Rock River Developments Ltd v Village of Nampa, 2022 ABKB 751

Court of King’s Bench of Alberta Citation: Rock River Developments Ltd v Village of Nampa, 2022 ABKB 751 Date: 20221114 Docket: 2101 03296 Registry: Calgary Between: Rock River Developments Ltd Applicant - and - Village of Nampa Respondent _______________________________________________________ Reasons for Judgment of the Honourable Justice M.H. Hollins _______________________________________________________ [ 1 ] The Applicant, Rock River Developments Ltd, is a closely held corporation which owns three real property lots (the Properties) in the Village of Nampa.

Since 2012, the Applicant has been in arrears on the property tax payments owing to the Respondent Village of Nampa, at least according to Nampa’s calculations. [ 2 ] When property taxes are in arrears for over one year, a municipality is entitled to begin proceedings to sell the property to collect the taxes; Municipal Government Act , RSA 2000, c.M-26 (the MGA ) (Part 10, Division 8). Alternatively, the municipality and the taxpayer can enter into a agreement regarding the payment of the arrears; s.418(4) MGA .

[3] In 2018, Nampa placed a Tax Arrears Notice on title to the Properties, following which the parties entered into an agreementfor the repayment of those arrears over 2 years (the Agreement). There were some short extensions granted as a result of variousCOVID-related developments, as a result of which the Applicant’s payments began in October of 2020. They paid the October andNovember, 2020 payments but in December of 2020, the Applicant’s cheque for its monthly installment payment was returned forinsufficient funds. [4] Nampa treated the NSF cheque as a breach of the Agreement and began the process of listing the Properties for sale byauction, as required by s.418(4)(

b) MGA. The Applicant obtained an interim injunction forestalling the auction of the Properties and nowapplies for a permanent injunction for the same relief. [5] For the reasons that follow, the Applicant’s application for a permanent injunction is dismissed.

Injunctive Relief [6] The three-part test for an interim injunction is well known; (1) whether there is a serious issue to be tried; (2) whether theapplicant is likely to suffer irreparable harm if the injunction is not granted; and (3) whether the applicant or the respondent will be moreadversely affected by the granting or refusal to grant the injunction; RJR-MacDonald v Canada (Attorney General), (SCC), 1994 CarswellQue 120 at para.48. [7] The burden of proof on all arms of the test is on the moving party, here the Applicant, on a balance of probabilities.

A Modified Test? [8] In the case at bar, the Applicant argued strenuously that a modified test applied, with no requirement, or a greatly reducedrequirement, to establish irreparable harm and the balance of convenience in its favour.

The rationale is that the issue to be tried is of anature that justifies an injunction even if the latter two arms of the RJR-MacDonald test could not otherwise be satisfied. [9] The Applicant relies on the case of Hamilton (City) v Loucks, (ON SC), 2003 CarswellOnt 3663, inwhich the City of Hamilton obtained an injunction against a group of environmental protestors who had formed a human blockade toprevent a permitted construction project from proceeding.

Justice Henderson said that in some cases, the traditional test for injunctiverelief should be modified to emphasize the serious issue test, even to the exclusion of the other two arms; para.3. [10] Henderson J identified the case before him as an appropriate case in which to so modify the test for injunctive relief becauseof three factors; the allegation of interference with the Plaintiff’s property rights, the established breach of a municipal by-law by theDefendants and the Defendant’s admitted civil disobedience; para.24. [11] He identified two sources of authority for this reasoning.

The first was a quote from the text Injunctions and SpecificPerformance, by Justice Robert J. Sharpe, which says that “[t]he balance of convenience and other matters may have to take secondplace to the sacrosanctity of property in matters of trespass”; see para.25 of Loucks. The second authority relied on by Henderson, J wasanother Ontario Superior Court of Justice case, 459103 Ontario Ltd v Metropolitan Toronto Condominium Corp No 677, [1999] OJ No2572, dealing with who rightfully controlled the parking security in a commercial property.

The judge described that case as alsoinvolving “near trespass”; para.7. [12] A brief review of the treatment of the Loucks case reveals that it has been cited almost without exception in cases involvingtrespass, usually by protestors. It has only been considered once in Alberta, in Calgary Airport Authority v Canadian Centre for Bio-Ethical Reform, 2014 ABQB 493 by Wittmann, CJQB (as he then was), who distinguished Loucks and applied the 3-part test from RJRin issuing an injunction against anti-abortion protestors at the Calgary airport. [13] The case at bar bears little resemblance to Loucks.

First, this is not a case of trespass. It does involve property rights to theextent that the Properties belonging to the Applicant may be sold but it involves no physical presence on the Properties as found in thetrespass cases using a modified test. [14] Further, this case does not involve a respondent who is in breach of a statute or bylaw.

The Applicant believes that the stepsbeing taken by Nampa are unfair but it can point to no provision in the MGA being breached. [15] Lastly, there is no respondent involved in civil disobedience in this case. [16] I might offer an observation that these factors as found by Henderson J in Loucks were all prima facie proven facts. There wasno question that the property slated for construction belonged to the City of Hamilton and no question that the protestors relied on amoral imperative but with no arguable legal right to occupy the property.

