SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-10-0687
DATE: 20130607

RE: UCCI CONSOLIDATED COMPANIES INC., Plaintiff

AND:

HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO, as represented by the MINISTER OF MUNICIPAL AFFAIRS AND HOUSING, Defendant

BEFORE: THE HON. MR. JUSTICE J.R. McCARTHY

COUNSEL:
M. McAree and J. Stevens, for the Plaintiff

J. Kelly and J. Parker, for the Defendant

HEARD: May 8, 2013

ENDORSEMENT

The Motion

[1] The Defendant brings a motion under rule 21.01 (1) (a) and (b) of the Rules of Civil Procedure, R.R.O. 1995, Reg. 194, for an order striking out the claim of the Plaintiff dated June 24, 2010.

[2] The claim is for damages and/or specific performance of an agreement entered into between the parties on February 27, 2007 and March 5, 2007 by way of minutes of settlement (the “agreement”).

Background

[3] The Plaintiff is the owner of certain lands (the “lands”) in the Township of Oro-Medonte, Ontario (the “township”). Beginning in 2002, it sought to develop an adult lifestyle community on those lands. The development was to be known as Baywinds Adult Lifestyle Community (“Baywinds”). The development required the Plaintiff to apply for amendments to both the County of Simcoe official plan and the township official plan. Its initial application to the Ontario Municipal Board (the “OMB”) was denied. After it launched an appeal, the Plaintiff embarked on negotiations with the Ministry of Municipal Affairs and Housing (the “MMAH”), a Ministry of the Defendant. The Province of Ontario had served a Provincial Interest Order on the Plaintiff, effectively negating any decision by the OMB. Ultimately, the Baywinds development was amended such that it was acceptable to the MMAH and other stakeholders. This formed the basis for the agreement between the Plaintiff, the Defendant, the township, and a local ratepayers association.

[4] As part of the agreement, the parties undertook to “execute diligently and expeditiously such further documents and take such further actions as may be reasonably required in order to implement and give full legal force and effect to the terms of these minutes.”

[5] Subsequent to the execution of the agreement, the Plaintiff prepared plans, designs, and environmental studies as part of the planning phase of the development. It did not, however, obtain final approval of a draft plan of subdivision or approval of a draft condominium description pursuant to the provisions of the Planning Act, R.S.O. 1990, c. P. 13 and the Condominium Act, 1998, S.O. 1998 c.19.

The Lake Simcoe Protection Act

[6] The Lake Simcoe Protection Act, 2008, S.O. 2008, c. 23 (the “Act”) came into force in December 2008. It provided for the creation of a Lake Simcoe Protection Plan (the “Plan”). The Plan was established on June 2, 2009. It served to place additional requirements on developments located within the Lake Simcoe watershed. The Act provides that a decision under the Planning Act or the Condominium Act, 1998 made by a municipal council or the OMB must comply with the provisions of the Plan. The Plan contains a transition or “grandfathering” clause: developments existing prior to the effective date of the Plan would not be governed by the provisions of the Plan if the developments had received approval of a draft plan of subdivision pursuant to s. 51 of the Planning Act, or approval of a draft condominium description pursuant to s. 9 of the Condominium Act, 1998.

The Impugned Pleading

[7] The Plaintiff alleges that the Defendant breached the agreement. Paragraphs 10 through 16 of the impugned pleading set out the details of the alleged breaches. The grounds for this claim can be summarized as follows:

• The Defendant breached an express or implied term of the agreement to permit the Baywinds development to proceed to completion (paragraph 12);

• The Defendant failed to provide notice to the Plaintiff or the public that the Plan was coming into force until after the Plan was in effect (paragraph 12);

• The Defendant failed to take steps to ensure that the development would be allowed to proceed under the transitional provisions of the Plan or otherwise “grandfathered in” (paragraph 12);

• MMAH has taken the position that the Baywinds development cannot proceed in accordance with the agreement without significant modifications such that the project would not be financially viable (paragraph 13);

• The Defendant failed to take all necessary steps to ensure that the Baywinds development proceeded in accordance with the agreement (paragraph 14);

• The Defendant failed to comply with its duty to provide prior notice to the Plaintiff of its intention to take the position that Baywinds could not proceed in accordance with the agreement (paragraph 16);

• The Defendant breached its duty of good faith in failing to communicate to the Plaintiff its interpretation of the Act and its intention to take the position that Baywinds could not proceed in accordance with the agreement prior to June 2, 2009 (paragraph 16);

• By way of a public pronouncement made by Premier McGuinty, the Defendant negligently misrepresented that the Plan would not apply to existing approved developments.

