



COURT OF APPEAL FOR ONTARIO

CITATION: Poplar Point First Nation Development Corporation
    v. Thunder Bay (City), 2016 ONCA 934

DATE: 20161214

DOCKET: C61761

Rouleau, van Rensburg and Benotto JJ.A.

BETWEEN

Poplar Point First Nation Development Corporation

Applicant (Respondent by Counter-Application)
(Appellant)

and

The Corporation of the City of Thunder Bay

Respondent (Applicant by Counter-Application)
(Respondent)

Rene Larson and Thomas Demetzer, for the appellant

Allan D. McKitrick, for the respondent

Heard: June 22, 2016

On appeal from the order of Justice W. Danial Newton of
    the Superior Court of Justice, dated January 19, 2016, with reasons reported at
    2016 ONSC 457.

van Rensburg J.A.:

A.

Overview

[1]

The central question in this appeal is whether the court has
    jurisdiction to grant relief from a deemed forfeiture occurring under s. 380(6)
    of the
Municipal Act, 2001
, S.O. 2001, c. 25 (the Act).

[2]

The appellant, a not-for-profit corporation supporting Poplar Point
    First Nation Band and its members, was the registered owner of a property that
    was sold by the City of Thunder Bay (the Municipality) in a municipal tax
    sale. After recovering $5,843.11 in tax arrears and additional associated
    costs, the Municipality paid into court the surplus (an amount exceeding
    $76,000).

[3]

Pursuant to s. 380(4) of the Act, the appellant had one year from the
    date of payment of the surplus into court to bring an application for payment
    out of court. Pursuant to s. 380(6), one year after payment in, the monies were
    deemed to be forfeited to the Municipality. The appellant applied to the court
    three weeks after the one year deadline. In response to the appellants
    application, the Municipality brought a counter-application, seeking payment
    out of court of the monies pursuant to s. 380(7) of the Act.

[4]

The application judge, after setting out the chronology of what had
    occurred, and the steps the Municipality had taken, all in accordance with the
    Act, considered whether to grant the appellant relief from forfeiture under s.
    98 of the
Courts of Justice Act
, R.S.O. 1990, c. C.43 or under s. 5(1)
    of the
Fines and Forfeitures Act
, R.S.O. 1990, c. F.13.
[1]
After considering the contradictory case authority, the application judge
    dismissed the appellants application on the basis that he was not empowered to
    grant relief from forfeiture under either statute. He said he would have
    granted relief from forfeiture, if he had the jurisdiction to do so. He granted
    the Municipalitys application for payment out of court. Neither party sought
    costs, and none were awarded.

[5]

The appellant appeals, arguing that the application judge erred in
    concluding that he did not have jurisdiction to grant relief from forfeiture.
    The respondent says that the application judge was correct on this point, and
    in any event that relief from forfeiture is not warranted on the evidence in
    this case.

[6]

For the reasons that follow, I would allow the appeal.

[7]

Briefly, I conclude that there is jurisdiction in the Superior Court
    under s. 98 of the
Courts of Justice Act
in proceedings under s. 380
    of the Act to grant relief from the deemed forfeiture arising under s. 380(6).
    Since the Act does not expressly, or by necessary implication, exclude the
    courts general power to grant relief from forfeiture in civil proceedings, and
    the forfeiture is not imposed as a penalty for breach of any requirement of the
    statute, such relief may be available. In this case, to grant relief would not
    undermine the purpose of the Act, or interfere with the finality and certainty
    of the municipal tax sale scheme. Resort to s. 5(1) of the
Fines and
    Forfeitures Act
is unnecessary and it is doubtful that this statute would
    apply. Finally, consistent with the application judges assessment of the facts
    and the equities, I conclude that relief from forfeiture is warranted in this
    case.

B.

Relevant Facts and Statutory Provisions

[8]

The appellant was the registered owner of a property located on County Blvd.
    in Thunder Bay. This was one of three properties in respect of which the
    appellant had failed to pay municipal taxes. As of December 31, 2011, $5,843.11
    was owing on the County Blvd. property.

[9]

The Municipality took the necessary steps under Part XI of the Act. This
    part provides for the rights of a municipality to sell a taxpayers land for
    the recovery of property tax arrears and specifies the procedures to be
    followed.

[10]

On
    November 28, 2012, the Municipality registered a tax arrears certificate
    against title to the property. The certificate stated that the land would be
    sold if the cancellation price (tax arrears, interest, reasonable costs, etc.)
    was not paid within one year following registration of the certificate. Notice
    of registration of the tax arrears certificate was sent to the appellant on
    January 23, 2013. The notice was sent to the appellant at two addresses  the
    County Blvd. address and an address on Simpson St. (a property that was also
    the subject of a municipal tax sale).

[11]

On
    September 19, 2013, a final notice was sent to the appellant, warning that the
    land would be advertised for public sale failing payment of the cancellation
    price within the prescribed time, in accordance with s. 379 of the Act.

[12]

The
    appellant did not challenge or respond in any way to the tax sale proceedings.
    The property was offered by the Municipality for sale by public tender and sold
    on June 26, 2014. The sale proceeds exceeded the cancellation price by $76,264.60.

[13]

Pursuant
    to s. 380(1) of the Act, after payment of the cancellation price, the remaining
    proceeds belonged to the appellant, as there was no other person or party
    having an interest in the land.

