The City of Toronto v. Home Depot Holdings Inc., 2010 ONSC 6071

CITATION: The City of Toronto v. Home Depot Holdings Inc., 2010 ONSC 6071 COURT FILE NO.: 527/09 DATE: 20101129 ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT SWINTON, Nadeau AND HARVISON YOUNG JJ. B E T W E E N: ) ) THE CITY OF TORONTO Appellant - and - HOME DEPOT HOLDINGS INC. Respondent ) ) ) ) ) ) ) ) ) ) ) ) ) )) R. Andrew Biggart , for the Appellant Steven A.

Zakem and Patrick Harrington , for the Respondent Stan Floras , for the Ontario Municipal Board ) ) HEARD at Toronto: October 26, 2010 Swinton J.: Overview [ 1 ] The City of Toronto (“the City”) appeals with leave from an order of the Ontario Municipal Board (“the Board”) dated October 21, 2009, which found that the application of Home Depot Holdings Inc. (“the respondent”) to develop certain lands for a major retail use did not constitute conversion of lands within an “Employment Area” to non-employment uses. [ 2 ] In reaching its decision, the Board was required to determine the meaning of “conversion” in the Greater Golden Horseshoe

Growth Plan and to interpret the Official Plan of the City of Toronto. At issue in this appeal is the reasonableness of the Board’s decision. The Planning Context [ 3 ] On November 28, 2002, Toronto City Council approved a new Official Plan for the amalgamated City of Toronto.

Chapter 4 of the Official Plan deals with land use designations, including policies with respect to uses permitted upon lands designated as “Employment Areas” within “Employment Districts”. Policy 4.6.1 defines “Employment Areas”: Employment Areas are places of business and economic activity.

Uses that support this function consist of: offices, manufacturing, warehousing, distribution, research and development activities, utilities, media facilities, parks, hotels, retail outlets ancillary to the preceding uses, and restaurants and small scale stores and services that serve area businesses and workers. [ 4 ] Policy 4.6.2 deals with the location of places of worship, recreation and entertainment facilities, business and trade schools and branches of community colleges or universities, limiting them to major streets in Employment Areas (unless they existed before the approval of the Official Plan). [ 5 ] Policy 4.6.3 is one of three policies dealing with major retail stores in Employment Areas.

It states: Large scale, stand-alone retail stores and “power centres” are not permitted in Employment Areas in the Central Waterfront and are only permitted in other Employment Areas fronting onto major streets as shown on Map 3, that also form the boundary of the Employment Areas through the enactment of a zoning by-law. Where permitted, new large scale, stand-alone retail stores and “power centres” will ensure that:

a) sufficient transportation capacity is available to accommodate the extra traffic generated by the development, resulting in an acceptable level of traffic on adjacent and nearby streets; and

b) the functioning of other economic activities within the Employment Areas and the economic health of nearby shopping districts are not adversely affected. [ 6 ] On April 9, 2003, the respondent filed a Notice of Appeal with the Ministry of Municipal Affairs and Housing with respect to Policy 4.6.3. It sought an amendment to the Employment Area policies to permit large scale, stand-alone retail stores on major streets within the interior of Employment Areas. [ 7 ] As a result of negotiations between the City and the respondent, a settlement was reached whereby a new policy would be added to the Official Plan.

The settlement was approved by the Board on June 5, 2006. The new Policy 4.6.4 reads: Consideration may also be given to permit large-scale and stand-alone retail stores in locations on major streets, as shown on Map 3, that do not form the boundary of Employment Areas , other than in the Central Waterfront , only by way of an Official Plan Amendment, if it can be demonstrated, among other matters, that:

a) such development will not undermine the stability of the Employment Area and will have particular regard for the viability of industrial uses;

b) sufficient transportation capacity is available to accommodate the extra traffic generated by the development, resulting in an acceptable level of traffic on adjacent and nearby streets; and

c) the economic health of nearby shopping districts is not adversely affected.

[ 8 ] Policy 4.6.5 provides that large scale, stand-alone retail stores and “power centres” that were legally established prior to the adoption of the Official Plan are permitted within Employment Areas . [ 9 ] On June 16, 2006, 11 days after the Board approved Policy 4.6.4, the Province of Ontario released the Growth Plan for the Greater Golden Horseshoe (“the Growth Plan”) pursuant to the Places to Grow Act, 2005 , S.O. 2005, c. 15 . Section 14(1) of that Act requires that a decision under the Planning Act , R.S.O. 1990, c. P.13 made by a municipal council or the Board shall conform with the Growth Plan applicable to the area affected. [ 10 ] At issue in this appeal is the effect of

