



COURT OF APPEAL FOR ONTARIO

CITATION: Balmoral Developments Hilda Inc.
    v. Orillia (City), 2020 ONCA 443

DATE:  20200707

DOCKET: C67140 & C67159

Doherty, MacPherson and Benotto
    JJ.A.

BETWEEN

Balmoral
    Developments Hilda Inc.

Plaintiff (Respondent/Appellant)

and

The Corporation of the City of Orillia, Ian Sugden
and Kelly Smith

Defendants (
Appellants
/Respondents)

David G. Boghosian and Mai T. Nguyen,
    for the appellants (C67140) and respondents (C67159)

Christopher D. Salazar, for the respondent
    (C67140) and appellant (C67159)

Heard: in writing

On
    appeal from the judgment of Justice Gregory M. Mulligan of the Superior Court
    of Justice, dated May 29, 2019, with reasons reported at 2019 ONSC 3292.

REASONS FOR DECISION

[1]

Balmoral Developments Hilda Inc. (Balmoral)
    built stacked townhouses consisting of 24 rental units in two buildings in the
    City of Orillia (City). Originally, the development was to be for affordable
    senior housing. However, when the funding for that project was no longer
    available, Balmoral modified the project to develop residential housing for
    students and other tenants.

[2]

The City advised Balmoral that the project was
    subject to the barrier-free accessibility requirements under
Ontarios
Building Code
, O. Reg.
    350/06. Balmoral did not appeal this decision. Balmoral complied with the
    Citys requirements with respect to the internal construction of two units in
    the development. Balmoral did not comply with the Citys requirements
    respecting exterior ramps, guards and handrails.

[3]

When construction was complete in 2011, Balmoral
    sought a ruling form the Superior Court of Justice that the development was not
    a boarding, lodging or rooming house pursuant to the Citys zoning by-law,
    thereby enabling it to rent each unit to up to seven students attending a local
    community college or university. A Superior Court justice ruled in Balmorals
    favour in 2012. This court overturned that decision, concluding that occupancy
    by more than four persons per unit would constitute a boarding, lodging or
    rooming house: see
Balmoral Developments Hilda Inc. v. Orillia (City)
,
    2013 ONCA 212.

[4]

While this litigation was unfolding, Balmoral
    submitted an application to the City for a Condominium Exemption pursuant to ss.
    9(6) and (7) of the
Condominium Act
, 1998, S.O. 1998, c. 19:

9(6)
    Before making an application under subsection 51 (16) of the
Planning Act
,
    the owner of a property or a person authorized in writing by the owner of the
    property may apply to the approval authority to have the description or any
    part of the description exempted from those provisions of sections 51 and 51.1
    of the
Planning Act
that would normally apply to it under subsection
    (2).

9(7) The
    approval authority may grant an exemption if it believes the exemption is
    appropriate in the circumstances.

[5]

The permissible effect of invoking this process
    was to bypass the requirements for notice and draft approval set out in the
Planning
    Act
, R.S.O. 1990, c. P. 13.

[6]

Two years later, the City, the approval
    authority in the above subsection, passed By-law 2014-75, granting the
    Exemption Application subject to one condition: Each unit or any group of
    units shall not be occupied and used as a boarding, lodging or rooming house.

[7]

Balmoral commenced an action against the City;
    it made two claims: (1) the City lacked the power to include a condition when
    granting the Exemption Application; and (2) the City unlawfully imposed
    barrier-free requirements on its development project.

[8]

Balmorals Amended Statement of Claim, the Citys
    Statement of Defence and Balmorals Reply were all filed within a twelve-day
    period in December 2014. Nothing happened until July 2018 when the City brought
    a motion for summary judgment. The Citys position was that it had authority to
    impose a condition when granting an Exemption Application and could impose
    barrier-free requirements on the development project.

[9]

The motion for summary judgment was heard in
    February 2019. The motion judge released his Reasons for Decision in May 2019.
    Success was divided between the two parties.

