Lakeview Developments Inc. v Stony Plain (Town), 2013 ABQB 619

Court of Queen ’ s Bench of Alberta Citation: Lakeview Developments Inc. v Stony Plain (Town), 2013 ABQB 619 Date: 20131022 Docket: 1103 18571 Registry: Edmonton Between: Lakeview Developments Inc. Plaintiff - and - Town of Stony Plain Defendant _ ________________________________________ ______________ Memorandum of Decision of the Honourable Madam Justice M.T. Moreau _________________________________________ ______________ I. Introduction [ 1 ] The Plaintiff, Lakeview Developments Inc., applies for

summary judgment in the amount of $140,871.54 against the Defendant, the Town of Stony Plain (“the Town”), on the basis that there is no genuine issue to be tried in relation to its claim. II. Background Facts [ 2 ] The Plaintiff was a registered owner of a remainder lot created from a plan of subdivision registered by the Town on September 9, 2009. The Plaintiff acquired the subdivision lands (“the Lakeview Subdivision”) from a foreclosure sale in January, 2011. At that time, the Town claimed to be owed $136,290.18 in outstanding utility charges and penalties subsequently transferred by the

Town to the tax roll. These charges relate to a water leak, which the Town alleged was the responsibility of the owner and sole occupier of the subdivision lands at the time. The Plaintiff, a subsequent purchaser, paid $140,871.54 to the Town under protest to clear its title and commenced this action. [ 3 ] In mid-June 2010, a resident of the Town advised the Town that water under pressure was discharging from a pipe protruding out of the ground in the Lakeview Subdivision. Town employees called to deal with the issue noted water flowing from a 25 mm diameter, three-meter-long pipe ("the flushing pipe").

It was leaking from the point it was connected to the main water service line running underground. They turned off a water valve located on a Town-owned roadway that stopped the water flow. [ 4 ] The Town assumed when it calculated the water utility bill that the water had been turned on prior to August 1, 2009 based on the observations of Mr. Tony Lew, the Manager of Operations for the Town of Stony Plain, who was responsible for the water/sewer divisions. Mr. Lew testified that he believed the flushing line was installed for the purpose of conducting a chlorine test of the water lines in the subdivision.

He assumed from the presence of individuals working on the land on July 29 or 30, 2009 that they were conducting a chlorine test and that the water was left running until turned off by Town employees on June 13, 2010. As a water meter was not connected to the flushing pipe or a water service line feeding the subdivision, the Town estimated the amount of water discharged and issued an invoice to Skyrider Developments Ltd. (“Skyrider).

The invoice for water usage was subsequently transferred to the property tax roll. [ 5 ] The Town did not provide an invoice to the owner of the land at all relevant times, 1376510 Alberta Ltd., or formal notice to the owner that the utility bill would be transferred to the tax roll. III. The Law relating to

Summary Judgment Applications [ 6 ] Rule 7.3(1) provides: Application and decision 7.3(1) A party may apply to the Court for

summary judgment in respect of all or part of a claim on one or more of the following grounds: (

a) there is no defence to a claim of part of it; (

b) there is not merit to a claim or part of it; (

c) the only real issue is the amount to be awarded. [ 7 ] The test for

summary judgment under Rule 7.3 is the same as under the old Rules: Encana Corp v ARC Resources Ltd , 2011 ABQB 431 at para 7 . The Applicant is required to establish that there are no genuine issues for trial. If a

summary judgment application is based on “factual merit,” then the applicant must establish “beyond doubt” that there is no genuine issue for trial: see Tottrup v Clearwater Municipal District No 99 , 2006 NBCA 380 at para 30 , citing Pioneer Exploration Inc (Trustee of) v Euro-Am Pacific Enterprises Ltd , 2003 ABCA 298 at para 19 . If the

summary judgment application is based on the

interpretation of documents or a statute, the test for

summary judgment is “whether the issue of law can fairly be decided on the record before the court. If the legal issue is unsettled or complex or intertwined with the facts, it is sometime necessary to have a full trial to provide a proper foundation for the decision”: Tottrup at para 11. [ 8 ] When considering an application for

summary judgment, “the court has an obligation to conduct a careful review with an eye to determining whether there are undisputed facts to resolve the matter, even when the action is complex”: Encana Corp at para. 9. IV. Submissions The Plaintiff's arguments [ 9 ] The Plaintiff first argues that because a development agreement (“the Agreement”) was entered into in 2007 between the developer and the Town, which provided for the supply of water by the Town to the proposed subdivision, the Agreement governs all issues arising from the supply of the water, as contemplated in para 3.5.2.

