CITATION: The Corporation of the Town of Espanola v. Manitoulin-Sudbury District Service Board, 2022 ONSC 7106
DIVISIONAL COURT FILE NO.: DC-21-359
DATE: 2022/12/21
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Lederer, MacEachern, Krawchenko JJ
BETWEEN:
THE CORPORATION OF THE TOWN OF ESPANOLA
Applicant
– and –
MANITOULIN-SUDBURY DISTRICT SERVICES BOARD
Respondent
John O’Kane for the Applicant
Allan McKitrick and Candace Hilchuck for the Respondent
HEARD BY VIDEO: April 12, 2022
MacEachern J.
Background
This judicial review concerns a decision made by the Manitoulin-Sudbury District Services Board on January 28, 2021, to reaffirm the cost apportionment formula that had been used since 2004[^1].
The cost apportionment formula determines the cost sharing amongst 18 different municipalities for shared social services. The Town of Espanola’s challenge is based on its view that it is paying a disproportionate share of these social services costs. The Town asks this court to quash the Board’s January 28, 2021 cost apportionment decision, and make several declarations as to how the Board must interpret and apply the legislation[^2].
The Board’s power to make the decision in issue is under the District Social Services Administration Boards Act, and specifically under Regulation 278/98. The Regulation provides for the cost of social services to be apportioned among municipalities in the Board’s district based on weighted property tax assessments. The Board may agree to apportion costs of social services in a way other than the default method is approved by a “double majority vote”, being,
a) a majority of the municipalities and members representing territory without municipal organization consent to that apportionment; and
b) those municipalities and members who have consented represent a majority of the electors in the board's district[^3].
In 2001, legislation was passed that exempted power dams from direct taxation. This impacted three municipalities within the Board’s district, one of which is the Town of Espanola. Instead of receiving property taxes for power dams, municipalities were paid a grant intended to equal the loss in taxes. The grant amounts have not changed since 2012.
In 2004, the Board obtained double majority vote to include power dam revenues in the cost apportionment formula. The 2004 cost apportionment formula assigned a percentage weight to power dam grants. This percentage has not changed since 2004. The Town argues that continued use of the percentage assigned in 2004 is unfair because, while the grants have been frozen since 2012, other property values have changed. The Town argues that the weight assigned to the power dam grant revenue should also be adjusted, to reflect its proportionate share of the changing revenue base. The Town estimates this results in the Town overpaying its share of social services by approximately $60,000 per year.
The Board has continued to use the 2004 cost apportionment formula since its approval on October 28th, 2004. In each subsequent year, the Board approved the continuation of the 2004 cost apportionment formula by a simple majority, and not by a double majority vote. The double majority vote only took place in 2004. In 2004, the double majority vote process took approximately six months to complete.
At the core of the Town’s criticism of the January 28, 2021 decision is its argument that a double majority vote was required in every subsequent year that the Board continued to use the alternate 2004 cost apportionment formula. However, in this judicial review, the Town is only challenging the January 28, 2021 decision, and only seeks a prospective remedy. The Town not seeking to quash Board decisions made prior to January 28, 2021 that were made on the same basis.
Extension of Time
- The Town is granted an extension of time to file this Application. This application was filed on April 7th, 2021, being more than 30 days after the impugned decision. The Respondent does not object to this extension of time, given that the Town seeks only a prospective remedy.
The Resolutions
- The January 28th, 2021 resolution No.21-09 states:
WHEREAS the Manitoulin-Sudbury DSP Board has reviewed the Treatment of Power Dam Grant Revenue report provided by the Town of Espanola, the Power Dam - Issue Report and the 2021 Apportionment.
THEREFORE BE IT RESOLVED that the Manitoulin-Sudbury DSB approves the Power Dam - Issue Report and reaffirms the 2004 Resolution #04-110 that power damn revenues be included in the apportionment formula and that the Board agrees with the current calculation of power dam revenues included in the current apportionment formula.
