COURT OF APPEAL FOR ONTARIO

CITATION: Vlanich v. Typhair, 2016 ONCA 517

DATE: 20160629

DOCKET: C59668

Sharpe, LaForme and van Rensburg JJ.A.

BETWEEN

Kaitland Vlanich, Robert Vlanich, Justin Vlanich,
    Jonathon Vlanich (by his litigation guardian Robert Vlanich), Rachel Vlanich
    (by his litigation guardian Robert Vlanich) and Joshua Sullivan

Plaintiffs (Interveners)

and

Clayton Typhair, 2043063 Ontario Ltd. (c.o.b. as
    Aces Taxi), Sheileena Mallette, Sheila Anne Sarah Mallette, Shirley Carne,
State
    Farm Mutual Automobile Insurance Company

Defendants (Appellant)

and

The Corporation of the
    Township of North-Grenville

Third Party (Respondent)

Chris G. Paliare and Tina H. Lie, for the appellant

Mark Charron and Stephanie Doucet, for the respondent

Lawrence Greenspon and Marisa Victor, for the
    interveners

Heard: April 21, 2016

On appeal from the judgment of Justice Stanley J.
    Kershman of the Superior Court of Justice, dated October 27, 2014, with reasons
    reported at 2014 ONSC 6245.

Sharpe J.A.:

[1]

The
    issue on this appeal is whether a municipality is liable in negligence for losses
    suffered as a result of a collision with a taxi that was inadequately insured
    in violation of the municipalitys taxi licencing bylaw.

A.

FACTS

[2]

Sheileena
    Mallette and Kaitland Vlanich, the plaintiffs and interveners on appeal, were
    injured in a motor vehicle accident involving a taxi owned by the defendant 2043063
    Ontario Ltd., carrying on business as Aces Taxi.

[3]

At
    the time of the accident, Sheileena Mallette was driving a vehicle owned by her
    mother Sheila Mallette, Kaitland Vlanichs aunt. The vehicle was insured by the
    appellant State Farm Mutual Automobile Insurance Company (State Farm). The
    State Farm policy includes a standard OPCF 44R Family Protection Coverage
    endorsement providing coverage if the at-fault motorist is uninsured or underinsured.

[4]

The
    interveners and their family members commenced separate actions to recover
    personal injury damages against Aces Taxi and Vlanich Typhair, the taxi driver.
    They asserted claims under the Family Protection Coverage endorsement and added
    State Farm as a defendant.

[5]

The
    plaintiffs amended their pleadings to add the respondent Corporation of the
    Township of North-Grenville (the Township) as a defendant. The Township had
    enacted a taxi licencing and regulation bylaw (the Bylaw) that required
    licensed taxis to carry a minimum of $1,000,000 in third-party liability
    insurance coverage. Aces Taxi had only $200,000 of coverage at the time of the
    accident. The plaintiffs alleged that the Township negligently failed to
    enforce the Bylaw to ensure that Aces Taxi had the required insurance coverage.
    State Farm brought third-party claims against the Township on the same basis.

[6]

Aces
    Taxi had provided the Townships bylaw enforcement officer with documentary
    proof that it carried the required $1,000,000 liability insurance when it
    applied for and obtained its taxi licence in 2005. The insurer cancelled coverage
    in August 2005 but a new policy was in place for the period August 16, 2005 to
    August 16, 2006. On September 12, 2005, the insurer provided the Township with
    a certificate of insurance indicating that Aces Taxi had $1,000,000 in
    third-party liability coverage.

[7]

On
    January 13, 2006, the insurer notified the Township that, effective January 22,
    2006, the policy was terminated for non-payment of premiums. Aces Taxi had no
    insurance from January 22, 2006 until January 29, 2007.

[8]

Aces
    Taxi completed a taxi licence application on February 6, 2006 containing a
    signed declaration that no information had been withheld and that, if licensed,
    Aces Taxi would comply with all applicable Bylaw provisions.

[9]

The
    Township had only one bylaw enforcement officer. In 2007, the bylaw enforcement
    officer was busy with other duties and, with the approval of his superiors, did
    not process taxi licence applications.

[10]

In January 2008, Aces
    Taxi submitted a renewal application with the standard signed declaration
    stating:

I, the undersigned, attest and certify the truth of all
    statements or representations contained herein. I further attest that I have
    not withheld any information pertinent to this application, and if licensed by
    the Township of North Grenville, agree to abide by the provisions of all
    applicable by-laws.

With respect to the approvals already on file with the
    Township, I hereby declare that there have been no significant changes which
    would affect my viability to hold a Municipal licence.

[11]

With that application,
    Aces Taxi submitted a pink slip for the period January 18, 2008 to February 1,
    2008 issued by the same insurer that had provided $1,000,000 of coverage in
    2005. The pink slip did not indicate the level of coverage, but in fact Aces
    Taxis coverage at the time of the application and on the date of the accident,
    June 19, 2008, was only $200,000.

B.

TRIAL DECISION

[12]

An order was made for
    a modified summary trial of the third-party claims with the outcome binding on
    the parties in the main actions. The interveners did not participate in the
    trial. The trial judge found that, although the Township owed the interveners a
    duty of care, the Township did not fall below the standard of care in enforcing
    the Bylaw.

[13]

The trial judge found
    that the Township had met the standard of care when it issued a licence to Aces
    Taxi in 2005 as a certificate of $1,000,000 coverage had been supplied. He found
    that Aces Taxi had either been untruthful or negligent when declaring that
    there were no significant changes affecting its ability to hold a license after
    ceasing to carry $1,000,000 of insurance coverage.

[14]

The trial judge
    concluded that [w]hile the best practice may have been for the Township to
    obtain proof of the $1,000,000 insurance coverage at the time of
    renewalfailing to do so [was] not unreasonable or in bad faith. He found that
    the Township had relied on other reasonable measures to enforce the bylaw. It
    had requested and obtained pink slips indicating that Aces Taxi was insured and
    was entitled to rely on the signed declarations that there had been no
    significant changes. That, said the trial judge, was sufficient to satisfy the
    standard of care.

C.

PARTIES POSITIONS ON APPEAL

[15]

State Farm appeals,
    arguing that the trial judge erred in finding that the Township did not fall
    below the standard of care.

[16]

The Township argues
    that the trial judges finding that it met the standard of care should not be
    disturbed on appeal. In the alternative, the Township submits that the appeal
    should be dismissed on the ground that the trial judge erred in holding that it
    owed the interveners a private law duty of care.

[17]

The interveners
    support State Farms position and urge this court not only to reverse the trial
    judgment but also to find that the Townships negligence caused their damages.

D.

ISSUES

[18]

This appeal raises the
    following three issues:

(1)

Did the Township owe the interveners a
    private law duty of care?

(2)

Did the trial judge err in finding that
    the Township did not fall below the standard of care?

(3)

Should this court determine that the
    Townships negligence was the cause of the interveners losses?

E.

ANALYSIS

(1)

Did the Township owe the interveners a private law
    duty of care?

[19]

The trial judges
    consideration of duty of care was cursory. He found that the Township had
    enacted the Bylaw to benefit and protect those residents sharing the road with
    taxicabs and that this amounted to evidence of a sufficiently close and
    proximate relationship between the Township residents and the municipality,
    such that the bylaw created a private law duty of care.

[20]

For the following
    reasons, I conclude that the trial judge erred in finding that the Township owed
    the interveners a private law duty of care.

(i)

The Anns/Cooper test

[21]

It is common ground
    that whether a public authority such as the Township owes a private law duty of
    care to an individual or to a class is determined by applying the two-part test
    first announced by the House of Lords in
Anns v. Merton London Borough
    Council
, [1978] A.C. 728, at pp. 751-52, and refined by the Supreme Court
    of Canada in
Cooper v. Hobart
, 2001 SCC 79, [2001] 3 S.C.R. 537, at
    paras. 30-31:

At the first stage of the
Anns
test, two questions
    arise: (1) was the harm that occurred the reasonably foreseeable consequence of
    the defendant's act? and (2) are there reasons, notwithstanding the proximity
    between the parties established in the first part of this test, that tort
    liability should not be recognized here? The proximity analysis involved at the
    first stage of the
Anns
test focuses on factors arising from the
    relationship between the plaintiff and the defendant. These factors include
    questions of policy, in the broad sense of that word. If foreseeability and
    proximity are established at the first stage, a
prima facie
duty of
    care arises. At the second stage of the
Anns
test, the question still
    remains whether there are residual policy considerations outside the
    relationship of the parties that may negative the imposition of a duty of care.

