



COURT OF APPEAL FOR ONTARIO

CITATION:
St.
    Mary's Cement Inc. (Canada) v. Clarington (Municipality),

2012 ONCA 884

DATE: 20121217

DOCKET: C53545

Winkler C.J.O., Pepall J.A. and Smith J. (
ad
    hoc
)

BETWEEN

St. Marys Cement Inc. (Canada)

Applicant (Appellant)

and

Municipality of Clarington

Respondent (Respondent)

Harry C. G. Underwood and Brendan Brammall, for the
    appellant

Ian Godfrey and Jon Smithen, for the respondent

Heard: November 20, 2012

On appeal from the judgment of Justice David G. Stinson
    of the Superior Court of Justice, dated March 11, 2011, with reasons reported
    at 2011 ONSC 1533, 81 M.P.L.R. (4th) 275.

Winkler C.J.O.:

A. Overview

[1]

This is an appeal by St. Marys Cement Inc. (Canada) (SMC) from a
    decision on an application for the interpretation of a municipal zoning by-law.
    SMC is proposing to substitute alternative fuel for part of the conventional fossil
    fuel currently used in its cement manufacturing process. The proposed fuel is
    recovered from post-recycling and post-composting materials. The appellant took
    the position that the by-law permits it to continue the manufacturing process
    with the new fuel. The respondent, the Municipality of Clarington
    (Clarington), disagreed.

[2]

The application judge interpreted the by-law in favour of Clarington and
    held that the use of the alternative fuel would be an impermissible change in
    land use.

[3]

The determinative issue in this case is whether SMCs proposed use of
    alternative fuel constitutes a new land use that is not permitted at the site
    in question. I conclude that it does not constitute a new land use. For the
    reasons that follow, I would allow the appeal.

B. Background

[4]

SMC operates a cement manufacturing plant on the north shore of Lake
    Ontario in the Municipality of Clarington, within the Regional Municipality of
    Durham. Claringtons By-Law 84-63 permits the use of the site for a cement
    manufacturing plant as well as any accessory uses that are customarily
    incidental and subordinate to, and exclusively devoted to, the main use.

[5]

SMC is proposing to substitute fuel consisting of post-composting and
    post-recycling materials for some of the conventional fossil fuel that it
    currently uses.

[6]

Clarington opposes SMCs proposal on the basis that it would give rise
    to a new land use; namely, the use of the site as a waste disposal area,
    which is not permitted under the by-law. Clarington therefore maintains that an
    amendment to the by-law is required for SMC to use the new materials. Further,
    Clarington takes the position that the alternative fuels are not customarily
    used in the cement industry in Ontario and therefore do not fall within the
    scope of the accessory use provision of the by-law.

[7]

SMC contends that its proposal does not give rise to a new land use.  In
    the alternative, it argues that use of the alternative fuels is a permissible
    accessory use authorized under the by-law.

[8]

Claringtons objection gave rise to the instant application. The
    application judge issued an order declaring that SMCs proposed use was neither
    a permissible use nor an acceptable accessory use under the by-law.

C. The Zoning By-Law

[9]

The SMC plant comprises approximately 321 hectares and is zoned as an Extractive
    Industrial (M3) Zone.

[10]

Section
    25.1 of the by-law lists the Permitted Uses of land within an M3 zone. Any
    use that is not permitted is prohibited. A cement manufacturing plant is not
    listed as one of the permitted uses in s. 25.1. However the plant is subject to
    a specific site exception in s. 25.4.1, which reads:

Notwithstanding Section
    25.1, those lands zoned M3-1 on the Schedules to this By-law may, in addition
    to the other uses permitted, be used for a cement manufacturing plant and a
    maximum of two (2) residential dwelling units for a manager, caretaker,
    watchmen, or other similar persons employed on the same lot and their families.

[11]

Section
    3.1(a) of the by-law permits Accessory Buildings, Structures and Uses:

Where this By-law
    provides that a lot may be used or a building or structure may be erected or
    used for a purpose, that purpose shall include any accessory building or
    structure or accessory use...

An accessory use is defined
    in s. 2 of the by-law to mean:

[A] use established
    during or after the establishment of the main use which is customarily
    incidental and subordinate to, and exclusively devoted to, the main use of the
    lot, and located on the same lot as such main use.

Use is also defined in s. 2 of the by-law to mean:

[T]he purpose or function
    for which a lot or building or structure, or any combination thereof, is
    designed, arranged, occupied or maintained and when used as a verb, USE shall
    have a corresponding meaning.

