SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-11-237-0000
DATE: 2012/09/24

RE: The Corporation of the Township of Stone Mills, Applicant

AND:

Rebel Scrap Metal Inc., Parts-A-Plenty Inc., James (Jim) Sinclair, Todd Sinclair, and Arrowstar Terminals Inc., and 816 Goodyear Rd. Inc. , Respondents

BEFORE: The Honourable Mr. Justice R. Leroy

COUNSEL: Timothy J. Wilkin/James L. McDonald, Solicitors for the Applicant
David Adams, Solicitor for the Respondents

HEARD: September 4, 2012 at Kingston

ENDORSEMENT

INTRODUCTION

[ 1 ] The Respondents founded a salvage yard business on April 4, 2011 on land within the Applicant Township. The property they are using is approximately 20 acres in size and is bare, vacant and undeveloped. The salvage operation involves open storage, piles of separated product, various steel containers for accumulation and transport, together with tractors for haulage. The Respondents attached an “office” sign to a recreational travel trailer delivered to the property. The Applicant seeks orders under Rule 14 declaring that this land use contravenes the municipal zoning by-law, in force since the year 2000, an injunction restraining continued operations, together with corollary enforcement relief. The zoning designation for the land authorizes use as a salvage yard.

[ 2 ] On May 19, 2011 the Applicant enacted an interim control by-law (ICB) under section 38 of the Planning Act, that applies to this and other lands in the municipality. The effect is to freeze development on the designated lands pending review of the land use policies in the Township’s Official Plan and zoning by-law relating to the establishment of new salvage yards.

[ 3 ] The Respondents’ position is that the Respondents’ use of the land complies with the incumbent by-law, that the Applicant’s engagement with the Respondents and enactment of the ICB was done in bad faith and the draconian remedies sought ought to be ameliorated down to reflect and balance the equities between the parties. The Respondents assert that there are material factual disputes between the parties that need to be threshed out and a trial of those issues is required before relief should be considered.

[ 4 ] The parties agree on the following:

a. By-law 2000-85 for the Corporation of the Township of Stone Mills regulates land use for this property. The land is designated as Restricted Industrial Exception One (M3-1) Zone in by-law 2000-85 and a salvage yard is a permitted use. The exception details are not pertinent to the application. The section states that no person shall use any lot or erect or use any building or structure except as authorized by the by-law;

b. This by-law provides that accessory uses shall only be permitted once the principal use is established;

c. By by-law 2001-100 this land is designated as a site plan control area. It provides that no person shall undertake any development in a designated area unless council or the Ontario Municipal Board (OMB), as the case may be, in accordance with s. 42 of the Planning Act has approved the plan and all conditions have been complied with, or unless so ordered by a court of competent jurisdiction. Site plans enable the municipal corporation to assess the project for such issues as electrical consumption, sewage disposal, well water access, storm water runoff, screening, noise management and potentially hazardous implications;

d. The Official Plan (paragraph 4.8.4.3) for the Township establishes a set of minimum requirements for the establishment of new salvage yards in the Township related to water discharge and discharge safety and compliance with minimum provincial legislation and regulations;

e. On March 29, 2011 Mr. Hogan, the Township clerk confirmed to Mr. Sinclair that salvage yard use was a permitted use for the land under the zoning by-law. He used the words “Good to go”. He iterated the requirement for compliance with township land use regulation. The Respondents began the salvage operation on the bare land on April 4, 2011 without municipal approval or knowledge. The fact of the operation was unknown to the Applicant until near the end of April 2011;

f. The parties did not reach site plan agreement;

g. The Respondents’ site plan application involved a building with four bays;

h. The Respondents have not delivered a fully completed application for a building permit;

i. At some point, the Respondents placed a travel trailer on the land augmented by a sign suggesting that it served as the site office;

j. The Applicant alerted the Respondents’ principals on more than one occasion, in timely fashion, the first in March 2011, of the need for site plan agreement and compliance;

k. The Applicant made cease and desist demands that were disregarded;

