1739061 Ontario Inc. v. Hamilton-Wentworth District School Board, 2015 ONSC 1442

COURT FILE NO.: CV-14-514477

DATE: 20150309

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 1739061 Ontario Inc., Applicant

AND:

Hamilton-Wentworth District School Board, Respondent

BEFORE: Whitaker J.

COUNSEL: Frank Sperduti/Christel Higgs, for the Applicant

Paul R. Henry, for the Respondent

HEARD: December 15, 2014

ENDORSEMENT

[1] The Applicant seeks an order to compel the Respondent to meet its obligations under s. 41(1) of the Expropriations Act, R.S.O. 1990 c.E.26 (“Act”).

[2] In 2013 the Respondent school board expropriated the Applicant’s land for purposes of the construction and operation of A school and related amenities. In another proceeding, the parties are before the Ontario Municipal Board to determine the appropriate compensation for the expropriation. What has triggered this application is that the Respondent has now taken action to transfer the subject property to a third party, the City of Hamilton. The Applicant argues that s. 41(1) of the Act should be interpreted to mean that if expropriated land is no longer needed for its original purpose by the expropriating authority, and compensation to the expropriated owner has not been paid in full, that authority must provide notice to the previous owner permitting it to take back the land. The Applicant argues that this obligation is mandatory and there is no discretion which would in any way permit the responding party to sell the expropriated land to a third party.

[3] From 1968 to 2001, the Respondent school board used the property as a school, housing a 194,500 square foot building known as the Scott Park Secondary School. In December of 2011, for purposes of redeveloping the existing building as a seniors’ centre, the Applicant purchased the property. In January, 2013, the Applicant applied to the City of Hamilton to rezone the subject property as the next step in the redevelopment of the site as a seniors’ residence. The expropriation of the property precluded the Applicant’s development plans. In the Spring of 2013, the Respondent advised the Applicant that the subject lands would be expropriated for the purposes of the construction and operation of a high school and related amenities. Upon receiving this advice, the Applicant requested an inquiry into the reasons and purposes behind the expropriation. Given the clear language of the statute however, the Applicant withdrew the request in the face of advice that the property would be used to serve as a new school. The subject property was expropriated on December 12, 2013.

[4] The Respondent now proposes to convey the subject property to the City of Hamilton for purposes of the City operating a seniors’ centre similar to the one that was part of the Applicant’s plans in the rezoning application. The Applicant has asked the Respondent to provide notice confirming that the subject property is no longer necessary for the Respondent’s purposes, that being the operation of a school and its amenities. The property is to be conveyed to the City without offering the Applicant the right of first refusal. It would seem from the materials filed by the Respondent that it continues to take the position that it has met the obligations of the Education Act, R.S.O. 1990, c. E.2.

[5] The Applicant argues that there are two questions that must be resolved in this adjudication. The first question is whether the property is necessary for the purpose stated by the Respondent expropriator to trigger the application under s. 41(1) of the Act, and secondly, is the Respondent obligated the give the Applicant the right to elect, pursuant to s. 41(1) of the Act to take the subject property back or continue with its claim for compensation.

[6] The Applicant relies on the decision of the Manitoba Court of Appeal in Progressive Developments (1978) Ltd. v. Winnipeg (City) (1982), 1982 2978 (MB CA), 145 DLR (3d) 405 (MBCA), lv to appl. denied (1983) 27 L.C.R. 142n interpreting s. 50(1) of the Manitoba Expropriation Act which mirrors the language in s. 41(1) of the Ontario Act. The Court of Appeal for Manitoba indicated that the reasoning in Progressive Development was simple and persuasive: unless the expropriating authority’s purpose for the interpretation of s. 50(1) is that which formed the basis of the expropriation to begin with, the owner’s statutory right to challenge the expropriation at the outset is defeated. The Respondent argues further that the scheme of the Manitoba legislation is similar to that of Ontario which essentially allows the owner of the land to be expropriated to force an inquiry into whether the intended expropriation is fair and reasonably necessary for the achievement of the objectives of the expropriating authority. It is argued by the Respondents, and I accept that it is not open to an expropriating authority to redefine the purposes after the fact so as to avoid an inquiry on the true purpose of the expropriation.

