



COURT
    OF APPEAL FOR ONTARIO

CITATION:
Charlesfort
    Developments Limited v. Ottawa (City), 2021 ONCA 410

DATE: 20210611

DOCKET: C67355

Doherty, Nordheimer and Harvison
    Young JJ.A.

BETWEEN

Charlesfort Developments Limited

Plaintiff (Respondent)

and

The Corporation of the City of
    Ottawa

Defendant (Appellant)

Alyssa Tomkins and Anne Tardif, for the
    appellant

Timothy J. Hill and Mark van Zandvoort,
    for the respondent

Heard: December 15, 2020 by video conference

On appeal from the judgment of Justice Sally
    A. Gomery of the Superior Court of Justice, dated July 24, 2019, with reasons
    reported at 2019 ONSC 4460.

Harvison Young J.A.:

A.

Overview

[1]

The respondent, Charlesfort,
    is a property developer in Ottawa. Charlesfort purchased a property it intended
    to redevelop for a condominium project. It commenced an action against the
    appellant, the City of Ottawa, for negligent misrepresentation after the City
    failed to accurately inform Charlesfort of the contents of a municipal easement
    in 2004-2005 during the rezoning process. The easement ran along the northern
    edge of the project sites lot line but was located on an adjacent property.

[2]

During the rezoning
    process, Charlesfort believed that the easement contained a trunk sewer. It was
    not until a few years later, during the site plan approval process, that it
    learned that the easement contained a four-foot-wide water main which was old
    and in unknown condition. The water main sat within three or four feet of the northern
    lot line. Millions of gallons of water flowed through the water main every
    hour.

[3]

The nature and location
    of the water main meant that Charlesfort could not excavate and construct its
    underground parking garage right up to the northern lot line as planned. As a
    result, Charlesfort was required to redesign the proposed garage and reduce the
    parking available to purchasers of units, which resulted in significant delays
    in construction and increased costs. Charlesfort claimed that the City negligently
    misrepresented what was in the easement during the rezoning process and that the
    City was liable for Charlesforts damages of around $6 million arising from
    increased construction costs, decreased project revenue, and damages associated
    with the delay, among other things.

[4]

The trial judge held that
    the City made negligent misrepresentations to Charlesfort during the rezoning
    process about the contents of the easement. The City owed a duty of care to
    Charlesfort based on their close and direct relationship during the rezoning
    process. The City had implicitly undertaken to take reasonable care to provide
    Charlesfort with accurate information about infrastructure in adjacent property
    that was materially relevant to the proposed redevelopment. The City failed to
    ensure that accurate and complete information was communicated to Charlesfort, and
    Charlesfort reasonably relied on the information it received from the Citys
    planning department. The trial judge awarded damages of around $4.5 million to
    Charlesfort for increased development costs, lost revenue, and lost interest.

[5]

The City appeals from
    this judgment. It says that it did not owe a duty of care to Charlesfort. I
    agree. I would allow the appeal for the following reasons.

B.

Facts

[6]

In 2004, Charlesfort
    purchased a property it planned to redevelop into the Continental, a
    condominium building. The purchase was conditional on both site remediation and
    the approval of a rezoning application, which was filed in 2003 by a previous
    developer, so that Charlesfort could build a high-rise condominium on the
    property.

[7]

The zoning in place at
    the time was a general commercial designation and included setbacks of around
    six to seven metres at the front and rear. The rezoning application sought a
    change of use to a residential designation, changes to permitted height and
    density, and a reduction in the setbacks to allow construction above-grade to
    within one metre of the front of the property and right up to the northern lot
    line in the rear. The application proposed parking on site and included
    drawings of an underground parking garage that would extend from the northern
    to southern lot lines, with no setback.

[8]

The Citys practice at
    the time for rezoning applications was to assign a City planner to prepare a
    summary of the application, which was circulated to interested parties to
    obtain feedback. The interested parties included internal groups, such as the
    Infrastructure Approvals division, and external agencies, such as school boards
    and pipeline companies when the rezoning application involved property within
    200 metres of their pipelines. The Citys planning department passed on any
    comments it received through the circulation process to the applicant. The City
    planner would obtain additional information and assessments from the applicant,
    if necessary, and prepare a staff report which would indicate whether the
    Citys planning department recommended the proposed rezoning. The staff report,
    if approved by senior leadership of the Citys planning department, would be
    discussed at a public meeting of the Planning and Environment Committee (the
    Planning Committee). If the Planning Committee voted to approve the
    application, it would go to City Council for a vote.

