Citation: Eldora v. City of Toronto, 2015 ONSC 2536
COURT FILE NO.: CV-14-514140
DATE: 20150420
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ELDORA DEVELOPMENTS LTD.
Applicant
– and –
THE CITY OF TORONTO and ANN BOROOAH CHIEF BUILDING OFFICIAL INC.
Respondents
David Cherepacha and Kyle Gossen, for the Applicant
Paul DeMelo and Christopher Henderson, for the Respondents
HEARD: April 13, 2015
REASONS FOR DECISION
F.L. MYERS J.
Background
[1] The applicant appeals under s. 25(1) of the Building Code Act, 1992, S.O. 1992, c.23 from the City’s refusal to issue a provisional building permit. Alternatively, the applicant applies under Rules 14.05(2) and (3) of the Rules of Civil Procedure for a declaration concerning the interpretation of §415-26C of the Development of Land Bylaw, being chapter 415, of the Toronto Municipal Code which is duplicated in policy 3.3.2.7 under the City of Toronto Official Plan.
[2] In essence, the applicant contends that the City has violated its bylaw by purporting to require the applicant to transfer off-site parkland to the City to meet its parkland dedication obligations under section 42 of the Planning Act, R.S.O. 1990, c. P.13. As a result, the City has refused to recognize the validity of the applicant’s desire to make a payment of cash equal to 5% of the value of the applicant’s proposed development as a payment of cash in lieu of land under the bylaw. The City has insisted upon payment equal to 10% of the value of the applicant’s proposed development based upon its assertion that it is entitled to require the applicant to convey off-site parkland of that value under the relevant enactments. The applicant says further that the City ought to be estopped by its own representations from denying the entitlement of the applicant to post 5% cash in lieu of land. Under the prevailing policies that were in place at the time that the applicant sought to make its payment of cash in lieu of land, the maximum payment to which the City would have been entitled was 5% of the value of the applicant’s proposed development. The applicant claims that this amount should continue to apply to it. Moreover, the applicant says that it should be entitled to pay development charges and education development charges at the rates that existed in May, 2014, when the City wrongly refused to allow the applicant to obtain a provisional building permit on paying cash in lieu of land in this matter.
The Appeal is dismissed as Premature
[3] Although the parties agreed that this matter should proceed as an appeal from a decision of the Chief Building Official under the Building Code Act, in my view an appeal is premature. The parties agree that the applicant is not entitled to a building permit yet because, among other things, it does not yet have planning approval for its development site. What is really at issue is the City’s refusal to issue a provisional building permit before the applicant gets OMB planning approval required for a final building permit. Apparently, there are no provisions of the Building Code Act governing provisional building permits. They are granted by the City as a matter of indulgence and discretion. Section 25(1) of the Building Code Act does not apply to the City’s discretionary decision to decline to issue a provisional building permit. It applies when the City has failed to issue a building permit when required to do so by applicable law.
[4] What is really in issue is not a decision of the Chief Building Official at all. The issue is a question of legal interpretation joined between the City’s planning staff and the applicant. I note in this regard that there are no reasons for decision of the Chief Building Official for me to review as an appellate court. There are competing lay affidavits setting out legal arguments in the main and some factual story which is largely uncontested.
[5] The process by which this matter finds itself before the court is not straightforward. There is circularity or, at least, an overlapping of the jurisdictions of the court and the Ontario Municipal Board that prevents me from finding that the Chief Building Official erred in refusing to issue a building permit to the applicant. The applicant is not entitled to a building permit until the OMB approves the development and planning process. The OMB proceeding requires an answer to the question of law that the parties have submitted to the court in this proceeding. That issue of law is not before the OMB as the City concedes that it had no entitlement to include an off-site parkland dedication condition in its notice of [planning] approval conditions except under s.42 of the Planning Act. But there is no appeal right to the OMB on that issue. The appeal right under s.42 of the Planning Act is limited to an issue of valuation of designated land. The appeal concerns the location of land that the applicant is required to transfer to the City as opposed to the value of a designated piece of land. The issue before the court is an issue under the City’s bylaw that is not encompassed in a s.42 appeal. Moreover, subsection 114(11) of the City of Toronto Act, 2006, S.O. 2006, c.11, Sch. A also does not entitle the City to include off-site parkland dedication conditions in its planning conditions. The City stuck the condition into its planning approval conditions to bootstrap its argument. This is what led to the appeal before the OMB. I am satisfied however that the issue of interpretation of the City’s powers under the relevant bylaw is one for the court. By trying to gild the lily, the City has gummed up the works.