The Plaintiff referred to ARW Development Corp v Beaumont (Town) , 2011 ABCA 382 , in which the Court of Appeal noted that a municipal bylaw cannot abrogate a contract entered into by a municipality, and that successor municipal councils are bound by the contracts of previous councils. As the Town is bound by the terms of the Agreement, it was obligated to refer the water leak to arbitration pursuant to para 3.12.

Not having done so, the Plaintiff argues that all steps taken by the Town to collect on its invoice are a nullity. [ 10 ] The Plaintiff next argues that as the Town has not determined the precise location of the water leak, the flushing pipe, or the underground water service, it cannot establish that the leak occurred within the land owned by the Plaintiff or within Town-owned land. Accordingly, it cannot establish that there was a “utility service provided to a parcel of land” within the meaning of s 42 of the Municipal Government Act (“ MGA ”).

It provides that: Liability for public utilities charges 42(1) The charges for a municipal utility service provided to a parcel of land are an amount owing to the municipality by the owner of the parcel.

(2) If the municipality agrees to provide a municipal utility service to a parcel of land on the request of an occupant of the parcel who is not the owner, the charges for the municipal utility service provided to the parcel are an amount owing to the municipality by the occupant and not the owner. [ 11 ]

Section 28(

c) of the MGA defines a “municipal utility service” as a utility service provided by a municipal public utility. [ 12 ] At the hearing of the application, the Plaintiff abandoned the further argument that in the absence of a written contract between the owner of a parcel of land and the Town, the Town could not enforce the payment of utility charges against the owner. [ 13 ] The Plaintiff next refers to s 4.14 of Town of Stony Plain, bylaw No 2473, Utility Bylaw (10 December 2012), (“ UB ”),: 4.14 Owner/Tenant Accounts In all cases the Owner shall be liable for the cost of water and sewer service supplied to a property, regardless of whether the property is occupied by the Owner or a Tenant, and all invoices issued by the TOWN OF STONY PLAIN shall be sent to the Owner.

The TOWN OF STONY PLAIN will, at the Owner’s request, send a copy of the invoice issued to an Owner to a Tenant, provided that the Town shall not be required to seek payment from a Tenant of any invoice issued to an Owner whether a copy is sent to the Tenant or not. [Emphasis added] [ 14 ] As the utility invoice was sent by the Town to Skyrider and not to the registered owner, the Plaintiff maintains that the Town is not entitled to collect on the invoice. The same argument applies to the transfer of the utility invoice to the tax roll without notice to the registered owner.

The Plaintiff submits that the Town should not be entitled to gain priority over registered encumbrances when it fails to adhere to mandatory provisions of its own bylaws. [ 15 ] The Plaintiff further argues that the Town cannot rely upon the UB to invoice and collect utility charges as it did not know who was responsible for turning on the water valve which caused the water to be discharged from the flushing pipe.

As ss 5.3 and 5.8 of the UB provide that only Town employees can turn the water valves on and off, it can be presumed that a Town employee turned the water valve on which caused the problem for which the Town purports to hold the owner (and subsequent owners) responsible. [ 16 ] The Plaintiff further argues that s 5.1(

a) of the UB makes it clear that all water supplied by the Town must be measured by a meter, and s 5.1(

h) clearly specifies the circumstances in which an estimate as to the amount of water used may be made by the Town manager. This not being one of those cases, the Town cannot rely upon the provisions of its bylaw that permit the Town manager to estimate the amount of water used. [ 17 ] Finally, counsel for the Plaintiff addressed the Town’s defence that in substance, the Plaintiff is advancing a claim challenging the Town’s administrative decision in rendering the utility invoice.

The Town maintains that in essence, the Plaintiff’s debt action is an application for judicial review and that the Plaintiff has no cause of action in debt. The Plaintiff argues in response that s 352 of the MGA entitles it to proceed by way of a debt action.

Section 352 states: 352(1) An action, suit or other proceedings for the return by a municipality of any money paid to the municipality, whether under protest or otherwise, as a result of a claim by the municipality, whether valid or invalid, for payment of taxes or tax arrears must be started within 6 months after the payment of the money to the municipality.