[8] The pleading alludes to the passage of the Act and the Plan at paragraph 11, which is incorporated under the general heading of “Breaches of the Minutes of Settlement”. The pleading does not specifically allege that the passage of the Act and the accompanying Plan, in and of itself, constituted a breach of the agreement. Notwithstanding that fact, in responding argument, counsel for the Plaintiff took the position that the passage of the Act and the Plan did constitute a breach of the agreement on the part of the Defendant. Accordingly, it is appropriate that such an allegation, although not well articulated in the claim, should be addressed by the court in the context of this motion.

The Agreement

[9] Article 5 of the agreement establishes that the parties will jointly recommend and request that the OMB issue a decision approving: (a) amendments to the official plans of the township and county; (b) a zoning by-law amendment; and (c) the Concept Plan. Article 6 stipulates that the OMB decision was not final and binding unless and until confirmed by the Lieutenant Governor in Council (“the Cabinet”). Article 9 states that the parties are contractually bound by the agreement and that it is enforceable by civil action in the event of a breach. Article 12 contains the “entire agreement” clause. The official plan amendment appendix sets out an entire series of steps remaining to be taken by the Plaintiff developer. It also contains the following wording at the conclusion of paragraph E.6.5:

It is a policy of this Amendment that if it is determined that the development will have an unacceptable impact on adjacent land uses as a result of further study, no further planning approvals are to be given and Council will consider the re-designation of the lands back to the Rural and the Environmental Protection Two (overlay) designations.

[10] Article 10 of the agreement contains the wording that the Plaintiff argues creates a positive duty on the Defendant to take all reasonable steps to ensure that the development is allowed. It reads as follows:

Subject to applicable law, the Parties shall execute diligently and expeditiously, such further documents and take such further action as may be reasonably required in order to implement and give full legal force and effect to the terms of these Minutes.

The Defendant’s Position

[11] In moving to strike the pleading, the Defendant’s position may be summarized as follows:

• The Action is statue barred by reason of the limitations on remedies section in the Act (s. 23);

• The agreement limits the parties to the obligations therein and the Defendant has complied with all of its obligations;

• There can be no implied terms outside the written agreement. The document contains a clause explicitly stating that the document constitutes the complete agreement between the parties;

• There is no basis for a claim in negligence. There is no private law duty of care owing by the Defendant to the Plaintiff;

• The statements allegedly made by the Premier were general in nature and it was unreasonable for the Plaintiff to rely on them;

• In any event, the statement allegedly made was, and remains, true: the Plan does not apply to existing approved developments. Accordingly, the statement of claim cannot support a claim for any kind of misrepresentation;

• No Minister of the Crown is permitted to bargain away or fetter her ability and obligation to act in the public interest. Nor can a Minister of the Crown enter into any agreement that would fetter the capacity of Ontario to create new legislation.

The Plaintiff’s Motion

[12] In response to the motion, the Plaintiff asserts that the Defendant cannot meet the “plain and obvious” test laid down by the Supreme Court in the case of Hunt v. Carey Canada Inc., 1990 90 (SCC), [1990] 2 S.C.R. 959. The Plaintiff proposed that the guiding principles in a Rule 21.01 motion are those summarized by Mr. Justice Bellamy in Progressive Casualty Insurance Co. v. Saygili, 1999 15092 (ON SC), 46 O.R. (3d) 10, [1999] O.J. No. 3331, at para. 17. The Plaintiff argues that the immunity provision in s. 23 (3) of the Act should not be available to the Defendant in these circumstances because the Defendant’s actions (namely its failure to provide notice or provide Baywinds with a grandfathering) are contrary to what citizens expect to receive from their government. In addition, the Defendant’s interference with the Plaintiff’s ability to pursue Baywinds represented a breach of the agreement and a breach of its duty of good faith. By enacting the legislation in question, the Defendant has trampled on the Plaintiff’s right to pursue the Baywinds development to its conclusion. Finally, the Plaintiff contends that it would be open to the court to determine that the immunity clause in question does not apply to a cause of action independent of the Act. It relies on the case of Rizmi Holdings Ltd. v. Vaughan (City) (2009), 63 M.P.L.R. (4th) 212 (Ont. S.C.), at para. 54, aff’d 2010 ONSC 1583, 71 M.P.L.R. (4th) 76 (Div. Ct.), for this proposition.

