CITATION: New Sunlight Inc. v. Ontario (Minister of Infrastructure), 2025 ONSC 638

DIVISIONAL COURT FILE NO.: 511/24

DATE: 20250214

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Sachs, Backhouse, S.T. Bale JJ.

BETWEEN:

NEW SUNLIGHT INC.

Applicant

– and –

HIS MAJESTY THE KING IN RIGHT OF ONTARIO AS REPRESENTED BY THE MINISTER OF INFRASTRUCTURE

Respondent

Douglas Smith, Piper Morley and Madeline Mackenzie, for the Applicant

Michael Sims and Andi Jin, for the Respondent

HEARD at Toronto: January 20, 2025

REASONS FOR DECISION

BACKHOUSE J.

[1] On January 24 2025, this Panel issued an Order dismissing this application with reasons to follow. These are those reasons.

Overview

[2] The Applicant, New Sunlight Inc., brings this judicial review application seeking to set aside two pieces of subordinate legislation issued by the Lieutenant Governor in Council ("Cabinet"): Order in Council 724/2024, dated June 6, 2024 (the "First OIC") and Order in Council 1325/2024, dated October 10, 2024 (the "Second OIC).

[3] The parties were negotiating an agreement whereby New Sunlight would convey lands at Toronto's East Harbour required for a priority transit project to the Respondent ("Ontario") in exchange for Ontario upzoning the remaining land, thereby permitting New Sunlight to develop the remaining land at a greater density.

[4] During these negotiations, and without notice to New Sunlight, Cabinet issued the First OIC designating the entirety of New Sunlight's East Harbour properties as "transit-oriented community land" ("TOC land") under the Transit-Oriented Communities Act, 2020, S.O. 2020, c.18, Sch 20. This designation allows for lands to be expropriated without a landowner having the right to a hearing of necessity, which is an inquiry into whether a proposed expropriation is "fair, sound, and reasonably necessary in the achievement of the objective of the expropriating authority". New Sunlight commenced this application for judicial review seeking to have the First OIC quashed. Before the application could be heard and again, without notice to New Sunlight, Cabinet issued the Second OIC authorizing Ontario to expropriate the entirety of New Sunlight's lands to complete development on various transit, housing, and community infrastructure projects.

[5] New Sunlight seeks orders quashing the OICs on the grounds that they are unreasonable, made arbitrarily on the basis of incomplete, inaccurate and misleading information, and made in bad faith. It submits that the First OIC was not necessary and was not justifiable. Ontario submits that both OICs are consistent with the purposes of their enabling statutes, intra vires and reasonable. Therefore, Ontario requests that the application be dismissed.

[6] The Supreme Court of Canada has recently confirmed in Auer v. Auer, 2024 SCC 36 ("Auer") that reasonableness review of subordinate legislation requires focusing on "whether the [subordinate legislation is] justifiably (or reasonably) within the scope of the authority delegated by the enabling legislation": at para. 54. It is not a review of the policy merits of the subordinate legislation, nor does it assess the reasonableness of the rules (here the OICs) promulgated: Auer, at paras. 55-58. Subordinate legislation can also be set aside if it was enacted for an impermissible reason, such as an improper motive: Auer, at para. 54.

[7] I have found that the OICs are justifiably (or reasonably) within the scope of the authority delegated by the enabling legislation and consistent with the legislation's overriding purpose or object, pursuant to the test set out in Auer at paras. 33 and 54. For the reasons set out below, I would dismiss the application.

Legislative Framework

[8] This application engages three statutes: the Transit-Oriented Communities Act, 2020, S.O. 2020, c.18, Sch. 20 ("TOCA"), the Ministry of Infrastructure Act, 2011, S.O. 2011, c. 9, Sch. 27 ("MIA") and the Expropriations Act, R.S.O., 1990, c. E.26 ("EA").

Transit-Oriented Communities Act ("[TOCA](https://www.canlii.org/en/on/laws/stat/so-2020-c-18-sch-20/latest/so-2020-c-18-sch-20.html)")

[9] Subsection 2(1) provides:

2 (1) The Lieutenant Governor in Council may, by order in council, designate land as transit-oriented community land if, in the opinion of the Lieutenant Governor in Council, it is or may be required to support a transit- oriented community project.

[10] "Transit-oriented community project" is defined in s. 1 of the TOCA:

"transit-oriented community project" means a development project of any nature or kind and for any usage in connection with the construction or operation of a station that is part of a priority transit project, and includes a development project located on transit corridor land within the meaning of the Building Transit Faster Act, 2020.

[11] Subsection 3(1) of TOCA exempts land designated as TOC land by removing a landowner's entitlement to a hearing of necessity under the EA:

3 (1) Subsections 6 (2) to (5), section 7 and subsections 8 (1) and (2) of the Expropriations Act do not apply to an expropriation of land, within the meaning of that Act, if,

(a) at least some part of the land is designated under subsection 2 (1) as transit-oriented community land; and

Ministry of Infrastructure Act ("[MIA](https://www.canlii.org/en/on/laws/stat/so-2011-c-9-sch-27/latest/so-2011-c-9-sch-27.html)")

[12] The MIA provides two avenues by which the Minister may expropriate land under ss. 10 (1) and (2):

Expropriation

10 (1) Subject to the Expropriations Act, the Minister, for and in the name of the Crown, may, without consent of the owner, enter on, take and expropriate any land or interest in land that the Minister considers necessary for the use or purposes of the Government.