l. The authority for the relief sought is contained in the by-law and the Municipal Act , 2001, S.O. 2001, c.25, s 440 and 446;

m. The enactment of the Interim Control By-Law (ICB) on May 19, 2011 is contemplated and authorized pursuant to s. 38(2) of the Planning Act and that, as the result, changes in land use for the affected lands was frozen for two one year terms or until repealed;

n. The Respondents did not take the issue of the ICB or site control approval to the OMB;

o. The Respondents did not cross-apply for relief based on assertions of bad faith against the municipality arising from enactment of the ICB;

p. The Township did not undertake review of the land use planning strategies in the Township Official Plan until at least July 2012, fifteen months after Motion 02-SS-2011 was passed on May 19, 2011. The Township extended the one year moratorium on development of the land for the second year in accordance with s. 38 of the Planning Act.

ISSUES

[ 5 ] The issues are:

a. Is this a proper case for determination under Rule 14 or should an order issue for trial of all or some of the issues?

b. If this is a proper case for determination of some or all of the material issues then:

i. Does the Respondents’ land use beginning in April 2011 comply with or contravene By-law 2000-85?

ii. If the Respondents’ land use complies with the zoning law of the municipality, is it grandfathered for purposes of the ICB as a prior non- conforming use?

The ruling, in respect to whether the Respondents’ land use complies with the land use regulation in the municipality, requires a consideration of what land use is lawful on the land and on what terms. That is a matter of law, not fact.

iii. What effect, if any, does the acknowledged declaration by the Township clerk to Mr. Sinclair that they were “Good to go” have insofar as the land’s status as M3-1 and permitted uses.

iv. Should the Respondents’ bare allegations of council bad faith be converted to trial of an issue?

v. What are the appropriate remedies, if any?

Is this a proper case for determination under Rule 14 or should an order issue for trial of all or some of the issues?

[ 6 ] The central issue and relief claimed can properly be determined under Rule 14. The jurisprudence allows that the court has power to hear an application under Rule 14(3)(a-g) even though there are factual disputes. That conclusion is subject to the reservation that in the appropriate case a trial should be ordered – McKay Estate v. Love [1991] O.J. No. 1971 , Seaworld Parks and Entertainment v. Marineland of Canada [2011] O.J. No. 3105 .

[ 7 ] Factors in the analysis include:

a. Whether there are material facts in issue. An application court would not determine genuine issues of credibility;

b. Whether there are complex issues requiring expert evidence or weighing of evidence. These first two considerations go to whether the hearing judge is confident that he or she is able to garner a full appreciation of the facts, circumstances and issues from the materials or not; and

c. The importance or impact of the application and relief sought.

[ 8 ] The first two considerations require an identification of the central or core issue in the dispute, which is whether the Respondents’ land use since April 4, 2011 complies with the municipal land use regulation in force at the time. The parties do not contest the Respondents’ use or the applicable municipal control enactments.

[ 9 ] Factual dispute as to collateral ancillary matters to the core issue between the parties are just that and although there may be alternative remedies for another day, the Applicant is entitled to a hearing based on material uncontested facts.

Importance or impact of the application and relief sought

[ 10 ] To the extent that the Respondents may be prejudiced by an order for, characterized by Respondents’ counsel, draconian relief sought, they are the authors of the predicament and this factor does not accrue in their favour. The Respondents’ narrative reveals that they leased, then purchased the land in June 2011. When they assumed possession, the site was bare, vacant and undeveloped land that had been unused for five or so years. The Respondents’ principals are experienced with municipal process involved in founding this type of business. The consequences of decisions to purchase and start-up without assuring compliance do not fall on the municipality.

[ 11 ] The importance or impact of the relief sought is assessed at the time the proceeding was served. The Respondents began accumulating salvage material on the site on or about April 4, 2011. The Respondents were never given authority from the Township to initiate business operations. They were instructed to cease operations on or about April 26, 2011, when the operation was still nascent. The Respondents chose to forge ahead without municipal approval. The injunction application was issued and served in June 2011. This matter was adjourned six times. Costs thrown away were awarded to the Applicant on the July 13, 2012 adjournment. The Respondents chose to continue to grow the business.

