Halifax (Regional Municipality) v. Mrkonjic, 2010 NSSC 434

SUPREME COURT OF NOVA SCOTIA Citation: Halifax (Regional Municipality) v. Mrkonjic, 2010 NSSC 434 Date: 20101130 Docket: Hfx. No. 328679 Registry: Halifax Between: Her Majesty the Queen -and- Joseph Mrkonjic and Barbara Mrkonjic LIBRARY HEADING Judge: The Honourable Justice Robert W. Wright Heard: November 10 , 2010 in Halifax, Nova Scotia Written Decision: November 30, 2010 Subject:

Interpretation of Land Use By-law for Sackville - requirement for development permit.

Summary: The respondents are owners and occupiers of a private residence located in a R-1 Zone, from which they operate the business of selling seaweed fertilizer/extract to outside customers. They were given notice by HRM that such business use of their property required a development permit under the Land Use By-law for Sackville. The respondents refused to apply for such a permit and then were charged with a

summary offence under the Municipal Government Act . The case was tried in Provincial Court and the trial judge ruled that the respondents were exempt from the requirement of obtaining a permit because the business which they operated did not fall within the by-law definition of the term “business use”. He therefore entered an acquittal and the case now comes before this court by way of a

summary conviction appeal. Issue: Did the trial judge err in his

interpretation of the relevant provisions of the by-law and in thereby deciding that the respondent’s business was exempt from the permit requirement.? Held: Appeal allowed. Where the business activity of the respondents constituted a “development” within the meaning of the by-law, it followed that a development permit was required. The by-law definition of “business use” and related provisions served to set out the parameters under which the development permit could be issued for the operation of a business in a R-1 Zone.

The respondents were not entitled to an exemption from the permit requirement and the trial judge erred in so finding. Accordingly, a conviction was entered by this court and the matter remitted to Provincial Court for sentencing.

THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT'S DECISION. QUOTES MUST BE FROM THE DECISION, NOT THE COVER SHEET. SUPREME COURT OF NOVA SCOTIA Citation: Halifax (Regional Municipality) v. Mrkonjic, 2010 NSSC 434 Date : 20101130 Docket: Hfx. No. 328679 Registry: Halifax Between: Her Majesty the Queen Appellant -and- Joseph Mrkonjic and Barbara Mrkonjic Respondents Decision Judge: The Honourable Justice Robert W. Wright Heard: November 10, 2010 at Halifax, Nova Scotia Written Decision: November 30, 2010 Counsel: Counsel for the Appellant - Joshua Judah The Respondents - personally

INTRODUCTION [ 1 ] On November 17, 2008 the respondents Joseph Mrkonjic and Barbara Mrkonjic were charged with a violation of s.4.1(

a) of the Land Use By-law for Sackville (the “by-law”), alleging that they allowed a business to operate without first obtaining a permit. Such violation constitutes an offence pursuant to s.505(1) of the Municipal Government Act , S.N.S. 1998, c.18. [ 2 ] The respondents both entered not guilty pleas and the matter proceeded to trial before Associate Chief Judge Brian Gibson in the Provincial Court on January 21, 2010. By written decision dated April 1, 2010, the court entered an acquittal of both respondents. It is from that decision that the Crown now brings a

summary conviction appeal before this court. [ 3 ] It should be noted in passing that the respondents were also charged, and acquitted, of a second offence of allowing open storage of material, goods or supplies related to the operation of a business, contrary to s.6.3(

d) of the by-law, but that count is not under appeal before this court. FACTS [ 4 ] The material facts surrounding this appeal are not contentious and can be summarized as follows. [ 5 ] The respondents are the owners and occupiers of a private residence located at 30 Pinehill Drive in Lower Sackville, Nova Scotia (“the Property”). This Property is located in an R-1 Single Unit Dwelling Zone. [ 6 ] Joseph Mrkonjic operates a business from the Property, with the permission or support of his wife Barbara Mrkonjic.

The Property is, or was at all material times, the mailing address for the business and was also its Registered Office. The name of the business, as registered at the material time under the Partnership and Business Names Registration Act , is Seaboost Liquid Seaweed Fertilizer, although other business names may have been used as well. [ 7 ] The nature of the business is similar to that of a manufacturer’s agent, combined with some repackaging of product at the Property for delivery to customers. There was no retail sale of business products from the Property.

