Nylene Canada Inc. v. Corporation of the Town of Arnprior

[Indexed as: Nylene Canada Inc. v. Arnprior (Town)]

Ontario Reports

Ontario Superior Court of Justice,

R.J. Smith J.

February 1, 2017

136 O.R. (3d) 599 | 2017 ONSC 795

Case Summary

Municipal law — Fees or charges — Section 394(1)(c) of Municipal Act not prohibiting municipality from charging for sewer and water treatment services based on amount of water supplied where amount of water discharged into system is less than amount supplied — Municipal Act, 2001, S.O. 2001, c. 25, s. 394(1)(c). [page600]

The plaintiff brought an action against the defendant municipality claiming that the defendant had overcharged it for the costs of providing sewer and water treatment services ("wastewater services") since 2005, because it had invoiced it based on the amount of water supplied and not on the lesser amount of wastewater discharged into the sewage system. The defendant brought a motion for summary judgment dismissing the action.

Held, the motion should be granted.

Section 384(1)(c) of the Municipal Act, which provides that no fee or charge by-law shall impose a fee or charge that is based on "the use . . . of a service other than a service provided by the municipality", did not prohibit the defendant from charging for wastewater services based on the amount of water supplied where the amount of water discharged into the system was less than the amount supplied. The scheme of the Act and the intention of the legislature in s. 394(1) (c) are consistent with restricting the municipality from charging ratepayers based on the use or consumption of services that are not provided by the municipality. The defendant had based the amounts that it charged for wastewater services on a reasonable estimate of the costs of providing those services. The amounts charged had actually resulted in a slight loss each year until 2014. The fees charged could not be considered to be a tax imposed by the defendant, nor could they be considered arbitrary, as there was a direct correlation between the amount charged and the cost of providing wastewater services. The decision to impose a charge for wastewater services based on the amount of water supplied was a policy decision and was protected by statutory immunity under s. 450 of the Act. The doctrine of unjust enrichment had no application as the defendant had not made a profit from providing wastewater services. Any enrichment would, in any event, have a juristic reason as it would be pursuant to a by-law based on a reasonable estimate of recovering the costs of providing wastewater services to ratepayers.

Prescott Finishing Inc. v. Prescott (Town), [2010] O.J. No. 3203, 2010 ONSC 212, 191 A.C.W.S. (3d) 1322 (S.C.J.), distd

R. v. Imperial Tobacco Canada Ltd., [2011] 3 S.C.R. 45, [2011] S.C.J. No. 42, 2011 SCC 42, 308 B.C.A.C. 1, 419 N.R. 1, 2011EXP-2380, J.E. 2011-1326, 335 D.L.R. (4th) 513, 21 B.C.L.R. (5th) 215, 25 Admin. L.R. (5th) 1, 86 C.C.L.T. (3d) 1, [2011] 11 W.W.R. 215, 83 C.B.R. (5th) 169, 205 A.C.W.S. (3d) 92, apld