Section 2.2.6.5 of the Growth Plan, which states: Municipalities may permit conversion of lands within employment areas, to non- employment uses, only through a municipal comprehensive review where it has been demonstrated that -

a) there is a need for the conversion

b) the municipality will meet the employment forecasts allocated to the municipality pursuant to this Plan

c) the conversion will not adversely affect the overall viability of the employment areas , and achievement of the intensification target, density targets, and other policies of this Plan

d) there is existing or planned infrastructure to accommodate the proposed conversion

e) the lands are not required over the long term for the employment purposes for which they are designated

f) cross-jurisdictional issues have been considered. For the purposes of this policy, major retail uses are considered non-employment uses. (emphasis in original) [ 11 ] Thus, if there is to be a conversion of lands within an Employment Area to a non-employment use (including a conversion to major retail use), there must be a municipal comprehensive review initiated by the municipality. However, the Growth Plan does not define the word “conversion”.

The Factual Background [ 12 ] On December 21, 2006, the respondent filed an application to amend the City’s Official Plan to obtain permission to develop a Home Depot store and associated retail uses totaling approximately 295,000 square feet on lands at 840-842 York Mills Road and 16 Lesmill Road (“the site”). It also filed a re-zoning application to change the zoning from Industrial/Office Business Part to an Industrial- Commercial zone with site-specific provisions.

Its application relied on Policy 4.6.4 of the Official Plan, as the proposed site is within a designated Employment Area and is not located on a major street that is the boundary of the area. [ 13 ] On January 18, 2008, the respondent appealed to the Board pursuant to ss. 17(40) and 34(11) of the Planning Act . The appeal was first heard in November 2008. In an earlier decision of the Board, the parties agreed that the appeal would be phased, with the first phase to address the threshold issue whether the proposed development was a conversion and so prohibited by

Section 2.2.6.5 of the Growth Plan absent a municipal comprehensive review. [ 14 ] In a decision dated January 29, 2009, a single member of the Board held that the respondent’s applications could proceed to phase 2, a site-specific hearing on the merits. The City sought a review of that decision pursuant to s. 43 of the Ontario Municipal Board Act , R.S.O. 1990, c. O.28 (the “OMB Act”), and a review was granted on three questions.

[ 15 ] A new two member panel determined, on the rehearing, that the applications could proceed to the next phase, as the proposed major retail use would not constitute a conversion of Employment Area lands within

Section 2.2.6.5 of the Growth Plan. The Board’s Reasons on the Rehearing [ 16 ] The Board began its analysis with the Growth Plan. It recognized that its decision must conform with the Growth Plan because of s. 14(1) of the Places to Grow Act. It then turned to the threshold issue of whether the respondent’s application would result in a conversion within

Section 2.2.6.5 of the Growth Plan. If it was not a conversion,

Section 2.2.6.5 would not apply. [ 17 ] The Board concluded that “[a] conversion is a change of status from an employment use to a non-employment use in an Employment Area within and framed by these defined terms” (Reasons, p. 8). However, the Board reasoned that “if the principle of permission for a proposed use for large retail commercial is already ‘ established, authorised or contemplated ,’ in an employment area, no conversion would be required” (Reasons, p. 9, emphasis added).

In its subsequent analysis, the Board drew a distinction between conversion (that is, introduction of a use) and evaluation or implementation of a use. [ 18 ] The Board then undertook a detailed study of Toronto’s Official Plan to determine how large retail uses are treated.

It noted that the Official Plan specifically bans large scale retail stores and power centres from certain areas, but there is also permission for large scale, stand- alone retail stores and power centres, limited to major streets, in Employment and Mixed Use Areas (Reasons, p. 10). [ 19 ] The Board then turned to Policy 4.6, describing it as a “prescription code for Employment Areas, ranging from the general to the specific” (Reasons, p. 11). The following paragraphs summarize its conclusions: However, the “rules of engagement” for large scale retail are specifically set out in Sections 4.6.3, 4.6.4, and 4.6.5.

Sections 4.6.3 & 4.6.4 set out prescriptions of such locational limitations for large scale retails.

Section 4.6.3 addresses the limitations at the edge of the Employment Areas. In contrast,

Section 4.6.4 addresses the limitations of the interior of the Employment Areas. Both the edge and the interior applicants must have sites fronting on a Major Street, without which the large retail will not be countenanced. Both require evaluations of site conditions and both are generic and apply citywide rather than site specific.

Section 4.6.3 requires a site analysis by way of a zoning amendment.

Section 4.6.4 requires a site analysis by way of an Official Plan amendment and the criteria to be met are far more onerous. Last, but not the least, both sections are entrenched and effective before the Growth Plan came into effect. Based on our conclusions in Parts 1, 2 & 3, our finding is conclusive: large scale retail use has been authorised, permitted or contemplated in the provisions of Sections 4.6.3 and 4.6.4 with 4.6.5 serving as almost a grandfathering device. The Policy thrust of the Plan is to allow large scale retail in certain defined areas and these provisions are to apply to one of the Areas.

