COURT OF APPEAL FOR ONTARIO

CITATION: Clublink Corporation ULC v. Oakville (Town), 2019
    ONCA 827

DATE: 20191023

DOCKET: C66402

Doherty, Nordheimer and Harvison Young JJ.A.

BETWEEN

Clublink Corporation ULC and Clublink Holdings
    Limited

Applicants (Respondents)

and

The Corporation of the Town of Oakville

Respondent (Appellant)

J. Thomas Curry, Jessica Starck, Derek Knoke and Rodney
    Northey, for the appellant

Earl A. Cherniak, Q.C., Cynthia Kuehl, Mark Flowers and
    Lindsay Woods, for the respondents

Heard: May 23, 2019

On appeal from the order of Justice Edward M. Morgan of
    the Superior Court of Justice, dated December 11, 2018, with reasons reported
    at 2018 ONSC 7395, 143 O.R. (3d) 738.

Harvison Young J.A.:

A.

Overview

[1]

This is an appeal from an order quashing five municipal by-laws passed
    by the Corporation of the Town of Oakville (the Town), and a conservation plan
    in respect of the Glen Abbey Golf Course property (Glen Abbey) approved by
    resolution of the Town council, on the basis that they are
ultra vires
, or outside the statutory authority of
the Town, were passed in bad faith, and are void for vagueness. The respondents,
    Clublink Corporation ULC and Clublink Holdings Limited (referred to
    collectively as Clublink), are the owners of Glen Abbey.

[2]

This appeal was argued before this court during the same week as another
    appeal between the same parties,
Oakville (Town) v. Clublink Corporation
    ULC
, 2019 ONCA 826. As the background facts and context are set out at
    length in the course of that decision, they need not be set out in such detail
    here: see
Oakville
at paras. 6-19.

[3]

As described below, the impugned instruments were passed following the
    Towns designation of Glen Abbey as a property of cultural heritage value or
    interest under the
Ontario Heritage Act
, R.S.O. 1990, c. O.18 (the
OHA
).
    The main by-law at issue authorizes the Town to prepare or require conservation
    plans for cultural heritage landscapes located on protected heritage property:
    Town of Oakville, by-law 2018-019,
CHL Conservation Plan By-law
(30
    January 2018) (the CHL By-law), ss. 2.1.1, 2.1.3.

[4]

Pursuant to the CHL By-law, Town council subsequently passed a
    resolution (the conservation plan resolution) approving a conservation plan
    in respect of Glen Abbey (the conservation plan). The conservation plan is purportedly
    directed at preserving the cultural heritage value associated with Glen Abbey.
    It requires Clublink to seek permission from the Town prior to making certain
    changes to the golf course.

[5]

The application judge held that the Town lacked the
    jurisdiction to make all the impugned by-laws and the conservation plan because
    they constituted by-laws respecting services or things in relation to [c]ulture,
    parks, recreation and heritage, contrary to s. 11(8)5 of the
Municipal
    Act, 2001,
S.O. 2001, c. 25 (the
Municipal Act
)
.
In
    the application judges view, the effect of the by-laws and the conservation
    plan was to require Clublink to continue to operate a championship-calibre golf
    course.

[6]

The application judge also found that the by-laws and the conservation
    plan were passed in bad faith. The evidence led on the application suggested
    that the impugned by-laws and the conservation plan had been directed at, and
    enforced against, Clublink alone. In the application judges view, the Town had
    failed to consider Clublinks economic interests and had, in effect,
    expropriated Glen Abbey to a public use in a manner that amounted to bad faith.

[7]

Finally, the application judge found that the by-laws were void for
    vagueness. The application judge noted that the CHL By-law required a conservation
    plan for all properties that fall within a cultural heritage landscape in or
    on a protected heritage property. However, in his view, it was unclear from
    the terms of the CHL By-law which properties require a conservation plan and
    what the contents of the plan must be. The application judge concluded that
    this vagueness risked transforming the applicable standards into subjective
    value judgments.

[8]

The Town now appeals to this court. In its submission, the application
    judge erred in all three of his conclusions.

[9]

For the reasons that follow, I would allow the appeal in part. The Town
    had statutory authority to pass all the impugned by-laws
, they were not passed in bad faith and they are not
    void for vagueness
. However, the Town did not have the authority to
    approve the conservation plan. In my view, its purpose and effect are to compel
    Clublink to provide a service, contrary to s. 11(8)5 of the
Municipal Act
.
    Having found that the conservation plan resolution is a nullity on this basis, I
    decline to consider whether the conservation plan was approved in bad faith or
    was impermissibly vague.

B.

The Facts

[10]

In
    January 2014, the Town adopted a strategy to conserve cultural heritage
    landscapes (the CHL strategy). The CHL strategy outlined a process to
    identify and protect cultural heritage landscapes in the Town, including by
    designating such properties under Part IV of the
OHA
. The Town
    identified 63 potential cultural heritage landscapes, including Glen Abbey. Experts
    retained by the Town visited Glen Abbey in September 2015.

[11]

In
    October 2015, Clublink advised the Town that it intended to redevelop Glen
    Abbey into a residential and mixed-use community. In particular, Clublink
    advised that it proposed to build approximately 3,000 to 3,200 residential
    units and approximately 140,000 to 170,000 square feet of office and retail
    space.

[12]

In
    August 2017, the Town issued a notice of intention to designate Glen Abbey as
    being of cultural heritage value or interest under s. 29 of the
OHA
(the NOID)
.
The NOID
    described Glen Abbeys heritage attributes as including:

The historic use and ongoing ability of the property to be used
    for championship, tournament and recreational golf;

The historic use and ongoing ability to host championship and
    other major golf tournaments, such as the Canadian Open; [and]

The close and ongoing association
    of the course design with Jack Nicklaus/Nicklaus Design[.]

[13]

On
    December 20, 2017, the Town passed a by-law designating Glen Abbey as being of
    cultural heritage value or interest under s. 29 of the
OHA
: Town of Oakville, by-law 2017-138,
A
    by-law to designate the Glen Abbey Golf Course Property located at 1333 Dorval
    Drive
(20 December 2017) (the
    Designation By-law)
. The Designation By-law contains largely the
    same description of Glen Abbeys heritage attributes as identified in the NOID.

[14]

Clublink
    has brought an application to quash the Designation By-law, which is currently
    pending before the Superior Court of Justice. The Designation By-law was
not
challenged before the application judge and its
    validity is therefore not in issue on this appeal.

[15]

Subsequent
    to the passing of the Designation By-law, the Town passed five further by-laws,
    stated to be of general application (collectively the impugned by-laws):

1.

The CHL By-law:
The CHL By-law authorizes
    the Town to prepare or require a conservation plan for significant cultural
    heritage landscapes. It defines the cultural heritage value or interest and
    heritage attributes of a property in reference to the statement contained in
    the applicable
OHA

designation by-law.

2.

Town of Oakville, by-law 2018-020,
A by-law to
    delegate Councils power under Parts IV and V of the Ontario Heritage Act to
    address proposed alterations of protected heritage properties and to repeal
    By-law 2011-115, as amended
(30 January 2018)
(the
    Delegation By-law): This by-law delegates certain decision making in respect
    of ss. 33 and 42 of the
OHA
to Town staff.

3.

Town of Oakville, by-law 2018-042,
A by-law to
    amend the Property Standards By-law 2017-007
(27 February 2018) (the
    Property Standards By-law):
This by-law amends the Towns
    existing property standards by-law to enable Town council to prescribe minimum
    standards for the maintenance of heritage attributes of a property designated
    under the
OHA
.

4.

Town of Oakville, by-law 2018-043,
A by-law to
    amend the Private Tree Protection By-law 2017-038
(27 February 2018) (the
    Tree Protection By-law):
This by-law amends the existing private
    tree protection by-law to address trees of relevance to the heritage value of a
    property.

5.

Town of Oakville, by-law 2018-044,
A by-law to
    amend the Site Alteration By-law 2003-021
(27 February 2018) (the Site
    Alteration By-law):
This by-law amends the existing site alteration
    by-law to require Town approval of alterations to existing cultural heritage
    properties.

[16]

In
    addition, the Town approved the conservation plan by resolution. The conservation
    plan reproduces the heritage attributes as identified in the NOID and the Designation
    By-law and requires Town consent for any alteration of Glen Abbey that is
    likely to affect its heritage attributes. Under the terms of the conservation plan,
    Clublink is required to seek the approval of Town staff before making certain Category
    B alterations to Glen Abbey, which include the addition, removal or replacement
    of parking lots, patios, gazebos, the addition or removal of up to four trees, and
    changes to water bodies, bunkers, mounds, berms, greens, fairways, tees and
    rough. The approval of Town
council
is required before
    making certain Category C alterations, which include the addition or removal
    of more than four trees, and the addition or removal of a water body, hole, tee
    or the internal road.

[17]

On
    February 6, 2018, Clublink commenced an application to quash the impugned by-laws
    and the conservation plan, on the basis that they were
ultra vires
the
    Towns jurisdiction under the
Municipal Act
and the
OHA
, passed
    in bad faith and void for vagueness.

C.

The Reasons Below

[18]

First,
    the application judge held that all the impugned by-laws and the conservation plan
    were
ultra vires
as they violated s. 11(8)5 of the
Municipal Act
.
    He quashed the impugned by-laws and conservation plan on this basis.

[19]

The
    application judge referred to the Towns general jurisdiction under s. 8 and its
    sphere of jurisdiction to pass by-laws in respect of culture, parks, recreation
    and heritage under s. 11(3)5 of the
Municipal Act
. He also noted that
    this sphere of jurisdiction is expressly limited at s. 11(8)5 of the
Municipal
    Act
to exclude except as otherwise provided,  the power to pass a by-law
    respecting services or things provided by any person, other than the
    municipality or a municipal service board of the municipality.