[22]

The Supreme Court went
    on to explain what was meant by proximity, the element necessary to establish
    a duty of care in addition to reasonable foreseeability of harm, at para. 31:

Two things may be said. The first is that "proximity"
    is generally used in the authorities to characterize the type of relationship
    in which a duty of care may arise. The second is that sufficiently proximate
    relationships are identified through the use of categories. The categories are
    not closed and new categories of negligence may be introduced. But generally,
    proximity is established by reference to these categories. This provides
    certainty to the law of negligence, while still permitting it to evolve to meet
    the needs of new circumstances.

[23]

Proximity is
    determined by "looking at expectations, representations, reliance, and the
    property or other interests involved" to "evaluate the closeness of
    the relationship between the plaintiff and the defendant" and by asking
    "whether it is just and fair having regard to that relationship to impose
    a duty of care in law upon the defendant":
Cooper
,
at para. 34.

(ii)

The Prima Facie Duty of Care

(a) Is there a recognized duty of care?

[24]

The first question is
    whether the case falls within or is analogous to one of the categories of cases
    in which the courts have recognized a duty of care:
Cooper
, at para.
    36. If the case fits within a recognized category or an analogous one and
    reasonable foreseeability is established, it is not necessary to proceed to the
    second stage of the
Anns/Cooper
test.

[25]

State Farm relies on
    the negligent inspection of buildings cases but concedes that its claim does
    not fall within a recognized category or an analogous one. Accordingly, to
    succeed, State Farm must establish proximity on the basis of the
Anns/Cooper
test.

(b) Is this a situation in which a new duty of care
    should be recognized?

[26]

The Township does not
    contest that failing to enforce the Bylaws $1,000,000 insurance requirement
    resulted in reasonably foreseeable harm to the interveners due to a motor
    vehicle accident with an underinsured taxi. However, in addition to
    foreseeability, State Farm must show that the Township and the interveners were
    in a relationship of proximity.

[27]

The proximity
    contemplated by the
Anns/Cooper
test requires a sufficient nexus or
    connection between the alleged neglect of the public authority and the risk
    that caused the losses suffered by the interveners.

[28]

If a duty of care
    exists, it must be found in the Townships Bylaw, which creates a relatively
    detailed scheme for the licencing and regulation of taxis, taxi drivers, and
    taxi brokers in North-Grenville: see
Cooper
, at para. 43. Of
    particular relevance to the present case are the following provisions:

5.       CONDITIONS FOR ISSUANCE OF TAXICAB OWNER LICENSE

(1) No license shall be issued to an applicant for a taxicab
    owner license unless and until the License Inspector has been furnished with
    satisfactory proof that:

(d)      the applicant has filed proof of insurance in
    accordance with the requirements of section 9 hereof;

9.       VEHICLE INSURANCE REQUIREMENTS

(1) Prior to the issuance of a taxicab owner license, each
    taxicab owner shall file with the License Inspector proof of insurance in
    respect of each vehicle owned or leased by the taxicab owner in accordance with
    the following minimum requirements:

(a)      coverage for public liability in the amount of not
    less than one million dollars ($1,000,000.00) in respect of death, bodily
    injuries and property damage for damage occasioned by an accident arising out
    of the operation of the vehicle;

(b)      endorsement to provide that the License Inspector
    will be given at least ten (10) days notice in writing of any cancellation,
    expiration or decrease in the amount of coverage provided by the policy below
    the requirement in subsection 9(1).

(2) Where a licenced taxicab owner no longer complies with
    subsection 9(1) hereof, the taxicab owner license issues under this by-law
    shall be deemed to be suspended as of the date of the cessation or decrease of
    the insurance.

[29]

State Farm argues that
    the Bylaw imposes a duty to enforce on the part of the License Inspector and relies
    on the negligent inspection cases including
Kamloops v. Nielsen,
[1984]
    2 S.C.R. 2,
Ingles v. Tutkaluk Construction Ltd.
, 2000 SCC 12, [2000]
    1 S.C.R. 298, and
Mortimer v. Cameron
(1994), 17 O.R. (3d) 1. State
    Farm submits there is a relationship of sufficient proximity because the
    interveners are in the very class of individuals the Bylaw intended to protect;
    namely, residents sharing the road with taxicabs.

[30]

By enacting the Bylaw,
    the Township established a general standard to benefit the public as a whole.
    This is a common feature of legislation and bylaws. Standards are established
    in the general public interest and public authorities have a duty to the public
    at large to see to their enforcement. But public authorities are not liable for
    losses simply because a legislated standard was not enforced: see e.g.
Cooper;
    Kent v. Laverdiere
, 2011 ONSC 5411, 85 C.C.L.T. (3d) 296, at paras. 115
    and 135; and
118143 Ontario Inc. v. City of Mississauga,
2015 ONSC
    3691, 39 M.P.L.R. (5th) 231, at paras. 226-27. The added element of proximity
    must be present.

[31]

Proximity between a
    public authority and an individual member of the public may arise in
    circumstances in which the public authority assumes responsibility for ensuring
    compliance with a standard that is intended to avoid or to reduce a risk of physical
    damage or harm.

[32]

In the inspection
    cases, the public authority is directly implicated in the risk of physical
    damage or harm because it has invited the injured party to rely on an
    inspection, and it has assumed responsibility for avoiding the risk. If the
    public authority fails to inspect as required by the legislated standard, the
    physical damage or harm will occur. The plaintiff relies on the public
    authority to take steps to avoid the risk through reasonable inspection and the
    authoritys obligation to do so is what creates a relationship of proximity
    with the injured party.

[33]

In all three cases
    cited by State Farm, the standard to avoid or to prevent a risk of physical
    damage or harm was set by a building code.
Tutkaluk
involved physical
    damage due to flooding. In
Mortimer
, the plaintiff was rendered
    quadriplegic when an exterior wall gave way causing him to plunge 10 feet. In
Kamloops
,
    the bylaw intended to prevent construction of houses on defective foundations
    and imposed on the Building Inspector a duty to enforce its provisions. The
    Supreme Court permitted recovery for economic loss for a defective foundation that
    was obviously going to have to be repaired since it represented a threat to
    the health and safety of the occupants and where there was no concern about
    indeterminate liability:
Kamloops
, at paras. 88 and 91. Importantly, had
    the health and safety standards been observed in these cases, the physical
    damage and injury would not have occurred.

[34]

Although the
    inspection cases might support a claim for physical damage or harm arising from
    the negligent enforcement of a safety bylaw, State Farm does not allege that
    enforcement of the insurance requirement would have prevented the interveners
    physical injuries. The Townships Bylaw did not set a standard to avoid a risk
    of physical damage or harm resulting from a motor vehicle accident with a taxi.
    Failure to ensure that Aces Taxi complied with the Bylaw was not an opportunity
    lost to prevent the physical harm that occurred.

[35]

State Farms claim is
    quite different. State Farm advances a claim for loss of access to insurance
    monies triggered by the tortious conduct of Aces Taxi and Clayton Typhair. As
    such, the claim is for a purely economic loss: see
DAmato v. Badger
,
    [1996] 2 S.C.R. 1071, at para. 13;
Martel Building Ltd. v. Canada
,
    2000 SCC 60, [2000] 2 S.C.R. 860, at para. 34; and
Design Services Ltd. v.
    Canada
, 2008 SCC 22, 1 S.C.R. 737, at para. 30.

[36]

State Farm has not
    provided any authority for finding that this case falls within one of the five
    recognized categories of economic loss or an analogous one: see
Canadian
    National Railway Co. v. Norsk Pacific Steamship Co
., [1992] 1 S.C.R. 1021,
    at p. 1049; Allen M. Linden and Bruce Feldthusen,
Canadian Tort Law
,
    10th ed (Toronto: LexisNexis, 2015), at pp. 470-71. Although courts have the
    power to recognize novel claims, the suggestion that a licencing authority
    should be liable for economic losses arising from the tortious conduct of
    non-compliant third-party licensees strikes me as extraordinary.

