Hummell Properties Inc. v. The Corporation of the Town of Niagara-on-the-Lake

[Indexed as: Hummel Properties Inc. v. Niagara-on-the-Lake (Town)]

Ontario Reports

Ontario Superior Court of Justice

Ramsay J.

April 15, 2021

155 O.R. (3d) 313 | 2021 ONSC 2793

Case Summary

Municipal law — By-laws — Validity — Bad faith — Interim control by-law — New council convening emergency meeting two days after being sworn in — Council enacting interim control by-law — Public consultation delaying adoption of Official Plan and resulting in by-law being extended — Interim control by-law and extending by-law repealed after Official Plan adopted — Applicant moving to quash by-laws for illegality and bad faith — Motion dismissed — Emergency meeting met procedural and statutory requirements — Bad faith argument not supported by evidence.

Following an election, the new council of the respondent Town was sworn in on December 3. The following day the new Lord Mayor called a special meeting for December 5. That was short notice under the procedural by-law, but it was permitted for an emergency meeting. At the December 5 meeting, council resolved to study land use planning policies and it enacted an interim control by-law restricting subdivision, condominium approval and zoning changes. The by-law was to expire after one year. Council then held public meetings and consultations, the result of which was to delay the adoption of the Official Plan update and cause the interim control by-law to be extended for another year. After the draft revised Official Plan was enacted, the interim control by-law and the by-law extending it were repealed. The applicant moved to quash those two by-laws for illegality and bad faith, and asked for a trial to determine the quantum of damages for misfeasance in public office and fraudulent and negligent misrepresentation.

Held, the motion should be dismissed. [page314]

No bad faith was established. The applicant claimed that the December 5 meeting and the interim control by-law did not meet statutory requirements, but those two complaints were rendered moot by the repeal of the by-law. However, those alleged illegalities had to be addressed as they formed part of the factual basis for the applicant's bad faith argument. As required by the Municipal Act, the December 5 meeting was open to the public. The Lord Mayor was entitled by the Town's procedural by-laws to call an emergency meeting. Nothing in those by-laws precluded her from considering the subject-matter to be an emergency, allowing shorter notice. Interim control was by its nature urgent. The applicant argued that there was a failure to meet the requirements of the Planning Act, but the applicant's unduly strict interpretation of the legislation did not accord with the liberal interpretation required by the jurisprudence. The Lord Mayor was entitled to move quickly with her agenda, which involved extensive public participation. Council was not limited to acting on the advice of staff but rather was entitled to act in accordance with its own judgment. The meeting was held in public and its agenda was not cryptic. The extension of the by-law was justified by the delay of the Official Plan. On the whole of the evidence the case for bad faith seemed contrived.

Quay West v. Toronto (City), [1989] O.J. No. 3072, 47 M.P.L.R. 109, 1989 CarswellOnt 516 (Div. Ct.); Equity Waste Management of Canada v. Halton Hills (Town) (1997), 1997 CanLII 2742 (ON CA), 35 O.R. (3d) 321, [1997] O.J. No. 3921, 103 O.A.C. 324, 40 M.P.L.R. (2d) 107 (C.A.), apld

Adams v. Greater Madawaska (Township), [2013] O.M.B.D. No. 784, 14 M.P.L.R. (5th) 311, 77 O.M.B.R. 384, not folld

Other cases referred to

715113 Ontario Inc. v. Ottawa (City) (1987), 1987 CanLII 4101 (ON SC), 63 O.R. (2d) 102, [1987] O.J. No. 1162, 46 D.L.R. (4th) 552 (H.C.J.); 2386240 Inc. v. Mississauga (City), [2018] O.J. No. 3018, 2018 ONSC 3162, 76 M.P.L.R. (5th) 307 (S.C.J.); London (City) v. RSJ Holdings Inc., [2007] 2 S.C.R. 588, [2007] S.C.J. No. 29, 2007 SCC 29, 283 D.L.R. (4th) 257, 364 N.R. 362, J.E. 2007-1242, 226 O.A.C. 375, 36 M.P.L.R. (4th) 1; Odhavji Estate v. Woodhouse, [2003] 3 S.C.R. 263, [2003] S.C.J. No. 74, 2003 SCC 69, 233 D.L.R. (4th) 193, 312 N.R. 305, J.E. 2004-47, 180 O.A.C. 201, 11 Admin. L.R. (4th) 45, 19 C.C.L.T. (3d) 163

Statutes referred to

Municipal Act, 2001, S.O. 2001 c. 25, ss. 239 [as am.], (2) [as am.], 273, 450

Planning Act, R.S.O. 1990, c. P.13, ss. 38 [as am.], (6), (6.1), (7), (8)

MOTION to quash municipal by-laws.