Rather, the sale of products, essentially to various distributors, was carried out by Mr. Mrkonjic either by arranging for direct delivery from the manufacturer to the customer or by delivery by Mr. Mrkonjic directly to his customers. [ 8 ] The Property is used by the respondents to take delivery of a pallet laden with bags of seaweed and containers of seaweed extract about eight times a year. The delivery is made by transport truck. Some of this product is stored inside the dwelling and other material is stored in the driveway.

The respondents acknowledge that they devote floor space inside their dwelling to storage and handling, albeit less than 40 square feet. [ 9 ] Some of the seaweed extract is decanted into smaller bottles, and labels attached, in the Property before being delivered to retail locations in the area. The bags of seaweed are removed from the shipping pallet in the driveway as they are sold and delivered directly to customers.

[ 10 ] Some of the bookkeeping of the business is done in the Property and some is done at an outside accountant’s office. Telephone calls and faxes relating to the business are made or sent to and from the Property. [ 11 ] Apparently acting on the complaint of a neighbour, the Municipality informed the respondents that a permit was required in order to operate the business from the Property. Written notice to that effect was sent to the respondents on May 8, 2008.

The respondents were further advised by the Municipality that the type of business being operated out of their residence may be allowed in the R-1 Zone, as long as it conformed to the limitations contained in the by-law. Nonetheless, the respondents refused to file an application for a permit, resulting in these charges being laid against them. ISSUE [ 12 ] Under his

interpretation of the relevant provisions of the by-law, the learned trial judge found that the business activity carried on by Mr. Mrkonjic, and permitted by Barbara Mrkonjic, did not oblige them to seek a development permit. He therefore acquitted them. [ 13 ] The issue to be decided by this court is whether the learned trial judge erred in law in his

interpretation of the relevant provisions of the by-law and coming to the decision that the business operated by the respondents was exempt from the permit requirement. STANDARD OF REVIEW [ 14 ] This appeal clearly turns on a question of law which invokes the standard of review of correctness (see, for example, Wilmont v. Ulnooweg Development Group Inc. , 2007 NSCA 49 and Borcherdt Concrete Products Ltd. v. Port Hawkesbury (Town) , 2008 NSCA 17 ). LEGAL ANALYSIS [ 15 ] The enabling legislation under which the by-law was enacted is

Part VIII of the Municipal Government Act , S.N.S. 1998, c. 18 (entitled “PLANNING AND DEVELOPMENT”). In particular, s. 219 authorizes and indeed requires, a municipal council to adopt or amend a land use by-law to carry out the intent of a municipal planning strategy that contains policies about regulating land use and development. [ 16 ] “Development” is a defined term under s. 191 (

c) of the Municipal Government Act . It reads as follows: “development” includes the erection, construction, alteration, placement, location, replacement or relocation of, or addition to, a structure and a change or alteration in the use made of land or structures . (emphasis mine) [ 17 ] The by-law here enacted, and in effect at the time of the alleged offence, contains the following relevant provisions (to which I have added underlining for emphasis): 4.1 DEVELOPMENT PERMITS (

a) No development shall be permitted unless a development permit has been issued and no development permit shall be issued unless the provisions of this By-law are satisfied. 6.1 R-1 USES PERMITTED

No development permit shall be issued in any R-1 (Single Unit Dwelling) Zone except for the following : Residential Uses Single unit dwellings Existing mobile home parks Daycare facilities for not more than fourteen (14) children and in conjunction with permitted dwellings Business uses in conjunction with permitted dwellings Bed & Breakfasts 2.12 BUSINESS USE means any occupation or business activity resulting in a product or service and which is conducted wholly within the principal operator ’ s dwelling unit and which is subordinate to the residential use on the property , but shall not include adult entertainment or escort services or the retail sale of products other than those incidental to the business. 6.3 OTHER REQUIREMENTS: BUSINESS USES Where business uses are permitted in any R-1 Zone, the following shall apply: (

a) Any business shall be wholly contained within the dwelling which is the principal residence of the operator of the business . 3.5 USES PERMITTED Uses permitted within any zone shall be determined as follows : (