[9]

The City planner who
    was assigned to Charlesforts rezoning application circulated his summary internally
    to the Infrastructure Approvals division and externally in January 2004. He received
    some comments from the Infrastructure Approvals division, which were relevant
    to the site plan stage but did not require Charlesfort to do anything further
    for the rezoning application. He passed these comments on to Charlesfort. Charlesfort
    retained a local planning firm in August 2004 to assist with the rezoning
    application process.

[10]

In the course of the
    rezoning application, the City planner, who was assigned to the file,
    erroneously advised Charlesforts planner that the easement contained a trunk
    sewer. Charlesforts principal was not aware of the statement at the time. The
    statement was repeated in the staff report, which was considered at a Planning
    Committee meeting on February 22, 2005. At the Planning Committee meeting, a
    representative for the owner of the adjacent property corrected this error,
    advising that the easement in fact contained a water main. Charlesforts principal
    and planner were present at the meeting.

[11]

Just prior to the
    Planning Committee meeting, the program manager of the Infrastructure Approvals
    division sent an email to various City engineers about the proposed redevelopment.
    He asked them to recommend a sewer to connect to and to advise whether there
    were any issues with storm and water services at the location. An engineer with
    the water resources group responded by email that there were no special water
    distribution issues related to the site, and he also noted the presence of a
    four-foot transmission main just north of the property. This response was received
    by the Infrastructure Approvals division but was not forwarded to the Citys
    planning department, nor was it forwarded to Charlesfort.

[12]

The rezoning
    application was approved by the Planning Committee, and City Council passed a
    site-specific zoning by-law with respect to the property in March 2005. The
    owner of the adjacent property, where the easement was located, appealed City
    Councils decision to the Ontario Municipal Board. The parties settled the
    appeal, and the Ontario Municipal Board issued a decision based on the
    settlement, which approved a one-metre above-grade setback from the northern lot
    line. There was no provision for a below-grade setback. In September 2005,
    Charlesfort waived the conditions related to rezoning and site remediation in
    its agreement of purchase and acquired the property.

[13]

The next step in the
    development approvals process required Charlesfort to obtain site plan
    approval. In August 2007, Charlesfort applied to the City for site plan
    approval for the Continental. The project included a 15-storey tower with a
    two-storey underground parking garage. Charlesfort expected that construction
    of the Continental would finish by the summer of 2009.

[14]

In October 2007, the
    Citys planning department sent Charlesfort some preliminary comments on its
    site plan approval application. Among other things, the City asked for revised
    drawings showing the water main and the easement. Charlesforts principal saw
    this letter but did not immediately understand the implications of the
    reference to the water main.

[15]

Charlesfort was not
    initially alarmed when it was told about the water main in October 2007. It had
    obtained a demolition permit around this time and applied for an excavation
    permit. Meanwhile, the City realized that the water main was very close to the property
    line and would need to be taken into account in the redevelopment of the
    property, particularly the underground parking garage which was planned to
    extend up to the property lot line. There were concerns about the condition of
    the water main given its age and that vibrations from excavation could affect
    its integrity and risk a breach.

[16]

The company that would
    excavate the site for Charlesfort revised its proposed approach for excavation
    to reduce risks, but the City was not willing to permit construction to go
    ahead if the water main could not be turned off. The water main could not be
    shut down for the foreseeable future because the water main had no back up
    while the City was doing maintenance work on its water systems, and the City
    was not sure that the valves that needed to be turned off were functional. Even
    if the water main could be shut down, City engineers had concerns about
    construction right next to the water main, whether there would be sufficient
    access to repair a possible break in the water main if a structure was
    constructed adjacent to it, and whether the easement itself adequately
    protected the water main.

[17]

In July 2008,
    Charlesfort changed its parking garage plans by moving it back from the
    northern lot line to increase the distance between the structure and the water
    main. Charlesfort signed a site plan agreement with the City in September 2008
    and received an excavation permit and site plan approval. The condominium was
    completed in November 2011, around two years later than initially contemplated.

C.

Decision below

[18]

The trial judge held
    that the City owed a duty of care to Charlesfort in 2004-2005 during the
    rezoning process. She first considered whether the City had an established duty
    of care in existing case law. She concluded that a novel duty of care analysis
    was required and conducted an
Anns/Cooper
analysis:
Anns v.

