John Deere Financial Inc v Macdonald Date:, 2020 MBCA 90

Citation: John Deere Financial Inc v Macdonald Date: 20200923 (Rural Municipality), 2020 MBCA 90 Docket: AI20-30-09426 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Holly C. Beard Mr. Justice Christopher J. Mainella Madam Justice Janice L. leMaistre BETWEEN : john deere financial inc. ) ) O. L. Currie and (Applicant) Respondent ) J. S. Hanson ) for the Appellant - and - ) ) M. L. Grande and the rural municipality of ) M. A.

Smith macdonald ) for the Respondent ) (Respondent) Appellant ) Appeal heard and ) Decision pronounced: - and - ) September 9, 2020 ) Samborski eNvirOnmental ltd. ) Written reasons: ) September 23, 2020 (Respondent) ) mainella JA (for the Court) : Introduction [ 1 ] This case is about the need for municipalities to take appropriate care before interfering with property rights. [ 2 ] The respondent, the Rural Municipality of Macdonald (the RM), appealed an order that declared the lawful owner of two front-end loaders, seized by the RM, was the applicant and that the loaders be released to it forthwith.

Having considered the submissions of counsel, we dismissed the appeal with reasons to follow. These are our reasons. Background [ 3 ] The operation of a waste disposal site just outside of Winnipeg by the respondent, Samborski Environmental Ltd. (Samborski), has produced a contentious land-use dispute between it and the RM. In this episode of the almost decade-long saga, the applicant was caught in the crossfire. [ 4 ] Samborski used two leased loaders at the waste disposal site. Under the terms of the leases, title and ownership of the loaders remained with the applicant.

The applicant registered a purchase money security interest in the Manitoba Property Registry with respect to both loaders. [ 5 ] On July 25, 2017, a designated officer of the RM issued a municipal order that Samborski (and the owner of the land, Vince Zettler) were in contravention of the Rural Municipality of Macdonald, by-law No 15/95, Zoning By-Law (9 May 1995) (the 1995 By-Law) and that they were required to remedy the contravention (the Remedial Order). [ 6 ] In September 2017, Samborski unsuccessfully exercised its right to appeal the Remedial Order to the council of the RM.

Samborski then declined to remedy its contravention. [ 7 ] Under the 1995 By-Law, the RM did not have the authority to remedy a contravention by “seizing, removing, impounding, confiscating and selling or otherwise disposing of plants, animals, vehicles or other things related to a contravention” ( The Municipal Act , CCSM c M225 at section 236(1) (b)(iv)).

[8] On January 19, 2018, the RM’s enforcement officers were denied entry by Samborski onto the land containing thewaste disposal site to enforce the Remedial Order. [9] On February 27, 2018, the RM passed the Rural Municipality of Macdonald, by-law No 1/18, By-Law to Provide forGeneral Enforcement (27 February 2018) (the 2018 By-Law), retroactive to January 1, 2018, which provided for general enforcement ofthe RM’s by-laws, including the remedying of a contravention by seizing, removing, impounding, confiscating and selling or otherwisedisposing of plants, animals, vehicles, equipment or other things related to a contravention. [10] The RM’s enforcement officers seized the loaders on March 2, 2018 and March 21, 2018, as a result of the execution oftwo warrants issued under

section 177 of The Planning Act, CCSM c P80, authorising entry onto the land to enforce the Remedial Order. [11] The applicant requested the return of the first loader within a week of its seizure (and prior to the seizure of the secondloader). The RM initially agreed, but then there was a change of course. [12] Counsel for the RM advised the applicant that Samborski was indebted to the RM for remediation of the land for$50,000 and, until the debt was paid, the loaders would not be released.

At the hearing of the appeal, counsel for the RM candidlyadmitted that the amount quoted to the applicant was an arbitrary amount not arrived at by any prescribed process. The applicant wasgiven the option of paying this arbitrary amount or the RM would sell the loaders to pay for the remediation.

The applicant commencedan application for return of the loaders. [13] The application judge found that the seizures of the loaders and the potential sale by the RM were “unlawful.” In hisview, the RM never complied with the procedures required under the 2018 By-Law to exercise its remedy powers, such as notice of aviolation in a particular form (see

section 9); an order to comply in a particular form (see

section 10); and the right to appeal acompliance order (see

section 14) before seeking to exercise its general remedy right under

section 20. He stated, “The RM cannotsimply piggyback the enforcement provisions or penalties of the 2018 By-Law onto the process it started under the 1995 By-Law.” Discussion [14] The usual standard of review for civil matters set out in Housen v Nikolaisen, 2002 SCC 33, governed our review of theapplication judge’s decision. [15] We see no palpable and overriding error in the application judge’s finding that “[t]he RM was clearly acting under theterms of the 1995 By-Law when it confiscated and seized the [l]oaders”.