- The 2004 Resolution, Resolution 04-110, states:
WHEREAS THE MANITOULIN-SUDBURY DISTRICT SOCIAL SERVICES ADMINISTRATION BOARD canvassed its member municipalities to have them record whether or not they wished to see the DSSAB’s annual municipal cost apportionment formula adjusted to include power dam grants in the revenues that its member municipalities receive in the DSSAB’s determination of the municipal share of the annual DSSAB budget that is attributed to and payable by each of its municipal member;
AND WHEREAS the DSSAB’s member municipalities have indicated, by way of Double Majority Vote, that they would recommend the inclusion of said municipal Power Dam revenues in the DSSAB’s calculation of the municipal share of the annual budget that is attributed to each member municipality;
BE IT THEREFORE RESOLVED THAT THE DSSAB accept the registered results of its member municipalities’ Double Majority Vote and commence to include municipal Power Dam revenues in the weighted assessment formula that it uses to determine that portion of the municipal share of the DSSAB’s approved annual budget that is apportioned to and payable by each of its member municipalities;
ANB IT THEREFORE FURTHER RESOLVED THAT THE DSSAB’S inclusion of Power Dam revenues in its annual municipal cost apportionment formula come into effect with the 2005 budget year which commences on January 1, 2005.
The Issue and the Answer
This Application is dismissed for the reasons that follow.
This Application concerns the legality of the process followed by the Board in making its January 28, 2021 decision to continue the 2004 costs apportionment formula. This Application does not concern itself with evaluating the policy merits of the formula adopted, including if there may be a better way to apportion the cost sharing. The focus is on the legality of the process, and the vires of the impugned decision.
We do not find that the January 28, 2021 decision is ultra vires. We reject the Town’s argument that the January 28, 2021 decision does not confirm with the regulation because the regulation requires a double majority in each year that the Board continued to use the 2004 cost apportionment formula.
The 2004 decision (Resolution 04-110) to use the alternate costs apportionment formula was made by the double majority vote in accordance with the Regulation. The 2004 decision is not being challenged in this Application.
The January 28, 2021 resolution continued the previous costs apportionment formula. In doing so, we do not find that a double majority vote was required by the governing legislation. There is nothing in the Regulation’s wording, and specifically section 6, that requires the cost apportionment formula be revised in each and every year, which would require a double majority vote in every year that the 2004 costs apportionment formula was continued. By not requiring a double majority vote in every year, the legislature recognizes that double majority process is lengthy and involved one. In 2004, the double majority process took approximately 6 months to complete. Interpreting the legislation as a whole, we do not conclude that, once the alternate cost formula was approved in 2004 by double majority vote, the legislation required the Board to obtain a double majority vote in each subsequent year that it continued the 2004 formula.
With respect to the concerns about fairness, we do not find that the January 28, 2021 decision offends the principles of fairness such that the decision becomes ultra vires, or unreasonable such that it should be quashed. The regulation provides a layer of protection for subject municipalities by requiring the double majority vote in the first instance to move to an alternative cost allocation formula. Concerns that such protection is not sufficient, or that further safeguards are required, fall into the domain of the legislature.
Lastly, entitlement to an order to quash on judicial review is a discretionary remedy, which we would decline to grant in this instance.
Costs
- The Respondent is awarded costs fixed at $12,000, inclusive of HAST and disbursements, being the amount agreed to by the parties as costs payable to the successful party on this application.
MacEachern, J.
I agree _______________________________
Lederer, J.
I agree _______________________________
Krawchenko, J.
CITATION: The Corporation of the Town of Espanola v. Manitoulin-Sudbury District Service Board, 2022 ONSC 7106
DIVISIONAL COURT FILE NO.: DC-21-359
DATE: 2022/12/21
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
RE: THE CORPORATION OF THE TOWN OF ESPANOLA
Applicant
AND
MANITOULIN-SUDBURY DISTRICT SERVICES BOARD
Respondent
REASONS FOR DECISION
Released: Dec. 21, 2022
[^1]: 2004 Resolution #04-110
[^2]: District Social Services Administration Board Act, R.S.O. 1990, Chapter D.15, as amended and Ontario Regulation 278/98
[^3]: Regulation 278/98 s. 6(5)