COURT OF APPEAL FOR ONTARIO

CITATION: Raibex Canada Ltd. v. ASWR Franchising Corp., 2018
    ONCA 62 DATE: 20180125

DOCKET: C62744

Sharpe, Blair and Epstein JJ.A.

BETWEEN

Raibex Canada Ltd., Ashraf Habashy, Ihab Lawandi
    and Ramy Bastaros

Plaintiffs/Defendants by counterclaim (Respondents/Appellants
    by way of cross-appeal)

and

ASWR Franchising Corp.*
,
ASWR
    Developments Inc.*
, Hellenic International Holdings Inc., Leontian Holdings
    Inc.,
Athanasios Anastopoulos aka Tom Anastopoulos
and J. Perry
    Maisonneuve

Defendants (
Appellants
/Respondents
    by way of cross-appeal)

*Plaintiffs
    by counterclaim

Geoffrey B. Shaw and Christopher Horkins, for the
    appellants

David S. Altshuller and Lara Di Genova, for the
    respondents

Heard: October 4, 2017

On appeal from the judgment of Justice Wendy M. Matheson
    of the Superior Court of Justice, dated September 7, 2016, with reasons
    reported at 2016 ONSC 5575.

Epstein J.A.:

OVERVIEW

[1]

The central issue on this appeal
    is whether the franchise disclosure document (FDD) provided by the appellant
    franchisor was so inadequate that it entitled the respondent franchisee to
    rescind the parties franchise agreement under s. 6(2) of the
Arthur Wishart Act (Franchise Dis
closure), 2000
,

S.O. 2000,
    c. 3 (the
AWA
).

The franchise agreement in issue was between Raibex
    Canada Ltd. (the Franchisee) and ASWR Franchising Corp. (the Franchisor).
    It gave the Franchisee the right to acquire and operate an AllStar Wings and
    Ribs (ASWR) franchise in Mississauga.
Neither
    the agreement nor the FDD specified a site for the prospective franchise.
    Rather,
the agreement stipulated that a
    suitable location would be selected through the reasonable best efforts of
    both parties. The FDD
included
an estimated range of costs for constructing an ASWR
    franchise from a shell,
but did
not provide cost estimates for converting a
    pre-existing restaurant to an ASWR outlet (a conversion).

[2]

The parties, working
    together, agreed upon a site for the franchise outlet that included an existing
    restaurant suitable for conversion. Differences arose after the costs of
    developing the franchise proved higher than the Franchisee expected. The
    Franchisee purported to rescind the franchise agreement on the basis of
    material non-disclosure. The Franchisor sought judgment for certain costs it
    incurred after taking over the restaurant following receipt of the Franchisees
    notice of rescission. The parties brought motions for summary judgment to,
    among other things, determine the validity of the Franchisees decision to
    rescind the agreement.

[3]

T
he motion judge held that the franchise agreement had
    been validly rescinded and dismissed the Franchisors claim for damages. The
    Franchisor appeals both aspects of her decision. The Franchisee cross-appeals certain
    related issues addressed in the motion judges reasons, and moves to admit
    fresh evidence.

[4]

For the reasons that
    follow, I would allow the appeal, except for part of the Franchisors claim for
    damages. I would dismiss the cross-appeal, largely for the reasons provided by
    the motion judge. I would also dismiss the motion to admit fresh evidence.

FACTS

The Parties

[5]

Ramy Bastaros is the
    sole director and officer of the Franchisee. Ashraf Habashy and Ihab Lawandi
    are shareholders in the Franchisee. These three individuals also acted as
    guarantors and covenantors in relation to the franchise agreement.

[6]

Athanasios (Tom)
    Anastopolous is a director and officer of the Franchisor. He controls, directly
    or indirectly, all four corporate defendants; specifically:

(1)

the Franchisor;

(2)

ASWR Developments Inc., a company
    that leases properties for the Franchisor and then subleases the premises to
    franchisees;

(3)

Leontian Holdings Inc., the owner
    of the trademarks used by the ASWR franchises. Leontian licenses those marks to
    the Franchisor for the purpose of sublicensing them to franchisees; and

(4)

Hellenic International Holdings
    Inc., previously the sole shareholder of the Franchisor, and now the
    controlling shareholder of ASWR Corp., the Franchisors current owner and a
    non-party to this action.

[7]

J. Perry Maisonneuve
    became a director and the chief financial officer of the Franchisor and of ASWR
    Developments in 2014. He was the sole sales representative dealing with the
    Franchisee during the parties negotiations.

Pre-Agreement Communications

[8]

In September 2012, Mr.
    Bastaros contacted Mr. Anastopoulos with a view to obtaining an ASWR franchise.
    His call was returned by Mr. Maisonneuve. During that call, Mr. Bastaros
    indicated that his maximum budget for acquiring a franchise was $400,000.

[9]

Mr. Maisonneuve sent
    Mr. Bastaros a preliminary information package on September 27, 2012. The information
    package contained cost estimates for constructing a restaurant from a shell.
    In his cover email, Mr. Maisonneuve mentioned that Mr. Bastaros could potentially
    reduce his costs by investing in existing restaurants that could be refurbished
    for $500,000 to $600,000. Mr. Maisonneuve estimated that Mr. Bastaros
    unencumbered cash investment in such a location would fall between $250,000 and
    $300,000. Mr. Bastaros and his business partners, Mr. Habashy and Mr. Lawandi,
    decided to purchase an ASWR franchise.

[10]

The
    Franchisee received the FDD on October 16, 2012. The document:

(1)

did not specify a location for the
    prospective franchise;

(2)

included a draft sublease, which
    indicated that the Franchisee was obliged to accept all terms in the head lease
    negotiated by the Franchisor and the landlord of the prospective franchise
    outlet;

(3)

did not contain a draft head lease;

(4)

provided an estimate of
    development costs to develop a franchise from a shell, in the range of $805,500
    to $1,153,286;

(5)

indicated that the cost to convert
    a pre-existing restaurant to an ASWR outlet was highly site-specific, although,
    in the Franchisor's experience, these costs had been significantly lower than
    the cost of building out from a shell;

(6)

cautioned that significant cost
    overruns could occur during a conversion due to infrastructure deficiencies
    that remain undetectable until reconstruction commences;

(7)

stated that the Franchisor had no
    reasonable means of estimating or predicting conversion costs with any certainty,
    and recommended the Franchisee maintain a significant contingency reserve;
    and

(8)

was signed only by Mr.
    Anastopoulos on behalf of the Franchisor. Mr. Anastopoulos did not sign
    separately for himself.

The Franchise Agreement

[11]

Mr.
    Bastaros formally applied for an ASWR franchise on October 30, 2012. The
    Franchisee was incorporated a week later. Mr. Bastaros then submitted a
    preliminary business plan that specified a development budget of $600,000, with
    an additional $50,000 for working capital.

[12]

Mr.
    Bastaros executed the franchise agreement and a general security agreement on
    behalf of the Franchisee on November 21, 2012. Mr. Bastaros, Mr. Habashy and
    Mr. Lawandi signed the agreements as guarantors and covenantors. Mr.
    Anastopoulos signed on behalf of the Franchisor.

[13]

The
    franchise agreement did not specify a site for the prospective franchise
    outlet, but did indicate that it would be located in Mississauga and that its
    territory would be reasonably determined by the Franchisor. Section 7.1 of
    the agreement required the parties to use their reasonable best efforts to
    find a suitable location for the [franchise] acceptable to the Franchisor. The
    franchise agreement also provided that if the Franchisor failed to negotiate a lease
    for a suitable location within 120 days of the agreement being signed, the
    Franchisee was entitled to terminate the agreement upon 20 days notice and
    receive a release and refund of all amounts paid to the Franchisor, less any
    costs and expenses reasonably incurred by the Franchisor in connection with the
    granting of the franchise.

Post-Signing Events

[14]

The
    Franchisor and Franchisee located a mutually acceptable restaurant in
    Mississauga, available for lease and conversion. The Franchisors affiliate,
    ASWR Developments, signed as head tenant and subleased the property to the
    Franchisee. The head lease required an initial deposit of approximately
    $120,000.

[15]

Mr.
    Bastaros signed the sublease on behalf of the Franchisor on October 23, 2013. As
    mentioned earlier, the sublease required the Franchisee to comply with all
    terms contained in the head lease  including the deposit requirement. Prior to
    signing the sublease, Mr. Bastaros had been informed of the deposit requirement
    but had not received a copy of the executed head lease. Mr. Bastaros consented
    to the deposit condition and asked the Franchisor to please accept [the
    lease], we want this deal to be done asap.

[16]

Construction
    of the franchise outlet was substantially completed in March 2014.
    Approximately one month prior to completion, Mr. Bastaros was informed that
    development costs exceeded $1 million. This amount fell within the range
    specified in the FDD for construction from a shell. However, as noted earlier,
    the franchise had been developed through conversion.

[17]

The
    Franchisor asked the Franchisee to resolve unpaid construction invoices
    totalling $110,361.79, and to pay the $120,000 deposit required under the head
    lease. The Franchisee refused and, on July 25, 2014, served the Franchisor with
    a notice of rescission. The Franchisor refused to accept the notices validity,
    terminated the franchise agreement, and assumed control of the franchise outlet
    on August 1, 2014

[18]

The
    Franchisee commenced this action in December 2014. It sought, among other
    things:

(1)

a declaration that it had validly
    rescinded the franchise agreement;

(2)

recovery of $1.28 million pursuant
    to its rescission;

(3)

a declaration that certain
    individuals and companies were the Franchisor's "associates" and
    therefore liable to the Franchisee; and

(4)

damages for misrepresentation and
    breach of the statutory duty of good faith and fair dealing.

[19]

The
    Franchisee moved for summary judgment on claims 1, 2 and 3. The Franchisor counter-claimed for, among other things, approximately $230,000 in damages. The Franchisor also brought a cross-motion for summary judgment, seeking to have the Franchisee's action dismissed in its entirety.

DECISION OF THE MOTION JUDGE

[20]

The
    Franchisor and Franchisees motions were heard and disposed of together. The
    motion judge considered five issues in her reasons:

(1)

whether the Franchisor failed to
    meet its disclosure obligations under s. 5 of the
AWA
;

(2)

If so, whether the disclosure
    deficiencies justified rescission under s. 6(2) of the
AWA
;

(3)

whether the certificate
    accompanying the FDD had been validly signed;

(4)

which parties, if any, were
    liable to the Franchisee for its claims under s. 6(6) of the
AWA
; and

(5)

whether the Franchisees claims
    under s. 3 and s. 7 of the
AWA
raised genuine issues requiring a
    trial.