[14]

The
    treasurer of the Municipality was required to pay into court the proceeds of
    sale minus the cancellation price, together with a statement in the prescribed
    form outlining the facts under which the payment into court [was] made: s.
    380(2). This occurred on September 18, 2014. Within 60 days after making a
    payment into court, the treasurer was required to send a copy of the statement
    to the Public Guardian and Trustee and to the appellant.
[2]
The Municipalitys representative deposed that this had occurred.

[15]

Pursuant
    to s. 380(4), the appellant (and any other person with an interest in the land
    claiming entitlement to the proceeds) had one year from the date of payment
    into court to apply for payment out. In this case there was no one other than
    the appellant with an interest in the land.

[16]

The
    balance of s. 380 provides for the court to determine the entitlements to
    receive payment out of the proceeds of sale, including deemed forfeiture to the
    municipality where no one applies for payment out (s. 380(6)), where there is a
    surplus after the determination of the entitlements of any applicants (s.
    380(6.1)) or where the surplus is $250 or less (s. 380.0.1).

[17]

For
    ease of reference I set out here section 380 in its entirety:

(1) The proceeds of a sale under section 379 shall,

(a) firstly, be applied to pay the cancellation
    price;

(b) secondly, be paid to all persons, other than
    the owner, having an interest in the land according to their priority at law;
    and

(c) thirdly, be paid to the person who immediately
    before the registration of the tax deed was the owner of the land.
[3]


(2) The treasurer shall pay the proceeds of sale,
    minus the cancellation price, into the Superior Court of Justice together with
    a statement in the prescribed form outlining the facts under which the payment
    into court is made.

(3) Within 60 days after making a payment into court
    under subsection (2), the treasurer shall send a copy of the statement to the
    Public Guardian and Trustee and to the persons to whom the treasurer sent
    notice under subsection 379(1).

(4) Any person claiming entitlement under clause (1)
    (b) or (c) may apply to the Superior Court of Justice within one year of the
    payment into court under subsection (2) for payment out of court of the amount
    to which the person is entitled.

(5) The court shall, after one year has passed from
    the day the payment was made into court, determine all of the entitlements to
    receive payments out of the proceeds of sale.

(6) If no person makes an application under
    subsection (4) within the one-year period referred to in that subsection, the
    amount paid into court under subsection (2) shall be deemed to be forfeited,

(a) to the Public Guardian and Trustee if, at the
    time of the registration of the tax arrears certificate, the land was vested in
    the Crown because of an escheat or forfeiture under the
Business
    Corporations Act
or the
Corporations Act
; or

(b) in any other case, to the municipality.

(6.1) If, after the entitlements of all applicants
    under subsection (4) to receive payment out of court have been determined,
    there remains any amount paid into court from the proceeds of sale, the
    remaining amount is deemed to be forfeited,

(a) to the Public Guardian and Trustee in the
    circumstances described in clause (6) (a);

(b) to the municipality in any other case.

(7) The Public Guardian and Trustee or the
    municipality, as the case may be, may apply to the Superior Court of Justice
    for payment out of court of the amount that was paid in.

(8) In the absence of evidence to the contrary, the
    Superior Court of Justice may rely on the statement of the Treasurer under
    subsection (2) in determining whether the amount paid into court under that
    subsection is forfeited to the Public Guardian and Trustee or the municipality
    under subsection (6).

(9) Money received by a municipality under subsection
    (6) shall be paid into the general funds of the municipality.

[18]

After
    the Municipality paid the surplus monies into court, the appellant did not
    respond or take any steps in relation to the arrears during the prescribed one
    year period to apply to obtain the funds in court.

[19]

The
    appellants explanation for its delay was that, while it was aware that there
    was a one year deadline, it did not receive the notice of payment into court which
    had been sent to the assessed (and sold) property, and that, because there were
    other properties subject to municipal tax sale proceedings, it misjudged the
    point at which the clock began running for the one year period. The appellant
    thought the Municipality would be making decisions about the three properties
    at the same time, and it believed the deadline to apply to the court was in
    October 2015. After a board member questioned when the deadline was, and began
    to look into the issue, the appellant discovered the one year deadline had
    passed. The appellant retained counsel and brought an application promptly on
    notice to the Municipality.
[4]

[20]

The
    appellants application was dated October 7, 2015, at a time when the
    Municipality had not yet applied for payment out of court of the surplus funds.
    The application claimed payment out of court. The Municipalitys
    counter-application for payment out was made on November 12, 2015.

[21]

In
    its application the appellant asserted that it was entitled to relief from
    forfeiture under s. 98 of the
Courts of Justice Act
or under s. 5(1)
    of the
Fines and Forfeitures Act.
Section 98 of the
Courts of
    Justice Act
provides:

A court may grant relief against penalties and
    forfeitures, on such terms as to compensation or otherwise as are considered
    just.

[22]

Section
    5(1) of the
Fines and Forfeitures Act
provides:

Where a fine is imposed by or under the authority of
    an Act of the Legislature, the court or judge having cognizance of the
    proceedings for the recovery thereof may at any time after the commencement
    thereof remit in whole or in part such fine, whether the money is in whole or
    in part payable to the Crown or to some person other than the Crown and whether
    it is recoverable by indictment, information, summary process, action or
    otherwise.

[23]

Section
    5(2) provides that a provincial judge or justice of the peace does not have the
    authority mentioned in subsection (1). Fine, for the purpose of the statute,
    is defined in s. 1 to include all pecuniary fines, penalties and forfeitures.

C.

Decision of the Application Judge

[24]

The
    application judge set out the relevant statutory scheme and facts. The central
    issue he had to decide was whether he had jurisdiction to grant relief from
    forfeiture.