a) If a use is not listed as a use permitted within any zone, it shall be deemed to be prohibited in that zone . (

b) If any use is listed subject to any special conditions or requirements, it shall be permitted subject to the fulfilling of such conditions or requirements . (

c) Where a use permitted within any zone is defined in

Section 2, the uses permitted within that zone shall be deemed to include any similar use which satisfies such definition except where any definition is specifically limited to exclude any use. [ 18 ] In undertaking his analysis of the central issue of whether the by-law required the respondents to obtain a permit to operate their business within the Property, the trial judge acknowledged that a “business use” occurring within a dwelling located in an R-1 Zone would constitute “a change or alteration in the use made of the land or structures” and as such, the business use would constitute a “development” as defined in the Municipal Government Act .

He then went on to find that “the provisions of s.4.1(a), s. 6.1 and s.6.3 of the by-law have extended the permit requirement to those ‘developments’ which fall under the description of ‘a change or alteration in the use made of land or structures’ which includes a business use”. [ 19 ] The trial judge framed the issue to be decided, however, as being whether the business operated (in part) from the Property by the respondents constituted a “business use” within the defined meaning of that term.

He then focused on the stipulation in the statutory definition that a “business use” be one which is conducted wholly within the principal operator’s dwelling unit . [ 20 ] In his decision, the trial judge approached his

interpretation of the meaning of “business use” on two different planes. On the one

hand, he found that aside from some outside storage, the business activity on the Property was conducted primarily within the dwelling unit and was subordinate to the residential use of the property by the respondents. He specifically found that the conditions set out in s.6.3 were met, meaning that he was satisfied that the business use was “wholly contained within the dwelling” in the physical sense. [ 21 ] However, the trial judge went on to find on the other hand that from an operational sense, he could not conclude that the business was being conducted “wholly within the principal operator’s dwelling unit”.

He had already categorized the nature of the business as that of a manufacturer’s agent, combined with some repackaging of product and direct sale to the customer (there being no retail sale of business products at the Property).

The trial judge accordingly found that the business was being operated only in part from the Property (there being a sales and direct delivery function which extended beyond the confines of the dwelling). [ 22 ] Having made that finding, the trial judge returned to the definition of “business use” and its requirement that the business be conducted wholly within the principal operator’s dwelling unit . [ 23 ] If not for this definition, the trial judge stated that he might have been inclined to give the words “business use” a broader meaning more consistent with their natural ordinary meaning.

However, he inferred that the Municipality, by including these words of limitation (as underlined above), meant to exclude from the permit requirements those businesses which are only partially conducted within the principal operator’s dwelling.

He further stated that if the Municipality wanted to include a wide scope of business activity that only partially occurred within R-1 Zones, it would not have so restricted the meaning of “business use” in its wording of the statutory definition. [ 24 ] The trial judge therefore reasoned that the business activity being carried on by the respondents at the Property did not fall within the statutory definition of “business use” with the result that they were not required to obtain a development permit under the by-law.

He therefore entered an acquittal. [ 25 ] The appellant argues that the trial judge erred in reaching this conclusion by misinterpreting the provisions of the by-law. The main thrust of the appellant’s argument is that the by-law explicitly regulates all uses of land and structures and therefore it regulates all business uses thereof. It further argues that the “business use” definition in s.2.12 of the by-law serves to provide the parameters under which a business must operate in order to be allowable within a particular zone, which here is R-1 (Single Unit Dwelling).

With all due respect to the trial judge, I agree with that submission. [ 26 ] As noted earlier, the trial judge correctly recognized that a “business use” occurring within a dwelling located in an R-1 Zone constitutes “a change or alteration in the use made of the land or structures” and as such, the business use would constitute a “development” as defined.

The trial judge also correctly recognized that the stated provisions of the by-law have extended the permit requirements to those “developments” which fall under the description of “a change or alteration in the use made of the land or structures” which includes a business use. [ 27 ] It was from that point in his decision that the trial judge embarked on his

interpretation of the statutory definition of “business use” and concluded that because the business was conducted only partially from the Property, it fell outside the statutory definition thereby providing the respondents with an exemption from the permit process through which the Municipality exercises land use controls. In my opinion, the trial judge thereby misinterpreted the intent and effect of the by-law and reached the wrong conclusion. [ 28 ] There appears to be no case law in which the subject provisions of the by-law have been judicially considered.

