CITATION: Graham v. Her Majesty the Queen, 2015 ONSC 41
COURT FILE NO.: 3164-14
DATE: 2015/01/07
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: George Keith Graham and Karn Graham “et al” (Applicants)
- and -
Her Majesty the Queen in Right of Ontario, Ministry of Natural Resources and Forestry and Ministry of Municipal Affairs and Housing (Respondents)
BEFORE: Justice A. J. Goodman
COUNSEL: David J. Kirwin, for the Applicants
Lise Favreau and Judith Parker, for the Respondents
HEARD: October 15, 2014
ENDORSEMENT
Background
[1] This application raises the question of whether or not the applicants are obliged or liable to pay a portion of the payment in lieu in taxes (“PILT”) paid by the Crown to the Municipality of Chatham-Kent pursuant to s. 4(3) of the Municipal Tax Assistance Act (“MTAA”).
[2] Rondeau Provincial Park ("Rondeau") is one of 334 provincial parks in Ontario regulated under the Provincial Parks and Conservation Reserves Act, 2006 ("PPCRA"). The lands comprising Rondeau are owned by the Ontario Crown and administered by the Ministry of Natural Resources and Forestry (“MNRF”). The park is located within the municipality of Chatham-Kent.
[3] The applicants are owners of private cottages located within Rondeau, one of only two provincial parks in Ontario that still permit such private cottages. Keith Graham, one of the applicants, and the principal affiant, owns a cottage located in Rondeau and known municipally as 17760 Lakeshore Road, Morpeth, Ontario.
[4] Pursuant to the MTAA, the Crown makes payments-in-lieu-of-taxes (“PILT”) to municipalities in respect of tenanted Crown lands. The Crown had not been collecting the PILT from the applicants since the MTAA was first made applicable to provincial parks, but recently requested that the applicants’ private cottages be separately assessed for tax purposes, and requested payment of the applicable PILT. During the entirety of the time that the applicants have owned a cottage in the park, they had never received a bill for municipal taxes, until 2013. The leases and licences for private cottage lots in Rondeau Provincial Park expire on December 31, 2017.
[5] For the reasons that follow, I find that the applicants are liable pursuant to the MTAA for PILTs paid on their behalf by the Crown.
Facts
[6] From the late 1890s to 1950, the Crown leased lands for private cottage lots in both Rondeau and Algonquin Provincial Parks. The land leases were originally for a 21-year term with an option to renew. During this period, the Crown also issued licences of occupation for lands to be used for private cottages in these parks.
[7] Up until the mid-1950s, the leases granted to cottages were renewable on a 21-year cycle. In 1954, in conjunction with the passage of the Provincial Parks Act, the Crown reversed its policy of permitting private cottages in these two provincial parks. Since 1954, the original phase-out policy has been modified twice: The 1978 modification gave leaseholders an opportunity to extend their term of occupation under a lease extension agreement at market rates until 1996 or the death of the leaseholder and any surviving spouse, whichever occurred first (“First Lease Extension”). The second modification occurred in 1986, after consultation, to enable the continued occupation of private cottage lots until December 31, 2017 (“Second Lease Extension”).
[8] Today, there remain 285 tenure agreements for private cottage lots in Rondeau, of which 284 are in the form of a land lease and one is in the form of a licence of occupation. Approximately 75% of the private cottage lots are located on the eastern side of the Park along a six kilometre stretch of land parallel to the Lake Erie shore, approximately 100 metres from the beach. The structures on the private cottage lots in Rondeau range from small rustic cabins to two-storey buildings capable of year-round occupancy. Some private cottage lots also contain outbuildings, such as car ports, sheds or garages.
[9] One of the 285 private cottage lots in Rondeau is occupied pursuant to a licence of occupation, rather than a lease. The licence grants a right to use and occupy the lands in accordance with the conditions of the licence. The current licence also expires on December 31, 2017. The licences contain similar terms and conditions as the leases and extensions. However, both the Original Licence and the Current Licence are silent with respect to the payment of taxes, rates, duties or assessments.
[10] The Grahams purchased the cottage in November 2009 for $230,000 and had previously owned a different cottage within the Park since September 2000.
[11] The Original Lease requires the payment of rent and “all taxes, rates, duties and assessments”. Clause 7 of the original lease states:
That the Lessee shall pay all taxes, rates, duties or assessments (including Local improvements), that may be imposed on the said land or on any buildings which may be erected thereon.