[6] While the practical result of my decision may well resolve the merits of the OMB appeal, it is only the OMB that can make that determination and deal with the appeals before it. Neither of the parties presented any precedent for me to decide a legal issue and thereby finally determine a matter before the OMB. Therefore, even if I were to decide that the applicant is correct in law, the Chief Building Official would still have been correct in refusing to issue a building permit because the OMB decision will not clear the last hurdle to a building permit until sometime after my decision becomes finalized. For those reasons, among others, the appeal is premature and is dismissed.
The Application Succeeds
[7] However, in my view, the applicant is correct in its interpretation of §415-26C of the Development of Land Bylaw. In my view the City was not and is not entitled to require the applicant to make an off-site dedication of parkland under the bylaw. The applicant is entitled to a declaration of right as to the interpretation of the bylaw. However, that decision does not entitle the applicant to pay cash in lieu of land under §415-24A of the bylaw either. Only City Council can decide if the City will take cash in lieu of land or if it will insist upon the transfer of on-site parkland or, perhaps, negotiate some other terms acceptable to the City and the applicant. If the applicant wants to argue that the City was required to let it post cash in lieu of land once it determined that an on-site dedication was not feasible, that is not an issue for an application for a declaration of right interpreting a bylaw. Rather, for a court to question or quash a decision of the City in the exercise of its statutory powers or in failing to exercise its discretion to allow payment of cash in lieu of land, the applicant’s remedy is by way of judicial review. On an application for the interpretation of the bylaw under Rule 14.05, the court is not in a position to review the correctness of the City’s purported exercise or non-exercise of its statutory powers.
§415-26C of the Development of Land Bylaw
[8] The applicant is engaged in the construction of a townhouse development in Toronto in an area in which the City’s “North York Centre Secondary Plan” applies. The applicant’s development has been divided into five contiguous sites which it labels A, B, C, D, and E respectively. Each of the sites involves a different segment of the development land. Underground parking is being built beneath all five pieces of the entire development.
[9] The applicant applied for necessary zoning approval, site plan approval, and building permits in 2012. It is common ground that the City cannot issue a building permit until the developer pays all proper park levies, development charges, and education development charges.
[10] Under s.42 of the Planning Act, a municipality may require a prospective developer to contribute to the municipality’s parks through a parkland dedication. That is, as a condition of development approval, the City may require the developer to convey to the City a piece of land for park or other public recreational purposes. Under subsection 42(6) of the Planning Act, in lieu of a conveyance, council of a local municipality may require payment of cash of up to the value of the land otherwise required to be conveyed by the developer.
[11] Nothing in s.42 of the Planning Act distinguishes between on-site and off-site dedications. That distinction is made in the Toronto Development of Land bylaw.
[12] §415-22 of the bylaw provides that to obtain City approval to develop land “the owner of the land shall convey or cause to be conveyed to the city, land for park or other public recreational purposes in the following manner:”. What follows are a number of scenarios under which different quantities of the “land to be developed” that must be conveyed to the City. That is, the default position under the bylaw is that the developer must convey a portion of its own land proposed for development to the City for park uses. This is referred to as an on-site dedication.
[13] §415-24A and B of the bylaw provide a cash alternative to an on-site parkland designation as follows:
A. Despite §415-22, where the size, shape or location of land proposed for parkland dedication is deemed by Council to be unsuitable for parks or public recreation purposes, Council may require payment of cash-in-lieu of land.