The Law

[13] In a Rule 21 motion, the court must assume that the facts pleaded in the statement of claim are true and must be satisfied that it is plain and obvious that the claim cannot succeed. When this test is met, the claim will be struck out. Claims with no reasonable prospect of success must be struck at an early stage as a measure essential to effective and fair litigation. (see Hunt v. Carey Canada Inc.).

[14] An immunity clause in an Act must be read in its entire context and in the grammatical and ordinary sense, having regard to the scheme and object of the Act and the intention of the Legislature. (see Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559, at paras. 26-30).

[15] In interpreting a contract, the court must give its words their ordinary and literal meaning, having regard to the contract as a whole. In the absence of an ambiguity, the court should not go outside the words of the contract. (see Eli Lilly & Co. v. Novopharm Ltd; Eli Lilly & Co. v Apotex Inc., 1998 791 (SCC), [1998] 2 S.C.R. 129, at paras. 54-60).

[16] The Supreme Court of Canada has held that no one has a vested right in the continuance of the law as it stood in the past. (see Gustavson Drilling (1964) Ltd. v. Canada (Minister of National Revenue –M.N.R.), 1975 4 (SCC), [1977] 1 S.C.R. 271).

[17] In order for any claim in negligence or negligent misrepresentation to succeed, the Defendant must owe a private law duty of care to the Plaintiff (see R v. Imperial Tobacco Canada Ltd., 2011 SCC 42, [2011] 3 S.C.R. 45, at paras. 43-50).

Analysis

The immunity provision

[18] I am of the view that the statutory immunity clause was intended to be of wide scope. It is plainly worded and unambiguous. It targets potential remedies in contract, restitution, tort, and trust. It applies to bar both direct and indirect causes of action. Moreover, it extends to causes of action that arose before or after the date when the Act came into force. I find that certain elements of the cause of action in the case at bar can be fairly said to arise directly or indirectly out of the enactment or making of the Act and Plan, or an act or omission in accordance with the Act and Plan. Those elements are found at paragraphs 12 and 16 of the impugned pleading. The scheme and object of the Act and the intention of the Legislature are clearly set out in the preamble and at s. 1 of the Act, which declares the public interest in protecting the ecosystem of the Lake Simcoe watershed. Having regard to the scheme of the Act, and the clarity and scope of the immunity clause, I find that it applies to bar any cause of action being advanced on the grounds set out at paragraphs 12 and 16 of the pleading.

The “Rizmi” Exception

[19] In Rizmi Holdings Ltd. v. Vaughan (City), the court allowed an action to proceed against a municipality for its negligent or deliberate failure to process applications for land re-designation that had been submitted in 1989, despite also holding that an immunity provision, similar to that found in the case at bar, provided comprehensive immunity from actions. The court at first instance determined that the immunity provision found in s. 20 of the Oak Ridges Moraine Conservation Act, 2001, S.O. 2001, s.31 (the “OMRCA”) did not apply to acts of negligence, malfeasance, or bad faith conduct committed for reasons or purposes unrelated to that Act (at para. 54). The reasoning of the motions judge can be found at para. 62 of his decision: “I shall not deny the plaintiffs the opportunity to have their claims heard where there is some evidence that the actions of the defendant’s staff had nothing to do with the OMRCA or where the immunity provision may not provide a shield to acts of male fides.”

[20] In upholding the decision of the motions judge on appeal, the Divisional Court held that it was at least arguable that the damages suffered did not flow solely from the legislation. The punitive damages sought by the plaintiffs in that case could theoretically be awarded independently of any harm sustained (at para. 10).

[21] In the case before me, I am unable to find that there is any independent, actionable act pleaded that could be said to have been committed for reasons or purposes unrelated to the Act. Nothing of the sort is pleaded. There is no claim for punitive damages. The claim for substantive relief is limited to damages and specific performance only. The body of the allegations themselves do not contain any allegations that the Defendants, or any employees of the Defendants, acted outside the scope of the legislation. The allegation of failing to act in good faith relates to the Defendant’s duty to perform its obligations under the agreement only.

[22] In one sense, the reasoning in Rizmi seems to apply to this case. The agreement itself does create a contractual setting between the parties in which rights and obligations contract would not just survive the immunity provision in the Act, but would operate in the absence of the legislation entirely. Indeed, the agreement stipulates that the parties are contractually bound and that the agreement is enforceable by civil action (Article 9). In the event of a breach of the agreement by the Defendant, it is difficult to see how the immunity clause in the legislation could operate to defeat a cause of action. Outside of the alleged breach of the agreement, however, I fail to see any allegation of an independent, actionable act or omission that would take away the protection afforded to the Defendant by the broadly worded immunity clause in s. 23 of the Act. Accordingly, I would distinguish the decision in Rizmi at both levels of court. I conclude, therefore, that it is plain and obvious that the Plaintiff cannot succeed in advancing a cause of action on the basis of the allegations contained in paragraphs 12 and 16 of the pleading.