[12] The First Lase Extension, creating the common expiry date of 1996, provides for additional and in some cases, different terms, than the Original Lease. However, it appends the Original Lease as Schedule “B”, and clause 6 of the First Lease Extension makes it clear that the terms and conditions of the Original Lease are in full effect except where explicitly changed by the First Lease Extension. The First Lease Extension contains no provision addressing taxes, rates, duties or assessments. Clause 7 of the Original Lease continued to govern with respect to these obligations after the First Lease Extension was executed.
[13] The Second Lease Extension, to December 31, 2017 was similar to the First Lease Extension. The Second Lease Extension appended both the Original Lease and where applicable the First Lease Extension. Clause 14 of the Second Lease Extension ensured that their terms remained in full force and effect except were explicitly provided for in the Second Lease Extension:
The terms, conditions, and provisions of these Letters Patent take precedence over and supercede any terms, conditions and provisions contained in any instrument referred to in Schedule “B” hereto to the extent that they are inconsistent or in conflict therewith. In all other respects, the terms conditions, and provisions of any instrument referred to in Schedule “B” hereto, as governed by the laws of Our Province of Ontario in that regard, shall continue in full force and effect, with necessary modifications.
[14] Historically, until 1984, the leaseholders and licensee of private cottage lots in Rondeau paid an annual rent or licence fee; (b) a fee for services provided to the Tenants in Rondeau; and Provincial Land Tax.
[15] While the Tenants were paying Provincial Land Tax, there were no municipal taxes paid directly by the Tenants. However, the Crown made a PILT to the municipality pursuant to the Provincial Park Municipal Tax Assistance Act (“PPMTAA”).
[16] In 1984, the PPMTAA was repealed and the MTAA was amended to apply to provincial parks. This change was made in order to increase the revenue received by municipalities from provincial parks within their boundaries, by shifting from the PPMTAA’s flat rate paid on the basis of hectarage to a PILT based on the assessed value of the park lands and the municipal tax rate.
[17] Given the shift to assessment-based payments, in November 1984, the Ministry of Revenue instructed all Regional Assessment Commissioners to remove tenants within provincial parks from the rolls for Provincial Land Tax effective January 1, 1985.
[18] Following this shift from flat rate payments to PILTs under the MTAA, the Crown did not seek recovery from the Tenants of any portion of the PILT. Rondeau was assessed thereafter as a whole (tenanted and untenanted lands together) and PILTs paid to the municipality at the commercial mill rate. Without assessment information for each private cottage lot, the Crown could not have apportioned the amount of the PILT for each Tenant in Rondeau.
[19] The service fee is intended to cover the costs to construct, operate and maintain services provided by the MNRF in Rondeau in connection with the private cottage lots, including garbage collection, electricity costs for streetlights, road maintenance, tree trimming, snow plowing and land remediation as well as the costs incurred in the administration of the leases and licence. The service fee does not cover the PILT paid in respect of Rondeau to the municipality.
[20] The annual rent in 2014 for cottage lots in Rondeau ranges from $1,201 to $2,407, depending on the size and location of the lot. Graham pays an annual rent of $2,406.93 and a park service fee of $421.06.
[21] During fiscal year 2009-2010, the MNRF conducted an internal review of its PILT program. The purpose of the review was to determine ways of managing consistently escalating PILT costs for MNRF-administered lands in Ontario. The PILTs for Rondeau were examined as part of the review, which revealed that these PILTs were high relative to other provincial parks. For the period of 1998-2012, the total amount of the PILTs for tenanted and untenanted lands in Rondeau was $10,775,572.09. During the five year period of 2008-2012, the average annual PILT for these lands was $876,011.58.
[22] Following this review, the MNRF determined that it would treat Tenants in Rondeau in the same manner as other tenants on MNRF-administered lands within municipal territory and would seek recovery from the Rondeau Tenants of the PILT amounts for their private cottage lots. Therefore in October 2010, the MNRF contacted the Municipal Property Assessment Corporation (“MPAC”) to request that they provide separate current value assessments of each of the private cottage lots in Rondeau. The same process is being applied in Algonquin Provincial Park. Of the 303 private cottage lots in Algonquin, there are 31 which lie within municipal territory.