Those kinds of cases are simply not applicable here. [17] I do agree with my brother, Justice Feth, who has said that the three arms of the RJR test are not “airtight compartments” andthat a very strong argument on one branch may mitigate the threshold requirements on others; Cleanit Greenit Composting System Inc vDirector (Alberta Environment and Parks), 2022 ABQB 582 at para.32.

However, focussing on one part of the test for injunctive reliefto the exclusion or minimization of the others is still the exception, not the rule; Cleanit at para.48. [18] No circumstances exist here to recommend a modified or relaxed or abbreviated RJR test. There is no “clear case on themerits”, nor any of the factors identified in Loucks. Accordingly, the Applicant must satisfy each of the arms of the RJR test to qualifyfor the permanent injunctive relief it seeks. Serious Issue

[ 19 ] The Plaintiff has a low threshold for establishing that there is a serious issue to be determined at trial, merely that the issues are not frivolous or vexatious; RJR-MacDonald at para.49. [ 20 ] Unfortunately, in preparation for this hearing, both parties focussed on the issues raised in a separate, related Action rather than the pleadings in this Action. [ 21 ] A bit of background will assist.

In cross-examining Nampa’s Chief Administrative Officer, Dianne Roshuk, on her Affidavit in this Action in 2021, the Applicant learned that Nampa’s Council had met and set a reserve price of $50,000 for the sale of the Properties, notwithstanding that the Properties had been annually assessed for tax purposes at a much higher value. [ 22 ] The Applicant has translated this into a new claim of unjust enrichment from the overpayment of taxes in a separate lawsuit (Action No 2201-11771), naming both the Village of Nampa and Dianne Roshuk as Defendants.

The lawsuits have not been consolidated and, at this point, no application to do so has been brought. [ 23 ] The Applicant raises and relies on the allegations made in the 2201 Action as relevant to and supporting its claim for a permanent injunction in this Action. I do not agree that the 2201 Action can be considered in that manner. [ 24 ] While it may be relevant for me to know that another claim has been advanced, I cannot treat those allegations as proven nor import those claims into this lawsuit to assess their merits, even on a preliminary basis.

The Statement of Claim in the 2201 Action was only filed October 14, 2022 and has not even been defended yet, much less adjudicated.

I cannot make findings of fact nor reach conclusions which could limit the discretion of the trial judge in the 2201 Action. [ 25 ] Restricting my consideration to the issues raised in this lawsuit, a review of the Statement of Claim shows that the Applicant is claiming the following: injunctive relief, declaratory relief (that the Applicant is not in breach of its obligation to pay property taxes), order for mandamus (forcing Nampa to re-draft the Agreement), as well as damages for emotional distress and punitive damages. [ 26 ] The Applicant’s ability to succeed in this lawsuit appears to turn on whether the Applicant breached the terms of its Agreement with the Applicant by missing the December, 2020 payment and if so, whether Nampa had an obligation to allow the Applicant to make good on that payment. [ 27 ] The Applicant has filed evidence of Ron Rock that the NSF cheque was a result of bank error, namely its failure to access the Applicant’s overdraft protection.

No bank statements or account agreements were provided by the Applicant to show this to be the case, nor any evidence from the bank admitting its error. Mr. Rock also deposed that he repeatedly attempted to notify Nampa about the NSF cheque and replace it. Ms. Roshuk denies receiving any such messages, whether by telephone or email. [ 28 ] Lastly, the Applicant contends that, regardless of how it happened, Nampa had an obligation to allow it to replace the NSF cheque and reinstate the Agreement or even re-write the Agreement with terms more favourable to the Applicant.

If such an obligation did not arise by contract or statute, the Applicant argues in the alternative that Nampa was simply being unreasonable in moving to sell the Properties. When pressed, counsel for Nampa agreed that the Village likely had some discretion remaining to reinstate the Agreement but maintains that there was no obligation whatsoever to do so, particularly given the long and difficult history of this tax debt. [ 29 ] The Applicant directed me to 1331679 Ontario Ltd v Brampton (City) , 2008 CarswellOnt 4494 (Ont SCJ) , which does have some similarities to the Applicant’s situation.

The plaintiff taxpayer in that case had sent a notice of change of address to the City but the City misplaced or misfiled it. By the time the City’s error came to light, the plaintiff owed over $500,000 in tax arrears. The plaintiff obtained an interlocutory injunction to prevent its properties from being sold. The City applied for leave to appeal but was denied. It also later applied for

summary judgment, which was also dismissed. I was unable to find any trial decision but given the remarks of the judge who dismissed the City’s

summary judgment application – who certainly intimated that the City had behaved unreasonably - my guess is that the parties settled their matters thereafter. [ 30 ] Again, despite the similarities between these cases on the underlying issues, there are obvious differences, beginning with the fact that the City of Brampton was found to have been at fault for the misplaced address change which gave rise to the tax arrears owing. [ 31 ] Further, the Applicant here has proceeded with its litigation strategy in a very different way, possibly to its detriment.