Other cases referred to

Allard Contractors Ltd. v. Coquitlam (District), 1993 CanLII 45 (SCC), [1993] 4 S.C.R. 371, [1993] S.C.J. No. 126, 109 D.L.R. (4th) 46, 160 N.R. 249, J.E. 93-1893, 35 B.C.A.C. 241, 85 B.C.L.R. (2d) 257, 19 Admin. L.R. (2d) 1, 18 M.P.L.R. (2d) 1, 43 A.C.W.S. (3d) 1083; Angus v. Port Hope (Municipality), [2016] O.J. No. 3148, 2016 ONSC 3931, 57 M.P.L.R. (5th) 170, 267 A.C.W.S. (3d) 720 (S.C.J.); Eurig Estate (Re) (1998), 1998 CanLII 801 (SCC), 40 O.R. (3d) 160, [1998] 2 S.C.R. 565, [1998] S.C.J. No. 72, 165 D.L.R. (4th) 1, 231 N.R. 55, J.E. 98-2121, 114 O.A.C. 55, [2000] 1 C.T.C. 284, 23 E.T.R. (2d) 1, 83 A.C.W.S. (3d) 146; Hryniak v. Mauldin, [2014] 1 S.C.R. 87, [2014] S.C.J. No. 7, 2014 SCC 7, 314 O.A.C. 1, 453 N.R. 51, 2014EXP-319, J.E. 2014-162, EYB 2014-231951, 95 E.T.R. (3d) 1, 12 C.C.E.L. (4th) 1, 27 C.L.R. (4th) 1, 21 B.L.R. (5th) 248, 46 C.P.C. (7th) 217, 37 R.P.R. (5th) 1, 366 D.L.R. (4th) 641, 2014EXP-319, J.E. 2014-162; Ontario Private Campground Assn. v. Harvey (Township) (1997), 1997 CanLII 12143 (ON SC), 33 O.R. (3d) 578, [1997] O.J. No. 1876, 146 D.L.R. (4th) 347, 31 O.T.C. 335, 39 M.P.L.R. (2d) 1, 70 A.C.W.S. (3d) 1087 (Gen. Div.); Rizzo & Rizzo Shoes Ltd. (Re) (1998), 1998 CanLII 837 (SCC), 36 O.R. (3d) 418, [1998] 1 S.C.R. 27, [1998] S.C.J. No. 2, 154 D.L.R. (4th) 193, 221 N.R. 241, J.E. 98-201, 106 O.A.C. 1, 50 C.B.R. (3d) 163, 33 C.C.E.L. (2d) 173, 98 CLLC Â210-006, D.T.E. 98T-154, 76 A.C.W.S. (3d) 894 [page601]

Statutes referred to

Municipal Act, R.S.O. 1990, c. M.45 [repealed by S.O. 2001, c. 25], s. 220.1

Municipal Act, 2001, S.O. 2001, c. 25, ss. 391, (1), 394(1) [as am.], (a), (b), (c), (d), (e), 450

Safe Drinking Water Act, 2002, S.O. 2002, c. 32

Rules and regulations referred to

Financial Plans Regulation, O. Reg. 453/07 [as am.]

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 20.04(2.1), (2.2)

MOTION by the defendant for summary judgment.

Pat Santini, for plaintiff.

Mélanie H. Levesque, for defendant.

[1] R.J. SMITH J.: — This summary motion raises the issue of whether a municipality is prohibited by s. 394(1)(c) of the Municipal Act, 2001, S.O. 2001, c. 25 (the "Act") from charging for wastewater services, based on the amount of water supplied to each resident, rather than the lesser amount of wastewater actually discharged into the sewer system. If so, is the municipality liable for the difference between the amount it charged and the actual volume of wastewater discharged? A decision on this issue will affect many municipalities in Ontario.

[2] The plaintiff ("Nylene") claims that the Corporation of the Town of Arnprior ("Arnprior" or the "Town") has overcharged it for the costs of providing sewer and water treatment services ("wastewater services") since 2005, because it has invoiced it based on the amount of water supplied and not on the lesser amount of wastewater discharged into the sewage system.

[3] In 2013, Nylene installed deduct meters, which quantified the amount of water leaving its facility, and discovered that it discharged approximately 89 per cent of the amount of water supplied to its facility. As a result, it claims it has been overcharged by 11 per cent for wastewater services that it did not use. It submits that s. 394(1)(c) of the Act prevents Arnprior from imposing a fee or charge that is based on the use or consumption of a service, other than a service provided or performed by the municipality.

[4] Arnprior has brought a motion for summary judgment seeking the dismissal of the plaintiff's claim against it on the grounds that the Town benefits from statutory immunity under the Act. The Town submits that it made a policy decision when it decided how to impose charges for providing wastewater services to its residents and, as a result, the plaintiff does not have a cause of action. In addition, the Town submits that the limitation period has expired for most of the period for which damages are claimed. [page602]

[5] The Town submits that the issues raised may be decided in a summary motion as the facts are not contentious and involve issues of law. In particular, a determination of whether s. 394(1)(c) of the Act prevents the Town from charging for sewer services that are not based on the exact amount of water that is discharged into the sewage system is a matter of statutory interpretation.