London Borough of Merton
, [1977] 2 All E.R. 492 (H.L. (Eng.));
Cooper v. Hobart
,

2001 SCC 79, [2001] 3 S.C.R. 537. The parties on appeal do not dispute
    that a

novel
    duty of care analysis was needed. The trial judge specifically cited
Deloitte

& Touche v. Livent
    Inc. (Receiver of)
, 2017
    SCC 63, [2017] 2 S.C.R. 855, as the

leading authority for the application of
    the
Anns/Cooper
test in the context of a

negligent

misrepresentation

claim.

[19]

The trial judge found
    that the parties had a sufficiently close and direct relationship to establish
    a duty of care. At the proximity stage of the analysis, she relied on a number
    of factors, including that, in making planning decisions such as rezoning
    decisions, the City had to avoid risks to public health and safety and critical
    infrastructure and that a water main breach would pose a serious threat to
    health and safety as well as the security of critical infrastructure. In
    addition, she determined that the City did not ask Charlesfort to conduct its
    own investigation of the easement, that the City had information about the size
    of the water main that Charlesfort could not obtain through publicly available
    sources, and that the parties expected that any information obtained by the City
    through the rezoning application summary circulation process would be shared
    with Charlesfort.

[20]

In those circumstances,
    the City implicitly undertook to take reasonable care to provide Charlesfort
    with accurate information about infrastructure in adjacent property that was
    materially relevant to the redevelopment.

[21]

The trial judge went on
    to find that the City could reasonably foresee that Charlesfort would rely on
    its representations about the contents of the easement and that Charlesfort
    would incur losses if the representations were inaccurate or incomplete due to
    negligence. The City knew that Charlesfort was seeking rezoning for the purpose
    of building a 15-storey condominium tower with an underground parking garage
    extending right up to the northern lot line. It was foreseeable that failing to
    tell Charlesfort about a feature that would prevent it from building the garage
    as planned would cause damage in the form of increased construction costs, lost
    profits, and delay costs.

[22]

There were no policy
    considerations to limit the Citys duty of care because the Citys
    misrepresentations did not involve core policy decisions. The Citys incomplete
    and inaccurate representations about the contents of the easement were
    negligent. The trial judge also found that Charlesfort reasonably relied on the
    Citys representations. Charlesforts principal expected that the City would
    inform

him

of

any

serious

issues

affecting

the

rezoning

application.

It

was

also

reasonable

for Charlesfort
    not to retain its own engineer to investigate the property or assist

with the rezoning
    application. If Charlesfort had known about the water main in

2005,

it

would

not

have

waived

the

conditions

on

the

purchase

of

the

property,

and

it

would

have

found

another

site

to

build

the

Continental.

The

trial

judge

found

that

Charlesfort
    suffered nearly $4.5 million in damages and pre-judgment interest as

a result of the
    Citys negligence, made up of increased development costs, lost

revenue,

and

lost

interest.

D.

Issues

[23]

The appellant City submits
    that the trial judge made three errors:

1.

The trial judge erred in holding that the
    City owed Charlesfort a duty of care;

2.

The trial judge erred in finding that
    Charlesfort relied on the Citys misrepresentation; and

3.

The trial judge erred in varying the rate
    of pre-judgment interest that Charlesfort was entitled to.

E.

Discussion

(1)

Did the City owe a duty of care to Charlesfort?

[24]

The City submits that
    the trial judge erred by failing to apply the correct test for proximity in a
    case of pure economic loss arising from negligent misrepresentation. She
    further erred in failing to consider the purpose of any representation provided
    by the City. In processing Charlesforts rezoning application, the City was
    discharging a statutory duty, which does not give rise to a private law duty of
    care. Even if the City had undertaken to rezone the property in accordance with
    the
Planning Act
, R.S.O. 1990, c. P.13, Charlesfort was not entitled
    to rely on the Citys silence for the purpose of assuring itself that the
    project could proceed as planned and was viable prior to completing its real
    estate transaction.

[25]

Charlesfort submits
    that the trial judge correctly applied the proximity test, consistent with
Livent
.
    The trial judge also identified the purpose of the undertaking. The City, in
    receiving its fee and Charlesforts rezoning application including its plans to
    build the parking garage up to the lot lines, undertook to take reasonable care
    to provide Charlesfort with accurate information about infrastructure in the
    adjacent easement that was materially relevant to the proposed redevelopment. The
    purpose was to further the interests of both parties in knowing whether the
    proposed redevelopment could proceed as proposed by Charlesfort. Given this
    purpose, the type of economic loss suffered by Charlesfort was reasonably
    foreseeable.