[37]

The interveners make
    the same claim as State Farm but also argue that the Townships failure to
    suspend Aces Taxis licence caused them physical harm. Had the Township
    enforced the Bylaw, the taxi would not have been operating on the day of the
    accident. That claim was not before the trial judge and, in any event, I do not
    think it advances the case for the recognition of a duty of care. The concept
    of proximity articulated in
Cooper
requires a much more immediate and
    direct nexus between the plaintiff and the defendant.

[38]

We were not referred
    to any case holding that a public authority owes a private law duty of care to
    a member of the public not to issue a licence for a regulated activity unless
    the licensee is in compliance with all requirements of the scheme. A claim
    similar to that advanced in this action was rejected in
Lake v. Callison
    Outfitters Ltd.
(1991), 58 B.C.L.R. (2d) 99 (S.C.) (failure to enforce a
    regulation requiring that a guide carry $500,000 in public liability
    insurance).

[39]

A public authority administering
    a licencing scheme owes a general duty to the public at large to ensure
    compliance with the regulatory scheme. However, that general public duty is not
    equivalent to a private law duty of care. Without something more, licencing a
    third party does not create a close and direct relationship capable of giving
    rise to a duty of care between a public authority and an individual member of
    the public who may interact with a licensee.

[40]

The conclusion that
    there is no duty of care on the facts of this case is supported by
Cooper
and
Edwards v. Law Society of Upper Canada
, 2001 SCC 80, [2001] 3
    S.C.R. 562, cases in which the Supreme Court found that the plaintiffs failed
    to establish a private law duty of care.

[41]

In
Cooper
,
    the British Columbia Registrar of Mortgage Brokers had a statutory right to
    license and regulate the activities of mortgage brokers. The plaintiffs, who
    had suffered economic losses investing with a non-compliant mortgage broker,
    argued that the Registrar owed them a private law duty to suspend the broker's
    licence or to notify investors if a mortgage broker was under investigation. In
Edwards
, the Law Society of Upper Canada had the statutory authority
    to license and regulate the activities of lawyers. The plaintiffs, who suffered
    losses allegedly caused by improper use of a lawyers trust account, argued that
    the Law Society, having knowledge of the manner in which the lawyer operated
    his trust account, owed them a private law duty to ensure that the lawyer's
    trust account was operated according to the regulations.

[42]

Arguably the case for
    finding a duty of care was stronger in both cases as the plaintiffs complained
    about a failure to investigate and to control improper behaviour by the licensee,
    not about an improperly granted licence. Yet in both cases, the Supreme Court
    of Canada held that there was not a private law duty of care.

[43]

I cannot accept State
    Farms submission that
Cooper
and
Edwards
are distinguishable
    on the basis that the regulatory bodies were not obligated to suspend the
    licenses by virtue of a specific bylaw. The Supreme Courts conclusions were
    premised on a finding that any duty was owed to the public as a whole rather
    than to individual investors or clients who interacted with the brokers or
    lawyers regulated by the legislation.

[44]

In
Cooper
,
    the Supreme Court noted, at para. 49: Even though to some degree the
    provisions of the Act serve to protect the interests of investors, the overall
    scheme of the Act mandates that the Registrar's duty of care is not owed to
    investors exclusively but to the public as a whole. Similarly in
Edwards
,
    the Supreme Court found, at para. 14: The
Law Society Act
is geared
    for the protection of clients and thereby the public as a whole, it does not
    mean that the Law Society owes a private law duty of care to a member of the
    public who deposits money into a solicitor's trust account.

[45]

As previously
    mentioned, in this case, the Townships duty was a general public duty to
    enforce the licensing scheme for the benefit of the public. I conclude,
    accordingly, that stage one of the
Anns/Cooper
test is not satisfied
    and that there is no
prima facie
duty of care.

(iii)

The Second Stage of the Anns/Cooper Test

(a) Are there residual policy considerations
    sufficient to negate the imposition of a duty of care?

[46]

If I am wrong in my
    analysis of proximity, moving to the second stage of the
Anns/Cooper
test, I would hold that there are residual policy considerations outside the
    relationship of the parties sufficient to negate the imposition of a duty of
    care. The Supreme Court described those considerations in
Cooper
, at
    para. 37:

These [residual policy considerations] are not concerned with
    the relationship between the parties, but with the effect of recognizing a duty
    of care on other legal obligations, the legal system and society more
    generally. Does the law already provide a remedy?  Would recognition
    of the duty of care create the spectre of unlimited liability to an unlimited
    class? Are there other reasons of broad policy that suggest that the duty
    of care should not be recognized?

[47]

The first question is
    whether the law already provides a remedy. The injured plaintiffs have the
    benefit of the standard OPCF 44R Family Protection Coverage endorsement. While
    that endorsement is not imposed as a matter of law, insurers like State Farm
    are legally required to make it available to afford protection against the risk
    of uninsured or underinsured at-fault drivers. The injured plaintiffs have the protection
    of that endorsement and it would not be sound policy to afford State Farm a
    remedy to recoup the loss it agreed to cover.

[48]

The related question
    is whether the burden that would be imposed on the Township if it were found liable
    for negligent enforcement of the licencing Bylaw suggests that a duty of care
    should not be imposed. In this case, liability would not be that of unlimited
    liability to an unlimited class but the burden on small municipalities with
    limited resources could be significant.

[49]

In my view, the
    residual policy considerations militate against the recognition of a duty of
    care in this case.

(2)

Did the trial judge err in finding
    that the Township did not fall below the standard of care?

[50]

Although my conclusion
    with respect to the duty of care is sufficient to dispose of the appeal, for
    the sake of completeness I will also deal with the standard of care.

[51]

State Farm argues that
    the trial judges analysis reveals an error of law in his interpretation of the
    Bylaw. State Farm contends that, properly read, the Bylaw required the Township
    to treat Aces Taxis 2006 and 2008 applications not as renewals but as new
    applications for which proof of $1,000,000 insurance was required. Pursuant to
    s. 9(2) of the Bylaw, Aces Taxis licence was deemed to be suspended when it
    lost its insurance coverage in January 2006. Subsection 9(3) provides that the
    licence shall be re-instated upon proof of compliance with subsection 9(1).
    Subsection 9(1) requires the applicant to provide proof of insurance at the
    minimum level of $1,000,000.

[52]

Although it was not
    argued at trial, State Farm also relies on s. 12 of the Bylaw to bolster this
    argument:

(1)      Every license issued pursuant to this by-law to a
    taxicab driver, taxicab owner or taxicab broker shall, subject to the
    provisions at sections 9, 14 and 15 hereof, be valid for a maximum period of
    one (1) year only, being from January 1
st
to December 31
st
.

(2)      Applications for renewals of licenses must be
    completed and submitted to the License Inspector no later than thirty (30) days
    prior to the expiration of each license.

(3)      Where an application for renewal of a license is not
    submitted to the License Inspector prior to the expiry date of a license, the
    licensee may make application for renewal up to and including the thirtieth day
    after the expiry of the license.

(4)      In the event that the licensee does not renew his or
    her license on or before the thirtieth day after the expiry date of the
    license, the licensee ceases to be a licensee and any application submitted
    shall be considered a new application for licence.

[53]

As no licence was
    issued for 2007, the 2008 application was made well after the expiry of Aces
    Taxis 2006 licence. Consequently, State Farm argues that the trial judge erred
    in treating the 2008 application as a renewal.

[54]

I am unable to accept
    State Farms argument for the following reasons.

[55]

First, I agree with
    the Townships submission that the trial judge was not engaged in an exercise
    of strict statutory interpretation attracting a standard of review of
    correctness.

[56]

Second, I also agree
    that it would be unfair to permit State Farm to shift ground on appeal. The
    issue whether the 2006 and 2008 applications should have been treated as new
    applications rather than renewals was not argued at trial. As noted, no
    reference was made to s. 12 of the Bylaw and State Farm did not challenge the
    characterization of the 2008 application as a renewal at trial. As the issue is
    raised for the first time on appeal, the Township is not in a position to
    provide evidence to explain its treatment of the 2006 and 2008 applications as
    renewals or its treatment of existing licences following the hiatus in 2007.

[57]

Finally, as I have
    noted, the Township did not grant the licence to Aces Taxi without
any
proof of insurance as required by s. 9(1). The issue is whether the evidence of
    insurance was adequate in the circumstances.