Issue

[ 12 ] As noted, the central issue properly before the court is whether the Respondents’ land use is permissible in this municipality in accordance with its land use by-laws. This issue does not relate to behaviour. Other provincial legislation, in this case, the Environmental Protection Act , is not a consideration unless it relates to a planning issue. The Applicant withdrew the claim for relief under 1(b) and that portion of the claim referencing the Environmental Protection Act in 1(e) of the amended Notice of Application, at the commencement of argument.

Approach to by-law interpretation

Purpose and context

[ 13 ] The proper approach to the interpretation of a municipal building by-law accounts for the words used (ordinary and plain meaning), the intent of council and the purposes and schemes of the by-law as a whole within the Official Plan. That involves a review of the purpose of the enactment as a whole so that the specific provision is interpreted in context, harmoniously with the whole by-law. Context can be drawn from the Official Plan and the declared purposes of the zoning by-law, subject to limits in the words actually used in the by-law.

Official Plan

[ 14 ] The purpose of an Official Plan is to establish a framework of goals, objectives and policies to shape and discipline operative planning decisions in the form of broad principles that are to govern the municipality’s land use generally – St. Mary’s Cement Inc. v. Clarington (Municipality) [2011] O.J. No. 1167 citing Toronto (City) v. Goldlist Properties Inc. (2003), 2003 50084 (ON CA) , 67 O.R. (3d) 441 ONCA.

[ 15 ] On its existing terms, the section of the by-law specifically dealing with Salvage Yards (5.16.6) barely reflects the policies and objectives depicted in the Official Plan for new salvage yards.

Compliance with by-law 2000-85

[ 16 ] The positions of the parties are:

a. The Applicant submits that the Respondents’ use of the property beginning April 4, 2011 was never lawful and cites various sections of the by-law in support;

b. The Respondents submit at paragraph 57 of their Factum that the salvage yard was legally in business on May 19, 2011 when the ICB was enacted.

[ 17 ] It may be that the Respondents were operating a lawful business at the material times. That is not the issue. The issue is whether their use of the land was lawful in the context of the zoning by-law as a whole.

[ 18 ] The by-law provides that no land (within the township) shall be used and no building or structure shall be erected, altered or used except in conformity with the by-law. The prohibition is iterated in the M3 section of the by-law where it provides that no person shall within the M3 zone use any lot or erect, alter or use any building or structure except as specified.

[ 19 ] The stated purpose of the by-law depicted in the explanatory notes is to regulate the use of land and the character, location and use of buildings and structures; to prohibit the juxtaposition of incompatible uses of land; and to prohibit the erection and use of buildings and structures within various areas of the Township unless in compliance with the by-law. The overall context involves implementation of the policies of the Official Plan, regulation of development to minimize adverse affects on existing areas and to prohibit development which may be detrimental to the future orderly development of the Township.

[ 20 ] The Applicant submits that the Respondents cannot establish outside storage as a lawful use in an M3 designated area without erection of a building or structure. I agree. The purposive, contextual and liberal construction of the by-law excludes a salvage yard on bare land. The by-law provides for salvage storage to the rear of the principal structure. A yard, as defined in the by-law, if it is to be used for a permitted purpose, contemplates a building or structure. Salvage yard compliance entails a building or structure, neither of which is present on this site. Without a building or structure, the accumulation of end of use vehicles, refrigerators, batteries and the like, whether for gain or not, amounts to refuse and contravenes the zoning by-law. It is an accessory use without a principal use.