D. SMCs Proposal

[12]

SMC
    currently uses petroleum coke (petcoke), a by-product of crude oil refining,
    as fuel for its cement manufacturing process. Most of the petcoke is
    transported to the site by lake freighter, and the rest arrives by truck.  SMC
    has proposed to conduct a time-limited demonstration project in which three
    alternative fuels would be substituted for up to 30 percent of the petcoke
    currently used. According to the proposal, the fuels would be transported
    exclusively by truck and delivered on a just-in-time basis shortly before
    their use. Three alternative fuel types are proposed: post-composting residual
    plastic film from a composting plant, post-recycling paper bio-solids, and
    post-recycling residual materials from a recycled paper plant. It is hoped that
    this project will reduce the plants dependency on non-renewable fossil fuels
    and cut costs. SMC has applied for the necessary approvals to the Ministry of the
    Environment under s. 27 of the
Environmental Protection Act
, R.S.O. 1990,
    c. E. 19 (the 
EPA
). These approvals are pending the outcome of this
    appeal.

[13]

Similar
    alternative fuels have been used by other cement manufacturers in plants in
    other jurisdictions including Quebec and British Columbia, as well as the
    United States and Europe.

[14]

SMC
    operates another cement plant in the Town of St. Marys in south-western
    Ontario. That site has proposed to use one of the same fuels proposed for use
    at the Clarington plant, pending approval by the Ministry of the Environment.
    The Town of St. Marys has a similar by-law but, unlike Clarington, the Town took
    the position that the use of alternative fuel does not constitute a change in
    use, that fuel storage and handling is an accessory use, and that no additional
    planning permission is required.

[15]

Should
    the Clarington pilot project demonstrate that the alternative fuels can be used
    without any significant change in emissions or environmental impact, SMC plans
    to seek regulatory approval for long-term use.

[16]

SMC
    filed expert evidence on the application to the effect that the project will
    not create adverse neighbourhood effects. While the substitution of fuels would
    result in some increased truck traffic, the system of alternative fuel delivery
    is enclosed and, by design, the process would not create additional litter,
    odour or dust nuisances. Instead, the use of post-recycled and post-compost
    materials is proposed to have environmental benefits and its substitution for
    petcoke is expected to reduce the plants greenhouse gas and sulphur emissions.

E. Decision Below

[17]

The
    application judge referred to the correct legal principles in interpreting the
    Clarington by-law. The modern principles of statutory interpretation apply
    equally to the interpretation of a municipal by-law and a statute:
Montréal
    (City) v. 2952-1366 Québec Inc
., 2005 SCC 62, [2005] 3 S.C.R. 141, at para.
    10. Thus, the interpretation of a by-law involves consideration of the text of
    the by-law, the intent of municipal council, and the purpose and scheme of the
    by-law as a whole:
Neighbourhoods of Windfields Limited Partnerships v.
    Death
(2008), 48 M.P.L.R. (4th) 183 (Ont. S.C.), at para. 33, affd 2009
    ONCA 277, leave to appeal to S.C.C. refused [2009] S.C.C.A. No. 253.


[18]

The
    application judge decided that the proposed fuel substitution would bring the
    subject lands outside the expressly permitted use of the land as a cement
    manufacturing plant. At para. 30 of his reasons, he concluded:

While I agree that SMCs use of the site for the manufacturing
    of cement will continue to be a permitted use under the Demonstration Project 
    in my view, through the introduction of a fuel that falls within the
EPA
definition of waste, SMC is introducing a new and additional use on the site,
    because it will be disposing of industrial waste. As such, SMC will be
    operating a waste disposal area on the site.

[19]

The
    application judge also rejected the argument that use of the proposed alternative
    fuel was an accessory use to the main use of the site as a cement manufacturing
    plant, holding, at para. 33, that [t]he evidence does not support the
    conclusion that the proposed use is common or customary within the Municipality
    of Durham or Province of Ontario.

F. Analysis

(i)

The error in the decision below

[20]

In
    my view, the application judge erred in concluding that the use of waste as
    fuel brought the plant within the definition of waste disposal area, and that
    it therefore constituted a new and additional use. In reaching this decision he
    did not apply the express language used in s. 2 of the by-law to define waste
    disposal area.