1. Disclosure Obligations

[21]

Section
    5(4)(a) of the
AWA

requires a franchisor to provide a prospective franchisee with a disclosure
    document containing all material facts, including material facts as
    prescribed in the Regulations accompanying the
AWA

(the Regulations: O. Reg.
    581/00). A material fact is defined in s. 1(1) of the
AWA
as any
    information about the business, operations, capital or control of the
    franchisor or franchisors associate, or about the franchise system, that would
    reasonably be expected to have a significant effect on the value or price of
    the franchise to be granted or the decision to acquire the franchise. Section
    6(1) of the Regulations stipulates that every disclosure document must include
    a list of all the franchisees costs associated with the establishment of the
    franchise.

[22]

The
    motion judge first determined that the FDD was the only document relevant to
    assessing the adequacy of the Franchisors disclosure.
[1]
She went on to find that the FDD did not contain all material facts as
    required by s. 5(4) of the
AWA,
for two reasons
.
First, the
    FDD did not include the terms of the head lease to which the Franchisee would
    be bound. Second, although the FDD outlined estimated costs for developing a
    franchise from a shell, it did not provide cost estimates for converting an
    existing restaurant to an ASWR franchise.

[23]

In
    the motion judges view, the Franchisor could not be excused from its
    obligation to disclose these facts simply because they were unknown to both
    parties when the franchise agreement was signed. The motion judge determined,
    at para. 78, that until a franchisor is prepared to make proper disclosure of
    all material facts, it must wait  it does not get excused from its statutory
    obligations. To hold otherwise would, in her view, allow franchisors to make
    disclosure at a premature stage and avoid the
AWA
s rigorous disclosure requirements,
    undermining the purpose of the legislation.

[24]

The
    motion judge also noted that the
AWA
s

disclosure requirements
    were mandatory and could not be waived. Accordingly, she attached no weight to
    the fact that the Franchisee knew the franchise location had not been
    identified.

2. Rescission

[25]

Section
    6(2) of the
AWA

allows a franchisee to rescind [a] franchise agreement, without penalty or
    obligation, no later than two years after entering into the franchise agreement
    if the franchisor never provided the disclosure document.

[26]

The
    motion judge acknowledged that for a deficient disclosure document to justify
    rescission under s. 6(2), it had to be so inadequate that it amounts to no
    disclosure. She held that the Franchisors breach of its disclosure
    obligations was egregious, as the FDD contained stark and material
    deficiencies with respect to the Franchisees lease obligations and estimated development
    costs. The motion judge therefore concluded that the test for rescission under
    s. 6(2) had been satisfied
.

3. The Certificate

[27]

The
    motion judge did not agree with the Franchisees alternative route to justify
    rescission; namely, that the certificate accompanying the FDD was not valid.
    Section 7(2) of the Regulations

states that every disclosure document
    must contain a certificate signed:

(b) in the case of a
    franchisor that is incorporated and has only one director or officer, by that
    person;

(c) in the case of a
    franchisor that is incorporated and has more than one officer or director, by
    at least two persons who are officers or directors.

[28]

The
    Franchisee raised three issues regarding the certificate:

(1)

Stilianos Costidis, an officer and
    director of the Franchisor as of July 2007, remained an officer and director of
    the Franchisor as of the date the franchise agreement was signed. Mr. Costidis
    did not sign the certificate.

(2)

Mr. Maisonneuve was a
de facto
director of the Franchisor, and did not sign the certificate.

(3)

Mr. Anastopoulos signed for the
    Franchisor, but did not sign in his personal capacity as an officer and
    director.

[29]

The
    motion judge rejected all three objections.  She acknowledged that the
    Franchisors 2012 Corporation Profile Report (CPR) named Mr. Costidis as a
    director, giving rise to a presumption of directorship. However, she found the
    presumption to have been rebutted by proof that Mr. Costidis had effectively
    resigned by 2009 at the latest. The motion judge based this finding on (1) the
    evidence of both Mr. Anastopoulos and Mr. Costidis, (2) emails from 2009 in
    which Mr. Anastopoulos indicated to his lawyer that Mr. Costidis should not be
    in any of the companies, and (3) an affidavit from the Franchisors corporate
    counsel stating that Mr. Costidis name had been left on the CPR through
    inadvertence.

[30]

The
    motion judge also held that Mr. Maisonneuves failure to sign the certificate
    was immaterial. Even assuming a
de facto

director was obliged to
    sign the certificate, the motion judge concluded there was no evidence that Mr.
    Maisonneuve exercised control over the Franchisor or held himself out as a
    director.

[31]

Finally,
    the motion judge held that Mr. Anastopoulos failure to sign the certificate
    twice did not compromise its validity. The
AWA
, in the motion judges view, did not
    require the sole director of a franchisor to sign a certificate twice. The
    motion judge also noted that the certificates purpose of bring[ing] home
    personal responsibility was not engaged, as Mr. Anastopoulos was not trying to
    disclaim responsibility for the FDDs contents.

4. Parties Liable

[32]

Under
    s. 6(6) of the
AWA
,
    a franchisor and its associates are liable to a franchisee for damages following
    a valid rescission. The statutory definition of associate has two relevant
    requirements  control by or over the franchisor, and direct involvement in the
    grant of the franchise:
AWA
,
    s. 1(1).

[33]

Employing
    that test, the motion judge made the following findings about the Franchisors
    associates:

(1)

Mr. Anastopoulos was an
    associate, by agreement of the parties.

(2)

ASWR Developments was an
    associate. It was controlled by Mr. Anastopoulos, who indirectly controlled the
    Franchisor. It had also entered into the sublease with the Franchisee.

(3)

Hellenic and Leontian were not
    associates, as they had not been involved in the grant of the franchise.

(4)

Mr. Maisonneuve was not an
    associate. While the Franchisor contracted with his company, Northern Lights
    Franchise Consultants Corp., for sales and marketing services, the Franchisor
    did not exercise sufficient control over Northern Lights  let alone Mr. Maisonneuve
     for Mr. Maisonneuve to be considered an associate.

5. Claims under s. 3 and s. 7 of the
AWA

[34]

Section
    3(1) of the
AWA
imposes on franchisors and franchisees a duty of fair dealing in performing and
    enforcing a franchise agreement. Section 3(2) provides a party to a franchise
    agreement with a right of action for damages against another party who breaches
    their obligations under s. 3(1). Section 7 provides franchisees with a right of
    action for damages if they suffer a loss due to a misrepresentation contained
    in a disclosure document.

[35]

The
    motion judge dismissed the Franchisees s. 3 and s. 7 claims, finding that they
    had not been the subject of any significant attention in the Franchisees
    oral argument, attracted no attention in [the Franchisees] written argument,
    and were only referenced briefly in the statement of claim. The motion judge
    concluded that [i]n the absence of any focused argument by the [Franchisee]
    seeking to demonstrate that either of these claims have been proved ... or
    require a trial, the claims should be dismissed.

ISSUES

[36]

This
    appeal and cross-appeal give rise to the following issues:

(1)

Did the motion judge err in holding
    that the franchise agreement was validly rescinded?

(2)

If the Franchisee did not validly
    rescind the agreement, is the Franchisor entitled to damages?

(3)

If the franchise agreement was
    validly rescinded, did the motion judge err in holding that the Franchisee
    could claim damages only against the Franchisor, Mr. Anastopoulous and ASWR
    Developments Corp.?

(4)

Did the motion judge err in
    dismissing the Franchisees claims based on misrepresentation and breach of the
    duty of fair dealing?

(5)

Should the fresh evidence be
    admitted?

(6)

Did the motion judge err in
    declining to award costs?

ANALYSIS

Issue 1  Did the motion judge err in holding that the franchise agreement
    was validly rescinded?

[37]

Before
    this court, as it did before the motion judge, the Franchisee offers two
    possible routes to justify rescission: the first based on s. 6(2) of the
AWA
, and the
    second based on alleged deficiencies in the certificate accompanying the FDD. I
    address both possible routes to rescission, in turn.

Rescission Based on s. 6(2)

[38]

The
    Franchisor argues that the motion judge erred in (1) finding that it breached
    its obligations under s. 5 of the
AWA
, and (2) finding that these breaches
    were so serious that s. 6(2) applied. On the s. 5 issue, the Franchisor submits
    the motion judge erred by finding that the FDD should have included the terms
    of the head lease and more detailed conversion cost estimates. In the
    Franchisors view, the motion judges finding that it should have delayed
    disclosure until acquiring those facts is unsupported by authority,
    inconsistent with the text of the
AWA
, and commercially unreasonable. The
    Franchisor also takes issue with the motion judges focus on protecting
    franchisees from abuse, arguing that the duty of fair dealing imposed by s. 3
    of the
AWA
adequately addresses that concern. Alternatively, the Franchisor submits the
    FDD was not so deficient as to entitle the Franchisee to rescind the agreement
    under s. 6(2).

[39]

The
    Franchisee submits the motion judges s. 5 analysis is consistent with the text
    and purpose of the
AWA
,
    which imposes rigorous disclosure requirements on franchisors to protect
    franchisees from abuse. In the Franchisees view, the motion judges approach
    prevents franchisors from circumventing their disclosure obligations by
    entering into franchise agreements before obtaining all facts necessary for a
    franchisee to make an informed investment decision. The Franchisee emphasizes
    that the motion judges ruling is narrow in scope, affecting only a limited
    range of franchise agreements. The Franchisee also supports the motion judges
    conclusion that the disclosure deficiencies in this case were egregious and
    justified rescission under s. 6(2).

[40]

To
    resolve this appeal, I need not decide whether the Franchisor breached its
    disclosure obligations under s. 5 of the
AWA
. The Franchisee alleges deficiencies
    in the FDD primarily as a basis for rescinding the franchise agreement,
    approximately twenty months after the agreement was signed. To justify
    rescission in these circumstances, the Franchisee must not only demonstrate
    that the FDD was deficient, but also show that it was so deficient that the
    Franchisor effectively never provided [a] disclosure document.

[41]

Assuming, without deciding, that the FDD did not comply with s.
    5, I conclude that the deficiencies the Franchisee complains of, viewed
    individually or collectively, are not so serious that the FDD is tantamount to
    a complete lack of disclosure. It follows that the Franchisee was not entitled
    to rescind the franchise agreement under s. 6(2).

Governing Principles

[42]

Section 6 of the
AWA

provides franchisees with an
    extraordinary remedy if the franchisor fails to provide a disclosure document
    in compliance with s. 5: the right to rescind the franchise agreement with two
    different limitation periods, depending on when and whether the franchisor provides
    a disclosure document:
4287975
    Canada Inc. v. Imvescor Restaurants Inc
.
, 2009 ONCA
    308, 98 O.R. (3d) 187, at para. 25, leave to appeal refused, [2009] S.C.C.A.
    No. 244.