[58]

State Farm contends
    that even if the 2006 and 2008 applications were properly treated as renewals,
    the Township fell below the standard of care. The Township knew or should have
    known that Aces Taxis insurance was cancelled in 2006 and it should not have
    relied on signed declarations and pink slips that contained no information as
    to policy limits. State Farm also submits that, not having processed any
    applications in 2007, it was unreasonable for the Township to rely on the
    declaration and pink slips when processing the 2008 application.

[59]

The trial judges
    determination that the Township met the standard of care is a question of mixed
    fact and law that attracts deference on appeal:
Housen v. Nikolaisen
,
    2002 SCC 33, [2002] 2 S.C.R. 235, at para. 37. His reasons indicate that he was
    fully aware of the facts and circumstances relating to Aces Taxis insurance
    coverage, including the fact that the Township is a small municipality with
    limited resources to devote to bylaw enforcement.

[60]

As the trial judge
    noted, this court has recognized that municipalities have discretion in
    determining how to enforce their bylaws provided they act reasonably and in
    good faith:
Foley v. Shamess
, 2008 ONCA 588, 297 D.L.R. (4th) 287, at
    para. 29; see also
Donnell v. Joseph
, 2012 ONCA 240, 94 M.P.L.R. (4th)
    169, at para. 28. Aces Taxi did provide some evidence of insurance in the form
    of the pink slips issued by the same insurer that had originally provided $1,000,000
    of coverage. The bylaw enforcement officer testified that on the basis of the
    pink slips and the signed declaration, and in the light of his personal
    relationship with the owner, he believed that Aces Taxi had the required
    $1,000,000 of coverage.

[61]

The trial judge was
    faced with a difficult judgment call as to whether the Townships practice of
    accepting pink slips and signed declarations was satisfactory proof of the
    required insurance pursuant to ss. 5 and 9 of the Bylaw. He recognized that
    there were shortcomings in the Townships approach and that the best practice
    might well have been to insist upon a certificate of insurance when the taxi
    licence was renewed, but he did not consider the failure to do so to be
    unreasonable or in bad faith. I cannot say that the trial judge committed a
    palpable and overriding error in concluding that, in all of the circumstances,
    the Township acted reasonably and in good faith.

[62]

Accordingly, I would dismiss
    State Farms appeal from the trial judges determination that the Township did
    not fall below the applicable standard of care.

(3)

Should this court determine that the Townships negligence was the cause
    of the interveners losses?

[63]

The interveners ask us
    to deal with the question whether the Townships negligence caused their losses.
    They do so because they wish to claim against the Township any damages exceeding
    the limits of the OPCF 44R Family Protection Coverage endorsement.

[64]

My decision on the issues
    of duty and standard of care is sufficient to dispose of this issue. However, I
    would add these brief comments. The order directing the trial of the third-party
    claims did not provide for the interveners participation at trial. The issue
    of causation was not raised at trial and, in my view, the interveners should
    not be permitted to raise it at this stage. It would be unfair to the Township
    for us to consider the issue in the abstract without the benefit of evidence
    and argument before the trial court. Moreover, without a proper record, I fail
    to see how we could decide the issue on appeal. Finally, as the issue of
    causation was not dealt with at trial, had we allowed State Farms appeal,
    there is nothing in the trial judges reasons that would have prevented the
    interveners from advancing the issue of causation at a new trial.

F.

DISPOSITION

[65]

I would, accordingly,
    dismiss the appeal with costs to the Township fixed at $12,500 inclusive of
    disbursements and taxes, payable by State Farm. The interveners and the
    Township agree that the costs of the three preliminary motions should follow
    the outcome of the appeal and accordingly, I would order the interveners to pay
    those costs to the Township, fixed at $5,000 inclusive of disbursements and
    taxes.

Released: June 29, 2016

Robert J. Sharpe
    J.A.

I agree H.S. LaForme
    J.A.

I agree K. van
    Rensburg J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: wpd Sumac Ridge Wind Incorporated v. Kawartha Lakes
    (City), 2016 ONCA 496

DATE: 20160622

DOCKET: C61634

Rouleau, Epstein and Benotto JJ.A.

BETWEEN

wpd Sumac Ridge Wind Incorporated

Applicant (Respondent)

and

Corporation of the City of Kawartha Lakes

Respondent (Appellant)

Clifford I. Cole and Konstantine Stavrakos, for the
    appellant

Andrew Faith, Andrew Max and Emma Carver, for the
    respondent

Heard: May 2, 2016

On appeal from the order of the Divisional Court
    (Justices Harriet E. Sachs, Alison Harvison Young and Douglas K. Gray), dated
    August 13, 2015, with reasons reported at 2015 ONSC 4164, 43 M.P.L.R. (5th) 91,
    quashing Resolution CR2014-279 and directing the Corporation of the City of
    Kawartha Lakes to consider and decide wpd Sumac Ridge Wind IncorporatedÕs
    applications in good faith.

Rouleau J.A.:

A.

Overview

[1]

This appeal concerns the interaction of municipal jurisdiction over
    roads, Renewable Energy Approvals under the
Environmental Protection Act
,
    R.S.O. 1990, c. E.19, and provincial paramountcy over municipal legislative
    enactments, codified in s. 14 of the
Municipal Act, 2001
, S.O. 2001,
    c. 25. Namely, does provincial paramountcy limit a municipalityÕs authority
    over one of its unopened municipal road allowances when the province issues a
    Renewable Energy Approval for a wind turbine project that provides for the use
    of that same road?

[2]

The appellant, the Corporation of the City of Kawartha Lakes (the
    ÒCityÓ), argues that the Divisional Court erred in concluding that it does. It
    submits that its resolution to refuse any requests by the respondent, wpd Sumac
    Ridge Wind Incorporated (ÒSumac RidgeÓ), to use an unopened municipal road
    allowance within its jurisdiction did not frustrate the purpose of the
    Renewable Energy Approval obtained by Sumac Ridge for a wind turbine project
    that provided for use of that same road. It also argues that the Divisional Court
    erred in ordering mandamus, and made palpable and overriding errors in finding,
    based on its past conduct with the respondent, that it passed the resolution in
    bad faith.

[3]

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

B.

facts

[4]

Sumac Ridge initiated a renewable energy project to build, operate and
    retire five industrial wind turbines in the City. As required by the
Environmental
    Protection Act
, it applied to the Ministry of the Environment, now the
    Ministry of the Environment and Climate Change, for a Renewable Energy Approval
    authorizing the project.

[5]

Sumac RidgeÕs application for a Renewable Energy Approval consisted of
    comprehensive plans and studies required by the
Environmental Protection
    Act
and regulations made under that act. The application included maps of
    the project setting out necessary roads for construction and operation of the
    turbines at their exact sites. Sumac Ridge proposed to locate the facility on
    privately owned lands, but planned to build its main access road on an unopened
    municipal road allowance, Wild Turkey Road.

[6]

The proposal contemplated widening an unopened portion of Wild Turkey
    Road by about one metre and levelling its surface to allow for the delivery of
    the wind turbines. Sumac Ridge undertook to pay for the upgrading, operation,
    and retiring of the road.

[7]

The regulation governing the approval of renewable energy projects,
    O. Reg. 359.09, requires the preparation of several reports. Those reports
    include a design and operations report, a consultation report, a project
    description report, a construction plan report, and a decommissioning plan
    report.

[8]

Two of these reports are of particular relevance to the issues raised in
    this appeal. The first is the consultation report, which summarizes, among
    other things, the applicant's communications with the public and the local
    municipality and how any concerns of the municipality have been considered. The
    second is the design and operations report, which sets out a site plan of the
    project, including maps of roads, utility corridors and rights of way situated
    within 300 metres of the facility. Those reports demonstrate the extent to
    which the Ministry takes into account all aspects of the proposed project Ð including
    municipal concerns and the placement of access routes Ð when issuing a
    Renewable Energy Approval.

[9]

Beyond the consultation required by the regulation, Sumac Ridge
    undertook early attempts to engage the City in the approval process for Wild
    Turkey Road.

[10]

It first approached the City about access routes, including Wild Turkey
    Road, in March 2011. Sumac Ridge was seeking a meeting to undertake the steps
    required to Òobtain the required municipal approvalsÓ. The City voiced no
    concerns about Wild Turkey Road or any of the proposed access routes. Rather
    than agree to an informal consultation about the needed municipal approvals,
    the City responded that it would not engage with Sumac Ridge outside of the
    formal Renewable Energy Approval process.