[23] The Tenants of the private cottage lots in Rondeau were first informed of the MNRF’s request to have individual lots assessed by MPAC for tax payment purposes in a June 20, 2011 letter. In October 2011, leaseholders were provided with additional information about the upcoming assessments. The Tenants were also informed them that the information collected by MPAC would be used to determine the 2012 current assessment value for taxation in 2013.
[24] MPAC performed the assessments of the Tenants’ private cottage lots in the fall of 2012. In February 2013, MPAC sent Tenants letters informing them of the assessed value of their private cottage lots. On March 2, 2013, the MNRF hosted an open house to provide Tenants with an opportunity to discuss the assessment of their private cottage lots with representatives from MPAC. Tenants were also provided an opportunity to file a Request for Reconsideration with MPAC or appeal the assessed value to the Assessment Review Board.
[25] The 2012 assessed values of the private cottage lots in Rondeau range from approximately $60,000.00 to $346,000.00. The average 2012 assessed value for these lots is approximately $139,000.00. These figures reflect the assessed value of the lands and improvements.
[26] The Crown made the 2013 PILTs to the Municipality of Chatham-Kent in respect of the private cottage lots in Rondeau occupied by the Tenants on November 18, 2013. The total amount of the PILTs made in respect of these lots was $589,560.45.
[27] As of June 30, 2014, the Crown has received payment in full for the amount of the PILT from Tenants of 35 private cottage lots. Accounts for all other private cottage lots remain unpaid.
Positions of the parties
[28] The applicants submit that on November 28, 2013, for the first time since the applicants acquired cottage property in the park, they received a letter from the Ministry of Municipal Affairs and Housing indicating that the applicants’ lease stipulated that the Tenants must reimburse the Province for “property taxes” in the total sum of $3,340.11 paid to the municipality of Chatham-Kent on the applicants’ behalf.
[29] As a demand for reimbursement of property taxes had never been made before, the applicants made inquiries of the Ministry regarding the tax bill and received a response dated February 4, 2014 from the MNRF. The Ministry official advised that the total amount payable was based on three components: Crown Land Rent; Park Service Fee; and Municipal Tax Assistance Fee. Originally, cottage leaseholders were required to pay taxes in respect of the land upon which their cottages were situated. This obligation was reflected in an earlier lease dated July 1, 1965.
[30] The applicants say that at before the time of the execution of the new lease agreement, cottagers received a letter from the Ministry advising as to the terms of the new lease and the fees associated with the new lease. These were outlined in a letter dated October 24, 1986 from Wendy McNab, District Manager, Ministry of Natural Resources, to George Frederick, who then owned cottage lease number 1148. In the letter, Ms. McNab advised that “the annual rent under the terms of the lease amending agreement has been established as follows”:
Annual Land Rental - $1,350.00
Annual Service Charges - 90.00
Total Annual Fee $1,440.00
[31] The applicants submit that there is no document or correspondence since the early 1980s that indicates a requirement upon the cottage leaseholders to pay taxes. Nowhere in any document does the Province refer to, let alone rely upon, a contractual obligation upon the cottage owners to pay taxes. Indeed, up until the applicants’ receipt of these letters from the ministry in November 2013, the applicants were under the impression that their lease fees and park service fees covered all the applicants’ obligations to the Ministry. This has been expressly confirmed on a number of occasions by various representatives of the Ministry, some of which is in writing, and supports the applicants’ understanding.
[32] To illustrate this point, the applicants submit that the Past-President of the Rondeau Park Leaseholders Association, Stewart McLaren, was involved in financial discussions with the MNR regarding the lease extensions. Like many other cottage owners, Mr. McLaren was under the impression that Rondeau cottage leaseholders have not been required to pay “taxes” in respect of the cottage lots since the early 1980s. In August 1996, Mr. McLaren signed the Memorandum of Understanding referred to rent and service fees payable, but taxes were never mentioned. It is Mr. McLaren’s view that taxes were never mentioned in this document because it was the understanding of all parties that they were simply not payable by the cottage lease holders.
[33] The applicants are very concerned about this new charge to their annual costs of leasing in Rondeau Provincial Park. The applicants’ current lease term expires on December 31, 2017. Notwithstanding that discussions regarding the extension of leases had been going on for over fourteen years the applicants are still no closer to having the Extension Agreement finalized. The applicants submit that an implied contract has been established between the parties in support of their position.