[43]

First,
    under s. 6(1), a franchisee may rescind a franchise agreement within 60 days of
    receipt of the disclosure document if the document is not provided within the
    time required by s. 5 or if [its] contents  did not meet the requirements of
    [s. 5]. Section 6(1) is not relevant to this appeal, as the Franchisee
    did not provide a notice of rescission within sixty days of receiving the FDD.

[44]

Second,
    under s. 6(2), a franchisee may rescind a franchise agreement within two years
    of entering into the agreement if the franchisor never provided the disclosure
    document.

[45]

This
    court has had several opportunities to interpret s. 6(2) of the
AWA
.
Two
    guiding principles have emerged.

[46]

On
    one hand, a franchisors failure to comply with s. 5 of the
AWA
does not always
    provide sufficient grounds for rescission under s. 6(2):
Imvescor
, at
    para. 43;
Vijh v.
    Mediterranean Franchise Inc
.
, 2012 ONSC 3845, at
    para. 6, affd 2013 ONCA 698.  A franchisee that receives imperfect disclosure
    does not necessarily stand in the same position as a franchisee that was never
    provided [with a] disclosure document. In
Imvescor
, at para. 37, this court warned
    that conflating those two scenarios would frustrate clear legislative intent:

The [
AWA
]  is clear that a
rescission remedy is
    available to the franchisee in two separate situations, and that the two
    situations are not to be blurred into one
. This interpretation is further
    bolstered by the purpose of the Act, which is in part to ensure that the
    franchisee has at least fourteen days to review a disclosure document before
    signing an agreement.
The legislature clearly chose to reserve the two year
    remedy for instances of a complete failure to provide a disclosure document
.
    [Emphasis Added].

[47]

On
    the other hand,
a purported disclosure document may be so
    deficient as to
effectively

amount
    to a complete lack of disclosure, thereby permitting rescission under s. 6(2).
As
    MacFarland J.A. observed at para. 74 of
6792341 Canada Inc. v. Dollar It Ltd
.
,
    2009 ONCA 385, 95 O.R. (3d) 291: [a] document does not become a disclosure
    document for the purposes of the [
AWA
] just because it is called a
    disclosure document. Put another way, calling something a disclosure document
    does not make it one.

[48]

Whether
    deficiencies in a disclosure document are so serious as to amount to no
    disclosure for the purposes of the
AWA
must be determined on the facts of
    each case:
Dollar It
,
    at para. 78. The necessary degree of deficiency has been described in several
    ways, including materially deficient (
Mendoza v. Active Tire & Auto Inc
.
,
    2017 ONCA 471, 414 D.L.R. (4th) 676, at para. 19;
Imvescor
, at para. 43;
2240802 Ontario Inc. v.
    Springdale Pizza Depot Ltd
.
, 2015 ONCA 236, 331
    O.A.C. 282, at para. 51), serious non-compliance (
Mendoza
, at para. 37),
    fundamentally inadequate and deficient disclosure (
2212886 Ontario Inc. v. Obsidian
    Group Inc
.
, 2017 ONSC 1643, 67 B.LR. (5th) 103, at
    para. 27), and stark and material deficiencies (
Dollar

It
, at para. 74).

[49]

Whatever
    terminology is employed, the inquiry into whether disclosure deficiencies are
    such that they justify rescission under s. 6(2) ultimately focuses on whether
    the franchisee has been effectively deprived  of the opportunity to make an
    informed [investment] decision:
Caffé Demetre Franchising Corp. v. 2249027 Ontario Inc.
,
    2015 ONCA 258, 125 O.R. (3d) 498, at para. 63. In my view, the seriousness of
    any given failure to comply with s. 5 must be measured by reference to the
    underlying purposes of s. 5 and the
AWA
more broadly: to obligate a
    franchisor to make full and accurate disclosure to a potential franchisee
so
    that the latter can make a properly informed decision about whether or not to
    invest in a franchise
:
1490664 Ontario Ltd. v. Dig This Garden Retailers Ltd
.
,
    256 D.L.R. (4th) 451 (Ont. C.A.), at para. 16 (emphasis added);
Dollar

It
, at
    para. 16;
Mendoza
,
    at para. 14. For example, this court found that the disclosure document in
Dollar

It
amounted to a complete lack of disclosure because there was simply no way
    anyone reviewing [the] document could make an informed decision about whether
    or not to invest in th[e] franchise:
Dollar

It
, at para. 68.

Applying the Principles

[50]

The
    motion judge stated at para. 114 that this is not a case of disclosure that
    is simply deficient. She went on to describe the lack of disclosure as
    egregious, saying that the [FDD] had stark and material deficiencies with
    respect to the lease and costs obligations, such that it amounted to no
    disclosure.

[51]

In
    my respectful view, the motion judge erred in law in her interpretation and
    application of s. 6(2), both with respect to the head lease and the conversion
    cost estimates.

[52]

Turning
    first to the head lease,
the motion judges
    failure to consider the terms of the parties franchise agreement within her s.
    6(2) analysis constitutes an extricable error of law, justifying appellate
    intervention.
As noted above,
whether a
    breach of s. 5 is sufficiently serious to engage s. 6(2) should be determined
    on a case-by-case basis, with a view to all relevant circumstances bearing on
    whether the franchisee can make a properly informed decision about whether or
    not to invest. This inquiry requires, where appropriate, taking into account the
    terms of the parties franchise agreement.

[53]

In this case,
all parties involved knew the
    proposed franchises location had not been selected, and agreed that the
    Franchisor and the Franchisee would work collaboratively to select a site. This
    commitment was formally incorporated into the franchise agreement through a
    clause requiring the parties to exercise reasonable best efforts in selecting
    a location. The best efforts clause contemplated the Franchisees active
    participation in the selection of the premises to which the head lease would
    apply, and constrained the Franchisors ability to enter into a lease without
    considering the Franchisees legitimate interests. These protections were
    bolstered by the opt-out clause in the franchise agreement.  Had the Franchisee
    found the prepaid rent requirement to be too onerous or the location otherwise
    unsuitable, rather than urge the Franchisor (as it did) to accept the deposit
    term and sign the lease, it could have rejected the location and either
    searched for another site, or elected to receive its money back.

[54]

These
    safeguards, in my view, provide a complete answer to the complaint that the
    Franchisors failure to disclose the head lease justified rescission under s.
    6(2). The absence of that information had little impact on the Franchisees
    ability to make an informed investment decision. The site selection and opt-out
    clauses also distinguish this appeal from
Dollar It
,
another case where a
    franchise disclosure document failed to provide terms of a head lease.
The franchise agreement in
Dollar It
did not include a collaborative site selection clause
    or provide the franchisee with any opt-out rights if a satisfactory location
    could not be found. Moreover
, the
disclosure
    document in
Dollar
    It
included far more serious
    deficiencies: it failed to provide the Franchisee with financial statements, a
    signed directors certificate, or a description of the licenses required to
    operate the franchise, in addition to five other omissions: see
Dollar It
, at paras. 21, 33, 40, 46-47.

[55]

In
    relation to the conversion cost estimates, I observe that the lengthy and
    detailed FDD would have put the Franchisee on notice as to the potential risks
    associated with pursuing a conversion opportunity, by providing:

(1)

cost estimates for developing an
    ASWR franchise from a shell;

(2)

a strongly worded warning that cost
    estimates associated with a conversion could vary greatly from site to site;
    and

(3)

a warning to the Franchisee to
    maintain a significant contingency reserve.

[56]

The
    Franchisee submits that the Franchisor had prior experiences with conversions,
    and should have disclosed those costs in the FDD. Even accepting that argument,
    given the wide variance in the costs associated with the Franchisors three
    prior conversions, I do not believe disclosing those figures would have
    significantly improved the Franchisees ability to make an informed investment
    decision. Further, the FDD provided detailed cost estimates for construction
    from a shell, and presented a conversion as a development strategy offering
    potential savings over that model. While the Franchisor acknowledged that it
    had no reasonable means of predicting the extent of those savings, the shell
    cost estimates nonetheless provided the Franchisee with a useful reference
    point against which to measure the upper range of possible costs associated
    with a conversion. The shell cost estimates, as noted earlier, accurately
    reflected the Franchisees actual costs in constructing the franchise outlet.

[57]

For
    these reasons, even if the above-mentioned omissions amounted to breaches of s.
    5, the motion judges conclusion that the FDD amounted to no disclosure at
    all cannot withstand scrutiny. As I have noted, the
AWA
draws a
    clear distinction between imperfect disclosure and situations where a
    franchisor provides no disclosure, thereby entitling the franchisee to rescission
    within a two year window. In my respectful view, the motion judge erred in law
    by failing to give effect to this important legislative distinction.

Rescission Based on The Certificates Validity

[58]

Seeking
    a secondary route to justify rescission, the Franchisee cross-appeals the
    motion judges finding regarding the validity of the certificate accompanying
    the FDD.

[59]

The
    Franchisee submits that Mr. Costidis failure to sign the certificate rendered
    it invalid. Relying on
Chriss
    v. R
.
, 2016 FCA 236, 403 D.L.R. (4th) 569, the
    Franchisee argues that the presumption of directorship created by Mr. Costidis
    presence in the 2012 CPR could only have been rebutted by a signed letter of
    resignation. Mr. Costidis did not offer a resignation letter. He therefore
    remained a director of the Franchisor and was obliged to sign the Certificate.

[60]

The
    Franchisee further submits that the motion judge erred in her findings about Mr.
    Maisonneuve. The Franchisee argues Mr. Maisonneuve was a
de facto

director
    of the Franchisor in 2012, as he received significant financial compensation
    from the Franchisor, exclusively handled its franchise sales, and was
    controlled by Mr. Anastopoulos at all material times.

[61]

The
    Franchisee also contends that, in any event,
no

director of the Franchisor
    signed the certificate as Mr. Anastopoulos did not sign in his personal
    capacity.

[62]

I
    disagree with all three of the Franchisees submissions.

[63]

I
    would not disturb the motion judges finding that Mr. Costidis had effectively
    resigned before the franchise agreement was signed. The motion judges
    conclusion is owed deference and finds ample support in the record. Moreover, I
    do not agree that her analysis is undermined by the Federal Court of Appeals
    decision in
Chriss
.
    I would not apply the approach in
Chriss
to the present case, as I do not
    see how a rigid requirement of written resignation would further the purposes
    of the
AWA
s
    certificate regime. The facts of this case are illustrative. By 2012, Mr.
    Costidis was not in a position to verify or suggest changes to the contents of
    the FDD. Requiring someone in his position to sign a disclosure document would
    not impress upon [franchisors] the importance of ensuring the document is
    complete and accurate:
Mendoza
,
    at para. 24.