[6] Nylene submits that there are genuine issues requiring a trial which cannot be resolved by the fact-finding powers under rule 20.04(2.1) and (2.2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Nylene also argues that Arnprior has failed to provide a sufficient evidentiary basis to justify a dismissal of its claim on a summary judgment based on the limitation issue, on whether the Town owed Nylene a private law duty of care and whether Arnprior has been unjustly enriched. However, Nylene has not identified any facts that are in dispute or any credibility issues that would require a trial.

[7] Nylene's primary argument is that the Town's motion for summary judgment should be dismissed because s. 394(1) (c) of the Act prohibits a municipality from charging for services it does not actually provide. Nylene relies on the Prescott Finishing Inc. v. Prescott (Town), [2010] O.J. No. 3203, 2010 ONSC 212 (S.C.J.) decision to support this submission.

[8] The following issues must be decided:

(1) Does s. 394(1)(c) of the Act prohibit a municipality from charging for wastewater services based on the amount of water supplied, where the amount of water discharged into the sewage system is less than the amount supplied?

(2) If the answer to issue #1 is yes, should all or part of the plaintiff's claim be dismissed based on the expiry of the limitation period?

(3) Is a trial required to determine whether Arnprior owed Nylene a private law duty of care, whether Arnprior has statutory immunity from this claim, or whether Arnprior made negligent misrepresentations, and/or was unjustly enriched by charging for sewer services based on the amount of water supplied and not on the amount of water discharged?

Facts

[9] Nylene filed a statement of claim on April 11, 2014 against Arnprior. Nylene alleged that the Town's billing system with respect to the water and wastewater was not fair. It has alleged that the Town was negligent and has been unjustly enriched in this respect. Nylene alleges that the Town should not [page603] be charging it for use of the sewer system on the basis of the volume of water consumed by them. It alleges that the Town has made misrepresentations with respect to the monthly water bills in that it led consumers to believe that the wastewater was metered. Nylene has claimed for overpayments made since 2005 and future overpayments.

[10] Nylene operates a polymer manufacturing facility located at 200 McNab Street in Arnprior, Ontario.

[11] Nylene has owned this property since 2005. Throughout that time, Arnprior has continuously billed Nylene for its consumption of fresh water and for its processing of the wastewater emitted from the property.

[12] The water invoices provided to Nylene indicated that both the water and wastewater were "metered". This suggested to Nylene that the water going in and out of the property was being measured, and that the invoice was intended to charge for the actual services used in a particular billing period.

[13] In July of 2013, Nylene became aware that other municipalities had implemented rebate programs for sewer charges based on the customers providing proof that the wastewater leaving the property was not the same quantity as the water entering the property. At this time, Nylene became aware of machines known as deduct meters, which are capable of measuring the amount of water used by various machines, which thus would not exit the property.

[14] Deduct meters were installed at the property in November of 2013, at which time Nylene came to be aware that the amount of water leaving the property was significantly lower than the amount that had entered.

[15] By the use of the deduct meters, Nylene has been able to calculate that only 88 per cent to 90 per cent of the water which enters the property is returned to the wastewater system. This means that Nylene is annually paying for between 7.5 and 9 million gallons of wastewater that is not actually being treated by Arnprior, and for which it is being charged.

[16] Arnprior has admitted that the wastewater is neither metered nor measured, but has taken the position that the quantity of wastewater supplied to Nylene has not been measured since it is not possible or practical to measure such amounts accurately. On that basis, it alleges to have made a "policy decision" to charge sewer rates as a commodity charge, based on wastewater rates multiplied by water consumption.

[17] In the recent past, Ontario Bill 175 required municipalities to move to a full cost recovery through water and wastewater rates. In 2004, the Town completed an extensive study process [page604] and established a "10 Year Water and Wastewater Financial Plan". C.N. Watson and Associates Ltd. was retained by Arnprior to prepare a water and wastewater rate study to identify all current and future water and wastewater system capital needs; identify the cost recovery options for ten years; and recommend new rates to recover the costs of the water and wastewater system. The report indicated that the Town council had considered a number of rate structure alternatives during the study process and adopted the best one to meet their needs.

[18] Nylene and other consumers were made aware of the above-noted "financial plan" which was explained in the notices sent out to consumers in the past, including Nylene.

