2020 ONSC 873
COURT FILE NO.: CV-19-28491
DATE: 20200207
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DeLuca Bros Apartments of Windsor Limited
Applicant
– and –
Windsor Essex Catholic District School Board, formerly known as Essex County Roman Catholic Separate School Board
Respondent
Counsel:
Jeffrey W. Nanson, for the Applicant
Jessica Koper, for the Respondent
HEARD: January 29, 2020
REASONS ON APPLICATION
CAREY J.:
[1] The applicant seeks an order that the respondent comply with the terms of a licence between the parties dated February 25, 1988, and, among other things, specifically provide the written consent for the applicant to assign the licence to a third party who is purchasing the property known municipally as 12037 to 12055 Tecumseh Road East, Tecumseh, Ontario.
[2] The parties entered into a licence agreement for 99 years, in 1988 that related to a sharing between the parties of a parking lot owned by and solely on the property of the respondent, now the Windsor Essex Catholic District School Board (“School Board” or “Board”). There is now a proposed sale of the DBL property, and the purchasers have requested an assignment of the licence. The School Board has refused that request.
[3] For the reasons set out, I have allowed the application with costs to the applicant, DeLuca Bros Apartments of Windsor Limited (“DBL”).
Facts and Analysis
[4] The School Board says it is reasonable for them to deny the request as the document has aspects of a lease and violates the Planning Act, R.S.O. 1990, c. P.13. In the alternative, they argue a licence is a personal contract unlike a lease which would assign rights respecting property. In approaching this issue, it is important to consider the Planning Act and the purposes of that Act. It is also essential to look at the intention of the parties in preparing a licence as opposed to a lease. If, in fact, the licence was prepared to get around the express purposes of the Planning Act, should it be upheld or viewed as a nullity that was entered into to circumvent the Planning Act, 1983 (now Planning Act, R.S.O. 1990 c. P.13)?
[5] The material filed on this motion makes it clear that much negotiation by experienced lawyers went into drafting a document that was designed to be of mutual benefit over a long period of time for the parties.
[6] The affidavit of Brian Nolan filed in the application record, and from an earlier application by the School Board in 2006 when they were attempting to sell their own property (at tab 1(e), paras. 9 and 10), states:
I was informed by … and I do verily believe that DeLuca Bros. required additional parking availability in order to expand the restaurant facilities on its site, and the school Board required a new parking area to serve the school needs as it planned to locate new permanent and portable classrooms on part of its existing parking area.
Details and terms and the scope of the work to be done and the financial arrangements between the parties were negotiated between the Board administrators and counsel for DeLuca Bros., in consultation with the Town of Tecumseh.
[7] The affidavit goes on to set out (in para. 11), the details of “[t]he construction of the parking lot on the part of the Board’s lands in issue in this matter…” This included an extension of Lanoue Street, an internal access road from the extension of the new street to the parking area and a 12-inch storm sewer and a six foot wide sidewalk along this extension. The storm sewer, sidewalk and waterlines estimated at $25,000 were to be paid by the Board. They also agreed to pay approximately $12,500 for the materials for the sanitary sewer and water main. From their part, DBL was to pay the cost of constructing the internal laneway and constructing and asphalting the parking lot as well as fencing the area. The estimated costs in 1986 of the DBL works was about $25,000.
[8] DBL also agreed to maintain and repair the parking area and to pay 50 percent of the cost of lawn maintenance, snow removal and electricity for the parking lot lands in consideration for use of the parking lot during non-school hours. The affidavit sets out that, to the affiant’s knowledge, there had never been an issue of DBL failing to meet their obligations under this agreement.
[9] The same application record at tab 2 contains the affidavit of Carmela DeLuca, vice president and shareholder of DBL and full-time manager of the Torino Banquet Hall. Her affidavit sets out the terms of the licence that began on November 15, 1987 and ends November 14, 2086. She describes the licence reflecting “a fair bargain between the parties: the Board would use the parking lot during normal school hours, defined as 7:00 a.m. to 6:00 p.m.”
[10] Paragraph 10 in the affidavit sets out the significant aggregate costs of DBL’s part of the bargain including insurance for both the Board and DBL. At para. 11 she estimates that the construction of a similar surface today would cost in excess of approximately $500,000.
[11] Mr. Nolan’s affidavit at paras. 21 and 22 indicates his recollection that the agreement was drawn as a licence and not a lease since a lease with a 99-year term would require consent under the Planning Act and a severance of the property and, further, that DBL would not be receiving exclusive possession and use of the lands under the proposed arrangement. (Bolding mine.)
