditions on a licence transfer, in order for the Tribunal to consider the financial impacts of said transfer, the Tribunal must derive that power as a result of the doctrine of necessary implication.
Necessary Implication
[25] Necessary implication may be acquired when the following conditions are met:
(a) the jurisdiction sought is necessary to accomplish the objectives of the legislative scheme and is essential to the Board fulfilling its mandate;
(b) the enabling act fails to explicitly grant the power to accomplish the legislative objective;
(c) the mandate of the Board is sufficiently broad to suggest a legislative intention to implicitly confer jurisdiction;
(d) the jurisdiction sought must not be one which the Board has dealt with through use of expressly granted powers, thereby showing an absence of necessity; and
(e) the legislature did not address its mind to the issue and decide against conferring the power upon the Board.
ATCO Gas & Pipelines Ltd., at para. 73.
[26] In determining whether implied powers exist, the legal provision in question must be considered in relation to other provisions in the legislation. The ultimate goal is to determine the clear intent of the legislature.
ATCO Gas & Pipelines Ltd., at paras. 49 and 77.
[27] The court may not simply ground implied powers as a result of only coherence, logic or desirability. Rather, the Supreme Court of Canada has held that implied power must be necessary for the administration of the terms of the legislation. A gap in the range of remedies provided in a statute does not mean that the legislature necessarily intended that the unstated remedies be incidental.
Canada (Human Rights Commission) v. Canadian Liberty Net, 1998 818 (SCC), [1998] 1 S.C.R. 626 at paras. 16 and 18.
[28] Finally, the function of a statutory body is of principal importance in assessing whether it is vested with an implied power to grant the remedy sought.
R. v. 974649 Ontario Inc., 2001 SCC 81, [2001] 3 S.C.R. 575 at para. 71.
The Tribunal and Appellate Review
[29] This court has held that the role of the Tribunal is one of balancing the factual and policy considerations underlying planning decisions. As was stated by Myers J. in My Rosedale Neighbourhood v. Dale Inc., 2019 ONSC 6631, 94 M.P.L.R. (5th) 151 (Div. Ct.) at para. 3:
Under s.37(1) of the Local Planning Appeal Tribunal Act, 2017, SO 2017, c 23, Sch 1, an appeal from the tribunal's decision lies to this court only with leave which may be granted on a question of law alone. That is, the Legislature has assigned to the tribunal alone the task of balancing the factual and policy considerations underlying planning decisions. The task of this court is limited to ensuring that when the tribunal exercises its exclusive decision-making authority, it applies the proper legal principles. [Emphasis added.]
[30] Inherent in such appellate review is the need to understand both the factual and policy underpinnings of a given decision. Without these underpinnings, an appellate court has no ability to adequately review a decision since the necessary preconditions for such a review are non-existent.
R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869, at paras. 28, 40 and 55.
Schneider and Maniplex
[31] As noted above, a key issue in the Tribunal’s ruling has to do with its interpretation of Schneider and Maniplex. The Tribunal distinguished these cases on the basis that the Aggregate Act, as it existed when Schneider and Maniplex were decided, empowered the OMB to make recommendations to the Minister when considering a licence transfer. While this is a relevant consideration, a further review of Schneider and Maniplex highlights another issue apposite to this appeal: the policies previously considered by the OMB.
[32] In Schneider, the OMB dealt with a situation where the OMB was asked to approve a non-consensual licence transfer. The OMB approved such a transfer and, at para. 19 and 20, the OMB recognized that an aggregate licence has an economic value:
The Board accepts that the resource may "belong" to the landowner, who in this case is the proposed recipient of the transferred licence, but the resource has no exchange value without an extraction licence. If a transfer is permitted, this owner will have been able to gain licence permission to extract the resource having paid no more than the fee required to apply for a transfer. He will not have occasioned any of the expenses ordinarily necessary to gain an extraction licence, yet he will be able to reap the remaining benefits of the resource.
Mr. Schneider says that this would not be fair. The Board agrees with this position. To ignore the economic value of the licence is to trivialize the process by which the licence is granted. The Board finds that the licence has value, a value that is some function of the resource and the value added by the applicant for the licence. The mere fact that Mr. Seip earnestly seeks to have the licence transferred is proof enough of the economic value to him of the licence.
[33] At paras. 21 and 22 of its decision, the OMB further found that, for policy reasons, financial compensation to the party losing an aggregate licence had to be considered by the OMB:
Furthermore, the Board believes that there may be important practical consequences that must be considered. Permitting an "automatic" transfer to the landowner after the lease has expired could have far-reaching undesirable implications for many current lessees and perhaps ultimately for the public. Some lessors of lands on which valid licences are held by others may decide not to renew their leases. Instead there may be some incentive to letting the lease lapse so that they can then keep the balance of the resource and gain the licence by "automatic transfer" from the current licensee for the mere price of an application fee. This and other possible consequences could yield uncertainty in the management of the resource that would not be consistent with the purposes of the Aggregate Resources Act, under Section 2, and with stated Ministry policy to maintain adequate supplies of the resource and protect the public's interest in an orderly marketplace for materials.
Consequently, the Board recommends to the Minister that the Minister consent to the transfer of the licence but as a matter of principle, the transfer of the licence be accompanied by some financial consideration. This is not to recognize the proposition that a licence is a right, or in some way, is akin to property. The Board would affirm that a licence is a privilege, held at the discretion of the Crown, and to be maintained upon satisfactory completion of certain obligations and conditions. Nevertheless, a licence when granted has value and can be seen to have economic value. Where a licence held by a licensee in good standing, is to be transferred without the consent of the licensee, compensation to balance the gains and losses of economic value between parties is warranted as part of the consideration of the merit of the transfer. [Emphasis added.]