Thomas A. Richardson and Sara J. Premi, for applicant.

Terrence H. Hill, for respondent.

ENDORSEMENT BY THE COURT: --

[1] The applicant moves under s. 273 of the Municipal Act, 2001, S.O. 2001 c. 25, to quash a municipal by-law for illegality and bad faith. It claims damages for misfeasance in public office and fraudulent and negligent misrepresentation and asks me to order a trial to determine the quantum. [page315]

[2] Niagara-on-the-Lake is a gem. Our historic capital, its history of European settlement goes back to the Loyalists. Set on the shore of Lake Ontario, surrounded by vineyards, it is a hub of history, culture and tourism. In the 2018 municipal election, development of the old town was much debated. A focus of the debate was one particular developer (not the applicant) who provoked discussion by cutting down old trees on his estate.

[3] In the November election, a new council was elected. Most of the members had not served before. One councillor, Betty Disero, was elected Lord Mayor. Most of the new council members had campaigned against uncontrolled development of the old town and in favour of updating the Official Plan.

[4] On November 22, 2018, Councillor Disero asked Town staff to draft an interim control by-law to take effect from December 5, 2018. On December 3, 2018, the new council was sworn in at the inaugural meeting. The meeting adjourned to the next regular meeting of December 17, "or to a special meeting at the call of the Lord Mayor". On December 4, 2018, Lord Mayor Disero, at the request of a majority of councillors, called a special meeting for December 5. Under the procedural by-law, that was short notice, but it was permitted for an emergency meeting.

[5] At the meeting of December 5, council resolved to commission a study of land use planning policies. Then it enacted by-law 5105-18 under s. 38 of the Planning Act, R.S.O. 1990, c. P.13. It prohibited subdivision, condominium approval and zoning changes in the old town. It also enacted a by-law to control cutting down trees on private property. That by-law is not in issue here.

[6] By-law 5105-18 was then published, as required. By its terms it was to expire on December 5, 2019.

[7] Council then proceeded to hold public meetings and consultations. In March 2019, it commissioned a study of some of the City of Markham's land use policies. Staff reviewed those policies and reported on them.

[8] The response to the requests for submissions was significant. Consultants prepared a summary of submissions. This delayed the adoption of the Official Plan update beyond the originally contemplated date of April 1, 2019.

[9] Council considered the summary of public submissions and the staff review of issues at its August 2019 meeting. It approved the draft revised Official Plan. The Official Plan revision was enacted by council on October 22, 2019. It would not take effect until appeals were exhausted. Council passed by-law 5105A-19 on November 11, 2019. Its effect was to extend by-law 5105 until November 11, 2020. The Official Plan amendment became law [page316] before then. Council repealed by-laws 5105-18 and 5105A-19 on June 22, 2020.

The Issues

[10] The applicant attacks the validity of the interim control by-law and the by-law that extended it on three main heads:

(a) The December 5, 2018 meeting of council did not meet the requirements of s. 239 of the Municipal Act.

(b) The interim control by-law did not meet the requirements of the Planning Act.

(c) The by-law was enacted and extended in bad faith.

[11] I consider the first two heads of complaint to be moot, because the by-law has been repealed. The applicant submits that the first two heads of relief are not moot, because a finding of illegality would be a basis for liability for the torts that it alleges. I disagree.

[12] Section 450 of the Municipal Act immunizes the municipality from liability for negligence in connection with the performance of a discretionary function in the absence of bad faith. That would include negligent misrepresentation. It does not provide immunity for action for misfeasance in public office or fraudulent misrepresentation.

[13] Misfeasance in a public office is an intentional tort with two distinguishing elements: a public officer must engage in deliberate unlawful conduct in the exercise of his or her public functions, and he or she must be aware that his or her conduct is unlawful and likely to injure the plaintiff: Odhavji Estate v. Woodhouse, [2003] 3 S.C.R. 263, [2003] S.C.J. No. 74, 2003 SCC 69. Fraudulent misrepresentation involves dishonesty. I cannot see how anyone could commit either tort without bad faith. I conclude that the applicant's case turns on whether it has established that the Town acted in bad faith. I need to address the alleged illegalities, however, because they are part of the factual basis for the applicant's argument that the Town acted with bad faith.