[11]

In January 2012, Sumac Ridge again sought a meeting with the City to
    discuss various reports that it had provided to the City. In its response, the
    City questioned the purpose of the proposed meeting given that it was not
    Òprescribed in the REA process, and not required prior to scheduling your
    public open house.Ó The City indicated that, instead, it would follow the
    Renewable Energy Approval regimeÕs prescribed municipal consultation process.

[12]

On March 14, 2012, Sumac Ridge repeated its request for a meeting with
    the City before completing its final layout of the project and before the final
    public meeting. As Sumac Ridge explained, the meeting was to address the permit
    process and assist in finalizing the projectÕs layout. It sought to discuss
    road upgrades, including the documents required for necessary approvals. It
    advised that the meeting would help it to decide if any amendments to the
    project application were warranted.

[13]

The City ultimately agreed to schedule a meeting for June 7, 2012. This
    was only 12 days before the final public meeting after which Sumac Ridge could
    not amend its proposal. At that meeting, the City simply advised that the use and
    upgrading of Wild Turkey Road would require the CityÕs approval, something
    Sumac Ridge already knew. The City, however, did not raise any specific
    objection to the use or upgrading of the road.

[14]

The final public meeting was held on June 19, 2012. On June 28, 2012,
    Sumac Ridge submitted its application for a Renewable Energy Approval, to be
    determined by a Director appointed under the
Environmental Protection Act
,
    s. 5.

[15]

On March 11, 2013, the City provided its response to the project as part
    of the municipal consultation process required by the regulation. The response
    contained no objection to the use or upgrading of Wild Turkey Road, despite the
    express invitation in the municipal consultation form, Part B, s. 5.2, to do so.

[16]

Outside of the prescribed Renewable Energy Approval process, however,
    the City was making it clear that it opposed wind turbine projects, including
    the Sumac Ridge project. On March 26, 2013, the City passed resolutions stating
    that it was not a Òwilling hostÓ for wind projects and seeking recommendations
    for legal options if the Province approved the Sumac Ridge project. This
    followed two earlier resolutions expressing the CityÕs objection and concern:
    the first, in February 2012, in which it asked the provincial government to
    impose a moratorium on approvals of industrial wind turbines pending further
    study on their impact on human health; and the second, in February 2013, in
    which it called on the provincial government to reject the Sumac Ridge project.

[17]

On May 31, 2013, while still awaiting the ProvinceÕs approval of its
    proposal, Sumac Ridge wrote to the City to request the formal commencement of
    the application process for Wild Turkey Road. In response, the City passed a
    resolution that read in part:

THAT council confirms the application from WPDÉ for permits
    relating to Gray Road and Wild Turkey RoadÉ are premature and directs the CityÕs
    legal counsel to advise the applicant accordingly; and

THAT that staff be directed to advise WPDÉ that any action not
    authorized by the municipality on Gray Road and Wild Turkey Road shall be seen
    as trespassing under the Trespass to Property Act and authorities will be
    contacted to enforce.

[18]

The City also advised Sumac Ridge that a Municipal Class Environmental
    Assessment, a planning study not mandated by the Renewable Energy Approval
    process, would have to be prepared for the proposed use of Wild Turkey Road.
    Sumac Ridge agreed to undertake the study at its own expense in order to comply
    with the CityÕs request.

[19]

The Director issued a Renewable Energy Approval to Sumac Ridge (the
    ÒSumac Ridge ApprovalÓ) on December 11, 2013. That approval was for five wind
    turbines to be placed at specific coordinates and for Òon-site access roadsÓ.
    The Sumac Ridge Approval set out the following:

[Sumac Ridge] shall construct, install, use, operate, maintain
    and retire the Facility in accordance with the terms and conditions of this
    Approval and the Application and in accordance with the following schedules
    attached hereto:

Schedule A - Facility Description

Schedule B - Coordinates of the Equipment and Noise
    Specifications

[20]

The project therefore had to be built as approved. The Sumac Ridge
    Approval covers all access roads, including Wild Turkey Road. No alternate
    placement of access roads is provided for. The City acknowledges that if Sumac
    Ridge cannot use Wild Turkey Road, the project cannot be built without
    reengaging in the Renewable Energy Approval process.

[21]

Third parties appealed the DirectorÕs decision to issue the Sumac Ridge
    Approval to the Environmental Review Tribunal. That appeal was ultimately
    dismissed.

[22]

On March 25, 2014, before Sumac Ridge had even completed the Municipal
    Class Environmental Assessment report requested by the City, City council
    passed resolution CR2014-279, which is the resolution subject to the
    frustration of purpose claim. It resolved the following:

THAT any request by [Sumac Ridge] and/or future successors for
    use of the unopened portion of Wild Turkey Road for property access and/or
    vehicular traffic to support proposed wind turbine development be refused.

[23]

In September 2014, Sumac Ridge completed its Municipal Class
    Environmental Assessment studies. The final report contained a detailed
    analysis of existing environmental conditions at the project location. It
    evaluated the proposed upgrades to Wild Turkey Road by comparing it to seven
    other options, including the option of not constructing the project. The option
    of using Wild Turkey Road as approved by the Sumac Ridge Approval received the
    best overall score.

[24]

The City did not alter its position after receiving the Municipal Class
    Environmental Assessment. The City discarded it on the basis that it provided
    no information of any value for councilÕs consideration. The CityÕs expert
    witness described the Municipal Class Environmental Assessment as biased and
    the worst one he had ever seen.

[25]

Through November and December 2014, Sumac Ridge and the City exchanged
    correspondence. Sumac Ridge sought to negotiate terms of an agreement to allow
    Wild Turkey Road to be upgraded as provided in the Sumac Ridge Approval. It
    offered to pay for the construction, operation, and retiring of the road. In
    January 2015, the City responded that it remained opposed to Sumac RidgeÕs use
    of the road. No vehicular access and entrance to unopened and unassumed
    portions of Wild Turkey Road would be granted, nor would the City grant any
    approvals to upgrade it.

[26]

Sumac Ridge then brought an application for judicial review to the Divisional
    Court, which was heard on April 23, 2015.

C.

the decision of the divisional court

[27]

The Divisional Court granted the application. It quashed the CityÕs
    resolution barring access to Wild Turkey Road and ordered the City to consider
    and decide Sumac RidgeÕs applications in good faith.

[28]

At paras. 41 and 43, it described the nature and purpose of Renewable
    Energy Approvals as follows:

[T]he particular purpose of the [Sumac Ridge Approval] is to
    authorize the Òconstruction, installation, operation, use and retiring of [the]
    Class 4Ó Sumac Ridge Wind Project. This approval furthers the overall
    policy goals underlying the [
Green Energy Act
] regime, as described in
East Durham Wind
at para. 37:

The [
Green Energy Act
] provides a complete regime
    for carrying out the governmentÕs policy in this regard. It features an
    economic incentive for project developers (the [Feed-in Tariff] program); a
    comprehensive approval process to scrutinize the potential effects of each
    project on the health of humans, plants and animals and to identify any
    conditions that might be necessary to account for local conditions (the [Renewable
    Energy Approval]); and an appeal process for [Renewable Energy Approvals] that
    utilizes a specialized tribunal (the [Environmental Review Tribunal]) and the
    oversight of the courts on questions of law. To maintain this streamlined
    system the ability of municipalities to restrict renewable energy development
    through various powers under the
Planning Act
and the
Municipal
    Act
has been curtailed.

É

The [Sumac Ridge Approval] approves the project as it was presented
    in [Sumac RidgeÕs] application. It is not merely an abstract approval in principle.
    It is a detailed and specific approval granted after an extensive and
    comprehensive process including consultation with the City. The [Sumac Ridge
    Approval] approves five [industrial wind turbines] at specified coordinates, as
    well as Òon-site access roadsÓ in accordance with the Application submitted by
    the company.