[34] In the alternative, the applicants also submit that the equitable doctrines of estoppel, waiver and laches are applicable in this case.
[35] The respondents say that s. 4(3) of the MTAA creates a Crown debt payable by the tenant in the amount of the PILT attributable to their property, unless the parties agree otherwise. No such agreement exists here.
[36] The respondents say that the amount that the Crown seeks to recover from the Tenants is determined in accordance with the MTAA. Subsection 4(3) of the MTAA provides that the amount is to be equal to the tax for municipal and school purposes that would be payable if the property were taxable. For 2013, the amounts that the Crown is seeking to recover from the Tenants range from $888.90 to $5,271.83, with an average amount of $2,055.62. For example, the assessed value of the Graham's leased private cottage lot is $217,000.00. Therefore, the amount of the PILT paid in respect of these lands, and which the Crown seeks to recover from the Grahams, is $3,340.11.
[37] The respondents say that the applicants have made a number of arguments that they do not have a contractual obligation to pay taxes, and have raised waiver, estoppel and laches. The applicants each have a statutory debt to the Crown in the amount of the PILT paid in respect of their private cottage leasehold. The existence of the contractual obligation to pay is only relevant to the question of whether or not the “parties have agreed otherwise” within the meaning of s. 4(3) and such is not the case here. Moreover, the equitable principles are not applicable in this case.
Analysis
[38] There are a number of interdependent statutes which together create a complete taxation regime for provincial parks in Ontario. The starting point to determine how Crown tenants in provincial parks are liable for these amounts under these statutes is the Assessment Act: Pursuant to paragraph 1 of s. 3(1) of the Assessment Act, all real property in Ontario is liable to assessment and taxation, except lands owned by the Crown. Section 18(1) of the Assessment Act states that, despite s. 3(1), a tenant of Crown lands shall be assessed in respect of the land as if the tenant was the owner. Section 18(1) of the Assessment Act applies to all Crown land, in municipal territory as well as non-municipal territory.
[39] As a result of s. 18(1), tenants on Crown land must pay the property tax as if they were the owner of the land. However, the MTAA has displaced that obligation for those tenants of Crown lands located in municipal territory. The MTAA provides that the Crown may pay the municipality an amount equal to the property tax for tenanted property, and that amount is a debt to the Crown from the tenant, “unless the parties have agreed otherwise”. In this way, the municipality receives the tax revenue from Crown lands in the form of a PILT for each tenanted property. Section 4(3) provides in part:
The following apply if section 18 of the Assessment Act would, but for this section apply to a tenant of provincial property.
Section 18 of the Assessment Act does not apply to the tenant.
Unless the parties have agreed otherwise, the tenant shall owe a debt to the Crown or Crown agency, as the case may be, equal to the amount paid under paragraph 2.
If the Crown or Crown agency that owns the provincial property is required, under an agreement made before January 1, 1998, to pay any tax payable as a result of the application of section 18 of the Assessment Act, the tenant’s debt under paragraph 3 shall be reduced to the extent that the Crown or Crown agency would have been required under the agreement to pay the tax payable if section 18 of the Assessment Act still applied.
[40] The applicants submit that they did not pay a service fee prior to the mid-1980s, and that the obligation to pay a service fee was “contemporaneous with the extinguishment of the tax obligation.” I do not find support in the proposition that the Tenants had never paid for services prior to the mid-1980s. The applicants rely on the recollections of Stewart McLaren, and a letter dated October 24, 1986 from the MNR which accompanied the Second Lease Agreement and that advised the Tenants of the imposition a service charge of $90 starting on January 1, 1987. However, according to John Sabo’s affidavit with exhibits, tenants had been paying a garbage collection fee since at least February 24, 1958.
[41] The end of Provincial Land Tax collection did not occur at the same time as the imposition of the service charge described in the MNR letter relied on by the applicants. The Tenants were removed from the Provincial Land Tax rolls for the 1984-85 fiscal years, coincident with the repeal of the PMTAA and the amendment of the MTAA. It was not until October 24, 1986, that the MNR sent the letter to the Tenants enclosing the Second Lease Extension, and advising that all Tenants in Rondeau would be required to pay the new “standard leaseholder service charge”.