Jurisdiction

[14] Section 273 of the Municipal Act gives this court the power to quash a by-law on the ground of illegality. Illegality includes bad faith: Equity Waste Management of Canada v. Halton Hills (Town) (1997), 1997 CanLII 2742 (ON CA), 35 O.R. (3d) 321, [1997] O.J. No. 3921 (C.A.). [page317]

Contravention of Section 239, Municipal Act -- The Meeting of December 5, 2018

[15] Section 38 of the Planning Act does not require the Town to give notice before enacting an interim control by-law. It is still, however, required by s. 239 of the Municipal Act to hold its meetings in public: London (City) v. RSJ Holdings Inc., [2007] 2 S.C.R. 588, [2007] S.C.J. No. 29, 2007 SCC 29.

[16] The meeting of December 5, 2018 was held in public. Council first discussed in camera some unrelated matters that are allowed by s. 239(2) of the Municipal Act to be discussed in private. Then the meeting was opened to the public and the interim control by-law and the tree by-law were discussed and adopted. The meeting lasted about an hour.

[17] The Lord Mayor was entitled by the Town's procedural by-laws to call an emergency meeting for December 5. Nothing in those by-laws precluded her from considering the subject-matter to be an emergency, allowing shorter notice. Interim control is by its nature urgent. The director of planning was not aware of an emergency, but that does not matter. It is evident that the Lord Mayor considered the matters on the agenda to be urgent. As John Henriks, the applicant's planning expert deposed: "In the case of an interim control bylaw, the bylaw is adopted before the study or review is initiated and often before the review and study is even publicly announced. The study or review is necessary and urgent because a matter has not previously been considered by the Council or something has occurred that demonstrates existing policy or regulation or both is inadequate . . .".

[18] The draft by-law contained in the agenda was not identical to the by-law that was passed. That does not strike me as unusual, suspicious or irregular. The Town's director of planning explained the by-law to council members. That may or may not have taken place during a break in the meeting. That does not mean that the meaning was closed to the public. The facts here are not comparable to those in RSJ Holdings.

Failure to Meet the Requirements of the [Planning Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-p13/latest/rso-1990-c-p13.html)

[19] The Planning Act provides:

38(1) Where the council of a local municipality has, by by-law or resolution, directed that a review or study be undertaken in respect of land use planning policies in the municipality or in any defined area or areas thereof, the council of the municipality may pass a by-law (hereinafter referred to as an interim control by-law) to be in effect for a period of time specified in the by-law, which period shall not exceed one year from the date of the passing thereof, prohibiting the use of land, buildings or structures within the municipality or within the defined area or areas thereof for, or except for, such purposes as are set out in the by-law. [page318]

[20] Per Henry J. in 715113 Ontario Inc. v. Ottawa (City) (1987), 1987 CanLII 4101 (ON SC), 63 O.R. (2d) 102, [1987] O.J. No. 1162 (H.C.J.) [at para. 19], this provision authorizes the municipality to freeze the use of lands temporarily for zoning purposes; it codifies the pre-existing law arising from judicial decisions:

A by-law enacted under this provision is authorized for the purpose of protecting the public interest in suitable zoning of the area in question, and it takes precedence over the right of affected landowners to use their lands freely. . . . By-laws of this type have been held to be remedial and are to be given such fair, large and liberal interpretation as will attain the objects of the Act . . .

[21] The applicant argues essentially that the Town did not comply with a number of imaginary conditions related to enacting an interim control by-law.

[22] Section 38 provides for administrative appeals. Accordingly, the Ontario Municipal Board has considered it. There is municipal board jurisprudence that suggest a strict interpretation of s. 38 and that a number of factors must be present to make a valid interim control by-law: see Adams v. Greater Madawaska (Township), [2013] O.M.B.D. No. 784, 14 M.P.L.R. (5th) 311, para. 25. I cannot follow that case law. I am bound by the decisions of this court and the Court of Appeal, which say that there are no conditions precedent to the exercise of the municipal council's authority to pass a holding by-law except that the council must make a formal decision directing a study or review of land-use policies in the area defined and that an interim control by-law is to be given a liberal interpretation: 715113 Ontario Inc., paras. 19-20; Equity Waste Management, para. 52. I am not to burden the Town with conditions that are not required by the statute.

[23] For example, the language of the by-law did not have to be identical to the language of the resolution that authorized a study. The study undertaken did not have to match the words of the resolution. Council was not limited to acting on the opinion of its staff.

[24] The applicant also argues that s. 38 of the Planning Act only allows control of land use, and subdivision is not land use. The by-law prohibited subdivision, condominium approval and zoning amendment. Zoning amendment is a land use within the meaning of s. 38 of the Planning Act. As Mr Henriks deposed, "Interim control is adopted to suspend zoning rights." Condominium approval is a land use.