Contract

[23] The Plaintiff alleges that, as contemplated in the agreement, it is entitled to see Baywinds through to completion. It further alleges that MMAH (and by extension the Defendant) is in breach of the agreement in failing to take the necessary steps to permit Baywinds to proceed as specified therein and in taking the position that further changes to the project were necessary. While there is no allegation that enacting the Act and the Plan per se amounted to a breach of the Agreement, the Plaintiff does allege that the Defendant’s failure to provide notice of the impact of the Plan, and to ensure that Baywinds was grandfathered in under the Legislation, constituted both a breach of an implied term of the agreement and a failure to act in good faith.

[24] Article 5 of the agreement sets out the specific obligations owed by the respective parties. It provides that they agree to make joint recommendations to the OMB on two official plan amendments, a zoning by-law amendment, and a Concept Plan. The Plaintiff points to Articles 8 through 12 of the agreement, under the heading “Other Provisions,” for the broad duties it alleges either existed or could be easily implied.

[25] Article 12 of the agreement stipulates that the minutes of settlement and the documents attached thereto constitute the entire agreement between the parties. This Article requires that any amendment or waiver to the agreement be in writing and signed by the parties.

[26] At its most basic level, then, the agreement itself forecloses any further express or implied terms if not reduced to writing and explicit agreement. That would, in most circumstances, be the end of the analysis: since the Plaintiff’s claim does not allege a breach of any particular obligation contained in the document, there is no cause of action in contract.

[27] Yet, the Plaintiffs’ pleading is more nuanced: it alleges express or implied terms that the development would be permitted to proceed to completion and that the Defendant was obligated to provide notice of the impact of the Plan on the development. In paragraph 14, the Plaintiff states that the MMAH is obliged to take all necessary steps required to implement and give full effect to the Agreement. It goes on to state that MMAH is in breach of the Minutes of Settlement in failing to take the necessary steps to permit Baywinds to proceed as specified in the Minutes of Settlement, and in taking a position that further changes were necessary such that the Baywinds project is not viable.

[28] In my view, this aspect of the pleading is fatally flawed. It fails to differentiate between MMAH’s obligations under the agreement and the Plaintiff’s “entitlement” to see the Baywinds development through to completion. Nowhere in the agreement is there any acknowledgment or acceptance of the Plaintiff’s right to have the Baywinds development seen through to its completion. The agreement was certainly part of the Plaintiff’s overall plan to complete the development but the agreement was only one step along the way to the realization of that goal. There is no suggestion that the Defendant did not comply with its obligations in Article 5. I agree with the Defendant that there were many steps left for the Plaintiff to take in order to attain its overall goal of development. Those steps had nothing to do with the agreement. Those steps involved different actors, different processes, and different authorities. The Defendant itself was not going to be a party to those processes. The Agreement makes no reference to MMAH being required to take any steps to assist the Plaintiff in obtaining draft approval of a plan of subdivision. Rather, the parties agreed to “…execute diligently and expeditiously such further documents and take such further actions as may be reasonably required in order to implement and give full legal force and effect to the terms of these minutes.” The prescribed obligations in the agreement fall well short of the kind of far reaching obligations which the Plaintiff seeks to imply into the contract. To imply the terms sought by the Plaintiff into the agreement would be inconsistent with the plain meaning of the wording contained therein.

[29] The pleading therefore does not disclose a maintainable cause of action for breach of contract. The obligations of the Defendant are specifically set out in the agreement. The agreement states that the minutes “supersede all prior negotiations and understandings”. Amendments or waivers to the minutes were to be in writing and executed by the parties. The pleading does not allege a breach of any identifiable part of the agreement. It is plain and obvious that no claim for breach of contract can succeed. The portions of the pleading alleging a breach of contract are therefore struck.

Duty of Care and Negligence

[30] Although it is included under the subheading of “Breach of the Minutes of Settlement” in the pleading, the allegation that the Defendant breached a duty of care owed to the Plaintiff hints of tortious conduct by the Defendant towards the Plaintiff. That duty of care encompassed a duty to warn of the pending Act and Plan, a duty to warn of the position MMAH intended to take, a duty to warn of the Plan’s impact on the development, and a duty to ensure that the development was exempted from the operation of the Plan.

