Court File and Parties

COURT FILE NO.: CV-17-570028 DATE: 20170301 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: 2424155 Ontario LTD, Applicant AND: Township of King, Respondent

BEFORE: Stinson J.

COUNSEL: Darryl Singer and Sarah Zakir, for the Applicant John Longo and Patrick Copeland, for the Respondent

HEARD at Toronto: February 24, 2017

Endorsement

Background

[1] Kent Nicolson is one of the principals of 2424155 Ontario Ltd. ("242"). In April 2016, 242 purchased a 40 hectare parcel of semi-rural land located in King Township, northwest of the City of Toronto. The property is rectangular in shape, being wider east to west than it is north to south. Its western boundary abuts Weston Road, a regional roadway that provides access to the property. At its eastern end, the property abuts Highway 400, a multi-lane controlled access highway. The property contains a barn and a few residential buildings.

[2] For the past several years, both before and after 242's acquisition of the property, Mr. Nicolson and his representatives have met with representatives of the Township to discuss potential uses for the property and applicable planning considerations. At one stage, those discussions concerned the possible operation of a shooting range on the property. More recently, the discussions concerned Mr. Nicolson’s proposal to operate a country bed-and-breakfast business. Common to both proposals was the creation of a large berm along the eastern edge of the property where it abuts Highway 400, as well as portions of the adjoining north and south edges of the site.

[3] As most recently conceived, the proposed berm would be approximately 10 meters high above the existing grade of the property at the relevant location. The purpose of the berm, according to Mr. Nicolson, is to provide an acoustical and visual barrier between Highway 400 and the property, in order to enhance the attractiveness of the proposed country bed-and-breakfast operation.

[4] It is estimated that the proposed berm would require approximately 500,000 m³ of fill to be brought onto the property and dumped and then shaped by earthmoving equipment. This would entail approximately 50,000 truckloads. The trucks would access the site via Weston Road and then travel east along a driveway across the property to the location at which the berm is to be constructed.

[5] Since 1997, the Township has had a Fill Control By-law which controls the dumping of fill and alteration of grades of land in the Township, By-law No. 97-84. The By-law contains a general prohibition against dumping fill or altering the grade of any land in the Township except in accordance with the By-law. It sets out a process by which a landowner may apply for a permit to dump fill or alter the grade of land. The By-law contains several exceptions, including s. 3(7) which provides that the By-Law does not apply "[w]here fill is placed on lands zoned for residential use within the meaning of the Zoning By-law for the purposes of lawn dressing, landscaping, adding to flower beds or vegetable gardens …."

[6] During the course of his communications with the Township regarding his proposed uses for the property and his proposed installation of the berm along its eastern edge, the Township made Mr. Nicolson aware that it considered his proposal would require a permit under the Fill Control By-law. For his part (and apparently with the input of some advisors) Mr. Nicolson was of the view that the installation of the berm amounted to landscaping and thus it fell within the exceptions to the By-law set out in s. 3(7).

[7] In reliance on his belief that the Fill Control By-law did not apply, Mr. Nicolson has taken several steps forward with his plan to install a berm on the property. Among other things, he has entered into a contract with an enterprise known as Soilcan to import approximately 500,000 m³ of fill material onto the property. That arrangement is financially advantageous for 242, because it will receive revenue in excess of $1.9 million by agreeing to permit Soilcan to deliver fill to the site. That revenue is an important element in 242's financial plan, since its bed-and-breakfast business is not yet operating and it must service a $3.3 million mortgage debt on the property.

[8] In furtherance of his plan to construct the berm, Mr. Nicolson applied to the Region of York (the municipality that maintains Weston Road) for a Road Occupancy Permit to allow trucks carrying fill for use in the berm to access the property via Weston Road. That permit was issued on February 6, 2017. At some point in January 2017 before the Road Occupancy Permit was issued, however, and without notifying the Township, 242 began receiving truckloads of fill at the property. Specifically, dump trucks were observed travelling along the driveway on the property and dumping quantities of fill, some comprised of earth and others comprised of concrete blocks, bricks and like material.

[9] The Township became aware of the activity on the property in late January 2017. A By-law Control Officer was dispatched to the site. He observed trucks depositing fill on the property. He spoke with Mr. Nicolson and informed him that the activity was contrary to By-law 97-84, and that all dumping activities should cease. Two days later, on February 1, 2017, the Township issued a formal Site Alteration Order pursuant to which 242 was ordered to stop all importation of fill and site alteration immediately. Despite service of the Order, on February 8, 2017, the Township discovered that 242 was continuing to dump substantial amounts of fill onto the property. Mr. Nicolson was again verbally directed at this time to cease all dumping activity and to immediately contact the Township to discuss the matter. Mr. Nicolson did not contact the Township.

