



COURT OF APPEAL FOR ONTARIO

CITATION: Rock Solid Holdings Inc. v. Shuniah (Municipality),
    2019 ONCA 35

DATE: 20190121

DOCKET: C65443

Brown, Paciocco and
    Zarnett JJ.A.

BETWEEN

Rock Solid Holdings
    Inc., 1103546 Ontario Ltd. and AK Aggregates Limited

Applicants (Appellants)

and

The Corporation of the
    Municipality of Shuniah

Respondent (Respondent)

Morris
    Holervich, for the appellants

R. W. Johansen, for the
    respondent

Heard:
January
    16, 2019

On appeal from the
    judgment of Justice John S. Fregeau of the Superior Court of Justice, dated April
    20, 2018.

REASONS FOR DECISION

OVERVIEW

[1]

The appellants, Rock Solid Holdings Inc., 1103546 Ontario Ltd., and AK
    Aggregates Limited, own or operate two gravel pits in the Municipality of
    Shuniah  the Mount Baldy Road Pit and the Mackenzie/Otte Road pit. In 2008,
    the appellants commenced an application to declare illegal a series of by-laws
    under which the Municipality sought to control the weight of vehicles
    travelling on municipal roads.

[2]

The road weight by-laws date back to the mid-1990s. In their most recent
    incarnations enacted in 2007, the by-laws prohibit the operation of vehicles
    with a Registered Gross Weight in excess of 6,000 Kg on 65 municipal streets
    (By-law 2279-07), but provide for the issuance of single trip, seasonal and
    annual permits for any vehicle in excess of 6,000 Kg to travel on municipal
    roads (By-law 2281-07).

[3]

In support of their challenge to the validity of the by-laws, the
    appellants advanced two main arguments before the application judge. First,
    they submitted that the by-laws were enacted in bad faith because the
    appellants (or the previous owners of the gravel pit) were not given actual,
    personal notice of the Municipalitys intention to pass them and an opportunity
    to be heard. Second, they contended the by-laws were discriminatory and passed
    in bad faith because the effect was to prevent the appellants from carrying on
    their aggregate extraction businesses in a commercially viable manner.

[4]

The application judge did not accept their submissions and dismissed the
    application. The appellants appeal. At the hearing we dismissed the appeal,
    with reasons to follow. These are those reasons.

FIRST GROUND OF APPEAL

[5]

The appellants advance two main grounds of appeal.

[6]

First, they submit the application judge misapprehended their lack of
    notice argument. The application judge held, at para. 11, that it was not in
    dispute that the
Municipal Act, 2001
, S.O. 2011, c. 25 did not require
    the Municipality to give notice to particular landowners or users regarding its
    intention to pass the road weight by-laws. Indeed, there is no suggestion that
    the Municipality failed to comply with its own notice requirements  By-law
    2114-03  when passing the 2007 road weight by-laws. However, the appellants do
    not rest their lack of notice argument on any failure to comply with the Act or
    the Municipalitys notice by-law. Instead, they submit that the Municipalitys failure
    to give them actual, personal notice of the intention to pass the by-laws was a
    badge or indicator of bad faith.

[7]

The application judges reasons do not disclose any misapprehension of
    the appellants notice argument. At para. 23 of his reasons, the application
    judge accurately described the appellants notice submission: The applicants
    suggest that the failure to notify persons known by council to have an interest
    in a by-law and the failure to hold a hearing are factors indicative of bad
    faith. The application judge returned to this submission, at paras. 52 and 53,
    and did not accept the appellants submission that the lack of specific notice
    to them, in and of itself, amounted to bad faith on the part of the
    Municipality.

[8]

Although in certain circumstances a municipality may have to give a form
    of notice of its intention to pass a by-law beyond that required by statute or
    its notice by-law, the cases relied upon by the appellants disclose that such
    circumstances generally involve attempts by municipalities to enact by-laws
    that seek to frustrate a specific landowners use of its property or regulate a
    particular industry:
Pedwell et. al. v. Pelham (Town)
(2003), 174
    O.A.C. 147 (C.A.), leave to appeal refused, [2003] S.C.C.A. No. 355, at para.
    61;
Langille v. City of Toronto
, 2007 CanLII 15245 (S.C.J.), at para.
    55;
Airport Taxicab (Pearson Airport) Association v. City of Toronto
,
    2009 CanLII 25973 (Ont. S.C.J.), leave to appeal refused, 2009 CanLII 33023
    (Ont. Div. Ct.), at para. 20.

[9]

Those circumstances do not exist in the present case. As the application
    judge noted, the Municipalitys road weight by-laws dated back to the
    mid-1990s: at para. 47. As the record disclosed, the overwhelming majority of
    the municipal roads subject to the by-laws control were not ones used by
    aggregate extraction businesses. The by-laws did not target the appellants
    operations or the aggregate extraction business; they focused more generally on
    roads within the Municipality. As well, Mr. Eric Collingwood, the Municipalitys
    Chief Administrative Officer, deposed that the majority of the licensed gravel
    pits in the Municipality utilize private roads to haul materials to provincial
    highways  neither the private roads nor provincial highways are subject to the
    by-laws.

[10]

Accordingly,
    we give no effect to the appellants submission that in the circumstances of
    this case the Municipality was required to give actual, personal notice to them
    of its intention to pass the by-laws.