[64]

I
    would also uphold the motion judges conclusion that Mr. Maisonneuve was not obliged
    to sign the certificate. Even assuming a
de facto

director must sign a
    certificate accompanying a disclosure document, the motion judge found that Mr.
    Maisonneuve did not fulfill any of the duties of an officer or a director, and
    was acting as an independent contractor. She was entitled to make those
    findings on the evidence before her. I see no reason to interfere.

[65]

Finally,
    I agree with the motion judge that Mr. Anastopoulos did not need to sign the certificate
    twice. As the motion judge noted, Mr. Anastopoulos was not trying to disclaim
    personal responsibility for the contents of the FDD. Requiring his signature
    would not have furthered the purpose of the certificate provision.

[66]

For
    these reasons, I would not give effect to this ground of appeal.

Issue 2  Remedies Available to the Franchisor

[67]

Based
    on the above analysis, I conclude that the Franchisee was not entitled to
    rescind the franchise agreement. The only remaining question relevant to this
    issue concerns the Franchisors remedy.

[68]

The
    Franchisor claims $230,221.45 in damages  $119,859.66 for the deposit required
    under the head lease, and $110,361.79 in unpaid construction invoices. The
    Franchisor paid these amounts on behalf of the Franchisee and seeks
    reimbursement.

[69]

In
    oral argument, the Franchisee submitted that any damages awarded to the
    Franchisor should not include amounts paid to cover the head lease deposit. The
    Franchisee notes that the deposit allowed the Franchisor to assume control of
    and derive benefits from  the ASWR outlet after receiving the Franchisees
    notice of termination.

[70]

In
    my view, the Franchisor is entitled to damages arising out of the Franchisees
    failure to fulfill its financial obligations under the franchise agreement.
    That said, I agree in principle with the Franchisee that these damages should
    account for the financial benefits the Franchisor derived from operating the
    franchise outlet. The record before this court does not disclose the extent of
    those benefits. If the parties are unable to agree on the amount, the
    quantification of the Franchisors damages should be remitted to the Superior
    Court, to be determined as follows. The Franchisor is entitled to $110,361.79
    as compensation for the amount it was forced to pay due to the Franchisees
    unpaid construction invoices. The Franchisor is also entitled to $119,859.66 on
    account of the head lease deposit, less any financial benefits it derived from
    operating the franchise outlet for the duration of the lease.

Issue 3  If the franchise agreement was validly rescinded, did the motion
    judge err in holding that the Franchisee could claim damages only against the
    Franchisor, Mr. Anastopoulous and ASWR Developments Corp.?

[71]

Given
    my conclusion that the Franchisee was not entitled to rescind the franchise
    agreement, I need not address this ground of appeal.

Issue 4  Did the motion judge err in dismissing the Franchisees claims
    based on misrepresentation and breach of the duty of fair dealing?

[72]

In
    its cross-appeal, the Franchisee submits the motion judge should not have
    dismissed its claims under s. 3 and s. 7 of the
AWA
. The Franchisee notes that the motion
    judge dismissed these claims only after

finding that the Franchisee was
    entitled to rescission. The Franchisee concedes that if the motion judges
    ruling on rescission is upheld, there may not be any further basis to claim
    damages for misrepresentation and breach of the duty of fair dealing. However,
    if that ruling is overturned on appeal, the Franchisee submits the arguments
    raised in respect of rescission cascade onto the s. 3 and s. 7 claims and
    should be remitted for trial.

[73]

The
    Franchisor contends that the motion judge correctly dismissed the s. 3 and s. 7
    claims. They were not particularized in the Franchisees statement of claim and
    were largely ignored in its oral and written argument. By not mounting a
    defence to the cross-motion, the Franchisee failed to put [its] best foot forward.
    Further, argues the Franchisor, the s. 3 claim does not cascade from the
    Franchisees rescission arguments. A failure to include material facts in a
    disclosure document does not constitute unfair dealing in the performance of a
    franchise agreement:
1250264
    Ontario Inc. v. Pet Valu Canada Inc
.
, 2016 ONCA 24,
    344 O.A.C. 222, at para. 62.

[74]

Alternatively,
    the Franchisor submits the s. 3 and s. 7 claims should have been dismissed for
    lack of merit. Addressing the s. 3 claim, the Franchisor submits it was honest,
    candid and forthright in its performance of the franchise agreement. It closely
    involved Mr. Bastaros in the location selection process and, by his own
    admission, used suitable best efforts to implement the agreement. The motion
    judge expressly stated that she was not suggesting that this Franchisor set
    out to abuse this prospective franchisee.

[75]

Turning
    to the s. 7 claim, the Franchisor notes that Mr. Bastaros admitted to acquiring
    the franchise with full knowledge that the location and lease details were unconfirmed.
    Section 7(4) of the
AWA
precludes damages under s. 7(1) where the franchisee acquired the franchise
    with knowledge of the [alleged] misrepresentation or of the material change.

[76]

I
    agree with the Franchisors position. I see no reason to interfere with the
    motion judges dismissal of these claims on the basis that the Franchisee
    failed to put its best foot forward. I also disagree with the Franchisee that
    its submissions on rescission cascade onto the claims under s. 3 and s. 7.
Pet Valu
is,
    in my view, dispositive of the cascade argument as it relates to the s. 3
    claim. I also fail to see how any of the Franchisees submissions regarding
    rescission raise a genuine issue requiring a trial in respect of its
    allegations of misrepresentation.

Issue 5  The Franchisees Motion to Introduce Fresh Evidence

[77]

The
    Franchisee filed a motion to introduce fresh evidence one week before the oral
    argument of this appeal. The proposed evidence is a notice of store closing
    posted by the Franchisor on the franchises (former) location, dated April 12,
    2017. The Franchisees motion factum relies on the following excerpts from the
    notice:

We regret to inform everyone that this location has closed its
    business permanently, effective April 12, 2017  Unfortunately our sales
    volumes, although respectable, were insufficient to cover our operating
    expenses - in particular our rent and occupancy costs. The store owners have
    therefore had no choice but to cease operations

[78]

The
    Franchisee submits that this notice provides further evidence that the
    Franchisors disclosure was premature and misleading. The Notice, in the
    Franchisees view, shows that the FDD contained grossly inaccurate earnings projections.

[79]

I
    would dismiss the motion. As the Franchisor notes, the proposed evidence did
    not exist at the time of the hearing.  This is not one of those rare cases where
    admission of such evidence would further the interests of justice:
Sengmueller v. Sengmueller

(1994), 17 O.R. (3d) 208 (C.A.), at paras. 8-10. The motion was not brought
    in a timely fashion. There is no basis to assess the reliability of the
    proposed evidence. Most importantly, I fail to see how the proposed evidence
    significantly advances any of the issues raised in the appeal or cross-appeal.

Issue 6  Did the motion judge err in declining to award costs for the
    proceedings below?

[80]

As
    I would allow the Franchisors appeal, it is not necessary for me to deal with
    this ground of appeal.

DISPOSITION

[81]

For
    these reasons, I would allow the appeal on the basis that the Franchisee was
    not entitled to rescission or damages under the
AWA
.  I would grant judgment against the
    Franchisee in favour of the Franchisor, and, failing the agreement of the
    parties, remit the determination of the precise amount to the Superior Court in
    accordance with paragraph 70 of these reasons. I would dismiss the cross-appeal
    and the motion to admit fresh evidence.

[82]

At
    the conclusion of argument, we were advised that the parties were not able to
    come to any agreement as to costs.  I would direct that the Franchisor make
    submissions as to costs of the motion below and of the appeal within 10 days of
    the receipt of these reasons, and that the Franchisee respond within 7 days of
    receipt of the Franchisors submissions.

Released: RJS JAN 25 2018

Gloria Epstein J.A.

I agree. Robert J. Sharpe J.A.

I agree. R.A. Blair J.A.

[1]
This finding, in my view, is dispositive of the Franchisees submission in oral
    argument that the Franchisor failed to provide disclosure in one document as
    required under s. 5(3) of the
AWA
.


COURT OF APPEAL FOR ONTARIO

CITATION: Ramadhin v. New Venture Group Inc., 2018 ONCA 6

DATE: 20180105

DOCKET: C63834

Doherty, Benotto and Huscroft JJ.A.

BETWEEN

Surace Persad Ramadhin

Plaintiff/Respondent

and

New Venture Group Inc., Bakshish Mand, also known
    as
Bob Mand and Homelife Miracle Realty Ltd.

Defendant (New Venture)/ and
Defendant/Appellant (Mand)

Allan D. Powell and Anikah Ahmad, for the appellant
    Bakshish Mand

Daniel Zacks and Travis Walker, for the respondent

Heard: December 22, 2017

On appeal from the order of Justice Jasmin Akbarali of
    the Superior Court of Justice, dated May 1, 2017.

APPEAL BOOK ENDORSEMENT

[1]

The appellant is a realtor who sold the respondents property by way of
    power of sale. The respondent sued him for improvident sale and negligence. The
    issue is when the agreed upon two year limitation period starts to run:

at the time the Agreement of Purchase and Sale (APS)
    was entered into; or at the time of closing.

[2]

The appellant moved for summary judgment alleging that because the APS
    was signed outside the limitation period, the case should be dismissed. The
    motion judge dismissed the motion on the basis that the limitation period
    started to run when the sale closed.

[3]

The appellant submits that the pleadings allege negligence for actions
    predating the APS namely obtaining defective appraisals and negligent
    marketing. These facts, it is alleged were known at the time of the APS.

[4]

The motion judge found as fact that no damage occurred prior to closing.

[5]

While the facts giving rise to negligence may have arisen before the APS
    was signed, the damage did not accrue until closing. It is at that point that
    the limitation period began to run. We agree with the conclusion of the motion
    judge when  at paragraph 19  she said:

Even if one assumes Mr. Mand breached a duty he owed to Mr.
    Ramadhin by the time the agreement of purchase and sale was entered into, until
    the sale of the property closed, Mr. Ramadhin suffered no damage. Damage is an
    essential element of the tort of negligence. Neither cause of action accrued
    until title was transferred.

[6]

The appellant raises for the first time on appeal an attempt to bring
    himself within the
City of Hamilton
case by proposing an analogy to slander
    of title. There was no evidentiary base for this proposition and we reject it.

[7]

The appeal is therefore dismissed with costs to the respondent fixed in
    the agreed amount of $9,000 inclusive of disbursements and HST.


COURT OF APPEAL FOR ONTARIO

CITATION: Reece v. Toronto (Police Services Board), 2018 ONCA
    91

DATE: 20180131

DOCKET: C63928

Sharpe, LaForme and van Rensburg JJ.A.