[10]

On the condition attached to the Exemption
    Application approval, the motion judge decided in favour of Balmoral. He said:

I am satisfied that, the City having proceeded
    on the Exemption Certificate track, lacked the right to impose conditions on
    Balmorals Exemption Certificate Application. The bad faith that I attribute to
    the City, through the actions of its staff, does not imply wrongdoing or
    personal advantage, but does rise to the level of unreasonableness and
    unfairness; conduct which is not expected of a municipal government. I am
    satisfied that a Declaration should issue. The City did not have authority to
    impose conditions. I further order that the conditions in By-Law 2014-75, set
    out in paragraphs 2 and 3 of the said by-law, be struck.

[11]

On the barrier-free access requirements imposed
    on Balmorals development project, the motion judge decided in favour of the
    City. He said:

In my view, the issue is moot. Balmoral
    constructed the two units as barrier-free units in accordance with the by-law
    and building permit. It declined to appeal the Citys requirements for
    barrier-free units. In my view, Balmoral cannot use its request for a
    declaration now to mount a collateral attack on a by-law which it did not
    appeal.

I, therefore, find that the barrier-free
    accessibility requirements imposed by the City were lawful. It follows that the
    City has the continuing right to impose the ramp, guard and handrail
    requirements pursuant to that by-law.

[12]

The City appeals from the motion judges
    decision on the Exemption Application issue. Balmoral appeals from the motion judges
    decision on the barrier-free accessibility requirements issue.

A.      The Citys appeal

[13]

On the Exemption Application issue, the City
    advances two grounds of appeal: (1) the motion judge erred by determining that
    the City was not authorized by s. 9(7) of the
Condominium Act
to
    impose a condition on its approval of Balmorals application; and (2) the
    motion judge erred by finding that Ian Sugden, the Citys Director of
    Development Services and Engineering, acted in bad faith in processing
    Balmorals Exemption Application.

[14]

On the bad faith issue, Balmoral concedes that
    the motion judge erred in finding that Mr. Sugden acted in bad faith in his
    dealings with Balmoral. In its factum, Balmoral says:

47. The Respondent did not seek any findings
    of bad faith against Mr. Sugden at the Motion nor did the Respondent seek any
    finding which required a finding of bad faith against Mr. Sugden.

48. The Respondent does not oppose the
    Appellants appeal regarding these findings by the Motion Judge.

[15]

In our view, this is an appropriate and fair
    concession. We accept it. The motion judges conclusion that Mr. Sugden acted
    in bad faith in his dealings with Balmoral is set aside.

[16]

That leaves the Citys statutory interpretation
    ground of appeal. We set out again ss. 9(6) and (7) of the
Condominium Act
:

9(6)
    Before making an application under subsection 51 (16) of the
Planning Act
,
    the owner of a property or a person authorized in writing by the owner of the
    property may apply to the approval authority to have the description or any
    part of the description exempted from those provisions of sections 51 and 51.1
    of the
Planning Act
that would normally apply to it under subsection
    (2).

9(7) The
    approval authority may grant an exemption if it believes the exemption is
    appropriate in the circumstances.

[17]

The motion judges entire analysis on this issue
    was:

However, s. 9(6) of the
Condominium Act
does not make any provisions for conditions when Certificates for Exemption are
    sought. The Ministry makes this clear in its Guideline to Municipalities by
    stating, No conditions of draft approval are required.

[18]

Balmoral agrees with the motion judges
    conclusion. It submits that s. 9(6) of the
Condominium Act
, by its
    terms, explicitly permits a property owner to apply for an exemption from the
    provisions of ss. 51 and 51.1 of the
Planning Act
. Those provisions,
    says Balmoral, constitute a complete code for subdivision control. In s.
    51(25), approval authorities are authorized to impose such conditions to the
    approval of a plan of subdivision as in the opinion of the approval authority
    are reasonable, having regard to the nature of the development proposed for the
    subdivision. Following this general statement, there is a long list of
    categories where, potentially, conditions on development could be imposed.
    Balmorals position is that since ss. 9(6) and (7) of the
Condominium Act
establish an alternative approval route to the one set out in the
Planning
    Act
, the potential conditions under that Act cannot be introduced through
    the back door of ss. 9(6) and (7) of the
Condominium Act
. Accordingly,
    a property owner that makes an Exemption Application is entitled to a simple
    Yes or No answer from the approval authority; the authority cannot impose
    conditions on its potential Yes answer.