[20]

The
    application judge concluded that the conservation plan and the impugned by-laws
    were
ultra vires
to the Towns jurisdiction under the
Municipal
    Act
, because they constituted by-laws respecting services or things in
    relation to [c]ulture, parks, recreation and heritage: at paras. 35-37. Specifically,
    the application judge found that the conservation plan defined the heritage
    value of Glen Abbey in relation to its continued operation as a championship
    golf course. Thus, [i]t is the service business of the [g]olf [c]ourse  continuing
    to host tournament, championship and recreational golf  that is preserved
    under the [c]onservation [p]lan: at para. 22. According to the application
    judge, while the heritage attributes of Glen Abbey are defined, in part, in
    relation to its physical features, if Clublink were to exit the business of
    running a golf course, without making any physical alterations to Glen Abbey,
    it would still be in violation of the terms of the conservation plan and the
    enabling CHL By-law. The application judge also found that the conservation plan
    required Clublink to provide things in a manner contrary to the
Municipal
    Act
.

[21]

The
    application judge accepted that the CHL By-law and the conservation plan were
    intended to accomplish indirectly what the Town did not have the power to do
    directly, namely, to use a heritage designation to compel a particular use of Glen
    Abbey. In the application judges view, there was nothing of inherent cultural
    value in a tee, green, or fairway once these things were divorced from the
    service of providing a golf course.

[22]

Second,
    the application judge concluded, in
obiter
, that the conservation plan
    resolution and impugned by-laws were passed in bad faith. A by-law is illegal
    where it is passed in bad faith:
Equity Waste Management of Canada v. Halton
    Hills (Town)
(1997), 35 O.R. (3d) 321 (C.A.). In this context, the
    application judge noted that bad faith connotes a lack of candour, frankness
    and impartiality: at para. 41. He considered whether there were badges or
    indicia of bad faith, which may include questionable timing, lack of notice, or
    a by-law that singles out one individual or property, citing
Toronto Taxi
    Alliance Inc. v. City of Toronto
, 2015 ONSC 685, 33 M.P.L.R. (5th) 103.

[23]

The
    application judge accepted Clublinks submission that the Town had acted in bad
    faith because, while the CHL By-law is purportedly applicable to all cultural
    heritage landscapes in Oakville, its application had been aimed solely at Glen
    Abbey. At that time, only Clublink had been required to adhere to a
    conservation plan. Similarly, the application judge noted that a press release
    issued upon passing of the CHL By-law expressly stated that the Town intended
    to conserve the cultural heritage value and attributes of the Glen Abbey Golf
    Course: at para. 43. The application judge also inferred bad faith from the
    timing of the passing of the CHL By-law which followed closely from Clublinks
    application under s. 34 of the
OHA
to demolish the golf course. In
    addition, the application judge found that the conservation plan sought to
    reinforce the Towns position that Clublink was required to apply under s. 33
    of the
OHA
, rather than s. 34 of the
OHA
, to make the
    proposed changes.

[24]

The
    application judge further found that the Town had acted in bad faith by
    disregarding the financial implications of the conservation plan and the CHL
    By-law for Clublink. The application judge found that the Town was aware of the
    financial implications for Clublink at the time it passed the CHL By-law and approved
    the conservation plan, as it had already received Clublinks proposal to
    redevelop Glen Abbey. Similarly, the Town had previously acknowledged, through
    its municipal tax assessment process, that continuing to use Glen Abbey as a
    golf course did not represent the highest and best use for the property. Nevertheless,
    there was no evidence of recognition or balancing in respect of Clublinks
    financial interest in the conservation plan or the CHL By-law.

[25]

The
    application judge further characterized the conservation plan as a form of
    disguised expropriation, citing
Lorraine (Ville) v. 2646-8926 Québec inc
.,
    2018 SCC 35, [2018] 2 S.C.R. 577, at para. 27. He found that the conservation plan
    requires Clublink to apply to the Town to make minor changes to the property
    and effectively requires Clublink to continue to operate a championship-level
    golf course, notwithstanding that this was a money-losing proposition for
    Clublink: at para. 67. In this vein, the application judge found that for the impugned
    by-laws and conservation plan to ignore the economic impact on the property
    owner, and to effectively require a property owner not only to maintain its
    property but to stay in business, all for the benefit of other residents of the
    Town, is to reflect bad faith decision[ ]making: at para. 72.

[26]

Third,
    the application judge concluded that the impugned by-laws were void for
    vagueness, citing
Wainfleet Wind Energy Inc. v. Wainfleet (Township)
,
    2013 ONSC 2194, 115 O.R. (3d) 64. The application judge noted that the CHL By-law
    requires a conservation plan for all properties that fall within a cultural
    heritage landscape in or on a protected heritage property. In his view, it is
    unclear from the terms of the CHL By-law which properties require a
    conservation plan and what the contents of each plan must be. The application
    judge concluded that this vagueness risks transforming the applicable standards
    into subjective value judgments.

[27]

The
    application judge further found that the vagueness of the impugned by-laws was
    intertwined with the Towns bad faith. In his view, [the] municipal
    instruments appear to suffer from an attempt to bury specifically targeted
    policies within general language. [The impugned by-laws] are unintelligible
    because they attempt to speak in general terms about a policy that is arguably
    specific to Glen Abbey: at para. 83.

D.

The Issues and Analysis

[28]

This
    appeal raises the following issues:

1.

Did the
    application judge err in failing to consider the legality of each impugned
    by-law and the conservation plan resolution separately?

2.

Did the
    application judge err in concluding that the impugned by-laws and the
    conservation plan resolution were outside

the Towns statutory authority?

3.

Did the
    application judge err in concluding that the impugned by-laws and the
    conservation plan resolution were passed in bad faith?

4.

Did the
    application judge err in concluding that the impugned by-laws were void for
    vagueness?

[29]

I
    begin by addressing the first issue. I then consider the remaining issues,
    which all concern the legality of the Towns actions. I consider these first in
    relation to the impugned by-laws and then in relation to the conservation plan.

(1)

The Legality of Each Impugned By-law and the Conservation Plan Resolution
    Must be Analyzed Separately

[30]

The application judge, correctly in my view, set out the analytical
    framework as requiring a consideration of each of the impugned by-laws as
    separate legal documents, though informed by the broader context of the scheme
    as a whole. However, he fell into error by allowing his findings regarding some
    of the impugned documents to draw conclusions about the others without adequate
    consideration of their respective purposes, content, and effects. In the course
    of his analysis, the application judge focused primarily on the CHL By-law, and
    to a lesser extent, on the conservation plan. He treated any finding as to the
    legality of the CHL By-law as determining the legality of the remaining
    instruments. Not only are the impugned by-laws all of general application, but each
    instrument also relies on differing sources of statutory authority.

[31]

The
    application judges approach is not compatible with
the presumption
    of validity that by-laws enjoy: see
Ontario Restaurant Hotel & Motel
    Assn. v. Toronto (City)
(2005), 258 D.L.R. (4th) 447 (Ont.
    C.A.), at para. 3, leave to appeal refused, [2006] S.C.C.A. No. 45. A by-law or
    resolution should not be quashed unless the presumption is overturned based on
that
instrument and the illegality of
    related instruments does not logically, in itself, rebut this presumption.

(2)

The Impugned By-laws are Valid

[32]

The
    Town had the statutory authority to pass all the impugned by-laws, but it did
    not have the authority to approve the conservation plan. Viewed as a whole and
    practically, the conservation plan resolutions purpose and effect are to
    require Clublink to provide a service by continuing to operate the property as
    a golf course, which is contrary to s. 11(8)5 of the
Municipal Act
.
    For this reason, it was outside the Towns jurisdiction

and cannot
    stand.

[33]

I begin with an overview of the relevant principles in determining
    whether the Town had jurisdiction to pass or approve the impugned instruments. I
    then consider whether the municipality had that power with respect to each of
    them in turn.

[34]

Municipalities are creatures of provincial legislation and a
    municipalitys law-making authority is limited to the powers conferred on it by
    the provincial legislature: see
Toronto (City) v. Ontario (Attorney
    General)
, 2019 ONCA 732, at para. 1;
Friends
    of Lansdowne Inc. v. Ottawa (City)
, 2012 ONCA 273, 110
    O.R. (3d) 1, at para. 12. The issue of whether the passing of a particular
    by-law is within a municipalitys power is therefore, at its core, a question
    of statutory interpretation. Applying the modern approach to statutory
    interpretation, the words of an Act are to be read in their entire context and
    in their grammatical and ordinary sense harmoniously with the scheme of the
    Act, the object of the Act, and the intention of [the legislator]:
Rizzo
    & Rizzo Shoes Ltd. (Re),
[1998] 1 S.C.R. 27, at para.
    21;
Bell ExpressVu Limited Partnership v. Rex
,
    2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26.

[35]

The interpretive exercise must, however, also be attentive to the important
    role of municipal governments. As Feldman J.A. observed in
Croplife
    Canada v. Toronto (City)
(2005), 75 O.R. (3d) 357 (C.A.),
    leave to appeal refused, [2005] S.C.C.A. No. 329, the
Municipal Act
is intended to give municipalities in Ontario the tools they need
    to tackle the challenges of governing in the 21st century and, as a
    consequence, municipal powers are to be interpreted broadly and generously
    within their context and statutory limits, to achieve the legitimate interests
    of the municipality: at paras. 34, 37; see also
1298417 Ontario
    Ltd. v. Lakeshore (Town)
, 2014 ONCA 802, 122 O.R. (3d)
    401, at para. 76, leave to appeal refused, [2015] S.C.C.A. No. 43.
The
    provincial legislator has made clear that it intends for municipal powers to be
    interpreted broadly by expressly stating as much at s. 8 of the
Municipal
    Act
.

