CITATION: Noethe v. City of Vaughan, 2016 ONSC 8153
COURT FILE NO.: FS-13-485650
DATE: 20161230
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
CARSTEN NOETHE
Applicant
- and -
THE CORPORATION OF THE CITY OF VAUGHAN
Respondent
Ian Thompson, for the Applicant
Kellie Hodges, for the Respondent
DECISION
D.L. Corbett J.:
[1] Mr Noethe moves to stay the tax sale of his commercial condominium at Unit 4, 260 Regina Road, Woodbridge, Ontario (the “Property”), and related relief, including:
(a) an order staying all actions involving the Property “pending the hearing or potential completion of the settlement” of this application;
(b) an interlocutory order setting aside the registration of the tax arrears certificate registered against the Property;
(c) an order declaring that the parties have settled on the basis of Mr Noethe paying taxes, interest and penalties for the years 2013, 2014 and 2015 and paying the City’s costs to the date of acceptance of the settlement offer, with all other claimed taxes, arrears and penalties for previous years being cancelled;
(d) in the alternative, a mandatory order requiring the City to hold a hearing of all of Mr Noethe’s claims for tax reductions, or an order for trial of issues and/or an accounting of Mr Noethe’s obligations to the City for the Property from 1999 to the present; and
(e) an interlocutory injunction restraining the City from taking steps to sell the property in a tax sale pending determination of the issues in this application, together with an order relieving Mr Noethe from the requirement to give an undertaking as to damages for this injunction.
[2] The respondent (the “City”) brings a cross-motion for an order dismissing this application on the terms of the settlement allegedly reached between the parties.
Disposition
[3] I find that the application and Mr Noethe’s motion ought to be dismissed because:
A. This case was settled, on the basis described by the City in its materials, and the settlement agreement ought to be enforced by this court.
B. Mr Noethe’s recourse for the matters of which he complains in this application are to the Assessment Review Board (“ARB”) and not this court. If this case had not been settled by the parties then I would have dismissed it on this basis.
C. An injunction should not be granted to support proceedings before the ARB because Mr Noethe has not satisfied any of the three tests for an interlocutory injunction and he does not come to this court with clean hands.
[4] Therefore, for the reasons that follow, I dismiss Mr Noethe’s motion, grant the City’s motion, and dismiss the application, all with costs to the City in an amount to be agreed between the parties or fixed by this court.
Background
[5] Mr Noethe’s property is a commercial condominium. Mr Noethe owes the City $242,703.82 in property tax arrears and penalties dating back to 1999. Mr Noethe has applied to the City repeatedly for relief from his municipal tax obligations because he is “unable to pay taxes because of sickness or extreme poverty” pursuant to s.357(5)(a) of the Municipal Act.[^1]
[6] The City’s tax department follows a policy restricting the availability of tax relief under s.357(5)(a) to residential properties. For this reason, the tax department never put any of Mr Noethe’s requests for tax relief before city council for decision. Mr Noethe was advised of this policy at least as early as 2005.
[7] Subsection 357(8) of the Municipal Act provides that if city council does not decide a request for tax relief, such as Mr Noethe’s requests pursuant to s.357(5)(a), then the taxpayer may appeal to the ARB. Such an appeal is to be brought by October 21 of the year following the year in respect of which the application for relief was made. The appeal before the ARB is conducted as “a new hearing”.
[8] City council never decided any of Mr Noethe’s requests for relief under s.357(a). Mr Noethe never appealed the city’s failure to decide his applications. When the City finally took steps to sell the Property to pay the tax arrears, Mr Noethe commenced these legal proceedings, back in 2013.
[9] In 2014 there were negotiations carried on by representatives of the parties. In my view the record is clear that these negotiations led to a settlement on the basis that this application would be dismissed without costs.
Analysis
Issue #1 – The Case Settled
(a) General Findings
[10] A settlement agreement is a contract. Thus it is subject to the general law of contract regarding offer and acceptance. For a concluded contract to exist the court must find:
(i) the parties had a mutual intention to create a mutually binding contract; and
(ii) the parties reached an agreement on all the essential terms of the contract.[^2]
[11] The City made a written offer to settle. It provides that “[t]his application… shall be dismissed on a without costs basis.” Mr Noethe accepted this offer. There were letters from both parties confirming that the offer had been accepted. It is clear that the parties intended to create a mutually binding settlement contract.
[12] In deciding whether the parties agreed on all essential terms of the contract, the court has recourse to the words used by the parties to reflect their bargain. “Where, as here, there is an agreement in writing, it is to be measured by an objective reading of the language chosen by the parties to reflect their agreement.”[^3] There is nothing in the offer to settle or the acceptance of the offer that is unclear. The language of those communications reflects an agreement to dismiss the application without costs.
(b) Timing of Offer and Acceptance
[13] The City’s offer to settle was made on the basis that the offer would expire on September 19, 2014. Mr Noethe’s representative, Mr De Nicola, accepted the offer on behalf of Mr Noethe orally on September 17, 2014.[^4] Written confirmation of this acceptance followed after September 19th, but the acceptance was communicated, effectively, on September 17, 2014. On this basis I find that the settlement was agreed prior to expiration of the offer to settle.
