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By David Sunday 2015/06/10

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In the recently decided case of Puslinch v. Monaghan, 2015 ONSC 2748 (the “Puslinch case”), the Ontario Superior Court has confirmed that Zoning By-laws that purport to regulate short-term rental use of a property cannot do so in a way that is discriminatory, vague, uncertain, or insufficiently specific.

In the Puslinch case, the Township of Puslinch (the “Township”) brought an application against the owner of a residential property on the shores of Puslinch Lake. The Property was being used both for the owner’s personal use as a vacation property and at times by short-term renters. The Township sought an injunction enjoining the owner from allowing her property to be used by short-term renters.

The Township argued that, under its Zoning By-law, use of the property by short-term renters was use as a “Tourist Establishment”, which was not a permitted use of the property under the Zoning By-law. The Zoning By-law defined this term as:

“… any premises operated to provide sleeping accommodation for the travelling public or sleeping accommodation for the use of the public engaging in recreational activities, and includes the services and facilities in connection with which sleeping accommodation is provided, and without limiting the generality of the term, also includes a cabin establishment, a tourist home, a tourist cottage and a housekeeping cottage …

Counsel for the owner (represented by David Sunday and Michael Letourneau of SorbaraLaw) argued that while the Township had the capacity to regulate short-term rental use of residential properties, the Zoning By-law was ineffective in this regard because the use of the property by short-term renters was substantively the same as personal use by the owner, which the Township conceded was permitted as a “single detached dwelling” use.

The Township ultimately took the position that only the owner, by virtue of her ownership of the property, could use it on a short-term basis, notwithstanding that she (like her renters) resided elsewhere and only occupied it for short periods of time and generally for recreational purposes. The Township also took the position that the owner could not loan the property to her friends and family, as such use would also constitute use as a “Tourist Establishment” and offend the Zoning By-law.

The Court rejected the Township arguments and found that “to the extent the Tourist Establishment by-law seeks to regulate short term use in the RR Zone, it seeks to regulate people not use and, therefore, is ultra vires the Planning Act”.  The Court further noted that the Township reasoning “fails to explain Ms. Monaghan’s exemption from the application of the Tourist Establishment bylaw. Ms. Monaghan’s primary residence is in Cambridge. The primary residences of vacationers, friends and family of Ms. Monaghan are also at a different location than [the property].

Short-term rentals continue to receive significant attention throughout Ontario and beyond. As municipalities grapple with these issues, the lesson of the Puslinch case is that those municipalities that seek to regulate short-term rental use through their Zoning By-laws need to do so in a way that is clear and non-discriminatory, otherwise such regulation is likely to be ineffective.

* * This article is intended only to inform and educate. It is not legal advice. Be sure to contact a lawyer to obtain legal advice on any specific matter.

David Sunday is the Group Leader in the Municipal, Land Use & Development Law Group at Sorbara, Schumacher, McCann LLP, one of the largest and most respected regional law firms in Ontario.

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By David Sunday 2015/05/21

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The Supreme Court of Canada has denied leave to appeal in the case of Vincorp Financial Ltd. v. Oxford (County), 2014 ONCA 876 (CanLII) (“Vincorp”). Notwithstanding the case has now been looked at by the highest court, the law around municipal bonusing is not a whole lot clearer today than it was back when we wrote our previous blog post on the lower court decision in November 2014.

As reviewed in that earlier blog post, the lower court in Vincorp decided that for an advantage conferred on a commercial entity to constitute a “bonus” within the meaning of s. 106 of the Municipal Act, 2001 there must be an “obvious undue advantage”.  The lower court found that there was no such advantage on the facts, but unfortunately provided little guidance on how distinctions between  “obvious undue advantages” and “merited advantages” should be made.

When the matter was heard by the Court of Appeal, the appellant maintained the argument that there had been a bonus to Toyota and that this should invalidate the expropriation of the appellant’s lands. In rejecting this argument, the Court of Appeal said “[e]ven if the subsequent sale and transfer to Toyota had breached s. 106, this breach would not invalidate or vitiate the proper purpose for the expropriation and would not render the expropriation invalid”.  The Court of Appeal went on to say “the appellants have an interest in the legality and propriety of the expropriation process and are entitled to receive the fair value of the mall lands as determined under the Expropriations Act, but their interests are not at stake in reviewing the second transaction [involving the alleged bonus to Toyota]”.  The Court of Appeal also took the opportunity to remind us that the legislative purpose underlying s. 106 is “to level the playing field between municipalities competing to attract development”.