[ 21 ] For illustration:

a. A yard means a space, appurtenant to a building, structure or excavation, located on the same lot as the building, structure or excavation ...;

b. Salvage yard is defined as an establishment where goods, wares, merchandise, articles or things are processed for further use and where such foods, wares, merchandise, articles or things are stored wholly or partly in the open and includes a junk yard, a scrap metal yard and a motor vehicle wrecking yard or premises;

c. Salvage yard provisions are contained in subparagraph 5.16.6 and specify additional provisions pertaining to outside storage, buffering, fencing and licensing. Outside storage is restricted to the rear of the front wall of the principal structure on the lot;

d. A building is defined as a structure, other than a wall or fence, having a roof, supported by columns or walls or supported directly on the foundation, and used for the shelter, accommodation or enclosure of persons, animals or goods;

e. A structure is defined as anything constructed or erected, the use of which requires location on or in the ground, or attached to something having location in the ground;

f. A travel trailer is neither a building nor structure.

[ 22 ] I agree with the applicant’s submission that the word establishment connotes “bricks and mortar”, particularly when used in the context of a land use by-law that utilizes buildings and structures as elemental to permitted uses.

[ 23 ] In conclusion, by-law 2000-85 does not contemplate an open salvage yard operation and the Respondents’ operation is not in compliance with it. The Respondents do not have site plan approval, do not have the requisite building permits.

[ 24 ] The Respondents’ business operations as they were on May 19, 2011 were not prior conforming uses because they were never lawful uses under the existing by-law. A legal non-conforming use is use of land, building or structure that was lawful at the time of enactment of the relevant zoning restriction. This was not.

What part, if any, does the Township clerk’s comment to Mr. Sinclair at the end of March 2011 that they were “Good to go” insofar as the land’s status as M3-1 and permitted uses?

[ 25 ] On or about March 29, 2011, Mr. Hogan confirmed with Mr. Sinclair that the municipal planner confirmed the authority for salvage yard operations on the land. Mr. Hogan noted the need for site plan approval and licence application and issuance. Mr. Hogan agrees that he may have used the words “Good to go”. Mr. Sinclair interpreted that to mean start business.

[ 26 ] The conclusion of the site plan is more than an administrative act. It often involves the imposition of expensive and sometimes project ending expense to achieve compliance and when the municipality and developer are unable to come to terms, resort is to an OMB hearing. The Respondents’ next step in the process to compliance involved the services of a planner/engineer to submit site plans to the municipality for review, while Mr. Hogan worked on the licensing by-law. They had only satisfied the first step in the process.

Bad Faith Allegations – interim control by-law

[ 27 ] The Respondents submit that the combination of municipal council bad faith conduct and estoppel should denude the ICB of efficacy. They seek an order for trial of those issues to forestall the imposition of declaration and injunction.

[ 28 ] During the next contact at the end of April 2011 Mr. Hogan requested the Respondents to close the operation. Council then enacted the ICB on May 19, 2011, effectively terminating the approval process until council had time to review its policies for land use in the applicable area.

[ 29 ] The Respondents cite the apparent about face as evidence of bad faith by the municipality. Their position is that if they had known it might be two years or perhaps never before they could operate a salvage yard on the site they would not have acquired the land and to enjoin continued operations now is disproportionately harsh. I dealt with the implications on that perspective earlier.

[ 30 ] The Respondents allege in the affidavit material that the decision to enact the ICB was based on council’s concern that Mr. Sinclair was notorious in another jurisdiction for breach of regulation. Although that may require a trial at some point, no evidence as to whether that was involved in council’s decision was adduced on that bald assertion. In argument, counsel suggested that the municipal chief administrative officer had personal interest in the project and undertook for the wrong reasons in bad faith to stop the project. No evidence was adduced on that bald assertion. The Respondents had not framed a bad faith cross claim at the time of hearing.

[ 31 ] Further, the Respondents submit that the Township is estopped from changing directions on his proposal citing promissory or contract estoppel. That assertion is misdirected. Estoppel is a rule of evidence. It cannot be invoked to enable a defendant to escape from a statutory obligation. Others have stated that it is not available to invalidate a law and does not operate against the crown. Planning dynamics are sophisticated, complicated and nuanced. Municipal officials have their own strengths and will often be very perceptive. That said, municipal officials can only interpret meaning and application to the best of his/her ability and the municipality (community) is entitled to results based on what the municipal law means as a matter of law, notwithstanding representations by the by-law officer – The Queen v. Baig [1979] O.J. No. 4134 , Aubrey v. Township of Prince 2001 28250 (ON SC) , [2001] O.J. No 123.