[29]

It then went on to conclude, at para. 52, that Òbecause the [Sumac Ridge
    Approval] contemplated the use of [Wild Turkey Road] as the artery of the
    project, the resolution purporting to refuse [Sumac Ridge] any use of [Wild
    Turkey Road] frustrates the purpose of the [Sumac Ridge Approval] and must be
    quashed.Ó
[1]

[30]

The Divisional Court also held that the CityÕs decision to refuse to
    allow Sumac RidgeÕs use of Wild Turkey Road was made in bad faith. The
    Divisional Court was of the view that, in making its decision, the City Òwas
    not exercising or attempting to exercise any legitimate jurisdiction over the
    use of the roads.Ó Rather, it was seeking Òto accomplish indirectly that which
    the City had been unable to achieve directly through the [Renewable Energy
    Approval] process: to stop the Sumac Ridge [industrial wind turbine] project.Ó

[31]

The Divisional Court inferred this intention based on, among other
    things, the way the City dealt with Sumac RidgeÕs request to access and upgrade
    Wild Turkey Road, and its failure to raise any concern regarding Sumac RidgeÕs
    proposed use of Wild Turkey Road until after the Renewable Energy Approval
    process had been completed.

[32]

The Divisional Court concluded that the appropriate remedy was to quash
    the CityÕs resolution and require the City to do the following:

1)       Consider and decide in
    good faith [Sumac Ridge]Õs applications to allow for the upgrading and use of [Wild
    Turkey Road]; and

2)       Consider and decide in
    good faith [Sumac Ridge]Õs applications for any municipal permits necessary for
    the expeditious construction and operation of [Sumac RidgeÕs] project.

D.

issues

[33]

The City raises three grounds of appeal, arguing that the Divisional
    Court erred as follows:

i)

By finding that the CityÕs resolution frustrated the legislative purpose
    of the Sumac Ridge Approval;

ii)

In making an order in the nature of mandamus requiring the City to
    consider and grant Sumac RidgeÕs application without applying the test for
    mandamus; and

iii)

By finding that the CityÕs resolution was made in bad faith.

E.

Analysis

(1)

Did the Divisional Court err in finding that
    the CityÕs resolution frustrated the legislative purpose of the
Sumac
    Ridge
Approval?

[34]

The City argues that a Renewable Energy Approval is simply a permissive
    instrument intended to secure environmental compliance if a renewable energy
    project is built. It submits that it is not a positive entitlement. It does
    not, as suggested by the Divisional Court, authorize the project and constitute
    a finding that the project furthers the policy goals underlying the
Green
    Energy and Green Economy Act
,
2009
, S.O. 2009, c. 12. Nor does it
    provide that the project can proceed without regard to municipal concerns.

[35]

In the CityÕs submission, the Divisional Court erred in attributing a
    broader purpose to the Renewable Energy Approval process. This led to its
    erroneous conclusion that the municipalityÕs exercise of its exclusive
    jurisdiction over roads to restrict access to Wild Turkey Road frustrated the
    purpose of the Sumac Ridge Approval. There is, in the CityÕs view, no conflict
    Ð in this case, the principles of paramountcy cannot be applied to prevent the
    municipality from exercising its exclusive jurisdiction over its roads.

[36]

For the reasons that follow, I would not give effect to this ground of
    appeal. I will first set out the doctrine of paramountcy and the governing test
    for frustration of purpose. Then I will review the evidence and statutory
    provisions to determine the purpose of Renewable Energy Approvals. Finally, I
    will explain why the CityÕs resolution preventing Sumac RidgeÕs access to Wild
    Turkey Road frustrates the purpose of the Sumac Ridge Approval.

(a)

The doctrine of paramountcy and the governing
    test for frustration of purpose

[37]

A cardinal rule of municipal law is that Òall by-laws are subject to the
    general law of the realm and are subordinate to itÓ, and that Òany by-laws
    which are repugnant to or inconsistent with general provincial legislation are
    void and of no effect, or else superseded to the extent that the legislature
    has actedÓ: Ian MacF. Rogers, Q.C.,
The Law of Canadian Municipal
    Corporations
, loose-leaf (2014-Rel. 5), 2d ed. (Toronto: Carswell, 1988),
    at para. 63.16 (citations omitted).

[38]

This principle has been codified in s. 14 of the
Municipal Act
,
    which provides as follows:

14. (1)
A by-law is
    without effect to the extent of any conflict with,

(a) a provincial or federal Act or a regulation
    made under such an Act; or

(b) an instrument of a legislative nature,
    including an order, licence or approval, made or issued under a provincial or
    federal Act or regulation.

Same

(2)
Without restricting
    the generality of subsection (1), there is a conflict between a by-law of a
    municipality and an Act, regulation or instrument described in that subsection
    if the by-law frustrates the purpose of the Act, regulation or instrument.

[39]

To determine whether municipal and provincial legislative enactments
    conflict, this court has endorsed applying the paramountcy doctrine governing conflicts
    between federal and provincial legislation:
Croplife Canada v. Toronto
    (City)
(2005), 75 O.R. (3d) 357, at para. 63;
Cash Converters Canada
    Inc. v. Oshawa (City)
, 2007 ONCA 502, 86 O.R. (3d) 401, at para. 32.

[40]

Whether a true conflict exists between federal and provincial legislative
    enactments has been the subject of considerable jurisprudence. It was most
    recently discussed in
Alberta (Attorney General) v. Moloney
, 2015 SCC
    51, [2015] 3 S.C.R. 327.

[41]

In that case, the Supreme Court of Canada set out the following
    analytical framework:

i)

As a preliminary question, it must be determined
    whether both laws are validly enacted. If one is invalid, then no conflict can
    exist:
Moloney,
at para. 17; see also
Rogers
    Communications Inc. v. Chteauguay (City)
, 2016 SCC 23,

at paras. 34-39.

ii)

If both laws are independently valid, the court must
    then examine whether the lawsÕ concurrent operation results in a conflict under
    either branch of the paramountcy test.
The two branches are (1)
    operational conflict Ð Òthere is an operational conflict because it is
    impossible to comply with both lawsÓ; or (2) frustration of purpose Ð
    when, Òalthough it is possible to comply with both laws, the operation of the
    provincial law frustrates the purpose of the federal enactmentÓ:
Moloney
,
    at para. 18.

iii)

If conflict is found, the inferior law
    remains in force but is inoperative to the extent it conflicts with the
    superior law:
Moloney
, at para. 29.

[42]

The party alleging the conflict bears the burden
    of proving conflict:
Moloney
, at para. 27.
    When examining conflict, it is the effect of the inferior law, and not its
    purpose that is the focus of the paramountcy analysis:
Moloney
, at para. 28;
Husky Oil Operations Ltd. v. Minister of
    National Revenue
, [1995] 3 S.C.R. 453, at para. 39. That
    being said, an intention to interfere with the superior governmentÕs purpose
    may call into question the legitimacy of the inferior law:
Moloney
, at para. 28;
Husky Oil
, at paras.
    39, 44-45.

[43]

In this case, the parties went straight to the second branch of the
    paramountcy test Ð frustration of purpose Ð which the Divisional Court applied
    to conclude that the CityÕs resolution was in conflict with the Sumac Ridge
    Approval and, therefore, invalid. Although the application could have been
    disposed of on the basis of the courtÕs finding of bad faith, given the nature
    of this dispute, it was, and is, in the interests of justice to determine
    whether the resolution frustrated the purpose of the Sumac Ridge Approval.

[44]

In
Moloney
, the court cautioned that the standard for
    establishing frustration of purpose is high. It identified, at para. 26, that
    the following situations would generally not lead to a conflict: ÒFor instance,
    duplicative federal and provincial provisions will generally not conflict. Nor
    will a conflict arise where a provincial law is more restrictive than a federal
    lawÓ (citations omitted).

[45]

The court went on to explain that Ò[t]he application of a more
    restrictive provincial law may, however, frustrate the federal purpose if the
    federal law, instead of being merely permissive, provides for a positive
    entitlementÒ (citations omitted).

[46]

The Supreme Court cited
Law Society (British Columbia) v. Mangat
,
    2001 SCC 67, [2001] 3 S.C.R. 113, as providing an example of a federal law that
    created a positive entitlement, rather than being merely permissive, and which
    was thus frustrated by a more restrictive provincial law.

[47]

In
Mangat
, the issue was whether provincial legislation
    preventing non-lawyers from charging a fee to represent persons at Immigration
    Review Board hearings conflicted with federal legislation: namely, ss. 30 and
    69(1) of the
Immigration Act
, R.S.C. 1985, c. I-2. Section 30 provided
    that every person before the adjudication tribunal had the right to retain and
    be represented by Òa barrister or solicitor or other counselÓ and was to be
    given a reasonable opportunity to Òobtain such counsel at the personÕs own
    expenseÓ. Section 69(1) provided that before the Refugee division the person Òmay,
    at that personÕs own expense, be represented by a barrister or solicitor or
    other counsel.Ó

[48]

In finding that the provincial legislation conflicted with those federal
    legislative provisions, the Supreme Court applied the modern approach to
    statutory interpretation to determine the federal purpose. It looked beyond the
    specific provisions at issue and considered the legislative scheme as a whole,
    how similar and related acts governed representatives before federal tribunals,
    and reviewed an Ontario legislative report that highlighted the benefits of
    non-lawyer representatives.