BETWEEN

Leonard Reece

Plaintiff (Appellant)

and

Toronto Police Services Board and Desjardins
    General Insurance

Defendants (Respondents)

Leonard Reece, in person

David Zarek, for the respondent, Certas Direct Insurance
    Company, improperly named as Desjardins General Insurance

Natalie Kolos, for the respondent, Toronto Police
    Services Board

Heard and released orally: January 30, 2018

On appeal from judgment of Justice E.M. Morgan of the Superior
    Court, dated June 21, 2017.

REASONS FOR DECISION

[1]

The motion judge found that the appellant was aware of all of the facts
    he asserts to support his claim against the respondent insurance company in May
    or June of 2010 and against the respondent police board by January 2011 at the
    latest.

[2]

The appellant commenced his action more than two years after those dates
    and, accordingly, the motion judge found that it was barred by the limitation
    period.

[3]

The record amply supports the motion judges findings. The appellant
    asserted racial profiling when he was arrested and he made a complaint against
    the police in January of 2011 for essentially the same reasons he now advances in
    support of his claim.

[4]

As for the claim against the respondent insurance company, the
    respondent states in his statement of claim that he was notified that his
    insurance was canceled in June 2010. The record also shows that the appellant
    was alleging fraud against the insurance company as early as June 2010. Those
    are the same facts now advanced in support of his claim against the respondent
    insurer.

[5]

The motion judge correctly found that discoverability for the purpose of
    limitations is based upon knowledge of the facts necessary to support a claim
    and does not require knowledge of the law that supports the claim.

[6]

We see no basis upon which we could interfere with the motion judges
    conclusion that the appellants action against both the respondent insurance
    company and the respondent police board is barred by the
Limitations
    Act, 2002
, S.O. 2002, c. 24, Sched. B.

[7]

Accordingly, the appeal is dismissed.

[8]

Costs to the respondent Certas Direct Insurance Company fixed at $4,500,
    inclusive of taxes and disbursements and costs to the respondent Toronto Police
    Services Board at $2,500, inclusive of taxes and disbursements.

[9]

We dispense with the appellants approval of the form and content of the
    formal order.

Robert J. Sharpe
    J.A.

H.S.
    LaForme J.A.

K.
    van Rensburg J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Richmond Hill (Town) v. Elginbay Corporation, 2018
    ONCA 72

DATE: 20180129

DOCKET: C63421 and C63422

MacFarland, Watt and Benotto JJ.A.

BETWEEN

The Corporation of the Town of Richmond Hill

Respondent

and

Elginbay Corporation,
    Zamani Homes (Richmond Hill) Ltd.
,
Haulover Investments Limited
,
    Montanaro Estates Limited, William and
Yvonne Worden
, Robert Salna and
Robert
    Salna Holdings Inc.
, and Ontario Municipal Board

Appellants

Earl A. Cherniak, Q.C., Cynthia Kuehl, Ira T. Kagan,
    David Winer and Alexandra DeGasperis, for the appellants Elginbay Corporation
    and Zamani Homes (Richmond Hill) Ltd.

Jeffrey E. Streisfield, for the appellants Haulover
    Investments Limited, Yvonne Worden and Robert Salna Holdings Inc.

Barnet H. Kussner and Kim Mullin, for the respondent the
    Corporation of the Town of Richmond Hill

Stan Floras, for the respondent the Ontario Municipal
    Board

Robert G. Doumani, for the intervener the Corporation of
    the City of Mississauga

Nadia Chandra, for the intervener the Corporation of the
    Town of Oakville

Andrea Wilson-Peebles, for the intervener the
    Corporation of the City of Markham

Bruce Engell, for the intervener the Corporation of the
    City of Vaughan

Heard: September 26 and 27, 2017

On appeal from the judgment of the Divisional Court
    (Justices Harriet E. Sachs, Ian V.B. Nordheimer and Carolyn J. Horkins), dated
    September 6, 2016
,
with reasons
    reported at 2016 ONSC 5560, 133 O.R. (3d) 686, reversing in part a decision of
    the Ontario Municipal Board (Vice Chair Jan de Pencier Seaborn) dated November
    5, 2012, with reasons reported at (2012), 74 O.M.B.R. 236.

MacFarland
    J.A.:

[1]

These are appeals, with leave, from a decision of the Divisional Court,
    overturning in part a decision of the Ontario Municipal Board (OMB or the
    Board) where, as part of its approval of the Official Plan (OP) for the
    Town of Richmond Hill (the Town), it imposed a 25 per cent cap on the
    alternative parkland dedication requirement proposed by the Town. The key issue
    on appeal is whether the Divisional Court erred in concluding that the OMBs
    decision imposing the cap was unreasonable. The answer to this question turns
    on the interpretation of s. 42 of the
Planning Act
, R.S.O. 1990, c. P.13,
    in particular ss. 42(3) and (4).

[2]

As I will explain, I see no reason to interfere with the Divisional
    Courts decision and thus would dismiss the appeal.

A.

BACKGROUND

(1)

Statutory Context

[3]

The purposes of the
Planning Act
are set out in s. 1.1 of the
    Act. They include:

(b) to provide for a land use planning system led by provincial
    policy;

(c) to integrate matters of provincial interest in provincial
    and municipal planning decisions;

(f) to recognize the decision-making authority and
    accountability of municipal councils in planning.

[4]

Under s. 2, the OMB shall have regard to a list of 18 matters of
    provincial interest in carrying out its responsibilities under the
Planning
    Act
. These matters include the provision of cultural and recreational
    facilities, and the provision of affordable housing.

[5]

When the OMB m
akes a decision under the
Planning
    Act
that relates to a planning matter, s.
    2.1(1)(a) mandates that it shall have regard to

any decision that is made under this Act by a
    municipal council  and relates to the same planning matter.

[6]

Section s. 3(5) of the
Planning Act
provides as follows:

A decision of the council of a municipality
, a
    local board, a planning board, a minister of the Crown and a ministry,
board
,
    commission or agency of the government,
including the

Municipal Board
,
    in respect of the exercise of any authority that affects a planning matter,

(a)
shall be consistent with the policy
    statements
issued under subsection (1) that are in effect on the date of
    the decision; and

(b)
shall conform with the provincial plans
that are in effect on that date, or shall not conflict with them, as the case
    may be. [Emphasis added.]

[7]

In accordance with s. 3(5), OMB and municipal decisions affecting
    planning matters must be consistent with Provincial Policy Statement 2014
    (PPS), which sets out the overall provincial policy for regulating land use
    and development. They must also conform to any applicable provincial plans - in
    this case, the Growth Plan for the Greater Golden Horseshoe (Growth Plan). In
    its submissions before this court, the OMB describes the PPS and the Growth
    Plan as being at the apex of [the] planning hierarchy, by virtue of their
    mandatory imposition directed by subsection 3(5).

[8]

Section 42 is at the heart of this appeal.
[1]
It permits a municipality to pass a by-law that requires developers, as a
    condition of development or redevelopment of land, to convey land to the
    municipality for use as parkland or for other public recreational purposes, or
    to pay cash instead of conveying land (cash-in-lieu).

[9]

Under s. 42(1), a municipality may require a conveyance of land not
    exceeding five per cent of the residential land being developed. Section 42(3)
    permits a municipality, as an alternative to s. 42(1), to require a conveyance
    of residential land at a rate of one hectare for each 300 dwelling units
    proposed or at such lesser rate as may be specified by by-law. Section 42(4),
    which is key to this appeal, imposes the following precondition for adopting an
    alternative requirement under s. 42(3):

The alternative requirement authorized by subsection
    (3) may not be provided for in a by-law passed under this section unless there
    is an official plan in effect in the local municipality that contains specific
    policies dealing with the provision of lands for park or other public
    recreational purposes and the use of the alternative requirement.

[10]

Thus,
    before providing for an alternative requirement in a by-law, a municipality
    must have an OP in effect containing specific policies dealing with the
    provision of parkland and the use of the alternative requirement.

[11]

An
    OP must contain, among other things, the
goals,
    objectives and policies established primarily to manage and direct physical
    change
:
Planning Act
, s. 16(1)(a). An OP is not in effect
    until it has been approved by an approval authority (in this case, the
    Regional Municipality of York). If the approval authority fails to give notice
    of a decision on the OP within the requisite time period, any person may appeal
    the OP to the OMB under s. 17(40) of the
Planning Act
.  Under s.
    17(50), the OMB has the following powers on an appeal:

On an appeal or a
    transfer, the Municipal Board may approve all or part of the plan as all or
    part of an official plan, make modifications to all or part of the plan and
    approve all or part of the plan as modified as an official plan or refuse to
    approve all or part of the plan.

[12]

Policies
    in an OP are implemented through various types of by-laws. Under s. 24 of the
Planning
    Act
, all by-laws must conform to the OP.

[13]

While
    an OP may be appealed to the OMB, it is significant that the
Planning Act
does not provide any right to appeal a parkland conveyance by-law under s. 42.

(2)

Chronology and Decisions Below

[14]

In
    July 2010, the Town adopted a new OP. Section 3.1.8. of the OP set out the
    Towns parkland dedication policies. Among other things, it provided that the
    required parkland conveyance for residential developments was the greater of
    (1) five per cent of the proposed development, and (2) one hectare per 300
    dwelling units proposed.

[15]

Numerous
    parties appealed the Towns OP. They challenged the Towns parkland dedication
    policies as set out in s. 3.1.8. of the OP and, in particular, the policy
    dealing with the Towns use of the alternative requirement under s. 42(3).

(a)

Preliminary Motion  2012 OMB Decision

[16]

The
    Town argued a preliminary motion before the OMB in 2012. It sought a
    determination that it was not required to justify the use of its alternative
    parkland dedication rate (i.e., one hectare per 300 dwelling units proposed) as
    it was a rate prescribed by s. 42(3) of the
Planning Act
.

[17]

The
    Town was not successful on its motion:
(2012),
    74 O.M.B.R. 236.
The OMB summarized its conclusion:

The Board finds that s. 42(3) of the Act does not preclude a
    municipality from including (or the Board approving, on appeal) policies in an [OP]
    that provide for an alternative parkland dedication rate. The Boards
    conclusion in this regard is based on the evidence and submissions provided in
    respect of the Towns own review of its parkland dedication policies, Ministry
    of Municipal Affairs and Housing (MMAH) Guidelines, precedent, and the
    Boards jurisdiction to consider [OP] policies that are under appeal. The Board
    has considered the detailed argument presented by the Town and responding
    parties and finds that the planning rationale for policy 3.1.8, including s. 3.1.8.2.a.ii
    [setting out the alternative parkland dedication rate] is an appropriate issue
    for the hearing.

The Board finds that to conclude that the use of an alternative
    rate can be explored at a hearing, but not the specific rate would  serve no
    useful purpose and unduly restrict the ability of [those challenging s. 3.1.8.]
    to test the planning rationale for the Towns policies as they relate to
    parkland dedication.

