



COURT OF APPEAL FOR ONTARIO

CITATION: Lacey v. Kakabeka Falls Flying Inc., 2018 ONCA 1007

DATE: 20181211

DOCKET: C65348

Doherty, van Rensburg and Hourigan JJ.A.

BETWEEN

Robin Lacey and Jennifer
    Lacey

Applicants

(Appellants)

and

Kakabeka Falls Flying Inc.

Respondent

(Respondent)

Michael Cupello, for the appellants

Jordan R.D. Lester and Warren A. Mouck, for the
    respondent

Heard: November 1, 2018

On appeal from the judgment of Justice W. Danial Newton
    of the Superior Court of Justice, dated April 6, 2018, with reasons reported at
    2018 ONSC 2239.

REASONS FOR DECISION

[1]

The appellants Robin Lacey and Jennifer Lacey brought an application for
    a declaration that a lease registered in 1972 against property they had
    purchased some seven years earlier (with notice of the lease) was void. The
    lease is between the respondent Kakabeka Falls Flying Inc. and the appellants
    predecessor in title, Robert Spence. The lease, which was signed on November
    20, 1968, is for a term of 99 years from January 1, 1967 to December 31, 2066.
    The appellants alleged that, at the time it was entered into, the lease
    violated s. 26(2) of the
Planning Act
,
    R.S.O. 1960, c. 296
(now s. 50(3) of the
Planning Act
,
    R.S.O. 1990, c. P.13)
,
which prohibits the subdivision of a property,
    including by a lease of only part of a property for a term exceeding 21 years.

[2]

Until May 2, 1968, s. 26(3)(a) of the
Planning Act
provided an
    exemption from the subdivision prohibition where both the subdivided land and
    the abutting lands had an area of ten acres or more (as is the case here). The
    application judge determined that the parties to the lease entered into an oral
    lease and that there had been part performance before May 2, 1968, such that
    the lease continued to be subject to the statutory exemption. This finding was
    determinative of his conclusion that there was a valid lease. The application
    judge therefore did not address any other arguments that were raised in
    response to the application.

[3]

The appellants raise three arguments on appeal.

[4]

First, the appellants argue that they were denied procedural fairness
    when they were refused leave to provide evidence on the question of whether
    there had been part performance of an oral agreement. This issue was only
    raised by the application judge at the conclusion of argument, and he permitted
    only written argument to be provided on this matter.

[5]

Second, the appellants submit that the application judge erred in law in
    finding part performance when there was no evidence to reasonably support such
    a finding.

[6]

Third, the appellants argue that the application judge erred in his
    application of the test for part performance.

[7]

We are satisfied that this appeal can be determined on the first ground.
    A fair reading of the record that was before the application judge indicates
    that no one had anticipated the need to address whether there was an oral lease
    and the question of part performance, before these issues were raised by the
    application judge at the conclusion of oral argument.

[8]

Indeed, in response to the application, the respondents affidavit
    evidence confirmed that the written lease was entered into in November 1968
    (that is, after the
Planning Act
amendments came into effect). It also
    (1) asserted that the
Planning Act
did not apply because the leased
    premises are an aerodrome, governed by the
Aeronautics Act
, R.S.C.
    1985, c. A-2, and not subject to provincial planning legislation (the
    jurisdiction issue); (2) relied on s. 26(3)(a) of the 1960
Planning Act
,

without reference to the statutory amendment by which that exemption was removed;
    and (3) argued that the relief sought was barred by the appellants delay, as
    they purchased the land with notice of the lease and accepted rent payments for
    a period of seven years (the laches issue).

[9]

At the conclusion of oral argument when the application was heard on September
    26, 2017, the application judge adjourned the hearing and directed that the
    parties provide written submissions to address two matters: whether a
    subsequent purchaser with notice could attack the validity of the prior lease, and
    whether there was an oral agreement prior to the written agreement dated
    November 20, 1968. The appellants then prepared an affidavit to address the
    matters raised by the motion judge, and served the affidavit on opposing
    counsel. The respondents counsel objected to the new evidence, and there was
    an exchange of correspondence about a possible motion to introduce the
    affidavit. Ultimately, the parties found themselves before the application
    judge on January 26, 2018 to address the two additional issues he had raised.
    The application judge granted the respondents motion to strike the new
    affidavit, granted leave to the respondent to deliver a reply factum, and
    adjourned the application to a new date.

[10]

After
    hearing further submissions on the two additional issues on March 5, 2018, the
    application judge released his reasons for dismissing the application on April 6,
    2018. As already noted, he concluded that there was an oral lease agreement and
    part performance before May 2, 1968 (the effective date of the amendment to the
Planning Act

removing the relevant exemption).

[11]

In
    our view, the evidence before the court to support a finding of part
    performance before May 2, 1968

was thin. Although the lease is dated November
    20, 1968 and was for a stated term commencing on January 1, 1967, the
    respondent lessee was only incorporated on February 19, 1969. There was
    evidence that the club started using the land after the lease was registered on
    title in 1972, but no evidence before the application judge about whether it
    was used before that time. There was some evidence that the land had been
    cleared of trees in 1968, however it is unclear when that occurred, or who did
    it. Although the written lease provided for rent payable commencing in January
    1968, there was no evidence about whether rent was actually paid. The application
    judge referred to a survey completed on February 22, 1968 and dated April 17,
    1968. A copy of the survey, with cross-hatching showing the leased area, was
    attached to the appellants initial affidavit. There was no evidence of the
    purpose of the survey, or when the cross-hatching was added.

[12]

In
    short, we agree with the appellants that the evidence that was before the court,
    without more, was not persuasive on the question of part performance and, more
    importantly, that, after raising this issue, the application judge erred in
    refusing to permit further evidence to be received.

[13]

We
    disagree with the respondent that the appellants failure to bring a motion
    specifically seeking to file a further affidavit is fatal. The affidavit had
    been served and filed with the court. The question of the admissibility of the
    affidavit was squarely before the application judge on January 26, 2018, when
    he ordered that fresh evidence could not be received. Nor was this a case where
    r. 39.02(2) of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194 (to
    prohibit, without leave, the filing of an affidavit by a party who has
    cross-examined on an affidavit delivered by an adverse party) was in play. In
    our view, the application judges refusal to permit the filing of fresh
    evidence to properly respond to an issue that he had raised, especially when
    the record provided so little evidence on that issue, was unfair to both
    parties.

[14]

The
    other defences to the application raised by the respondent, namely the jurisdiction
    and laches issues, were argued before the application judge but not determined
    by him. The respondent invites this court to decide these issues. We are not
    prepared to do so. The record before this court is incomplete and does not
    permit us to arrive at any determination of these issues. Further, as the
    jurisdiction issue raises the constitutional applicability of the
Planning
    Act

to the subject property, this issue cannot be determined until
    the Attorney General of Canada and the Attorney General of Ontario have
    received notice of a constitutional question in accordance with s. 109 of the
Courts
    of Justice Act
, R.S.O. 1990, c. C.43. No such notice has been provided.

[15]

For
    these reasons, the appeal is allowed, and the judgment of the application judge
    is set aside. The application is referred back to another judge of the Superior
    Court for a determination on the merits, including any directions that judge
    may provide with respect to the evidentiary record. The costs award of the
    application judge is set aside. Costs of the application, including the
    proceedings before the first application judge, are to be determined by the new
    application judge hearing the matter.

[16]

The
    respondent shall pay the appellants their costs of the appeal in the sum of
    $12,000, inclusive of disbursements and applicable taxes.

Doherty
    J.A.

K.
    van Rensburg J.A.

C.W.
    Hourigan J.A.