[25]

The
    application judge identified a number of cases in which relief from forfeiture
    under municipal statutes was granted or was considered available under the
Courts
    of Justice Act: Niagara Falls (City) v. Diodati
, 2011 ONSC 2180, 106 O.R.
    (3d) 154 (Ont. S.C.J.);
Halton Hills (Town) v. Row Estate
, [1993] O.J.
    No. 1222 (Gen. Div.); and
Northern Bruce Peninsula (Municipality) v. Kerry
,
    2015 ONSC 7361, 45 M.P.L.R. (5th) 316 (Sup. Ct.).

[26]

The
    application judge also noted decisions to the contrary that refused to
    recognize the courts authority to relieve from a forfeiture arising in the
    municipal context:
St. Louis v. Thunder Bay (City)
(2005), 16 M.P.L.R.
    (4th) 233 (Ont. Sup. Ct.); and
Household Realty Corp. v. Chatham (City)
(1988), 42 M.P.L.R. 215 (Ont. Dist. Ct.).



[27]

The
    application judge accepted the authority of a line of cases (that will be
    discussed later in these reasons) that the equitable relief provided for under
    s. 98 of the
Courts of Justice Act
could not apply to relieve against
    statutory penalties and forfeitures. With respect to the
Fines and
    Forfeitures Act
, the application judge stated that he did not read that statute
    as applying to municipal tax sales.

[28]

Referring
    to authorities dealing with challenges to tax sale proceedings (
Zeitel v.
    Ellscheid
, [1994] 2 S.C.R. 142 and
Elliott v. Toronto (City)
(1999),
    43 O.R. (3d) 392 (C.A.)), the application judge concluded that the tax sale
    regime is a carefully crafted legislative scheme, and that, while denying a
    remedy deprives the former owner of the surplus proceeds and results in a
    windfall for the municipality, it creates certainty and places the obligation
    to act diligently on the delinquent owner.

[29]

The
    application judge held that, if he had authority to grant relief from
    forfeiture, he would have done so in this case. He noted that the appellants
    conduct was inadvertent, although negligent, that a three-week delay would not
    unduly prejudice the Municipality and the disparity between the lateness of the
    application and the value of the property forfeited.

D.

Positions of the Parties

[30]

The
    appellant says that the application judge erred in law in concluding that he
    did not have jurisdiction to grant relief from forfeiture. The appellant argues
    that relief from the forfeiture occasioned by s. 380 of the Act is available
    under either or both of the
Courts of Justice Act
and the
Fines
    and Forfeitures Act
. Further, since the application judge would have
    granted relief from forfeiture in the circumstances, the appellant submits that
    the appeal should be allowed and an order substituted granting relief from
    forfeiture and payment out of court to the appellant.

[31]

The
    respondent says that there was no error in the decision of the application
    judge in finding that there was no jurisdiction to grant relief from a forfeiture
    arising under a statute. Further, the respondent contends that to permit relief
    from forfeiture would be inconsistent with the municipal tax scheme which is a
    complete code, and would undermine its policies and purpose. Finally, the
    respondent contends that, if the court has the power to grant relief from the
    forfeiture provided by s. 380 of the Act, relief should not be ordered in this
    case, considering the conduct of the appellant in relation to the sale and its
    weak explanation for failing to meet the one year deadline to claim payment out
    of court.

E.

Analysis

[32]

As
    I have indicated, I would allow the appeal. In my view, there is nothing in the
    scheme outlined in s. 380 of the Act that would preclude this court from
    granting relief from forfeiture under s. 98 of the
Courts of Justice Act
where
    the circumstances warrant.

[33]

I
    will begin by considering the broad and general language of s. 98 and its
    placement in the
Courts of Justice Act.
I will then address in turn
    the two impediments to the exercise of this jurisdiction identified by the
    application judge. The first is what he accepted as a general proposition that
    the court does not have the authority under s. 98 to grant relief against
    statutory penalties and forfeitures. I will explain why I conclude that the
    prohibition against such relief is properly limited to circumstances where the
    forfeiture is in the nature of a penalty for breach of the statute; or where the
    statute expressly or by necessary implication precludes equitable relief from
    forfeiture. This will take me to the second impediment identified by the
    application judge: that relief from forfeiture would be contrary to the
    statutory scheme. As I will explain, although s. 380 is part of a
    statutory scheme for municipal tax sales, recognizing the courts ability to
    relieve from forfeiture in an application for payment out of the surplus funds
    would not undermine the certainty or finality of that scheme.

[34]

I
    will briefly discuss the
Fines and Forfeitures Act
and why in my view
    relief under that statute from the forfeiture that occurred here is both not
    contemplated thereunder and unnecessary.

[35]

Finally,
    I will consider the merits respecting relief from forfeiture in this case and explain
    why I would accept the application judges assessment that relief from
    forfeiture, on the facts of this case, is warranted.

(1)

Relief from Forfeiture under the
Courts of Justice Act

[36]

The
Courts of Justice Act
provides for what appears to be broad and
    unlimited authority to the court to grant relief from forfeiture. Section 98 is
    a general provision that states:

A court may grant relief against penalties and
    forfeitures, on such terms as to compensation or otherwise as are considered
    just.