[42] I note that the service charge was imposed on all Tenants in Rondeau, whether or not they exercised their option to obtain a lease amending agreement. In other words, while the new service charge was contemporaneous with the Second Lease Extension, it also applied to those who were not a party to the Extension. The Second Lease Extension incorporated the express term in the Original Lease making the leaseholders liable for taxes, rates, duties and assessments.
[43] The amount of rent and the service charge was most recently renegotiated in 1996, resulting in a Memorandum of Understanding (“MOU”). The MOU is silent with respect to taxes, rates, duties and assessments. The affidavit of Stewart McLaren states it was the parties’ understanding at the time of the MOU that their rental fees were used, in part, to pay an appropriate portion of a “grant in lieu of taxes” but I agree with the respondents that apart from an “impression”, there is no foundation for this statement. I am persuaded that the fact that the MOU is silent with respect to taxes or their equivalent is consistent with the fact the Crown was not collecting the PILT from the Tenants at the time but specifically did not waive any further rights in that regard.
[44] It is noteworthy that although the leases would qualify as residential tenancies if the cottage were located on private land, I am advised that such does not appear to be the case here, and the leases are not subject to the Residential Tenancies Act (“RTA”). Accordingly, unlike a tenant whose tenancy is governed by the RTA, there is no obligation for the landlord to justify this unilateral increase in the cost of the tenancy by way of an application brought in advance of the proposed increase.
[45] It is the applicants’ position that, in addition to basic contractual principles, the agreement between the parties to remove the obligation to pay tax was an agreement within the meaning of section 4(3)3 of the MTAA, and the applicants have no liability for the taxes now alleged owing by the Province. However, an amount of tax owing with respect to a property is not something affected or negotiated by contract.
[46] The applicants submit that there was an implied agreement between the parties, based on the conduct of the parties in the mid-1980s, in which the parties agreed that the obligation to pay taxes would be replaced by an obligation to pay service charges. There was an implied variation of the term of the original Lease such that the Crown abandoned its right to insist that the cottagers pay taxes as there was mutual consideration exchanged in the form of the cottagers contemporaneously assuming liability for service charges. It is submitted that this agreement, or variation, can clearly be implied, as a matter of law, from the conduct of the parties. Such a conclusion is reinforced by the evidence that in all documents and correspondence exchanged between the parties from 1986 to 2013, there is no mention or suggestion of an obligation to pay taxes. In fact, the various statements made by Provincial officials since 1984, in particular the Nov. 1984 Ministry of Revenue letter are consistent with a mutual agreement and understanding that cottagers are not liable to pay taxes.
[47] It is true that there may also be an implied abandonment of a contract as a result of the conduct of the parties, or a modification or qualification or suspension of contractual rights and obligations as result of the conduct of the parties.
[48] As mentioned, para. 3 of s. 4(3) provides that a tenant is not liable if “the parties have agreed otherwise”. The Original Lease and the Extensions expressly state that the leaseholders are liable for “all taxes, rates, duties or assessments (including Local improvements)” and therefore there is no formal agreement otherwise. With respect to the one licence of occupation, there are no terms or conditions dealing with the obligation to pay tax, and thus no agreement that the licensee is not liable to pay tax pursuant to s. 4(3) of the MTAA.
[49] The applicants nonetheless argue that the parties have agreed otherwise, and that therefore they do not owe a debt to the Crown equal to the PILT paid in respect of each of their private cottage lots. The applicants have not provided evidence of any written or oral agreement that they are not liable for the statutory debt created in s.4(3) of the MTAA. Instead, the applicants argue that there is an implied contract that they are not liable for taxes.
[50] There are several problems with this argument, chief among which is that no contract can be implied – by law or fact – where there is already a valid express contract in place, whether oral or in writing.[^1] Clearly, there are already express contracts between the applicants and the Crown, in the form of the leases and the licence of occupation.
[51] I agree with the respondents that no extrinsic evidence can be considered that would add to, subtract from, vary, or contradict a contract that has been wholly reduced to writing, including evidence of the subjective intention of the parties.[^2] Nor can extrinsic evidence can be used to prove the existence of a collateral contract which contradicts the express terms of the main contract.[^3] On this basis, reliance on any communications between the parties or statements about subjective intention to establish a term contrary to clause 7 of the Original Lease is not permitted.
