ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Anthony Luke Schipper and Lois Elaine Schipper, Applicants
AND:
Her Majesty the Queen in Right of Ontario as represented by the Minister of Natural Resources and Forestry, Respondent
BEFORE: MacNeil J.
COUNSEL: T. Richardson and A. Mannell, for the Moving Party/The Corporation of the Township of West Lincoln
B. Duxbury, for the Responding Party/Applicants
No one appearing for the Minister of Natural Resources and Forestry
HEARD: March 9, 2021, by videoconference
ENDORSEMENT
Overview
1The Moving Party, The Corporation of the Township of West Lincoln (“the Township”), seeks to set aside an order that declares that a watercourse passing over lands owned by the Applicants was a navigable waterway at the time of the original Crown grant of the lands and, accordingly, title to the bed of the watercourse remains vested in the Crown in right of the Province. If the order is set aside, the Township seeks to be joined as a respondent to the within proceeding; alternatively, it seeks leave to intervene as an added party or as a friend of the court.
2The Applicants oppose the Township’s motion. They argue that the Township has no standing to bring this motion as it does not have a proprietary or economic interest in the order made and so does not meet the affected person test under Rule 38.11. The Applicants submit that the Township should not be allowed to re-open the proceeding claiming that the order was made based on insufficient evidence as this would effectively constitute an appeal of the Consent Order, which is not permitted. The Applicants argue that there was no appeal of the Consent Order, and there is no proceeding anymore as the court is functus officio. The Township was not entitled to notice of the Application. The Minister of Natural Resources and Forestry (“the MNRF”) was the proper respondent and it consented to the relief sought by the Applicants.
3Both parties filed supporting affidavits. The affiants were cross-examined on those affidavits, and the transcripts of those cross-examinations were filed with the court.
Background Facts
4In 2013, the Applicants purchased property known legally as Part Lot 11, Concession 3 as in RO348780, in the former Township of Caistor now West Lincoln (the “Subject Lands”). Anthony Luke Schipper (“Mr. Schipper”) describes the lands as a rural property consisting of approximately 100 acres that has frontage on both Concession 3 and Concession 2 in the Township. A watercourse passes through the Subject Lands.
5At the time of purchase, there was a small house on the property which had frontage onto Concession 2 (“the Original Dwelling”). The Applicants wished to build a new home on the property with frontage on Concession 3.
6At some point prior to 2016, Mr. Schipper met with Brian Treble, the Director of Planning and Building for the Township (“Mr. Treble”), to discuss the possibility of severing the Subject Lands. Mr. Schipper advised that the Applicants’ objective was to create two separate lots so the dwelling that fronts onto Concession 2 could be sold off, together with its adjacent lands (around 20 acres), and then the second parcel would have the new dwelling which would include the remaining lands. Mr. Treble advised Mr. Schipper that only one dwelling is permitted on the Subject Lands pursuant to the Township’s applicable planning policies, and that severance would not be granted. He informed Mr. Schipper that his only possibility for lot creation on the Subject Lands would be if the watercourse met the test for navigability under the Beds of Navigable Waters Act, R.S.O. 1990, c. B.4 (“the Beds of Navigable Waters Act”), following which a natural severance of the lands would be effected. Mr. Treble told Mr. Schipper to explore the possibility with a lawyer as Mr. Schipper seemed unfamiliar with the process. This meeting occurred prior to the Applicants submitting a building permit application for the new house.
7In or around 2016, the Applicants approached the Township about the construction of a new dwelling on the Subject Lands. As a condition of obtaining a building permit, the Township required the Applicants to enter into an agreement whereby they were permitted to occupy the Original Dwelling during the new construction and then, within six months of occupancy of the new dwelling, they were required to demolish the Original Dwelling (“the Demolition Agreement”). The Applicants signed the Demolition Agreement on January 23, 2017.
8Construction of the new dwelling commenced in late 2017.
9On February 23, 2018, the Applicants issued a Notice of Application seeking an order from the court declaring that the MNRF is the absolute fee simple owner of the bed of the watercourse passing through the Subject Lands, as it is a “navigable body of water or stream” as defined by the Beds of Navigable Waters Act (“the Application”).
10The MNRF was the only named respondent to the Application. The Township was not named as a party and the Application was brought without notice to it.
11In support of the Application, the Applicants filed an affidavit sworn by Mr. Schipper which attached as exhibits the original Crown Patent obtained from the MNRF and information relating to the watercourse on the Subject Lands. They also filed a signed consent from the MNRF attaching a draft order and authorizing the Applicants’ lawyer to obtain, issue and enter the said order subject to the approval of the court.