(2) If no action, suit or other proceeding is started within the period referred to in subsection (1), the payment made to the municipality is deemed to have been a voluntary payment. [ 18 ] The Plaintiff maintains that because the Town transferred the utility charges to its tax roll, the Plaintiff is entitled to proceed with the debt action, being an “action, suit or other proceedings” contemplated by s 352. [ 19 ] Finally, the Plaintiff submits that the Town’s defence that the exclusive forum for any challenge to a utility invoice is the Alberta Utilities Commission (the “AUC”) cannot be relied upon in the circumstances.

While s 43 of the MGA gives authority to the AUC to hear an appeal challenging the reasonableness of a municipality’s utility invoice, in this case, the AUC refused to take jurisdiction to deal with the Town’s invoice given that it had been transferred to the tax roll. The Town's Arguments [ 20 ] The Town submits that its authority to issue utility services invoices derives from the UB and is unaffected by the existence of a development agreement. The Agreement addresses only the construction of a water supply system, not the supply of water on completion of the development.

According to the Town, it is unclear whether the uncontrolled discharge of water from a partially constructed water supply system would constitute a breach of the Agreement. The Town argues that the

interpretation of and the interaction between the Agreement and the UB are genuine issues for trial. [ 21 ] Next, with respect to the evidence regarding the location of the flushing pipe, counsel for the Town argued that nothing in s 42(1) of the MGA requires the Town to prove that the source of the service is located on a parcel that receives the utility service. The Town only need establish that what was supplied to the development pursuant to s 42(1) of the MGA was a municipal utility service and that it was supplied to a parcel of land.

In any event, given that "as built" engineered drawings were never provided by the developer, it was impossible for the Town to know the exact location of the water lines within the subdivision.

The Town should not be prevented from charging for water supplied to the subdivision due to the developer’s own failure to provide the means to locate the water lines. [ 22 ] With respect to the argument that the Town is presumed to have turned on the water and therefore should be responsible for the water loss, counsel for the Town argued that s 42(1) of the MGA , read in conjunction with ss 4.14 and 5.2 of the UB , render the owner liable when water is supplied, independently of who turned on the water.

There is no requirement in the UB or the MGA making invoicing contingent upon knowing the identity of the person who turned on the water supply. If this were the case, argued the Town, it

would be unable to invoice any person who uses the utility service unless the Town was able to prove that such person caused the utility to be consumed. With respect to the argument that the owner at the time the water leak was discovered, 1376510 Alberta Ltd., did not receive the invoice for the utility charges or formal notice of the transfer of the utility charges to the tax roll, the Town noted that the president of Skyrider, Mr. Derek Prue, was listed in the corporate registry as “Director, Shareholder, Liquidator” of 1376510. There was no other occupier of the lands. Notifying Skyrider of the charges was in this case effective notice to the owner. The Town also relies on s 7.1(

b) of the UB , which provides that a consumer’s failure to receive an account shall in no way affect the liability to pay the account. [ 23 ] As regards the fact that the water charges in this case were unmetered, counsel for the Town pointed out that meters are not installed until the completion of construction and construction in this case had not been completed. Pursuant to s 5.2 of the UB , the consumer is responsible for water consumption.

Section 5.1(

h) of the UB referred to by the Plaintiff was not intended to exclude the ability of the town to charge for unmetered water services during construction periods. [ 24 ] Finally, counsel for the Town relies on two additional defences based on choice of forum. It maintains that the Plaintiff’s action is in substance a judicial review of Town Council's decision confirming the reasonableness of the utility charges.

While s 352 of the MGA refers to an “action, suit or other proceeding”, its purpose is not to dictate the choice of appropriate proceedings available to taxpayers but simply to impose a shorter limitation period upon their claims. The Town maintains that the Plaintiff's claim is in essence a challenge to the Town's administrative decision on the basis it was unreasonable and outside its authority.

The Plaintiff should have proceeded by way of judicial review. [ 25 ] Alternatively, the Town maintains that the AUC is the exclusive forum to determine challenges to the reasonableness of a municipality’s utility invoice. V. Discussion [ 26 ] I am of the view that there are triable issues of fact, mixed fact and law, and law arising in this case. First, there are triable issues with respect to the application of the Agreement and its interaction with the Town's authority under the UB to charges for water utility services as regards an unanticipated discharge of water in the construction phase.

