CITATION: His Majesty the King in right of Ontario v. Dell, 2024 ONSC 613
DIVISIONAL COURT FILE NO.: 326/23 DATE: 20240206
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
Matheson, Davies and O’Brien JJ.
BETWEEN:
HIS MAJESTY THE KING IN RIGHT OF ONTARIO
Appellant
– and –
JAMES DELL, SOPHIE DELL, PATRICIA ANN DELL, THE ESTATE OF ERIC JAMES DELL, by his Estate Trustee, JAMES DELL, CHARLENE QUEVILLON, RON QUEVILLON, MARY La VALLE, DAN La VALLE, RICHARD ZIRGER, SHARON ZIRGER, GEORGE LEPP, ERICA LEPP, MARK LEPP, 1774724 ONTARIO INC. O/A LEPP FARMS, BRUCE MOORE, SANDRA MOORE, KRISTINA MOORE, JAMIE WERSTROH and JOHN and JANE DOE
Respondents
Shahana Kar and Brandon Fragomeni, for the Appellant
Debra McAllister, Paul Marshall and Cassandra Kirewskie, for the Respondents
HEARD at Toronto: January 24, 2024, by video-conference
Matheson J.:
[1] His Majesty the King in right of Ontario (“Ontario”) appeals with leave[^1] from the order of Perell J. dated May 9, 2023 (the “Order”).
[2] The statement of claim in the underlying proceeding includes allegations of bad faith against Ontario. The respondents (plaintiffs) are therefore required to obtain leave as set out in s. 17(2) of the Crown Liability and Proceedings Act, 2019, S.O. 2019, c.7, Sch. 17. Under the same subsection, the proceeding is automatically stayed unless and until leave is granted.
[3] The respondents brought the required leave motion. Rather than addressing it first, the case management judge ordered that a total of six motions proceed concurrently, including ordering Ontario to bring a motion. The motions are scheduled to be heard over six days in March 2024. This appeal relates to all of the motions except the motion for leave under s. 17(2) of the Act. Ontario submits that the automatic stay prevents the other motions from going ahead because the leave motion has not yet been decided.
[4] The appeal is granted for the reasons set out below. All motions other than the leave motion are stayed pending the decision on the leave motion.
Brief Background
[5] The backdrop to this appeal is a dispute about the use of a property in Niagara on the Lake. In 2009, approval was given to use the property as a waste disposal site, including a facility that converts organic waste into fertilizer and biogas. The respondents to this appeal (the “Dell group”) live or farm nearby and have worked hard to shut the facility down. The facility has not been operating for the last six years and the Dell group wants it to stay that way. They have sued various parties including Ontario.
[6] The Corporation of the Town of Niagara on the Lake (the “Town”) and 2507626 ONTARIO INC. o/a 4 Mile Creek Farms (“4 Mile Creek’), which are defendants in the underlying litigation, took no part in this appeal.
[7] As alleged by the Dell group in the statement of claim, grape pomace (winery waste) was being stored on the site and approval was sought in 2008 to receive and process more industrial wastes and operate an anerobic digester for waste disposal. The approved waste disposal facility began to operate in about 2009, giving rise to complaints of odour, pests, noise, health impacts and other ill-effects.
[8] In 2014, the Dell group took the matter to the Normal Farm Practice and Protection Board. At that point, a receiver had been operating the facility for some years. According to the statement of claim, in 2016, just before the hearing concluded, the receiver gave notice of a motion to approve a sale of the property. Ultimately, the sale of the property to 4 Mile Creek was approved.
[9] By decision given in 2018, the Board ordered the facility shut down. It has not operated since then. However, in denying a request for review of its decision, the Board held that its decision did not bind a new or future operator of the facility.
[10] In 2021, the Dell group commenced an application in the Superior Court, naming the Town, Ontario and the mortgagee that had put the receiver in place. They alleged that the Town and Ontario were negligent but did not allege bad faith.
[11] Both the Town and Ontario brought motions to strike out the application. The Dell group brought a motion to add 4 Mile Creek as a respondent to the application, among other relief. After a failed attempt to have the matter joined with the receivership on the Commercial List, the claim against the mortgagee was dismissed.
[12] In December 2022, the Dell group sought an urgent court date because 4 Mile Creek might have been planning to reactivate the facility. A schedule was set that contemplated a full day hearing on May 9, 2023, but did not address the motions to strike.
[13] On March 9, 2023, the matter came before Perell J., who seized himself of the matter (the “case management judge”).[^2] He described the application as follows, at para. 16:
The Applicant’s application is essentially a nuisance and negligence action claiming $70 million. Whether these causes of action even exist is in dispute and the Town’s and Ontario’s motions to strike remain pending and unscheduled. And 4 Mile Creek Farms might well wish to bring a similar motion to strike if it were added as a respondent to the application.
