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Municipal - Quashing By-Laws for Illegality [s.273]. 2682283 Ontario Ltd (Volcano Café and Lounge) v. Durham (Regional Municipality)
In 2682283 Ontario Ltd (Volcano Café and Lounge) v. Durham (Regional Municipality) (Ont CA, 2024) the Court of Appeal cites the lower court as noting that 'declarations' as a remedy are exempt from limitation [under the combination of Limitations Act s.2(1) ('Application') and s.16 ('No limitation period')], although the one-year limitation at play was set out in MA 273(5):[7] The application judge dismissed the application. He found that the application to quash the by-law pursuant to s. 273 of the Municipal Act was statute barred by the limitation period of one-year after the passage of a by-law set out in s. 273(5). However, relying on this court’s decision in Foley v. St. Mary’s (Town), 2016 ONCA 528, the application judge held that the application for declaratory relief was not subject to the one-year limitation period under the Municipal Act, and considered the claim on the merits. . 2682283 Ontario Ltd (Volcano Café and Lounge) v. Durham (Regional Municipality)
In 2682283 Ontario Ltd (Volcano Café and Lounge) v. Durham (Regional Municipality) (Ont CA, 2024) the Court of Appeal considered (and dismissed) an appeal by a 'hookah lounge' operator of an MA 273 application to quash an MA 115(5) 'Health, Safety and Nuisance - Smoking in public places' (anti-vaping and anti-smoking) by-law. Such by-laws are first passed by an upper-tier municipality, but not in force until passed additionally by the majority of contained lower-tier municipalities and that majority has a majority of electors in the upper-tier municipality.
Here the court confirms that municipalities have clear authority to pass anti-smoking/vaping bylaws, here having used the unique authority of MA 115(5):[8] The application judge found that the by-law is valid and intra vires the Region’s authority to legislate under the Municipal Act. Its purpose is to protect public health and safety from the risks of smoking, a purpose authorized under the Municipal Act. He rejected the appellant’s argument that the by-law was a disguised attempt to regulate business.
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[28] It is not in dispute that for the by-law to come into force, in addition to being passed by the Regional Council, a majority of the lower-tier municipalities in the Region representing the majority of the electors in the Region were required to pass resolutions consenting to the by-law. This requirement is sometimes referred to as a “triple majority” because it requires: (i) a majority of the regional council; (ii) a majority of the lower-tier municipalities; and, (iii) that the lower-tier municipalities consenting to the by-law represent a majority of the electors in the region. The triple majority requirement is imposed on by-laws that prohibit or regulate the smoking of tobacco or cannabis in public places and workplaces: Municipal Act, s. 115(1) and (5). In this case, for greater certainty, the by-law specifies in s. 11.1 that it comes into force once a “triple majority” has been obtained in accordance with s. 115(5) of the Municipal Act. As noted above, in this case, the final consent required for the by-law to come into effect was obtained on June 24, 2019. . Oro-Medonte Property Owners’ Association v. Oro-Medonte (Township)
In Oro-Medonte Property Owners’ Association v. Oro-Medonte (Township) (Ont CA, 2023) the Court of Appeal considered (and dismissed) an appeal from a denied municipal application to quash a by-law that would have imposed "fees or charges for services" [under MA s.391]:[6] In any event, it is unclear why the ownership of the Zone 1 system is suggested to be determinative of the issues raised. Regardless of the ownership, the Zone 1 system is a public utility. It is part of the broader water system that serves the area. Under s. 11(3)4 of the Municipal Act, 2001, S.O. 2001, c. 25, a municipality has the authority to pass by-laws with respect to a public utility. In addition, s. 391 of the Municipal Act, 2001 authorizes a municipality to impose fees or charges for services provided. Further, the Resort owners and the respondent have entered into agreements regarding the interests and obligations that the respondent has with respect to the Zone 1 system, given its potential assumption by the respondent at some future date.
[7] We do not see any error in the motion judge’s conclusion that the respondent was acting within its statutory authority when it passed the by-law in question. The appellant acknowledges that it cannot challenge the by-law on the basis that it is unreasonable. Rather, the appellant must establish that the by-law is illegal in order to have it quashed. The appellant has failed, on the record, to establish that illegality. .... . Larabie Estate v. Moonbeam (Township)
In Larabie Estate v. Moonbeam (Township) (Ont CA, 2022) the Court of Appeal considered an appeal from a dismissed application by a property owner to quash a by-law for illegality. Section 273(1) of the Municipal Act, 2001 reads:Application to quash by-law
273 (1) Upon the application of any person, the Superior Court of Justice may quash a by-law of a municipality in whole or in part for illegality. The court stated:[8] The application judge dismissed the appellant’s application. He held that the by-law was procedurally illegal, as the Township failed to adhere to the statutory notice provisions. However, he exercised his discretion not to quash the by-law pursuant to s. 273(1) of the Municipal Act, 2001, S.O. 2001, c. 25.