(a)

Legal principles

(i)

Proximity under the
Anns/Cooper
test

[26]

Until recently, the
    analysis of whether there is a novel duty of care was governed by the
Anns/Cooper
test. That test, however, has been refined by the Supreme Court in
Livent
and
16688782 Ontario Inc. v. Maple Leaf Foods Inc
., 2020 SCC 35, 450
    D.L.R. (4th) 181. It will be useful to review this development briefly.

[27]

The
Anns/Cooper
test
    sets out two stages for establishing a novel duty of care. The first stage requires
    the establishment of a
prima facie
duty of care through the
    application of a proximity and foreseeability analysis. The second stage asks
    whether there are policy reasons for why a duty of care should not be
    recognized:
Cooper
, at para. 30.

[28]

As the majority of the Supreme
    Court explained in
Livent
,

at para. 16, the legal principles
    have evolved since
Anns
. Under that test, a
prima facie
duty
    of care would arise where injury to the plaintiff was a reasonably foreseeable
    consequence of the defendants negligence, and where present, the relationship
    was labelled as one of proximity:
Livent
, para 20.

[29]

It was
Cooper
that recognized that foreseeability alone is insufficient to establish a
prima
    facie
duty of care. Rather, the court must also undertake a proximity
    analysis:
Cooper
, at paras. 22, 29 and 31. This analysis considers
    whether the parties are in such a close and direct relationship that it would
    be just and fair having regard to that relationship to impose a duty of care
    in law:
Cooper
, at paras. 32, 34;
Livent
, at para. 25.

[30]

In
Livent
, at
    para. 29, the court held that where an established proximate relationship
    cannot be found, courts must undertake a full proximity analysis:

To determine
    whether the close and direct relationship which is the hallmark of the
    common law duty of care exists, courts must examine all relevant factors
    arising from the
relationship
between the
    plaintiff and the defendant. While these factors are diverse and depend on the
    circumstances of each case, this Court has maintained that they include
    expectations, representations, reliance, and the property or other interests
    involved as well as any statutory obligations. [Citations omitted. Emphasis in
    original.]

[31]

In the case of pure
    economic loss arising from negligent misrepresentation or the performance of a
    service, two factors are determinative in the proximity analysis: the
    defendants undertaking and the plaintiffs reliance. A relationship of
    proximity is formed when the defendant undertakes to provide a representation
    or service in circumstances that invite reasonable reliance by the plaintiff, as
    the defendant becomes obligated to take reasonable care and the plaintiff has a
    right to rely on the defendants undertaking to do so:
Livent
, at
    para. 30;
Maple Leaf
, at para. 32.

[32]

However, any reliance
    on the part of the plaintiff that falls beyond the scope of the defendants
    undertaking of responsibility necessarily falls outside the scope of the
    proximate relationship and, therefore, of the defendants duty of care:
Livent
,
    at para. 31. The purpose for which the representation was made or the service
    undertaken is key to the determination of the scope of the duty of care. As the
    court noted, at para. 31:

By assessing all
    relevant factors arising from the relationship between the parties, the
    proximity analysis not only determines the
existence
of a relationship of proximity, but also delineates the
scope
of the rights and duties which flow from that relationship. In short, it
    furnishes not only a principled basis upon which to draw the line between
    those to whom the duty is owed and those to whom it is not, but also a
    principled delineation of the scope of such duty, based upon the purpose for
    which the defendant undertakes responsibility. [Citation omitted. Emphasis in
    original.]

[33]

In
Livent,
at
    para. 24, the court also observed that in cases involving negligent
    misrepresentation or performance of a service, the proximity analysis will be
    more usefully considered
before
the foreseeability
    analysis. That is because, as the court notes, at para. 34, and as will be seen
    from the discussion below, the factors applied in the proximity analysis will
    inform the foreseeability inquiry:

[T]he
purpose
underlying that undertaking and that
    corresponding reliance limits the type of injury which could be reasonably
    foreseen to result from the defendants negligence. [Emphasis added.]

[34]

The most recent Supreme
    Court decision which addresses the proximity analysis in a duty of care
    determination involving negligent misrepresentation is
Maple Leaf
. In
Maple
    Leaf
, Mr. Sub franchisees sued Maple Leaf Foods for the lost profits and
    other economic loss they sustained when they experienced a shortage of product
    after Maple Leaf Foods recalled meat products due to a listeria outbreak at a
    Maple Leaf Foods factory. The majority began its analysis by noting that the
    franchisees were making claims for pure economic loss, observing that tort law
    has historically been concerned mainly with negligent interference with or
    injury to rights in bodily integrity, mental health and property, which
    explains why the common law has been slow to accord protection to pure economic
    loss.