[37]

Section
    98 is found in Part VII of the
Courts of Justice Act
. Section 95(1)
    provides that Part VII applies to civil proceedings in courts in Ontario.
[5]
Civil proceedings are not only proceedings commenced by statement of claim,
    but include proceedings commenced by application. In this case, s. 380 of the
    Act requires an application to the court before money paid into court will be
    released, whether by the party entitled to the surplus under s. 380(4), or
    by the municipality after a deemed forfeiture under s. 380(7). The context of
    the appellants claim for relief from forfeiture is within a civil proceeding
    commenced by way of application under s. 380 of the Act.

[38]

The
    origin of the courts ability to grant relief from forfeitures and penalties was
    in the equitable jurisdiction of the Chancery Courts. Its scope was limited,
    available only for penalty clauses.  It was also restricted to contracts
    concerning the transfer of proprietary or possessory rights: J. McGee,
Snells
    Equity
3rd ed. (London: Sweet & Maxwell 2010), at para. 13-015.

[39]

With
    the fusion of the courts of equity and common law (commencing in 1873 with the
Administration
    of Justice Act
, S.O. 1873, c. 8 and completed in 1881 with the
Ontario
    Judicature Act, 1881
, S.O. 1881, c. 5) the ability to grant relief from
    forfeiture was no longer restricted to the Chancery Courts. Section 16 of the
Ontario
    Judicature Act, 1881
provided that in every civil cause or matter
    commenced in the High Court of Justice where equitable relief was claimed, the
    court was empowered to grant such and the same relief as ought to have been
    given by the Court of Chancery before the passing of this Act."

[40]

Specific
    statutory authority for granting relief from penalties and forfeitures appeared
    first in the
Ontario Judicature Act,
following an amendment to that
    Act in 1886: S.O. 1886, c. 16, s. 38(b).  Relief from penalties and forfeitures
    was included as a rule of law for every civil cause or matter commenced in
    the High Court of Justice. This new statutory power was quickly interpreted as
    having expanded the circumstances in which relief from forfeiture could be
    granted. See, for example,
Townsend v. Toronto, Hamilton and Buffalo Railway
    Company
(1898), 28 O.R. 195, where Meredith C.J. noted that it was
    unnecessary to consider what, if any, limit was to be placed upon the wide
    general language of [the] provision (at p. 199).

[41]

The
    statutory provision was re-enacted in the various
Judicature Acts
,
    until the last was repealed and replaced by the
Courts of Justice Act, 1984
,
    S.O. 1984, c. 11, where it was placed under Part VII (originally as s. 111, and
    now s. 98).

[42]

The
    broad wording of s. 98 and its application to civil proceedings, suggest,
    without more, that it should be available in this case, in the context of an
    application to obtain payment out of court of monies deemed to be forfeited to
    the Municipality.

[43]

I
    turn to consider the two impediments that the application judge considered
    insurmountable in applying s. 98 in this case: first that, as a general
    principle, s. 98 would not be available to relieve from a statutory penalty or
    forfeiture, and second that relief from forfeiture is precluded in the absence
    of a specific discretion provided by the legislature as part of the carefully
    crafted legislative scheme for municipal tax sales.

(a)

Penalty or Forfeiture Imposed by Statute

[44]

The
    application judge referred to two lines of cases as authority that relief from
    forfeiture is not available to relieve from a penalty or forfeiture imposed by
    statute. The first is what I refer to as the
McBride
line of cases, which
    would preclude such relief as improperly interfering with the legislative
    function. However, this line of cases has been overtaken by a modern approach
    that rejects a categorical exclusion of s. 98 in the case of any forfeiture arising
    under a statutory scheme, and instead considers whether as a matter of
    statutory interpretation, s. 98 may apply.

[45]

The
    second line of cases involves true penalties for breach of a statute, where it
    is clear that civil relief from forfeiture should not in any event be
    available.

(i)

The
McBride
line of cases

[46]

At
    issue in
McBride v. Comfort Living Housing Co-operative Inc.
(1992), 7
    O.R. (3d) 394 (C.A.) was the termination of rights of occupancy in a
    co-operative housing building. The Court of Appeal, resolving a dispute that
    had waged in the lower courts, decided that the residential tenancy provisions
    of the
Landlord and Tenant Act
, R.S.O. 1990, c. L.7 did not apply.
    These included specific authority to grant relief against forfeiture. Finlayson
    J.A. referred to s. 98 of the
Courts of Justice Act
as a general
    provision giving the courts power to relieve against all penalties and
    forfeitures. He commented that he [did] not rule out the equitable
    jurisdiction of the court to grant relief against forfeiture apart from the
    provisions of the [residential tenancy legislation] (at p. 402), but noted
    that equitable relief from forfeiture had not been relied on. He went on to
    comment that s. 98 apparently does not empower a court to relieve against
    penalties and forfeitures imposed by statute (at p. 402), citing
Webb v.
    Box
(1909), 14 O.W.R. 802 (Div. Ct.), leave to appeal refd (1910), 15
    O.W.R. 205 (C.A.).

[47]

Both
    comments by the court are
obiter.
Relief from forfeiture under the
Courts
    of Justice Act
was not requested by the moving party, and the forfeiture
    in question arose under an occupancy agreement, not as the result of the
    failure to comply with a statutory requirement. Perhaps Finlayson J.A. was
    attempting to define the outer limits for such relief  that it would not
    apparently apply to a penalty or forfeiture imposed by statute. What he
    meant by a forfeiture imposed by statute was however not entirely clear.