Lieutenant Governor in Council direction

(2) Subject to the Expropriations Act, the Minister, on the direction of the Lieutenant Governor in Council, for and in the name of the Crown, shall, without consent of the owner, enter on, take and expropriate any land or interest in land that the Lieutenant Governor in Council considers necessary for the benefit of the public.

[Expropriations Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-e26/latest/rso-1990-c-e26.html) ("EA")

An expropriation process is commenced by an expropriating authority serving a Notice of Application for Approval to Expropriate ("Expropriation Notice") pursuant to s. 6 of the EA. A landowner served with such Notice may request a hearing of necessity before the Ontario Land Tribunal ("OLT") pursuant to s. 6(2) (unless the land has been designated as TOC land under s.3(1) of TOCA).

Factual Background

[13] New Sunlight is a commercial and residential real estate developer with several properties on Sunlight Park Road in Toronto's East Harbour. It is an affiliate of Talisker Corporation, a developer of commercial and residential real estate.

[14] The Respondent Minister of Infrastructure is responsible for administering Ontario's TOC Program.

The Transit-Oriented Communities Program

[15] Ontario's Transit-Oriented Communities Program ("TOC Program") seeks to establish Transit Oriented Communities ("Communities") across the Greater Toronto Area by building and improving transit infrastructure, then facilitating higher density mixed-use development around that infrastructure. The overall goal of the TOC Program is to build higher density, mixed use, and accessible communities that are connected by transit at the local and regional level. Ontario states that similar programs have been successfully implemented in major cities around the world.

[16] Ontario explains its TOC Program in the following way. Much of the land in the GTA is privately held. Accordingly, to deliver the TOC Program, Ontario must obtain privately held land to build the planned transit and supporting infrastructure. In order to ensure that the goals of the TOC Program are met, it must maintain an interest in how and when a higher density mixed use community will be developed after the transit and supporting infrastructure is constructed. Ontario's approach to implementing the TOC Program is to negotiate "TOC Agreements" with building partners at proposed Community sites.

[17] Where there is one predominant landowner, a TOC Agreement is typically sought with that landowner. Where there is no single predominant landowner at a Community site, or where an Agreement cannot be reached with the predominant landowner, Ontario will purchase or expropriate all lands for the proposed Community and seek a TOC Agreement with a building partner pursuant to an open market offering process. Under a TOC Agreement, the predominant landowner typically agrees to transfer its lands to Ontario and commits to becoming a building partner and to developing the lands in alignment with the goals of the Community and TOC Program. In exchange, Ontario commits to returning the "left over" land in the Community following the construction of transit infrastructure, and to upzoning the lands surrounding the newly constructed infrastructure under s. 47 of the Planning Act, R.S.O. 1990, c. P.13.

[18] This provides a benefit to the landowner and/or building partner. In turn, TOC Agreements benefit Ontario by providing assurance that the Communities will be developed in alignment with the TOC Program's goals and in a timely manner, thus justifying Ontario's significant investment in the TOC Program and Community.

Toronto's East Harbour

[19] Toronto's East Harbour is a proposed Community site and will be a significant component of the TOC Program. It is situated immediately east of the Don River and Don Valley Parkway, south of Sunlight Park Road, and north of Lakeshore Boulevard, and is bisected by four GO Transit tracks. As of October 2024, Ontario estimates the proposed development at East Harbour will result in the construction of 4,000 new residential units (including affordable housing units), the creation of 50,000 new jobs, and 3.5 acres of parks and community space. The proposed Community at East Harbour will be developed around the anticipated East Harbour Transit Hub, which will serve as an Ontario Line station and also connect various local and regional transit projects. The Ontario Line is a "priority transit project" under s. 1 of TOCA.

[20] East Harbour is comprised of "East Harbour South" and "East Harbour North", with the existing GO Transit tracks serving as the dividing line. Cadillac Fairview is the predominant landowner for East Harbour South and entered into a TOC Agreement with Ontario for the development of its lands in April 2022.

[21] New Sunlight is the predominant landowner of East Harbour North. Ontario asserts that it requires East Harbour North for two significant infrastructure projects: a) a southward extension of Broadview Avenue and b) a Flood Protection Landform on the east bank of the Don River. The Broadview Extension is necessary to access and construct the East Harbour Transit Hub and will be required after construction to serve the anticipated Community. The Flood Protection Landform is necessary to protect the East Harbour Community, i.e., both East Harbour North and East Harbour South, from flooding from the Don River. Higher density development in the Community cannot proceed until the Flood Protection Landform is in place as East Harbour is a flood plain.

[22] Following the construction of these two infrastructure projects, the remaining lands in East Harbour North are anticipated to become part of the higher density mixed use of the East Harbour Community. Ontario asserts that this land will be developed pursuant to a TOC Agreement between Ontario and a building partner, either New Sunlight if a TOC Agreement is reached, or a different building partner.