[19]

For several reasons, we are not persuaded by
    this submission.

[20]

First, there is nothing in ss. 9(6) and (7) of
    the
Condominium Act
that prohibits the imposition of conditions as
    part of an Exemption order. These provisions simply establish an alternate
    route for a property owner to seek approval of its development project. In many
    cases, this is probably a desirable route for property owners because it has
    the potential to be simpler, faster and less expensive. That is probably why
    Balmoral invoked this route in this case. However, there is nothing in this
    context, let alone the actual words of ss. 9(6) and (7), to suggest that in
    addition to these virtues, the property owner is entitled to a straight-up Yes
    or No answer to its Exemption Application.

[21]

Second, and related, the actual wording of s.
    9(7) suggests the opposite of Balmorals position. Section 9(7) provides that
    the approval authority may grant an exemption if it believes the exemption is
    appropriate in the circumstances. In our view, there are probably many cases
    where an approval authority would welcome, along with the land owner,
    invocation of the Exemption Application process. As mentioned above, it is
    probably an attractive alternative to the formal
Planning Act
process.
    The broad wording of s. 9(7) set out above gives the approval authority the
    opportunity to balance the interests and submissions of the municipality and
    the land owner and achieve a disposition that is more nuanced, and potentially
    fairer, than a simple Yes or No result. That is what happened in this case;
    the City granted the Exemption Application, but with a single condition central
    to the Citys view of the appropriate use of the proposed residential units.

[22]

Third, we observe that the Citys position is
    supported by ss. 8(1) and 10(2) of the
Municipal Act
, 2001, S.O. 2001,
    c. 25:

8(1) The
    powers of a municipality under this or any other Act shall be interpreted
    broadly so as to confer broad authority on the municipality to enable the
    municipality to govern its affairs as it considers appropriate and to enhance
    the municipalitys ability to respond to municipal issues.



10(2) A
    single-tier municipality may pass by-laws respecting the following matters:



6. Health, safety and well-being
    of persons.

[23]

We agree with the City that the purpose of
    By-law 2014-75 was to protect the health, safety and well-being of prospective
    tenants and occupants of the townhouse units as well as protecting purchasers
    of the units. The stacked townhouses were built as single residential unit
    dwellings; they were not built to meet the additional safety requirements
    imposed on developments for a boarding, lodging or rooming house. The purpose
    of the condition attached to the Exemption Application was to notify all future
    unit owners and occupants that use of the units as boarding, lodging or rooming
    houses was not permitted due to health and safety hazards.

[24]

Fourth, the motion judge erred by relying on the
    sentence No conditions of draft approval are required in a Government of
    Ontario booklet entitled
Understanding the Subdivision & Condominium
    Application Process
. This sentence has no application to this case because
    there is no draft plan of condominium approval in the case of a ss. 9(6) and
    (7) Exemption Application.

[25]

For these reasons, we would allow the Citys
    appeal from the motion judges decision that the City did not have the
    authority to impose a condition on its approval of Balmorals Exemption
    Application.

B.      Balmorals
    appeal

[26]

Balmoral contends that the motion judge erred by
    determining the barrier-free accessibility requirements issue against it on the
    basis of mootness.

[27]

We do not accept this submission. We agree with
    the motion judge that, in light of Balmorals own conduct, namely compliance
    with the Citys requirements with respect to the internal construction of the
    two units and failure to appeal the Citys decision, it was too late in the day
    for Balmoral to challenge the lawfulness of the accessibility component of the by-law.

[28]

Accordingly, we would dismiss Balmorals appeal.

Disposition

[29]

The Citys appeal is allowed and Balmorals action
    is dismissed. Balmorals appeal is dismissed.

[30]

The issue of costs of Balmorals action and the
    motion for summary judgment is remitted to the motion judge. The City has been
    successful on both appeals. If the City seeks costs of the appeals, it should
    file its costs submissions (up to five pages) within 21 days of the release of
    this decision. Balmoral could then file its response (up to five pages) within
    an additional 21 days.

Doherty
    J.A.

J.C.
    MacPherson J.A.

M.L.
    Benotto J.A.