B. Despite §415-22, where the size, shape or location of land proposed for parkland dedication in the parkland acquisition priority area is deemed by Council to be unsuitable for parks or public recreation purposes, Council may require payment of cash-in-lieu of land, provided… (emphasis added)
[14] It is significant to note that to depart from the default requirement that a developer make an on-site designation, Toronto City Council has two discretionary decisions to make. First, it must “deem” that the size, shape or location of land proposed is “unsuitable” and then it “may require payment of cash-in-lieu of land”. Counsel for the City argues that the City has discretion as to whether on-site dedication or cash in lieu of land will be accepted. The developer has no right to dictate the alternative to the City it argues.
[15] §415-26C of the bylaw provides for a third alternative as follows:
C. Where on-site parkland dedication is not feasible, an off-site parkland dedication that is accessible to the area where the development site is located may be substituted for an on-site dedication, provided that:
(1) The off-site dedication is a good physical substitute for any on-site dedication;
(2) The value of the off-site dedication is equal to the value of the on-site dedication that would otherwise be required; and
(3) Both the City and the applicant agree to the substitution. (Emphasis added)
[16] Despite subsection (3) immediately above, the City argues that it is entitled to exercise the discretion to require an off-site parkland dedication under §415-26C without the agreement of the applicant. It interprets the requirement for agreement in subsection (3) to be limited to the identification and value of the piece of land to be substituted for the on-site dedication that would otherwise be required. The City notes that because there is no appeal right provided from a decision by municipality to require parkland dedication under s.42 of the Planning Act, the decision is one for the City alone. The City argues that this is an issue within its sole and unfettered discretion.
[17] As noted above however, s.42 is silent on the issue of on-site or off-site dedications. That is an issue dealt with in the bylaw. Moreover, I am unaware of any principle of statutory interpretation of a municipal bylaw that looks simply to whether a statutory appeal is provided in the empowering statute.
[18] The modern rule of statutory interpretation requires that the words of statute be read in their entire context and in their grammatical and ordinary sense, harmoniously with the scheme of the act, the object of the act, and the intention of the legislature. See Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 SCR 27, 1998 CanLII 837 (SCC). I am unable to read the words of §415-26C(3) as the City contends.
[19] §§415-24A and 415-24B of the bylaw, as set out above, are very clear in granting specific discretionary authority to Toronto City Council. They speak of Council deeming certain facts and that “Council may require” a result. One would expect the drafters to track that language were it intended that §415-26C would also be a matter for Council’s unilateral discretion. Yet the opening words of §415-26C do not track the language used previously to actively create a discretion in the City. Rather, the opening paragraph is written in the passive voice. It is silent on who the decision-maker is intended to be for an off-site dedication. Moreover, the word “substitution” is not used only in subsection (3) to refer to the particulars of a proposed alternative piece of property as argued by the City. Rather, the opening language of the section provides that “off-site parkland… may be substituted for an on-site dedication, provided that…”. That is, the subsections that follow the opening language are the provisos upon which off-site land may be substituted for an on-site dedication. The proviso in subsection (3) then requires agreement of the parties “to the substitution”. The developer’s agreement is required to the “substitution” and the opening words of the section require that for there to be a substitution at all, the provisos must be satisfied. Therefore, under the words as written, there can be no substitution of an off-site parkland dedication unless the developer agrees.
[20] This analysis is consistent with the plain meaning of the words used as well as the harmonious reading of the related sections in the same part of the bylaw.
[21] Counsel for the City agreed that for the purpose of this proceeding, the provisions of the Development of Land bylaw should be taken as constraining the authority of the City and its officials. Whether the City may have authority to amend, explicitly or implicitly, the provisions of §415-26C is therefore not before the court.
[22] As noted above, counsel for the City also agreed that the City included the requirement of an off-site dedication in its notice of approval conditions for planning purposes solely based on section 42 of the Planning Act and §415-26C of the bylaw. The City does not seek to justify the condition as a general planning condition under subsection 114(11) of the City of Toronto Act, 2006 or otherwise. Accordingly, as counsel confirmed during the hearing, the City’s requirement of off-site dedication lives or dies solely on the interpretation of §415-26C the bylaw.