[10] On Friday, February 10, 2017, the Township contacted Mr. Nicolson to schedule a meeting for the following Monday, February 13, 2017. Following the meeting, 242 decided to commence this proceeding. It served application materials during the afternoon of Friday, February 17, 2017, and sought an urgent date for a hearing to set aside the Site Alteration Order.

Procedural History

[11] This proceeding was commenced by means of a Notice of Application issued on February 21, 2017. On that same date, counsel appeared in Civil Practice Court requesting an urgent date for a hearing to seek an injunction. The hearing was scheduled for February 24, 2017. Further materials exchanged during that week.

[12] As formally constituted, this matter was initiated by Notice of Application seeking final injunctive and declaratory relief. No Notice of Motion was served in which interlocutory relief was requested. Despite this fact, both sides prepared for and approached the hearing on February 24 on the basis that the applicant was seeking interlocutory relief only.

[13] Before me, counsel for the applicant confirmed that he was seeking an interlocutory mandatory injunction that would require the Township to lift the Site Alteration Order and allow the continued importation of fill, subject to the load restriction limits applicable to all heavy trucks travelling on rural roads between March 1 and April 30. Both sides agreed to proceed with the argument of the matter as an interlocutory motion on the basis of the undertaking of counsel for the applicant to regularize the process by filing a Notice of Motion, after the fact. The parties further agreed that, following the disposition of the interlocutory motion, they would agree on a timetable for future steps in the proceeding.

[14] On the basis of the foregoing agreement and undertaking, I will proceed to determine the matters argued before me on February 24 on the basis of the legal principles applicable to a motion for an interlocutory mandatory injunction.

Relevant Legal Principles

[15] The test for an interlocutory injunction is governed by the decision of the Supreme Court of Canada in RJR-MacDonald Inc. v. Canada (Atty. Gen.), [1994] 1 S.C.R. 311. In that case, the Court adopted as generally appropriate the three stage test set out by the House of Lords in American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396. The test that must be considered by a court is as follows:

1. the court must make a preliminary assessment of the merits of the case to ensure that there is a serious question to be tried;
2. the court must determine whether the moving party would suffer irreparable harm if the motion were refused; and
3. the court must assess which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits. This third branch of the test is often referred to as the “balance of convenience."

[16] In this case, 242 is asking for an interlocutory mandatory injunction. There is considerable authority for the proposition that a party seeking a mandatory interlocutory injunction must meet a higher standard than a party who applies for a prohibitory interlocutory injunction. In Ticketnet Corporation v. Air Canada, [1987] O.J. No. 782, White J. found that the applicable law was correctly stated by Megarry J. in Sheppard Homes Limited v. Sandham, [1970] 3 All E.R. 402, at p 412, as follows:

[O]n motion, as contrasted with the trial, the court is far more reluctant to grant a mandatory injunction than it would be to grant a comparable prohibitory injunction. In a normal case the court must, inter alia, feel a high degree of assurance that at the trial it will appear that the injunction was rightly granted; and this is a higher standard than is required for a prohibitory injunction. … No doubt a mandatory injunction may be granted where the case for one is unusually sharp and clear; but it is certainly not a matter of course.

[17] In his text on injunctions, Justice Sharpe describes interlocutory mandatory injunctions as “especially difficult to obtain." See Robert J. Sharpe, Injunctions and Specific Performance, 4th ed. (Toronto: Canada Law Book (looseleaf), 2012) at para. 2.640. In Barton-Read Canada Ltd. v. Alfresh Beverages Canada Corp., [2002] O.J. No. 4116, at para 9, Mesbur J. succinctly summarized the case law as follows: “the plaintiff must not only satisfy the court that there is a serious issue to be tried, but also that they are clearly right and almost certain to be successful at trial." [footnote omitted].

Analysis

[18] I turn next to the application of the foregoing principles to the facts of this case.

[19] Before doing so I should acknowledge that, as a judge hearing and deciding a preliminary motion such as this, I am constrained in several ways. First, I must recognize that I do not have at hand all the information and arguments that will be available when the case is fully argued. Secondly, and in part due to the factor I have just mentioned, my comments on the evidence and the merits of the case must be viewed as preliminary only and not determinative of the merits of the underlying arguments or, indeed, my final view of the merits. As stated by the Supreme Court of Canada in RJR-Macdonald (at para. 50), “a prolonged examination of the merits is generally neither necessary nor desirable" at the interlocutory injunction stage.

Issue 1 - Is there a serious question to be tried?

[20] The essence of the applicant’s case is that the construction of the berm amounts to landscaping. As such, it falls within the exception contained in s. 3(7) of the By-Law and thus no permit is required.