[48]

In
    fact, the case referred to by Finlayson J.A.,
Webb v. Box
, involved a
    true breach of a statutory provision (illegal distress by a landlord), and its prescribed
    consequence (payment to the tenant of double the value of goods). The landlord
    claimed relief from forfeiture under the
Judicature Act
to reduce the
    payment to the tenant to the actual value of the goods seized. In refusing such
    relief at first instance, Chancellor Boyd commented that to do so would be to
    repeal by adjudication what the legislature has distinctly provided for, not so
    much in the way of penalty as to afford protection to tenants against
    unwarrantable seizure and sales of property to the great detriment of the
    tenants rights (at p. 804). Leave to appeal to this court was refused, with Meredith
    J.A. observing that to take away the double value damages would repeal the
    statute (at p. 208). Citing
Keating v. Sparrow
(1810), 1 Ball & B.
    367, he went on to query, apart from these considerations, what power has the
    Court to relieve from even a penalty imposed by statute, except under R.S.O.
    1897, ch. 108 [a predecessor of s. 5(1) of the
Fines and Forfeitures Act
]?

[49]

The
    main reason for the courts refusal of relief in
Webb v. Box
was that
    the statutory scheme specifically provided for the payment of double value of the
    goods as the consequence of unlawful distress. Even if the requirement to pay
    double value of the goods seized were characterized as a penalty then the only
    power to relieve from such a penalty would be under the equivalent to the
Fines
    and Forfeitures Act.
Again, the comment about the limitations on equitable
    relief from forfeiture was
obiter
to the courts decision.

[50]

The
    origin of the statement that the court has no power to relieve against
    statutory penalties and forfeitures is the 1810 decision of the Irish High
    Court of Chancery in
Keating v. Sparrow.

[51]

Keating
    v. Sparrow
however was decided when civil relief from forfeiture was
    limited to circumstances where the forfeiture was designed to secure the
    payment of money. More importantly, at the time of the decision there was no
    statutory provision for relief from forfeiture. The court was unwilling to
    apply equitable jurisdiction to override the legislative will expressed in a
    statute. The equitable jurisdiction to relieve against penalties and
    forfeitures has since been both expanded and legislated.

[52]

Many
    cases took the approach referred to in
obiter
in
McBride
. An
    example is
Johnson v. Dominion of Canada Guarantee and Accident Insurance
    Co.
(1908), 12 O.W.R. 980 (C.A.), where this court held that relief from
    forfeiture under the
Judicature Act
was not available to relieve from
    the requirement of providing timely proof of loss under an insurance contract.
    The court was confronted with the sympathetic case of a claim made out of time
    for a survivors benefit through no real fault of the claimant. In overturning
    the decision of Chancellor Boyd advocating a liberal interpretation of the
    courts power under the
Judicature Act
and granting relief from
    forfeiture, this court noted that the legislature had gone to great pains to
    regulate contracts of insurance (at p. 982).  Meredith J.A. stated that it
    would be legislation, not adjudication to grant relief from forfeiture other
    than as provided under the insurance statute itself. By 1994 however, the
    Supreme Court of Canada rejected an argument based on
Johnson
and
    stated that the case  was  no longer good law, as the court wrongly treated the
    insurance legislation at issue as a statutory code:
Saskatchewan River
    Bungalows Ltd. v. Maritime Life Assurance Co.
, [1994] 2 S.C.R. 490, at 505-506.

[53]

The
    evolution in the courts approach is reflected in
State Farm Mutual
    Automobile Insurance Co. v. Ontario (Minister of Finance)
(2001), 53 O.R.
    (3d) 436. In that case an insured failed to provide a proof of loss within the 90
    days prescribed by a regulation under the
Insurance Act
, R.S.O. 1990,
    c. I.8. The application judge denied relief from forfeiture under s. 98 of the
Courts
    of Justice Act
,

stating that it was questionable whether the
    court has any jurisdiction to relieve against a penalty or forfeiture that is
    decreed by statute (at para. 38), referring to authorities including
McBride
.
    He concluded that even assuming there is some residual jurisdiction in the
    court to relieve against penalties and forfeitures imposed by statute (at
    para. 40), he could not see how the jurisdiction could arise in a situation
    where the legislature has occupied the field and stipulated for relief to be
    given in certain defined conditions; conditions the party seeking relief had
    failed to meet (at paras. 37 and 32)

[54]

On
    appeal to this court (reported as
Kingsway General Insurance Co. v. West
    Wawanosh Insurance Co.
(2002), 58 O.R. (3d) 251 (C.A.)), Sharpe J.A.
    concluded that the court should not exercise any general discretion it might
    have under s. 98 to grant relief from forfeiture, because the regulation in
    question provides a scheme that contemplates extensions of the 90-day notice
    period in certain circumstances, and that, by implication, any general
    discretion a court might have to grant extensions in other circumstances is
    excluded (at para. 13). Sharpe J.A. approached the issue not through a blanket
    prohibition against the use of s. 98 relief from forfeiture in instances of statutory
    forfeitures, but by considering the statutory scheme itself. The focus of the
    analysis was on whether by implication any general discretion a court might
    haveis excluded. In that case, the provision for relief from forfeiture
    contained in the regulation was considered to be exhaustive, and therefore no
    further relief was available under s. 98.


[55]

The
    question is not whether there is a statutory scheme, but whether the language
    and scheme of the statute would exclude relief from forfeiture under s. 98.
    This is now firmly the approach taken in the case of forfeitures arising under
    insurance contracts governed by the
Insurance Act.
Relief from
    forfeiture under s. 98 is available where the insureds breach constitutes
    imperfect compliance with a policy term and the specific relief from forfeiture
    provisions under the
Insurance Act
do not apply:
Kozel v. Personal
    Insurance Co.
, 2014 ONCA 130, 119 O.R. (3d) 55. As LaForme J.A. noted in
Kozel
at para. 58:

in the absence of clear legislative intent indicating that s.
    129 of the
Insurance Act
applies to the exclusion of s. 98 of the
CJA
,
    I would hold that the latter provision is available as an avenue of relief for
    contracts governed by the
Insurance Act
.