[19] The water provided to Nylene and all other consumers is of known quality and measured quantity, in accordance with provincial legislation and regulations. A fee is legislatively enacted by the Town, as required by the province, to recover the total cost of supplying water and wastewater services. The fee is derived from the arm's-length water and wastewater rate study, as mentioned above.

[20] The cost of fresh water supplied is only one variable in the calculation of the cost of treating sewage. However, as a matter of administrative efficiency and in the exercise of its discretionary powers, the Town made a policy decision, informed, among other matters, by its Water and Wastewater Rate Study, to express sewer rates as a commodity charge based on wastewater rates multiplied by the amount of water consumption. Charging fees for the use of the wastewater system is a normal occurrence followed by other towns, cities and municipalities. In each year, the Town has legislatively enacted a fee to recover the total cost of treatment, once again in accordance with provincial legislative and regulatory requirements, which was derived from the arm's-length engineering study.

[21] The fees charged for wastewater are necessary to recover the expenses as set out in its financial plan. The high costs and high volumes of wastewater treatment and services justify the Town's right to charge these fees. For example, the Town budgeted $2.175M for wastewater treatment and services in 2014 and $2.264 million in 2015. For 2014, the annual total flow m3 for water was 1,723,726 and 2,202,185 for wastewater. As mentioned above, the provincial government had wanted municipalities to move to a full cost recovery through water and wastewater rates, the costs of wastewater treatment is billed to the residential and commercial users of water within the Town of Arnprior.

[22] One justification for charging for wastewater based on the amount of water supplied is that water consumed will be eventually discharged to the sewer system. Due to the nature of [page605] sanitary discharge, metering of the wastewater is not always practical and could lead to inaccurate readings as a result of meters becoming soiled because of the discharge. It has always been the Town's standard practice to base water and sewer charges on metered water consumption.

[23] The Town is unaware of how the plaintiff has calculated its alleged overpayments for sewer charges, as stated in its claim. As mentioned above, the quantity of sewer waste created by the plaintiff has not been able to be calculated and the same applies to other customers. The plaintiff has provided some metering information to the Town in the past but there are concerns regarding the accuracy of the data for reliance purposes as the meter used is not the same quality as used by the Town and the Town has been unable to verify if the meter is properly calibrated on a regular basis.

[24] Throughout the years, the Town's billing process has been consistent. Prior to 2011, invoices to customers contained the references to "Water/Wastewater Charges" to show rates applied to both water and wastewater. After 2011, the newer billing system invoices contained references to water and wastewater as well and included both the waste and wastewater rate amounts charge under the "important notes" section of the invoice, which were tied directly to the by-law approved rates.

[25] In addition to the invoices sent on a monthly basis, the plaintiff received rates notice letters on a yearly basis, showing how the rates were calculated dating back to 2005. A rates notice letter is sent with each water/wastewater bill annually to every residential and commercial account. Typically, the rates notice letter is sent with the first bill of the year. Further, hardcopies of it are available in the main entrance lobby of the Town Hall and included on the Town's website for the public. The rate notice letters are very clear on how the rates/fees were calculated. As such, the plaintiff would have been notified of all water/wastewater rates changes on a timely basis and informed on how the charges were calculated.

[26] The wastewater fees are based strictly on cost recovery and the billing system is considered fair for all customers. The Town does not make a profit from these fees and any surplus/deficits in these cost centres are transferred to/from the water or wastewater reserve funds. All moneys received from the water/wastewater rates charged are directly applied against water and wastewater capital and operating expenditures. Cost centres for water and wastewater services are appropriately segregated in the Town's accounting records. All water fees received are recorded as revenue in the water services cost centre and applied against water operating and capital expenses for the year. [page606]

[27] Further, provincial legislation such as the Safe Drinking Water Act, 2002, S.O. 2002, c. 32 and the Financial Plans Regulation, O. Reg. 453/07 required that the Town move towards achieving a financially sustainable drinking water and wastewater system. A means of achieving this is by charging rates for the use of the water/wastewater system. The study conducted by C.N. Watson in 2004 shows the move towards achieving this goal and sets out recommendations on imposing such rates. The Town abided by the provincial legislation when it imposed such rates and it has consistently followed the rates as identified in the cost recovery financial models.