[21] In support of its position, the applicant filed, among other material, a professional opinion from a landscape architect to the effect that the proposed berm “constitutes a landscaping element." I do not consider the court is bound by that opinion for purposes of determining the legal meaning of the contents of the By-Law or its application to the facts at hand. That said, the applicant has raised an issue as to the interpretation and scope of the By-Law and thus it has demonstrated that there is a serious question to be tried.

[22] In relation to a motion for a mandatory interlocutory injunction, however, the moving party must show more: it must demonstrate that it is clearly right and almost certain to be successful at trial. For the following reasons, I conclude that the applicant has not met this higher standard.

[23] The judge who hears and decides the main application will need to interpret and apply the By-Law and specifically the exceptions contained in s. 3(7). The s. 3(7) exceptions are said to be available where fill is placed on lands “for the purposes of lawn dressing, landscaping, adding to flowerbeds or vegetable gardens…". The word “landscaping” in s. 3(7) cannot be read in isolation. Applying the ejusdem generis principle of statutory interpretation to interpret the meaning of that term, the accompanying exceptions (lawn dressing, adding to flowerbeds or vegetable gardens) suggest to me that the s. 3(7) exceptions were intended to relate only to modest additions of fill for the indicated purposes, as contrasted to a significant alteration in the terrain, such as will result from the addition of 500,000 m³ of soil.

[24] The foregoing interpretation is reinforced by the contents of s. 4(2) of the By-Law. Under the heading “General Prohibitions and Regulations" the By-Law states as follows:

(2) No person may place or dump fill or cause fill to be placed or dumped and no person may alter the grade of any land or cause the grade of any land to be altered in the Township without a permit where the volume of the fill being placed or dumped one of the volume of the fill involved in the alteration exceeds fifty (50) cubic metres.

This provision indicates that, read as a whole, the intention of the By-Law overall is to control any placement of fill where the volume involved exceeds 50 m³. The exception in s. 3(7) should be interpreted in this context. More importantly, s. 4(2) would indicate that the By-Law is directed to controlling additions of fill whenever the quantity exceeds 50 m³. This would clearly extend to the proposed activities of the applicant.

[25] Finally, it is beyond argument that the proposed activity by the applicant will result in the addition of a significant quantity of fill on the property. The applicant’s own experts have detailed a range of considerations that ordinarily would go into the placement of such a quantity of fill, ranging from hydrogeologic monitoring, to soil testing, etc. It must also be borne in mind that the property is located in the Oak Ridges Moraine, an environmentally protected area. As such, the applicant's proposal – and its assertion that if it falls within the exception contained in the By-Law – is likely to come under close scrutiny by the judge who hears the ultimate application, and that the outcome of such scrutiny is by no means certain to favour the applicant’s position.

[26] In view of all the foregoing considerations, I conclude that the applicant has not met the first branch of the test, since it is unable to demonstrate that it is clearly right and almost certain to be successful at the main hearing of the application.

Issue 2 - Will the applicant suffer irreparable harm?

[27] In support of its submission that it has satisfied this branch of the test, the applicant points to the various financial features of its proposed business plan. In essence, in order for the plan to operate the bed-and-breakfast business to remain viable, the applicant must continue to receive cash flow from Soilcan so that it may stay current with its mortgage obligations, pay its employees and meet other financial commitments. Very little backup documentation has been provided to support these allegations. The court has not seen the Soilcan agreement, the mortgage documentation, a business plan or any other financial documents.

[28] Assuming that the applicant will experience financial hardship if the mandatory interlocutory injunction is not granted, I cannot overlook the fact that the applicant itself has created the situation of potential harm that brings it to court. Well before it purchased the property, 242 was aware that the Township considered that the construction of a berm of the magnitude proposed would require a permit under the Fill Control By-Law. Despite that knowledge, the applicant proceeded to purchase the property, enter into mortgage financing commitments and other contracts and the arrangement with Soilcan. The applicant therefore knew in advance that it was risking that the Township would intervene as it has, if not inviting it to do so.

[29] In the face of the Township’s clearly articulated position, in lieu of entering into the legal and financial arrangements described above, the applicant and Mr. Nicolson could have pursued a more prudent – and less confrontational and risky - course of action. They quite easily could have commenced an application under rule 14.05(3)(d) of the Rules of Civil Procedure for “the determination of rights that depend on … the interpretation of … a municipal By-Law." Such an approach would have provided them with certainty of their legal position in advance of engaging in these various legal and financial commitments. They chose not to do so. In my view, in circumstances such as these, the applicant cannot complain of the potential for irreparable harm where such harm could easily have been avoided by seeking a ruling as I have described and where, in essence, the applicant is the author of its own misfortune.

[30] I therefore conclude that the applicant has not met the second test for an interlocutory mandatory injunction.

Issue 3 – In whose favour does the balance of convenience lie?