[23] New Sunlight, on the other hand, asserts that Ontario, as confirmed by Ontario's witness, Ms. Cuthbertson, does not require the entirety of its properties to complete the East Harbour Transit Hub. Rather, only certain comparatively small portions are necessary to build the Flood Protection Landform and the Broadview Extension. It submits that Ontario does not have the authority to expropriate more land than it requires for its purposes.[^1]

[24] At the time the First OIC was issued, the parties had been negotiating a potential TOC Agreement for approximately a year. That is, New Sunlight would convey portions of its land that were required to construct the East Harbour Transit Hub, the Flood Protection Platform and Broadway extension, in return for Ontario's commitment to obtain a Ministerial Zoning Order permitting New Sunlight to redevelop its remaining lands with greater density than is currently permitted.

[25] Ontario asserts that New Sunlight has always been aware of Ontario's intention to expropriate its lands in the event an amicable agreement with respect to those lands cannot be reached. New Sunlight, in turn, asserts that Ontario passed the impugned OICs in bad faith so as to leverage its position in the continuing negotiations with New Sunlight. By virtue of the OICs, New Sunlight was put in the position of conducting the negotiations knowing that if it did not agree to Ontario's terms, Ontario had been authorized to expropriate its lands.

The First Order in Council

[26] Ontario provides the following rationale for the First OIC.

[27] The First OIC was issued alongside three other Orders in Council making similar TOCA designations at other proposed Communities in Toronto (collectively, the "TOCA OICs"). This impacted multiple landowners, including existing and potential building partners in Communities across Toronto.

[28] The TOCA OICs were issued following amendments to the Planning Act that created uncertainty in existing and anticipated TOC Agreements. A key component of Ontario's TOC Agreements contemplates that Ontario will exercise its powers under s. 47 of the Planning Act to "upzone" surrounding lands after the construction of transit infrastructure is complete. However, in December 2023, the Legislature enacted immunizing provisions in s. 47 of the Planning Act, which immunized Ontario from liability for any decisions made in relation to the exercise of its s. 47 powers ("Bill 150"). In other words, if Ontario were to breach its "upzoning" commitments to a landowner, it could not be sued.

[29] Following the enactment of Bill 150, Cadillac Fairview expressed concern about the enforceability of their TOC Agreement with Ontario at East Harbour South. As a result of these concerns, and as similar concerns would necessarily arise in relation to other and future TOC Agreements, Ontario proposed the following solution that came into effect in June 2024:

a) The Planning Act would be further amended to enact s. 47(29), which would remove the applicability of Bill 150 on land that is designated as transit-oriented community land under the TOCA; and

b) The TOCA OICs were issued, designating four proposed Communities - including

East Harbour - as transit-oriented community land.

[30] Ontario asserts that the TOCA OICs were issued primarily to provide commercial certainty and accountability to existing TOC building partners by enabling them to enforce contractual agreements with the Province and to help ensure the viability of the TOC program.

[31] New Sunlight submits that in the midst of their negotiations with Ontario, and without any notice to it, Cabinet issued the first OIC on June 4, 2024 designating the entirety of New Sunlight's properties as TOC lands, a designation which allows for lands to be expropriated without a landowner having the right to a necessity hearing. New Sunlight did not get notice of the OIC until July 5, 2024. It emphasizes that the three other properties designated as TOCs were all owned by developers that had TOC Agreements in place with Ontario. Since New Sunlight did not have a TOC Agreement, it did not need the protection from the immunity provision in the Planning Act. Further, it asserts that East Harbour was inaccurately considered as one entity (instead of East Harbour South owned by Cadillac Fairview and East Harbour North owned by New Sunlight).

[32] At the time Cabinet made the decision to issue the First OIC, it had before it a briefing note provided by staff to the Minister of Infrastructure, a "Technical Q & A sheet" given to the Minister of Infrastructure and the rest of Cabinet, and speaking remarks prepared for the Minister of Municipal Affairs and Housing and Minister of Infrastructure (collectively the "First Briefing Notes"). The First Briefing Notes were almost entirely focused on Cadillac Fairview and Cadillac Fairview lands.

[33] The First Briefing Notes do not mention New Sunlight by name nor do they specifically refer to the New Sunlight properties. The indirect references to New Sunlight are inaccurate—the Technical Q & A Sheet inaccurately stated that a TOC Agreement had been entered into with it and the briefing note inaccurately stated that negotiations with New Sunlight related to a TOC Agreement were concluding. The speaking remarks did not specifically refer to New Sunlight at all.

[34] Ontario points out that the First Briefing Notes also contemplated that it would be necessary to designate lands in addition to those that were already subject to TOC Agreements to protect negotiations with future building partners, stating: "failure to designate TOCs and exempt them from immunity provisions will constrain the Province's ability to negotiate with potential Building Partners." The Technical Q & A Sheet noted that a TOC designation would streamline any potential expropriation process for the TOC Program, as it would "exempt designated transit-oriented community land from sections of the Expropriations Act including Hearings of Necessity."