[34] The OMB faced a similar situation in Maniplex. At paras. 21 to 23 of Maniplex, the OMB described its holdings in Schneider as follows:
In my view, Re Schneider stands for three things. First, the Minister can consent to transfer a licence without the consent of the licence holder. This does not mean that the licence must be transferred. It is still to be considered on its merits.
Second, a licence has value:
"The board accepts that the resource may "belong" to the landowner ... but the resource has no exchange value without an extraction licence. ..."
“To ignore the economic value of the licence is to trivialize the process by which the licence is granted. ... the licence has value, a value that is some function of the resource and the value added by the applicant for the licence."
Finally, there is the matter of equity: equity goes to the merits of the transfer, and compensation for the loss of the privileges granted by the licence goes to equity:
"Where a licence is held by a licensee in good standing, and is to be transferred without the consent of the licensee, compensation to balance the gains and losses of economic value between parties is warranted as part of the consideration of the merit of the transfer."
Mr. Polowin's submissions deal only with value added by the licence holder. They do not deal with the value added to the resource by the permission to extract that resource. Without that permission represented by the licence, the aggregate has no exchange value. As the Board held in Re Schneider a licence is not a right, or in some way akin to property, but a privilege held at the discretion of the Crown. Mr. Polowin's submissions do not take account of this privilege.
[35] Therefore, the OMB’s resort to equity occurred because the Aggregate Act did not explicitly contemplate a “hostile transfer” of a licence. Further, the Aggregate Act did not specifically direct the OMB to consider the financial positions of the transferor and the transferee as conditions precedent for the transfer of an aggregate licence. In Schneider and Maniplex, the OMB effectively held that principles of equity coupled with the policy objectives of the Aggregate Act required the OMB to consider such issues when determining whether to impose conditions on such a transfer.
Application to this Case
[36] In this case, the Tribunal stated in its decision that the sole relevant policy consideration was the need to “manage the supply of aggregate resources in a manner that protects the public interest. The public interest matters that the Minister and the Tribunal must have regard to do not include the financial interests of the landowner or the licensee”. As seen earlier in this decision, the OMB previously held it had to consider financial compensation when dealing with licence transfers. In the case before the court, therefore, the Tribunal effectively reversed course regarding this policy and found that the financial positions of the transferor and the transferee were no longer relevant considerations. Given the reasons in Schneider and Maniplex, the Tribunal needed to explain why this policy changed. Without such reasons, this court cannot provide a meaningful appellant review policy.
[37] Further, I agree that the Tribunal has no explicit power to make recommendations under the Aggregate Act. However, the doctrine of necessary implication is such that, if the previous policy regarding financial compensation remains in effect, the Tribunal must consider that policy when determining whether it has the power to enforce said policy as a result of necessary implication as described in ATCO Gas & Pipeline Ltd. It may yet be that the financial interests affected by the transfer may not meet the threshold associated with the doctrine of necessary implication. Such a finding, however, is a separate inquiry from whether, as a matter of policy, the Tribunal is capable of considering the financial interests of the affected parties.
[38] Compounding this issue is the fact that the Tribunal has not made any substantive decision with regard to the licence in question. It may well be that the substantive decision will provide a factual basis to determine why the Tribunal ruled as it did on the jurisdictional question. In the absence of a substantive decision, however, a reviewing court is not in a position to determine whether the policy and factual balance achieved by the Tribunal is legally correct as per My Rosedale Neighbourhood.
[39] Therefore, the Tribunal’s apparent change in policy regarding the relevance of financial compensation, coupled with the absence of factual findings on the hearing proper, are such that it is impossible to determine at this time whether the Tribunal was correct in its jurisdictional decision.
CONCLUSION
[40] Accordingly, the appeal is dismissed as it is premature. The matter is hereby remitted back to the Tribunal to complete the matter without prejudice to the appellant’s ability to argue this ground of appeal once the entire matter is decided by the Tribunal. It is possible that this ground of appeal will ultimately fail. It is possible that this ground of appeal will succeed. Given this latter possibility, I encourage the Tribunal to determine an economic value for the aggregate licence irrespective of its jurisdictional holding in case it ultimately becomes a relevant consideration.
COSTS
[41] The parties agreed:
if the appellant is successful, the respondent 2520650 Ontario Inc. shall pay $10,000 and the MNRF $20,000, (both sums inclusive of HST), for the costs of both the leave to appeal and the appeal proper;
if the appellant is unsuccessful, the appellant shall pay the respondent 2520650 Ontario Inc. $2500 and the MNRF $12,500 (both sums inclusive of HST), for the costs of both the leave to appeal and the appeal proper.
Costs as set out above shall be paid to the successful party in the cause.
Varpio J.
I agree.
Backhouse J.
I agree.
King J.
Released: September 23, 2022
CITATION: 1386146 Ont. Inc. v. 2520650 Ont. Inc. et al., 2022 ONSC 5277
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Backhouse, Varpio, King, J.J.
BETWEEN:
1386146 ONTARIO INC.
- and –
2520650 ONTARIO INC., MINISTRY OF NATURAL RESOURCES AND FORESTRY AND ONTARIO STONE, SAND & GRAVEL ASSOCIATION
REASONS FOR DECISION
Released: September 23, 2022
[^1]: There is a dispute as to whether this lack of evidence was on consent. Given my decision, I need make no finding in this regard.
[^2]: The Ontario Municipal Board (“OMB”) was the predecessor of the Tribunal.