The Facts
[23] After the applicant applied for municipal approval of the development in early 2012, the first response from City staff on the parkland dedication issue was a memo indicating that the applicant’s parkland dedication obligations would be met by a cash in lieu of land payment. Staff reported that “[t]he parkland dedication for the subject site is too small to be functional.” It is common ground that given the current plans to develop an underground garage, there is no available piece of the site that is well suited to serve as an on-site park.
[24] In March, 2013, City staff revised their view and recommended requiring the applicant to satisfy its parkland dedication obligations by way of an off-site parkland dedication. The applicant has very little evidence that it objected to making an off-site dedication. However, the City does not assert that the applicant ever positively agreed to substitute an off-site dedication for the applicant’s on-site dedication obligations. The bylaw requires the applicant’s agreement to this alternative.
[25] In the spring of 2013, North York Community Council of Toronto City Council approved the applicant’s development proposal including the staff’s off-site parkland dedication recommendation.
[26] On June 11, 2013 City Council passed bylaw 1085-2013 to approve the zoning and related matters for the applicant’s development. The supporting staff report dated April 24, 2013 provides as follows:
Parks, Forestry and Recreation staff have advised that the parkland dedication for the subject site is too small to be functional and would greatly affect the applicant’s ability to conform to Secondary Plan’s design and density principles. The applicant is therefore required to satisfy the parkland dedication through off site parkland dedication. The size and location of the parkland will be the subject to the approval of the General Manager, Parks, Forestry and Recreation. The appropriate off site parkland dedication will be required prior to the issuance of the first above grade building permit.
[27] The applicant did not object to the processes before North York Community Council or Toronto City Council. The applicant did not appeal the bylaw. In fact, a neighboring property owner did appeal the bylaw to the OMB. On motion of the City, supported by the applicant, the OMB dismissed the appeal in late 2013.
[28] With zoning finalized, in December, 2013 and early 2014, the applicant asked the City to issue it provisional building permits on an urgent basis. As noted above, parkland charges, development charges, and education development charges are payable on the issuance of a building permit. The City accepts payment of these charges on the issuance of a provisional building permit even though an applicant does not yet qualify for the issuance of its final building permit.
[29] The applicant sought provisional permits urgently in January, 2014 because development charges in Toronto were scheduled to increase by approximately 25% on February 1, 2014. The City accommodated the applicant indicating it was willing to issue provisional building certificates. However, there was a problem with some of the measurements in the plans that the applicant had submitted to the City that affected the allowable height of proposed buildings. Correction required re-measurement and an amendment to the zoning bylaw. The applicant was able to make minor design changes on sites A, B, and C to comply with the existing zoning bylaw. It could not fix sites D and E without amending the zoning bylaw. The City accommodated the applicant and urgently amended the zoning bylaw to correct the applicant’s error on February 20, 2014.
[30] In contemplation of the provisional building permits, the city sent memos to the applicant setting out applicable development charges, education development charges, and park levies for each of the five blocks. The total amount sought by the City for park levies was $975,959.18.
[31] It appeared to the applicant from these communications that the City had determined to accept cash for its parkland dedications notwithstanding the provisions of the zoning bylaw that require the applicant to buy and transfer to the City off-site parkland. However, the amount sought by the City was equivalent to 10% of the value of the applicant’s development. At that time, the North York Centre Secondary Plan had yet to be harmonized with the rest of Toronto. It limited cash in lieu of parkland dedication payments to 5% of the value of the developer’s site.
[32] The City admits that its left-hand did not know what its right hand was doing. The people sending the payment notifications to the applicant had no authority to make a decision to accept cash in lieu of parkland transfers. Only City Council can exercise that discretion and it had already determined to require an off-site parkland dedication. However, the City argues that the 10% figure charged by the City was not an error but was, in reality, an offer by the City to accept payment of 10% that is equivalent to the value of an off-site dedication. This is very unlikely. What is more likely is that the person who set the rate did not realize that the land was still subject to the 5% cash in lieu cap under the North York Centre Secondary Plan since much of the rest of the City has already been harmonized and pays cash in lieu to a maximum of 10%. The City has subsequently made clear that it is prepared to accept 10% on the basis that it is entitled to an off-site dedication and it is quite prepared to take the funds and apply them to buy land on its own behalf.