[21]

I
    agree with the application judge that the proposed fuel falls within the broad
    definition of waste under the
EPA
. Section 2 of the
General Waste
    Management
Regulation, R.R.O. 1990, Reg. 347, sets out an expansive list of
    materials designated as wastes under the
EPA
, including post-recycling
    and post-composting materials regulated by
Recycling and Composting of Municipal
    Waste
Regulation, O. Reg. 101/94. Waste is not defined by the by-law; the
    Official Plans of Clarington and Durham define the term by reference to the EPA
    definition.  Since by-laws are the means by which official plans are
    implemented, the terms of the official plans aid in the contextual
    interpretation of the by-law:
Aon Inc. v. Peterborough (City)
(1999), 1
    M.P.L.R. (3d) 225, at para. 18.

[22]

The
    parties agree that use of the subject lands as a waste disposal area is not
    permitted. The term waste disposal area is defined by s. 2 of the by-law as a
    place where garbage, refuse or domestic or industrial waste is dumped,
    destroyed, or stored in suitable containers. Under the by-law, a waste
    disposal area is neither a generally permitted use nor a use listed under the
    site specific exemption for the subject lands.

[23]

Under
    the proposal, however, SMC would not be dumping, destroying or storing waste. As
    a result, there is no waste disposal area within the meaning of the by-law.
    Accordingly, the sole use continues to be the use expressly permitted by s.
    25.4.1 of the by-law  that is, the operation of a cement manufacturing
    plant.

(ii)

Waste
    disposal area

[24]

The
    application judge concluded that because SMC would be operating a waste
    disposal area on the site it would be introducing a new use to the site. This
    conclusion is based on his finding that the proposed activity falls within the
    definition of waste disposal area. In reaching this conclusion he failed to
    consider, and therefore analyze, the wording of the definition as it appears in
    the by-law. In adopting this approach to the construction of the by-law he fell
    into error.

[25]

The
    site must be used for dumping, destroying or storing waste to fall within
    the definition of a waste disposal area. Clarington contends waste is
    destroyed when it is burned as fuel in a cement kiln.

[26]

SMCs
    use of the alternative fuel would not be considered destruction of waste,
    just as the use of petcoke fuel would not be characterized as the destruction of
    petcoke. In both cases, fuel is being used productively as part of the
    permitted use  the manufacturing of cement.

[27]

Reading
    the definition of waste disposal area in the context of the by-law as a whole,
    and in the context of the official plans, the purpose of the definition is
    clear: the Municipality seeks to regulate land that is used for the purpose of
    removing, containing or managing unwanted materials. Conversely, SMC is
    proposing to use the materials as a resource for an existing and approved
    manufacturing process. The fact that the fuel materials are being diverted from
    the waste stream is not, on the facts of this case, determinative of the land
    use. In this context it is worth noting that petcoke is a by-product of
    petroleum production, and by definition, would itself be a waste product if it
    did not have a productive use. The use of one fuel as opposed to another does
    not alter the fact that the SMC plant is in essence a cement plant and not a
    waste disposal area.

(iii)

Is the proposed use of the land a prohibited additional use?

[28]

Clarington
    submits that even if the proposal does not fall within the definition of waste
    disposal area, the proposed substitution of fuels is a use that is still
    prohibited because the by-law does not permit any kind of waste processing at
    the SMC site. The by-laws should be interpreted in the context of the Official
    Plans for Durham and Clarington. Clarington argues that the provisions in the
    Official Plans show an intention to regulate the land use aspects of waste
    handling. Neither the M3 Zone, nor the M3-1 Exception Zone, explicitly lists
    any kind of waste processing as a permitted use. By contrast, another provision
    in the by-law explicitly allows for a waste transfer station and material
    recovery and recycling facility for solid non-hazardous waste. Therefore, by
    implication, it is Claringtons position that any kind of waste processing activity
    is a new use that would require explicit permission.

[29]

Clarington
    cites the decision of this court in
1121472 Ontario Inc. v. Toronto (City)
(1998), 39 O.R. (3d) 535 (C.A), at para. 15 as authority for the proposition
    that land may have more than one use, and if one of the uses is prohibited, that
    use is not saved because the primary use is permitted. Applying this reasoning
    to the instant circumstance, Clarington asserts that the proposed use of
    alternative fuel constitutes a second use of the subject lands, namely the
    handing of waste, which is not permitted.

[30]

I
    cannot accede to this submission that the use of the alternative fuel by SMC constitutes
    a second use. All the above arguments by Clarington are contingent on a finding
    that the SMC proposal would introduce an additional use of the land. In my view,
    there is no additional use in the present circumstances. This is a complete
    answer to the line of argument advanced by Clarington.