[12] It is clear from the supporting material in the application record that the parties were not intending to offend the purpose of the Planning Act in maintaining orderly control over the subdivision of property. I find no attempt to defeat the Planning Act but rather an intention to comply with it for the mutual benefit of both parties. The evidence supports that the licence agreement has had its intended purpose and has operated since 1987 without any issues between the parties over the obligations of the parties.
[13] The Ontario Court of Appeal in Kraemer v. Kraemer, 2020 ONCA 91, very recently rejected an argument that a licence was really a lease. The Court made the following observation at para. 9:
The parties were represented by lawyers as they worked together to draw up the Agreement. The entire Agreement, starting with the title and continuing through its provisions, is a licence, not a lease. Accordingly, it is not surprising that the motion judge’s conclusion on this issue, with which we agree, was expressed in relatively blunt language:
The submissions that the agreement is really a lease, is simply put forward as a proposition by [the appellant] without any legal basis to do so.
[14] I disagree with the respondent’s characterization of either this dispute or the earlier vendor and purchase application of 2006 as “issues arising out of the operation of the agreement.” Then and now the disagreement is over whether the Board should continue to be held to their obligations under the licence. For over 32 years, both parties have got exactly what they bargained for. The Board got a paved and maintained parking lot for their use during business hours and DBL got sufficient parking for their expanding restaurant and catering business. There is no exclusive possession given to DBL and nothing that would allow a division of the property in violation of the Planning Act.
[15] I have further concluded that the agreement, both in its running period (99 years) and specific terms, was drafted to allow it to be transferred with the sale of the DBL property as long as the restaurant and catering aspects of the use of that property were to continue. The plain language of the agreement allows for no different interpretation. The information in this application makes it clear that is what the parties intended. The significant investment by DBL in their own business expansion and the construction and maintenance of the parking lot make that clear. The type of business being operated by DBL, including restaurant events and catering, would be hobbled without the access that they have been guaranteed for a total of 99 years, to ample parking to accommodate the customers and guests to their facility. It is highly unlikely that a prospective purchaser would value the business the same without the parking agreement.
[16] I am satisfied that the construction of the parking lot fence and other improvements to the property in issue here falls within the exception in s. 50(9) of the Planning Act:
Nothing in subsections (3) and (5) prohibits the entering into of an agreement that has the effect of granting the use of or right in a part of a building or structure for any period of years.
[17] I accept that legal interpretation in a number of cases relied on by the applicant as well as the definition of “structure” in the Canadian Dictionary of Law includes the improvements to the parking lot and surrounding areas, including the sidewalks and roads constructed by the applicant. I see no merit in the respondent’s assertion that the section has no applicability because what was granted was a whole of the parking lot which is not a building or structure. The agreement explicitly calls for the “construction” of the various improvements undertaken by the applicants. The agreement was clearly designed for the mutual benefit of both parties in using a constructed parking lot, roads and sidewalks to the mutual benefit of the parties and without exclusion of the other’s rights for part of the time. In my view, the use of the word “part” in s. 50(9) is designed to address an exclusive use that could undermine the Act’s clear intention in s. 50 to prevent the subdivision of a lot. In this sense, part time use of the parking lot is as consistent with the purposes of the Act as the wording of “part of a building or structure.”
[18] Accordingly, I find the licence to be a valid agreement negotiated between the parties’ lawyers and is not in contravention of the Planning Act. It is disingenuous for the Board to argue after all of the benefits they have received from this agreement and the negotiations that went into it that it has, for the last 32 years, been relying on a document that had an illegal purpose and was thus a nullity. I find that given the wording of the agreement ensuring that the agreement is nullified by a change in the use of the restaurant catering aspect of the DBL property and the assurances by DBL that these uses will continue, the Board has no objectively reasonable basis to withhold the consent to the assigning of the said licence.
[19] Accordingly, an order will issue in accordance with Part 4, para. 56 of the applicant’s factum (i), (ii), (iii) and (v).
[20] In the event the parties are unable to agree on costs, they may make brief written submissions (three double-spaced pages), along with a costs outline and any relevant offers to settle, according to the following timeline:
a) The applicant may provide submissions within 15 days;
b) The respondent may provide submissions within 15 days thereafter; and
c) The applicant may provide reply submissions within 5 days thereafter.
Original signed by Justice Thomas J. Carey
Thomas J. Carey
Justice
Released: February 7, 2020
2020 ONSC 873
COURT FILE NO.: CV-19-28491
DATE: 20200207
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DeLuca Bros Apartments of Windsor Limited
Applicant
– and –
Windsor Essex Catholic District School Board, formerly known as Essex County Roman Catholic Separate School Board
Respondent
REASONS ON APPLICATION
Carey J.
Released: February 7, 2020