[49]

Ultimately, and relying heavily on ss. 68(2) and 80.1(4) of the
Immigration
    Act
Ð which called for proceedings to be as informal and expeditious as
    the circumstances and fairness permit Ð the court found that in enacting the
    provisions at issue, Parliament Òwas pursuing the legitimate objective of
    establishing an informal, accessible (in financial, cultural and linguistic
    terms), and expeditious processÓ:
Mangat
, at para. 72. The provisions
    were not simply permissive. They provided a positive entitlement for
    non-lawyers to represent participants at hearings. Provincial legislation
    forbidding non-lawyers from charging a fee at the Adjudicative and Refugee
    divisions was accordingly held to be of no effect.

(b)

The purpose of the Renewable Energy Approval

[50]

A Renewable Energy Approval is an Òinstrument of a legislative natureÓ
    as contemplated by s. 14(1)(b) of the
Municipal Act
. As a result,
    if the CityÕs by-law Òfrustrates the purpose of the É instrumentÓ the by-law is
    without effect:
Municipal Act,
s. 14(2).

[51]

The correct characterization of the Renewable Energy ApprovalÕs purpose
    is, therefore, central to the appeal. Is the Renewable Energy Approval simply
    permissive Ð a determination that the project would not harm the environment,
    as argued by the City? Or is it, as Sumac Ridge maintains, a positive
    entitlement Ð the product of an extensive regulatory process aimed at
    facilitating and encouraging the development of green energy projects?

[52]

The CityÕs submissions on this point focused on ss. 3(1) and 47.2(1) of
    the
Environmental Protection Act
. Subsection 3(1) of the
Environmental
    Protection Act
establishes the purpose of the act: ÒThe purpose of this
    Act is to provide for the protection and conservation of the natural
    environment.Ó Further, Part V.0.1 of the
Environmental Protection Act
,
    which created and governs the Renewable Energy Approval process, reaffirms that
    purpose, at s. 47.2(1): ÒThe purpose of this Part is to provide for the protection
    and conservation of the environment.Ó

[53]

In other words, the City submits that the issuance of a Renewable Energy
    Approval is akin to an environmental clearance certificate, which confirms that
    proceeding with the project will not harm the environment. It does not, as the
    Divisional Court found, ÒauthorizeÓ or ÒapproveÓ the project as presented.

[54]

The City also points out that provincial documentation explaining the
    Renewable Energy Approval process specifically provides for applicantsÕ having
    to obtain necessary permits and authorizations, such as a road use agreement.

[55]

If municipal permits for road use were contemplated by the legislative
    framework, then, in the CityÕs submission, the issuance of a Renewable Energy
    Approval does not limit the CityÕs ability to assess Sumac RidgeÕs request to
    access Wild Turkey Road as it would any other request. If, acting in good
    faith, the City concluded that the project was not in its interest, it could
    refuse to allow access to the road.

[56]

This lends further support to their position that a municipality is at
    liberty to exercise its jurisdiction over its roads without it being found to
    be interfering or conflicting with the legislative purpose of the Renewable
    Energy Approval. Had the Divisional Court properly understood the purpose of
    the Renewable Energy Approval, the City submits, it would have found that no
    conflict exists between the approval and the municipalityÕs decision to
    exercise its statutory authority over its roads.

[57]

Such an interpretation, the City argues, is consistent with the Supreme
    Court of CanadaÕs admonition in
Moloney
, at para. 27, to apply the
    doctrine of paramountcy with restraint. As the court explained, ÒIt is presumed
    that Parliament intends its laws to coexist with provincial laws. Absent a genuine
    inconsistency, courts will favour an interpretation of the federal legislation
    that allows the concurrent operation of both laws.Ó

[58]

I disagree with the CityÕs submissions. The overall purpose of ÒPart
    V.0.1 Ð Renewable EnergyÓ of the
Environmental Protection Act
Ð Òto
    provide for the protection and conservation of the environmentÓ Ð is a broad
    one. That purpose is not limited to preventing projects that may harm the
    environment. Understood in its greater legislative context, the Renewable
    Energy Approval is a part of a larger scheme that aims to promote that purpose
    by encouraging and facilitating renewable energy projects.

[59]

That larger scheme was put in place by the
Green Energy and Green
    Economy Act
. That act enacted the
Green Energy Act
,
2009
,
    S.O. 2009, c. 12, Sched. A, and amended several statutes, which included adding
    Part V.0.1 to the
Environmental Protection Act
, and establishing an
    economic incentive for renewable energy project developers, the feed-in tariff
    program.

[60]

During the first reading of the bill that ultimately became the
Green
    Energy and Green Economy Act
, the Minister of Energy and Infrastructure
    highlighted the objectives of the act: Ontario, Legislative Assembly,
Official
    Report of Debates (Hansard)
, 39th Parl., 1st Sess., No. 112 (23 February
    2009) at 4951-52. There, he explained the following:

[The act] has two equally important thrusts: first, making it
    easier to bring renewable energy projects to life, and secondly, creating a
    culture of conservation, one where we go about our daily lives using less
    energy

...

If passed, the Act would ensure that new green power doesnÕt
    get tripped up in all kinds of red tape, but instead that new renewable
    generation would be built and flowing into the system faster, complete with
    service-time guarantees on our processes.

...

[S]o long as all necessary documentation is successfully
    completed, permits would be issued within a six-month service window. My
    ministry would emerge with new capabilities and new leadership to support the
    facilitation of renewable energy projects.

[61]

The MinisterÕs statements are reflected in the preamble of the
Green
    Energy Act
. That preamble provides that the government Òis committed to
    fostering the growth of renewable energy projects, which use cleaner sources of
    energy, and to removing barriers to and promoting opportunities for renewable
    energy projectsÓ.

[62]

The purpose of the
Green Energy and Green Economy Act
,
    therefore, was to encourage and actively facilitate the development of
    renewable energy projects, including wind projects. It created a framework for
    the provinceÕs approval of these projects.

[63]

As noted earlier, the Renewable Energy Approval is the product of the
    regime that the
Green Energy and Green Economy Act
put in place. It
    cannot, as a result, be interpreted as nothing more than a clearance certificate
    or finding that the project will not harm the environment.

[64]

Even a cursory review of the comprehensive regulation enacted under the
Environmental
    Protection Act
demonstrates that a Renewable Energy Approval is much more
    than this. That regulation, O. Reg. 359/09, puts in place a much broader
    process to assess the desirability of the project, including consultation with
    the public, municipalities, local authorities and Aboriginal communities.

[65]

The Sumac Ridge Approval itself imposes terms and conditions on noise,
    water management, monitoring natural heritage, traffic management planning,
    archaeological resources, establishing a community liaison committee, operations
    and maintenance, record keeping, notification of complaints, changes of
    ownership, and Aboriginal consultation.

[66]

Municipal concerns are clearly addressed as part of the process. The
    regulation requires the preparation of reports that outline the project and the
    impact on the public and the municipality, including roads surrounding the
    project. These reports are provided to the local municipality as part of the
    consultation. They explicitly seek municipal input on the proposed projectÕs
    impact on municipal roads and infrastructure.

[67]

Significantly, the project is only approved if, after consideration of
    all of the relevant factors, including municipal concerns, the Director is of
    the opinion that the project is Òin the public interestÓ:
Environmental
    Protection Act
, s. 47.5(1).

[68]

Therefore, the issuance of a Renewable Energy Approval is not simply an
    assessment that the project would not harm the environment. With the object of
    the
Green Energy and Green Economy Act
in mind, a Renewable Energy
    Approval is the authorization and approval of a project consistent with the
    legislativeÕs objective of encouraging the development of green energy, which
    in turn contributes towards the objectives of protecting and conserving the
    environment. It is a positive entitlement, and not merely permissive.