Second OIC

[35] New Sunlight initially commenced this application for judicial review seeking to have the First OIC quashed. However, on October 10, 2024, shortly before the scheduled hearing date, Cabinet issued the Second OIC authorizing the Minister to expropriate New Sunlight's properties pursuant to s. 10(2) of the MIA. The Second OIC provided the Minister with legal authority to expropriate. It did not actually commence the expropriation process itself.

[36] New Sunlight emphasizes that the Second OIC was issued without any notice to it and Ontario waited 14 days after the OIC was signed to provide it with a copy. It also emphasizes that it was made in the face of evidence given under oath by Ontario's affiant on the same day of the issuance of the Second OIC that Ontario had not initiated any expropriation process in respect of New Sunlight's properties. It submits that the Second OIC was passed in bad faith to influence ongoing negotiations over New Sunlight's lands.

[37] The Second OIC authorizes Ontario to "enter on, take and expropriate" New Sunlight's Properties for the purposes of the East Harbour Transit Hub, the Broadview Extension, the Flood Plain Land, the "construction of the subway line known as the Ontario Line" and the "development of a transit-oriented community known as the East Harbour Transit-Oriented Community Project."

[38] Ontario points out that at the second reading of the bill introducing TOCA, the Minister confirmed that one purpose of TOCA is to exempt certain lands from a hearing of necessity, specifically to allow for timely and efficient acquisition of much-needed transit development.

[39] Ontario asserts that the briefing notes for the Second OIC (the "Second Briefing Notes") make it clear that it was not passed in bad faith. The Second Briefing Notes set out that Ontario's preferred approach is to negotiate an amicable outcome and that expropriation authority was sought as a last resort in the event negotiations broke down with deadlines imminent:

a) "While negotiations with Talisker [New Sunlight's affiliate] are ongoing, there are concerns regarding timing for access to the lands and therefore a simultaneous process of expropriation is needed in case negotiations are delayed or breakdown."

b) "Expropriation at this site is only being considered as a backstop measure due to tight timelines".

c) "The Province will continue to work with Talisker in an amicable manner. Note that the authority in the proposed OIC may be exercised concurrently with the ongoing negotiations to preserve timelines…"

[40] The Second Briefing Notes also confirm Ontario's understanding that the Second OIC would not commence an expropriation in and of itself, as the Approval Form states:

The OIC does not serve to commence the expropriation process. The expropriation process is initiated with the delivery of a Notice of Application to Expropriate to an affected property owner".

[41] In response to the Second OIC, New Sunlight obtained leave from this court to amend its application to include a challenge to the Second OIC. After the issuance of the amended application, Ontario relied on the authority granted to it by the Second OIC to issue two Notices of Application setting out Ontario's proposal to expropriate New Sunlight's land or portions of it.

[42] New Sunlight and Ontario had not reached a TOC agreement at the time of the First or Second OIC. By the hearing date before this court, negotiations had ceased. Ontario concedes that due to tight timelines, it intends to expropriate the entirety of New Sunlight's land.

Issues

1. Is the First OIC unreasonable or ultra vires?

a. Is the First OIC arbitrary?

b. Does the First OIC discriminate against New Sunlight?

c. Is the First OIC unnecessary?

2. Is the Second OIC unreasonable or ultra vires?

a. Was the Second OIC made in bad faith?

b. Does the Second OIC satisfy the Auer test?

Court's Jurisdiction

[43] This court has jurisdiction to hear this matter pursuant to ss. 2 and 6(1) of the Judicial Review Procedure Act, R.S.O. 1990, c. J.1.

Standard of Review

[44] The Supreme Court of Canada recently confirmed in Auer that subordinate legislation such as an order in council is presumptively reviewable on the reasonableness standard pursuant to the framework set out in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65.

[45] However, the Court also instructed that the following principles set out in Katz Group Canada Inc. v. Ontario, 2013 SCC 64 continue to inform the reasonableness analysis:

1.Subordinate legislation must be consistent both with specific provisions of the enabling statute and its overriding purpose;

2.Subordinate legislation benefits from a presumption of validity;

3.The challenged subordinate legislation and enabling statute should be interpreted using a broad and purposive approach to statutory interpretation;

4.A vires review does not involve assessing the policy merits of the subordinate legislation to determine whether it is necessary, wise, or effective.[^2]

[46] The Court also deviated from Katz Group in holding that subordinate legislation no longer needs to be "irrelevant", "extraneous" or "completely unrelated" to its enabling statute in order to be found ultra vires. The Court found that this threshold was too deferential and inconsistent with Vavilov's robust reasonableness review.[^3] Instead, the reviewing court will consider whether the decision bears the hallmarks of reasonableness (justification, transparency, and intelligibility) and whether it is justified in relation to the relevant factual and legal constraints.

[47] The challenging party must show that the subordinate legislation is not reasonably within the scope of the authority delegated by the enabling legislation.[^4] In applying this test, the governing statutory scheme, other statutory and common law, and principles of statutory interpretation establish the bounds of reasonableness.[^5]

Analysis

Issue 1 (a): Is the first OIC arbitrary?