[56]

See
    also
Lavoie v. T.A. McGill Mortgage Services Inc
., 2014 ONCA 257, 119
    O.R. (3d) 651, where this court upheld the ruling in
Kozel
that relief
    against forfeiture under s. 98 may be available, however the facts in
Lavoie
were not amenable to such relief.

[57]

In
    my view, this is the approach that should govern in the present case. Section
    98 is a statutory provision expressed in broad and general terms to be
    available in civil proceedings. Where a forfeiture occurs under a statutory
    scheme, the scheme should be examined in order to determine whether by
    necessary implication relief from forfeiture under s. 98 would be precluded.

(ii)

Cases involving Penalties for Breach of a Statute

[58]

The
    application judge also referred to a second line of cases in concluding that the
    court does not have the power to grant relief against statutory penalties and
    forfeitures. These cases involved, what I would refer to as true statutory
    penalties imposed for breach of a statutory provision. While, this is an
    appropriate limit on s. 98 relief from forfeiture, in my view, none of these
    cases would preclude reliance on s. 98 in the present case.

[59]

In
R. v. Canadian Northern Railway Co.
(1922), 64 S.C.R. 264; on appeal
    to the Privy Council, [1923] 3 W.W.R. 547, the court held relief from
    forfeiture under the Alberta
Judicature Act
was not available to
    relieve from penalties for failure to pay taxes under federal taxation statutes
    (although the court concluded that the railway was not subject to taxation). In
Canada (Attorney General) v. Wheeler
, [1944] O.R. 138 (H.C.J.), the
    court concluded that relief from forfeiture under the
Judicature Act
would
    not be available to relieve against a forfeiture of share warrants imported
    into Canada in contravention of orders and regulations under the
War
    Measures Act.


[60]

The
    application judge also referred to
Mullen v. Flin Flon (City)
, 2000
    MBCA 104, 193 D.L.R. (4th) 300, leave to appeal refd, 269 W.A.C. 160 (note). In
    that case, a taxpayer claimed relief from forfeiture of its property after a
    completed municipal tax sale, where the taxpayer had not received actual notice
    of the sale and the property was sold to municipal councillors at what was
    described as a bargain basement price. The court purported to follow the
    authority of the
Canadian Northern
and
Wheeler
cases to
    refuse relief.
[6]

[61]

None
    of these cases are determinative of whether relief from forfeiture should be
    available in the present case. First, both the
Canadian Northern
and
Wheeler
cases involved a forfeiture imposed as a consequence of the breach of a
    statute. As a matter of statutory interpretation, granting relief from
    forfeiture would amount to rewriting or repealing the statute, revoking the very
    consequence for breach of the statute that the legislature prescribed. Further,
    relief from forfeiture under the
Judicature Act
(and now the
Courts
    of Justice Act
) would not be available because the ability to grant such
    relief from forfeitures and penalties is in the context of civil proceedings,
    and not criminal or statutory offences.

[62]

As
    for
Flin Flon
, it is only by regarding the sale of a taxpayers property
    in a tax sale as a forfeiture occurring as a penalty for failure to pay taxes
    that the analysis under the
Canadian Northern
and
Wheeler
cases
    would apply. Respectfully, the relief from forfeiture issue in that case could
    have been decided, not by referring to cases involving true statutory
    penalties, but by finding that relief from forfeiture would be contrary to the
    carefully crafted legislative scheme for tax sales, as the Supreme Court did
    in
Zeitel v. Ellscheid,
(discussed below at para. 66). The result
    would have been the same  it would be inconsistent with the finality and
    certainty of the scheme to permit an attack on a tax deed after a tax sale had
    taken place.

[63]

I
    do not see this line of cases therefore as an impediment to the relief sought
    in the present case. The forfeiture of the surplus to the municipality under s.
    380 is not a penalty for the taxpayers failure to pay taxes or breach of any
    other obligation, nor does it occur as the release of security for an
    obligation owed to the municipality. The municipality has already been made
    whole, having received the cancellation price consisting of the tax arrears,
    interest and its costs. The forfeiture does not occur in order to punish the
    property owner, but to ensure that the money, which belongs to the owner or
    other claimants at the time it is paid into court, does not sit in court
    unclaimed, in perpetuity. The forfeiture brings finality to the process where
    funds might otherwise remain in court and unclaimed. The forfeiture arises from
    the failure to meet a time limit, and not as the consequence of any breach of a
    statutory obligation.

[64]

As
    such, I would find that there is no absolute bar to granting relief from
    forfeiture in relation to the forfeiture in this case simply because it occurs
    in the context of a statutory scheme. The issue is one of statutory interpretation.
    The question is whether relief from forfeiture is expressly or implicitly
    precluded. I turn to this question now.

(b)

Would s. 380, in the Context of the
Municipal Act, 2001
, Preclude
    Relief from Forfeiture under s. 98 of the
Courts of Justice Act
?

[65]

The
    application judge accepted the argument that relief from forfeiture would not
    be available under s. 98 because the municipal tax sale statutory scheme is a carefully
    crafted legislative scheme. He referred to certain cases where the courts
    rejected challenges to the tax sale process and efforts to redeem the subject
    property by owners and mortgagees.