[52] There is nothing in the Second Lease Extension dealing with taxes, rates, duties or assessments. Therefore, the Original Lease Agreement remained operative as it relates to this obligation. Stewart McLaren claims that the provision dealing with taxes in the Original Lease was “dropped in subsequent leases”. I am not satisfied that the term dealing with taxes was removed in the manner suggested by the applicants.
[53] A contract in law cannot be established here, because the applicants have not established any unjust enrichment. To the contrary, the applicants have benefited from years of not paying any property taxes or amounts in respect of PILTs for their private cottages in Rondeau, although the Crown was paying a PILT on their behalf.
[54] The applicants also argue that the terms of the Original Lease were varied. However, a contract that is required to be made in writing can only be varied in writing.[^4] Pursuant to the Statute of Frauds, the Rondeau leases are required to be made in writing, and thus any variance must also be in writing.[^5]
[55] Even if the Statute of Frauds did not apply and an implied variance were possible, the applicants would have to establish all of the elements of a contract with respect to the varied terms, including a common intention and an exchange of consideration. While conduct can demonstrate offer and acceptance, that conduct must be a positive act. The evidence of the parties' subjective intention has no place in determining whether there was a contract or its terms.
[56] Here, the applicants state that the variance was formed “based on the conduct of the parties in the mid-1980s, in which the parties agreed that the obligation to pay taxes would be replaced by an obligation to pay service charges”. The applicants allege that there was mutual consideration exchanged in the form of the Tenants “contemporaneously assuming liability for service charges”.
[57] The conduct referred to between the parties is the 1986 offer of the Second Lease Extension. Clearly, there is an express contract arising from this offer. That contract is silent as to service charges and explicitly preserves the term in the Original Lease making the Tenants liable for all taxes, rates, duties and assessments. Any variance of this express term would have to have been created after the Second Lease Extension in 1987. It is not clear, therefore, when the offer and acceptance is alleged to have occurred, or what was offered to whom. I am not satisfied that the objective test would be met.
[58] Nor is it clear how there could be mutual consideration. The Crown ceased to collect Provincial Land Tax as a result of legislative changes almost two years before the 1987 Second Lease Extension. In addition, the Tenants were already paying a fee for garbage collection before the mid-1980s. In any event, it is wholly unclear what the benefit to the Crown would be in such a bargain. The Crown would have to bear the cost of the PILT for all of Rondeau, as well as provide services to the Tenants, while the Tenants would pay only for the services and bear no liability for the PILT.
[59] The applicants’ evidence of this alleged bargain also includes two letters from Ontario Parks, one in 1999 stating that discussions about lease renewal will include “the applicable portion of the Grant in Lieu of Taxes (paid by the Province to the Municipality)” and another in 2004, which stated that “leaseholders do not pay any property taxes”.
[60] In my opinion, these statements do not clearly demonstrate an intention to vary the legal rights and obligations between the parties. They are equally if not better understood as simple statements of the fact that the PILTs have not been recovered until now, and that the Crown still considers the Tenants liable for payment but the apportionment is not settled. These statements are consistent with the fact that the leaseholders remain liable for taxes, rates, duties or assessments under the terms of the Original Lease.
[61] As to the licence of occupation, it is silent with respect to taxes, rates, duties or assessments. Section 4(3) of the MTAA requires there to be an “agreement otherwise”, and there is no such agreement in the terms of the licence. Nor is it possible to imply a term that the licensee is not liable to pay the applicable portion of the PILT under s. 4(3). Terms can be implied into existing contracts, but I am reluctant to do so as the express terms of a contract should govern. I agree with the respondents that the tax obligation was not extinguished. The obligation for taxes, rates, duties and assessments is in full force and effect, and had been since the Original Lease was executed. There is nothing about the intention of the parties in evidence which makes it obvious that the licensee and the Crown intended to include a term that the licensee would not be liable for the statutory debt created under s. 4(3) of the MTAA. Nor is such a term necessary to ensure the contract operates effectively. Thus, there is no basis to conclude that the parties to the licence of occupation “agreed otherwise” within the meaning of s. 4(3) of the MTAA.
[62] As stated, the existence of the contracts setting out a clear requirement that the applicants are liable to pay taxes, rates, duties and assessments only emphasizes that there is no implied contract excusing them from this statutory debt.
Waiver, estoppel, and laches
[63] The applicants have made a number of arguments that they do not have a contractual obligation to pay taxes, raising the equitable doctrines of waiver, estoppel and laches.