[36]

Further
, as I mention above, municipal by-laws and resolutions benefit from
    a presumption of validity. The onus is on the applicant to prove that the
    enactment falls outside of the municipalitys powers:
Ontario
    Restaurant
, at para. 3. Courts require a clear demonstration
    before concluding a municipalitys decision was made without jurisdiction:
Friends
    of Lansdowne
, at para. 14.

[37]

In assessing whether a municipality has acted
    within their statutory authority, it is necessary to have regard both to the
    stated purpose and actual substance of the impugned instrument. This point was
    made by Doherty J.A. in
Barrick Gold Corp. v. Ontario (Minister of
    Municipal Affairs and Housing)
(2000), 51 O.R. (3d) 194
    (C.A.), at para. 59:

Municipalities must, however, do more than conform with the
    strict letter of the law in order to remain within the boundaries of their
    lawmaking powers. As indicated in
R. v. Greenbaum
,
supra
, the
    purpose of the provincial enabling legislation also constrains the municipal
    lawmaking power. In Rogers,
The Law of Canadian Municipal Corporations
,
supra
at 1021, it is put this way:

A by-law which is ostensibly within
    the authority of a council to enact may be set aside or declared invalid if its
    real purpose and attempt is to accomplish by indirect means an object which is
    beyond its authority
. ... Hence, the court must always in examining a
    by-law, see that it is passed for the purpose allowed by a statute and that
    such purpose is not resorted to as a pretext to cover an evasion of a clear
    statutory duty.

[Emphasis in original.]

[38]

I appreciate that
Barrick Gold
was decided prior to the enactment of the
Municipal Act
. In my view, however, the foregoing remains an accurate statement
    of the law. It follows logically from the principle that municipal powers find
    their source in statutes that are interpreted purposively applying the modern
    approach. Where the legislator has evidenced its intention to set limits on
    otherwise expansive municipal authority, municipalities cannot rely on broad
    grants of power to escape these constraints.

[39]

The question of whether a by-law is
ultra vires

a municipality is a
    question of law, reviewed on a standard of correctness:
Cash
    Converters Canada Inc. v. Oshawa (City)
, 2007 ONCA 502,
    86 O.R. (3d) 401, at para. 20;
Friends of Lansdowne
, at para. 14. At the same time, an appellate court must give the
    usual deference owed to an application judges factual findings and the
    inferences drawn from those facts.

[40]

Here, the jurisdictional
    questions turn primarily on the interpretation of the
Municipal
    Act
.
Section
    11 of the
Municipal Act
provides a general
    grant of powers to a municipality in respect of certain spheres of
    jurisdiction. Of particular relevance is s. 11(3) which provides that
    lower-tier and upper-tier municipalities can pass by-laws respecting a number
    of broad spheres of jurisdiction, which include transportation systems,
    parking, animals, waste management, and [c]ulture, parks, recreation and
    heritage.

[41]

The authority granted by s. 11(3) in respect of
    heritage is, however, expressly limited by s. 11(8)5 to exclude by-laws
    respecting services or things provided by persons other than the municipality
    and its service boards:

The power of a municipality to pass
    a by-law under subsection (3) under the following spheres of jurisdiction
does
    not, except as otherwise provided, include the power to pass a by-law
    respecting services or things provided by any person, other than the
    municipality or a municipal service board of the municipality, of the type
    authorized by that sphere
:

5. Culture,
    parks, recreation and heritage.

[Emphasis added.]

[42]

Reading the text of these provisions in the
    context of the
Municipal Act
as a whole, the
    legislator clearly intended to grant broad powers to municipalities in respect
    of culture, parks, recreation and heritage. At the same time, however, it explicitly
    held back the ability of municipalities to exercise this power to regulate the
    provision of goods and services by persons other than the municipality and its
    service boards.

[43]

On the application below, the application judge
    focused primarily on the CHL By-law. He concluded that the CHL By-law was
outside

the
    Towns jurisdiction because it was passed without a proper purpose and mandated
    the ongoing provision of services or things by a private landowner in respect
    of [c]ulture, parks, recreation and heritage: at para. 37.

[44]

In my view, and respectfully, the application
    judge erred in this conclusion. The CHL By-law finds its statutory authority in
    s. 11(3)5 of the
Municipal Act
and the
OHA
and there is nothing in the CHL By-law that requires a property
    owner to provide services or things in respect of culture, parks, recreation or
    heritage.

[45]

In assessing the
validity

of the
    CHL By-law, it is important to consider the actual substance of the instrument.
    It purports to apply to all cultural heritage landscapes contained or included
    in or on a protected heritage property: s. 2.1.1. The term protected heritage
    property is defined to mean a property subject to a designation under the
OHA
or a property in respect of which a designation is pending: s.
    1.1.1. The CHL By-law prohibits a property owner from altering a cultural
    heritage landscape without a conservation plan having first been prepared for
    the property, from altering the protected heritage property in a manner
    contrary to a conservation plan and from altering the property in a manner that
    is likely to affect the heritage attributes of the property: s. 2.2.

[46]

The CHL By-law also specifies a process whereby
    the property owner may apply to alter a cultural heritage landscape on a
    protected property: s. 5.1. The property owner is to apply to the Towns
    Director of Planning Services (or their designate), who in turn categorizes the
    proposed action. If the proposed action will not affect the cultural heritage
    attributes of the property, Category A, it does not require municipal
    approval. A s. 33 application in respect of a Category B alteration may be
    submitted to, and decided by, the Towns Director of Planning Services, whereas
    an application in respect of a Category C alteration must be submitted to
    Town council.

[47]

The CHL By-law does
not
specify, in any detail, the
    contents of a conservation plan to be developed in respect of a given cultural
    heritage landscape. Section 1.1.1 of the CHL By-law provides only general
    guidance as to the contents of a conservation plan. It provides no operational
    detail as to what a property owner may or may not do in respect of a cultural
    heritage landscape or designated property, beyond the general prohibition against
    altering the cultural heritage landscape without having a conservation plan. Further,
    the cultural heritage attributes associated with a specific protected
    property do not flow from the CHL By-law, but rather from the by-law
    designating the property under s. 29 of the
OHA.
Similarly, the CHL By-law does not delineate between Category A, B
    or C changes in respect of a given property; it authorizes the preparation of a
    conservation plan that imposes such classifications.

[48]

Considering the content and substance of the CHL
    By-Law leads me to the conclusion that the Town had the statutory authority to
    pass it. The CHL By-law is plainly a municipal by-law in respect of culture and
    heritage within the meaning of s. 11(3)5 of the
Municipal Act
. Authority for the CHL By-law is also found at s. 35.3 of the

OHA
, which

empowers a municipality to prescribe minimum standards
    for the maintenance of heritage attributes of a property designated under s. 29
.
Similarly, ss. 33(15), 33(16), 42(16) and 42(17) provided
    authority for those portions of the CHL By-law that provide for the exercise of
    delegated authority by Town staff.

[49]

Contrary to the application judges conclusion,
    the CHL By-law does not, on its own, run contrary to s. 11(8)5 of the
Municipal
    Act
. It is not a by-law respecting the provision of a
    service or thing. As enabling legislation of general application, the CHL
    By-law is entirely neutral as to the requirements imposed in respect of a specific
    property. It applies to a wide range of properties, in respect of which the
    cultural heritage attributes contained in the designating by-law may have no
    relation to any service or thing in respect of culture, parks, recreation or heritage.
    It does not compel any particular use of a given property, nor purport to
    regulate the provision of a service at that property.

[50]

For these reasons, and with respect, the
    application judge erred in holding that the CHL By-law was passed without
    jurisdiction. The CHL By-law was properly within the Towns jurisdiction.

[51]

A similar analysis applies to the remaining
    impugned by-laws. An examination of the actual substance of each by-law leads
    me to the conclusion that the Town had the statutory authority to make each of
    them. They are all by-laws
of
    general application. They all fall within the sphere of culture, parks,
    recreation and heritage at s. 11(3)5 of the
Municipal Act
.
Nothing in any of the
    impugned by-laws regulates the provision of services or things.

[52]

In addition, there are further
    sources of authority relevant to each of the impugned by-laws. The Delegation
    By-law was also authorized by
ss. 33(15), 33(16),
    42(16) and 42(17) of the
OHA
, which explicitly
    provides for the effected delegations, as well as s. 23.2(1)(c) of the
Municipal
    Act,
which empowers a municipality to delegate certain
    legislative and quasi-judicial powers to an individual who is an officer,
    employee or agent of the municipality. The Property Standards By-law, like the
    CHL By-law, was authorized by s. 35.3 of the

OHA
. The Tree Protection By-law was authorized by
s. 135 of the
Municipal Act
,

which confers upon municipalities
    the power to prohibit or regulate the destruction or injuring of trees. Finally,
    the Site Alteration By-law was authorized by s. 142 of the
Municipal
    Act,
which empowers a municipality to pass by-laws in
    respect of proposed site alterations.

[53]

Overall then, and respectfully, the application
    judge erred in finding that the impugned by-laws were outside the Towns
    jurisdiction. Each by-law is of general application and they were all supported
    by clear grants of power, and none of them purport to regulate the provision of
    a service or thing. Given that there is no basis on which to rebut the
    presumption of validity for any of these by-laws, I conclude that they were
    validly passed by the Town.

[54]

I would not find that the impugned by-laws were enacted in bad
    faith. As I have discussed, these by-laws are all of general application and they
    do not unfairly target Clublink. This includes the CHL By-law despite the fact
    that at the time the application was heard only Glen Abbeys initial heritage
    condition assessment had been requested or prepared by the Town. The
    application judges reasons focus primarily on the fact that the Town had
    disregarded Clublinks economic interests in favour of that of the neighbouring
    community by compelling them to run the golf course. This is achieved through
    the operation of the conservation plan, not the by-laws of general application.
When each impugned by-law is given proper consideration and
    distinguished from the conservation plan, the record is insufficient to
    overturn the presumption that each by-law was enacted in good faith.