[14] Had I concluded otherwise, I would nevertheless have found that settlement had been agreed. Two alternative legal interpretations of the facts support this conclusion. If I had concluded that the acceptance had been first communicated after the offer had expired, then it would have been open to the City to reject the late acceptance and refuse to proceed with the settlement. It also would have been open to the City to accept the acceptance and thereby form a binding settlement agreement, either by:
(a) waiving the stipulated expiry date; or
(b) treating the late acceptance as an offer and accepting it.[^5]
The correspondence between the parties is clear that they considered that they had concluded the case on the basis of the City’s offer to settle, whether through the oral acceptance on September 17th, or on the basis of the subsequent written confirmation of the settlement that was accepted by the City. The deal was done.
(a) Substance of the Agreement
[15] The City only made one written offer. Its terms are clear. Mr Noethe argues that the settlement he accepted was a different proposal – one made by the City orally that would have seen tax arrears restricted to the taxation years of 2013, 2014 and 2015. The evidence to support this proposition is from Mr Noethe’s representative, Mr De Nicola. I do not accept that evidence; it entirely lacks credibility.
[16] The City’s written offer was September 16, 2014. It was stated to expire September 19, 2014. Oral acceptance was communicated on September 17, 2014. This acceptance was subsequently confirmed in writing. None of these communications referenced some offer other than the written offer made by the City on September 16th.
[17] Mr De Nicola says that he was accepting an earlier offer made by the City in June 2014 by which Mr Noethe’s arrears would have been reduced. There are several problems with this evidence:
(a) There is nothing in writing to confirm the existence of such an offer – either at the time or subsequently. It was not until December 2014 that Mr Noethe asserted this basis of settlement, and this in communications with the tax department rather than the City’s counsel.
(b) The City’s offer in August 2014 would have had the effect of terminating a prior oral offer (had there been one). The offer in August cannot be read as contemplating that there was some other offer, more advantageous to Mr Noethe, still available for him to accept.
(c) Counsel for the City did not have authority to make an offer in the terms described by Mr De Nicola. This does not preclude the theoretical possibility that counsel exceeded his authority and made the offer. However, in weighing the credibility of the evidence before me, I accept that counsel did no such thing.
(d) In his correspondence accepting the City’s offer, Mr De Nicola did not specify any of the terms that he was accepting on behalf of his client. This absence of terms is explicable only on the basis that all the terms were already expressed in the City’s written offer. If Mr De Nicola had been accepting an oral offer, as an experienced and competent professional paralegal, he would have understood that it was important to specify precisely the terms that had been agreed, so that there would be a written record of them. In Mr De Nicola’s letter to counsel for the City dated November 21, 2014, Mr De Nicola wrote that the application “will not be proceeding” and that “the settlement and its acceptance will be filed with the court”. An oral offer cannot be “filed with the court”. In referencing “the settlement and its acceptance”, Mr De Nicola was referencing two documents: the offer and the acceptance. Both were in writing.
[18] I conclude that there is good reason to believe that Mr Noethe and Mr De Nicola’s account of the settlement terms is a fabrication. I would need to hear oral evidence before making a definitive finding on this point. There is a strong factual foundation for such a conclusion, but I decline to draw it without having heard these witnesses orally. However I do not need to hear oral evidence to conclude that Mr Noethe’s and Mr De Nicola’s version of the settlement is not correct. On the record it is clear that the only settlement offer was the City’s written offer. Whether Mr Noethe and Mr De Nicola are mistaken or lying is a question I do not need to decide to dispose of this application.
(b) Summary and Conclusion
[19] The terms of the settlement are set out in the City’s accepted offer to settle. They are straightforward: the parties agreed that this application would be dismissed without costs.
[20] The court will enforce this settlement pursuant to R.49.09. This application is dismissed without costs to September 17, 2014. Mr Noethe agreed to file the settlement with the court, and so the City should have had no further assessable costs after the settlement was agreed.
[21] The settlement does not preclude costs being payable from the date of the settlement, and in particular, the costs to enforce the settlement. If those costs cannot be agreed then the City shall provide me with its costs submissions by January 20, 2017, and Mr Noethe shall provide me with his responding submissions by February 10, 2017.
Issue #2 – The Underlying Dispute is in the Jurisdiction of the ARB
[22] Section 357(1)(d.1) of the Municipal Act permits a taxpayer to apply to the treasurer of a municipality to cancel, reduce, or refund all or part of the taxes levied on the land in the year in respect to which the application is made if the applicant is unable to pay taxes because of sickness or extreme poverty.
[23] Section 357(5) of the Municipal Act provides:
On or before September 30 of the year following the year in respect of which the application is made, counsel shall,
(a) Hold a meeting at which the applicants may make representations to council;
(b) Notify the applicants of the meeting by mail sent at least 14 days before the meeting; and
(c) Make its decision.