[48] New Sunlight makes the following points in support of its argument that the First OIC is arbitrary:

(a) New Sunlight cites Roncarelli v. Duplessis[^6] for the proposition that statutory power cannot be exercised in an arbitrary, capricious, or irrational manner. It argues that Cabinet acted arbitrarily and exceeded its authority under TOCA because it failed to consider any specific facts or information about New Sunlight or its properties. It cites the First Briefing Notes relied on by Cabinet in rendering the first OIC, which failed to even mention New Sunlight by name or explain why its properties were necessary for the proposed infrastructure projects. It argues that this lack of reference shows that Cabinet could not have formed any opinion about the need to designate New Sunlight's lands as opposed to, for example, designating Cadillac Fairview's lands.

(b) Though the First Briefing Notes did make indirect reference to New Sunlight, they inaccurately characterized it as one of the Minister's "building partners" who had "already signed or are concluding negotiations on Contribution Agreements." This claim is incorrect and does not accurately describe the state of negotiations between the two parties.

(c) New Sunlight also asserts that this statement likely misled Cabinet and influenced its decision to issue the First OIC. It argues that this runs afoul of the First OIC's enabling legislation, TOCA, which only permits TOC designation if "in the opinion of the Lieutenant Government in Council, it is or may be required to support a transit-oriented community project". Given the flawed information in the First Briefing Notes, it submits that Cabinet could not have validly formed an opinion about which properties were required to support the TOC.

(d) New Sunlight also cites Paudash Shores as an example where the Divisional Court quashed a decision based on inaccurate information. In that decision, the Court set aside the Minister of Natural Resources' issuance of an aggregate removal license as it was based on the municipality's unsubstantiated claim that the subject property contained a legal non-confirming use. Having found that this was based on "misinformation", Swinton J. set the decision aside".[^7]

(e) Finally, New Sunlight submits that regardless of the wide discretion afforded to Cabinet, common law requires that its decisions not be arbitrary or unjustified. This is particularly true in the expropriation context, which is "one of the ultimate exercises of governmental authority" constituting severe loss and interference with property rights.[^8] In light of this, New Sunlight submits that there had to be at least some rational connection between its properties and the First OIC.

(f) In sum, issuing the First OIC on such an insufficient record was unreasonable and was clearly an arbitrary and untrammeled exercise of Cabinet's statutory power made in order to allow for expedited expropriation of New Sunlight's properties.

The First OIC is not arbitrary

[49] The First OIC was issued as one of four OICs (the "TOCA OICs") pursuant to s. 2 of TOCA. The TOCA OICs designated four proposed Communities – including East Harbour – as transit-oriented community land. The TOCA OICs impacted multiple landowners, including existing building partners (those with TOC Agreements) and potential building partners (those without TOC Agreements) in Communities across Toronto. New Sunlight was not the only landowner without a TOC Agreement to have their land designated as TOC land.

[50] The precipitating factor behind the issuance of the TOCA OICs was Cadillac Fairview's concern about the impact of the immunity provision in s. 47 of the Planning Act on the enforceability of its TOC Agreement. However, Ontario also maintains that this concern would make it more difficult to negotiate TOC Agreements with potential building partners, as they too would be concerned about the enforceability of any upzoning commitments made by the Province. Ontario submits that another purpose of the TOCA OICs was to streamline the expropriation process by avoiding hearings of necessity. This was necessary because of approaching construction deadlines.

[51] Section 2 of TOCA provides a broad grant of authority for Cabinet to designate land if it forms the opinion that the designation "is or may be required to support a transit-oriented community project." Section 1 is also broad in defining a transit-oriented community project as a "development project of any nature or kind and for any usage in connection with the construction of or operation of a station that is part of a priority transit project."

[52] The First Briefing Notes provided to Cabinet in regard to the TOCA OICs stated that:

i) the primary purpose of designating the four Communities as transit-oriented community land was to "provide certainty for current and future TOC Building Partners by enabling them to enforce contractual agreements with the Province and to help ensure the viability of the TOC program;

ii) the TOCA OICs "will provide confidence to our building partners that we are committed to the delivery of the transit-oriented communities program;"

iii) it was necessary to designate lands in addition to those that were already subject to TOC Agreements, to protect future negotiations, stating: "failure to designate TOCs and exempt them from immunity provisions will constrain the Province's ability to negotiate with potential Building Partners;"

iv) streamline potential expropriation for the TOC Program, as it would "exempt designated transit-oriented community land from sections of the Expropriation Act including Hearings of Necessity".

[53] I find that these goals fall within the permissive and broadly defined purpose of potentially supporting a transit-oriented community project in s. 2 of TOCA.

