Board Acted Unreasonably by Not Following the Only Reasonable Interpretation of Statute

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Author: Anthony Pugh, Student-at-Law, Law Works P.C.

Editor: Ben Hanuka

In Richmond Hill (Town) v. Elginbay Corporation, a January 29, 2018, decision of the Court of Appeal for Ontario, the court agreed with the Ontario Divisional Court that the Ontario Municipal Board’s decision to impose a cap in the Official Plan of Richmond Hill on the amount of land required to be conveyed for parkland was unreasonable.

The Court of Appeal upheld the Divisional Court’s determination that the statutory provisions of the Planning Act in question were unambiguous and there were not multiple reasonable interpretations.

In addition, the court held that the Board did not have jurisdiction to impose this cap. The Planning Act empowered only the municipality to choose the appropriate rate, within the statutory limit.

Key Facts

In July 2010, the Town of Richmond Hill adopted a new Official Plan, under the Planning Act. It provided that, for residential developments, developers would have to convey for parkland the greater of five percent of the proposed development and one hectare per 300 proposed dwelling units.

Section 42(3) of the Planning Act allows a municipality to enact a by-law requiring conveyance of one hectare for each 300 proposed dwelling units for parkland. This is an alternative to section 42(1), which provides that a municipality may require five percent of the land to be conveyed.

To use the alternative requirement, section 42(4) requires a municipality to have an Official Plan in place. The Official Plan must contain specific policies concerning the provision of land for parks and other recreational purposes, and the use of the alternative requirement.

Several developers challenged Richmond Hill’s use of the alternative requirement, including Elginbay Corporation. They claimed that the Official Plan must include references to the alternative rate of one hectare per 300 proposed dwelling units and policies prescribing a lesser rate to that alternative rate. Otherwise, the rates would be left to a by-law, for which there is no right of appeal.

The parties challenging the use of the alternative requirement also claimed that it would not be consistent with Provincial Policy Statement 2014 and the Growth Plan for the Greater Golden Horseshoe, by discouraging high-density development and affordable housing. Decisions by a municipality affecting planning are required to be consistent with these provincial plans under section 3(5) of the Planning Act.

The Ontario Municipal Board imposed a 25% cap on the land required to be conveyed for parkland, out of the land proposed for development, reasoning that it balanced certainty for landowners with flexibility for the municipality. It concluded that parkland policies must be detailed enough to provide a level of certainty for developers.

The Divisional Court found that the Board erred in law by determining that it had the authority to modify Richmond Hill’s policy and imposing a lower maximum alternative rate than one hectare per 300 proposed dwelling units.

Elginbay and other parties appealed the Divisional Court’s decision to the Court of Appeal for Ontario.

The standard of review – there was no statutory uncertainty

The parties did not dispute that the standard of review was reasonableness. However, they disagreed on how the court must apply that standard.

The Court of Appeal held that there was no reason to interfere with the Divisional Court’s decision that there was no possibility of several competing reasonable interpretations of the statutory provisions, as there was no statutory uncertainty at play.

Like the Divisional Court, the Court of Appeal referred to the Supreme Court’s decision in British Columbia (Securities Commission) v. McLean. There, the Supreme Court noted that when statutory interpretation leads to a single reasonable interpretation and a decision-maker adopts a different interpretation, that decision-maker’s interpretation is unreasonable.

The Board’s decision was unreasonable – it did not have jurisdiction to impose a cap

Under section 42(4), for a municipality to use the alternative requirement, the Planning Act requires that the Official Plan be in effect. This Official Plan must have specific policies dealing with provision of lands for parkland and the use of the alternative requirement. To be in effect, the Official Plan must be approved by an approval authority, such as the Board.

The developers argued that the requirement for specific policies in the Official Plan included a specific alternative rate, including policies regarding a lesser rate. The Court of Appeal disagreed. Section 42(3) or (4) makes no mention of a lesser rate being specified in an Official Plan, only in a by-law. The court found that the Board had essentially read an extra unwritten requirement on Richmond Hill to specify a lesser rate in the Official Plan into these provisions.

Applying the principle of statutory interpretation that the legislature uses words in a consistent manner, the court held that the legislature would have used the word “rate” in section 42(4) if it intended for the municipality to include the rate in its Official Plan. “Rate” is used twice in section 42(3).

Furthermore, the court rejected the developers’ argument that the Divisional Court’s interpretation ignored section 17(50) of the Planning Act. This section enables the Board to make modifications to an Official Plan on appeal. The developers also pointed to provisions in the Ontario Municipal Board Act which grant broad powers to the Board.

However, even these broad powers did not give the Board jurisdiction to set the rate under section 42(3). To give meaning to both sections 42 and 17(50), section 42(3) must be a matter for the municipality because the municipality sets the rate through by-law, which is unappealable.

The Board’s role is not to set the rate, but to examine policies dealing with such issues as the types of land that are eligible to be dedicated as parkland and the need for inter-connected parks.

This interpretation balances both the needs of developers for certainty, through setting the maximum rate in section 42(3), and the needs of the municipality for flexibility, through their ability to change the rate in the by-law.

The developers further argued that provision of the rate in the Official Plan is required for the Board to ensure that it complies with provincial policy statements. However, the court held that section 3(5) of the Planning Act imposed an obligation to ensure compliance on municipalities, as well as on the Board.

The court rejected the developers’ reliance on cases purporting to show that the Board may make any decision that Richmond Hill would be authorized to make. Those cases involved particular statutory provisions which were not at play. As a creature of statute, the Board does not have power to act in areas where the legislature has limited its ability to do so (i.e., it has no inherent jurisdiction, like a court does).

Because the legislature had given the power to select the rate to municipalities, the Board’s decision to impose a rate on Richmond Hill which was less than the prescribed rate in the Planning Act was unreasonable.

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