[18]

And
    finally:

If the position taken by the Town is adopted, then there would
    be no ability or discretion for any municipal Council to set a specific rate in
    its [OP]. The Board would effectively be directing that specific rates in [OPs]
    run afoul of s. 42 of the Act. Yet, some municipalities have chosen to set out
    alternative rates in both their [OPs] and implementing by-laws. In those
    instances, would municipalities be required to amend their [OPs] and remove
    specific rates? In the Boards view, the Town is urging the Board to adopt an
    unduly restrictive interpretation of the Act which would result in limiting
    what can be included in the parkland dedication policies of any [OP]. The
    provisions of s. 42 of the Act are not that restrictive.
Simply put, when
    read together, s. 42(3) and s. 42(4) do not say that a specific rate cannot be
    identified in an [OP]. The Board will not read such a restriction into the Act
    and thereby limit the flexibility of municipalities to determine what detail
    they wish to provide at the [OP] level
. [Emphasis added.]

[19]

The
    Town sought leave to appeal that decision, pursuant to s. 96 of the
Ontario
    Municipal Board Act,
R.S.O. 1990, c.
    028
(OMBA), but the Divisional Court dismissed the leave motion
    as premature: 2013 ONSC 2252, 76 O.M.B.R. 363.

(b)

Appeal of s. 3.1.8.  2015 OMB Decision

[20]

The
    appeals related to s. 3.1.8. proceeded before the OMB over a number of months. The
    OMB accepted the Towns position on all of the issues that remained in dispute
    between the parties other than the issue of the alternative requirement.

[21]

The
    Town proposed some modifications to s. 3.1.8., which included policies on a
    number of issues related to parkland dedication  for example, land uses exempt
    from any conveyance/cash-in-lieu requirement; lands not accepted as part of
    land dedication and factors to be considered in determining whether all or part
    of a conveyance could be satisfied by a payment of cash-in-lieu. Notably, the
    Town proposed modifications to s. 3.1.8.a.ii. as follows:

For residential
development
the greater of the
    following:

5% of the land proposed for residential
    development; or

up to
1 hectare of land for each 300
    dwelling units proposed for
residential
development,
as may be
    specified by by-law in accordance with section 42(3) of the
Planning Act
.
    [Underlining added to indicate changes this provision.]

[22]

The Board articulated the positions of the parties as follows:

The focus of these appeals is
    the use of the alternative requirement (also referred to as the alternate
    rate) as a condition of residential development. The difference between the
    parties revolves around whether the Towns OP should specify not only the first
    component of the alternate rate of 1 hectare (ha) of land for each 300
    dwelling units proposed)  but go further and include policies which prescribe
    a second component of the alternate rate, referred to as a lesser rate. The
    alternative requirement and any lesser rate must be specified in a by-law
    pursuant to s. 42(3) of the Act and the Town has a parkland dedication by-law
    in effect for this purpose. However, the Act also stipulates that the
    alternative requirement may not be provided for in a by-law unless there is an [OP]
    in effect that contains specific policies dealing with the provision of lands
    for park or other public recreational purposes and the use of the alternative
    requirement (s. 42(4)).
The parties have divergent positions on the level
    of detail required in the [OP] setting out these specific policies and the
    use of the alternative requirement. [Those challenging s. 3.1.8.] submitted
    that there is evidence to support a lesser rate and the details should form
    part of the Towns OP. Otherwise, the stipulation of a lesser rate (if any)
    would be left to the parkland dedication by-law, for which there is no right of
    appeal under the Act.
[Emphasis added.]

[23]

In
    addition to arguing about the level of detail to be included in the OP, those
    challenging s. 3.1.8. argued that the proposed alternative requirement would
    discourage high-density development and threaten affordable housing  both
    important goals of the PPS and the Growth Plan.
[2]
They proposed a sliding scale and a cap on the amount of land required to be
    conveyed.

[24]

The
    OMB noted the Towns desire for flexibility (which the Town argued it had
    through its parkland dedication by-law), whereas the developers who challenged
    s. 3.1.8. sought more certainty with respect to the costs associated with
    providing parkland whether by dedication or cash-in-lieu. The Board concluded
    that as a minimum the parkland policies must include a sufficient level of
    detail to provide some level of certainty with respect to the magnitude of the
    parkland requirement. It went on to note that the extent to which the Board
    should go in fixing a particular rate will depend on the quality of the
    evidence, the planning merits and rationale provided to support a particular
    rate and most importantly, an assessment of what constitutes the correct
    balance between the competing interests.

[25]

The
    OMB was not prepared to require the Town to include a detailed sliding scale as
    part of its policies in relation to parkland dedication rates. It instead added
    the following language to s. 3.1.8.3.:

a.

For residential
development
,
    the Town may specify in a by-law enacted pursuant to section 42(3) of the
Planning
    Act
, a sliding scale for parkland dedication requirements, having regard to
    the proposed size of dwelling units, types of dwelling units, density of the
    development and/or the number of occupants per dwelling unit. [Italics in
    original.]

[26]

The
    OMB then went on to consider whether a cap ought to be imposed. The Board
    concluded that a cap would have the effect of providing sufficient policy
    direction at the OP level with respect to the magnitude of any parkland
    dedication. On the basis of the evidence before it, the OMB concluded:

A cap at 25% provides some room for the Town to implement a
    sliding scale by by-law and provides some certainty for landowners that is not
    reflected in the Towns proposed 3.1.8.3 which reflects the maximum alternative
    requirement of up to 1 ha per 300 units.

In my view the policies as modified by the Town, coupled with
    the addition of a revised policy direction that includes a 25% cap and an
    acknowledgement that a sliding scale may be implemented by by-law, provides
    both transparency and guidance going forward. This approach is consistent with
    the requirements of the PPS, conforms to the Growth Plan (and other applicable
    provincial plans) and strikes a balance between the competing interests.

[27]

The
    OMB ordered that the underlined words, imposing a cap on the amount of land to
    be conveyed, be added to s. 3.1.8.a.ii.:

ii. up to 1 hectare of land for each 300 dwelling
    units proposed for residential
development
, as may be specified by
    by-law in accordance with section 42 (3) of the
Planning Act
,
provided
    that in no case shall the amount of land required to be conveyed for park or
    other public recreational purposes exceed the equivalent of 25% of the land
    proposed for
development
. [Italics in original; underlining added.]

[28]

It
    is this cap that was at issue before the Divisional Court and is at issue on
    these appeals.

(c)

Appeal from OMB  2016 Divisional Court Decision

[29]

The
    Town was granted leave to appeal to the Divisional Court on two questions of
    law: 2016 ONSC 1673. The two questions were as follows:

1. Did the [OMB] err in law by
    determining that it had the authority to modify Policy 3.1.8 of the Town of
    Richmond Hill [OP] by approving a policy which imposes a lower maximum
    alternative requirement than 1 hectare per 300 dwelling units?

2. If the answer question #1 is no, did
    the Board err in law in modifying Policy 3.1.8 by capping the alternative
    requirement based on a percentage of the land area to be developed, rather than
    the number of units to be developed?

[30]

A
    unanimous panel of the Divisional Court answered the first question in the
    affirmative and accordingly there was no need for it to answer the second
    question.

[31]

All
    of the parties agreed that the applicable standard of review was that of
    reasonableness.

[32]

The
    Divisional Court described the issue before it in the following language:

The principal issue  is the OMBs interpretation of s. 42 of
    the
Planning Act
and, in particular, its conclusion that s. 42(4),
    either alone or in conjunction with s. 17(50), authorized the OMB to impose a
    cap as part of its approval of the policies of the municipality, relating to
    the alternative requirement, that are required to be part of the municipalitys
    [OP].

[33]

A
    municipality, the court noted, had two options for residential developments:
    the five per cent default rate or the alternative requirement. In the courts
    view, two things were clear from the legislation. First, a municipality can
    decide which of the alternatives it will employ and the rate, up to the
    legislated maximum, it will require from the developer. Second, the mechanism
    by which the municipality decides both the alternative and the rate to be used
    is the passing of a by-law  a by-law which is not subject to any right of
    appeal to the OMB.

[34]

The
    court noted that, under s. 42(4), the only pre-condition to the use of the
    alternative requirement is that the municipality must have an OP that sets out
    the policies that will guide its use of the alternative requirement. Policies,
    stated the court, serve to outline, in broad strokes, how a body expects to
    approach a given topic. They are not rigid rules, formulas or equations. There
    is a difference between policy and decision-making.

[35]

The
    court identified two flaws in the OMBs ultimate decision that it could fix a
    particular rate.

[36]

First,
    the OMB had assumed that it had the authority to fix a particular rate, but
    provided no explanation of the source of that authority.  While those
    challenging s. 3.1.8. were attempting to fill the OMBs gap in reasoning with
    s. 17(50) of the
Planning Act
, that provision did not assist them:

Unquestionably, s.
    17(50) gives authority to the OMB to approve, reject, or modify, an [OP].
    That authority presumes, however, that the [OP] is engaged.  Section
    17(50) does not assist in determining whether a municipality must include in
    its [OP] the rate it intends to use for the alternative requirement.

[37]

The
    second flaw in the OMBs decision was that the OMB had effectively taken unto
    itself the task of fixing individual rates in individual municipalities through
    the guise of its authority to review an OP:

[I]t reads into the very general language
    of s. 42(4) a specific authority that appears, on its face, to be inconsistent
    with the intent of ss. 42(1) and (3).  It effectively abrogates the role
    that the Legislature clearly intended municipalities would perform and instead
    bestows that role onto itself.  And in doing so, the OMB finds authority
    to establish a maximum rate for the alternative requirement that is different
    from the maximum provided by the Legislature in the statute.

[38]

The
    Divisional Court concluded that there was no statutory uncertainty and, indeed,
    the OMB had not pointed to one. Accordingly, there was no possibility of
    competing reasonable interpretations. The OMBs interpretation was unreasonable.

[39]

While
    the OMB could not impose a rate, it still had a role in the application of the
    alternative requirement by an individual municipality. The OMB, the court noted,
    is required to ensure that municipal policies regarding the alternative
    requirement are appropriate, effective and accord with provincial policies.

[40]

In
    this case, if the OMB had a legitimate concern about how the implementation of
    the Towns policy might affect high-density development, it could have given a
    direction to the Town that the Towns implementation of its by-law must not
    unduly restrict high-density development.

[41]

The
    Divisional Court set aside the OMBs decision to impose the 25 per cent cap and
    remitted the matter to the OMB.

B.