In Brampton , the plaintiff taxpayer (once it became aware of the property tax assessments), followed all the proper procedures to have those taxes reassessed and, in the result, drastically reduced. In our case, the Applicant has not availed itself of its rights under s.460 MGA to challenge the tax assessments giving rise to its arrears. Nampa has already raised potential limitations issues with any such complaint.

There may be issues around discoverability which, in turn, may involve the distinction between assessed value and appraised value, on which the 2201 Action rests. [ 32 ] While all of this may be relevant to the 2201 Action, it is not relevant to the issues in the pleadings of this case.

However, while Brampton does not assist the Applicant, I cannot know what findings of credibility may later be made concerning the NSF cheque, nor how another judge may assess the parties’ obligations in these circumstances. [ 33 ] While far from a clear case, I believe that the Applicant has satisfied the low threshold of raising a serious issue to be tried.

Irreparable Harm [ 34 ] Irreparable harm is that which “either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other”: RJR at para.341 . [ 35 ] The Applicant came somewhat unprepared to argue irreparable harm as it relied on the modified injunction test addressed earlier. Counsel did point to the fact that, if the injunction is not granted, the Applicant could lose title to the Properties and thereby, its

ability to develop and sell or lease the Properties. [ 36 ] However, counsel for the Applicant conceded that any loss arising from the sale of the Properties was likely quantifiable. The Properties can be valued as at any specific past, present or future date.

Any loss of that value that is ultimately found to be the fault of Nampa could be quantified and paid. [ 37 ] Further, as was confirmed in oral argument, the Applicant still has the right to pay the current arrears, totalling approximately $25,000-$30,000 (depending on penalties, which could be arguable depending on the effect and duration of the Agreement) and obviate the sale of the Properties completely.

The Applicant can arguably mitigate its losses, considerably if not completely. [ 38 ] The Applicant’s conduct in relevant to this analysis, including the fact that it continues in evident breach of its obligations to pay taxes. Even if, as the Applicant argues, the taxes have been calculated incorrectly or the sale of the Properties is unfairly improvident to the Applicant,

section 479 MGA still obligates the Applicant to pay its taxes anyway and sue for damages. There is expressly no right of abatement, which is the self-help remedy the Applicant has chosen. [ 39 ] The Applicant attempted to argue that the “clean hands” doctrine applied to Nampa but Nampa is not the party seeking equitable relief here. As Justice Feth observed: The Court also considers whether the harm suffered by the applicant was “self-inflicted and avoidable” in determining whether irreparable harm is established: Arctic Cat at para 33.

An interim stay or an interlocutory injunction is a form of equitable relief. The applicant must come to the Court with clean hands. Where the applicant unreasonably delays in commencing the judicial review application or seeking an interim stay, the Court may consider whether the irreparable harm is caused by the applicant’s own conduct and therefore should be disregarded; Cleanit at para.104. [ 40 ] For these reasons, I find that the Applicant has failed to prove the likelihood of irreparable harm.

Balance of convenience [ 41 ] Who will suffer more if the permanent injunction is not granted? [ 42 ] The Applicant asserts that Nampa would suffer “no harm whatsoever” if a permanent injunction was granted. This cannot be accepted as a true statement in view of the fact that the Applicant has not been current on its property taxes for a decade and, as of today, remains at least $25,000 in arrears by its own admission. [ 43 ] While “harm” may seem an odd description of the position of a municipality which is owed taxes, in the context of this legal test, an unpaid debt may indeed constitute harm.

As argued by counsel for Nampa, those taxes largely form the “pot” for the Town’s operating budget. As a result of one taxpayer failing or refusing to pay property taxes, that burden is visited upon the rest of the tax base or the Village operates on a reduced budget.

It cannot be argued that conceptually, there are no potential losses. [ 44 ] This is particularly true where the Applicant seeks permanent injunction, with no proposed expiry. [ 45 ] The Village only has two options when tax arrears have accumulated; to enter into an agreement with the debtor for payment or to sell the property to pay the taxes, returning any net surplus to the debtor. If a permanent injunction is granted precluding Nampa from selling the Properties, this Court would be removing the only statutory enforcement mechanism available to it in the absence of a current agreement.

While I will not speculate on what might happen to the appraised value of the Properties during an indefinite delay, I do note that the Applicant has not, to my knowledge, provided the required undertaking to pay any such damages. [ 46 ] I advert again to the fact that the Applicant could avoid the sale of its Properties simply by coming current on its tax arrears, without prejudice to its right to argue for reimbursement of amounts if it is successful on these remaining claims or in the 2201 Action. [ 47 ] The Applicant has therefore also failed to establish that the balance of convenience favours the granting of a permanent injunction.

Conclusion [ 48 ] In the result, the Application is dismissed. Counsel may speak to costs if they cannot agree. Heard on the 04 th day of November, 2022. Dated at the City of Calgary, Alberta this 14 th day of November, 2022. M.H. Hollins J.C.K.B.A.

Appearances: Lori A. O’Reilly for the Applicant, Rock River Developments Ltd Shauna N. Finlay and Jenna M. Chamberlain for the Respondent, Village of Nampa