12On June 27, 2019, the Honourable Justice Braid granted the Application and made the following order, which reflects the draft order consented to by the MNRF and declares that the title to the watercourse bed is still vested in the Crown (“the “Consent Order”):
THIS COURT DECLARES that the waterway known as Mills Creek as it passes in and out and through the land of the Applicant in PIN 46065-0055 (LT), being Part of Lot 11, Concession 3 in the former Township of Caistor, Township of West Lincoln was a navigable waterway at the time of the original crown grant within the meaning of s. 1 of the Beds of Navigable Waters Act, R.S.O. 1990, Chapter B.4 and accordingly, the bed of the said Mills Creek was not intended to pass and did not pass in the grant of Lot 11, Concession 3, Township of Caistor to John Chrysler dated June 30, 1801.
THIS COURT FURTHER DECLARES that the bed of the said creek as it passes through the land of the Applicant in PIN 46065-0055 (LT), being Part of Lot 11, Concession 3 in the Township of Caistor, Township of West Lincoln in the Province of Ontario, is still vested in the Respondent, Her Majesty the Queen in Right of Ontario pursuant to Section 1 of the Beds of Navigable Waters Act, R.S.O. 1990, Chapter B.4, and does not form part of PIN 46065-0055 (LT).
13The Township first became aware of the Application on or about May 25, 2020 when Mark Vandervelde, a sales representative with Royal LePage, emailed Mr. Treble on behalf of the Applicants. He inquired as to what was required from the Township in order for the Applicants to proceed with listing for sale the Original Dwelling and its adjacent parcel of land, now that the new dwelling was constructed and new lots had been created by virtue of the creek running through the property. Mr. Treble responded that the Township does not recognize lot creation by natural severance unless it predates the zoning bylaw and stated that it required more information.
14On or about May 27, 2020, Mr. Vandervelde provided Mr. Treble with a reference plan of the Subject Lands, dated August 27, 2019, prepared by Harold Hyde, an Ontario Land Surveyor in reliance on the Consent Order (“the Reference Plan”). The Reference Plan showed the Subject Lands divided into ten parcels, each of which had been assigned its own property identification number. Two of these ten parcels were the lots with the Original Dwelling and the new dwelling; the eight remaining parcels were vacant. Mr. Vandervelde also provided Mr. Treble with a copy of the Consent Order.
15Upon receiving the Consent Order, Mr. Treble contacted the Township’s lawyer who obtained a copy of the materials filed on the Application. After reviewing these, Mr. Treble sought and received instructions from Council for the Township to bring the within motion to set aside the Consent Order.
Analysis
16The issues to be decided on this motion are:
(i) What is the test to be applied in considering whether to set aside or vary an order under Rule 38.11?
(ii) Has the Township satisfied this test?
(iii) If so, should the court exercise its discretion to set aside the Consent Order?
a. What is the test to be applied in considering whether to set aside or vary an order under Rule 38.11?
17Rule 38.11 of the Rules of Civil Procedure provides:
38.11 (1) A party or other person who is affected by a judgment on an application made without notice or who fails to appear at the hearing of an application through accident, mistake or insufficient notice may move to set aside or vary the judgment, by a notice of motion that is served forthwith after the judgment comes to the person’s attention and names the first available hearing date that is at least three days after service of the notice of motion.
(3) On a motion under subrule (1), the judgment may be set aside or varied on such terms as are just.
18In Peralta v. Ponce, 2020 ONSC 8138 (Ont. S.C.J.), at paras. 25-26, Kimmel J. held that the test on a Rule 38.11 motion is like the test on a Rule 34.17 motion. And that, once the threshold entitlement to bring the motion has been established, the court may go on to consider other factors under sub-rule 38.11(3). She noted the five-part test set out by Strathy J. in Ontario (Attorney General) v. 15 Johnswood Crescent, 2009 CarswellOnt 5765 (Ont. S.C.J.), 2009 CanLII 50751, at para. 34, when dealing with a Rule 37.14 motion:
(i) Proof of accident or mistake: The moving party must establish a failure to appear on the original motion through accident, mistake or insufficient notice. This is a precondition to relief under the rule. A party who has simply chosen not to appear on a motion cannot complain later if he or she does not like the outcome.
(ii) The party must move forthwith after the order comes to his or her attention: This is also a precondition to relief under the rule, but there is room for flexibility in the interpretation of "forthwith", depending on the circumstances . . .
(iii) The length of the delay and the reasons for it: In considering whether to set aside an order, the court will consider whether there has been delay in bringing the motion and the reason for it. All other things being equal, the longer an order has been in effect, particularly where parties have acquired rights or changed their positions as a result of the order, the less likely it will be that the court will set it aside.