[55]

Similarly, I would not find that the impugned
    by-laws are void for vagueness. As I have discussed, they are of general
    application and they are sufficiently clear when each by-law is considered on
    its own and in context. I agree with my colleagues analysis on this point and
    the conclusion he reaches.

(3)

The Town Did Not Have
    the Statutory Authority to Approve the Conservation Plan

[56]

The application judge concluded that approving the conservation plan
    was
ultra vires
the Towns jurisdiction,
    because it concerns the provision of services or things in respect of
    culture, parks, recreation or heritage. I agree.

[57]

The application judge engaged in a close review of the conservation plan.
    Based on the evidentiary record before the application judge, I am not
    satisfied that he erred in concluding that both the purpose and effect of the conservation
    plan are to require Clublink to continue to operate Glen Abbey as a golf
    course. There are a number of aspects of the conservation plan and its context
    that support this conclusion.

[58]

First, the Scope of Work document, produced September
    26, 2017, by the Heritage Oakville Advisory Committee to set the parameters of
    the conservation plan, states that the purpose of the conservation plan is to
address how Glen Abbey can be managed and used as a
    golf course for championship and recreational play
 (emphasis added).

[59]

Second, the stated purpose of the conservation plan
    is to guide future alterations of Glen Abbey that are likely to affect the
    cultural heritage attributes of the property. While the conservation plan
    expressly states that it is not a maintenance plan  [n]or is it an
    operational plan, it lists the cultural heritage attributes as including the
    ongoing ability to host championship and other major tournaments, such as the
    Canadian Open and the ongoing ability of the property to be used for
    championship, tournament and recreational golf. Given these cultural heritage
    attributes, any change or alteration to Glen Abbey that would impact its
    current readiness to host championship, tournament and recreational golf requires
    Town approval as set out in the conservation plan.

[60]

Third, the conservation plans focus on
    preserving the ongoing operation of Glen Abbey as a golf course is evident in its
    categorization of which actions require Town review. Even a minor alteration to
    the location of a tee or the shape of a bunker triggers the need for the
    approval of Town staff, as these are classified as Category B alterations.
    Removing a single tee or a single water hazard, as Category C alterations, triggers
    the need for the approval of Town council. This classification means, in
    effect, that any change to Glen Abbey that affects the way a round of golf is
    played there is subject to Town approval. The conservation plan very closely
    regulates Glen Abbey and seeks to subject any meaningful change to the course
    to public scrutiny.

[61]

The core of the Towns position, and my
    colleagues approach to this appeal, is that since the conservation plan seeks
    to preserve only the physical attributes of Glen Abbey, the resolution
    approving it cannot concern the provision of services or things within the
    meaning of s. 11(8)5 of the
Municipal Act.

[62]

Consistent with this view, my colleague takes
    issue with the application judges finding, at para. 24 of his reasons, that if
    Clublink were to cease to operate Glen Abbey as a golf course, it would be in breach
    of the conservation plan. In his view, Clublink could cease to operate and
    maintain Glen Abbey as a golf course and remain in compliance with the conservation
    plan, provided it did not alter the physical features of the golf course. For
    example, Clublink could turn Glen Abbey into a wildlife preserve. Provided it
    did not remove any tees, fairways, bunkers, greens or other features of the
    golf course, and provided that Glen Abbey could  at some undetermined point in
    the future  be returned to operational use, there would be no violation of the
    terms of the conservation plan.

[63]

I do not agree, for several reasons.

[64]

First, the Towns consent is required for any
    action that is likely to affect Glen Abbeys heritage attributes. Given that
    the cultural heritage attributes of the property are defined as including the
ongoing

ability to host championship, tournament
    and recreational golf, I do not agree that the conservation plan envisions that
    Clublink could cease the daily and seasonal maintenance associated with
    operating a golf course. The term ongoing ability refers to an actual,
    present ability, not some future, potential ability.

[65]

Second, the analysis as to whether the Town had
    the authority to pass

the
    conservation plan resolution must involve proper consideration of its true effect.
    The evidence on the application below was that it costs approximately $2
    million annually to maintain Glen Abbey as a championship-calibre golf course.
    Practically, if Clublink is required to maintain Glen Abbey, and is prohibited
    from putting the property to any use inconsistent with Glen Abbeys ongoing
    ability to host championship, tournament and recreational golf, Clublink has no
    logical or practicable choice
but

to continue to operate Glen Abbey as a golf course. Put somewhat
    differently, it might be theoretically open to Clublink to not operate Glen
    Abbey as a golf course and remain in compliance with the conservation plan.
    However, any such scenario is virtually certain to be a money-losing
    proposition for Clublink, leaving them no practical option but to operate Glen
    Abbey as a golf course.

[66]

The Town relies on
232169 Ontario
    Inc. (Farouz Sheesha Café) v. Toronto (City)
, 2017 ONCA
    484, 67 M.P.L.R. (5th) 183, for the proposition that the ultimate effect of a
    by-law on the economic interests of the applicant need not be considered when
    determining whether the by-law was passed for a proper purpose. In that case,
    this court held that a by-law banning the use of hookah devices was passed for
    legitimate public health and safety concerns. This legitimate purpose was not
    abrogated by the economic effects the by-law would impose on owners of hookah
    establishments: at para. 15.

[67]

The situation here is different. The application
    judge found that the purpose of the conservation plan is to force Clublink to
    continue to operate Glen Abbey as a golf course. The economic reality created
    by the conservation plan is not incidental to an otherwise
legitimate or legal

purpose; it is part and parcel of an otherwise non-legal purpose.
    The problem with the conservation plan is not that it affects Clublinks economic
    interests. Clearly, many types of legitimate municipal regulation necessarily impose
    costs on the regulated community. The problem with the conservation plan is
    that it purports to regulate so exactingly the use of Glen Abbey that it has
    the effect of compelling the provision of a service, which is specifically
    prohibited by s. 11(8)5 of the
Municipal Act
.

[68]

I note as well that
Farouz
did not require the court to consider a legislated limitation on
    municipal power, as I am confronted with here. Section 11(8)5 provides that a
    municipality
may not

pass
    by-laws concerning the provision of a service or thing in respect of culture,
    parks, recreation and heritage,
except
    as otherwise provided
. The Town has not identified
    any alternative source of authority that conferred on it the power to regulate
    the provision of services by Glen Abbey. In particular, there is nothing in the
OHA
that provides the Town the authority to
    use a heritage designation to mandate the ongoing provision of a service.

[69]

My colleague suggests that, because Clublink did
    not challenge the Designation By-law on the application below, the analysis as
    to
whether

the Town had the authority to pass the impugned by-laws and the conservation
    plan resolution must proceed on the basis that the Town has validly designated
    Glen Abbey as a cultural heritage property: at para. 82.

[70]

I agree that since the Designation By-law was
    not challenged on the application, the legality of that by-law is not formally
    in issue. However, this does not somehow insulate the conservation plan from
    review. The conservation plan, as approved by a resolution of the Town council
    under the CHL By-law, must have properly fallen within the Towns powers
    regardless of the validity of the Designation By-law.

[71]

Similarly, the fact that the conservation plan
    incorporates the definitions of cultural heritage value and cultural
    heritage attributes defined in the Designation By-law, and prohibits certain
    alterations without Town approval, does not mean it is coterminous with the Designation
    By-law. The conservation plan goes much further by identifying specific
    processes and considerations to be taken into account where Clublink seeks to
    make a change to the designated property. It also prospectively asserts that
    some seemingly minor alterations, such as the removal of a single tree or changes
    to a single bunker, are alterations that will affect the propertys cultural
    heritage attributes and therefore require Town approval. I would note as well
    that the CHL By-law prohibits any alterations contrary to the conservation
    plan, regardless of the content of the Designation By-law: s. 2.2.2.

[72]

The substance of the conservation plan, taking
    into account its purpose and effect, requires Clublink to continue to operate
    Glen Abbey as a golf course or, in other words, to provide a service in respect
    of culture, parks, recreation and heritage. This is a power expressly withheld
    from municipalities, pursuant to s. 11(8)5 of the
Municipal Act
. As noted above,
[a] by-law which is ostensibly within the
    authority of a council to enact may be set aside or declared invalid if its
    real purpose and attempt is to accomplish by indirect means an object which is
    beyond its authority:
Barrick Gold
,

at para. 59.

While the conservation plan purports to regulate the physical
    features of Glen Abbey with a view to preserving heritage features of the golf
    course, the real purpose and effect are to regulate the provision of the
    service offered by the golf course. Allowing the Town to achieve indirectly
    what it is forbidden to do directly would be contrary to the legislators
    intention expressed at s. 11(8)5 of the
Municipal Act
.

[73]

In light of my conclusion that the conservation plan
    mandates the provision of a service in respect of culture, parks, recreation or
    heritage by Clublink, it is not necessary to determine whether it concerns the
    provision of things. As it exceeded

the Towns statutory authority, the application judge was correct to
    quash the conservation plan resolution. However, I do agree with my colleague
    that the application judge erred in concluding that the conservation plan
    compels the provision of things for the reasons my colleague provides at
    paras. 104-6.

[74]

It
    is not necessary for me to determine whether the conservation plan resolution
    was passed in bad faith, given that I would find that the Town lacked
    jurisdiction to make it. Similarly, I decline to determine whether it is void
    for vagueness.

E.

Conclusion

[75]

The
    Town had the statutory authority to pass all the impugned by-laws
. Each impugned by-law, considered separately but in
    context, was grounded in the Towns statutory authority in the
Municipal
    Act
and other applicable statutes and
    therefore validly passed. Contrary to the conclusion of the application judge,
    none of them mandated the provision of a service. There was no basis to
    overturn the presumption that they were validly enacted, and it was an error
    for the application judge to do so. Further, the impugned by-laws were not
    passed in bad faith and are not void for vagueness
. They are
    therefore legal.