To the extent there has been any clarification of the law of bonusing, it appears to be only this: an expropriation will not be invalidated only on the basis of some indirect connection to another transaction involving a bonus.

While we had hoped the Court of Appeal might provide further guidance on how distinctions between  “obvious undue advantages” and “merited advantages” should be made, unfortunately that was not in the cards. As a result, significant uncertainty around where to draw the line between an “obvious undue advantage” and a “merited advantage” remains.

* * This article is intended only to inform and educate. It is not legal advice. Be sure to contact a lawyer to obtain legal advice on any specific matter.

David Sunday is the Group Leader in the Municipal, Land Use & Development Law Group at Sorbara, Schumacher, McCann LLP, one of the largest and most respected regional law firms in Ontario.

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By David Sunday 2014/12/02

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Through amendments to the Building Code introduced by Ontario Regulation 191/14, Ontario will increase the permissible height of wood frame buildings from the current 4 storeys to 6 storeys effective January 1, 2015.

While these changes have received broad support from the home construction industry, certain industry stakeholders have raised concerns around the increased fire risk posed by wood frame construction.  The amendments as passed respond to these concerns by requiring stairwells to be constructed of non-combustible materials and roofs to be combustion resistant.

The local municipality is the authority having jurisdiction for enforcing the Building Code. Accordingly, municipalities will need to ensure that their building officials are familiar with and able enforce the new Building Code provisions around mid-rise wood frame construction by the time they come into force on January 1, 2015, including that all requirements around fire risk prevention and/or mitigation are adhered to.

At the time of writing, the Code Advisory Unit of the Ministry of Municipal Affairs and Housing (MMAH) advised that it was developing overview material on the Code changes related to midrise wood construction which would be posted on the MMAH website shortly. George Brown College, which has responsibility for the development and delivery of Building Code training, is also in the process of updating its training materials to reflect the new content. Municipalities will want to monitor for additional information from these sources, but in the meantime will have to rely on the amended Code provisions as set out in Ontario Regulation 191/14.

* * This article is intended only to inform and educate. It is not legal advice.  Be sure to contact a lawyer to obtain legal advice on any specific matter.

David Sunday is the Group Leader in the Municipal, Land Use & Development Law Group at Sorbara, Schumacher, McCann LLP, one of the largest and most respected regional law firms in Ontario.

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By David Sunday 2014/11/20

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Section 106 of the Ontario Municipal Act, 2001 is a much worried about “anti-bonusing” provision of broad application. It is worrisome because its limits and applications are far from clear. By its terms, the provision purports to create an unqualified prohibition on municipalities directly or indirectly assisting any manufacturing, industrial, or commercial enterprise through “bonusing”. The scope of prohibited “bonusing” extends to the giving or lending of any municipal property, including money, guaranteeing borrowing, leasing or selling any municipal property, or giving a total or partial exemption from any levy, charge, or fee.

Even though the anti-bonusing provision, by its terms, would appear to place very significant and wide-ranging restrictions on municipal action, in the little judicial consideration the provision has received, it has actually been construed and applied quite narrowly. Four Ontario cases have now considered the anti-bonusing provision, with the most recent consideration being in Vincorp Financial Ltd. v. The Corporation of the County of Oxford (2014) ONSC 2580 released April 30, 2014.

The judicial consideration prior to Vincorp establishes several principles applicable to the interpretation of the anti-bonusing provision. Stated briefly these are:

  1. Powers conferred upon municipalities by the Municipal Act, 2001 are to be given a broad and purposive interpretation;
  1. The anti-bonusing provision restricts municipal powers, therefore must be construed narrowly so as not to unduly detract from municipal powers;
  1. All municipal contracts confer an advantage or benefit of some kind;
  1. The anti-bonusing provision should be construed as only prohibiting the granting of “obvious undue advantages”.

The challenge with the anti-bonusing provision lies in the application of these principles to the facts of any particular situation. Determining whether there has been a contravention of the anti-bonusing provision requires a judgment call as to whether there has been an “obvious undue advantage” or, stated another way, an “unmerited windfall” to some enterprise. These are inherently subjective concepts. In the absence of further judicial guidance, precisely how municipalities and their advisors should go about making such a judgment call remains unclear.

In Vincorp, the Court had an opportunity to provide further legal guidance, but unfortunately it did not do so. The Vincorp case involved an expropriated shopping mall owner who alleged that the County of Oxford had provided a bonus to Toyota by expropriating the mall lands and then transferring those lands to Toyota at the “expropriation price” as opposed to “fair market value”. There was no evidence and no specific finding by the Court as to the actual difference, if any, between these values.