[28] The Town has passed by-laws each year fixing the rates to be charged for both water and wastewater services. The charges for wastewater services are based on the volume of water supplied to Nylene. An example of Arnprior's rates notice for water and wastewater charges in 2006 is attached as Schedule "A".

[29] The Town set out the wastewater budget for 2011 in its materials which shows the revenue received and expenses incurred to operate the wastewater system for 2004--2009. The budget demonstrates that the wastewater system has been operated at a slight deficit (-$1,572 in 2009) but in 2006, 2007 and 2008, it operated at a slight surplus, with some contributions from general tax revenue.

[30] A sample of Arnprior's invoice for water and wastewater services for August of 2010 is attached to the Town's motion record under Tab L, p. 2. The invoice sets out the metered water charge and also sets out the metered wastewater charges. The wastewater charge is $1.58 per m3 of the amount of water supplied to Nylene. It is acknowledged that the wastewater was not metered, but was based on the amount of water supplied which was metered.

Issue #1 -- Does S. 394(1)(c) of the Municipal Act Prohibit a Municipality from Charging for Wastewater Services Based on the Amount of Water Supplied, where the Amount of Water Discharged into the Sewage System is Less than the Amount Supplied?

Analysis

[31] Section 391(1) of the Act gives the municipality the power to impose fees or charges on persons for services provided by it. It reads as follows:

391(1) Without limiting sections 9, 10 and 11, those sections authorize a municipality to impose fees or charges on persons, [page607]

(a) for services or activities provided or done by or on behalf of it;

(b) for costs payable by it for services or activities provided or done by or on behalf of any other municipality or any local board; and

(c) for the use of its property including property under its control.

[32] Nylene argues that s. 394(1)(c) of the Act prevents Arnprior from charging it more for wastewater services than the amount it actually discharges. Nylene discharges approximately 89 per cent of the quantity of water it receives each month into the wastewater system.

[33] Section 394(1) reads as follows:

394(1) No fee or charge by-law shall impose a fee or charge that is based on, is in respect of or is computed by reference to,

(a) the income of a person, however it is earned or received, except that a municipality or local board may exempt, in whole or in part, any class of persons from all or part of a fee or charge on the basis of inability to pay;

(b) the use, purchase or consumption by a person of property other than property belonging to or under the control of the municipality or local board that passes the by-law;

(c) the use, consumption or purchase by a person of a service other than a service provided or performed by or on behalf of or paid for by the municipality or local board that passes the by-law;

(d) the benefit received by a person from a service other than a service provided or performed by or on behalf of or paid for by the municipality or local board that passes the by-law; or

(e) the generation, exploitation, extraction, harvesting, processing, renewal or transportation of natural resources.

(Underlining added)

Statutory interpretation

[34] In the decision of Rizzo & Rizzo Shoes Ltd. (Re) (1998), 1998 CanLII 837 (SCC), 36 O.R. (3d) 418, [1998] 1 S.C.R. 27, [1998] S.C.J. No. 2, at para. 21, the Supreme Court of Canada adopted Elmer Driedger's approach to statutory interpretation, which is as follows:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

Summary judgment test

[35] In Hryniak v. Mauldin, [2014] 1 S.C.R. 87, [2014] S.C.J. No. 7, 2014 SCC 7, the Supreme Court held that summary judgment motions must be granted whenever there is no genuine issue requiring a trial. There will be no genuine issue requiring [page608] a trial when the judge is able to reach a fair and just determination on the merits of the motion. This will be the case when the process (1) allows the judge to make the necessary findings of fact; (2) allows the judge to apply the law to the facts; and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

[36] At para. 16 of Hyrniak, the court stated:

The Court of Appeal set out a threshold test for when a motion judge could employ the new evidentiary powers available under Rule 20.04(2.1) to grant summary judgment under Rule 20.04(2)(a). Under this test, the "interest of justice" requires that the new powers be exercised only at trial, unless a motion judge can achieve the "full appreciation" of the evidence and issues required to make dispositive findings on a motion for summary judgment. The motion judge should assess whether the benefits of the trial process, including the opportunity to hear and observe witnesses, to have the evidence presented by way of a trial narrative, and to experience the fact-finding process first-hand, are necessary to fully appreciate the evidence in the case.

