Indexed as:

Markham v. Sandwich South (Township)

Between

Earl Markham and Ed Markham, applicants (appellants), and

The Corporation of the Township of Sandwich South, respondent

(respondent)

[1998] O.J. No. 2183

160 D.L.R. (4th) 497

110 O.A.C. 79

46 M.P.L.R. (2d) 179

79 A.C.W.S. (3d) 1048

Docket No. C23523

Ontario Court of Appeal

Toronto, Ontario

Finlayson, Rosenberg and Moldaver JJ.A.

Heard: April 29 and 30, 1998.

Judgment: May 27, 1998.

(15 pp.)

[Ed. note: A Corrigendum was released by the Court May 29, 1998 and the correction has been made to the text.]

Municipal law -- Bylaws -- Quashing bylaws, grounds for judicial interference -- Ultra vires -- Lack of food faith.

Appeal by Earl and Ed Markham from dan order dismissing their application to quash a bylaw. In 1989, the appellants' business was destroyed by fire and the Township ordered them to clean up the debris. They did so and the debris was taken to a waste disposal dump situated in the Township but, operated by the Corporation of the County of Essex. The Township issued weigh-bills. Tipping fees of $45,000 were levied but not paid. The Township paid the County and attempted unsuccessfully to recover from the appellants. In 1990, the Township instituted an action against the appellants for reimbursement of tipping fees. The Township then brought a motion for summary judgment on its action. The Township claimed that it did not have the right to recover the tipping fees. In September 1994, the Township passed Bylaw 94-22, without notice to the appellants, which provided that persons dumping waste at the County landfill site would have to pay fees at an identical rate to that paid by the Township to the County. The bylaw was purported to be deemed to come into force on January 1, 1986. The appellants learned of the bylaw in the course of the litigation in October 1994. The Township again sought summary judgment in February, 1995. That motion was adjourned and the appellants were ordered to apply for a determination of whether the bylaw was ultra vires and, if so, whether the Township could recover on the basis of restitution. The application to quash the bylaw was dismissed on the basis that there was no statutory prohibition to the passage of the bylaw and there was no evidence of bad faith.

HELD: The appeal was allowed. The order was set aside and the bylaw was quashed. The passage of this bylaw was a clumsy exercise in fence-mending directed at providing a legal basis for the claim for reimbursement of tipping fees. The bylaw purported to be authorized by a subsection of the Municipal Act which did not come into existence until some three years after the bylaw was deemed to have come into force. The purpose of passing the impugned bylaw was not to establish fees for a waste management system. It was to attempt to recover a specific cost incurred in the summer of 1989 under a specific agreement made with the County covering a specific waste site with respect to particular loads of waste taken from the appellants and them alone. Further, the timing of the passage of the bylaw, the procedure used to pass the bylaw, the text of the bylaw, and the circumstances under which it was passed, all constituted an overt act of bad faith. It was an ad hominem one-shot reimbursement device. It was directed to the appellants alone and to a stale-dated claim. As such, it was discriminatory and the court would have no hesitation in quashing it.

Statutes, Regulations and Rules Cited:

Bylaw 94-22.

Municipal Act, R.S.O. 1980, s. 208(5).

Municipal Act, R.S.O. 1990, c. M-45, ss. 208.2, 208.6(1), 208.6(2)(b), 209(2), 209(23)(b).

Municipal Amendment Act, 1989, S.O. 1989, c. 43, s. 1.

Municipal Statue Law Amendment Act, 1993.

Counsel:

Harvey T. Strosberg, Q.C., for the appellant.

Raymond G. Colautti, for the respondent.

The judgment of the Court was delivered by

1 FINLAYSON J.A.:-- The appellants, Earl Markham and Ed Markham ("the Markhams"), appeal from the order of the Honourable Mr. Justice Cusinato of the Ontario Court (General Division) wherein their application under the Municipal Act, R.S.O. 1990, c. M-45 (the "Act") to quash By-law 94-22 (the "By-law") of the Corporation of the Township of Sandwich South (the "Township") was dismissed.