[76]

The
    conservation plan, however, regulates Glen Abbey to such a degree that it has
    the effect of compelling the provision of the service of operating a golf
    course. In order to comply with the conservation plan, Clublink has no
    practicable option but to continue to operate the golf course as it currently is
    and minor changes to its course are subjected to Town approval. Indeed, I
    accept, as the application judge found, that this was the purpose behind this
    conservation plan: to compel the operation of the golf course. This runs afoul
    of the clear limitation on the Towns otherwise expansive jurisdiction over the
    sphere of heritage enacted at s. 11(8)5 of the
Municipal Act
. Given
    that the legislator withheld the power to enact by-laws respecting the
    provision of services from the Towns general jurisdiction over heritage, the
    Town lacked authority to approve the conservation plan and I would find that
    the conservation plan resolution purporting to do so is a nullity.

F.

Disposition

[77]

I
    would allow the appeal in part. I would set aside the order below except for
    the order quashing the resolution approving the conservation plan. The parties
    agreed that costs would be fixed in the amount of $35,000 plus disbursements
    and HST to the successful party. Given the mixed success, I would award costs
    in the amount of $18,000 to the respondent.

A.
    Harvison Young J.A.

I
    agree Doherty J.A.

Nordheimer J.A. (dissenting in part):

[78]

I
    have reviewed the reasons of my colleague. I agree with her conclusion that the
    application judge erred in quashing the five by-laws at issue. I do not agree
    with her analysis in respect of the Cultural Heritage Landscape Conservation
    Plan for the Glen Abbey Property (the Conservation Plan). In my view, the
    application judge erred in quashing the Conservation Plan on the basis that it
    was
ultra vires
.

[79]

I
    agree with my colleague that the issue of the Towns jurisdiction is a question
    of law and questions of law are reviewed on the basis of correctness:
Housen
    v. Nikolaisen
, 2002 SCC 33, [2002] 2 S.C.R. 235, at para. 8. Clublinks
    repetitive efforts to describe the reasons of the application judge as
    amounting to findings of fact or of mixed fact and law, and thus attracting
    deference and a standard of review of reasonableness, are misconceived and
    fundamentally flawed. At the centre of his decision is the legal question of
    whether the Town has the jurisdiction to do that which it purported to do
    through the by-laws.

[80]

The
    application judge treated all the by-laws as one. He found that they stood or
    fell as a group. In particular, the application judge treated any finding regarding
    the CHL By-law as determining the fate of all the challenged by-laws. I agree
    with my colleague that he erred in doing so. Each of the by-laws ought to have
    been reviewed independently, especially given that all five of the by-laws are
    of general application.

(1)

The Towns Jurisdiction

[81]

I
    begin my analysis of the by-laws by quoting the following observation made by
    the application judge, at para. 11:

In order to do justice to the Town's enactment of the Impugned
    By-laws, I must consider them in their own right without being distracted by
    other measures not currently being challenged.

[82]

I
    agree with this observation. Unfortunately, the application judge did not heed
    his own advice in reaching his ultimate conclusions. In considering the
    validity of the by-laws and the Conservation Plan, it is important to remember
    that the by-law designating Glen Abbey as a cultural heritage property was not
    challenged before the application judge. Therefore, any analysis of the
    validity of the by-laws must proceed on the basis that the Town has validly
    designated Glen Abbey as a cultural heritage property under the provisions of
    the
Ontario Heritage Act
, R.S.O. 1990, c. O.18.

[83]

I
    repeat that it is important to remember that each of the by-laws are by-laws of
    general application. They are not specific to the issue surrounding Glen Abbey,
    despite the efforts of Clublink to paint them as such. Only the Conservation
    Plan is specific to Glen Abbey, and for obvious reasons. I do not dispute that
    the situation regarding Glen Abbey may have been the catalyst that caused the
    Town to act, but that is a very different thing than finding that the by-laws
    targeted Clublink. Whenever a new policy or approach is taken, someone will
    always have to be first to feel the impact.

[84]

The
    starting point for considering whether the Town was empowered to enact the
    by-laws and the Conservation Plan is the presumption of validity. As this court
    said in
Ontario Restaurant Hotel & Motel Assn. v. Toronto (City)
(2005)
,
202 O.A.C. 395 (C.A.), leave to appeal refused, [2006] S.C.C.A. No. 45, at
    para. 3:

The modern approach presumes that municipal by-laws are validly
    enacted absent clear demonstration that the by-law was beyond the
    municipality's powers.

[85]

In
    addition, on this point, s. 8 of the
Municipal Act, 2001
, S.O. 2001,
    c. 25 reads, in part:

(1) The powers of a municipality under this or any other Act
    shall be interpreted broadly so as to confer broad authority on the
    municipality to enable the municipality to govern its affairs as it considers
    appropriate and to enhance the municipalitys ability to respond to municipal
    issues.

(2) In the event of ambiguity in whether or not a municipality
    has the authority under this or any other Act to pass a by-law or to take any
    other action, the ambiguity shall be resolved so as to include, rather than
    exclude, powers the municipality had on the day before this Act came into
    force.

[86]

What
    then are the Towns powers with respect to these by-laws? Section 11(3) of the
Municipal
    Act
reads, in part:

A lower-tier municipality and an upper-tier municipality may
    pass by-laws, subject to the rules set out in subsection (4), respecting
    matters within the following spheres of jurisdiction:

5.  Culture, parks, recreation and heritage.

[87]

In
    considering the scope of the powers in s. 11 of the
Municipal Act
, it
    is important to remember the purpose behind the section. It was described by
    Feldman J.A. in
Croplife Canada v. Toronto (City)
(2005), 75 O.R. (3d)
    357 (C.A.), at para. 7:

One of the ways in which the new
    Act introduces more flexibility is by giving municipalities two kinds of
    powers. Part II of the new Act, for the first time, gives municipalities the
    power of a natural person (s. 8) and as well, ten broad spheres of
    jurisdiction (s. 11) within which municipal councils have wide discretion to
    enact by-laws.

[88]

The
    by-laws in issue here and the Conservation Plan are all clearly dealing with
    matters relating to heritage. That is their core purpose. Consequently, not
    only is there presumptive validity to the by-laws, there is express authority
    for them pursuant to s. 11(3)5.

[89]

In
    order to find the by-laws and the Conservation Plan
ultra vires
, one
    must find an exception to, or restriction on, the plain authority that s.
    11(3)5 of the
Municipal Act
provides. On that point, Clublink relies
    exclusively on s. 11(8) which reads, in part:

The power of a municipality to pass a by-law under subsection
    (3) under the following spheres of jurisdiction does not, except as otherwise
    provided, include the power to pass a by-law respecting services or things
    provided by any person, other than the municipality or a municipal service
    board of the municipality, of the type authorized by that sphere:

5.  Culture, parks, recreation and
    heritage

[90]

Consistent
    with the presumption of validity, and with the fundamental power provided by s.
    8, this restriction must be read narrowly. Additionally, it is consistent with
    the thrust of s. 8(2), to find that, if there is any ambiguity as to whether
    the Town has the authority to pass a by-law, that ambiguity should be resolved
    in favour of the Town having the authority.

[91]

With
    those principles in mind, it is my view that s. 11(8)5 does not preclude the
    Town from passing the by-laws and the Conservation Plan. In accordance with the
    proper interpretative principles, the expression services or things provided
    by any person must be read narrowly and restrictively. Otherwise, s. 11(8)
    could include almost anything that a municipality would otherwise attempt to
    govern, especially since there is very little that could not be captured
    between the terms services and things. Absent a restrictive interpretation
    of s. 11(8)5, the result would be that there would be very little room for s.
    11(3)5 to operate.

[92]

The
    application judge held that s. 11(8)5 precluded the Town from passing the
    impugned by-laws because he accepted Clublinks principal submission that the
    Conservation Plan required it to provide a service in relation to culture,
    parks, recreation and heritage, that service being to require Clublink to
    operate Glen Abbey as a golf course: at paras. 22-25, 35. Indeed, the
    application judge said that, if Clublink were to cease to operate Glen Abbey as
    a golf course, that would constitute a breach of the Conservation Plan and thus
    the CHL by-law: at para. 24.

[93]

I
    do not agree with the application judges conclusion or with his reasoning.
    There is, in fact, nothing in the Conservation Plan that requires Clublink to
    operate a golf course nor can Clublink point to anything in the Conservation
    Plan that expressly does so. Indeed, the Conservation Plan does the opposite.
    It expressly states:

This plan is not a maintenance
    plan for the Glen Abbey property. Nor is it an operational plan. Maintenance,
    meaning routine non-destructive actions that preserve the existing form, and
    operations are exempt from Town heritage review. Other activities are exempt
    from heritage review because they will not affect the propertys heritage
    attributes.

[94]

What
    the Conservation Plan does do is to restrict the actions that Clublink can take
    respecting the Glen Abbey property as long as it owns the property and the
    property remains subject to a heritage designation. It precludes Clublink from
    taking any action that might alter the heritage attributes of the Glen Abbey
    property, without first seeking and obtaining the approval either of the Town
    or its delegate. That is, after all, the fundamental purpose of a conservation
    plan. By definition, the heritage attributes here involve most of the aspects
    of the golf course. This should not come as a surprise since it is the
    existence of the golf course, including all of its component parts, along with
    its history, that creates its heritage value.

[95]

I
    pause at this juncture to say that the Conservation Plan flows from the
    designation by-law. The restrictions imposed by the Conservation Plan, in turn,
    flow from the fact and the terms of the heritage designation. I repeat that the
    heritage designation was not challenged before the application judge.

[96]

The
    Conservation Plan itself is authorized by the 2014 Provincial Policy Statement
    which addresses, among other things, the conservation of cultural heritage
    landscapes. Indeed, the Provincial Policy Statement provides, in its definition
    of the word conserved, that the conservation of cultural heritage landscapes
    may be achieved by the implementation of recommendations set out in a
    conservation plan. I note, on this point, that provincial policy statements
    are authorized by the
Planning Act
, R.S.O. 1990, c. P.13. By virtue of
    s. 3 of the
Planning Act
, any decision of the council of a
    municipality in respect of the exercise of any authority that affects a
    planning matter must be consistent with any policy statements.