[37] I am satisfied that I am able to make a fair and just determination of the statutory interpretation of s. 394(1) (c) of the Act because the facts are largely not in dispute and there are no issues of credibility that would require a trial. A resort to the powers set out in rule 20.04(2.1) and (2.2) is only required to determine if the rate charged for wastewater services is based on the cost of providing this service. This issue was not really contested.

[38] Subsections 394(1)(a), (b), (d) and (e) may be summarized as follows:

(a) bars the city from considering a ratepayer's income;

(b) prohibits reference to how a ratepayer uses property outside of the city's control;

(d) prohibits consideration of benefits a ratepayer received from any party apart from the city; and

(e) bars the city from considering how natural resources are retrieved, transported or processed by the ratepayer.

[39] Section 394(1)(c) of the Act states as follows:

394(1) No fee or charge by-law shall impose a fee or charge that is based on, is in respect of or is computed by reference to,

(c) the use, consumption or purchase by a person of a service other than a service provided or performed by or on behalf of or paid for by the municipality or local board that passes the by-law[.]

(Emphasis added) [page609]

[40] It is agreed that the Town's by-law setting the rates to be charged for water and wastewater services are a "fee or charge bylaw" as set out in s. 394(1) of the Act.

[41] Nylene argues that s. 394(1)(c) should be interpreted to mean that "Municipalities are prohibited from charging for services they do not actually provide". Arnprior submits that s. 394(1)(c) should be interpreted in context, harmoniously with the scheme of the Act and the intention of the legislature to mean that the municipality is prohibited from imposing a charge based on a ratepayer's use of a service, other than for a service provided by the municipality.

[42] When considering the grammatical and ordinary meaning of the words of s. 394(1)(c), Arnprior has actually provided wastewater discharge services to all of the ratepayers of Arnprior, including the plaintiff Nylene. The Town has installed municipal sewers and a treatment plant to treat all of the water discharged into its sewage system. The wastewater service rates are based on a cost recovery estimate for providing these services, as set out in the ten-year engineering study prepared by C.N. Watson and Associates Ltd.

[43] Section 394(1)(c) must also be read consistently with the scheme of the Act. This section must be considered together with the other subsections of 394(1) and with s. 391 of the Act, which permits a municipality to impose charges for services provided by it to ratepayers. All of the other subsections of s. 394(1) restrict a municipality from imposing charges that are external to its relationship with its ratepayers, including (a) their income, (b) how a person uses property outside the municipality's control, (d) consideration of benefits received from a party other than the municipality, or (e) how natural resources are retrieved or processed by the ratepayer.

[44] In this case, Arnprior directly provides the wastewater services to Nylene and is not imposing a charge that is external to its relationship with a ratepayer. The scheme of the Act and the intention of the legislature in s. 394(1) (c) is consistent with restricting the municipality from charging to a ratepayer based on the use or consumption of services that are not provided by the municipality. The scheme and intention of the legislature in s. 394(1)(c) would not apply where the services were actually provided by the municipality to Nylene and not by some other party.

[45] The existing case law is based on s. 220.1 of the predecessor to this Act, Municipal Act, R.S.O. 1990, c. M.45, which contained similar wording to s. 394(1). The case law under s. 220.1 of the previous Act addressed the issue of the city's authority to [page610] charge ratepayers for a service provided from the perspective of whether the fee charged was actually a tax, which is prohibited.

[46] In Ontario Private Campground Assn. v. Harvey (Township) (1997), 33 O.R. (3d) 578, [1997] O.J. No. 1876, 146 D.L.R. (4th) 347, 1997 CanLII 12143 (ON SC), Howden J. wrote [at p. 596 O.R., at pp. 364-65 D.L.R.]:

. . . s. 220.1(4) further cuts into the assumption of a taxing authority by prohibiting any "tax that is based on, or is in respect of the use of property other than property owned or controlled by the municipality . . . In my view, the words in s. 220.1(6)(a) only broaden the distinct meaning of "fees or charges" to the extent that a by-law properly authorizing fees or charges within the parameters of s. 220.1 may charge fees which may exceed the cost of the service or property being provided in return.