However, on my reading of the statutory framework,the permit requirement does not turn on the question of whether the respondents conducted their business only partially from their Property. The overall scheme of this by-law, like any other zoning by-law, is to regulate land use and development through a permit process.

Through that process, the Municipality sets parameters of permitted uses of properties which vary according to their particular zoning and location. [ 29 ] Hence, if a business is being conducted out of a private dwelling in an R-1 Zone, such business use constitutes a “development” which triggers the requirement of a permit under s.4.1(

a) of the by-law. Whether the operation of the business extends beyond the confines of the dwelling is misfocussed. The legislative intent is to regulate the use of property within the zone by requiring, inter alia, that a business be conducted wholly within the confines of the subject dwelling.

[ 30 ] There are a number of other parameters set out in the by-law that must be met in order to qualify for obtaining a permit for a business use in an R-1 Zone. By virtue of s. 6.1 of the by-law, no development permit shall be issued in any R-1 Zone except, inter alia , for business uses in conjunction with permitted dwellings. By virtue of s. 2.12 and s. 6.3, additional requirements (as noted from the materials provided to the court) are: (

a) An occupation or business activity resulting in a product or service; (

b) It must be conducted or contained wholly within the dwelling; (

c) The dwelling must be the principal residence of the operator of the business; (

d) The business use must be subordinate to the residential use on the Property. [ 31 ] Although these parameters are important in order to qualify for a permit, the obligation to obtain a permit is triggered by the operation of a business in a dwelling in an R-1 Zone, being a “development” as defined.

Respectfully, the trial judge fell into error by misinterpreting the import and effect of the statutory definition of the term “business use” so as to provide an exemption to the respondents from the permit process. [ 32 ] It should be added that the appellant acknowledged in its submissions that an exemption from the permit process does exist under the “accessory use” provisions as defined in s. 2.2 of the by-law and implemented in s.4.10.

The statutory definition of this term reads as follows: ACCESSORY USE means a use which is subordinate, normally incidental, and exclusively devoted to a main use or building permitted under the provisions of this by-law, shall include home occupations related to the domestic arts of cooking, sewing, tutoring or repairing household articles, or related to traditional crafts carried on within a dwelling without alteration to the dwelling and without devoting any space within the dwelling exclusively to such occupations. [ 33 ] The trial judge did not address these provisions in his decision, presumably because he found that the respondents were entitled to an exemption from the permit process on the analysis above mentioned.

In any event, I accept the submissions on behalf of the appellant that the commercial activity conducted by the respondents in their Property is properly characterized as a “ business use ” rather than an “ accessory use ” . Even if such commercial activity could be said to be “ normally incidental ” and exclusively devoted to the main use or building permitted under the by-law, which is a questionable proposition, clearly the respondents have devoted space within their residential dwelling exclusively to this commercial operation, as earlier noted in this decision.

They do not fall within the “ accessory use ” exemption from the permit process. CONCLUSION [ 34 ] In the result, I find that the respondents are not relieved of the obligation to obtain a development permit under the by-law for their business use of the Property and that the learned trial judge erred in concluding otherwise. This appeal is therefore allowed and a conviction against both respondents entered.

The matter should now be remitted to Provincial Court for sentencing. [ 35 ] As a footnote, I want to address the respondents ’ assertion that the appellant, by laying these charges has improperly, and indeed vexatiously, attempted to impede their livelihood from the business which they have been operating in this fashion for many years.

There is reason for optimism that this impediment will not materialize, given the fact that the appellant has previously advised the respondents that their type of business may be allowed to continue to be conducted from the Property, as long as it conforms to the parameters contained in the by-law. As mentioned by counsel for the appellant in his oral submissions, there is no parameter which would preclude the respondents from selling their products outside the Property to their customers.

It therefore remains open to the respondents to now apply for a development permit that would enable them to continue to earn their livelihood so long as their business use of the Property conforms to the parameters contained in the by-law.

J.