[31] As the Supreme Court of Canada stated in RJR-Macdonald, the court must assess which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits. If the mandatory interlocutory injunction is granted and the Site Alteration Order is removed, the applicant intends to proceed with the construction of the berm. To do so, it proposes to continue to dump up to 500,000 m³ of fill on the site.

[32] The importation of fill for the berm has already begun. As well, based on photographs and maps contained in the Township’s materials, some of the fill is comprised of brick and other non-soil materials that has been deposited along the edges of the driveway to reinforce it, apparently in the vicinity of a watercourse identified by the Lake Simcoe and Region Conservation Authority.

[33] If the motion is granted, the importation and dumping of fill will continue. Should it ultimately be determined, however, that the By-Law is applicable, the applicant will be faced with the task of either obtaining a permit from the Township with retroactive effect, or, if unable to do so, removing 500,000 m³ of fill from the site. As a practical matter, if it cannot secure retroactive permission under the By-Law, the applicant may find it impossible to remove that quantity of soil and other fill material.

[34] One of the reasons is the likely expense of doing so. The applicant’s financial resources are limited and already stretched, according to its own materials. As a matter of simple logic, it seems unlikely that the applicant could afford the cost of remediation when a basic premise of its business plan is its entitlement to dump soil on the site in the first place: if the applicant needs the Soilcan dumping revenue to finance its operations, how will it be able to pay to dump the soil elsewhere? The Township might well end up being forced to undertake the remediation at public expense.

[35] Another consideration is the potential adverse impact of the fill while on the site. As I have mentioned, there is reason to believe that this is an environmentally sensitive area. At this juncture, it is impossible to know with any degree of confidence, the possible adverse impact on the land arising from the introduction of such a large quantity of fill. One must be mindful of the concerns of the Lake Simcoe and Region Conservation Authority and also of the underlying aquifer found in the Oak Ridges Moraine. As the applicant’s own expert reports indicated, a wide range of environmental considerations need to be taken into account in placing such a large quantity of fill in any particular area. The evidence to date falls far short of satisfying those concerns.

[36] Based on the foregoing analysis, I consider that the Township would potentially suffer far greater harm from the granting of an interlocutory mandatory injunction than the applicant would potentially suffer from its refusal. I therefore conclude that the balance of convenience does not favour the applicant and that it has failed to meet this branch of the test for an interlocutory injunction, as well.

Issue 4 – Is the applicant’s undertaking as to damages adequate?

[37] As noted in Guelph Taxi Inc. v. Guelph (City) Police Service, 2016 ONSC 3671, at paras 15-16, “[t]he undertaking as to damages is an essential condition to or prerequisite for an injunction ….” and “[t]he party giving the undertaking is obliged to disclose whether it or its principals have sufficient assets to recover any reasonable award of damages (see 642947 Ont. Ltd. v. Fleisher (2001), 56 O.R. (3d) 417 (C.A.), at para 63).” Implicit in those statements is the requirement that the undertaking be adequate to cover the potential damage award that a court may grant should the injunction later be found to have been unwarranted.

[38] Here, the applicant is admittedly in precarious financial circumstances, as are its principals. Assuming the interlocutory mandatory injunction were granted and the dumping continued, then in the event the By-Law is held to be applicable and the applicant cannot obtain the required permit, the fill would have to be removed and the property restored to its former condition. Quite apart from the cost of remedying any possible environmental damage, the expense of just removing the fill (which would, presumably include a dumping fee in the order of the one being paid to the applicant by Soilcan) would be substantial, and likely well in excess of any equity that the applicant has in the property, its only known asset.

[39] I therefore conclude that the undertaking as to damages proffered on behalf of the applicant is inadequate.

Conclusion and Disposition

[40] For these reasons, I conclude that the applicant’s motion for an interlocutory mandatory injunction must be dismissed.

[41] In relation to costs, I encourage the parties to reach agreement. Should they be unable to do so, I direct as follows:

(a) The respondent shall serve its Bill of Costs on the applicant, accompanied by written submissions, within 30 days of the release of these reasons. (b) The applicant shall serve its response on the respondent within 20 days thereafter. I expressly invite the applicant to submit the Bill of Costs it would have presented had it been successful on this motion. (c) The respondent may, but is not obliged to, serve a reply within 10 days thereafter. (d) In all cases, the written submissions shall be limited to three double-spaced pages, plus Bills of Costs. (e) I direct counsel for the respondent to collect copies of all parties' submissions and arrange to have that package delivered to me in care of Judges' Administration, Room 170 at 361 University as soon as the final exchange of materials has been completed. To be clear, no costs submissions should be filed individually: rather, counsel for the respondent will assemble a single package for delivery as described above.

Stinson J. Date: March 1, 2017