[47] In Allard Contractors Ltd. v. Coquitlam (District), 1993 CanLII 45 (SCC), [1993] 4 S.C.R. 371, [1993] S.C.J. No. 126, at para. 72, the Supreme Court of Canada established that there was no need for a rigorous analysis of municipal accounts regarding surpluses generated by fees that a city imposes:

. . . so long as the municipalities made reasonable attempts to match the fee revenues with the administrative costs of the regulatory scheme, which is what occurred in this case. It is easy to imagine reasons for the existence of a so-called "surplus" at any given time. For example, changes in forecasted prices might lead to road repair being over-budgeted, or a municipality might choose not to repair a certain road in order to undertake more extensive repairs or reconstruction at a later date.

[48] In Eurig Estate (Re) (1998), 1998 CanLII 801 (SCC), 40 O.R. (3d) 160, [1998] 2 S.C.R. 565, [1998] S.C.J. No. 72, at para. 22, the Supreme Court built on this concept and stated as follows:

In determining whether that nexus exists, courts will not insist that fees correspond precisely to the cost of the relevant service. As long as a reasonable connection is shown between the cost of the service provided and the amount charged, that will suffice.

[49] In this case, Arnprior has based the amounts that it charges for wastewater services on an estimate of the costs of providing this service as set out in the C.N. Watson and Associates Engineering Study. The amounts charged for the wastewater services have actually resulted in a slight loss each year until 2014. Based on the uncontested evidence, I find that Arnprior has made a reasonable attempt to estimate its costs to provide wastewater services and has not made a profit or ran a surplus from the amount it charged ratepayers for this service. As a result, the fees charged for wastewater services cannot be considered to be a tax imposed by Arnprior nor can it be considered arbitrary as there is a direct correlation between the amount charged and the cost of providing wastewater services, unlike [page611] the facts in the decision of Angus v. Port Hope (Municipality), [2016] O.J. No. 3148, 2016 ONSC 3931.

[50] The plaintiff relies on the Prescott Finishing decision where the court found that the Town of Prescott had been unjustly enriched by overcharging the plaintiff for water and sewer services based on a faulty water meter. The Prescott Finishing case is distinguishable as the judge did not consider the above case law under the predecessor sections of s. 394(1)(c) of the Act, and did not conduct an analysis of the scheme or intention of the legislature under s. 394(1). In addition, the Prescott Finishing decision did not decide that a municipality was prohibited from determining on the method to be used to charge for services that it provided to recover its costs.

[51] In the Prescott case, the judge found that there had been an unjust enrichment by the town because it had overcharged for its services because of a defective meter. The Prescott decision did not concern a policy decision by the Town of Prescott to charge for services it provided in a specific manner in order to recover its cost of providing this service. As a result, I find that the Prescott Finishing decision is not applicable to the case before me.

[52] In R. v. Imperial Tobacco Canada Ltd., [2011] 3 S.C.R. 45, [2011] S.C.J. No. 42, 2011 SCC 42 (at paras. 63, 72, 74, 76, 87 and 91), the Supreme Court held that policy decisions that are based on social, political or economic factors are exempt from tortious claims. When Arnprior decided to impose wastewater fees based on the quantity of water supplied, it was exercising a policy decision by considering social and political factors in adopting a method to charge for its wastewater services that was linked to the amount of water supplied, which was metered and capable of accurate measurement. The decision was also based on an economic factor -- covering the costs incurred by the Town in delivering the wastewater services to ratepayers.

[53] The policy-operational divide adds an extra layer of distinction between Nylene's case and that in Prescott. From Imperial Tobacco, we see that policy decisions attract immunity, even when they result in some form of harm, as long as the decision-making process was rational and not in bad faith. Courses of action based on such policy will be immune too (Imperial Tobacco, at para. 116). In Imperial Tobacco, the Government of Canada had chosen to grow and market low tar tobacco as a safer alternative to regular cigarettes. While the strain was eventually linked to a variety of health maladies, the government remained immune from suit because growing and marketing this strain had been consistent with its goal of improving public health. [page612]