(iv) The presence or absence of prejudice: The court should consider whether a party will be prejudiced by setting aside the order or by failing to set aside the order. There will always be prejudice if an order is made against a party without sufficient notice and there will always be some kind of prejudice to the other party if the order is set aside. Nevertheless, the exercise of the court's discretion may require an examination of the relative prejudice to the parties.
(v) The underlying merits of the moving party's case: It may be necessary to consider the underlying merits of the moving party's case in weighing the various factors, balancing the interests of the parties, and determining what is just in the circumstances. Lengthy delay in bringing the motion may be more readily forgiven if the moving party has a very strong case on the merits. It will be less readily forgiven if the party's case appears frivolous.
19In Rougemount Co-operative Homes v. Plummer, 2010 ONSC 1595 (Ont. S.C.J.), at paras. 10-11, Boswell J. also looked to Rule 37.14 jurisprudence when explaining the test to be applied under Rule 38.11, stating:
10 Cases decided under Rule 38.11 do not, however, appear to import the same test as applied to Rule 19 motions. If anything, the language of Rule 38.11 is very similar to the language of Rule 37.14, …
11 Cases decided under Rule 37.14 indicate that the question to be answered on such motions is not just whether the order should have been made, but whether, having been made, the order should now be set aside in view of any change in the state of affairs or the positions of the parties: see for example, Strazisar v. Canadian Universal Insurance Co., [1981] O.J. No. 2194 (Ont. Co. Ct.).
20On a Rule 38.11 (or Rule 37.14) motion, it is not the function of the court to sit in appeal of the order made by the application judge or to second guess that judge’s assessment of the evidence that was before her: Johnswood Crescent, supra, at para. 57. The purpose of setting aside or varying an order is to prevent unfairness or a miscarriage of justice where the order has been obtained without the affected person having been given the chance to present their case: Johnswood Crescent, supra, at para. 29.
21I agree with counsel for the Township that if the Rule 38.11 test is met, then the principle of functus officio does not apply.
b. Has the Township satisfied this test?
22I will deal first with the threshold entitlement to bring a motion under Rule 38.11. To satisfy this, the Township must establish that it is a “person who is affected by a judgment”, who did not have notice of the Application, and who moved “forthwith” to set aside or vary the judgment.
Person who is Affected
23To be considered a “person who is affected by a judgment”, the order must be one that directly affects the rights of the moving party in respect of its proprietary or economic interests. (See Sistem Myhendislik Insaat Sanayi Ve Ticaret Anonim Sirketi v. Kyrgyz Republic, 2012 ONSC 4351 (Ont. S.C.J.) [Commercial List]), at paras. 24-25, affirmed 2013 ONCA 83 (Ont. C.A.); and Ivandaeva Total Image Salon Inc. et al v. Hlembizky, 2003 CanLII 43168 (Ont. C.A.), at paras. 27 and 32.)
24The Township offers the following three main reasons why it is a person “affected by” the Consent Order:
(i) pursuant to the Planning Act, R.S.O. 1990, c. P.13 (“the Planning Act”), the Township is the body with authority to sever and create lots within its boundaries;
(ii) it entered into the Demolition Agreement with the Applicants and that agreement may be affected by the Consent Order; and
(iii) the Application and the Consent Order constitute a material change to the building permit issued by theTownship to the Applicants for the construction of the new dwelling.
25I will consider each of these reasons, in turn.
Authority over lot creation
26The Township argues that it has a proprietary interest that is directly affected because it has been delegated authority over the granting of consents to create lots under the Planning Act which, in turn, it has delegated to its Committee of Adjustment. The Township submits that it follows then that a new lot cannot be created through a severance without the consent of the Committee of Adjustment pursuant to the criteria set out in the Planning Act and related policies. The Township contends that it is a necessary party to the Application as its interest in and authority over lot creation and land use cannot be represented by the MNRF. It is also concerned that others will attempt to bypass planning legislation by using the Beds of Navigable Waters Act route and this could result in widespread lot creation that would be harmful to the Township, especially in its agricultural areas.
27It is the Township’s position that permitting the Consent Order to remain in force would be prejudicial to the Township as it would permit lot creation in a manner that is inconsistent with the Planning Act, the Provincial Policy Statement, 2020, the Regional Official Plan, and the Township Official Plan; and it would permit the Applicants to sever the Subject Lands without adhering to the authority and processes mandated by these planning documents.
28The Township does recognize that lot creation may occur by way of a natural severance, without the need for Committee of Adjustment approval, through application of the Beds of Navigable Waters Act. However, it argues this is not one of those situations as it believes the Applicants did not file sufficient evidence in the Application to satisfy the test of navigability under the Beds of Navigable Waters Act.