[35]

The Mr. Sub franchisees
    claimed that Maple Leaf Foods undertook to provide ready-to-eat meats fit for
    human consumption. In support of their allegation, they relied on Maple Leafs
    reputation for product quality and safety, and its public motto We Take Care.
    The majority held that there was no proximate relationship between Maple Leaf
    Foods and the Mr. Sub franchisees. The purpose and scope of Maple Leaf Foods
    undertaking was to ensure that Mr. Sub customers who ate the meats would not become
    ill or die. Properly construed, the undertaking was made to consumers with the
    purpose of reassuring them that their interests were being kept in mind, and
    not made to commercial intermediaries such as Mr. Sub or its franchisees. The
    business interests of the franchisees lay outside the scope and purpose of the
    undertaking.

[36]

This decision is
    important to the present appeal for a few reasons. First, it held that correctness
    is the standard of review applicable to the determination of the existence of a
    duty of care between the plaintiff and the defendant: at para. 24. Second, it affirmed
Cooper
and
Livent
, both of which emphasized the importance of
    proximity in the duty of care analysis, at para. 33:

Taking
Cooper
and
Livent
together, then, this Court has emphasized the requirement of
    proximity within the duty analysis, and has tied that requirement in cases of
    negligent misrepresentation or performance of a service to the defendants
    undertaking of responsibility and its inducement of reasonable and detrimental
    reliance in the plaintiff.

[37]

Third,
Maple Leaf
confirmed
    that undertakings are not to be treated as given at large. A court must
    consider whether the undertaking is made to the plaintiff and for what purpose:
    at paras. 35, 38. Further, when a defendant undertakes to do something, they
    assume the task of doing so reasonably, which manifests an
intention
to induce the plaintiffs reliance: at para. 33.
    As
Maple Leaf
explains, at para. 34, it is the intended effect of
    the defendants undertaking upon the plaintiffs autonomy that brings the
    defendant into a relationship of proximity:

Where that effect
    works to the plaintiffs detriment, it is a wrong to the plaintiff. Having
deliberately solicited
the plaintiffs reliance as a
    reasonable response, the defendant cannot in justice disclaim responsibility
    for any economic loss that the plaintiff can show was caused by such reliance.
    The plaintiffs pre-reliance circumstance has become an entitlement that runs
    against the defendant. [Citation omitted. Emphasis added.]

[38]

The plaintiffs
    entitlement to rely operates only so far as the undertaking goes. Any reliance
    which falls outside of the purpose for which the representation was made or the
    service was undertaken necessarily falls outside the scope of the proximate
    relationship and therefore, of the duty of care. Citing
Livent
, the
    majority stated that [t]his end and aim rule precludes imposing liability upon
    a defendant for loss arising where the plaintiffs reliance falls outside the
    purpose of the defendants undertaking: at para. 35.

(ii)

Reasonable
    foreseeability

[39]

The second part of the
prima
    facie
duty of care analysis requires considering reasonable foreseeability.
    The question is whether an injury to the plaintiff was a reasonably foreseeable
    consequence of the defendants negligence:
Livent
, at para. 32.

[40]

An injury to the
    plaintiff will be reasonably foreseeable if the defendant should have
    reasonably foreseen that the plaintiff would rely on their representation and
    such reliance would be reasonable. The reasonable foreseeability and the
    reasonableness of the plaintiffs reliance is determined by the proximate
    relationship between the parties. A plaintiff only has a right to rely on a
    defendant to act with reasonable care for the particular purpose of the
    defendants undertaking, and in such situations, the plaintiffs reliance is
    both reasonable and reasonably foreseeable. Reliance by the plaintiff for any
    other purpose would fall outside the scope of the defendants undertaking, and
    any consequential injury would not be reasonably foreseeable:
Livent
,
    at para. 35.

(iii)

Claims against
    government bodies

[41]

In addition, this is a
    claim against a government body. There are generally two situations that may
    create a
prima facie
duty of care in claims against a government
    defendant: where a duty of care arises from the statutory scheme or where a
    duty of care arises from interactions between the plaintiff and the government
    and is not negated by statute:
R. v. Imperial Tobacco Canada Ltd.
,
    2011 SCC 42, [2011] 3 S.C.R. 45, at para. 43. Proximity might also be based both
    on the governments statutory duties and interactions between the parties: at
    para. 46.