[69]

In addition, the legislative scheme demonstrates the legislatureÕs
    intention to put the decision as to whether a renewable energy project is in
    the public interest in the hands of the Director. It is not open to a
    municipality to conclude otherwise.

[70]

Section 14 of the
Municipal Act
applies, therefore, to prevent
    a municipality from using its authority over roads to prevent an approved project
    from going ahead for being against its interests and, in effect, thwarting the
    provincial purpose.

[71]

To the extent that municipal permits are required, the only concerns a
    municipality can advance are reasonable considerations such as costs,
    indemnification, and liability, and only so long as it does so in good faith.
    Permits may not be refused simply because the municipality disagrees with the
    overall project.

(c)

Did the CityÕs resolution frustrate the purpose
    of the
Sumac Ridge
Approval?

[72]

The CityÕs resolution prevents Sumac Ridge from using or accessing Wild
    Turkey Road. No alternatives to using that road were provided for in Sumac
    RidgeÕs application and none are specified in the Sumac Ridge Approval. The
    City concedes that without the ability to use Wild Turkey Road, the project, as
    contemplated by the Sumac Ridge Approval, cannot be built or operated.

[73]

Because the project cannot be built, as approved, without the ability to
    use Wild Turkey Road, the CityÕs resolution blocking Sumac RidgeÕs access to that
    road makes compliance with its approval impossible.

[74]

The purpose of that approval Ð to authorize a renewable energy project
    of the type fostered by the
Green Energy Green Economy Act
, and to
    place the decision as to whether it is in the public interest in the hands of
    the Director Ð has been frustrated by the CityÕs purported exercise of its
    jurisdiction over roads.

(2)

Mandamus

[75]

The City submits that the Divisional CourtÕs order Ð directing the City
    to reconsider in good faith the upgrading and use of Wild Turkey Road Ð is an
    order in the nature of mandamus. Before making such an order, it argues, the
    Divisional Court ought to have applied the test for mandamus. The City goes on
    to explain that the Divisional CourtÕs order does more than direct reconsideration;
    it directs the result of what is a municipalityÕs discretionary decision-making
    power. That is because, it claims, the Divisional Court found that the City
    could not refuse Sumac RidgeÕs request.

[76]

According to the City, the relevant aspects of that test, set out in
Apotex
    Inc. v. Canada (Attorney General)
, [1994] 1 F.C. 742 (C.A.), at pp. 766-67,
    affÕd by [1994] 3 S.C.R. 1100, are as follows:

i)

there must be a public legal duty to act;

ii)

the duty must be owed to the applicant;

iii)

there must be a clear right to the performance of that duty; and

iv)

if the decision is discretionary, mandamus is unavailable where the
    decision-making power is unqualified, absolute, permissive or unfettered.

[77]

The City maintains that, had the Divisional Court applied the test, it
    would have concluded that it could not be satisfied in this case. That is
    because

i)

the City was under no public legal duty to alter Wild Turkey Road;

ii)

the City did not owe such a duty to Sumac Ridge;

iii)

Sumac Ridge did not have a clear right to the performance of such a
    duty; and

iv)

the CityÕs decision-making authority is discretionary, unqualified,
    permissive and unfettered.

[78]

The Divisional CourtÕs order, it therefore concludes, ought not to have
    been made.

[79]

I would not give effect to this submission. The Divisional CourtÕs order
    is not an order of mandamus directing the result of a municipalityÕs
    discretionary decision-making power.

[80]

There was no finding that the City could not refuse Sumac RidgeÕs
    request. To the contrary, the Divisional CourtÕs reasons explained that the
    City retains jurisdiction to negotiate over legitimate considerations such as
    indemnity, liability and decommissioning costs, so long as it does so in good
    faith.

[81]

The order does not require the City to alter or open Wild Turkey Road.
    The orderÕs effect is to merely prohibit the City from continuing to frustrate
    the Sumac Ridge Approval and act in bad faith. Requiring the City to act in
    good faith is not mandamus, but rather a statement of an established principle
    of law.

[82]

The CityÕs resolution prohibiting Sumac Ridge from using Wild Turkey
    Road was invalidated by the Divisional CourtÕs order for frustrating the
    purpose of the Sumac Ridge Approval. It follows then that Sumac Ridge can once
    again apply to use Wild Turkey Road. Clearly, a refusal to even consider such
    an application would equally frustrate the Sumac Ridge Approval. In these
    circumstances, the City cannot reasonably take the position that, in exercising
    its jurisdiction over roads, it is permitted to refuse to even consider
    applications.

(3)

Did the Divisional Court err in finding that
    the CityÕs resolution was made in bad faith?

[83]

The City submits that, in finding that the City acted in bad faith, the
    Divisional Court committed palpable and overriding errors. Specifically, the
    City argues that it made three errors:

i)

It failed to show deference to the CityÕs decision;

ii)

It ignored unchallenged City evidence that it did not intend to thwart
    the project, but rather was concerned with traffic network policy; and

iii)

It improperly concluded that the City could not consider whether the
    project was for a purpose in the municipalityÕs interest when deciding whether
    to grant a public municipal asset for a commercial projectÕs private use
    without compensation.

[84]

In the CityÕs submission, the Divisional Court improperly inferred bad
    faith, despite the fact that municipalities have broad discretion in exercising
    their regulatory powers. When such broad discretion exists, the City argues
    that courts should not find bad faith unless there is no other rational
    conclusion. As there was evidence in the record from which the court could
    conclude that the CityÕs actions were motivated for reasons other than bad
    faith, the Divisional Court committed a palpable and overriding error.

[85]

In my view, the Divisional Court did not err in concluding that the City
    had acted in bad faith.

[86]

In
Grosvenor v. East Luther Grand Valley (Township)
,
    2007 ONCA 55, 84 O.R. (3d) 346, this court considered what constitutes bad
    faith on the part of a municipality. It endorsed the following statement of
    Robins J. in
HG Winton Ltd. v. North York
(1978), 20 O.R. (2d) 737
    (Div. Ct.):

To say that Council acted in what is characterized in law as
    Òbad faithÓ is not to imply or suggest any wrongdoing or personal advantage on
    the part of any of its members. But it is to say, in the factual situation of
    this case, that
Council acted unreasonably and
    arbitrarily and without the degree of fairness, openness, and impartiality
    required of a municipal government
. [Emphasis in original, citation
    omitted.]

[87]

The Divisional Court found that the City had acted in bad faith by exercising
    its jurisdiction over roads for an improper purpose; that is, to frustrate the Sumac
    Ridge Approval and prevent wind energy projects from being constructed within
    its jurisdiction. This was an inference it was entitled to draw based on the
    record before it, including the following evidence:

á

The
    City rebuffed Sumac RidgeÕs efforts to discuss Wild Turkey Road.

á

The
    City did not express any objections to the use and upgrading of Wild Turkey
    Road before the completion of the Renewable Energy Approval process.

á

The
    CityÕs arguments for refusing to allow the use of Wild Turkey Road changed.

á

City
    staffÕs report to Council, which formed the basis for the resolution, supports
    the inference that the City was motivated by its opposition to the project.

á

The
    City passed the impugned resolution before the Municipal Class Environmental
    Assessment Ð which it had explicitly promised to consider in making its
    decision Ð was complete.

á

The
    City only chose to object to the use of Wild Turkey Road after the window for
    addressing these purported concerns had passed and Sumac Ridge was locked into
    its Renewable Energy Approval that depended on the use of Wild Turkey Road.

[88]

Contrary to the CityÕs submission, the Divisional Court did not commit
    any reviewable error. It carefully examined the totality of the evidence before
    it and its conclusion is entitled to deference.

F.

conclusion

[89]

In my view, the appeal ought to be dismissed.

[90]

As per the agreement of counsel, Sumac Ridge, as the successful party,
    is entitled to its costs fixed in the amount of $30,000, inclusive of
    applicable taxes and disbursements.

Released:
ÒPRÓ June 22, 2016

ÒPaul Rouleau J.A.Ó

ÒI agree G.J. Epstein
    J.A.Ó

ÒI agree M.L. Benotto
    J.A.Ó

[1]
As I will set out later, and as provided under the
Municipal
    Act,
s. 14, the proper remedy for frustration of purpose is to declare that
    the inferior law is of no force or effect to the extent of the conflict. Given
    the Divisional CourtÕs conclusion on bad faith, however, quashing the
    resolution was
an
appropriate
remedy
.