29The Township believes it should have the opportunity to argue that the watercourse on the Subject Lands does not meet the navigability test.
30It is the position of the Applicants that a planning interest is not a proprietary interest owned by the Township. They argue that the Township is trying to prioritize the Planning Act provisions over the Beds of Navigable Waters Act. The Applicants contend that the Beds of Navigable Waters Act provides an acceptable, legitimate way to obtain severance of lands in appropriate circumstances. The Application was brought on notice to the MNRF, who was the proper respondent. The Applicants submit that the MNRF and the court are the proper “gatekeepers” to decide if the watercourse meets the test of navigability, this is not a determination to be made by the Township. They submit that the real issue is the Township is upset about its loss of control over lot creation as it relates to the Subject Lands. However, the Planning Act does not give the Township authority over lot creation to the exclusion of the Beds of Navigable Waters Act.
31I find that the Township’s authority over lot creation and land use under the Planning Act does not constitute a proprietary or economic interest so as to make it an affected person within the scope of Rule 38.11(1).
32The Planning Act does not preclude a property owner from obtaining a natural severance through the application of the Beds of Navigable Waters Act. Nor does the Planning Act state that it or its processes supersede the Beds of Navigable Waters Act. They coexist. And while other landowners may try to use the navigable waters route to obtain a natural severance, each case is fact-specific and the test of navigability needs to be satisfied by each applicant as it relates to their specific watercourse.
33In Middlesex Centre (Municipality) v. MacMillan, 2016 ONCA 475, 2016 CarswellOnt 9524 (Ont. C.A.), at para. 9, the Ontario Court of Appeal recognized that the Beds of Navigable Waters Act can apply so as to create natural severances outside of the Planning Act processes:
9 The application judge held, at para. 49, that the respondents' motive for advancing its claim was irrelevant to her determination of whether the Creek was a navigable stream. I agree. Navigability is essentially a factual question based upon an assessment of the capabilities of the waterway at the time of the Crown grant. The answer to that question cannot turn on the motive of the party advancing or resisting the navigability claim over 100 years after the Crown grant. The Creek is or is not a navigable waterway. If s. 1 of the Act is having an unforeseen and unacceptable impact on effective land management in the Province, the Legislature can amend the Act. I observe that this is hardly the first case in which s. 1 has been relied on to achieve severance of a lot: see e.g. Coleman v. Ontario (Attorney General) (1983), 1983 CanLII 3055 (ON SC), 143 D.L.R. (3d) 608 (Ont. H.C.), at p. 611; O'Donnell v. Ontario, 2013 ONSC 590 (Ont. S.C.J.), at para. 3. To date, there has been no legislative reaction. [Emphasis added.]
The Demolition Agreement
34The Township argues that it has an economic interest that is directly affected because the Applicants contend that the Consent Order “obviates the requirement contained in the Demolition Agreement that they demolish the Existing Dwelling”. (At paragraph 7 of his affidavit, Mr. Schipper states that he assumed “that once we went through the process of severing the Property, using the navigable waters process, the need for a demolition permit and the Agreement to Demolish would simply disappear or be superseded by the severance process.”)
35It is the Township’s position that the Demolition Agreement is central to the issuance of the building permit for the construction of the Applicants’ new dwelling.
36The Township further argues that it has a proprietary interest in the issuance of building permits for the construction of dwellings within its jurisdiction, and that the Applicant’s failure to include the Township as a party to the Application has affected its ability to ensure compliance with the Building Code Act, 1992, S.O. 1992, c. 23 (“the Building Code Act”). The Township clarified that it is not saying that in every Beds of Navigable Waters Act proceeding notice must be given to a municipality. But rather here, in this case, because of the existence of the Demolition Agreement, notice ought to have been given to it as the Consent Order may affect the enforceability of the Demolition Agreement.
37I find that the Demolition Agreement does not constitute a proprietary or economic interest of the Township for the purposes of Rule 38.11. The Demolition Agreement is a legal contract between the Township and the Applicants. If the Township believes that it has been breached, then the Township can take such remedial measures as it deems appropriate, either under the contract itself or under the Building Code Act. The Consent Order does not make any pronouncement on the validity or enforceability of the Demolition Agreement. They remain separate matters. What effect or impact the Consent Order may have on the Demolition Agreement is not relevant to the test of navigability nor is it a determination to be made on this motion.