DISCUSSION

(1)

The Parties on the Appeal

[42]

There
    are two groups of appellants on these consolidated appeals. The first group,
    the Haulover appellants, includes Haulover Investments Ltd., Yvonne Worden and
    Robert Salna Holdings Inc. The second group, the Elginbay appellants, includes
    Elginbay Corporation and Zamani Homes (Richmond Hill) Ltd. I will refer to the
    Haulover appellants and the Elginbay appellants collectively as the
    Appellants.

[43]

The
    Town is the respondent on this appeal. The OMB, which has a statutory right to
    participate in this appeal, is also a respondent but its submissions are limited
    to its jurisdiction, role and mandate under the
Planning Act
, and the
    applicable standard of review.

[44]

Finally,
    four municipalities were granted intervener status: the City of Vaughan, the
    City of Markham, the Town of Oakville and the City of Mississauga. Each of the
    interveners supports the Towns position.

(2)

Standard of Review

[45]

As
    noted above, the standard of review was never in question before the Divisional
    Court. All parties agreed that the standard was reasonableness; where the
    parties parted ways was on the application of that standard.

[46]

As
    will be made clear in my discussion below, I am satisfied that, contrary to the
    Appellants submissions, the Divisional Court did not fail to accord the OMBs
    decision sufficient deference. In my view, there is no reason to interfere with
    the Divisional Courts conclusion that the OMBs decision was unreasonable.

[47]

The
    Divisional Court referred to the Supreme Courts decision in
McLean v.
    British Columbia (Securities Commission)
, 2013 SCC 67, [2013] 3 S.C.R. 895.
     At para. 33, the Supreme Court noted:

[T]he resolution of unclear
    language in an administrative decision makers home statute is usually best
    left to the decision maker.  That is so because the choice between
    multiple reasonable interpretations will often involve policy considerations
    that we presume the legislature desired
the administrative decision
    maker
 not the courts  to make.  Indeed, the exercise of that
    interpretative discretion is part of an administrative decision makers
    expertise. [Italics in original.]

[48]

But
    the Supreme Court went on, at para. 38, to state:

It will not always be the case that a
    particular provision permits multiple reasonable interpretations.
Where
    the ordinary tools of statutory interpretation lead to a single reasonable
    interpretation and the administrative decision maker adopts a different
    interpretation, its interpretation will necessarily be unreasonable
 no
    degree of deference can justify its acceptance.  In those cases, the
    range of reasonable outcomes will necessarily be limited to a single
    reasonable interpretation  and the administrative decision maker must adopt
    it. [Citations omitted; emphasis added.]

[49]

As
    I have noted, the Divisional Court concluded that there was no statutory
    uncertainty giving rise to the possibility of competing reasonable
    interpretations.

(3)

No Jurisdiction to Impose Cap/ Set Rate

(a)

Interpretation of ss. 42 and 17(50) of the
Planning Act

[50]

The
    Appellants submit that the Divisional Court erred in interpreting s. 42 and effectively
    ignoring s. 17(50) of the
Planning Act
.

[51]

In
    particular, the Elginbay appellants submit that the Divisional Court erred (1) in
    concluding that the OMB was limited to providing general guidance, given the
    requirement in s. 42(4) that no by-law can be passed unless there is an OP in
    effect with specific policies on the use of the alternative requirement, and
    (2) in finding that s. 17(50) does not provide the OMB with jurisdiction to cap
    the maximum alternative requirement below the statutory maximum.

[52]

Similarly,
    the Haulover appellants submit that the Divisional Court erred (1) in finding
    that the language of s. 42 was limited to only one single reasonable
    interpretation and that s. 17(50) was not relevant to the interpretive
    exercise, and in failing to afford the OMB judicial deference as it was
    required to do, and (2) in failing to appreciate that the municipalitys role
    in respect of OP policy was limited to that of proposing OP policy whereas
    approval of that policy is for the exclusive jurisdiction of the OMB by virtue
    of s. 17(50).

[53]

Together,
    the Appellants argue that the Divisional Courts interpretation up-ends the
    legislated planning hierarchy. They say that the role of the OMB is clear given
    that s. 42(4) of the
Planning Act
requires that an OP be in effect and
    that the OP have specific policies. An OP must be approved by an approval
    authority, such as the OMB, before it can be in effect. To be approved, the OP
    must comply with provincial policies, including the PPS, and while s. 2.1(1) of
    the
Planning Act
requires that the OMB have regard for the decisions
    of a municipality, it is required to ensure that a municipalitys OP is
    consistent with provincial policy. In the Appellants submission, the
    requirement that an OP be in effect prior to any by-law being passed indicates
    that the legislature intended for there to be OMB scrutiny, including scrutiny
    of the rate, at the OP approval stage.

[54]

I
    do not accept these submissions.

[55]

I
    begin with the trite observation that the OMB is a creature of statute: it can
    do only what the legislature has empowered it to do through various statutory
    provisions. And the converse of that of course is that it cannot do what it has
    not been empowered to do or do that which has been given by legislative
    authority to another.

[56]

Thus,
    as the OMBs jurisdiction is a matter of statutory interpretation, it will be
    helpful here to set out the relevant parts of s. 42:

(1)
As a
    condition of development or redevelopment of land, the council of a local
    municipality may, by by-law applicable to the whole municipality or to any
    defined area or areas thereof, require that land in an amount not exceeding, in
    the case of land proposed for development or redevelopment for commercial or
    industrial purposes, 2 per cent and in all other cases 5 per cent of the land
    be conveyed to the municipality for park or other public recreational
    purposes.

(3)
Subject to
    subsection (4), as an alternative to requiring the conveyance provided for in
    subsection (1), in the case of land proposed for development or redevelopment
    for residential purposes, the by-law may require that land be conveyed to the
    municipality for park or other public recreational purposes at a rate of one
    hectare for each 300 dwelling units proposed or at such lesser rate as may be
    specified in the by-law.

(4) The alternative
    requirement authorized by subsection (3) may not be provided for in a by-law
    passed under this section unless there is an official plan in effect in the
    local municipality that contains specific policies dealing with the provision
    of lands for park or other public recreational purposes and the use of the
    alternative requirement.

[57]

Before
    turning to these provisions, the Divisional Court reviewed the proper approach
    to statutory interpretation. As has been oft repeated, 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 Parliament:
Bell ExpressVu Ltd. Partnership v. Rex
, 2002
    SCC 42, [2002] 2 S.C.R. 559, at para. 26, citing Elmer A. Driedger in the
Construction
    of Statutes
,
2nd ed. (Toronto:
    Butterworths, 1983).

[58]

Applying
    this approach, the Divisional Court first looked at the words used by the
    legislature in s. 42 and made the following observation:

Both s. 42(1) and s. 42(3) refer expressly to the municipality
    establishing by by-law the rate that will be charged to a developer. Neither
    subsection refers to the rate being set by the OMB nor does the OMB have any
    right of review over the contents of the by-law. Further, neither subsection
    requires that the rate to be charged be included in the municipalitys [OP].
    The subsections mention only the by-law. Further s. 42(4) does not contain any
    express requirement that the rate to be charged to a municipality must be
    included in its [OP]

Indeed the plain wording of s. 42 leaves the decision as to the
    rate to be applied in each instance to the municipality to decide by by-law.

[59]

The
    only proviso to this authority bestowed on the municipality is found in s.
    42(4)  there must be an OP in effect in the municipality and it must contain
    specific policies dealing with the provision of lands for park or other public
    recreational purposes and the use of the alternative requirement.

[60]

Section
    42(1) provides the default rate for residential development: the municipality
    may by by-law require a developer of residential land to convey land in an
    amount not exceeding five per cent to the municipality for parkland. That is a
    specific power given to the municipality, which it is authorized to implement
    by by-law  a by-law not appealable to the OMB.

[61]

If
    one then moves to s. 42(3), the alternative to s. 42(1) is proposed. It is not
    a standalone section but part of s. 42 and it says that, as an alternative to
    conveying, for park purposes, five per cent of the land to be developed, the
    by-law that s. 42 (1) authorizes the municipality to make and that is not
    appealable to the OMB may require that land be conveyed  at a rate of one
    hectare for each 300 dwelling units proposed or at such lower rate as may be
    specified in the by-law. Again, the section clearly speaks of the rate  whether
    5 per cent or one hectare per 300 units or less  being specified by by-law. In
    my view, the OMB effectively interpreted s. 42(3) as if it read or at such
    lesser rate as may be specified in the OP, which is at odds with the clear
    wording of s. 42(3).

[62]

The
    Appellants make much of the fact that s. 42(4) refers to specific policies
    and not simply policies. The suggestion is that specific policies must
    include the specific alternative parkland dedication rate to be imposed. On my
    reading, the wording of s. 42(4) does not support that interpretation.

[63]

Section
    42(3) uses the word rate twice: at a
rate
of one hectare for each 300
    dwelling units and at such lesser
rate
as may be specified in the
    by-law (emphasis added). In contrast, s. 42(4) does not use the word rate. Instead
    it mandates that the OP include
specific policies
dealing with the
    use of the alternative requirement (emphasis added).

[64]

As
    a matter of statutory interpretation, it is presumed that the legislature uses
    words in a consistent way: Ruth Sullivan,
Statutory Interpretation
,
    2nd ed. (Toronto: Irwin Law Inc., 2007), at p. 167. Thus, the same words are
    presumed to have the same meaning, and, conversely, different words are presumed
    to have a different meaning.

[65]

Had
    the legislature intended that the municipality include the rate in its OP one
    would have expected it to have used the word rate in s. 42(4). By way of
    example, as the Divisional Court suggested, the words including the rate that
    the municipality will require under that alternative could have been added to
    the end s. 42(4). Instead, while the legislature chose to qualify the use of
    the word policies with the adjective specific, it failed to specify that
    the rate was a necessary component of the specific policies.

[66]

The
    Appellants make the point that the OP containing the specific policies must be
    in effect, which means that the OP must have been approved by an approval
    authority. They rely on the OMBs general approval/ modification /rejection
    powers when matters come before the Board by way of appeal to give it authority
    to impose the rate under s. 42(3). In particular, they point to s. 17(50), which
    I repeat for ease of reference:

On an appeal or a transfer, the
    Municipal Board may approve all or part of the plan as all or part of an
    official plan, make modifications to all or part of the plan and approve all or
    part of the plan as modified as an official plan or refuse to approve all or
    part of the plan.

[67]

Admittedly,
    the OMB has broad powers on appeal to approve, modify or refuse to approve all
    or part of an OP under s. 17(50). The Appellants also point to the OMBs powers
    under other sections, such as ss. 35, 36 and 88 of the OMBA:

35.
The Board, as
    to all matters within its jurisdiction under this Act, has authority to hear
    and determine all questions of law or of fact.

36.
The Board has
    exclusive jurisdiction in all cases and in respect of all matters in which
    jurisdiction is conferred on it by this Act or by any other general or special
    Act.