[42]

In the first situation,
    it may be difficult to find that a statute creates sufficient proximity to
    give rise to a duty of care:
Imperial Tobacco
, at para. 44. Often,
    statutes are aimed at public goods and it may be difficult to infer that the
    legislature intended to create private law tort duties to claimants: at para.
    44.

(b)

Analysis

(i)

Proximity

[43]

With respect, the trial
    judge erred in concluding that the City of Ottawa owed a duty of care to
    Charlesfort as claimed. While she correctly cited the applicable test from
Livent
,
    she erred in failing to consider adequately the scope and purpose of the undertaking
    that she found had been implicitly made. She did not have the advantage of
Maple
    Leaf
which has added clarity to the importance of the undertaking
    analysis in the course of considering whether the parties were in a
    sufficiently proximate relationship to ground a
prima facie
duty of
    care.

[44]

The trial judge began
    her proximity analysis with the question of whether the parties had a
    sufficiently close and direct relationship to ground a
prima facie
duty of care. She went on to say that this required a consideration of the
    expectations, representations, reliance, interests, and statutory obligations of
    the parties in the course of the rezoning application process and cited a
    number of factors that led her to conclude that they were in such a
    relationship.

[45]

These included the fact
    that the Citys rezoning application processing service was provided for a fee,
    the statutory scheme placed the onus on the municipality to obtain information
    on the proposed rezoning, the Citys practice of giving notice permitted it to
    identify existing infrastructure that could have an impact on construction, and
    the City had to consider whether the developer had plans to provide adequate
    parking and that its plan was broadly feasible. She also pointed to the Provincial
    Policy Statement issued pursuant to the
Planning Act
which provided
    that the City should avoid development that would create risks to public health
    and safety or to critical infrastructure. Any breach of the water main would be
    a serious risk to health and safety and critical infrastructure, and she noted
    that the City knew all along that the plan included a two-storey underground
    parking garage extending right up to the northern lot line where the easement
    was located. Both parties had an interest in knowing whether the development
    could proceed as planned in the course of the rezoning process.

[46]

The trial judge also
    found that both parties expected that any information that the City obtained
    would be shared with Charlesfort, and the City planner assigned to Charlesforts
    rezoning application acknowledged that the City generally provided all the comments
    it received, even when not directly related to the rezoning. She also found
    that developers generally rely on information received from City planners. She
    concluded that the parties had a sufficiently close and direct relationship
    based on these factors. On receipt of the rezoning application and fee, the
    City at the very least undertook to transmit the comments it obtained during
    the circulation process to Charlesfort. Stating that the proximity analysis
    must inform the scope of the duty of care, she found that the narrow scope
    proposed by the City does not do so. Ultimately, she found that the City
    implicitly undertook to tell Charlesfort about the existence, location, and
    size of municipal structure such as the water main and to advise whether it
    played a critical role in the municipal water supply and whether the City had
    any knowledge of its condition.

[47]

The trial judges
    central error was her analysis of the Citys undertaking. In finding that the
    undertakings were implicit she avoided analyzing whether the City manifested
    an intention to induce, or deliberately solicited, Charlesforts reliance, as
    well as the purpose and scope of any such undertaking. These, as
Maple Leaf
made clear, are critical aspects of the proximity analysis.
Maple Leaf
emphasized that it is the
intended effect
of the defendants
    undertaking that brings the defendant into a relationship of proximity and duty
    with the plaintiff, and it affirmed that the purpose of any undertaking limits
    the scope of the plaintiffs entitlement to rely.

[48]

With respect, I do not
    agree that the City made an undertaking to Charlesfort in the course of the
    rezoning application to provide Charlesfort with accurate information about municipal
    infrastructure in adjacent property that was materially relevant to the
    proposed redevelopment. Moreover, I do not agree that Charlesfort can be said
    to have reasonably relied on any such representation. In support of finding
    this implicit undertaking, the trial judge pointed to the Citys obligations
    under statute and other policy instruments, the Citys powers, abilities, and
    access to information during the rezoning process, and the typical practices
    and expectations of the parties. These factors do not indicate that the City intended
    to induce Charlesfort to rely on the Citys representations about municipal
    infrastructure during the rezoning process. They merely describe the respective
    positions and knowledge of the parties during the rezoning process.

[49]

The trial judges
    finding that the Citys undertakings were implicit laid the groundwork for
    this error. While I would stop short of saying that an undertaking can never be
    implicit, it is much more difficult to properly consider the existence and the
    purpose and scope of an implicit undertaking than an explicit one. This is
    partly because in considering the scope of the undertaking, it is necessary, as
Maple Leaf
illustrates, to determine who the intended beneficiaries of
    any undertakings are.