SECOND GROUND OF APPEAL

[11]

As
    their second ground of appeal, the appellants submit the application judges
    rejection of their argument that the by-laws were passed in bad faith rested on
    his erroneous finding that the by-laws did not preclude the commercial
    operation of the two gravel pits. They supplemented this in oral argument with
    a submission that their failure to secure a permit for overweight vehicles in
    connection with the Mackenzie/Otte Road pit demonstrated the arbitrary nature
    of the bylaws themselves.

[12]

We
    are not persuaded by these submissions for several reasons.

[13]

First,
    the application judges finding that the Municipality had not acted
    unreasonably, arbitrarily or unfairly in passing the challenged road weight
    by-laws was based on several factors: (i) the evidence of the Municipalitys
    conduct over the course of two decades in extensively reviewing and analyzing
    the issue of resource extraction, public roads and highways, and residential
    development within the municipality in an attempt to balance competing
    interests, including commercial interests, residential use and development,
    public safety and noise/disturbance concerns (para. 48); (ii) the Municipality
    enacting and amending legislation in an effort to address all concerns (para.
    51); together with (iii) his conclusion that the by-laws did not preclude the
    commercial operation of the two gravel pits (para. 53).

[14]

Second,
    we see no palpable and overriding error in the application judges conclusion
    that the by-laws do not preclude the viable operation of the two gravel pits.
    The application judge noted, at para. 54, that one of the appellants, 1103546
    Ontario Ltd., had reached an agreement with the Municipality under the by-laws
    permitting process to use Mount Baldy Road for the purposes of the operation of
    the Mount Baldy Road pit.

[15]

As
    to the Mackenzie/Otte Road pit, the appellant Rock Solid purchased the pit
    property in 2008, after the challenged 2007 by-laws had been enacted. Mr. Ryan
    Jones, the President of Rock Solid, testified that when it purchased the pit
    the company was aware of the road weight restrictions, the history of the
    property, and the issues associated with the property. After an extensive due
    diligence process, Rock Solid went into the pit purchase with eyes wide open.

[16]

The
    record contains extensive materials detailing the discussions between Rock
    Solid and the Municipality between 2009 and 2012 to reach some resolution. Those
    discussions considered the construction by the appellants of a private road to
    the gravel pit or the negotiation of a Road Agreement within the parameters of
    the by-laws permit process. During those discussions, the Municipality made
    clear that its consideration of an application for a permit to use municipal
    roads for the Mackenzie/Otte Road pit could include requiring the appellants to
    post financial security for road repairs and maintenance, regulating the time
    of day for hauling gravel, and speed restrictions. The Municipality also made
    clear that it was not prepared to fund the construction of a private road to
    support the appellants Mackenzie/Otte Road pit; the appellants would have to
    bear that cost.

[17]

At
    a meeting in April 2012, the appellants submitted to the Municipality permit
    applications for both gravel pits, together with draft Road Agreements. At a
    meeting of the Municipalitys Committee of the Whole Council on May 14, 2012, a
    resident distributed an information package to Council concerning the Mackenzie/Otte
    Road pit and explained that the safety of the community was the most important
    issue and that this road was not suitable for hauling gravel. At its meeting
    on June 25, 2012, Council approved the permit application for the Mount Baldy
    Road pit, but denied that for the Mackenzie/Otte Road pit.  In a June 26, 2012
    email to the appellants, Mr. Collingwood advised that the decision of Council
    to approve or not to approve was based on Health and Safety issues brought
    forward to Council by the residents.

[18]

In
    2015, the appellants provided the Municipality with an engineers report, which
    stated that upgrades would be required to the Mackenzie Station and Otte Roads in
    order to provide dependable access to the gravel pit. To address safety
    concerns, the report recommended widening the roads, enhancing visibility, and posting
    appropriate signage. The report estimated the construction of a private access
    road to the pit would cost between $3 million to $4.5 million.

[19]

Shortly
    after providing the report to the Municipality, the appellants filed a new
    permit application identical to the one filed in 2012. The attached draft Road
    Agreement did not include any offer by the appellants to contribute to the
    costs of the road upgrades recommended by its engineers to deal with safety
    concerns. According to Mr. Paul Greenwood, Mr. Collingwoods successor as the
    Municipalitys Chief Administrative Officer, the new application still failed
    to address the safety concerns along the McKenzie Station Road/Otte Road
    corridor and was declined by Council.

[20]

Although
    Mr. Jones deposed in his 2010 affidavit that the by-laws permit process was
    practically useless to anyone seeking to use the mineral aggregate resources
    located at the two pits, he did not update his evidence: (i) to explain how he
    reconciled that broad assertion with the permit and Road Agreement reached in
    2012 that enabled the commercial operation of the Mount Baldy Road pit; or (ii)
    to detail how the cost of the recommended road upgrades or of constructing a
    private road would prevent the commercial operation of the Mackenzie/Otte Road
    pit.

[21]

Given
    that state of the record, we are not persuaded that the application judge erred
    in finding the by-laws did not preclude the commercial operation of the Mackenzie/Otte
    Road pit. Moreover, the record fully supports the application judges
    conclusion that the Municipality did not act in bad faith in passing the
    by-laws. The record discloses the Municipality acted with the degree of
    fairness, openness, impartiality and focus on the public interest required of a
    municipal government:
Grosvenor v. East Luther Grand Valley (Township)
,
    2007 ONCA 55, 84 O.R. (3d) 346, at paras. 43-45.

DISPOSITION

[22]

For
    these reasons, the appeal is dismissed.

[23]

The
    appellants shall pay the Municipality its costs of the appeal fixed in the
    amount of $15,000, inclusive of disbursements and all applicable taxes.

David
    Brown J.A.
David M. Paciocco J.A.
B. Zarnett J.A.