[31] In Imperial Tobacco, at paras. 37-38, the Supreme Court set out a two-stage test for determining whether a duty of care would exist between a legislative authority and a private entity: first, if the facts disclose that there exists a relationship of proximity between the parties in which failure to take reasonable care might foreseeably cause loss or harm, then a prima facie duty of care arises; second, policy reasons outside of this relationship might serve to negate the prima facie duty.

[32] I agree with the Defendants that the facts pleaded are insufficient to support any finding of such proximity or foreseeability; accordingly, there is no private law duty of care to consider. The Plan does not impose a private law duty of care towards the Plaintiff. The immunity clause in the Act serves as a clear indication that the Plan is intended to operate outside of the realm of private law. The contractual relationship between the parties arising out of the agreement is limited to the specific obligations contained therein. The Plaintiff has not asserted any facts about further interactions with the Defendant that could serve as the basis for a finding of a special relationship.

[33] In any event, any prima facie duty of care would be negated because imposing a restriction on how and to whom legislation will apply would amount to a shackling of Cabinet’s discretion to act in the public interest. This would be contrary to public policy. So too would the recognition of a duty owing to one developer in preference to another or in preference to the public interest. The Supreme Court has made it abundantly clear that it is a core function of legislative bodies to make laws based on public policy considerations. Policy decisions of the Legislature cannot be the basis of a claim in tort.

Negligent Misrepresentation

[34] Although the pleading does not expressly assert a claim in negligent misrepresentation, a suggestion of this tort is found at paragraph 12, which sets out the detrimental reliance that the Plaintiff placed on public pronouncements allegedly made by the Premier of the Province. Again, in the absence of a private duty of care, there can be no basis for a claim of negligent misrepresentation.

[35] Any statements made by the Premier were made to the public at large, not to the Plaintiff. There was no professional or expert advice included in the pronouncement and certainly none directed at the Plaintiff. There are no facts alleged in the pleading that could serve as the basis for a finding that the Defendant ought reasonably to have foreseen that the Plaintiff would rely on the representation and that such reliance would have been reasonable.

[36] Even if there was a basis for a claim in negligent misrepresentation, the principles set out in Imperial Tobacco serve to prevent such a claim being advanced. When legislative initiatives constitute core policy decisions, the public authority behind those initiatives is immune from liability.

[37] There is no cause of action in negligent misrepresentation.

The Claim for Damages

[38] The overarching, if perhaps curable, defect of the pleading is that its claim for damages is not sustainable on the facts as set out. In paragraph 12, it is expressly pleaded that, at the time of the alleged pronouncement by the Premier, “Baywinds was an existing and approved development”. If this be true, then the entire basis for the claim is simply nonexistent. The Baywinds development should, based upon that state of affairs, qualify for exemption from the Plan’s embrace, allowing it to proceed as if the legislation had not been passed. Presumably, any opposition from a public authority citing the Plan as a barrier to the development’s proceeding could be overcome by an appropriate application and a review of that authority’s decision.

[39] Moreover, the particulars of the claim for damages fail to indicate why it is that the Plaintiff “cannot proceed with Baywinds and has lost all of its invested fees and expenses.” Counsel for the Plaintiff suggested that the Plaintiff has been apprised that its application for subdivision approval has been, or will be, rejected by the appropriate planning authority. However, that has not been pleaded. Nor is it alleged that the MMAH or the Defendant have thwarted that process; indeed, the materials before me suggest that the Defendant has absolutely nothing to do with the planning process.

[40] At its most basic level, the claim cannot possibly succeed as pleaded because there is no identifiable event to support a cause of action. This is not a case of damages that have not yet crystallized or are as yet unquantifiable; rather, the circumstances that might cause those damages to be suffered have not been pleaded. The Plaintiff has not been denied subdivision approval by an authority charged with the power to entertain and dispose of such an application. In short, there has yet to be an event which might serve to trigger a flow of damages suffered to form the basis of a claim.

Disposition

[41] For the above reasons, the claim is struck in its entirety. The Defendants have met their onus of establishing that it is plain and obvious that the claim as pleaded cannot succeed. In the event that the parties are unable to agree on the issue of costs, it is ordered that written submissions be served and filed by the litigants according to the following schedule: (i) submissions from the Defendant limited to 3 pages by June 30, 2013; (ii) responding submissions from the Plaintiff limited to 2 pages by July 15, 2013; and (iii) reply submissions, if any, from the Defendant limited to 1 page by July 22, 2013.

McCARTHY J.

Date: June 7, 2013