[50]

In my view, to the
    extent that the City made any undertaking to Charlesfort when it accepted the
    fee and Charlesforts application, in the sense that the City intentionally
    induced or deliberately solicited Charlesforts reliance, that undertaking was
    to process the rezoning application and to take the appropriate considerations
    into account in so doing. Any representations made by the City must be
    considered in the context and purpose of the rezoning process in which they
    were made. Even where an undertaking exists, there is a need to consider the
    purpose of the undertaking and whether the plaintiffs reliance fell within or
    outside the purpose of the defendants undertaking of responsibility. These are
    the determinative factors in establishing a
prima facie
duty of care
    in cases of negligent misrepresentation.

[51]

This point is
    illustrated by
Maple Leaf
. There was no question that Maple Leaf Foods
    had made representations about the quality and safety of its meat products to
    consumers. That did not mean that Mr. Sub was in a relationship of proximity
    with Maple Leaf Foods such that it could reasonably rely on a representation or
    undertaking made to consumers. This is because the undertaking was made for the
    purpose of reassuring consumers that they would not become ill or die from
    their meat, and not for the purpose of protecting franchisees such as plaintiffs
    from pure economic loss.

[52]

Similarly, Charlesfort essentially
    submits that the purpose of any undertaking by the City included assessing the
    viability of the condominium project and protecting Charlesforts economic interests
    in being able to build the project as planned. I disagree. The scope and
    purpose of the Citys undertaking to process Charlesforts rezoning application
    was limited to fulfilling its statutory duty and acting in the public interest
    in doing so, for a number of reasons.

[53]

First, [z]oning is
    about regulating land use in the public interest and is the expression of
    public policy in land use areas: Ian Rogers, Alison Butler and Greg Levine,
Canadian
    Law of Planning and Zoning
, 2nd ed. (Toronto: Thomson Reuters Canada
    Limited, 2021), at s. 4.2. It enables local governments, like municipalities,
    to control the use of land by depriving property owners of certain uses of
    property for the public good. The public interest purpose of zoning does not
    suggest that the City was guaranteeing or had Charlesforts economic interests
    in mind when it undertook to process the rezoning application.

[54]

Second, the statutory
    scheme and other policy instruments reflect the public interest focus of zoning
    decisions. The
Planning Act
, which authorizes municipalities to pass
    zoning by-laws, requires that planning officials, in exercising authority that
    affects a planning matter, have regard to policy statements issued under s.
    3(1) of the
Planning Act
. The 1997 Provincial Policy Statement, which
    governed at the time the rezoning took place, identified a number of key
    provincial interests related to land use planning and development. These
    included wise use and protection of Ontarios resources, protecting the
    long-term health and safety of Ontarios population, and the financial and
    economic well-being of Ontario and municipalities. The City also had several
    official plans it considered to be relevant, and these official plans included
    objectives and policies such as encouraging denser residential development in
    urban areas, compatibility with existing neighbourhoods, and promoting growth
    that facilitated the use of public transit.

[55]

It is clear from the
Planning
    Act
, the Provincial Policy Statement, and the Citys official plans that
    land use planning and restrictive zoning target the protection of the public
    and good management of land resources. These are public goals. The trial judge
    identified several issues the City should have been aware of during the rezoning
    process based on these instruments, including risks to public health, safety,
    and critical infrastructure, and adequate parking. These again are public
    interests, concerned with public health, infrastructure that serves the public,
    and ensuring that local traffic flow is not impeded.

[56]

This court was not
    referred to anything in any of the statutes or other instruments relating to
    planning that creates a duty to protect developers from pure economic loss.
    Nothing in the legislative framework suggests that the legislature intended
    that the exercise of zoning powers alone should also give rise to a private law
    duty to developers. The observation in
Imperial Tobacco
, at para. 44,
    that it may be difficult to find that a statute creates sufficient proximity to
    give rise to a duty of care, applies in this case:

However, more often, statutes are aimed at
    public goods, like regulating an industry, or removing children from harmful
    environments. In such cases, it may be difficult to infer that the legislature
    intended to create private law tort duties to claimants. [Citations omitted.]