[14] The case management judge converted the application into an action because the application was outside the court’s jurisdiction under r. 14 of the Rules of Civil Procedure. The Dell group was required to deliver a statement of claim naming the Town, 4 Mile Creek and Ontario as defendants, after which the defendants could move to strike out the action for failing to disclose a cause of action or as an abuse of process.
[15] The Dell group then delivered a statement of claim which, for the first time, alleged bad faith by the Town and Ontario.
[16] The Dell group commenced the required motion seeking leave to sue Ontario alleging bad faith under s. 17(2) of the Act. The motion also sought orders against 4 Mile Creek including injunctive relief.
[17] The Town and 4 Mile Creek brought motions to strike out the claim under r. 21.01 of the Rules of Civil Procedure, however, Ontario did not do so at that stage.
[18] There was then the Order under appeal and related endorsement of May 9, 2023. In the endorsement, the case management judge noted that under s. 17(2) of the Act, the action was stayed until leave was granted, and stated as follows:
It is a debatable point whether or not the action is stayed in its entirety or only against the province, which is my tentative view.
There is no doubt that the leave motion, which has been brought has not been stayed, and in my opinion, I have the jurisdiction to grant leave, if necessary, for the pleadings motions and the request for interlocutory relief as against all of the defendants to proceed concurrently with the leave motion. This direction is fair and efficient. I so direct.
[19] The related Order included the following:
(i) an order that Ontario bring its motion to strike out the statement of claim; and,
(ii) an order that the pleadings motions and the request for interlocutory relief proceed concurrently with the motion for leave under s. 17(2) of the Act.
[20] Ontario sought leave to appeal. While the leave motion was pending, Ontario also brought a motion to strike in compliance with the Order, without prejudice to its position on the issues raised in the Divisional Court.
[21] There are six motions scheduled to be heard concurrently in March. Three motions are brought by the Dell group, seeking leave to proceed with its negligence claim against Ontario, an injunction against 4 Mile Creek, and enforcement of the Board’s order to shut down the facility. The other three motions are the motions to strike out the statement of claim by the Town, 4 Mile Creek, and, under the Order, Ontario.
[22] Leave to appeal was granted in August 2023.
Fresh evidence
[23] In January 2024, just before the hearing of this appeal, the Dell group delivered a compendium that includes considerable evidence that does not form part of the appeal record. The Dell group did not bring a motion seeking leave to adduce fresh evidence on this appeal. Ontario seeks an order striking out five affidavits, five transcript excerpts from cross-examinations, and the decision of the Board.
[24] Most of the affidavits were from the motions that have been scheduled for a hearing in March. The fifth affidavit is a lengthy account by one of the members of the Dell group, setting out that witness’s view of the events from 2008 forward. That affidavit was sworn on January 11, 2024 and says it is in response to the appeal.
[25] Ontario seeks to strike out these materials as improper as this stage, irrelevant to this appeal and for failing to meet the test for fresh evidence on an appeal. Before addressing the affidavit and transcript evidence at issue, I find no problem receiving the decision of the Board. It is a public record of that tribunal’s decision.
[26] The test for receiving fresh evidence is set out in R. v. Palmer, [1980] 1. S.C.R. 759 and Sengmueller v. Sengmueller (1994), 17 O.R. (3d) 208, 1994 8711 (C.A.). It is readily apparent that the affidavits would not meet the test for fresh evidence, even if a proper motion has been brought. They are largely evidence about the factual history of the merits of the claim, from the standpoint of certain witnesses, as well as inadmissible argument. I am not persuaded that this evidence is relevant to the appeal. With respect to the transcript excerpts, they are attempted cross-examination about the purpose of the Act based on public documents and do not give rise to admissible evidence. Further, even if all the affidavit and cross-examination evidence was admitted, it would not be conclusive of an issue on this appeal.
[27] I understand the desire of the Dell group to focus on their history, stretching through the many years that they have been resisting the waste facility. But this appeal will not decide whether the merits of their claim will succeed. The focus here is on legal issues about the interpretation of s. 17 of the Act and the Superior Court’s inherent jurisdiction. The affidavit evidence and cross-examination excerpts are not permitted.
Issues and Standard of Review
[28] There are two issues on this appeal:
(1) whether the Order failed to comply with the automatic stay mandated in s. 17 of the Act; and
(2) whether the Order was permitted as an exercise of the Superior Court’s inherent jurisdiction.
[29] There is no issue about the standard of review, which is correctness: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, at para. 36-37, citing Housen v. Nikolaisen, 2002 SCC 33.
(1) Section 17 of the Crown Liability and Proceedings Act, 2019
[30] Ontario submits that the case management judge erred in failing to give effect to the automatic stay in s. 17 of the Act in two ways:
(i) by requiring that Ontario bring a motion; and,
(ii) by ordering that all six motions proceed concurrently rather than addressing the leave motion first.