[97]

Further,
    even if one could find something in the Conservation Plan that required
    Clublink to provide the service of a golf course, that would be a problem with
    the Conservation Plan. It would not be a reason to find that any of the
    impugned by-laws breach s. 11(8)5. The Town is entitled, under its authority
    and responsibility to protect properties that have heritage value, to pass a
    by-law (here, the CHL By-law) that requires a property owner to comply with a
    Conservation Plan. Any problem with the scope and validity of the Conservation
    Plan does not perforce equate to a problem with the validity of the by-law.

[98]

I
    would also point out that, if Clublinks position is correct, then the Town
    would be precluded from doing the very thing that both the
Ontario Heritage
    Act
and the
Municipal Act
authorize it to do  namely, protect
    properties that have heritage value. There is no interpretive principle that
    could be properly applied that would lead to that result.

[99]

All
    of that said, I am prepared to accept that, if the Conservation Plan purported
    to tell Clublink how much it could charge people to play Glen Abbey, or what
    tee-off times they could book, or how many groups could play Glen Abbey each
    day, that might draw the Conservation Plan into the realm of legislating with
    respect to services provided by a person, and thus be outside of the powers of
    the Town. However, that is not what the Conservation Plan does.

[100]

What the Conservation
    Plan does do is advise Clublink, with some degree of detail, what it can do
    with the Glen Abbey property on its own and what it needs the Towns approval
    to do, and the process for obtaining that approval. While I appreciate that
    Clublink does not believe that the Town has any such authority, if it should
    turn out that Clublink is wrong in that position, then I would have thought
    that Clublink would welcome the details provided by the Conservation Plan as
    providing them with a roadmap going forward in terms of its dealings with the
    Glen Abbey property. I would also observe that the Conservation Plan represents
    the antithesis of vagueness about which Clublink otherwise complains.

[101]

I appreciate that
    Clublink says that the harmful consequence for it, that results from the
    combination of the Conservation Plan and the CHL By-law, is that, from a practical
    point of view, it is required to operate a golf course, as otherwise it will be
    left with the expense of maintaining the golf course without receiving any
    revenue. I make two observations with respect to that claim of harm. First,
    while Clublink may make the business decision to continue to operate Glen Abbey
    as a golf course, it is not required to make that decision. It has other
    options, including selling the property if it does not wish to continue to
    operate a golf course on it. Second, Clublink has been operating Glen Abbey as
    a golf course for twenty years, so this is not a new venture for it, nor does
    it appear to be one that has been economically damaging to it during that time.
    I would note, on that point, that Clublink says, in the affidavit of its Senior
    Vice President, Investments filed in this matter, that it is Canadas largest
    owner and operator of golf clubs, with 33 golf course locations in Ontario and
    Quebec. Operating golf courses would therefore appear to lie at the very core
    of Clublinks business.

[102]

The application judge
    concluded, at para. 37:

The Impugned By-laws were enacted
    without a proper purpose under the
Municipal Act
and in direct
    contradiction to a specific statutory limitation of the Town's authority. For
    that reason, they are
ultra vires
the authority of the Town to enact
    them.

[103]

Again, I disagree. As
    will be evident from the above, the Town was authorized both by the
Ontario
    Heritage Act
and the
Municipal Act
to enact by-laws and
    resolutions to protect properties, within its municipal boundaries, that have
    heritage value. There is no legal or factual basis for the application judges
    finding that the by-laws were enacted without a proper purpose.

[104]

The application judge
    also found support for his conclusion that the by-laws and Conservation Plan
    are
ultra vires
in this courts decision in
Galganov v. Russell
    (Township),
2012 ONCA 409, 293 O.A.C. 340. With respect, the application
    judge appears to have misread that decision.

[105]

First, in
Galganov
,
    this court found that the municipality had authority to pass a by-law requiring
    the content of any new exterior commercial signs to be in French and in
    English. The basis for that conclusion was found in the broad authority granted
    to municipalities under s. 11(1) of the
Municipal Act
. It was in the
    context of that broad authority that this court concluded that signs fell
    within the meaning of the word things as used in s. 11(1). What this court
    did not consider, in
Galganov
, was the scope of any of the exceptions
    provided for in s. 11(8). Thus, the decision in
Galganov
has limited
    application to the case here.

[106]

Second, the
    application judge compares the CHL By-law with the by-law in
Galganov
and says, at para. 28, that the purported governance of signs in the
    Conservation Plan is governance of, among other things, the very thing
    signage  that the Court of Appeal says is beyond the boundaries of municipal
    authority. In fact, what this court decided in
Galganov
was that the
    municipality
did
have authority to legislate with
    respect to signage. It found that the by-law in question was
intra vires
the Towns authority:
Galganov,
at para. 49. The decision in
Galganov
,
    therefore, to the degree it has any relevance to this case, actually provides
    support for the Towns position.

[107]

Applying the proper
    interpretive principles, there is no basis for the application judges broad
    interpretation of the restriction found in s. 11(8)5 of the
Municipal Act
.
    With respect, the application judges conclusion turns the jurisdictional issue
    on its head. It gives paramountcy to the limitation in s. 11(8)5 rather than to
    the general authority and purpose found in ss. 8, 11(1) and 11(3). It is also
    inconsistent with the proper approach to the interpretation of municipal
    by-laws.

[108]

In addition, the
    application judge failed to consider that there are other statutory authorities
    by which the Town can enact these by-laws, which my colleague refers to at
    paras. 48 and 52 of her reasons. The application judges reasons do not address
    any of these other statutory authorities. It was not open to the application
    judge to find that all five of these by-laws were
ultra vires
the
    Towns jurisdiction without considering all of these other sources of statutory
    authority in terms of the jurisdiction issue. He erred in not undertaking that
    analysis before reaching the conclusion that he did.

[109]

In the end result, I
    conclude that the by-laws and the Conservation Plan were within the
    jurisdiction of the Town to enact.

(2)

Bad faith

[110]

I agree with my
    colleague that the application judge erred in finding that the by-laws were
    enacted by the Town in bad faith. I go further and also conclude that the
    application judges finding that the Conservation Plan was enacted in bad faith
    cannot be sustained. On this issue, I recognize that the application judges
    decision attracts a deferential standard of review and that the decision below
    should not be interfered with absent palpable and overriding error. However,
    that standard is met in this case. In my view, the application judge was unable
    to point to anything in the factual record, viewed objectively and fairly, that
    could support a finding of bad faith.

[111]

To begin, by-laws are
    presumed to have been enacted in good faith. Consequently, there is a high
    burden on anyone challenging a by-law by seeking to establish bad faith:
Seguin
    (Township) v. Hamer
, 2014 ONCA 108, at para. 5.

[112]

Bad faith was
    discussed by this court in
Equity Waste Management of Canada v. Halton
    Hills (Town)
(1997), 35 O.R. (3d) 321 (C.A.). As Laskin J.A. observed, at
    p. 340:

Bad faith by a municipality
    connotes a lack of candour, frankness and impartiality. It includes arbitrary
    or unfair conduct and the exercise of power to serve private purposes at the
    expense of the public interest.

[113]

There is no evidence
    in this record that would support a finding of bad faith in accordance with
    that definition. Indeed, the application judge himself found, at para. 68:

[T]here is no suggestion that the
    Town enacted the Impugned By-laws out of any motive other than what they
    thought was the best interest of their constituents at large.

[114]

Notwithstanding that
    clear finding, the application judge engaged in negative speculation regarding
    the motives of the Town in enacting the by-laws and Conservation Plan. He also
    placed great weight on the fact that Clublink was being prohibited from using
    its property as it wished, which the application judge characterized as [t]he
    wholesale transfer of property value from owner to community: at para. 62. I
    do not understand how the application judge reached that conclusion but, more
    importantly, I do not see how that sustains a finding of bad faith. In
    considering the actions of the Town, in this respect, it is important to
    remember the observation made by Major J. in
Nanaimo (City) v. Rascal
    Trucking Ltd
, 2000 SCC 13, [2000] 1 S.C.R. 342, at para. 35:

The reality that municipalities
    often balance complex and divergent interests in arriving at decisions in the
    public interest is of similar importance.

[115]

The Town is
    legislatively empowered to designate property as having cultural heritage value
    under the
Ontario Heritage Act
. I repeat that the Towns designation
    of Glen Abbey as a cultural heritage landscape was not challenged before the
    application judge. The designation of any property as having cultural heritage
    value will inevitably limit the use to which the property can be put by its
    owner. It will mean that the owner may not be able to maximize the value of the
    property. Given that practical reality, one cannot equate the potential
    economic consequences associated with a heritage designation, standing alone,
    with bad faith, without effectively equating any use of the heritage authority
    as amounting to bad faith.

[116]

It is readily apparent
    that the Town wishes to have Glen Abbey remain essentially as it is. It is the
    nature of Glen Abbey as a championship golf course, designed in the way that it
    was, that caused the Town to designate Glen Abbey and the surrounding property
    as a cultural heritage property. It is a landmark in Oakville that the Town
    wishes to preserve. The fact that the Town has acted to achieve that objective,
    which it is fully entitled to do under the
Ontario Heritage Act
, does
    not mean that the Town has failed to balance the interests of the Towns
    constituents with the interests of Clublink. As Laskin J. A. noted in
Equity
,
    at p. 343:

A court should not be quick to
    find bad faith because members of a municipal council, influenced by their
    constituents, express strong views against a project.

[117]

The application
    judges view of what constitutes a balancing of interests abjectly fails to
    take into account the realities of the situation. The Town wishes to maintain
    Glen Abbey as a golf course and Clublink wishes to transform Glen Abbey into a
    residential and commercial development. There is no common ground between those
    positions. Either one or the other must prevail. Those realities cannot render
    the Towns actions in pursuit of its goal as constituting bad faith.