[54] New Sunlight's argument that the First OIC was arbitrary because it was based on incomplete or inaccurate information falls outside of the scope of review provided for in Auer. As put by the Supreme Court in Auer:

[57] A court must be mindful of its proper role when reviewing the vires of subordinate legislation, especially when it relies on the record, other sources or the context to ascertain the delegate's reasoning process. Mancini[^9] explains:

Importantly courts must organize these various sources properly to preserve the focus on the limiting statutory language. Again, the reasonableness review should not focus on the content of the inputs into the process or the policy merits of those inputs. Rather, courts must key these sources to the analysis of whether the subordinate instrument is consistent with the enabling statute's text, context, and purpose. For example, Regulatory Impact Analysis Statements can inform a court as to the link between an enabling statute's purpose and a regulatory aim, much like Hansard evidence. These analyses can help show how the effects of a regulation which, at first blush appear unreasonable, are enabled by the primary legislation. [p. 279]

[58] The potential or actual consequences of the subordinate legislation are relevant only insofar as a reviewing court must determine whether the statutory delegate was reasonably authorized to enact subordinate legislation that would have such consequences. Whether those consequences are in themselves necessary, desirable or wise is not the appropriate inquiry.

[59] In Vavilov, our Court explained that "[e]lements of the legal and factual contexts of a decision operate as constraints on the decision maker in the exercise of its delegated powers" (para. 105). Reviewing the vires of subordinate legislation is fundamentally an exercise of statutory interpretation to ensure that the delegate has acted within the scope of their lawful authority under the enabling statute (para. 108; Mancini, at pp. 274‑75; see, e.g., West Fraser Mills, at para. 23).

[55] The relevant question under Auer is not whether the first OIC was reasonable or justified by the record, but whether Cabinet reasonably acted within the legislative constraints of its enabling statute in forming the opinion that designating New Sunlight's land as TOC land is or may be required to support a TOC project as defined in s. 1 of TOCA.

[56] I am also not persuaded that the First OIC was arbitrary because New Sunlight was inaccurately described and was not directly referenced by name. The First OIC is unlike the decisions New Sunlight relies on: Roncarelli v. Duplessis[^10] and Paudash Shores Cottagers Association v. Ontario.[^11] In those cases, the respondents made decisions that specifically targeted individuals, and those decisions found no support in the law or record. Here, the TOCA OICs were not made to target any specific person but were directed at a broad range of lands, in a manner that was consistent with the text and purpose of TOCA.

[57] The First Briefing Notes did not refer specifically to any landowner in any proposed Community other than Cadillac Fairview, which was mentioned as background information because it was the first building partner to have raised the specific issue of immunity in s. 47 of the Planning Act. Ontario submits that the First Briefing Notes were drafted from a high-level perspective with a view to the Communities and the TOC Program, not with respect to any specific landowner.

[58] In my view, this does not make the First OIC arbitrary. While state power cannot be exercised capriciously, New Sunlight pointed to no authority requiring that Cabinet specifically consider every landowner impacted by the OIC.

[59] Ontario's evidence is that it requires a TOC Agreement with a building partner for any proposed Community so that it retains a say in the terms of how and when the Community will be developed and has a mechanism to enforce those terms. Following the construction of the extension of Broadview Avenue and the Flood Protection Landform, Ontario anticipates that the remaining lands in East Harbour North will be developed pursuant to a TOC Agreement between Ontario and a building partner, potentially but not necessarily New Sunlight.

[60] I am not persuaded by New Sunlight's argument that Cabinet was misled or influenced to make the First OIC even if the First Briefing Notes left the impression that New Sunlight had or was close to reaching a TOC Agreement. Whether or not New Sunlight had or was close to having a TOC Agreement or ever planned to have one at all, the First Briefing Notes make it clear that Ontario considered it necessary, with or without a TOC Agreement, to designate its land as TOC land to protect future negotiations and avoid hearings of necessity in any expropriation proceedings.

[61] Accordingly, I conclude that the First OIC was not arbitrary.

Issue 1(b): Does the First OIC discriminate against New Sunlight?

[62] New Sunlight submits that since Cadillac Fairview's properties were expressly referenced in the First Briefing Notes, this "may" justify Cabinet's opinion that designating them as TOC was required to support the projects. However, this did not support the same conclusion regarding New Sunlight or its property since they were never explicitly referenced. Despite this, the First OIC arbitrarily "lumped" its properties in with Cadillac Fairview's to allow for a quicker expropriation process. By failing to distinguish New Sunlight and its properties from Cadillac Fairview, it argues that this was "something akin to Administrative Discrimination."

The First OIC does not discriminate against New Sunlight

[63] I do not agree that New Sunlight's lands were simply "lumped in" with Cadillac Fairview's property. The First Briefing Notes support that New Sunlight's land was deliberately designated along with land in four other Communities in order to support TOC projects.

[64] Having regard to the caselaw New Sunlight cites in support of its argument of administrative discrimination,[^12] discrimination refers to a distinction set out in subordinate legislation, for example a regulation prescribing different conditions to be met for different classes of drug manufacturers, that is not authorized by the enabling legislation. The First OIC did not set out any distinctions across persons or classes and the concept of discrimination does not apply.

Issue 1(c): Is the First OIC unnecessary?

[65] New Sunlight submits that the TOC designation was unnecessary because it already had plans to develop the properties to create a transit-oriented community whether given this designation or not. Unlike Cadillac Fairview, New Sunlight had no need to have the immunizing provision removed against its land because it had no TOC Agreement it was concerned about enforcing. It further objects to all of its land being designated as TOC since it is unclear how much of it will be needed for the projects. Since only small portions of the property are likely required, it argues that the blanket TOC designation for all of its land was unnecessary and detrimental, having removed its right to a hearing of necessity under the EA.