The Court in Vincorp rejected the mall owner’s position, but in reaching its conclusion simply adopted and applied past judicial analysis to conclude that any advantage conferred on Toyota did not pass the pre-existing threshold of “obvious undue advantage”. The Court noted that the County and the Province would derive significant economic benefits as a result of Toyota building a new manufacturing plant in Woodstock, such that any benefit that might have accrued to Toyota through the transfer of the mall lands at the expropriation price could not be considered an “obvious undue advantage”.

The Vincorp decision’s greatest significance appears to be that it involves a novel, albeit failed, attempt to apply the anti-bonusing provision to an expropriation for a municipal economic development purpose. Beyond that, however, it provides little by way additional judicial guidance as to how to distinguish between “obvious undue advantages” and “merited advantages”.

In the event an appeal from Vincorp is heard (and we understand an appeal has been filed), then it would be hoped that the Court of Appeal takes the opportunity to provide further guidance on how the distinction between  “obvious undue advantages” and “merited advantages” ought to be made. Municipalities should monitor for further judicial guidance on the anti-bonusing provision and, in the meantime, exercise caution to ensure that any advantage conferred by the municipality cannot be characterized as “undue”. At present, this appears to mean that the municipality needs to be able to point to significant (and perhaps proportionate) benefits to itself and/or the public any time an advantage is conferred, otherwise a municipality may be exposed to allegations of illegal bonusing.

* * This article is intended only to inform and educate. It is not legal advice.  Be sure to contact a lawyer to obtain legal advice on any specific matter.

David Sunday is the Group Leader in the Municipal, Land Use & Development Law Group at Sorbara, Schumacher, McCann LLP, one of the largest and most respected regional law firms in Ontario.

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Municipal, Land Use, and Development Law – David Sunday

As part of its consultations on the development of a new Provincial Policy Statement (“PPS”), Ontario’s Ministry of Municipal Affairs and Housing recently made available draft PPS policies (http://www.mah.gov.on.ca/Page9990.aspx) and invited stakeholder comments:

(http://www.mah.gov.on.ca/Page10054.aspx)

The PPS is intended to provide “policy direction on matters of provincial interest related to land use planning and development”. It has legal weight by virtue of a provision within the Planning Act that requires all decisions of land use planning authorities to be consistent with the PPS. To see what’s new in the draft PPS, I created a comparison of the draft policies to the existing PPS 2005 which you can view here:

(http://ontariolanddevelopment.files.wordpress.com/2013/01/pps_comparison.pdf)

If you look at the comparison, you’ll see right away that what’s proposed is not a complete rewrite, but rather a revision to what’s already there in the PPS. That said, there are some fairly significant proposed changes. Some of the more interesting changes relate to the “greening” of development.

GREEN INFRASTRUCTURE

A very obvious “green” addition in the draft PPS policies is the introduction of the new term Green infrastructure:

Green infrastructure: means natural and human-made elements that provide ecological and hydrological benefits. Green infrastructure can include components such as natural heritage features and systems, parklands, storm water management systems, urban forests, permeable surfaces, and green roofs.

Green infrastructure appears to require a new and different understanding of what we currently think of as infrastructure, another defined term in the PPS. Unlike infrastructure, green infrastructure is not limited to just “facilities and corridors”, but may include any “element” that provides “ecological and hydrological benefits”.

The only draft PPS policy dealing with green infrastructure is section 1.6.2. This section requires planning authorities to encourage the use of green infrastructure to augment infrastructure and for other associated ecological and hydrological benefits before consideration is given to developing new infrastructure and public service facilities.

It’s notable that the definition of green infrastructure contains no reference to infrastructure itself, which suggests that green infrastructure is not intended to be just a subset of infrastructure. Rather green infrastructure seems intended to be something that stands beside infrastructure, figuratively speaking, and somehow lessens the load that conventional infrastructure would otherwise have to bear.

The draft policies provide some examples of green infrastructure but the definition is clearly non-exhaustive. If implemented, it will be interesting to see what comes to be generally recognized as green infrastructure and what types of policies municipalities develop to encourage the use of it.

RESILIENT COMMUNITIES

“Resilient” is a word that does not appear at all in the existing PPS, but appears six times in the draft PPS. The word is not specifically defined in the draft PPS, so I assume the conventional meaning is intended, i.e., being able to withstand or recover from some adverse condition.

  • “Resilient” is used in the draft PPS primarily to modify the words “communities” and “development”, as in:
  • “sustainable and resilient communities”
  • “resilient development and land use patterns”
  • “efficient and resilient communities”
  • “liveable and resilient communities”

Of course the question this raises is: What is it that communities and development are to be resilient against?