[7] In the case of Young v. Cape Breton (County of), [1987] NSJ. No. 42 (NCSC) the Nova Scotia Supreme Court dealt with a similar dispute where not all the land expropriated from an owner for purposes of a road extension was required for this purpose. The court in that case determined that it was “settled law” that there was no implied general statutory power to appropriate ab initio.

[8] In the case of Grauer Estate V. Canada, [1986] FCJ No 946 (TD) the Ontario Superior Court stated that the scheme of the Act properly construed would provide the taking of lands that are “necessary” and this provided a safe guard to land owners against unnecessary taking.

[9] In Ontario, this reasoning has been followed in Marisa Construction v. Toronto (City), [1998] OJ No 4069 (Div Ct). The Respondents suggest that there are four issues to be decided. Firstly, are all or part of the lands expropriated by the Board no longer necessary for the purposes of the Board. Secondly, must the Board serve notice on the Applicant advising the Applicant of its options to take the subject lands back; thirdly, should this Court restrain the Board from conveying all or part of the expropriated lands to the City; and fourthly, should the Court exercise this discretion to restrain the Board from dealing with the building.

[10] The Board takes the position that it is not abandoning the subject property, nor has it found the expropriated lands to be unnecessary. The Board intends to construct a new school on at least part of the lands and the City intends to build a recreation centre facility on the south part of the property. The facilities are to be used by citizens of the City, staff and students of the school. In other words, greater numbers of persons will be able to access the facilities. The Notice of Expropriation indicated that the purpose of the construction was the operation of a school and related amenities. The Respondent takes the position that the recreational facilities and the pool fall into the category of “related amenities” for the construction and operation of the school. The Respondent argues that the subject property is critical to the Board’s plans to construct a new secondary school and that this school as indicated, is to be contiguous with the City so that the sharing of Board and City facilities can be encouraged consistent with policy statements by the Ministry of Education and in particular, consistent with the provisions of s. 183 of the Education Act.

[11] The Applicant has not demonstrated that it will suffer irreparable harm that cannot be compensated by damages. The Applicant has already commenced an expropriation proceeding before the Ontario Municipal Board which will determine the fair market value of the subject property.

[12] There has been an elaborate consultation process engaged in by both the City and the school board concerning the purposes for which the land will be used in the future. In my view, the courts should be reluctant to interfere with school board policy choices regarding whether or not facilities such as parking lots, pools, and recreation centres are referable to the term “related amenities” as that was used in the Notice of Expropriation.

[13] There is no doubt that the Board has the power to expropriate a site within its area of jurisdiction. The Education Act in s. 1(1) defines site to include lands and premises for any other school purposes. In my view, this formulation is broad enough to include swimming pool, recreational facilities and parking lots which may be built by the City.

[14] The Board and the City take the position that it is essential and fundamental to the creation of shared services that amenities be interpreted broadly enough to include the grounds which will be improved by the City. The Board suggests that s. 42 of the Act does not apply to the facts in this case because the subject lands have not been found to be no longer required for the Board’s purposes, again, the Board’s purposes include a pool and recreational facility. If s. 42 is to apply as argued in this case, there is no obligation on the part of the Board to give the Applicant the first chance to repurchase the lands.

[15] In my view, the Board has met its obligations under the Education Act and the Applicants have not made their claim.

[16] This application is dismissed including the application for a temporary injunction.

[17] With respect to costs, I have considered the factors that should guide the exercise of my discretion to award costs under Rule 57. I am particularly aware of the Court’s obligation to award costs that are proportionate to the circumstances of the dispute and also within the reasonable expectation of the losing party. With these considerations in mind, the Respondent is entitled to its costs, including disbursements and taxes fixed at $58,815.46. Given the proceedings before the Ontario Municipal Board to arbitrate the value of the expropriated lands, there is no need for the Court to make any order in that regard. The claim in its entirety is dismissed.

Whitaker J.

Date: March 9, 2015