2 The application to quash is collateral to an action instituted by the Township against the Markhams and others on October 29, 1990 claiming reimbursement of "tipping fees" paid by the Township to the Corporation of the County of Essex ("the County") with respect to waste or garbage dumped by the Markhams in a waste disposal dump situated in the Township but owned and operated by the County.

3 While a number of grounds for quashing the By-law were advanced in this court, I believe they can be considered under the following headings:

(a) Was notice to the Markhams required as a condition to passage of the By-law?

(b) Did the enabling provisions of the Act empower the Township to pass a By-law that was retroactive or retrospective?

4 The relevant provisions of the Act relating to waste management programs are as follows:

209. (2) The council of a county may pass a by-law to empower it to adopt a waste management plan or to assume any or all of the waste management powers, or both, for all the local municipalities forming part of the county for municipal purposes.

(21) Despite section 374, the council of a county may by by-law provide for imposing on and collecting from participating local municipalities in which it is providing waste management services or facilities, a waste management rate sufficient to pay the whole or such portion as the by-law may specify of the capital costs including debenture charges and expenditures for the maintenance and operation of the waste management services or facilities in the participating local municipalities and such rate may vary based on the volume, weight or class of waste or on any other basis the council of the county considers appropriate and specifies in the by-law.

(22) All rates under subsection (21) constitute a debt of the participating local municipality to the county and shall be payable at such times and in such amounts as may be specified by by-law of the council of the county.

(23) Despite sections 369 and 374, the participating local municipality may,

(a) pay the whole or part of the amount chargeable to it under this section out of its general funds;

(b) pass by-laws for imposing a rate sufficient to recover the whole or part of the amount chargeable to it under this section in the same manner as by-laws under paragraphs 91 and 92 of section 210 may be passed; and

(c) include the whole or any part of an amount chargeable to it under this section as part of the cost of an urban service within an urban service area established in the participating local municipality under any general or special Act.

Chronology of events

5 In 1987, the County, acting under the authority of the Municipal Act, R.S.O. 1980 passed by-laws authorizing it to enter into agreements with one or more municipalities, including the Township, for the joint management of garbage collection and disposal systems and for the establishment and operation of municipal sanitary landfills in and for the County.

6 The Township entered the agreement with the County under the authority of s. 208(5) of the then Act. The subsection read as follows:

By-laws may be passed by the councils of all municipalities:

5. For entering into agreement with one or more municipalities to provide for the joint management and operation of water systems, sewage systems, works for the disposal, interception or purification of sewage, garbage collection and disposal systems, hydro-electric systems, transportation systems, road systems, fire departments, police departments, or other municipal utility, systems or services, and for the establishment of joint boards of management thereof.

7 The version of the agreement that was in force between the County and the Township in August of 1989 was dated November 1, 1987 and included a procedure whereby the County would bill the Township directly for any and all waste received at County landfill sites from inhabitants of the Township. However, there was no provision in this agreement for "charges back" whereby the Township could recover these fees from commercial users within its boundaries.

8 The present waste management provisions contained in s. 209 of the Municipal Act, R.S.O. 1990 were introduced by the Municipal Amendment Act, 1989 by S.O. 1989 c. 43, s. 1 and assented to on July 13, 1989. This amendment introduced s. 209(23)(b) permitting municipalities such as the Township to pass by-laws for imposing a rate upon users of the Township landfill sites to recover the whole or part of the amount charged to it under s. 209 by the County. Resort was not made to this section until the impugned By-law was passed in 1994. Prior to that, the Township relied upon a resolution, Resolution 351/85 dated November 4, 1985, providing that all contractors, builders and dump trucks were to be charged for dumping at landfill sites No.1 and No.3 at the same rate as the Township is charged by the County, effective January 1, 1986. It is conceded that a resolution is not effective to impose liability upon the Markhams for charges paid by the Township to the County on its behalf.

9 On August 7, 1989, the business of the Markhams was destroyed by fire. The Markhams were ordered by the Township to clean up the debris. They did so and the debris was taken by their carrier to landfill No.1 in the County during the period August 15, 1989 to August 21, 1989. Weighbills were issued by the Township to the carrier and a charge or tipping fee of $45,000 was levied. It was not paid.