[64] The applicants submit that it is evident that the Ministry has waived its rights under the Lease to insist on taxes being paid by cottagers. The clause was removed, by the Province, in the 1987 Lease Extension Agreement, when, contemporaneously, the service charge obligation was imposed upon the cottagers. Having waived the tax clause, the Province cannot now resurrect it without the consent of the tenants. The applicants argue that, after 30 years, the Province ought not to be permitted to claim on the original contractual obligation of the cottagers to pay taxes and the doctrine of estoppel or laches clearly applies. I disagree.
[65] Waiver occurs where one party to a contract takes steps which amount to foregoing reliance on some known right or defect in the performance of the other party. Waiver will be found only where the evidence demonstrates that the party waiving had full knowledge of the rights; and an unequivocal and conscious intention to abandon them. The test is a strict one, since an “overly broad interpretation of waiver would undermine the requirement of contractual consideration.”[^6]
[66] The applicants rely on the alleged removal of the provision requiring the payment of tax from the leases in support of their claims of waiver and estoppel. However, as mentioned, I find that the term was not removed. Rather the leases were extended twice, and in both cases, the original leases were appended and their terms continued to govern except where there was a contradiction.
[67] In addition, the applicants point to the contemporaneity of the 1987 Second Lease Extension and the imposition of the service charge. However, as mentioned, there was a service fee prior to 1987, and in any event, there is nothing inconsistent with imposing a service fee and holding the Tenants to their obligation under the lease to be responsible for taxes, rates, duties and assessments. In my view, the imposition of a service fee is not sufficient to establish “an unequivocal and conscious intention to abandon” this right.
[68] With respect to estoppel, this doctrine has been applied in cases involving contracts between parties where one party has unilaterally changed a term, which he was not lawfully entitled to do, and the other has by words or conduct accepted and consented to the act.
[69] The applicants seek to establish that the Crown is estopped from insisting on its legal rights under the contract. This amounts to a case of promissory estoppel.[^7] To establish promissory estoppel, the applicant must show that the Crown has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on, and that the applicants relied on the representation or promise to their detriment.[^8]
[70] At its highest, the letters filed in support of the application and the evidence submitted could only establish that the Crown was not collecting taxes and that there was no apportionment of the PILTs paid in respect of the private cottage lots in Rondeau. I am satisfied that there is certainly no cogent evidence of any representation intended to alter the legal relationships of the parties, that is, to alter or remove the term in the Original Lease that stipulates the leaseholders are liable for taxes, rates, duties and assessments.[^9]
[71] Here, the applicants must show that the Crown made a promise or provided an assurance through words or conduct that the applicants would never be liable in the future to pay taxes, rates, duties, or assessments in respect of their private cottage lots. This promise must have been clear, unequivocal and unambiguous.[^10]
[72] Even assuming there was a representation that the applicants would never again be required to pay taxes in respect of their cottage properties, there is no detrimental reliance.[^11] On the contrary, the applicants have benefited from not paying taxes for a long period of time. The Crown is only requesting payment for PILTs paid in 2013 and in the future, and not demanding payment for prior years. There is no inequity in requiring them to meet their obligations under the contract.
[73] In view of my findings, I need not decide whether a right waived under a contract may, with reasonable notice be re-asserted to insist on strict performance of the other party’s obligations,[^12] and an estoppel can be terminated on reasonable notice where it would not be inequitable to do so.[^13] Parenthetically, I note that the applicants were advised in 2011 that their cottages were to be assessed for taxation, followed by the October 2011 letter from John Salo indicating the exercise was to establish current value assessments for the cottage lots for taxation in 2013. In March 2013, the MNRF held an open house with respect to the assessments. If there was any detrimental reliance, reasonable notice has been provided.
[74] Finally, the applicants also rely on laches. Laches is a doctrine of equity which prevents a party seeking an equitable remedy from doing so where the party has delayed in bringing their claim. I do not find that the Crown had delayed its activity to seek recovery of the PILT from Tenants under the applicable statutory regimes. The doctrine cannot assist the applicants.
Conclusion
[75] I find that the obligation to pay the PILT is not contractual. It is a statutory obligation created pursuant to s. 4(3) of the MTAA. There is no implied agreement to the contrary. However, even if the only basis the Crown relied on to require payment of the PILTs was contractual, none of the equitable doctrines of estoppel, waiver or laches apply or can assist the applicants in the circumstances of this case.
