RECOMMENDATION:
That the report by the Town Solicitor entitled
“Ontario Divisional Court Decision Dated February 18, 2004 Respecting Eastpine
Kennedy-Steeles Limited and The Corporation of the Town of Markham et al”,
dated February 24, 2004, be received for information.
PURPOSE:
The purpose of this report is to inform Council
about a decision of the Ontario Divisional Court in the matter of an appeal by
Eastpine Kennedy-Steeles Limited and Ricenberg Developments Limited (“Eastpine”) from a decision of the Ontario Municipal Board (“OMB”)
requiring Eastpine to pay its share of municipal infrastructure that was front-ended
by Cedarland Properties Limited (“Cedarland”) when it developed neighbouring lands.
EXECUTIVE SUMMARY:
The
Divisional Court dismissed Eastpine’s appeal and upheld the Board’s decision.
The Court stated that “to give effect to Eastpine’s argument would give
Eastpine an unfair windfall at the unfair expense of Cedarland.” The Court
found that the Development Charges Act, 1989
(the former Act) prohibits the imposition of development charge by way of
agreement, but not by way of direct charge imposed by a condition of draft
approval under the Planning Act.
In this regard, the Court agreed that the OMB had general power under Section
51 of the Planning Act to impose
directly a condition of draft approval requiring Eastpine to pay its fair and
equitable share of the costs front ended by Cedarland.
The result is that the
Board’s decision which required Eastpine to pay $568,391 recoveries to
Cedarland was upheld by the Court. The Town supported Cedarland’s position at
the Board and Divisional Court.
DISCUSSION:
Background:
In
a decision of the Ontario Divisional Court released on February 18, 2004, the
Court upheld the decision of the OMB imposing a condition of draft approval on
Eastpine which required Eastpine to pay Markham recoveries in the amount
of $568,391, representing Eastpine’s
proportionate share of the costs of Cedarland works that were to the direct
benefit of Eastpine.
The
main issue in this case was whether Section 45 of the Development Charges Act, 1989, which
prohibits a municipality from entering into a subdivision agreement under the Planning Act that imposes a charge related
to a development, also prevented a municipality from imposing a condition to
impose a direct charge as a condition of draft approval.
The
pertinent facts of this case are as follows:
·
Cedarland developed lands
surrounding the Eastpine lands. Eastpine benefited from the “front ending” of
municipal services installed by Cedarland;
·
On February 8, 1998 the Town
approved Eastpine’s draft subdivision plan for a 110 lot residential
development near Kennedy Road and Steeles Avenue;
·
On March 1, 1998 the
Development Charges Act, 1989 was repealed and replaced with the Development
Charges Act, 1997;
·
On December 15, 1998 the
conditions of draft approval were amended to expressly require Eastpine to
enter into a subdivision agreement with the Town in which Eastpine would agree
to pay recoveries in the amount of $750,000;
·
Eastpine appealed the
condition to the OMB and posted a letter of credit in the amount of $750,000
with the Town pending the outcome of the appeal;
The OMB Decision
Eastpine
argued at the OMB that it was not liable for any share of the municipal
servicing costs front-ended by Cedarland. The Board rejected that argument and
held that:
(a) the recoveries
were costs incurred by Cedarland;
(b) Eastpine has
benefited from the Cedarland’s expenditures; and
(c) it was fair and
equitable for Cedarland to pay these recoveries in the amount of $568,391, an
amount considerably less than that claimed.
In
reaching the above conclusions, the Board determined that the Development Charges Act, 1989 applied and,
that the condition in question was prohibited under that Act. The Board,
however, held that it had general power under Section 51 of the Planning Act to impose directly a
condition of draft approval requiring Eastpine to pay its fair and equitable
share of the costs front ended by Cedarland.
The end result was that the
Board (a) allowed Eastpine’s appeal of the original condition; (b) refused to
approve the Town’s Bylaw which required Eastpine to pay $750,000; and (c)
imposed a new condition of draft approval under the Planning Act which required Eastpine to pay $568,391 as
opposed to the $750,000 required by the bylaw appealed from.
Decision of the Divisional Court
Eastpine
requested and received leave to appeal to the Divisional Court. The main
question before the Divisional Court was whether the OMB had power to impose a
new condition on Eastpine under the Planning
Act.
The Divisional
Court dismissed Eastpine’s appeal and upheld the Board’s decision. The Court
stated that “to give effect to Eastpine’s argument would give Eastpine an
unfair windfall at the unfair expense of Cedarland.” The Court found that the Development Charges Act, 1989 prohibits
the imposition of development charge by way of agreement but not by way of
direct charge imposed by a condition of draft approval under the Planning Act.
The
Court invited counsel to make submissions with respect to costs within two
weeks of the decision. The Town will make submissions on costs within the
timeline stipulated by the Court.
_________________________________
Catherine
M. Conrad, Town Solicitor
Q:\Exec
Office\Legal\REPORTS\Reports 2004\Easpine Kennedy-Steeles.doc