Part IV: Vision for Ontario’s Land Use Planning System of the draft PPS appears to answer the question with this statement:

Strong, liveable and healthy communities promote and enhance human health and social well-being, are economically and environmentally sound, and are resilient to climate change.

If adopted in their current form, the draft PPS policies would make climate change resiliency an indicator of good land use planning and a characteristic good development. As with green infrastructure, it will be interesting to see what would become generally recognized as “resilient communities” and “resilient development” and also what yardsticks will be developed to measure resilience.

ACTIVE TRANSPORTATION

Another new defined term in the draft PPS is active transportation:

Active transportation: means human-powered travel, including but not limited to, walking, cycling, inline skating and travel with the use of mobility aids, including motorised wheelchairs and other power-assisted devices moving at a comparable speed.

The general policy direction in the draft PPS is to promote and increase the use of active transportation, but there is no specific direction to set targets or otherwise set benchmarks for how this is to be done.

The addition of the term would not appear to present a marked policy shift, so much as an effort to clarify of what was intended by a mishmash of terminology in the existing PPS, such as “alternative transportation modes”, “pedestrian mobility and other forms of travel”, “other alternative transportation”, and “pedestrian and non motorized movement”.

COMMENTING AGENCIES

If you are interested in further reading on the draft PPS policies, many commenting agencies have posted their comments online including submissions from:

* * This article is intended only to inform or educate. It is not legal advice.  Be sure to contact a lawyer to obtain legal advice on any specific matter.

 

Author: David Sunday is the Group Leader in the Municipal, Land Use & Development Law Group at Sorbara, Schumacher, McCann LLP, one of the largest and most respected regional law firms in Ontario. David may be reached at (519) 741-8010 or<dsunday@sorbaralaw.com>.

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Corporate Commercial – Real Estate – David Sunday

When a landlord’s commercial premises are up for lease and the leasing broker locates an interested tenant, it is quite common for the prospective landlord and tenant to sign an agreement to lease as a first step towards putting in place a final lease agreement.

While an agreement to lease is no substitute for a final lease, it is important for prospective landlords and tenants to understand that signing an agreement to lease often has the same legal effect as signing a final lease itself.

Ontario’s Courts have said that, to be valid and enforceable, an agreement to lease must show the parties, give a description of the premises, set out the commencement and duration of the term, the rent, and all the material terms of the contract that are not just incidental to the relationship of landlord and tenant.  If these requirements are met, then an agreement to lease may be legally enforced, even though the parties did not ultimately agree on the final form of lease.

If the requirements for a binding agreement to lease are not met, then an agreement to lease will usually only be considered an “agreement to agree” or an “agreement to negotiate”.  In law, such “agreements to agree” are not generally treated as legally enforceable contracts.  However, even an agreement to agree may have enforceable provisions with respect to certain matters, such as forfeiture of deposit monies, and the entering into of an agreement to lease may trigger broker commission obligations.

Often agreements to lease contain a clause that says that the tenant will accept the landlord’s standard form of lease when presented subject only to minor modifications to make it consistent with the terms of the agreement to lease.  It is one thing to have such a clause included when the landlord’s standard form of lease is available to the tenant and reviewed before the tenant signs the agreement to lease, but potentially unfair to the prospective tenant if the landlord’s standard form of lease is not provided to the tenant until after the agreement to lease is signed.  Notwithstanding the potential unfairness, the Court’s will enforce such agreements to lease if the legal requirements set out above are met.

To avoid problems, parties to an agreement to lease should always ensure that:

  • the agreement to lease is clearly drafted and fully understood by both parties;
  • the agreement to lease clearly states whether it is intended to be a binding agreement to lease or non-binding in nature;
  • the agreement to lease clearly sets out the rights of the parties insofar as preparation and acceptance of the final lease agreement is concerned;
  • the agreement to lease clearly sets out what happens in the event the parties fail to agree upon a final form of lease (e.g., Are parties entitled to walk away? Are deposit monies forfeited?); and
  • any conditions included in the agreement to lease with respect to lawyer approval are clearly drafted, reflect realistic timelines, and confer sufficient rights as to allow for meaningful lawyer review and comment.

Before signing any agreement to lease, landlords and tenants should ensure that their interests are fully protected and should ask themselves if they could abide by the terms of the agreement if it were legally enforced even in the absence of a separate finalized lease agreement.

* * This article is intended only to inform or educate. It is not legal advice.  Be sure to contact a lawyer to obtain legal advice on any specific matter.