Also at issue is whether there was in fact a “utility service provided to a parcel of land” within the meaning of s 42(1) of the MGA . Another question is whether a temporary water line can be considered to be a “municipal utility service” within the meaning of the MGA definition in s 28(c).

There is also an issue with respect to the interplay between the Agreement and s 5.2 of the UB that makes the consumer responsible for all water consumed on a premise. [ 27 ] As to the Plaintiff's argument that the water leak occurred on Town property and is therefore not the responsibility of the Plaintiff, genuine issues are raised as to whether there is a requirement under s 42(1) of the MGA to pinpoint the precise location of the leak, particularly in circumstances where the Town can establish that water services were being provided to the parcel in question and flushing activities were believed to have been carried out on the parcel. [ 28 ] In the Town’s written decision on May 16, 2011 in relation to the application by the Plaintiff for a reduction in the tax bill, it noted at page 42 what it believed to have been the cause of the water discharge: In mid-June 2010, the Town manager at the time advised that he had received a call from Mr.

Gerald Stroh relative to a pipe protruding out of the ground in the Lakeview development. Water, under pressure, was being discharged from the pipe. Upon investigation by the administration it was concluded that this discharge was indeed treated water from the town’s water distribution system. This was further confirmed when the main water valve near the entrance of the development was turned off and the discharged stopped.

It was also believed that the protruding pipe was only a temporary installment to facilitate the removal of residual chlorine in the permanently installed underground water lines after the disinfection process of such water lines.

It was also discovered that a very large partially completed storm water retention pond was completely filled with very clean water; thus it was concluded that much, if not all, of the discharged water made its way into the partially completed storm retention pond. [ 29 ] As to the allegation of the Plaintiff that the leak occurred on the Town-owned roadway, the Plaintiff’s Notice to Admit Facts states: On or about June 13, 2010, Gerry Stroh, a resident of the Town of Stony Plain, informed the town that water was leaking from a pipe on or near the land . [ 30 ] Paragraph 8 of the Town's Reply to the Notice to Admit Facts, the Town states: Denied .

In mid-June 2010, Gerry Stroh informed the town manager at the time that water, under pressure, was being discharged from a pipe, which was protruding out of the ground in the Lakeview development . [ 31 ] At para 18 of the Notice to Admit Facts, the Plaintiff states: At all material times to this action, any water which leaked or discharged was from a 25 mm pipe located on roadway plan number 092 8859, a roadway owned by the Town of Stony Plain . [ 32 ] At para 18 of its Reply, the Town states: Denied .

Para. 8 of the Notice to Admit contains a statement which is not relevant to the allegations put in the Plaintiff’s Statement of Claim. [ Emphasis added]

[ 33 ] Read together the Notice to Admit and Reply do not conclusively establish that the flushing pipe was located on Town lands. [ 34 ] Mr. Lew in questioning for discovery was asked (at p. 12): Q What else did you do when you got to the site? A Well, I asked the staff to show me where the pipe was. Q You recall – A And he showed me. Q Where was it located approximately to the best of your recollection?

A I think the road goes in, goes towards the west, and then it bends to the south a bit, and then it kind of is just around the corner there. [ 35 ] At page 21: A My experience has been usually after the flushing the line is removed and capped like cut off and capped. Q Is it cut off at ground level or down below. A Down below ground level. Q At the joint where it taps into the main line? A Yes. Q Upon your arrival on site in June of 2010 the tie in line to the flush line and the service line that was all buried , correct? A Correct.

Q You estimate would be that that main line was probably about 8 or 9 feet below the ground? A Correct. Q It would appear as though someone buried those lines and left the flush line out of the ground ? A That is what it appears. Q How much of the flush line was actually above grade? A Approximately, I would say about 4 to 5 feet. [Emphasis added] [ 36 ] Mr. Lupul testified in questioning that he saw the flushing pipe on four separate occasions and that it was located on the Town roadway. Mr. Goulden's was not able to specifically confirm or deny this: Q You don’t have as built drawings.

So accordingly, you did not know where the location of where the water leak was at specifically? A Like where the water was leaking? Q Correct. From the flush line. Q Does the town know whether or not the water flush line was located on the roadway, as described in the plan of subdivision, or whether it was on a piece of land other than the roadway? A I don’t know if we have ever been able to determine where it physically sits in relation to anything else for that matter. We know where it was generally because we showed up and turned it off.