[24] Section 357(8) provides that if council fails to make a decision “by September 30 of the year following the year in which the application is made”, then the applicant has the remedy of appealing to the ARB.
[25] Although s.357(5), read alone, appears to require council to hold a hearing whenever an application is made. However, the provision has to be read within the context of s.357 as a whole, and in particular, in light of s.357(5). If council fails to hold a meeting in respect to an application, the remedy is a proceeding before the ARB, and not a court order of mandamus to require council to conduct a meeting: an aggrieved applicant must exhaust the administrative procedures available to him at the ARB before having recourse to the courts. This point has been decided definitively by the Court of Appeal.[^6]
[26] Mr Noethe has applied repeatedly to the treasurer for tax relief under s.357(1)(d.1). He has been told repeatedly that the City’s policy is that it will not grant relief under s.357(1)(d.1) in respect to commercial premises (which is what the Property is). Mr Noethe has been advised of this at least as early as 2005. Mr Noethe has never appealed to the ARB pursuant to s.357(5). Mr Noethe cannot enlist the assistance of the court when he has not pursued the administrative law remedies available to him.
[27] If this application had not been settled, then I would have dismissed it on this basis.
Issue #3 – Injunctive Relief
[28] There is a limited jurisdiction in the court to provide interlocutory relief in respect to administrative proceedings. The metes and bounds of that jurisdiction is a complicated topic, which I decline to explore in this decision because, even if it was concluded that there are situations where this court should restrain a tax sale pending completion of related administrative proceedings, I would not grant such relief in this case.
[29] The well-known test for injunctive relief has three components:
(a) Is there a serious issue to be tried?
(b) Will the claimant suffer irreparable harm if the relief is not granted?
(c) Does the balance of convenience favour granting the relief sought?
[30] I would answer each question “no” in the context of this case.
[31] Mr Noethe has not placed before the court a record to show that there is merit in his claim for tax relief for a commercial condominium. The situation has gone on now for over a decade and it appears that arrears may now be approaching the equity in the property. There is nothing in the record to explain why it would be equitable for Mr Noethe to get a free ride on his property taxes, for so many years. On the record before me I think it unlikely that Mr Noethe would receive any tax relief if his application was heard by the ARB, and I consider that there is no serious issue to be tried that he will receive tax relief that would materially reduce his overall tax indebtedness for the Property. I also conclude that there is no serious issue to be tried as to whether Mr Noethe has any continuing ability to challenge most of the claimed tax arrears because of his failure to appeal to the ARB in a timely way.
[32] At this juncture it seems clear that Mr Noethe will lose the Property in a tax sale. Any dispute over the precise amount owed for taxes may be determined once the Property has been sold and it is known whether there is any equity left in the Property.
[33] The balance of convenience weighs in favour of a tax sale. There is now some risk that the City will not be made whole for the taxes, penalties and interest owed for the Property. I see no good reason to delay the sale.
[34] Finally, as indicated above, I am satisfied that Mr Noethe failed to implement a settlement agreement and relied upon false evidence to defend his breach of contract. I have declined to make a finding that Mr Noethe and his representative knowingly lied under oath in this proceeding. Mr Noethe has accused the City of bad faith in these matters. These allegations are unfounded. It is all too easy to bandy words around like “bad faith”. Perhaps Mr Noethe does not fully appreciate that there are living, breathing human beings who work for the City, who have feelings, and who suffer when baseless allegations of serious misconduct are made against them. By reason of the false evidence relied upon by the applicant and the baseless allegations of bad faith made by the applicant, I find that the applicant does not have clean hands in respect to these matters: I would decline to grant him equitable injunctive relief on this basis, as well as the other grounds set out above.
Conclusion and Order
The City’s motion succeeds. The application is dismissed without costs to September 17, 2014, with costs since September 17, 2014 to be addressed in writing as set out in this decision. It
follows that the applicant’s motion is dismissed in its entirety with costs to be addressed as part of the costs of the application since September 17, 2014.
D.L. Corbett J.
Released: December 30, 2016
CITATION: Noethe v. City of Vaughan, 2016 ONSC 8153
COURT FILE NO.: FS-13-485650
DATE: 20161230
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Karsten Noethe Applicant
- and -
The Corporation of the City of Vaughan Respondent
DECISION
D.L. Corbett J.
Released: December 30, 2016
[^1]: Municipal Act, SO 2001, c.25 (the “Municipal Act”), s.357(5)(a). [^2]: Olivieri v. Sherman, 2007 ONCA 491, para. 41. [^3]: Olivieri v. Sherman, 2007 ONCA 491, para. 44; Copperwaite v. Reed, 2016 ONSC 1824, paras. 11-14. [^4]: De Nicola Transcript, p.81-82, lines 2 to 10. [^5]: Alves v. Azvedo, 2010 ONSC 2853; Michon v. Renic-Cully, [2001] OJ No. 2025 (SCJ). [^6]: Toth Equity Limited v. Ottawa (City), 2011 ONCA 372.