Material Change and Subsection 8(12) of the Building Code Act
38The Township relies on ss. 8(12) of the Building Code Act in support of its argument that notice of the Application was required to be given to the Township because the ruling on the Application constitutes a “material change” to a plan upon which the building permit for the new dwelling was based. The Township also argues that the Consent Order results in a material change to the Demolition Agreement such that the Applicants ought to have obtained the authorization of the Township’s Chief Building Official prior to commencing the Application.
39The Applicants submit that this material change argument is simply a conceptual argument. They dispute that notice to the Chief Building Official of the Application was required under ss. 8(12) of the Building Code Act. The Applicants submit that the Township is trying to use the alleged non-compliance with the Demolition Agreement to gain an advantage in attempting to set aside the Consent Order.
40I am not persuaded that the Building Code Act and the Township’s responsibility to ensure compliance with that Act constitute a proprietary or economic interest so as to make the Township an affected person for the purposes of Rule 38.11. The Township’s Chief Building Official retains all of their authority under the Building Code Act. If the Chief Building Official believes there is a material change such that ss. 8(12) is engaged, they can choose to take such enforcement steps as they deem appropriate under that Act. The Consent Order does not curtail any of those statutory powers.
41With respect to the Township’s reliance on Middlesex Centre v. MacMillan et al., 2012 ONSC 6874, at para. 12, I find that case is distinguishable. There, the municipality had already denied a severance application respecting the property and the Ministry of Natural Resources supported the municipality’s position that the creek was not navigable within s. 1 of the Beds of Navigable Waters Act. In the within case, there is no formal decision denying severance and the MNRF consented to the order ultimately made by Braid J.
42The Application did not directly engage the rights or legal interests of the Township. The Consent Order does not directly require the Township to do or refrain from doing anything at all, nor does it compel the Township to act contrary to law. While the Township is generally affected by the Consent Order in the sense that it is bound by the order’s effect of parcelling the Subject Lands into 10 lots, I find that the Township “can at best be described as being contingently affected” by the Consent Order in this regard, to use the words of the Ontario Court of Appeal in Sistem Muhendislik Insaat Sanayi Ve Ticaret Anomic Sirketi v. Kyrgyz Republic, 2013 ONCA 83, at para. 1.
43Accordingly, for all of these reasons, it is my opinion that the Township has failed to establish that it is a person “affected by” the Consent Order within the meaning of Rule 38.11.
Notice and Timing
44If I had found that the Township was a person affected by the Consent Order, I would have found that the lack of notice and timing requirements of Rule 38.11(1) were met by the Township. The Township was not a party to the Application or given notice of it. The Township found out about the Consent Order almost a year after it was made, in May 2020. It acted diligently thereafter, and a Notice of Motion was served on the Applicants and the MNRF on July 9, 2020.
c. If so, should the court exercise its discretion to set aside the Consent Order?
45Because of my conclusion that the Township is not an affected person within the purview of Rule 38.11(1), it is unnecessary to determine if I should exercise my discretion and set aside the Consent Order. However, as the Township raised the issue of the sufficiency of the evidence before the application judge, I will briefly indicate what my opinion would have been on this issue, if the motion was not being dismissed for other reasons.
46The Township submits that it has uncovered historical evidence that conflicts with the evidence put before the application judge by the Applicants and that supports a finding that the watercourse on the Subject Lands was not navigable at the time of the original Crown grant. In my opinion, the evidence relied upon by the Township in this regard, as found in the record before me, is speculative and does not demonstrate “a change in the state of affairs” sufficient to warrant setting aside the Consent Order.
47While the Township may not agree that the evidence before the application judge was adequate, that was a determination to be made by the application judge herself. I do not sit in appeal of that decision. It follows from her granting of the Consent Order that she was satisfied that the watercourse on the Subject Lands met the test of navigability, based upon the evidence and materials before her.
Conclusion
48For the above reasons, therefore, I am satisfied that the motion should be dismissed.
49In light of this, it is not necessary for me to address the arguments made by the Township concerning being added to the proceeding as a party or being granted leave to intervene.
Costs
50I would urge the parties to agree on costs but if they are unable to do so, then costs submissions may be made as follows:
By July 5th, 2021, the Applicants shall serve and file their written costs submissions, not to exceed three pages, double-spaced, together with a draft bill of costs and copies of any pertinent offers; and
The Township shall serve and file its responding costs submissions of no more than three pages, double-spaced, together with a draft bill of costs and copies of any pertinent offers, by July 19th, 2021; and
The Applicants’ reply submissions, if any, are to be served and filed by July 26th, 2021 and are not to exceed two pages.
If no submissions are received by July 26th, 2021, the parties will be deemed to have resolved the issue of the costs and costs will not be determined by me.
B. MacNeil, J.
MacNEIL J.
Date: June 14, 2021