[33] The applicant says it relied upon the memos and paid $496,951.46 on January 30, 2014 to obtain provisional building permits for sites A, B, and C.
[34] In April, the City issued its notice of approval conditions for the applicant’s site plan application. As noted above, the conditions repeated the requirement for off-site parkland dedication. The applicant responded that it had already paid cash in lieu as required for sites A, B, and C and requested that the City amend the notice of approval conditions to replace the off-site requirement with cash in lieu. The City declined. Instead, on May 13, 2014, the City requested that the applicant purchase a specified property near the development in order to convey it to the City as an off-site parkland dedication. The applicant then appealed the site plan conditions to the OMB. It is that appeal that is outstanding and which turns on the interpretation of the bylaw noted above.
[35] In May, 2014, the applicant asked the City for a calculation of the charges associated with issuing provisional building permits for sites D and E. The City once again responded with an email calculating levies for the two blocks at a rate of 10%. On May 22, 2014, the applicant paid the City a further sum of $97,745.27 to obtain a provisional building permit for site D. The applicant made this payment under protest. It argued that the amount paid on January 30, 2014 already met 5% requirement for payment of cash in lieu of land for the whole development.
[36] On June 4, 2014, the City declined to issue a provisional building permit for site E on the basis that the full amount claimed by the City had not yet been paid. The applicant appealed to the OMB under section 42 of the Planning Act arguing that the City’s request for 10% was an incorrect value as only 5% was due. In September, 2014, a City solicitor wrote to the applicant indicating that the issue is not one for valuation by the OMB. Rather, the issue was a legal issue of the entitlement of the City to require an off-site parkland dedication and that the applicant should therefore appeal under section 25 of the Building Code Act to bring the legal issue to the court. Hence this application followed.
Analysis
[37] As noted above, I have already found that the City had no right to require that the applicant make an off-site dedication without its agreement. The issue is what flows from this.
[38] The applicant relies on the doctrine of promissory estoppel to argue that the City is estopped from denying it the right to satisfy its parkland dedication obligation by paying cash in lieu of a transfer of land. It argues that the March, 2012 first response by staff, and the two memos in 2014 setting out the payments required and, ultimately accepted, by the City for provisional building permits on sites A though D, were representations that it was entitled to pay cash in lieu upon which it relied.
[39] I did not require the City to respond to this argument for several reasons. First, the decision as to the appropriate type of parkland dedication is one for City Council under the statute. It is not obvious that an estoppel will lie to prevent implementation of a statutory requirement. Plus, the applicant is a sophisticated real estate developer with sophisticated advisors. There is no reasonable basis upon which it could rely upon a first staff report as binding City Council. Moreover, the March, 2013 staff report gave notice to the applicant that any representation that might have been made was no longer in effect. The applicant was provided more than ample notice to effectively withdraw any estoppel that could have arisen.
[40] Of greater significance however is the absence of any detrimental reliance throughout. The applicant submitted no evidence that it altered its position to its detriment in reliance upon a supposed representation that it would be entitled to pay cash in lieu of a parkland dedication i.e. 5%. The City says that it erred in accepting cash from the applicant. City Council has not approved a cash in lieu payment at any percentage. The funds paid can be applied by the City toward the purchase of off-site land whether by the applicant or by the City on its behalf. Moreover, the memos from January and May, 2014, that set a cash rate, rightly or wrongly, on purpose or by accident, set the rate at 10%. The applicant submitted no evidence that it paid 5% or budgeted to pay 5% or relied on anything done by the City to say that it believed that it was entitled to pay cash in lieu at 5%. Absent detrimental reliance, the doctrine of estoppel does not assist the applicant.