 

Author: David Sunday is the Group Leader in the Municipal, Land Use & Development Law Group at Sorbara, Schumacher, McCann LLP, one of the largest and most respected regional law firms in Ontario. David may be reached at (519) 741-8010 or<dsunday@sorbaralaw.com>.

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Real Estate – David Sunday 

Ontario has commenced a formal review of the Condominium Act.  Although the review is still underway, the review panel has issued a first recommendation to require condominium managers to hold certain mandatory qualifications.

The Ministry of Consumer Services has already endorsed this early recommendation, due to its relatively broad support across most stakeholder groups, including from the Association of Condominium Managers of Ontario.

Property managers across Ontario and Waterloo Region will want to monitor this development and ensure that they are ready when mandatory qualifications become a reality.

The Stage Two Condominium Act Review report is expected to be available for public comment by the end of summer 2013. Expect it to provide further detailed recommendations with respect to the types of mandatory qualifications that are likely to be required for condominium managers at some time in the future.  You can watch for the report online at:

http://www.sse.gov.on.ca/mcs/en/Pages/condo_rev.aspx

* * This article is intended only to inform and educate. It is not legal advice.  Be sure to contact a lawyer to obtain legal advice on any specific matter.

 

Author: David Sunday is the Group Leader in the Municipal, Land Use & Development Law Group at Sorbara, Schumacher, McCann LLP, one of the largest and most respected regional law firms in Ontario. David may be reached at (519) 741-8010 or<dsunday@sorbaralaw.com>.

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Municipal, Land Use, and Development Law – David Sunday

Real estate developers in Canada and the United States will all be familiar with the due diligence issues that are common to most jurisdictions during the development land acquisition phase, such as the need to confirm zoning permissions and market feasibility. However, each Province and State will have its own unique variety of land use controls, some of which may “fly below the radar” of the development community but nevertheless can have a major impact on a property’s development potential. Ontario is no exception and this article flags three of its lesser known land use controls which should be considered when evaluating a possible development land acquisition in Ontario.

1. Endangered Species Act

Under the Endangered Species Act, the Province maintains a list of Species at Risk in Ontario (the “SARO List”). Once an endangered or threatened species is added to the SARO List, a variety of legislative provisions come into play, the overall goals of which are to protect species at risk and their habitats, and to promote the recovery of species at risk.

A site that provides habitat for a species at risk will typically be subject to very significant development constraints, as the Act prohibits any damage or destruction of species at risk habitat.

It bears noting that the SARO List includes not only mammals, but also various species of at risk trees and reptiles. In the Region of Waterloo, for example, the Jefferson Salamander and the Butternut Tree are two at risk species whose habitat has been identified on quite a number of sites proposed for development with significant resultant constraints.

Qualified biologists can assist a developer in determining if a site contains habitat for any species at risk and, if so, in assessing the extent of the development constraints.

2. Records of Site Condition under the Environmental Protection Act

In Ontario, what is known as a Record of Site Condition (“RSC”) must be registered with the Ministry of the Environment prior to changing the use of a property from industrial or commercial use to residential or parkland use.

An RSC is a document that summarizes the environmental condition of a property as determined by a “Qualified Professional” after conducting a Phase I Environmental Site Assessment, a Phase II Environmental Site Assessment (if appropriate), and confirmatory sampling (in the case of site cleanup).

The aim of this requirement is to ensure that contaminated industrial or commercial sites are not converted to more sensitive residential or parkland uses without first being properly remediated or risk assessed.

The effect of the RSC requirement is that any former industrial or commercial site in Ontario is unavailable for residential or parkland use until someone invests the time and money needed to obtain and register an RSC for that site.

3. Heritage Act

Ontario’s Heritage Act is intended to protect heritage properties and archaeological sites. It provides a framework for municipalities to designate individual heritage properties or to designate entire areas as Heritage Conservation Districts.

Once designated as a heritage property through the passing of a municipal by-law, a property becomes subject to restrictions on alterations which will affect heritage attributes. Before making such changes, an owner must obtain written consent from the municipal Council to such alterations.

An owner must also obtain written consent from the municipal Council prior to demolition of any building or structure on a designated property.

Developers will therefore find that heritage designated properties are more challenging development candidates than non-designated properties.

* * This article is intended only to inform and educate. It is not legal advice.  Be sure to contact a lawyer to obtain legal advice on any specific matter.

 

Author: David Sunday is the Group Leader in the Municipal, Land Use & Development Law Group at Sorbara, Schumacher, McCann LLP, one of the largest and most respected regional law firms in Ontario. David may be reached at (519) 741-8010 or<dsunday@sorbaralaw.com>.   

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