Necessity is not part of the legal test

[66] I agree with Ontario that "necessity" is not a legal constraint on Cabinet's discretion to designate land under s. 2 of TOCA. The legislature uses broad language to authorize designation of transit-oriented community land where it "is or may be required to support a transit-oriented community project" (emphasis added). Moreover, the Supreme Court stated in Auer that reasonableness review of subordinate legislation "does not involve assessing the policy merits of subordinate legislation to determine whether it is necessary, wise, or effective in practice."[^13]

[67] Even if necessity were an issue, New Sunlight's argument ignores the factual record regarding Ontario's approach to implementing the TOC Program. From Ontario's perspective, a TOC Agreement was required for the development of East Harbour North, and the First OIC was necessary because it preserved Ontario's ability to negotiate one.

The First OIC is reasonable and intra vires

[68] New Sunlight argues that the First OIC is unreasonable because it is arbitrary, discriminatory, overbroad and based on incomplete and/or incorrect information.

[69] As the Supreme Court made clear in Auer, the issue is not whether the first OIC was reasonable in that it was justified by the record, but whether Cabinet reasonably acted within its legislated grant of authority under TOCA.[^14]

[70] At para. 62 of Auer, the Court stated:

[62] The language chosen by the legislature in an enabling statute describes the limits and contours of a delegate's authority (Vavilov, at para. 110). The legislature may use precise and narrow language to delineate the power in detail, thereby tightly constraining the delegate's authority. Alternatively, the legislature may use broad, open‑ended or highly qualitative language, thereby conferring broad authority on the delegate (ibid.; see also Keyes (2021), at pp. 195‑96). Statutory delegates must respect the legislature's choice in this regard. They "must ultimately comply 'with the rationale and purview'" of their enabling statutory scheme in accordance with its text, context and purpose (Vavilov, at para. 108, citing Catalyst Paper, at paras. 15 and 25‑28, and Green, at para. 44).

[71] Here, the language of the enabling statute, s. 2 of TOCA, is broadly permissive and the issuance of the First OIC falls within its scope. The preservation of existing and future TOC Agreements, and the streamlining of a potential expropriation to ensure project deadlines can be met, "is or may be required to support" the various development projects intended at East Harbour. These development projects exist "in connection" with the East Harbour Transit Hub and therefore qualify as "transit-oriented community projects". New Sunlight has not shown that the First OIC was not reasonably within the scope of authority delegated to Cabinet by s. 2 of TOCA.

Issue 2(a): Was the Second OIC made in bad faith?

[72] New Sunlight submits that Auer does not affect this Court's ability to quash subordinate legislation made in bad faith. It argues that Ontario has acted in bad faith by threatening to expropriate the entirety of certain properties even though not all of the land is needed to support its projects. Ontario has continued to apply pressure even as they negotiate a potential TOC agreement and is abusing their power of expropriation.

[73] New Sunlight further submits these efforts have been part of Ontario's broader bad faith strategy throughout this dispute, including its decision to wait two weeks after the Second OIC was signed before serving New Sunlight with a copy. New Sunlight also highlights that Ontario chose to do so in the midst of its legal challenge to the First OIC.

New Sunlight has failed to meet the heavy burden to establish bad faith

[74] Bad faith/improper purpose refers to "acts committed deliberately with intent to harm" as well as acts that are "so markedly inconsistent with the relevant legislative context that a court cannot reasonably conclude that they were performed in good faith."[^15] The party alleging bad faith bears the onus of proving it, and in doing so must meet a "heavy burden".[^16] Speculation and innuendo are not evidence capable of proving bad faith.[^17]

[75] It is important not to conflate any adverse impact that may be faced or suffered by the claimant with "deliberate intent to harm". As the Supreme Court has held, "In a democracy, public officers must retain the authority to make decisions that, where appropriate, are adverse to the interests of certain citizens."[^18]

[76] New Sunlight has failed to establish bad faith or improper purpose on the part of Cabinet in issuing the Second OIC.

[77] New Sunlight's principal testified that he believes Cabinet issued the Second OIC to "avoid delay to its self-imposed timelines and to avoid potential additional costs of construction." There is nothing inconsistent with the legislative scheme in this.

[78] New Sunlight's suspicion that Ontario would use the Second OIC to expropriate its land to resell it to a third party is countered by Ontario's stated preference at the time the Second OIC was issued to negotiate an agreement that would allow New Sunlight to retain and develop the "unused portions of the Properties."

[79] New Sunlight argues the Second OIC was issued as a "threat" to "gain leverage over the Applicant'' in negotiations. The Second Briefing Notes state that an amicably negotiated agreement remained Ontario's preferred strategy and the Second OIC was sought only as a "backstop" to preserve project timelines in case negotiations broke down. Again, there is nothing inconsistent with the legislative purpose in wanting to ensure that steps could be taken to acquire the lands at issue in time to meet project deadlines.