10 It appears to be undisputed, that at about this time (October of 1989) the Township went to a "user pay" system whereby the users of the landfill sites would pay tipping fees directly to the County. However, this was not the case with respect to the waste hauled from the Markhams' premises. The Township paid the County and attempted without success to obtain reimbursement from the Markhams.

11 On October 29, 1990, the Township issued a statement of claim against the Markhams and others for payment of the tipping fees. In May of 1994, the Township brought a motion for summary judgment. The motion was resisted, in part, by the assertion that the Township did not have the right to recover the tipping fees in question. The validity of Resolution 351/85 was questioned.

12 On September 26, 1994, By-law 94-22 was passed during one council meeting without notice to the Markhams. It reads as follows:

BY LAW 94-22

being a by-law to recover waste disposal charges

WHEREAS the Municipal Act, Section 209 (23) authorizes municipalities to pass by-laws to recover waste disposal charges.

AND WHEREAS the Council of the Corporation of the Township of Sandwich South deems it expedient to adopt said by-law;

NOW THEREFOR THE CORPORATION OF THE TOWNSHIP OF SANDWICH SOUTH HEREBY ENACTS AS FOLLOWS:

1. That all contractors, builders, businesses and dump trucks be charge[d] for dumping or disposing of waste materials at the County of Essex Landfill Sites Number 1 and at an identical rate that the Township of [S]andwich South is charge[d] by the County of Essex;

2. This By-Law shall not apply to residents of the Township of Sandwich South who dump less tha[n] 6,000 pounds per month;

3. This By-Law shall be deemed to come into force and take effect from and after January 1st, 1986;

READ A FIRST, SECOND AND THIRD TIME

AND FINALLY PASSED THIS 26TH DAY OF

SEPTEMBER 1994.

13 There are a number of typographical errors that I have corrected with square brackets. The most significant ones are the two references to "charges", which the Clerk Treasure conceded in his cross-examination in these proceedings should have read "charged". I also note that in paragraph 1 of the By-law that "Sites" is plural and if a "3" was added after "... Number 1 and" that the sentence would become grammatically correct. This explanation for the absence of reference to Landfill Site No. 3 in the By-law was not provided in the record. The existence of By-law 94-22 was disclosed to the Markhams by counsel for the Township in the litigation on October 3, 1994.

14 The Honourable Mr. Justice Ouellette heard a motion for summary judgment brought by the Township on February 21, 1995. He adjourned the motion and ordered the Markhams to institute an application to determine (1) whether the By-law that is the subject of this appeal is ultra vires and (2) if the By-law is ultra vires, whether the Township can recover the amount claimed in its statement of claim on the principle of restitution.

15 Cusinato J. heard the application to quash By-law 2496 and dismissed it on November 24, 1995. In his reasons, he stated that the Township derived its legislative authority to pass By-law 94-22 from s. 209 of the Act and its various subsections. In the absence of specific statutory authority stating otherwise, it was entitled to pass the by-law without notice. He found that there was no evidence of bad faith and he held that "in the absence of statutory prohibition of which I find none, it may take effect retroactively". Finally, he held that having concluded that the By-law was not ultra vires, "the [Markhams'] liability having been satisfied by the Township the latter is entitled to plead restitution".

Analysis

16 With great respect to the learned judge in appeal, the passage of this By-law cannot be supported. Looked at facially in the context of the Township's dispute with the Markhams, it is a clumsy exercise at fence mending directed to providing a legal basis for the claim for reimbursement of tipping fees. The original reliance upon Resolution 351/85 as the legal underpinning for the Township's claim has been abandoned. It is now argued that the use of a resolution instead of a by-law was a mere technical defect in the Township's position. However, the court was referred to no contemporaneous legislative authority that would have supported the passage of a by-law in the place and stead of Resolution 351/85. Rather the effort has been to persuade the court that legislation that postdated the events in issue is sufficient to justify validity of By-law 94-22.