It is also clear from the thrust of the policies in Sections 4.6.3 and 4.6.4 that these two sections are there not to fathom whether such use is authorised or not on an a priori basis.

They are to evaluate the locational limitations and apply further and specific mechanism for site evaluations (Reasons, p. 11). [ 20 ] The Board rejected the argument that the use was not established, authorized or contemplated in Policy 4.6.4 because of the need for an Official Plan amendment, stating “the particular hierarchy of the instrument required for site evaluation is not a tell-tale sign whether the use is already permitted or contemplated” (Reasons, p. 12).

In the Board’s view, the policy thrust was clear from the current Official Plan. [ 21 ] The Board also considered the history and context of how Policy 4.6.4 came about, in settlement of an appeal concerning the Official Plan policies on Employment Areas. The Board concluded that Policy 4.6.4 “is entirely consistent with the rest of the Plan in general and the Employment Areas in particular, a provision that had passed scrutiny and considered meritorious by City staff, City Council and the Board” (Reasons, p. 14). The Issues on Appeal [ 22 ] There are three issues on this appeal:

1. Should the appeal be dismissed as premature? 2. What is the standard of review? 3. Was the Board’s decision a reasonable one? Issue No. 1: Should the appeal be dismissed as premature? [23] This appeal was brought at the end of phase one of the Board hearing. Although the appeal was fully argued before this Courton the merits, the respondent raised, as one ground of appeal, the argument that the appeal is premature.

That argument had beenrejected by Sachs J. when she granted leave, although she left open the possibility that it could be raised again on the appeal. [24] This Court is reluctant to hear applications for judicial review or appeals taken in the course of proceedings beforeadministrative tribunals, because to do so fragments the process and causes delay (Ontario College of Art v. Ontario (Human RightsCommission)(1993), (ON SCDC), 11 O.R. (3d) 798 (Div. Ct.)). [25] In two cases relied on by the respondent, this Court has quashed an appeal from the Ontario Municipal Board on the groundsof prematurity.

In Maplehurst Bakeries Inc. v. Brampton (City), (ON SCDC), [1999] O.J. No. 1736, the DivisionalCourt commented on one issue in the appeal – whether the Board had jurisdiction to modify an Official Plan to change the uses proposedin it. However, given that the Board had yet to make a decision as to what modifications, if any, would be made, the Court refused tohear the appeal on the merits. [26] Similarly, in Eastpine Kennedy-Steeles Ltd. v. Markham (Town), [2000] O.J. No. 809, the Divisional Court refused to hear anappeal from a decision on a motion to determine certain questions of law and jurisdiction.

The Court refused to deal with the appeal untilall of the issues in the case had been finally determined by the Board. [27] In granting leave to appeal, Sachs J. expressed the view that this was an exceptional case, stating, The question at issue in Phase 1 is one that will not be affected by any of the evidence that is led in Phase 2. Further, the answer to thequestion could be determinative of the proceedings. The City’s appeal raises a fundamental question about the application of the GrowthPlan and, specifically, what constitutes a “conversion” within the meaning of that Plan.

That question may be of significance not only forthe development in question, but for other developments in areas that are subject to the Growth Plan. Guidance from this court on appealmay not only result in a more economic process in this proceeding, but may also save time and expense in other applications that mayengage the same issue. (The City of Toronto v. Home Depot Holdings Inc., 2010 ONSC 1669 (Div. Ct.) at para. 23) [28] I agree with her reasons on this issue.

While this Court remains reluctant to hear an appeal brought during the course of aproceeding before the Board, in the exceptional circumstances of this case, we have decided to determine the issue concerning themeaning of a conversion within the Growth Plan, given the significance of that issue not only for the parties to this case but for othercases as well. Issue No. 2: The Standard of Review [29] The City argued that the standard of review of the Board’s decision is correctness because it involves a question of law -namely, the

interpretation of the Growth Plan, as well as an

interpretation of the Toronto Official Plan. For support, it relied on thedecision of the Court of Appeal in Niagara River Coalition v. Niagara-on-the-Lake (Town), 2010 ONCA 173.

[30] That was an appeal from the judgment of a Superior Court judge quashing a municipal by-law because he determined that theuse of a dock for a jet boat operation was not a permissible use under the applicable Official Plan. The Court of Appeal held that theinterpretation of an official plan is a question of law and applied the correctness standard, in accordance with Housen v. Nikolaisen, 2002SCC 33 , [2002] 2 S.C.R. 235. [31] The Divisional Court can hear an appeal from the Board only on a question of law, provided leave is granted (OMB Act, s.96(1)).