[ 32 ] The ICB passed on May 19, 2011 immobilized the Respondents’ development from that moment. The Ontario Court of Appeal in Equity Waste Management of Canada v. Halton Hills (Town) (1997), 1997 2742 (ON CA) , 35 O.R. (3d) 321 validated resort to the ICB when the council needs space to rethink its land use policies to protect the public’s interest in suitable zoning. In the process, the court confirmed that those interests take precedence over the rights of the affected land owners to freely use their land.

[ 33 ] It is impossible to know, based on the affidavit material, whether there may be an issue requiring a trial involving Respondents’ allegations of municipality’s bad faith. The allegations were made. There is no direct evidence on the issue. The court is not about to speculate.

[ 34 ] The Respondents bear a heavy burden to establish the bad faith needed to merit quashing the by-law. In Equity Waste Management of Canada , the court assessed council bad faith around lack of candour, frankness, impartiality that includes arbitrary or unfair conduct and exercise of power to serve private interests at the expense of the public interest. The role of the court is limited to ensuring that the municipality did not exceed its powers or exercise those powers in bad faith. The court does not second-guess council. What is or is not in the public interest is a matter for the judgment of council and what it determines, if it reaches its conclusions honestly and within the limits of its powers is not open to court review.

[ 35 ] The ICB is valid until it is quashed. The Respondents bear the burden of proof in showing bad faith. Allegations and surmise are not evidence. A council is entitled to rethink its land policies in the public interest. The Respondents did not apply to the OMB for review. They did not formulate a cross-claim so the Township would know what was being alleged on what basis. Their decision to operate outside legal parameters was not the appropriate response. The bias/bad faith assertion is collateral to the core issue. It hasn’t been developed with factual or evidentiary grounding.

[ 36 ] The Applicant’s evidence is that the land is located on a known groundwater recharge and surface interaction area that is highly vulnerable to contamination from surface activity. As noted, the part of the zoning by-law that attempts to implement the official plan policy for new salvage yards does so minimally. Concern for control of surface contamination is a matter that transcends the jurisdictional autonomy of Environmental Protection Act agents. Concern for contaminant discharge in a salvage operation is axiomatic and municipal planning is part of the control process. That complies with the framework of goals objectives and policies contained in the official plan and Municipal Act , 2001.

[ 37 ] Nothing written here is intended to prejudice the Respondents should they choose to pursue remedies against the Township and individuals involved in bad faith dealings. I eschew adjudication on those issues. The Applicant seeks relief based on the core issues and facts, none of which are disputed on merit. In these circumstances, bad faith dealings constitute a separate cause of action collateral to the core issues.

REMEDY

[ 38 ] Accordingly, judgment to issue in favour of the Applicant for the relief claimed in the Amended Notice of Application paragraphs a, c, d, e as amended, f, g and h, subject to the following variations:

a. Respondents to have a period of 60 days to remediate the site on their own.

[ 39 ] Subject to filing evidence of delivered written offers to settle that would affect the costs standard within twenty days, costs are awarded to the Applicant on a partial indemnity basis.

Justice Rick Leroy

Date: September 24 th , 2012

COURT FILE NO.: CV-11-237-0000
DATE: 2012/09/24

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: The Corporation of the Township of Stone Mills Applicant

AND:

Rebel Scrap Metal Inc., Parts-A-Plenty Inc., James (Jim) Sinclair, Todd Sinclair, and Arrowstar Terminals Inc., and 816 Goodyear Rd. Inc. Respondents

BEFORE: Justice Rick Leroy

COUNSEL: Timothy J. Wilkin / James L. McDonald, Solicitors for the Applicant
David Adams, Solicitor for the Respondents

ENDORSEMENT

Leroy J.

DATE: September 24 th , 2012