[66]

In
Zeitel v. Ellscheid
, the Supreme Court of Canada held that a tax sale
    under the
Municipal Tax Sales Act, 1984
(the predecessor to Part XI of
    the
Municipal Act, 2001
) was immune from attack by a party claiming an
    interest in the property. The court held, at p. 152, that the statute exists
    to allow property which is the subject of tax arrears to be sold by a
    municipality and that purchasers must be assured of the integrity of title so
    with some exceptions when a tax deed is issued it is final. The court held
    that as a matter of statutory interpretation any attack on the tax deed after
    the tax sale had taken place was not permitted, as the statute provided for a carefully
    crafted legislative scheme (at p. 152). This characterization of the statutory
    provisions respecting municipal tax sales has been adopted in numerous
    subsequent cases, including
Elliott v. Toronto (City)
.

[67]

In
Elliott,
the owners and mortgagee of a property subject to a municipal
    tax sale challenged a sale before the registration of a tax deed, in part on
    the basis of lack of actual notice. This court held that there was no right to
    redeem the property by paying the outstanding taxes after the prescribed one
    year period had expired unless the tax sale proceedings were voidable under the
    Act. The court refused to read in additional notice requirements as interfering
    with the carefully crafted legislative scheme and expressed concern about
    impairing the integrity of the tax sale process (at p. 407-408).

[68]

The
    policy reasons for restricting the circumstances in which municipal tax sales might
    be challenged (certainty, finality and the integrity of the sale process,
    including interests of third parties) are not engaged when dealing with the
    surplus under s. 380.
[7]
The taxpayer is not challenging the sale process, but asserting a claim to the surplus.
    Section 380 operates after the municipality has recovered its tax arrears and
    its costs, at a time when its claim against the property is spent, and without
    affecting the rights or interests of third party purchasers. At issue under s.
    380 is entitlement to the surplus, not the property itself. As such, there is
    no prospect of interfering with or undermining the municipal tax sale process.

[69]

I
    read the Acts provisions as consistent with, and not precluding, the ability
    of the court to relieve from forfeiture in an appropriate case. First, the
    statute states specifically to whom the sale proceeds shall be paid. After
    payment of the cancellation price, payment is to persons with a prior interest
    in the land, and then to the owner: s. 380(1).  Second, the statute requires
    the municipality to pay the surplus into court: s. 380(2). Arguably, if the
    intent were to provide for an absolute forfeiture to a municipality on default
    of a claim to the funds, there would be no reason to require the involvement of
    the court, until there is a dispute about priorities.

[70]

Third,
    the statute does not provide that the unclaimed surplus belongs to the municipality,
    but deems a forfeiture in three circumstances: (1) if the surplus is $250 or
    less; (2) if those entitled to the money have not applied for payment out
    within a year; or (3) if there is any surplus left after the payment out to a
    claimant (presumably because the owner has not made a claim). At the time the
    surplus was paid into court in this case, it belonged to the appellant, since
    there was no other party with an interest in the land, and it was only at the
    one year period without an application by the claimant, that it was deemed
    forfeited to the municipality. The municipality has no right to the funds
    absent a forfeiture, and in every case where the surplus is forfeited to the
    municipality, the municipality receives a windfall.

[71]

Fourth,
    and most importantly, the statute requires an application to the court for payment
    out, whether it is by the taxpayer or by the municipality. In this way, the
    court retains jurisdiction over the process, and the parties of necessity are
    engaged in a civil proceeding. The requirements for payment into the Superior
    Court of Justice, and for an application in all cases for payment out
    anticipate that the court will have at its disposal all authority available to
    it under the
Courts of Justice Act
, including under s. 98.

[72]

For
    these reasons, I conclude that the courts general authority to relieve against
    forfeitures under s. 98 would be available in the context of a deemed
    forfeiture under s. 380, in circumstances such as are present in this case.
    There is no clear legislative intent to exclude relief from forfeiture, nor is
    the recognition of such authority inconsistent with the statutory scheme.

(2)

Relief under the
Fines and Forfeitures Act

[73]

As
    a result of my conclusion that a court considering an application in respect of
    a surplus under s. 380 would have jurisdiction to grant relief from forfeiture
    under s. 98 of the
Courts of Justice Act,
it is unnecessary to
    consider in any detail the alternative claim that relief should be granted
    under s. 5 of the
Fines and Forfeitures Ac
t, which provides the
    Superior Court the authority to remit in whole or in part a fine (defined
    to include a forfeiture).

[74]

In
    my view, however, a fair reading of that statute suggests that it applies in
    the context of fines, penalties and forfeitures that are imposed for violations
    of Ontario statutes. And as such, it has no application to the facts of this
    case.

[75]

Recall
    that s. 5(1) deals with the remission of fines (defined to include all
    pecuniary fines, penalties and forfeitures):

5. (1) Where a fine is imposed by or under the
    authority of an Act of the Legislature, the court or judge having cognizance of
    the proceedings for the recovery thereof may at any time after the commencement
    thereof remit in whole or in part such fine, whether the money is in whole or
    in part payable to the Crown or to some person other than the Crown and whether
    it is recoverable by indictment, information, summary process, action or
    otherwise.