We have what should have been drawings of essentially what was supposed to be built but we were never certain as to what was built. Q So you are not sure if it was on the roadway or on the remainder lot that we have described, correct? A No. I guess. Q And it’s not a concern of the town’s as to whether it was on the roadway or on the remainder lot? A Not really no. [ 37 ] The upshot of these exchanges is that the water had been discharging from a flushing pipe which was connected to the water- main servicing the development.

I am of the view that there are triable issues with respect to who should ultimately be responsible for the costs associated with the water leakage that may have been caused by flushing activities: having regard to two arguments raised by the Town. Firstly, the Town could not establish the precise location of the leakage within an underground system for which it had

received no as built engineered drawings. Secondly, nothing in the s 42(1) of the MGA requires the source of the service to be located on the very parcel that makes use of the utility service. [ 38 ] There are also triable issues with respect to the notice provisions in s 4.14 of the UB, and whether a flexible

interpretation should be given to those provisions as urged by the Town. I note that a letter dated April 20, 2009 from the Town's development officer to Skyrider attached one copy of the executed Amendment of Development Agreement assigning the Lakeview Development agreement to 1376510 Alberta Ltd. It also advised of next steps to be carried out with respect to the release of subdivision endorsement documents. I note from Exh. "E" to Mr. Goulden's July 17, 2013 Affidavit that Mr.

Derek Prue signed the Amendment of Development Agreement on behalf of the numbered company. [ 39 ] In a May 27, 2009 email from the Director of Planning and Infrastructure of the Town of Stony Plain to “dereksdp” (consistent with Skyrider Developments) there is a discussion of a performance bond provided by 1376510 Alberta Ltd. for the Lakeview subdivision. On August 4, 2009, the Director of Planning and Infrastructure, Mr. Sharp, wrote to Skyrider providing the necessary documentation required to register the Lakeview subdivision application.

A further letter of October 15, 2009 from counsel for the Town to Derek Prue referred to the development agreement with 1376510 Alberta Ltd., and gave notice of the unacceptable state of the roadway in the subdivision. [ 40 ] The evidence therefore discloses a history of correspondence between the Town's planning and infrastructure department and Mr. Prue. It is clear from these communications that Skyrider was involved in the Lakeview subdivision development. As earlier noted, Mr. Prue was listed on a corporate search of 1376510 Alberta Ltd. conducted in 2012.

The Town was clearly sending its notices to someone who was affiliated with the owner of the parcel in question. The Town also relies on s 7.1(

b) of the UB . It provides that a consumer’s failure to receive an account in no way affects the liability to pay the account.

Accordingly, I find that there are genuine issues to be tried with respect to the alleged failure of the Town to provide notice to the Owner of its water services invoice and whether notice in the form given fulfils the requirements of s 4.14 of the UB . [ 41 ] As to the argument that because there was no meter installed to measure water consumption within the subdivision there could be no legitimate estimate made of water consumption by the Town Manager, I am of the view that the Town has raised a triable issue as to whether calculations can be made in circumstances where water is being supplied by the Town during the construction phase when meters are not yet installed. [ 42 ] As to the defences raised relating to the choice of forum, no appeal was taken by the Plaintiff to the AUC pursuant to s 43 of the MGA .

However, it was clear from the questioning of Mr. Goulden regarding his conference call discussions with an AUC official on April 26, 2012 that because the utilities charge had been transferred to the property tax roll, the AUC was not prepared to entertain an appeal. In the circumstances, the Town having elected to add the municipal utility service charge to the tax roll and the AUC refusing to take jurisdiction, I am of the view that this defence has no chance of success in the circumstances of this case.

The Plaintiff should not be prevented from accessing a forum to review the reasonableness of the Town Council’s decision to confirm the utility invoice. Whether in the circumstances of this case that forum is a debt action or whether the Plaintiff should have proceeded by way of a judicial review of the Town’s decision, in light of a form of review of the reasonableness of the tax bill having been conducted by the Town Council at the Plaintiff’s request, is a triable issue. VI. Conclusion [ 43 ] For the reasons given, the Plaintiff's application for

summary judgment is dismissed. [ 44 ] Counsel may speak to costs within 30 days if they are unable to reach an agreement as to same. Heard on the 2 nd day of October, 2013. Dated at the City of Edmonton, Alberta this 21 st day of October, 2013 . M.T. Moreau JCQBA Appearances:

Donald J. Lupul for the Plaintiff, Lakeview Developments Inc. Caeleigh Shier for the Defendant, Town of Stony Plain