[54] As noted above, decisions rooted in an assessment of social, economic and political considerations are policy and the domain of the government -- not courts (see Imperial Tobacco, at para. 87). Since courses of action flowing from such policies are immune, the key in the present case is to determine the genesis of the pricing at issue. Arnprior as a matter of policy decided to implement cost-recovery in its waste water system. The pricing scheme annexing water consumption to wastewater rates flowed from a policy objective to ensure financial stability. This scheme was not rash but well-considered after a detailed study. Conversely, in Prescott, the user's charge flowed from a defective meter provided by the Town of Prescott. While fixing rates by meters it provided could have been categorized as a course of action flowing from policy, failing to maintain the meters is clearly an operational failure. Rates charged to a ratepayer based on such a failure would not be immune. In the same way, this case may have had a different outcome if Arnprior had relied on defective meters to determine the rate of water consumption and then imposed disposal fees based on this rate.

[55] I find that imposing a charge for wastewater services, that was calculated based on the amount of water supplied, was a policy decision and not an operational function by the Town, and as a result, it is protected by statutory immunity of s. 450 of the Act. Arnprior's decision to implement the financial plan, as recommended by the engineering study, was also a policy decision that was implemented in good faith by the elected members of council through passing a by-law.

[56] The doctrine of unjust enrichment has no application to this case because the Town actually operates its wastewater services at a slight deficit and has attempted to recover its costs of providing wastewater services. The Town has not made a profit from providing wastewater service to the ratepayers and has not been enriched. In addition, any such enrichment would be for the juristic reason of having passed a bylaw based on a reasonable estimate, relying on the engineering study to recover the costs of providing the wastewater service to its ratepayers.

Disposition of issue #1

[57] For the above reasons, I find that s. 394(1)(c) of the Act does not prohibit the Town of Arnprior from charging an amount for wastewater services, calculated on the amount of water supplied to a ratepayer, where wastewater services were provided to the ratepayer by the Town, where such charges were a reasonable estimate of recovering its costs of providing the services, and where the Town made a valid policy decision on the method they [page613] decided to use to charge for these wastewater services. As a result, the plaintiff's claim is dismissed.

Issues #2 and #3

[58] Given my findings on issue #1, it is not necessary to address issue #2.

[59] With regards to issue #3, it is not necessary to decide whether Arnprior owed a private law duty of care or whether it made negligent representations given my findings on issue #1. In addition, it was not necessary to have a trial to allow me to have a full appreciation and to reach a fair and just decision on these issues because the facts were not contested that the amount charged and recovered by the Town for wastewater services did not result in a profit, but rather a slight deficit and, as such, Arnprior was not unjustly enriched by the amount it charged for wastewater services. There was also a valid juristic reason because the charges for wastewater services were validly imposed by by-law and not prohibited by s. 394(1)(c) of the Act.

[60] The finding that Arnprior is protected by statutory immunity flows from the finding that Arnprior was not prohibited from making the policy decision to charge for wastewater services it provided based on the amount of water supplied to a ratepayer.

Costs

[61] The parties shall have 15 days to make submissions on costs not to exceed 15 pages.

Motion granted.

SCHEDULE "A"

TOWN OF ARNPRIOR Notice of New Water and

Wastewater Rates Effective January 1, 2006

In 2004 the Town of Arnprior completed an extensive study process and established a ten year Water and Wastewater Financial Plan. This plan provides for the full cost recovery on operating and capital needs for both water and sanitary sewage service through a revised rate structure. C.N. Watson and Associates Ltd. were engaged by the Town to undertake the study to address the current and future water and wastewater services and provide recommendations for a long range financial plan recognizing the recent provincially legislated requirements governing municipal water and wastewater services. In order to ensure that these services are most economically provided, Council will annually review and update the plan. With the establishment of a ten year financial plan for water wastewater services, the Town will be better prepared to adapt to the ever changing water and wastewater service requirements. [page614]

On February 6, 2006 Town of Arnprior Council passed by-laws

establishing the following new rates and charges for Water

and Wastewater services that are effective January 1, 2006

Commodity Charges

(these are charges based on the following water and wastewater rates multiplied by water consumption) <graphicname:chart from page OR 614.jpg>

End of Document