[31] The Dell group submits that s. 17 should be interpreted to permit the Order, either by limiting it to claims against Ontario or excluding motions from the operation of the stay.
[32] The analysis of these positions turns on the proper interpretation of s. 17 of the Act. The required approach to statutory interpretation is well-settled. The words of a statute should be read in their “grammatical and ordinary sense and harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”: Rizzo & Rizzo Shoes Ltd. (Re), 1998 837 (SCC), [1998] 1 S.C.R. 27, at para. 21.
[33] Beginning with the scheme and object of the Act, it “imposes liability on the Crown for tortious conduct from which it would otherwise be immune at common law”, “preserves various immunities for the Crown …with respect to the performance of certain duties” and “governs the conduct of proceedings in which the Crown is a party”: Poorkid Investments Inc. v. Ontario (Solicitor General), 2023 ONCA 172, at para. 8.
[34] Moving to the role of s. 17, it “establishes a screening procedure that applies to claims against the Crown… for misfeasance in public office or a tort based on bad faith respecting anything done in the exercise or intended exercise of powers, duties, or functions.”: Poorkid Investments Inc., at para. 8.
[35] The screening process under s. 17(2) imposes an obligation on plaintiffs to get leave of the court. It allows the court to screen out unmeritorious bad faith claims: Poorkid Investments Inc., at para. 27.
[36] The Dell group must therefore obtain leave to pursue its claim of bad faith against Ontario. The leave process is streamlined. Subsections 17(3)-(6) limit the evidence that may be adduced by the parties on the leave motion and s. 17(7) limits the grounds for granting leave.
[37] Subsection 17(2) also imposes a stay. Proceedings that include torts based on bad faith are deemed stayed, unless and until leave to bring the proceeding is granted pursuant to s. 17(2): Poorkid Investments Inc., at para. 8.
[38] Against that backdrop, we have a dispute about the scope of the automatic stay in s. 17(2). Under that subsection, the “proceeding” that s. 17 applies to is stayed. The respondents submit that it is limited to the claims against Ontario and does not stay the entire action.
[39] The term “proceeding” is defined in s. 1(1) of the Act. It is broadly defined and not limited to claims against the Crown:
1(1) “proceeding” means an action or application for damages and any other civil proceeding in respect of damages to which the rules of court apply;
[40] The proceedings to which s. 17 applies are set out in s. 17(1):
17(1) This section applies to proceedings brought against the Crown or an officer or employee of the Crown that include a claim in respect of a tort of misfeasance in public office or a tort based on bad faith respecting anything done in the exercise or intended exercise of the officer or employee’s powers or the performance or intended performance of the officer or employee’s duties or functions. [Emphasis added.]
[41] The obligation to obtain leave and the automatic stay are in s. 17(2):
(2) A proceeding to which this section applies … may proceed only with leave of the court and, unless and until leave is granted, is deemed to have been stayed in respect of all claims in that proceeding from the time that it is brought. [Emphasis added.]
[42] This interpretation is also consistent with the notice requirements to sue the Crown, as set out in s. 18 of the Act. That section expressly distinguishes a “proceeding” from a “claim” against the Crown by precluding the plaintiff from bringing a “proceeding that includes a claim for damages” against the Crown unless notice is given.
[43] Reading these provisions using their plain and ordinary meaning, the proceeding in this case is the Dell group’s entire action, not just the claims against Ontario. The definition of “proceeding” encompasses all actions to which the Rules of Civil Procedure apply, which includes actions against other parties.
[44] Section 17 applies because the proceeding “includes” “a claim” against the Crown in respect of a tort based on bad faith, as set out in s. 17(1). And under s. 17(2), the Dell group action is stayed “in respect of all claims in that proceeding” unless and until leave is granted. The entire action is stayed.
[45] The respondents submit that these provisions should be read more narrowly such that the stay applies only to the claims against the Crown, not the claims against other defendants. This is inconsistent with the express words of s. 17(2) quoted above. The action is stayed in respect of “all claims in that proceeding”.
[46] This interpretation is consistent with s. 17(9) and (10), which set out the impact of the granting or refusing of leave:
(9) The granting of leave under subsection (2) lifts the stay of the proceeding.
(10) If leave is not granted under subsection (2),
(a) the proceeding is rendered a nullity; or
(b) if the proceeding contains any claims other than the claim described in subsection (1), the proceeding is rendered a nullity in respect of the claim described in that subsection and the stay is lifted with respect to the remainder of the proceeding.
[Emphasis added.]
[47] Subsection 17(10) shows that the “proceeding” that is stayed includes both the claims against the Crown under s. 17(1) and any other claims. It speaks about the stay being lifted from the “remainder of the proceeding” not just other claims against the Crown.