[31]

The
    proposition that partial substitution of alternative fuels constitutes a change
    in use requiring new planning permission was considered and rejected by the
    Court of Appeal of England and Wales in
R. (ex parte Lowther) v. Durham
    County Council

and Lafarge Redland Aggregates Limited
, [2001] EWCA Civ 781
. Although
Lowther
was decided under a different regulatory framework, the interpretive issue in
    that case is analogous to the present circumstance.

[32]

In
Lowther
, the Lafarge company ran an operation in which kilns were used
    to produce dolomite. Petcoke served as the primary fuel. Lafarge proposed to substitute
    a fuel derived from waste solvents for some of the petcoke used and received
    approval from the Environment Agency. The issue was whether use of the alternative
    fuel constituted a material change in use of any buildings or other land
    requiring separate planning permission. The court in
Lowther
noted that
    waste disposal could constitute a separate and distinct use of land.

[33]

In
Lowther
, the court held that the use of alternative fuel was not a
    material change in land use. At para. 45, Phillips M.R. stated:

I have been unable to identify any principle of planning law
    that decrees that, simply because waste is matter which has to be disposed of,
    a person who makes constructive use of the waste for the purpose of some
    activity other than disposal of the waste, but who incidentally disposes of the
    waste at the same time, must be deemed to be making two uses of the land,
    namely waste disposal and the ulterior activity.

[34]

Moreover,
    at para. 54, the Master of the Rolls relied on the principle that, when one is
    dealing with waste, the object of the operation is of particular importance
    when analysing the nature of the activity for planning purposes. At para. 72, Phillips
    M.R. agreed that there was no waste disposal use in Lafarges burning of the
    alternate fuel. He concluded that the burning of fuel is a process of energy
    recovery that is so entirely part of the manufacture of cement for lime that
    it would be wrong to characterise it as a separate use.

[35]

I
    find the reasoning in
Lowther
to be compelling and apposite to the
    instant case. The burning of fuel is inherent in the production of cement, and
    the use of alternative fuel does not amount to a separate use of the land.

[36]

There
    may be instances where land truly has two uses, one of which would render the
    entire enterprise prohibited. Examples of this could include methane recapture
    from a landfill site or energy generation from a garbage incinerator. These
    situations could fall within the restricted definition of waste disposal
    area.  Phillips M.R. averted to this possibility at para. 58 of
Lowther
:

In some circumstances an operation may involve a nice balance
    between the objective of waste disposal and the ultimate objective of the
    operation. In those circumstances it may be correct to hold that the land is
    being subjected to two uses, waste disposal and the ultimate objective.

[37]

Whether
    any particular activity constitutes a second use for planning purposes will
    depend on the facts of the case and specific language of the by-law at issue.

G. Conclusion and Disposition

[38]

My
    conclusion that the by-law does not bar SMCs alternative fuel use is in no way
    an invitation to unregulated waste disposal in the municipality. The by-law is
    still effective against any activity captured by the definition of waste
    disposal area, as it is against any other activity where land is being used
    for an additional use that is not permitted.

[39]

It
    is worth repeating that the present case is a land use case and not an
    environmental matter. Even though the by-law does not restrict the substitution
    of fuels in this case, SMC is still subject to the broad regulatory oversight
    of the Ministry of the Environment. At para. 10 of his reasons, the application
    judge emphasized that the focus of this case is on land use, not environmental
    regulation. Use of the proposed fuels still requires s. 27 approval from the
    Ministry under the
EPA
, which is pending in this case.

[40]

Moreover,
    it is also important to emphasize that this case is about the interpretation of
    a specific by-law. It does not involve an issue as to the powers of the
    municipality.

[41]

Given
    my conclusion that the proposed use of alternative fuel falls within the permitted
    use under the by-law, it is unnecessary to address the second issue of
    accessory use.

[42]

For
    the reasons above, I would allow the appeal, set aside the judgment below and
    the application judges order as to costs.

[43]

An
    order shall issue declaring that use of the proposed alternative fuels at the
    SMC plant in the Municipality of Clarington does not constitute a new land use
    and is permissible for the purposes of Zoning By-Law 84-63.

[44]

SMC
    is entitled to its costs on the application and the appeal. The costs of the
    appeal are fixed at the agreed amount of $25,000, inclusive of disbursements
    and taxes.

Released: WKW   December 17, 2012
W.K. Winkler CJO

I agree S.E. Pepall
    J.A.

I agree Patrick
    Smith J.
(ad hoc)



