Marsh v. Quinte West (City), 2017 ONSC 6869
COURT FILE NO.: CV-16-0471-00
DATE: 2017Oct16
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: RANDOLPH ALLAN MARSH, Applicant
AND:
THE CORPORATION OF THE CITY OF QUINTE WEST, KEN PAPAKIRIAZIS and GUS PAPAKIRIAZIS, Respondents
BEFORE: Madam Justice H. MacLeod-Beliveau
COUNSEL: Robert Reynolds, for Applicant
Suzanne E. Hunt, for Respondent/City
Ken and Gus Papakiriazis, not appearing
HEARD: 12 October 2017, at Belleville
ENDORSMENT ON APPLICATION
[1] On October 12, 2017, I advised counsel of the result of the hearing of this application with Reasons to follow. These are those reasons.
[2] The applicant seeks a declaration that the proceedings taken by the respondent City of Quinte West under the Municipal Act for the sale to the respondents Ken Papakiriazis and Gus Papakiriazis for tax arrears of the premises identified as Roll #301-010-14450-0000 municipal address 17 Carter Road, Carrying Place, Ontario, K0K 1L0 are void, and further, an order prohibiting the City from proceeding with any new tax sale proceedings in respect of the property except on notice to the applicant and others, who like the Applicant, have a registered easement interest in the property.
[3] The issues in this case are:
Did the treasurer of the City fail to exercise his discretionary duty entrusted to him in dealing with the applicant, and was prejudice suffered by the applicant as a result?
Is the applicant and others with a registered easement interest in the property entitled to notice from the City of any new tax sale proceeding?
Result:
[4] The application is granted and the proceedings for the tax sale of this property are declared void. The city is prohibited from proceeding with any new tax sale proceedings in respect of the property before January 1, 2018. The relief sought for notice of any future new tax sale proceedings to be given to the applicant and others with an easement interest in the property is dismissed. Costs are reserved.
Background Facts and Analysis:
[5] The parties are generally agreed on the history of the case. The property in question was first assessed in 2007. Since that time, the City has sent out tax bills and notices in accordance with the Municipal Act, including the notices of sale to the registered owners of the property. The registered owners of the property, Edward Leech and Charlie Munroe, have not had any dealings with the property since the 1960’s and have long since sold their cottages and disappeared.
[6] The applicant’s cottage and seven other cottages are on the north side of Barcovan Road. The lands in question are a private roadway and a larger common use area that runs from the applicant’s cottage down to a small cove and then to Weller’s Bay. The common use area is used for swimming, boating, BBQ’s and boat storage year-round by all the cottagers. The cottagers have registered easement rights over the roadway and all of the common lands, but have also maintained the property. This arrangement was set up in the 1940’s. The applicant and the other cottagers never turned their minds to who was the registered owner of the property.
[7] In 2006, the City purported to sell part of the common lands in a tax sale proceeding in conjunction with abutting lands on the peninsula. Mr. Coers brought it to the City’s attention that the City had mistakenly included some of the common use lands used by the cottagers. This led the City to further investigate the title, and the City ultimately agreed and amended their tax sale proceedings to exclude the common use lands. What it also did, however, was make the City aware that the common use lands and the roadway used by the cottagers, including the applicant, had never been assessed. Assessment of the property began in 2007.
[8] At first, MPAC showed the owners of the property to be all of the cottagers, including the applicant. In 2008, the cottagers names were removed as owners and Mr. Leech and Mr. Munroe’s names were substituted. Tax bills and notices were sent out to Mr. Leech and Mr. Munroe, but were never paid. They have not had anything to do with the property for over 55 years. Whether the notices were received by the owners was immaterial to the City as it had met its requirements under the Municipal Act.
[9] In October of 2016, the City decided to start tax sale proceedings to sell the property for arrears of taxes which then totalled approximately $7,500.00 with interest accumulating. Notice to the cottagers, including the applicant was not required, as they had easement rights over the property, which are not extinguished in the tax sale. The parties agree that the City followed proper procedures for the sale, with the exception of the discretionary issue which is central to this application.
[10] The applicant became aware of the sale and called the City in October of 2016 and was told by staff that there was nothing they could do to stop the sale. Ms. Trumbley and Ms. Powers stated they had an internal report that said everything was done properly and that the only thing that could stop the sale was a court order.
[11] The applicant then sent a formal letter to Mr. David Clazie, Director of Corporate & Financial Services (the treasurer) for the City dated December 8, 2016 asking him to review the matter and cease the sale proceedings. The next day, December 9, 2016, Mr. Clazie replied that “At this point in the process the City cannot cease the transfer”, and that the City intended to proceed with the transfer and that the applicant should take whatever action he deemed necessary on his end to try and stop the pending transfer.
[12] This application was issued and served and an interlocutory order was obtained on December 12, 2016 prohibiting the completion of the tax sale. Once the tax deed is registered, the sale is final and cannot be set aside. The tax sale deed has therefore not yet been registered and is prohibited by court order pending the final determination of this matter by the court.
1. Did the treasurer of the City fail to exercise his discretionary duty entrusted to him in dealing with the applicant, and was prejudice suffered by the applicant as a result?
[13] The central issue in this matter is whether or not the treasurer, Mr. Clazie, exercised his discretion when asked to do so, or was even aware that he had such discretion, to stop the tax sale up until the time the tax sale deed was registered.