[118]

Further, none of the
    badges of bad faith, identified by the application judge, demonstrate bad
    faith, either viewed individually or collectively. I note, on that point, that
    one cannot take individual actions not taken in bad faith and then, in some
    fashion, add them together and find bad faith.

[119]

I will address
    specifically one of those badges of bad faith identified by the application
    judge because it demonstrates the error in the application judges analysis. It
    is the application judges finding that while the Town is keenly aware of the
    development value locked up in alternative uses for the Glen Abbey property it
    is blithely unaware of the value locked up in the very same property when it
    suits its need to suppress all development beyond its current use: at para. 60.

[120]

First, I have already
    made the point that the designation of a property as having heritage value will
    inevitably restrict the use to which the owner can put the property, and thus
    limit the value that the owner may be able to extract from it. Second, the application
    judges reliance on this point, even it was otherwise valid, arises from the
    designation of Glen Abbey, and the surrounding property, as a cultural heritage
    property. I repeat that that designation was not in issue in this application.
    Clublink cannot, through the back door, do that which it was not prepared to do
    directly and that is challenge the heritage designation. Third, there is no
    foundation for the application judges finding that the Town is blithely
    unaware of the consequences of the designation. That is an unfair and unjust
    characterization of the Towns actions, especially given the point, which I
    referred to earlier, that municipalities often have to balance complex and
    divergent interests in arriving at decisions that are in the public interest.

[121]

Lastly on the bad
    faith point, the application judge also criticized the Town for its failure to
    realize that operating Glen Abbey as a golf course is a money-losing
    proposition for the property owner: at para. 67. The evidence does not establish
    that to be the case. Indeed, Clublink itself does not make that assertion
    anywhere in its evidence. All that Clublink does say is that it would cost
    Clublink approximately $2 million annually to maintain Glen Abbey as a
    championship golf course. What is missing from Clublinks evidence, of course,
    is how much revenue Clublink generates from Glen Abbey annually through
    membership, green fees, and other sources. The record before the application
    judge was simply insufficient to permit any conclusions to be made regarding
    the economic impact, if any, of the Conservation Plan.

[122]

The application
    judges analysis on the issue of bad faith is fundamentally flawed. Thus, his
    conclusion that bad faith was established is an unreasonable one.

(3)

Vagueness

[123]

The application judge
    found that the CHL By-law was void for vagueness. He then applied that
    conclusion to the other by-laws without further analysis. He did not make any
    finding on this point with respect to the Conservation Plan.

[124]

The application judge
    referred to the leading case on the concept of vagueness  namely
R. v.
    Nova Scotia Pharmaceutical Society
, [1992] 2 S.C.R. 606. In that decision,
    Gonthier J. identified, at pp. 626-27, five propositions that could be drawn
    from the existing case law. It is the third proposition that is of relevance
    here:

Factors to be considered in determining whether a law is too
    vague include (a) the need for flexibility and the interpretative role of the
    courts, (b) the impossibility of achieving absolute certainty, a standard of
    intelligibility being more appropriate and (c) the possibility that many
    varying judicial interpretations of a given disposition may exist and perhaps
    coexist.

[125]

It appears, however,
    that the application judge imposed a much heavier burden on the Town to support
    the scope of its by-laws then is justified by the decision in
Nova Scotia
    Pharmaceutical
. He did so by relying on earlier authorities that do not
    mirror the approach laid out by Gonthier J.: see e.g. paras. 75, 82.

[126]

In particular, I note
    the following observation by Gonthier J. at p. 632:

As was said by this Court in
Osborne
and
Butler
,
    the threshold for finding a law vague is relatively high.

[127]

As with the first
    issue, on the issue of vagueness, the application judge dealt exclusively with
    the CHL By-law. The central reason why the application judge found that the CHL
    By-law was vague was as follows, at para. 77:

It is entirely unclear from the
    terms of the CHL By-law which properties require a conservation plan and what
    the contents of the plan must be.

[128]

I disagree with the
    application judges reasoning. In my view, the CHL By-law is sufficiently clear
    on this point. First, the by-law only applies to cultural landscapes contained
    or included in or on a protected heritage property in the Town (s. 2.1.1).
    Consequently, a property has to have been designated as a heritage property
    before the by-law applies. Second, the preparation of a conservation plan
    begins with a direction from the Town Council (s. 2.1.3). In the absence of any
    such direction, there is no obligation to prepare a conservation plan, with one
    exception. That sole exception is where the owner of the property seeks to
    alter a cultural heritage landscape on a designated cultural heritage property.
    In that situation, the owner must prepare a conservation plan to accompany the
    request to alter (s. 5.1.2). I do not see anything vague in these provisions.
    No property owner would be confused as to whether the CHL By-law applies to
    their property, nor whether they were required to prepare a conservation plan.

[129]

The application judge
    also appears to have been unduly influenced in his consideration of the issue
    of vagueness by his earlier conclusion that the by-laws had been enacted in bad
    faith. Bad faith and vagueness are two separate and distinct concepts. There is
    nothing in the plain wording of the by-laws that could justify the application
    judges conclusion, at para. 83:

The argument about the vagueness
    of the Impugned By-laws is intertwined with the argument about bad faith  That
    is, the CHL By-law, the amendments to the Property Standards By-law, and the
    other Impugned By-laws are unintelligible because they attempt to speak in
    general terms about a policy that is arguably specific to Glen Abbey.

In fact, the by-laws are all ones of general
    application within the Town. That the Town has been focused on Glen Abbey,
    given its importance to the Town, does not change that fact. There is nothing
    unintelligible about any of the by-laws.

[130]

As I earlier noted,
    the application judge did not directly address the other by-laws. It is
    sufficient to point out, in that respect, that the other by-laws simply amend
    existing by-laws to provide consistency with the CHL By-law and the Towns
    cultural heritage landscape strategy. In addition, By-law 2018-020 delegates
    certain authority from the Town Council to the Director of Planning Services
    relating to heritage matters. By-law 2018-042 updates the minimum standards for
    maintenance and occupancy of property so that they apply to cultural heritage
    landscapes. Similarly, By-law 2018-043 updates the Towns Tree Protection
    By-law and By-Law 2018-044 updates the Towns Site Alteration by-law, so that
    both of those by-laws apply to cultural heritage landscapes. There is nothing
    vague about any of these amendments, nor does Clublink suggest that there is.

[131]

Finally, there is
    nothing vague about the Conservation Plan. To the contrary, it is a very
    detailed document that is intended to guide future alterations of the Glen
    Abbey property that are likely to affect the heritage attributes of the
    property. Indeed, Clublink complains in its written submissions that the
    Conservation Plan chose to dictate in minute detail the operation and
    maintenance of the Golf Course. It appears, therefore, that Clublinks
    complaint with respect to the Conservation Plan is the polar opposite of
    vagueness.

[132]

In the end result, the
    vagueness argument fails.

Conclusion

[133]

I would allow the
    appeal, set aside the order below and dismiss the application with costs to the
    Town fixed in the agreed amount of $35,000 inclusive of disbursements and HST.

Released: October 23, 2019

DD

I.V.B.
    Nordheimer J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Del Hugh Terrelonge v. CVC
    Ardellini Investments Inc., 2019 ONCA 811

DATE: 20191010

DOCKET: C66562

Sharpe, Hourigan and Jamal JJ.A.

In the Matter of the Bankruptcy
    of The Templar Hotel Corporation, of the City of Toronto, in the Province of
    Ontario

BETWEEN

Monk Development Corporation,

1586091 Ontario Limited c.o.b. as Rhed

and
Del Hugh
    Terrelonge

Applicants

(
Appellant
)

and

CVC Ardellini Investments Inc.
, The
    Templar Hotel Corporation, Gabretta Investments Limited, Gail Appel, Lynn
    Digenova, Taragar Holdings

Limited, Tenebaum Family Trust, Lawrence Tenenbaum,

Wendy Tenenbaum, Randi Usher, Shael Sone,

Her Majestry The Queen in Right of Ontario

as represented by the Minister of Finance,

National Leasing Group Inc., Howieco Entertainment Inc.,

Martin Kravashik, in Trust, Misim Investments Limited,

Prime One Financial, Inc., Ralcap Investments Corporation, Indcom
    Leasing

Inc., 1220356 Ontario Limited, 768124 Ontario Inc., Snap Premium
    Finance Corp., Her Majesty the Queen in the Right of Canada as represented

by the Minister of
    National Revenue, Aubrie Appel, MCAP Service Corporation, Templar Lake on the
    Mountain Inc. and A5 Capital Inc.

Respondents

(
Respondent
)

Alfred Schorr, for the appellant

Liliana Ferreira and Raffaele Sparano, for the respondent

Heard: October 4, 2019

On
    appeal from the order of Justice H.J. Wilton-Siegel of the Superior Court of
    Justice, dated January 8, 2019.

REASONS FOR DECISION

[1]

The appellant, Del Terrelonge, was the principal
    of Templar Corporation (Templar), which owned a hotel in Toronto. The Romspen
    Investment Corporation (Romspen) extended mortgage financing to Templar and
    held charges against the hotel property and the appellants personal residence.
    Templar defaulted on the mortgage in 2013. At that time, the balance owing was
    approximately $15 million.

[2]

To avoid a sale of the properties, Templar
    arranged financing from the respondent, CVC Ardellini Investments Inc. (CVC)
    and other parties who CVC has subsequently bought out. In May 2014, that group
    paid Romspen $8.5 million for the debt owed by Templar. CVC also signed a
    Forbearance Agreement with the appellant and Templar in the same month.