[57]

Third, the scope and
    purpose of the undertaking in this case also must consider the nature of the
    process. This was a rezoning application. There were still a number of steps
    that the developer had to complete before construction, including the site plan
    approval process, during which the City could impose conditions to an approval,
    and permit approvals. The only goal at the rezoning stage was to determine
    whether a site-specific by-law should be granted as sought by Charlesforts
    rezoning application. Even though Charlesfort paid a fee for the rezoning
    application and a site-specific zoning by-law was eventually passed, there is
    no basis in the record to support the inference that the City was intending to
    undertake that the ultimate project would be built or would be as profitable
    for Charlesfort as it had initially anticipated. Such a result could, in
    effect, render municipalities insurers of developers profits. It would, in
    other words, create a potentially limitless liability.

[58]

Fourth, there was
    nothing that made the relationship between the appellant and the respondent
    unique. The trial judge found that the City never asked Charlesfort to
    investigate what the easement contained during the zoning process. She also
    found that developers applying for site-specific rezoning generally rely on the
    information provided by City planners. While I would not interfere with these
    findings, I would not infer from these factors that the City invited Charlesfort
    to rely on anything beyond the purpose and scope of the rezoning application.

[59]

As the trial judge also
    found, the parties met and communicated with one another, and the City shared
    comments it received from the circulation process. In my view, this was done
    not to induce Charlesfort to rely on the Citys undertaking to review its rezoning
    application and anything resulting from the process as assurance about its
    economic interests or that it could proceed with its development as planned.
    Rather, this was done to further the purpose of the City fulfilling its
    statutory obligations and acting in accordance with the public interest.
    Sharing and receiving information as was the Citys practice may be seen to
    increase transparency among various interested parties and allowed the City to
    determine the best way to protect and advance the public interest within the
    planning and zoning framework. There were no interactions between the parties
    that went beyond regular interactions required to process a rezoning
    application.

[60]

In summary, there is no
    relationship of proximity in this case. Charlesfort has not established that
    the City made any representations or undertakings whose purpose or scope
    included assuring Charlesfort that its condominium project as planned would be
    viable or protecting Charlesfort from pure economic loss, such that Charlesfort
    was induced to rely and suffered economic detriment as a consequence.

(ii)

Reasonable
    Foreseeability

[61]

Although it is not
    strictly necessary to consider reasonable foreseeability given the conclusion
    on the proximity analysis, it is useful to do so as it illustrates the effect
    of the proximity analysis on the subsequent reasonable foreseeability analysis.

[62]

The trial judge pointed
    to the fact that no one at the City ever suggested to Charlesfort that it
    should retain an engineer to investigate the infrastructure in the property or
    adjacent property. Because the City knew that Charlesfort was seeking rezoning
    for the purpose of building a 15-storey condominium tower with a two-storey
    underground garage that extended right up to the northern lot line, she found
    that it was foreseeable that if the City failed to inform Charlesfort about a
    feature in the property or adjacent property that would prevent it from
    building the parking garage as planned, this would cause damage to Charlesfort
    in the form of increased construction costs, lost profits and delay costs.

[63]

As I have discussed, there
    was no undertaking from the City that had the purpose of ensuring the viability
    of constructing the condominium and parking garage as planned or maintaining a
    particular level of profitability which was intended to induce Charlesforts
    reliance in the course of the rezoning application and process. For that
    reason, there can be no reasonable foreseeability of any reliance upon such an
    undertaking. This conclusion on reasonable foreseeability illustrates the
    significance of the analysis of the purpose of an undertaking as emphasized in
Livent
and
Maple Leaf
and its constraining effect on what can be
    reasonably foreseeable:
Livent
, at para. 35.

(iii)

Conclusion on duty of
    care

[64]

Charlesfort has not
    established a
prima facie
duty of care. There is no need to proceed to
    the second stage of
Anns/Cooper
to determine whether any residual
    policy reasons negate the imposition of a duty of care.

[65]

As I have concluded
    that the City did not owe Charlesfort a duty of care during the rezoning
    process such that the City can be held liable for Charlesforts pure economic
    losses, there is also no need to consider the other grounds of appeal raised by
    the City.

F.

Disposition and Costs

[66]

For these reasons, the
    appeal is allowed and Charlesforts claim is dismissed. If the parties are
    unable to agree on costs, they may make written submissions on costs of the
    appeal and costs below, not to exceed 5 pages, the appellant City to file
    within 10 days of this decision, and the respondent Charlesfort to file 5 days after.

Released: June 11, 2021 D.D.

A.
    Harvison Young J.A.

I
    agree Doherty J.A.

I
    agree I.V.B. Nordheimer J.A.