[14] The applicant’s letter of December 8, 2016 I find was a clear request by the applicant for the treasurer to review the matter and to exercise his discretion to ensure the fairness of tax sales as provided for in the Municipal Act, s.382(1) and (6). The treasurer refused the applicant’s request and said the City had followed the Act, and that was the end of the matter.
[15] I agree with the submissions of the applicant and find that the treasurer failed to exercise his broader discretion given to him, to determine whether or not, in all the circumstances, not simply limited to the mandatory requirements of the Act, that the tax sale was fair to the applicant and the other cottagers as taxpayers.
[16] The City was aware of the interest of the cottagers from their dealings with them in 2006. They were aware that Mr. Leech and Mr. Munroe long since disappeared. The treasurer gave no thought as to whether or not lack of notice to the applicant and his neighbours rendered the process unfair. The prejudice to the applicant and the cottagers is significant as a sale would directly impact on the cottagers use and enjoyment of their properties. Of note as well is that the property in dispute cannot be built upon, and no tents or trailers can be put on it. What use a new purchaser could make of the property would be severely restricted due to the registered easements against the property and the restricted use of the property required by the City.
[17] The discretion given to the treasurer in the Act is broad and the neglect, error or omission does not have to involve a breach of the mandatory requirements of the Act and must take into account the interests of the affected taxpayer and not just the City. The treasurer has a duty to exercise his/her discretion. The failure to act on discretion is a failure to exercise discretion. In this case, the treasurer failed in his duty.
[18] I accept and find the evidence of the applicant on this application to be credible. I reject the treasurer, Mr. Clazie’s affidavit evidence as being unreliable. His evidence consists mostly of his opinions on his interpretation of the Municipal Act and reads like legal argument, much of which is repeated in the City’s factum. He does refer briefly to the discretionary issue in his supplementary affidavit of June 20, 2017, at para 6, but I find that it is reconstructive and after the fact evidence of his conduct and actions in light of this litigation. His evidence given in his cross examination on June 27, 2017, only one week later, is supportive of this finding.
[19] I find Mr. Clazie failed to exercise his discretion and that he was not aware that he had the discretion to stop the tax sale at any point in time up until the registration of the tax sale deed. He simply stated that the City had followed the mandatory requirements of the Act.
[20] In Cunningham v. Front of Yonge (Township) [2004] O.J. 4104 (Ont. C.A.), it was held that just following the mandatory requirements of the Act was not enough. I find the treasurer in this case made a mistake as did the treasurer in the Cunningham case. That mistake or error is reviewable by the court.
[21] In this case, I find that there was a complete failure by the treasurer to exercise discretion to ensure the fundamental object of fairness to those affected. The treasurer’s conduct in this regard I find was unreasonable. The actual prejudice to the applicant and his neighbours is significant. The practical effect is to put the applicant and others with a similar registered easement to the property in a direct conflict of interest position with the purported purchasers, the respondents Ken Papakiriazis and Gus Papakiriazis. While these respondents did not appear at the hearing of the application before me, the evidentiary record fully supports a finding that they have already begun to try and limit and restrict the use of the property by the applicant and other cottagers, and they are not yet the legal owners of the property. To proceed with the tax sale, I find, is unfairly prejudicial to the applicant.
[22] The result is that the tax sale is set aside and declared void.
Order Made:
[23] I order that the proceedings taken by the respondent City of Quinte West under the Municipal Act for the sale of the property to the respondents Ken Papakiriazis and Gus Papakiriazis for tax arrears of the premises identified as Roll #301-010-14450-0000 municipal address 17 Carter Road, Carrying Place, Ontario, K0K 1L0 are therefore declared void. The full legal description of the property shall be contained in the order.
2. Is the applicant and others with a registered easement interest in the property entitled to notice from the City of any new tax sale proceeding?
[24] The Municipal Act does not require the City to give notice to those with registered easements as those easements continue after the property has been sold. The easement situation in relation to this property is unique, highly unusual and irregular. The applicant and other cottagers now are aware of the true nature of the title to the property in question. They are in a position to pay the taxes themselves if they see fit to do so. They can then decide if they wish to proceed to determine their potential legal ownership interest to the property in question and regularize the title to the property.
[25] In my view, it is not necessary to make the order sought for future notice to be given to the applicant and the other cottagers. The Municipal Act does not require it. I will give the applicant however in the interest of fairness, until December 31, 2017 to decide how he wishes to proceed. After January 1, 2018, the City is allowed to proceed with new tax sale proceedings in accordance with the requirements of the Municipal Act, if the property continues to be in arrears of taxes as required by the Act.
Order Made:
[26] I therefore order that the City of Quinte West is prohibited from proceeding with any new tax sale proceedings in respect of the property before January 1, 2018. The relief sought for notice of any future new tax sale proceedings to be given to the applicant and others with an easement interest in the property is dismissed.
Costs:
[27] Costs are reserved. The parties shall have until November 15, 2017 to file written submissions on costs after which time the issue of costs shall be determined by me based on the material filed.
[28] Orders in this matter are to be signed by MacLeod-Beliveau, J. after approval by counsel.
MacLeod-Beliveau, J.
Released: October 16, 2017