[76] I find that a Tenant of a provincial park in a municipality must pay to the Crown the assessed amount for any PILT made under s. 4(3) in respect of the tenanted property. In this case, the applicants each have a statutory debt to the Crown and the Tenants owe a statutory debt to the Crown pursuant to the MTAA in the amount of the PILTs paid in respect of their private cottage lots in Rondeau Provincial Park. In accordance with the respondent’s submissions, such obligation and payments shall not encompass any period of time prior to 2013.
[77] Although the application contained a reference to a question of methodology, no argument was advanced in that regard and no determination is being rendered.
[78] If the parties cannot agree on the issue of costs, I will consider brief written submissions. These cost memoranda shall not exceed three pages in length, (not including any bill of costs or offers to settle). The Ministry shall file its costs submissions within 15 days of the date of this endorsement. Graham may file their costs submissions within 15 days of the receipt of the respondent’s materials. The Ministry may file a reply within 10 days thereafter.
[79] I wish to express my gratitude to counsel for their helpful submissions and comprehensive arguments expressed through their respective written facta and oral arguments.
“Justice A. J. Goodman”
A.J. Goodman J.
Released: January 7, 2015
[^1]: Chem-Tronix Laboratories, Inc. v. the Solocast Company 258 A. 2d. 110; Garland v. Consumers' Gas Co., 2004 SCC 25, [2004] S.C.J. No. 21 at para. 38.
[^2]: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] S.C.J. No. 53 at para. 59; Eli Lilly & Co. v. Novopharm Ltd.; Eli Lilly & Co. v. Apotex Inc., 1998 CanLII 791 (SCC), [1998] 2 S.C.R. 129 at paras. 54-56.
[^3]: Carman Construction Ltd. v. Canadian Pacific Railway Co., 1982 CanLII 52 (SCC), [1982] 1 S.C.R. 958 at pp. 966-967, 969; Hawrish v. Bank of Montreal, 1969 CanLII 2 (SCC), [1969] S.C.R. 515 at 520-521
[^4]: S.M. Waddams, The Law of Contracts, 6th ed. (Toronto: Canada Law Book Inc., 2010) at §249; GHL Fridman, The Law of Contracts in Canada, 6th ed. (Toronto: Thomson Reuters, 2011) at pp. 549-550.
[^5]: Statute of Frauds, R.S.O. 1990, c. S.19 ss. 1-3; SK Properties & Development Inc. v. Equitable Trust Co., [2003] O.J. No. 2234 at paras. 13-14 (S.C.J.)
[^6]: Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 CanLII 100 (SCC), [1994] S.C.J. No. 59 at paras. 19 and 20.
[^7]: Sales Promotion Services Inc. v. Ultramar Canada Inc., [1998] O.J. No. 1514 at para. 4 (C.A.)
[^8]: Maracle v.Travellers Indemnity Co. of Canada, 1991 CanLII 58 (SCC), [1991] S.C.J. No. 43 at para. 13; Sales Promotion Services Inc. v. Ultramar Canada Inc., [1998] O.J. No. 1514 at para. 4 (C.A.)
[^9]: Engineered Homes Ltd. v. Juniper Lands Ltd. (Trustee of), 1983 CanLII 142 (SCC), [1983] 1 S.C.R. 641 at 647 where the Supreme Court cites Lord Denning’s statement that “there must be evidence from which it can be inferred that the first party intended that the legal relations created by the contract would be altered as a result of the negotiations”.
[^10]: Sales Promotion Services Inc. v. Ultramar Canada Inc., [1998] O.J. No. 1514 at para. 4 (C.A.)
[^11]: Ryan v. Moore, 2005 SCC 38, [2005] S.C.J. No. 38 at para. 68.
[^12]: Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 CanLII 100 (SCC), [1994] S.C.J. No. 59 para. 27.
[^13]: Owen Sound Public Library Board v. Mial Developments Ltd., 1979 CanLII 1624 (ON CA), [1979] O.J. No. 4414 at paras. 30-33 (C.A.); Otis Canada Inc. v. International Union of Elevator Constructors, Local 50, [2000] O.J. No. 2605 (Div. Ct.) at paras. 20-24