[9] The application judge accepted the evidence of the appellant that she never received the notice of the public meeting, although he also accepted that the municipality sent the notice to her by regular mail. Nonetheless, as the Township did not follow the requirements with respect to notice, the by-law was illegal.
[10] Section 273(1) of the Municipal Act provides that any person can bring an application in the Superior Court of Justice to quash a by-law on the basis of illegality.
[11] The application judge concluded that he should not exercise his discretion to quash the by-law for three reasons. First, the attempt to provide notice to the appellant by regular mail reduced the significance of the municipality’s breach of the statutory notice process. Second, there was no evidence of bad faith in the municipality’s lack of rigour in pursuing notice, adding, “While perhaps careless, that conduct cannot be qualified as high-handed or callous.” Third, while he acknowledged the importance of the breach to the appellant, he found the consequences of the illegality more broadly were “negligible.” He noted that the concerns the appellant wished to raise in relation to the by-law were in fact before council based on the concerns of others who participated in the public meeting.
[12] The appellant argues that the application judge erred in law by using the incorrect definition of bad faith, and therefore erred in holding that there was no evidence of bad faith on behalf of the municipality.
[13] The appellant relies on Equity Waste Management of Canada v. Halton Hills (Town) (1997), 1997 CanLII 2742 (ON CA), 35 O.R. (3d) 321 (C.A.), at p. 340, where this court stated that, “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” (emphasis added). The appellant argues that had the application judge applied this interpretation, he would not have concluded there was no evidence of bad faith in this case.
[14] We disagree. The application judge properly instructed himself on the standard of bad faith within the s. 273 Municipal Act context, as discussed in London (City) v. RSJ Holdings Inc., 2007 SCC 29, [2007] 2 S.C.R. 588, and O'Mara v. Northern Bruce Peninsula (Municipality), 2013 ONSC 660, 7 M.P.L.R. (5th) 296. It was open to him to conclude that the facts underlying the procedural illegality did not meet the threshold of bad faith. The finding of procedural illegality is not akin to a finding that the Township had engaged in “arbitrary or unfair conduct” for purposes of a bad faith analysis. The application judge’s conclusion was based on factual findings which are entitled to deference, including his finding that the Township attempted to provide notice to the appellant through regular mail.
[15] The appellant also argued that having found illegality, but not bad faith, the application judge nonetheless erred in not exercising his discretion to invalidate the by-law under s. 273. The appellant takes issue with the application judge’s factual findings in relation to the provision of notice and to the conclusion that the impact of the absence of notice to the appellant was negligible.
[16] We reiterate that the authority of the court to invalidate a by-law under s. 273 is discretionary. In RSJ Holdings, at para. 39, the Supreme Court affirmed that a range of factors are relevant in the exercise of this discretion, including the nature of the by-law in question, the seriousness of the illegality committed, its consequences, delay, and mootness. Considering some of these factors, the application judge explained why it was not appropriate to quash the bylaw in the circumstances. This exercise of discretion is entitled to deference on appeal. . Hummel Properties Inc. v. Niagara-on-the-Lake (Town)
In Hummel Properties Inc. v. Niagara-on-the-Lake (Town) (Ont CA, 2022) the Court of Appeal considered a Municipal Act, 2001 s.273 application to quash a by-law for illegality and bad faith. In these passages the court comments on the effect of a bylaw being found to be made in 'bad faith':(5) Was the initial by-law passed in bad faith?
[45] It is common ground that a by-law passed in bad faith is void for illegality: Equity Waste Management, at para. 28.[2]
[46] The application judge found the case that the Town passed the interim control by-law in bad faith to be “contrived”. The application judge disagreed with the appellant’s assertion that mere illegality would be an adequate basis on which to find the Town liable for negligent misrepresentation or misfeasance in public office. He took the position that the appellant had to prove council’s bad faith in order to establish these torts and to avoid the application of s. 450 of the Municipal Act, which provides some immunity for tort liability.[3] The application judge found that Town council did “essentially what they were supposed to do” by freezing the status quo, considering studies and public input, amending the Official Plan, and then repealing the interim control bylaws.
[47] I have found that the application judge made three overriding legal errors in his brief six-page endorsement: first, the legality issue was not moot; second, the interim control by-law was illegal because it did not relate to “land use” as required by s. 38 of the Planning Act; and third, that the by-law was illegal under s. 38(7) of the Act because another interim control by-law affecting the Hummel land was in force. I have also found that the application judge did not adequately analyze whether the process leading to the by-law’s enactment was legal.
[48] The application judge’s finding that there was no bad faith rested on these three errors, and on his inadequate analysis of the process leading to the by-law’s enactment. Accordingly, I would set aside that finding.
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