[25] In my view, at least for the purposes of s. 38, prohibition of subdivision amounts to prohibition of a land use. Prohibition of subdivision has the effect of prohibiting any increased density of use. I do not agree with Mr Henricks that s. 38 is only aimed at zoning, and not at subdivision. [page319]

[26] Next, the applicant argues that the by-law contravened ss. 38(6)-(8), which limit an interim control by-law to a term of one year subject to extension for one year, with no further interim control for three years after the by-law has ceased to be in force. When By-law 5105-18 was enacted, By-law 5029-18, which applied to lands zoned industrial, had been in force since January 9, 2018. It expired on January 8, 2019. By-law 5089-18 was passed on August 27, 2018. It restricted all cannabis-related land use in the Town. Enacting two interim control by-laws for completely different purposes does not contravene the section: Quay West v. Toronto (City), [1989] O.J. No. 3072, 1989 CarswellOnt 516 (Div. Ct.), para. 2. Given the existence of the Quai West decision, the breach of ss. 38(6) to (8) would not have evidenced bad faith in the circumstances.

[27] Finally, the applicant submits that s. 38 did not allow the Town to extend the control by-law once the Official Plan amendment had been passed. I see no such restriction in the Act. It seems to me that extension of the by-law until the amendment had the force of law is consistent with the purpose of the section.

Bad faith

[28] The principles involved in quashing a by-law for bad faith are set out in Equity Waste Management, para. 61. Bad faith by a municipality connotes a lack of candour, frankness and impartiality. It includes arbitrary or unfair conduct and the exercise of power to serve private purposes at the expense of the public interest. Courts should adopt a generous, deferential standard of review toward the decisions of municipalities (para. 57).

[29] I set out here the elements emphasized by the applicant as proof of bad faith, followed by my assessment in each case:

(a) The impetus for interim control was driven by the Lord Mayor. It came from a meeting, or discussions, outside of a proper council process. Council did not deal with all aspects of the interim control by-law in public.

A newly elected official is entitled to move quickly with her agenda. Private and other discussions always precede legislation. The interim control by-law was enacted after being discussed in a public meeting.

(b) Council failed to comply with its own procedural by-law in announcing the December 5 meeting. There was no notice. There was no emergency. Council hid the fact of the meeting from the public.

The meeting complied with the procedural by-law. Council made the by-law in a public meeting and published the by-law after it was passed. It is not fair to say that anything was hidden from the public. Given the extensive public participation engendered by council after the by-law was passed, the notion that a hidden agenda existed is far-fetched, to say the least. [page320]

(c) As in RSJ Holdings, the meeting agenda did not reveal that an interim control by-law was being considered -- rather, the agenda was cryptic and misleading.

The agenda was not cryptic. It set out the text of the proposed by-law, substantially although not exactly in the same terms as the text that was adopted.

(d) The initial interim control by-law was not supported by staff. There is no valid planning rationale for interim control -- the Director has stated that he would not have recommended interim control, and that he didn't understand the basis for it.

Council is not limited to acting on the advice of staff. It is entitled to act in accordance with its own judgment and to take into account the wishes of the public.

(e) The extended interim control by-law was also enacted without any basis and contrary to a staff recommendation. Its preamble cites a review that, as recognized by staff, was already complete. The justification for the extended by-law in the preamble is false. The Town has given a revolving set of reasons for interim control. Even the Director has said he is unaware of the true basis. The Town did not call evidence relating to the facts and impetus for interim control. The Town has not provided any explanation for not doing so.

The extension was justified by the delay before the amendment to the Official Plan would come into force. The intent of legislation is determined from the legislation itself: 2386240 Inc. v. Mississauga (City), [2018] O.J. No. 3018, 2018 ONSC 3162 (S.C.J.). Legislation is an expression of policy, which can reflect public opinion and compromise. The lack of a sworn rationale from any particular official is no indicium of bad faith.

[30] On the whole of the evidence the case for bad faith strikes me as contrived. I think that council wanted to preserve the old town's heritage and that it considered the matter urgent. They wanted to fulfil the mandate that they thought they had been given by the public. They froze the status quo, considered studies and public input, amended the Official Plan and then repealed the interim control by-law. That is essentially what they were supposed to do. I just do not see any bad faith.

Damages

[31] The absence of bad faith is dispositive. The Town has no liability in damages.

[32] The application is dismissed. The parties may make written submissions to costs not exceeding three pages in length, to which a bill of costs and any offers to settle may be appended, the respondent within seven days and the applicant within seven further days.

Motion dismissed.

End of Document