[41] In light of my holding as to the meaning of the bylaw however, the applicant does not need to rely upon the doctrine of estoppel. In January, 2014, the City had no right to require the applicant to pay the equivalent of an off-site parkland dedication. It had the right to require an on-site dedication. It also had the discretion to accept cash in lieu which, at the time, would have been limited to a maximum of 5%. It was a precondition of the City purporting to require off-site parkland dedication under §415-26C of the Development of Land Bylaw that “on-site parkland dedication is not feasible”. The zoning bylaw passed by City Council effectively relied upon or adopted the staff recommendation “that the parkland dedication for the subject site is too small to be functional and would greatly affect the applicant’s ability to conform to Secondary Plan’s design and density principles.” Is this sufficient to amount to a determination by the City that cash in lieu of land will be accepted under §415-24A of the bylaw? I repeat that section for convenience:
24A Despite §415-22, where the size, shape or location of land proposed for parkland dedication is deemed by Council to be unsuitable for parks or public recreation purposes, Council may require payment of cash-in-lieu of land.
[42] Arguably, City Council has already deemed the applicant’s site unsuitable for parks or public recreation purposes in the zoning bylaw. If the applicant will not agree to an off-site dedication, then, the applicant argues that all that was left for the City was a payment of cash in lieu of land. The applicant says that the City ought to have exercised its discretion to require that the applicant pay cash and, had it done so as required, the quantum was then limited to 5%. However, there are at least two other options. The City could have refused the development application altogether. Or, the City could have required the applicant to change its plans to make an on-site dedication feasible. In either case, might negotiations have occurred that might have led to an agreement for an off-site transfer or some other settlement?
[43] The applicant argues that it should be entitled to a provisional building permit with park levies, development charges, and education development charges set at the rates prevailing as at January 31 or May 22, 2014. However, as set out at the outset, this is not a decision for me to make. If the Applicant wishes to argue that the City acted improperly in failing to exercise its discretion under §415-24A to allow cash in lieu, that is an issue for judicial review. It is not a matter that I can resolve on an application for a declaration of right as to the meaning of a bylaw. The parties seemed content that I make this decision. However, the administrative law issues that appertain to the review of the exercise or non-exercise of a municipal government’s discretion were not argued. Moreover, I would be most reluctant to exercise jurisdiction over an issue that the Judicial Review Procedure Act, RSO 1990, c.J.1 plainly intends to be heard and resolved by the Divisional Court absent urgency.
Result
[44] Accordingly, a declaration of right will issue that the City does not have the authority under §415-26C of the Development of Land Bylaw to require an applicant to substitute an off-site parkland designation for an on-site parkland designation unless the applicant agrees to the substitution.
Costs
[45] The fixing of costs is a discretionary decision under section 131 of the Courts of Justice Act. That discretion is generally to be exercised in accordance with the factors listed in Rule 57.01 of the Rules of Civil Procedure. These include the principle of indemnity for the successful party (57.01(1)(0.a)), the expectations of the unsuccessful party (57.01(1)(0.b)), the amount claimed and recovered (57.01(1)(a)), and the complexity of the issues (57.01(1)(c)). Overall, the court is required to consider what is “fair and reasonable” in fixing costs, and is to do so with a view to balancing compensation of the successful party with the goal of fostering access to justice: Boucher v Public Accountants Council (Ontario), 2004 CanLII 14579 (ON CA), (2004), 71 O.R. (3d) 291, at paras 26, 37.
[46] Costs ought to follow the event barring Rule 49 offers or some other very significant factor. The dismissal of the appeal flowed from the City’s determination that an appeal was the right route to have this matter decided. The applicant ought not to be responsible for the costs associated with that issue. The applicant succeeded on its principal principle point. The parties ought to be able to resolve costs themselves. If they cannot, the applicant may deliver up to 5 pages of submissions plus a Costs Outline by May 1, 2015. The City may respond with 5 pages of submissions and shall include its own Costs Outline by May 15, 2015. All costs submissions are to be made by searchable pdf attachment to an email to my Assistant. Case law, if any, shall not be provided but may be referenced by hyperlinks to another reporting service in the submissions.
F.L. Myers J.
Released: April 20, 2015
CITATION: Eldora v. City of Toronto, 2015 ONSC 2536
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ELDORA DEVELOPMENTS LTD.
Applicant
– and –
THE CITY OF TORONTO and ANN BOROOAH CHIEF BUILDING OFFICIAL INC.
Respondents
REASONS FOR JUDGMENT
F.L. Myers J.
Released: April 20, 2015