[48] Essentially, the respondents ask that we read in “against the Crown” after the various references to proceedings and claims in these sections of the Act. However, the definition of “proceeding” is clear and not limited. Reading s. 17 as a whole and in the context of the Act, the stay in s. 17(2) is not a stay of the “claim” against the Crown or a “proceeding” only to the extent that it is a claim against the Crown. It is a stay of the proceeding – in this case, the Dell group action.
[49] The above arguments by the respondents would not, even if accepted, justify the Order requiring Ontario to bring a motion during the stay. On that issue, the respondents submit that the stay does not apply to motions.
[50] The respondents rely on the definition of “action” in s. 1 of the Courts of Justice Act, R.S.O. 1990, C. C.43 (“CJA”). An action is defined as meaning “a civil proceeding commenced by” various documents such as a statement of claim or notice of action. The respondents also rely on related Rules of Civil Procedure regarding the commencement of proceedings. The respondents submit that a motion is different from an action because it does not commence a proceeding. However, a motion is defined in s. 1 of the CJA and in the Rules of Civil Procedure to mean “a motion in the proceeding…”, showing that it is part of the proceeding. This does not suggest that the stay in s. 17 of the Act excludes motions. This proposed interpretation is inconsistent with the Act.
[51] The respondents also submit that the history of Crown immunity and of the Act are inconsistent with an interpretation that the stay applies to the whole action. The respondents submit that the Act is solely addressed to the rights and privileges of the Crown. However, these submissions overlook the purpose of the Act to govern the conduct of proceedings in which the Crown is a party”: Poorkid Investments Inc., at para. 8. This includes proceedings with other parties as well.
[52] The respondents put forward other statutory regimes with what they submit are analogous screening mechanisms, including the Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3, s. 69, Companies Creditor’s Arrangement Act, R.S.C. 1985, c. C-36, s. 11.02(2), Securities Act, R.S.O. 1990, c. S.5, s. 138.8(1), Class Proceedings Act, 1992, S.O. 1992, c. 6, ss. 12, 13. These statutes have different purposes and statutory language and are not especially helpful.
[53] Having considered all the statutory interpretation issues, I conclude that the Order contravenes the Act in two ways: by ordering Ontario to bring a motion and by scheduling the six motions to be heard concurrently rather than deciding the leave motion first.
[54] I recognize the importance of case management and see that the case management judge saw his Order as a fair and efficient way of proceeding. I agree that it would be inefficient and likely also unfair not to hear the three motions to strike out the claim together. However, that cannot be accomplished as set out in the Order. The remaining motions can be heard together after the leave motion is decided. Similarly, I recognize that the respondents are concerned that the waste facility may be reopened. They sought interlocutory relief against 4 Mile Creek to prevent that outcome and that application was scheduled to be heard in May 2023, before the application was converted to an action. The bad faith claim was then added. I am not persuaded that through case management in compliance with the Act, these matters could not be addressed fairly and efficiently, with the leave motion being decided first.
(2) Inherent Jurisdiction
[55] All agree that the scope of inherent jurisdiction does not extend to making orders that contravene a statute. The court may exercise its inherent jurisdiction even in respect of matters that are regulated by statute, “so long as the court can do so without contravening any statutory provision”: R. v. Caron, 2011 SCC 5, at para. 32 (emphasis in Caron); Stephen Francis Podgurski (Re), 2020 ONSC 2552, at para. 69.
[56] It is therefore unnecessary to address this issue. The Superior Court’s inherent jurisdiction cannot be used to contravene the automatic stay in s. 17 of the Act.
Order
[57] The appeal is granted. The Order is set aside except as it relates to the motion for leave under s. 17(2) of the Act.
[58] There shall be no order as to costs.
___________________________ Matheson J.
I agree
Davies J.
I agree
O’Brien J.
Date: February 06, 2024
CITATION: His Majesty the King in right of Ontario v. Dell, 2024 ONSC 613
DIVISIONAL COURT FILE NO.: 326/23 DATE: 20240206
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Matheson, Davies and O’Brien JJ.
BETWEEN:
HIS MAJESTY THE KING IN RIGHT OF ONTARIO
And
JAMES DELL, SOPHIE DELL, PATRICIA ANN DELL, THE ESTATE OF ERIC JAMES DELL, by his Estate Trustee, JAMES DELL,CHARLENE QUEVILLON, RON QUEVILLON, MARY La VALLE, DAN La VALLE, RICHARD ZIRGER, SHARON ZIRGER, GEORGE LEPP, ERICA LEPP, MARK LEPP, 1774724 ONTARIO INC. O/A LEPP FARMS, BRUCE MOORE, SANDRA MOORE, KRISTINA MOORE, JAMIE WERSTROH and JOHN and JANE DOE
REASONS FOR DECISION
Matheson J.
Date of Release: February 06, 2024
[^1]: 2023 ONSC 445 [^2]: 2023 ONSC 1610