88.     U
pon any
    application to the Board, the Board may make an order granting the whole, or
    part only, of the application, or may grant such further or other relief in addition
    to, or in substitution for, that applied for as to the Board may appear just
    and proper as fully in all respects as if the application had been for such
    partial, other, or further relief.

[68]

In
    light of these provisions, there can be no question that for matters within its
    jurisdiction the OMB has very broad powers. In my view, however, none of these
    provisions bestows jurisdiction on the OMB to set the rate under s. 42(3).

[69]

As
    a matter of statutory interpretation, there is a presumption of coherence  it
    is presumed that the provisions of legislation are meant to work together as
    part of a functional whole: Ruth Sullivan,
Sullivan on the Construction of
    Statutes
, 6th ed. (Markham, Ont.: LexisNexis Canada Inc., 2014), at §11.2.
    As Professor Sullivan explains, [t]he parts are presumed to fit together
    logically to form a rational, internally consistent framework.

[70]

In
    this case, we have s. 42, which deals with the conveyance of land for park or
    recreational purposes and which falls under Part V entitled Land Use Controls
    and Related Administration.

[71]

Section
    17(50) falls under Part III of the
Planning Act
, which is entitled
    Official Plans. It is a more general provision, setting out the OMBs powers
    on appeal (or transfer) of an OP.

[72]

An
    interpretation that best reconciles these provisions is one that gives meaning
    to both. In my view, the Appellants proposed interpretation does the opposite.
    It gives to the OMB the power to set the rate, even though s. 42 provides that
    where a municipality determines to use the alternative requirement that it will
    do so by way of a by-law that is not appealable to the OMB.

[73]

In
    contrast, the Divisional Courts interpretation gives effect to both
    provisions. It respects the legislative direction that the rate under s. 42(3)
    be a matter for the municipality, and also the requirement under s. 42(4) that
    there be an OP in effect that contains specific policies dealing with the use
    of the alternative requirement. Its interpretation maintains a role for the OMB
    in reviewing an OP that includes specific policies relating to parkland
    dedication. For instance, as the OMB acknowledged in its November 2012 decision,
    it could examine policies dealing with issues such as the need for
    inter-connected parks and urban open space system; the criteria governing the
    imposition of cash-in-lieu of parkland dedication; the types of land that are
    eligible to be dedicated as parkland; and the criteria governing dedication in
    the cases of development for both residential and commercial purposes.

[74]

This
    interpretation, which recognizes the role of municipalities and the role of the
    OMB, helps resolve a tension recognized by the Divisional Court. On the one
    hand, municipalities desire flexibility and the ability to change the by-law
    rate without the need for an onerous and costly OP amendment process. On the
    other hand, developers desire certainty as to their exposure under s. 42. While
    developers may take issue with the maximum set by s. 42(3), they have certainty
    in knowing their maximum exposure, which is prescribed by s. 42.

[75]

The
    Appellants contend that this interpretation turns the planning hierarchy on its
    head. They describe the PPS and the Growth Plan as being the apex of the
    planning hierarchy since an OP must comply with applicable provincial policy
    statements and conform to growth plans, and a municipalitys by-laws must
    conform to its OP.

[76]

To
    the contrary, the Divisional Courts decision respects that the legislature is
    at the very apex of that hierarchy. The legislature has given the exclusive
    authority to the municipality to determine whether it will use the default rate
    or the alternative requirement and the rate, up to the legislated maximum, it
    will employ and the only proviso to the use of the latter is that there be an
    OP in effect containing specific policies dealing with the provision of
    parkland and the use of the alternative rate.

[77]

The
    OMB also submits that an interpretation of s. 42 that allows it to cap the
    statutory rate is necessary for it to ensure consistency and conformity with
    provincial policies and growth plans and, in particular, those that deal with
    intensification and affordable housing. But to suggest that the OMB is the only
    entity with a duty to ensure such compliance ignores s. 3(5) of the
Planning
    Act
, which imposes the same obligation on municipalities.

(b)

OMBs Approval Powers v. Powers of Municipality

[78]

The
    Elginbay appellants raise a further issue: did the Divisional Court err in
    determining that the OMBs powers were different and lesser than the Towns
    adoption powers respecting the Towns OP such that the Town alone could
    self-impose a specific parkland dedication rate? They submit that it is a
    long-standing principle of planning law that the OMB can make any decision that
    the Town is authorized to make.

[79]

The
    Haulover appellants similarly argue that if a municipality can ask for a cap
    through the adoption of its OP then so can the OMB as the approval authority
    pursuant to s. 17(50) and s. 88 of the OMBA.

[80]

The
    Appellants refer to a number of decisions on this point, including
Mississauga
    Golf and Country Club Ltd. (Re)
, [1963] 2 O.R. 625 (C.A.), and
Cloverdale
    Shopping Centre Ltd. v. Township of Etobicoke
, [1966] 2 O.R. 439 (C.A.).

[81]

In
Mississauga Golf
, the golf and country club applied to the Toronto City
    Council and requested it to amend the citys OP and a zoning by-law so as to
    change the designation of certain lands from residential to commercial.  The
    City refused the clubs application. The matter went to the OMB and then came
    to this court on a stated case. One of the questions before this court was
    whether the OMB had the jurisdiction to make an order directing amendment of
    the by-law in terms other than those applied for, creating a classification not
    provided for in the zoning by-law. It was argued that the OMB was limited to
    dismissing the appeal or directing that it be amended in accordance with the
    country clubs request for amendment to the municipal council. This court
    rejected that argument, at pp. 629-630:

In the circumstances
    prevailing, s. 30(19) gives the Board power to "direct that the by-law
    (the zoning by-law) be amended in accordance with its order". These words
    coupled with the very broad provisions of s. 87 of the
Ontario Municipal
    Board Act
leave no doubt that the Board in acting pursuant to s. 30(19) is
    not fettered as the appellant submits here.
On the appeal to the Board, the
    Board is exercising an original jurisdiction and may direct the council to do
    anything a council could have done in dealing with the application to it, even
    if this departs from the strict terms of the relief requested in the
    application.

In exercising the
    powers conferred on it under s. 30(19) of the
Planning Act
, the Board
    has jurisdiction to direct that amendments be made to the zoning by-law other
    than those sought in the application for amendment made to the municipal
    council provided that such amendments so directed are otherwise within the
    competence of the municipal council acting under s. of the
Planning Act
even if such direction entail a zoning designation not theretofore provided in
    the zoning by-law. [Emphasis added.]

[82]

This
    case is distinguishable. It involved a challenge to a zoning by-law appealable
    to the OMB, which is not the case here, and dealt with the question of whether
    the OMB could grant relief even if this departs from the strict terms of the
    relief requested in the application, which is not in issue in this case.

[83]

Cloverdale
involved an appeal from a decision of the OMB allowing an amendment to the OP
    for the Township of Etobicoke. One of the issues before this court was the
    OMBs jurisdiction to approve the amendment. The court described the issue, at
    p. 448:

Under these various provisions it, of course, falls to be
    determined, as the very crux of the matters in issue in this appeal, whether
    the functions of the Municipal Board in determining the question of an
    amendment to an [OP] proposed by council are precisely those of the Minister
    when the matter has been referred to the Board by the Minister under s. 34 or
    whether those functions are different in their nature and, perhaps, as a
    corollary to this consideration, whether the functions of the Board are
    different in their nature when considering an amendment to an [OP] proposed by
    council (ss. 12, 14(1)) as contrasted with an amendment proposed by some entity
    other than council (s. 14(3), (4), (5)), and again, whether the functions of
    the Board when considering an original zoning by-law or a by-law amending a
    zoning by-law (s. 30(9), (10); are different from those when considering a
    proposal to amend a zoning by-law (s. 30 (19)) by some entity other than
    council.

[84]

Based
    on its interpretation of the relevant provision, this court concluded that the
    Boards duties were the same as those of the Minister and that the duties of
    the Board when considering a zoning by-law enacted by council or a zoning
    by-law amending proposal emanating from a private entity were identical. The
    court also concluded that the Boards powers to modify an OP were broad.

[85]

This
    courts decision in
Cloverdale
turned on an interpretation of the
    statutory provisions in question. The case did not involve the interpretation
    of s. 42 or any provision similar to s. 42.

[86]

More
    generally, the Appellants argument on this point fails to recognize that as a creature
    of statute, the OMB stands in the shoes of the municipality only with respect
    to matters within the OMBs own statutory jurisdiction. In other words, the
    Boards power to act as the original decision maker could have acted does not
    confer on the OMB the power to interfere in specific circumstance where the
    legislature has limited its ability to do so.

(c)

OMBs Decision Was Unreasonable

[87]

In
    conclusion, I agree with the Divisional Courts conclusion that the OMBs
    interpretation of s. 42 was unreasonable. The OMB erred in concluding it could take
    unto itself, as part of its statutory power to consider OP appeals, an authority
    that that the legislature has specifically given to municipalities. By adopting
    an unreasonable interpretation of s. 42, the OMB did indirectly what the
    legislature prohibits it from doing directly  namely, compelling the Town to
    limit itself to a rate which is less than the statutory prescribed rate.

(3)

Additional Guidance

[88]

The
    Appellants submit that the Divisional Court failed to give the OMB the guidance
    it requested. In my view, the reasons of the Divisional Court speak for
    themselves and no additional guidance should be necessary. The OMB will carry
    out its duties as it has always done but do so without exceeding its authority
    by imposing a cap below the ceiling prescribed by s. 42(3) or otherwise
    dictating the rate. In para. 58 of its reasons, the Divisional Court offered
    suggestions that the OMB might consider in its review of alternative
    requirement policies.

C.

DISPOSITION OF APPEALS

[89]

For
    these reasons, I would dismiss the appeals.

[90]

I
    would order the Elginbay appellants to pay costs to the Town in the amount of
    $20,000 and the Haulover appellants to pay costs to the Town in the amount of
    $14,000. These costs, which include costs of the leave motions and appeals,
    include disbursements and HST. The interveners sought no costs and none are
    awarded. No costs are payable by or to the OMB.

Released: January 29, 2018 (D.W.)

J. MacFarland J.A.

I agree. David Watt J.A.

I agree. M.L. Benotto J.A.

[1]

Section 42 has recently been amended but those amendments
    post-date the decisions under appeal and so they are not in issue in these
    appeals.

[2]

It is argued that the greater the density, the greater the
    land value. Since cash-in-lieu is determined by the parcels fair market value,
    an increase in density drives an increase in the amount of cash-in-lieu payable
    and produces a result whereby sites with greater density pay more cash-in-lieu
    per unit. This, it is argued, has a negative impact on intensification and
    affordable housing.