The record reasonably supports his conclusion. [16] We are also not persuaded that the application judge erred when he determined that the RM could not rely on theprocess started by the Remedial Order under the 1995 By-Law as a lawful reason not to strictly follow the requirements of the 2018 By-Law. His reasons confirm that he was alive to the correct legal principles and applied them reasonably in the circumstances. [17] As previously mentioned, seizure and other remedies in relation to the loaders were not available to the RM under the1995 By-Law.

Leaving aside the point raised by the applicant that the 2018 By-Law could not have had retroactive effect as that is notgenerally permitted under The Municipal Act (see section 146(3)), there was no transition provision in the 2018 By-Law (or resolution ofthe council of the RM) authorising the enforcement of the Remedial Order under the 2018 By-Law. [18] As was explained in R v Greenbaum, (SCC), [1993] 1 SCR 674, “Municipalities are entirely thecreatures of provincial statutes” (at p 687).

The powers granted to a municipality by provincial legislation must be exercised inconformity with the provisions of the enabling legislation. In Manitoba, The Municipal Act prescribes the manner in whichmunicipalities must exercise their powers.

Section 140(1) provides that “[a] council may act only by resolution or by-law.” In our view,the RM did not have the discretion to proceed in the manner in which it did with the resulting interference with the property rights of theapplicant without strictly complying with this mandatory provision of The Municipal Act (see Costello and Dickhoff v Calgary, (SCC), [1983] 1 SCR 14 at 21). [19] The RM and the applicant both agree that the validity of the 2018 By-Law was not being challenged (see section 382(1)of The Municipal Act). That said, a number of aspects of this case are concerning to us: (

i) the RM says that, by virtue of section 236(1)(b)(iv) of The Municipal Act, the Legislature has given municipalities theunfettered right to create by-laws to seize and forfeit the property of innocent third parties for a by-law contravention of another person; (ii) the RM believes that the seizure and forfeiture provisions of its 2018 By-Law do not require notice to third parties whenactions are taken against their property and the only redress available to them lies in the courts; and (iii) the RM underscores that it is empowered to sell seized property of a third party without any court supervision. [20] Counsel for the RM noted that many municipalities have similar seizure and forfeiture provisions in their by-laws andhow they apply to innocent third parties is a bit of a “mystery” given the wording of The Municipal Act. [21] The power of a municipality to seize or forfeit property to enforce a by-law is extraordinary (see Re By-Law 92, Town ofWinnipeg Beach (1919), (MB CA), 50 DLR 712 at 715 (Man CA)).

The situation is even more so when the propertyin question belongs to an innocent third party. We agree with the comments of Ian MacF Rogers with the editorial assistance, revisionsand contributions of Greg Levine, in The Law of Canadian Municipal Corporations, 2nd ed (Toronto: Thomson Reuters, 2019) (loose-leaf updated 2020, release 9), ch 9 at para 81.4 (online: WL Can (date accessed 21 September 2020)): . . .

No one’s property is to be forfeited unless all necessary formalities have been complied with . Notwithstanding that a confiscatory power is vested in a municipality by statute, it must be effected in a legal manner through the courts and not by the corporation or its officers.

Extraordinary powers of this nature must be exercised in such a manner that the rights of the owner of the property are not to be disregarded and notice may have to be given in order to constitute a valid seizure. [footnotes omitted] [ 22 ] We fail to understand what authority the RM had under The Municipal Act to allow it to seize and sell the applicant’s property to reimburse the RM’s costs of remediating the land because of the wrongdoing by Samborski.

There are specific provisions in The Municipal Act which allow a municipality to sell items and use the proceeds to cover costs in relation to dangerous structures (see

section 246) and tax arrears (see

section 349), but there is no such general enforcement power in the legislation. Section 245(3) indicates that the costs of the remedial actions taken by the municipality are an amount owing to the municipality by the person who contravened the by-law; it does not state that the costs of remedial action can be satisfied by selling any items that are seized to remedy the contravention pursuant to section 236(1)(b)(iv). [ 23 ] We agree with counsel for the applicant that this case really turns on its facts and deference to the application judge’s assessment of them.

Nevertheless, the legal issues raised were of such concern that we felt it necessary to identify them for further consideration. In a rule-of-law society such as ours, attention to due process and fundamental rights can never be forgotten or taken for granted. [ 24 ] The RM raised further submissions on the appeal, none of which had merit. [ 25 ] In

summary, we were not convinced that the application judge made a reversible error that would require us to interfere with his decision. In our judgment, the application judge’s conclusion that the RM had run “roughshod” over its legal obligations was open to him. Disposition [ 26 ] In the result, the appeal was dismissed. The applicant shall have its costs in accordance with Tariff C. JA JA JA