[76]

Section
    2 of the
Fines and Forfeitures Act
provides that where a fine has
    been imposed
for a contravention
of an Act of the Legislature or a
    regulation made thereunder and no other provision is made for its recovery, it
    is recoverable with costs by a civil action at the suit of the Crown (emphasis
    added). Section 3 provides that, where no other mode of recovery is prescribed,
    a fine may be recovered upon indictment in the Superior Court of Justice. Section
    4 also refers to fines imposed for a
contravention
of any statute
    and directs their payment, except so far as other provision is made in respect
    thereto, to the Treasurer of Ontario (emphasis added).

[77]

Reading
    these provisions together suggests that the ability of the court to remit a
    fine, penalty or forfeiture is in the context of proceedings for their recovery
    where they have been imposed for contraventions of a statute (and where no
    other provision is made in respect thereof). In this case, the deemed
    forfeiture arises from the expiry of a time limit under s. 380 of the Act, and
    is not a penalty imposed for a contravention of the Act. In any event, as I
    have found that relief from forfeiture here would be available under s. 98 of
    the
Courts of Justice Act,
it is unnecessary to offer any definitive
    views about the scope and availability of relief under s. 5 of the
Fines
    and Forfeitures Act.


(3)

Should Relief from Forfeiture be Granted in this Case?

[78]

Before
    exercising discretion to grant relief from forfeiture in a particular case, a
    court must first consider: (1) the conduct of the applicant; (2) the gravity of
    the breach; and (3) the disparity between the value of the property forfeited
    and the damage caused by the breach:
Dube v. RBC Life Insurance Co.
,
    2015 ONCA 641, 127 O.R. (3d) 161, at para. 6;
Kozel
, at paras. 31 and
    59;
Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co.
,
    at p. 504.

[79]

Had
    the trial judge concluded that s. 98 was available, he would have exercised his
    discretion to grant relief from forfeiture and to allow the appellants late
    application for payment out of court of the surplus funds. He found that the
    appellants conduct was inadvertent, although negligent, and that the Municipality
    did not suffer undue prejudice from the three-week delay. He noted the
    disparity between the short delay in applying and the value of the property
    forfeited (at para. 64).

[80]

I
    see no reason to depart from the application judges assessment of the relevant
    factors in this case. The appellant would have been entitled to the monies in
    court, without any claim by the Municipality, had its application been
    initiated three weeks earlier. The appellants delay was explained by its
    erroneous belief about timing because of its two other properties also subject
    to tax sales. When it realized its error, the appellant moved promptly. The
    Municipality had not received the funds, and had not even commenced an
    application for payment out. And the windfall to the Municipality would have
    been enormous, amounting to the receipt of $76,264.60 in surplus funds when the
    initial tax arrears, which had been fully satisfied, were $5,843.11.

[81]

Therefore,
    I would grant the appellant relief against forfeiture under s. 98 of the
Courts
    of Justice Act
.

F.

Disposition

[82]

For
    these reasons I would allow the appeal and set aside the order of the
    application judge. I would grant relief from forfeiture and order payment out
    of court of the sum of $76,264.60 paid to the credit of Court File No.
    CV-14-0344-00 at the Superior Court of Justice in Thunder Bay, plus accrued
    interest. Such payment shall be made to Rene Larson Law Office Professional
    Corporation on behalf of the appellant.  As agreed between the parties, I
    would make no order as to costs.

Released: P.R. December 14, 2016

K. van Rensburg
    J.A.

I agree Paul Rouleau
    J.A.

I agree M.L. Benotto
    J.A.





[1]
The application judge also considered and rejected, an argument by the
    appellant that the doctrine of special circumstances was available to extend
    the time for its application for the surplus funds. That argument is not
    renewed on appeal.



[2]
All of the references to the Public Guardian and Trustee in this subsection as
    well as others in s. 380 will be replaced by the minister responsible for the
    administration of the
Forfeited Corporate
    Property Act, 2015
 when that statute (S.O. 2015, c. 38, Sched. 7)
    comes into force December 10, 2016, and alters the scheme for dealing with the
    property of a dissolved corporation.




[3]

On
    December 10, 2016, S.O. 2015, c. 38, Sched. 7 comes into force, and the
    following subsection will be added:

(1.1)

If
    the land was vested in the Crown in right of Ontario because of an escheat or
    forfeiture as a result of the dissolution of a corporation is sold under
    section 379, the Crown shall not be excluded under clause (1)(b) in respect of
    interests that the Crown has in the land other than its ownership.



[4]

The application, and the Municipalitys counter-application
    were both brought within Court File No. CV-14-0344-00 in the Superior Court of
    Justice in Thunder Bay, in the proceeding in which the Municipality had paid
    the surplus funds into court under s. 380(2).



[5]
Pursuant to s. 95(2) certain sections under Part VII also apply to
proceedings under the
Criminal Code
and pursuant to s. 95(3)
    certain sections also apply to proceedings under the
Provincial Offences
    Act.



[6]

The motion court judge determined that notice had not been
    given to the taxpayer where it was sent in accordance with the statutory
    requirements at the time but not received. (As the Court of Appeal noted, the
    statute was later amended to require personal service of the notice.) Relief
    from forfeiture was raised only on appeal. A dissenting opinion in the Court of
    Appeal would have dismissed the appeal on the notice issue, and did not address
    relief from forfeiture.



[7]
While the Municipality in its factum raises concerns about certainty, in
    particular as to how the treasurer should proceed in the face of a late
    application and whether and to whom additional notice would be required, these
    concerns are misplaced. Section 380 requires payment into court of the surplus
    and from that point on, any determinations of entitlement, forfeiture and
    relief from forfeiture, are for the court.


