ONTARIO SUPERIOR COURT OF JUSTICE
2014 ONSC 2580
COURT FILE NOS.: 05-CV-301179 PD3 & 05-CV-301154 PD3
DATE: 20140430
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
VINCORP FINANCIAL LTD.
Plaintiff
– and –
THE CORPORATION OF THE COUNTY OF OXFORD and THE CORPORATION OF THE CITY OF WOODSTOCK
Defendants
Peter Lukasiewicz and Evan Atwood, for the plaintiff
Steven Stieber and Murray Stieber, for the defendants
AND BETWEEN:
BLANDFORD SQUARE DEVELOPMENTS LIMITED
Plaintiff
– and –
THE CORPORATION OF THE COUNTY OF OXFORD and THE CORPORATION OF THE CITY OF WOODSTOCK
Defendants
Kevin Sherkin and Robert Gold, for the plaintiff
Steven Stieber and Murray Stieber for the defendants
HEARD at Toronto: December 10, 11 and 12, 2013
Reasons for judgment
C. Horkins J.
introduction
[1] These actions arise out of the expropriation of land (“the mall lands”) in the County of Oxford in 2005. The parties refer to this land as the mall lands because a mall was located on the property.
[2] The plaintiff Blandford Square Developments Limited (“Blandford”) was the registered owner of the mall lands and the plaintiff Vincorp Financial Ltd. (“Vincorp”) is the holder of a first and second mortgage in the amount of $9 million.
[3] The defendant, the Corporation of the County of Oxford (“Oxford”) is the government body that expropriated the mall lands. The plaintiffs are no longer proceeding against the defendant, The Corporation of the City of Woodstock (“Woodstock”) that is located in Oxford.
[4] In late 2004, Toyota Motor Manufacturing North America Inc. (“Toyota”) commenced its search for a site to build a new motor manufacturing plant in North America (“Toyota plant”). From the outset, Toyota had a number of immutable requirements, including that the property be at least 1,000 acres in size. A number of sites were identified in Ontario and the United States that met Toyota's requirements. One of the sites was located in Woodstock. This 1,000 acre site consisted of 28 properties, one of which was the mall lands.
[5] In February 2005, Oxford commenced the process of acquiring the 28 properties to provide for the development of the Toyota plant. Oxford negotiated the purchase of 27 of these parcels of land but was unable to negotiate the purchase of the 28th parcel (“the mall lands”). As a result, Oxford expropriated the mall lands.
[6] After the mall lands were expropriated, Oxford transferred the 1,000 acres that included the mall lands to Toyota. The mall lands were approximately 91.5 acres in size. Toyota proceeded to build a new North American motor vehicle manufacturing plant on the 1,000 acre site.
[7] Oxford offered the plaintiffs $4.2 million in compensation for the expropriated mall lands pursuant to s. 25 of the Expropriations Act. The plaintiffs have not accepted this offer.
[8] The plaintiffs allege that the transfer of the mall lands to Toyota was unlawful and without jurisdiction because the transfer conferred a bonus on Toyota at the expense of the plaintiffs, contrary to s. 106 of the Municipal Act, 2001. In essence, they say that a bonus was conferred when Oxford sold the mall lands to Toyota for the same price that Oxford offered to pay for the mall lands pursuant to the Expropriations Act. As a result, the plaintiffs allege that Oxford is liable to them in damages.
[9] Section 106 of the Municipal Act states as follows:
- (1) Despite any Act, a municipality shall not assist directly or indirectly any manufacturing business or other industrial or commercial enterprise through the granting of bonuses for that purpose.
(2) Without limiting subsection (1), the municipality shall not grant assistance by,
(a) giving or lending any property of the municipality, including money;
(b) guaranteeing borrowing;
(c) leasing or selling any property of the municipality at below fair market value; or
(d) giving a total or partial exemption from any levy, charge or fee.
[Emphasis added.]
[10] Instead of proceeding to trial, the parties submitted an Agreed Statement of Facts and Chronology (“Agreed Statement”) and a series of documents. These documents are not contested. The Agreed Statement and the documents are the agreed facts before the court. No witnesses were called. The parties presented four questions for the court to answer. During the hearing, the parties withdrew one question leaving the following three questions to be answered:
Question 1: Could Oxford lawfully expropriate the mall lands for the purposes set out in Oxford By-law No. 4545-2005, including in order to transfer the mall lands to Toyota for the proposed development of the Toyota Plant?
Question 2: Did the expropriation and later sale of the mall lands by Oxford, or any step in that transaction or series of transactions, confer a “bonus” on Toyota contrary to the provisions of subsection 106(1) of the Municipal Act?
Question 3: If a bonus was conferred and/or if the expropriation of the mall lands was unlawful, are the plaintiffs entitled to a remedy in damages against the Oxford?
Agreed Facts
[11] A brief overview of the facts is set out in the Introduction. A more detailed review of the facts follows.
History of the Mall Lands
[12] On August 7, 2002, Blandford purchased the mall lands from Continental Saxon Holdings Limited for $1,350,000. The mall lands are legally described as part of Lot 12, Concession 1 in the Township of Blandford-Blenheim, County of Oxford, designated as parts 1 and 2 on Plan 41R-1024. Blandford is wholly owned by the V. Salvatore Family Trust. The mall lands were zoned for “shopping centre commercial” uses.
[13] On August 7, 2002, Blandford mortgaged the mall lands for the amount of $6,000,000 in favour of Joseph Paradiso, in trust. The mortgage was personally guaranteed by Vincent Salvatore.
[14] On December 15, 2003, the V. Salvatore Family Trust sold all of the shares of Blandford to First Summit Shopping Centres Inc. for $14,000,000.
[15] On December 30, 2003, Blandford was granted a mortgage on the mall lands in the amount of $9,000,000 in favour of 2036900 Ontario Inc. This numbered company changed its corporate name to Vincorp Financial Ltd. in September 2005. I will refer to the numbered company as Vincorp.
[16] The $9,000,000 mortgage blankets the existing $6,000,000 mortgage on the mall lands in favour of Joseph Paradiso, in trust, and is personally guaranteed by Vincent Salvatore. The shares of Vincorp are owned by the V. Salvatore Family Trust.
[17] Prior to the construction of the Toyota plant, there was an old, one storey retail shopping centre located on part of the mall lands. The mall itself was approximately 240,000 square feet in size, largely vacant and in very poor repair. The remainder of the mall land was vacant and unimproved.
[18] On January 4, 2005, Vincorp served a notice of default and sale on Blandford with respect to its mortgage on the mall lands. On this date, the outstanding amount due under the mortgage was $8,328,447.43.
[19] Subject to the plaintiffs’ position that the expropriation was contrary to s. 106 of the Municipal Act, it is otherwise agreed that the expropriation of the mall lands was lawful and complied with the various applicable statutes. As the following facts demonstrate, Oxford obtained the necessary authority to expropriate the mall lands and acted within its jurisdiction. At no time did the plaintiffs ever take steps to challenge any of the relevant by-laws that are set out below.
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