17 By-law 94-22 purports to be authorized by s. 209(23) of the Act and yet it is deemed to come into force and take effect from and after January 1, 1986, long before s. 209 was introduced by the Municipal Amendment Act, 1989. Subsection 209(23)(b) was not in existence in 1986, nor was any other section in existence that provided legislative authority for the By-law. Under the Act at the time, the Township only had authority to pass a by-law to enter into an agreement regarding the joint management of waste disposal with the County pursuant to s. 208(5). If a by-law had been passed in 1986 in the language of Resolution 351/85, it would have been void ab initio because it had no legislative underpinning.

18 Though s. 209(23) of the Act was introduced in July of 1989, which is before the Markhams dumped their waste in August 1989, the section does not save the By-law. Section 209(2) authorizes a county to pass by-laws empowering it to adopt a waste management plan or to assume any or all of the waste management powers of the local municipalities forming part of the county. If this was done, it is not in evidence. In any event, the Township relies upon its agreement of 1979 and that agreement is continued in force by virtue of s. 209(18) of the Act. The power to enter into similar agreements continued after the amendment as s. 207(5) of the Act. Accordingly, the charges assessed against the Township by the County, which are in issue in this appeal, were not created in accordance with a waste management scheme the County created under s. 209(2), but rather under the earlier agreement between the County and Township. It follows that the Township could not have passed the impugned By-law even in July 1989 after the addition of s. 209(23) to the Act because it was not relying for reimbursement upon any obligation imposed upon it under the provisions of s. 209.

19 Belatedly, the Township appears to have recognized this problem. Despite the fact that the recitals to the By-law make clear that the Township was relying on the authority of s. 209(23) of the Act in passing the By-law, we are now told in argument that it finds its authority in an amendment to s. 209(23)(b) introduced by the Municipal Statute Law Amendment Act, 1993 effective October 26, 1993, being "An Act to amend certain Acts related to Municipalities concerning Waste Management". Section 209(23)(b), as amended, now reads:

(b) pass by-laws for imposing a rate sufficient to

recover the whole or any part of the amount chargeable to

it under this section in the same manner as by-laws under

section 208.5 and clause 208.6 (2) (b) may be passed; and

20 Section 208.6(2)(b) must be read in conjunction with s. 208.2 which permits a local municipality to pass by-laws "to establish, maintain and operate a waste management system". Section 208.6(1) states that "for the purpose of section 208.2, a local municipality may pass by-laws to prohibit or regulate the use of any part of a waste management system" and s. 208.6 (2) provides:

A by-law passed under subsection (1) may,

(b) establish fees for the use of any part of the waste management system;

21 It is quite evident that the impugned By-law is not purporting to establish fees for a waste management system as described in s. 209 of the Act as enacted in 1989 or after it was further amended in 1993. It is attempting to recover a specific cost incurred in the summer of 1989 under a specific agreement with the County made in 1987 covering a specific waste site with respect to particular loads of waste taken from the premises of the Markhams and the Markhams alone. Nor was the By-law intended to provide a fee schedule for the benefit of future users of the County landfill sites as permitted by s. 208.6(2)(b) of the Act. There is no fee schedule. We are not dealing with the correction of a technical failure in the implementation of a regulatory scheme, we are dealing with an ex post facto attempt to validate a claim asserted in a piece of litigation.

22 Though I have established there is no statutory basis for the By-law, I turn now to an inquiry into whether the By-law should be quashed since it was passed in bad faith. The issues are not entirely separate since an absence of statutory basis for the passage of the By-law may be evidence to support a finding of bad faith. At the outset I should state that I am fully aware of the many expressions of caution within the case law on the scope of review by courts of actions by municipal councils especially when this review involves an examination of the motives for the actions by municipal councils. An example is the often quoted passage of Middleton J. in Re Foster and Township of Raleigh (1910), 22 O.L.R. 26 at 27, that stated: "[w]ith regard ... to all questions which arise regarding matters which have or are supposed to have some relation to morals or social questions, nothing could be more dangerous than any attempt to enter upon the motives and reasons which have actuated the legislative body." The Supreme Court of Canada has also considered this issue recently in Shell Canada Products Ltd. v. Vancouver (City), [1994] 1 S.C.R. 231. The authorities are consistent, however, on the point that courts should not hesitate to intervene where it is found a council has acted in bad faith.