[3]

The nature of the Forbearance Agreement is
    contested in this appeal, but all parties agree that it obliged CVC to hold off
    on enforcing its rights for one year, and to accept payment limited to $8.5
    million plus interest, costs and expenses upon maturity, provided that Templar
    did not default on payments or conditions within the year of forbearance. In
    the agreement, Templar and the appellant acknowledged that the debt owing
    exceeded $17 million and that there was an existing default that had not been
    waived. The agreement also included an entire agreement clause that provided in
    part:

This Agreement constitutes the entire
    agreement between the Chargee and the Chargor with respect to the subject
    matter herefor but is not intended to replace the Charge and/or Security
    Documents, which remain in full force and effect

[4]

The parties dispute what the Forbearance
    Agreement requires in the event of default. CVC maintains that in the event of
    default, the full $17 million becomes due. The appellant takes the position
    that the amount due on default is limited to $8.5 million.

[5]

Templar defaulted on its obligations to CVC
    during the forbearance period. In August 2015, CVC obtained judgment against
    the appellant personally for approximately $8 million and possession of his
    residence. CVC also took possession of the hotel and sold it for $9,750,000.

[6]

The appellant brought a motion in the Superior
    Court submitting that under the terms of the Forbearance Agreement, the debt to
    CVC was limited to the $8.5 million that CVC paid to Romspen. The appellant
    claimed that this debt was now paid off by the sale proceeds of the hotel, and
    that CVCs charge against his residence ought to be discharged. The motion
    judge rejected this argument, holding that CVC had been assigned the full $17
    million debt, and was still owed at least $7 million.

[7]

The appellant appeals this decision, submitting
    that the motion judge made legal and palpable and overriding errors of mixed
    fact and law by interpreting the Forbearance Agreement as assigning the full
    $17 million. Further, he submits that the motion judge erred in law by
    determining that the court had no jurisdiction to grant relief from forfeiture
    under s. 98 of the
Courts of Justice Act
, R.S.O.1990, c. C.43, or that
    it lacked grounds to exercise its discretion under s. 98 in his favour.

[8]

With respect to the amount assigned, the
    appellant argues that Templars intention was to borrow $8.5 million and that
    the commitment letters exchanged as part of the negotiation of the new
    financing are consistent with that intention. The appellant submits that the
    only reason the Forbearance Agreement included a transfer of the full
    outstanding debt owing was to preserve that debts priority over other Templar
    creditors. According to the appellant, the intention of the parties was that
    Templar would not be liable for more than the $8.5 million, interest and
    associated costs of enforcement in the event of default.

[9]

We do not give effect to this ground of appeal.
    There in nothing in the Forbearance Agreement that indicates that CVC is
    limited to recovering only $8.5 million on default. The motion judge was
    correct in his observation that if the purpose of the Forbearance Agreement was
    to preserve CVCs priority, and not assign the full debt in the event of
    default, then the agreement would have provided for that explicitly. These were
    sophisticated parties represented by counsel and they could have easily
    documented the interpretation of the agreement now urged upon us by the
    appellant. The trial judge did not err in holding them to the bargain they
    struck as memorialized in the Forbearance Agreement.

[10]

In addition, article 10 of the Forbearance
    Agreement provided for the reduction in the principle amount owing only if
    Templar complied with its obligations under the agreement and paid the $8.5
    million plus interest and associated costs at the end of the forbearance
    period. That article would not have been necessary had the parties intended
    that the amount owing was limited to $8.5 million regardless of default.

[11]

The appellant submits that the motion judge
    erred in law by not giving sufficient consideration to the circumstances
    surrounding the creation of the Forbearance Agreement. We disagree. The motion
    judge was cognizant of the surrounding circumstances but avoided impermissibly
    using them to deviate from the text such that the court effectively creates a
    new agreement:
Sattva Capital Corp. v. Creston Moly Corp
, 2014 SCC
    53, [2014] 2 S.C.R. 633, at para. 57.

[12]

We also do not give effect to the appellants
    submission regarding relief from forfeiture under s. 98 of the
Courts of
    Justice Act
. Contrary to the appellants argument, the motion judge did
    not find that the court lacked jurisdiction to grant relief. Instead, the
    motion judge found that this was not an appropriate case to grant the relief
    sought. This is a discretionary remedy, highly dependant on the equities of the
    case, and is generally used to relieve against unconscionable transactions and
    disproportionate results.

[13]

The motion judge did not err in declining to
    grant relief. The transaction the parties agreed to was not unconscionable and
    the result was not disproportionate. There was no dispute that Templar received
    the benefit of the funds advanced under its financing arrangement with Romspen.
    At the time the Forbearance Agreement was executed, the total amount owing was
    over $17 million. If Templar had complied with the terms of the agreement, it
    would have expunged that debt for the price of approximately $8.5 million and
    would have notionally earned an additional $3.5 million in equity based on the
    appellants projected value for the hotel. Therefore, if the Forbearance
    Agreement was complied with, it would have granted Templar and the appellant a
    significant windfall. In addition, if the $8.5 million was not repaid within a
    year, it is commercially reasonable that CVC would require repayment of a
    greater sum.

[14]

For the foregoing reasons, the appeal is
    dismissed. The appellant shall pay CVC its costs of the appeal fixed in the
    all-inclusive amount of $15,000.

Robert J. Sharpe
    J.A.

C.W. Hourigan
    J.A.

M. Jamal J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Demetriou v. AIG Insurance Company of Canada, 2019
    ONCA 855

DATE: 20191029

DOCKET: C66624

Feldman, Fairburn and Jamal JJ.A.

BETWEEN

James
    Demetriou

Plaintiff

(Respondent)

and

AIG Insurance Company of Canada

Defendant

(Appellant)

Alan DSilva and Alexandra Urbanski,
    for the appellant

Brian Brock and Stephen Libin, for the respondent

Heard and released orally: October 22, 2019

On appeal from the
    judgment of Justice Gray of the Superior Court of Justice, dated January 24,
    2019.

REASONS FOR DECISION

[1]

The respondent insured a ring appraised at over $500,000, took that ring
    to a resort in the Dominican Republic, wore it on a gold chain around his neck
    on a late night walk on the beach, where he claimed it was stolen from him by a
    man who approached him and demanded his jewellery. The insurer denied the claim
    on the basis that the circumstances were suspicious and the insurer was not
    prepared to pay unless the respondent proved the loss. The respondent had lost
    another very valuable ring and recovered from another insurer the year before.

[2]

On summary judgment, the motion judge ordered the insurer to pay the
    claim. He also awarded punitive damages against the insurer for bad faith
    dealing and substantial indemnity costs.

[3]

The main issue on the appeal is whether the motion judge erred in law in
    two ways: 1) by failing to allow the insurer to amend its pleadings to rely on
    provisions of the policy that exclude coverage for deliberate acts or fraud,
    and 2) having disallowed the amendment, by granting summary judgment on the
    claim without giving any consideration to the many suspicious circumstances
    raised on the record, on the basis that they were not relevant without a plea
    of fraud.

[4]

The appellant submits that had the motion judge considered the entire
    record he would have concluded that the credibility of the insured was in issue
    and that a trial was required.

[5]

We agree with the submission of the appellant. In paragraph 48 of the
    reasons, the motion judge stated: The suspicious circumstances raised in the
    affidavit material would certainly be relevant to whether or not the claim is
    fraudulent, if fraud were being relied on. Although those suspicious
    circumstances may have been relevant to a plea of fraud, had one been made or
    allowed, they were also directly relevant to whether the respondent could prove
    his loss.

[6]

The motion judge reversed the burden of proof by ignoring those
    suspicious circumstances in relation to whether the respondent had proven his
    claim. In
Shakur v. Pilot Insurance Co.
(1990), 74 O.R. (2d) 673 (C.A.)
, a similar case where the
    insurer did not accept that the insured had proved that her jewellery was
    stolen, this court stated at p. 681:

It is fundamental insurance law that the burden of
    proof rests on the insured to establish a right to recover under the terms of
    the policy. In this case, the burden rested on the respondent and remained on
    the respondent to prove on the balance of probabilities that a theft of her
    jewellery had occurred. That the appellant, in denying the allegation of theft,
    impliedly alleged that the respondent was fraudulent in putting forward the
    claim in no way shifted the basic burden of proof resting on the respondent.

[7]

The motion judge in this case found that
Shakur
did not apply
    and was distinguishable because in this case the insurer had disclaimed
    reliance on fraud. He erred in so doing. While the appellant did not invoke the
    policy exclusions relating to fraud, the appellant was clearly challenging the
    respondents version of events.
Shakur
is binding and applies to this
    case. The primary issue was not whether the insurer had established fraud, but
    whether the insured had proved on a balance of probabilities that theft of the
    ring had occurred within the meaning of the policy:
Shakur,
at pp. 681-682.

[8]

In fact, the factum of the insurer asked for the amendment to plead
    fraud if it is deemed necessary to have done so to have the evidence regarding
    the plaintiffs credibility admitted. Rule 26.01 provides that the court shall
    grant leave to amend a pleading at any stage of an action, unless there is
    prejudice that cannot be compensated by costs or an adjournment. In our view,
    there was no such prejudice in this case. The motion judge thus erred by
    denying the amendment and then excluding from his consideration the evidence
    that raised the credibility issues and concerns regarding the insureds claim.

[9]

In our view, the motion judge was required to take a hard look at the
    entire record on the summary judgment motion in order to determine whether
    there was a genuine issue requiring a trial or whether he could decide the case
    on summary judgment. Because he did not do so, it is up to this court to do so
    on the record. In our view, it is clear that the credibility of the claim and
    of the claimant was squarely in issue and requires a trial.

[10]

We also allow the amendment of the respondents pleading, if desired.

[11]

The order is set aside including the punitive damages and costs. The
    costs of the motion shall be left to the trial judge to determine.

[12]

Costs of the appeal to the appellant in the agreed amount of $25,000,
    inclusive of disbursements and HST.

K. Feldman J.A.

Fairburn J.A.

M. Jamal J.A."