[80] With respect to consultation and notice, the Second OIC had no direct impact on New Sunlight's rights and only impacted the Minister's legal authority. An inference of bad faith cannot be made from the fact that New Sunlight was not consulted on the Second OIC or the alleged two week delay in advising New Sunlight of it.

[81] New Sunlight states that Ontario's witness, Ms. Cuthbertson, testified inaccurately during her cross-examination that "the Province has not, at this point, initiated an expropriation process." Whether or not it can be argued that the Second OIC initiated the expropriation process, the accuracy of Ms. Cuthbertson's testimony has no bearing on Cabinet's motivations in issuing the Second OIC.

Issue 2 (b): Does the Second OIC satisfy the Auer test?

[82] The Second OIC is consistent with the text and purpose of its enabling statute. The Second OIC was available to Cabinet under s. 10(2) of the MIA upon Cabinet considering that New Sunlight's lands "were necessary for the benefit of the public", as required by s. 10(2).[^19]

[83] It is clear from the face of the second OIC that Cabinet considered New Sunlight's lands to be necessary for various public benefits relating to the East Harbour Community and the TOC Program, vis-à-vis transit, housing and community infrastructure. These are clearly identified public benefits and the Second OIC clearly fell within the grant of authority available to Cabinet under s. 10(2) of the MIA. I find that the Second OIC meets the Auer test.

Is the Second OIC unreasonable or ultra vires?

[84] New Sunlight has not shown that the Second OIC is not reasonably within the scope of the authority delegated by the enabling legislation.

Conclusion

[85] Subordinate legislation benefits from a presumption of validity.[^20] The burden is on the party challenging the subordinate legislation to show that it is not reasonably within the scope of the delegate's authority.^21 I find no failure of rationality internal to the reasoning process nor are the OICs untenable in light of the factual and legal constraints that bear on them.[^22] New Sunlight has not shown that either of the OICs are ultra vires. I would therefore dismiss the application.

Costs

[86] In accordance with the agreement of the parties, New Sunlight shall pay costs to Ontario in the all inclusive amount of $45,000.

Backhouse J.

I agree _______________________________

Sachs J.

I agree _______________________________

S.T. Bale J.

Released: 20250214

CITATION: New Sunlight Inc. v. Ontario (Minister of Infrastructure), 2025 ONSC 638

DIVISIONAL COURT FILE NO.: 511/24

DATE: 20250214

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Sachs, Backhouse. S.T. Bale JJ.

BETWEEN:

NEW SUNLIGHT INC.

Applicant

– and –

HIS MAJESTY THE KING IN RIGHT OF ONTARIO AS REPRESENTED BY THE MINISTER OF INFRASTRUCTURE

Respondent

REASONS FOR decision

BACKHOUSE J.

Released: 20250214

[^1]: Bisallon v. City of Montreal, 1918 70 (SCC), [1918] 58 SCR 24 pp28-29; McQueen v. Canada, 1886 83 (SCC), [1886] 16 SCR 1 at p.40.

[^2]: Auer at para. 3.

[^3]: Auer at para. 4.

[^4]: Auer at para. 54.

[^5]: Auer at paras. 60-65.

[^6]: Roncarelli v. Duplessis, 1959 50 (SCC), [1959] SCR 121, 16 DLR (2d) 689.

[^7]: Paudash Shores Cottagers Association v. Ontario (Ministry of Natural Resources), 2012 ONSC 2839 (Div. Ct.).

[^8]: Toronto Area Transit Operating Authority v. Dell Holdings, 1997 400 (SCC), [1997] 1 S.C.R. 32 at para. 20.

[^9]: Mancini, Mark P. "One Rule to Rule Them All: Subordinate Legislation and the Law of Judicial Review" (2024), 55 Ottawa L. Rev. 245.

[^10]: Roncarelli v. Duplessis, 1959 50 (SCC), [1959] S.C.R. 121 (S.C.C.).

[^11]: Paudash Shores Cottagers Association of Ontario (Ministry of Natural Resources), 2012 ONSC 2839 (Div Ct.).

[^12]: Transalta Generation Partnership v. Regina, 2021 ABQB 37 at para.71, citing Katz Group Inc. v. Ontario, 2013 SCC 64 at para.47.

[^13]: Auer at para. 3.

[^14]: Auer at para.57-59.

[^15]: Wise Elephant Family Health Team v Ontario, 2021 ONSC 3350 at para 82-83.

[^16]: Wise Elephant Family Health Team v Ontario, 2021 ONSC 3350 at para 84 (Div Ct); Hardick v College of Chiropractors of Ontario, 2023 ONSC 1479 at para 37 (Div Ct); Weisdorf v Toronto, 2020 ONCA 401 at para 12.

[^17]: Wise Elephant, supra, at para.84.

[^18]: Odhavji Estate v Woodhouse, 2003 SCC 69 at para 28, cited in Trillium Wind Corporation v Ontario, 2013 ONCA 683 at para 53-54.

[^19]: MIA, s.10(2).

[^20]: Auer, supra, at para.50, quoting Katz Group, at para.25.

[^22]: Auer at para.51, quoting Vavilov at para.101.