23 Bad faith connotes many meanings, but as stated by Britton J. in Re Hamilton Powder Co. and Gloucester (1909), 13 O.W.R. 661 at 664:

Bad faith does not mean some particular advantage to one or more members of the council. It is not necessary to establish enmity or ill-will on the part of one or more members against a person interested in a by-law or contract. It may be bad faith without corrupt motives, and it may not be bad faith, although local feelings and prejudices influence members of a council in their action.

24 A majority of this court in Re Burns and Township of Haldimand, [1965] 2 O.R. 768, concluded that a finding of bad faith in the passing of an expropriation by-law is justified where it appears that the municipality was actuated not so much by the desire to acquire park land (there being no evidence that this purpose had been previously discussed, although this was stated to be the purpose), as by the wish to settle an argument with the owner in a pending action by him against the municipality for trespass in which he had secured an ex parte injunction.

25 In Chippewas of Saugeen First Nation v. Keppel (Township) (1994), 117 D.L.R. (4th) 419 (Ont. Ct. (Gen. Div.)), Belleghem J. considered a situation where the Township of Keppel had passed by-laws to issue quitclaims to owners of land over which ownership was disputed by the Chippewas of Saugeen First Nation. Just over a month before the passage of the by-laws, a court had ordered a trial to resolve the ongoing land ownership dispute. Belleghem J. considered, among other things, that local authorities must exercise their powers in the public interest. The close timing of the court order and the passage of the by-laws persuaded Belleghem J. that the Township and the landowners had sought to circumvent the ruling of the court and the Township's actions therefore amounted to bad faith and the by-laws should be quashed on that ground.

26 The timing of the passage of the By-law at issue in this appeal, the procedure utilized to pass the By-law, the text of the By-law, and the circumstances under which the By-law was passed, all constitute, in my opinion, an overt act of bad faith. On May 20, 1994 the Township had moved for summary judgment on the action brought against the Markhams. In an affidavit filed on July 15, 1994, in response to the motion, the solicitor of the Markhams, among other things, asserted that there were questions as to the validity and enforceability of Resolution 351/85 and that this was a triable issue. The By-law was passed soon after the end of that summer on September 26, 1994. In Chippewas of Saugeen First Nation, supra, the court concluded that the close timing of a court order and the passage of by-laws circumventing the order constituted bad faith. Similarly, I conclude that the timing of the passage of the By-law in this case indicates that the By-law was passed in bad faith to avoid a motion for summary judgment that might well have been lost due to the unenforceability of Resolution 351/85 and to avoid the result of the overall lawsuit that was also likely to be lost. This finding is supported by the unusual procedure used to pass the By-law. The By-law was passed with no notice to the Markhams or the public and it was read three times and passed at just one council meeting. The circumstances of the passage of the By-law and its text indicate further that it was passed in bad faith. As I have established, there was no statutory basis for the By-law and it only affected the Markhams. The drafters and the council knew of the pending lawsuit against the Markhams and the response to the motion for summary judgment that undermined their case. The council passed the By-law that was specifically designed to overcome the legal difficulties the Township's lawsuit against the Markhams was encountering. The By-law was not passed in the public interest. These factors, taken together, provide ample evidence to support my conclusion that the By-law was passed in bad faith.

27 By-law 94-22 is a one-shot reimbursement device. It is directed to the Markhams alone and to a stale dated claim. As such it is discriminatory. Passed without notice, in response to an unexpected defence in a lawsuit that it instituted, and in total disregard of its statutory authority, it is the ultimate in bad faith legislation. The court should have no hesitation in quashing it.

Disposition

28 I would allow the appeal, set aside the order of Cusinato J. and quash By-law 94-22. It follows that the Township is not entitled to rely upon the By-law to plead restitution.

29 I would award the appellants their costs of this appeal and their costs below on the application to quash.

FINLAYSON J.A.

ROSENBERG J.A. -- I agree.

MOLDAVER J.A. -- I agree.

cp/d/bbd/mjb/DRS