A number of cases have held that the appropriate standard of review of a decision of the Board is reasonableness when thequestion before the Board involves the

interpretation of the Planning Act and related planning documents, such as an Official Plan (see,for example, R & G Realty Management Inc. v. North York (City) (2009), (ON SCDC), 254 O.A.C. 66 (Div. Ct.) atparas. 6-7; Ottawa (City) v. Minto Communities Inc., (ON SCDC), [2009] O.J. No. 4913 (Div. Ct.) at para. 16). Suchquestions engage the Board’s specialized land use and planning expertise, and therefore, the Board’s decision is entitled to deference. [32] In the present appeal, the Board applies both the Planning Act and the Places to Grow Act, which are among its homestatutes.

It also applies the Growth Plan and the Toronto Official Plan, which are matters within its specialized expertise in planning. Therefore, the standard of review is reasonableness. [33] In my view, the Niagara River Coalition case does not call into question the correctness of the cases which have held that thestandard of review is reasonableness in an appeal like the present one. Understandably, the Court of Appeal did not turn its mind to theissue of the standard of review applicable to a decision of the Board that involves the

interpretation of planning legislation and planningdocuments, as the issue was not relevant in an appeal from a judge. [34] The City argues that it would be unacceptable to have a situation where the Board could reach an incorrect decision, while ajudge would have to be correct. With respect, this submission fails to appreciate that the task of a court undertaking a reasonablenessreview is to determine whether the tribunal’s decision falls within a range of reasonable outcomes. As the Court of Appeal stated inAbdoulrab v.

Ontario Labour Relations Board, 2009 ONCA 491 at para. 42, Judicial review on a standard of reasonableness recognizes there is no single outcome that must be regarded as the correct one. Rather,there is a range of outcomes that are acceptable and the function of judicial review on a standard of reasonableness is merely todetermine whether the decision falls within that range. The Supreme Court of Canada has explained this repeatedly. Issue No. 3: Was the Board’s decision reasonable? [35] The Supreme Court of Canada described the reasonableness standard in Dunsmuir v.

New Brunswick, 2008 SCC 9 ,[2008] 1 S.C.R. 190 as follows (at para. 47): Reasonableness is a deferential standard animated by the principle that underlies the development of the two previous standards ofreasonableness: certain questions that come before administrative tribunals do not lend themselves to one specific, particular result.Instead, they may give rise to a number of possible, reasonable conclusions. Tribunals have a margin of appreciation within the range ofacceptable and rational solutions.

A court conducting a review for reasonableness inquires into the qualities that make a decisionreasonable, referring both to the process of articulating the reasons and to outcomes. In judicial review, reasonableness is concernedmostly with the existence of justification, transparency and intelligibility within the decision-making process.

But it is also concernedwith whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law. [36] The City challenges the Board’s decision because the Board found that large scale retail stores were a use “authorized,permitted or contemplated” in the Employment Areas. In particular, counsel points to the wording of Policy 4.6.4, which states that“consideration may … be given” to allow a large retail store on a major street that is not a boundary.

That wording, he argues, showsthat there is no permission for major retail stores in the Employment Areas if they are not on major streets that form the area’sboundary. He submits that all Policy 4.6.4 requires of the City is a good faith consideration of an application for an amendment to theOfficial Plan. [37] As well, counsel argues the fact that an Official Plan amendment is necessary to allow such a major retail store is a furtherindication that such a use is not permitted.

Therefore, he argues that the Board erred in finding that there would be no conversion withinSection 2.2.6.5 of the Growth Plan if these applications were to proceed through the approval process. [38] The respondent argues that the Board’s decision is a reasonable one, based on the

interpretation of both the Growth Plan andthe Toronto Official Plan. Counsel submits that the City asks the wrong question in this appeal – namely, whether there is a permission

in Policy 4.6.4. The correct question is, instead, whether the respondent’s applications pursuant to Policy 4.6.4 would result in a conversion of the lands from employment use, as contemplated by

Section 2.2.6.5 of the Growth Plan. [ 39 ] The Board identified the threshold question to be whether

Section 2.2.6.5 of the Growth Plan applied to the respondent’s proposal. It did not start its analysis at the bottom and work its way up, as the City argued; rather, it started at the top with the Places to Grow Act and the Growth Plan. It clearly understood the primacy of the Growth Plan. [ 40 ] The Board concluded that if a major retail use was already permitted in an Employment Area, permission for a major retail store in the area would not be a conversion. This conclusion was consistent with the evidence of the three planners who testified.

It was also consistent with the understanding in a Background Paper produced by the Province in May 2008, entitled “Planning for Employment in the Greater Golden Horseshoe”. At pp. 207-08, the Background Paper stated, … the Growth Plan addresses a concern raised by many stakeholders about the conversion of lands in employment areas to major retail uses.

The Growth Plan clarifies that where major retail is not already permitted in an employment area, it is considered a conversion of use and must meet certain policy tests before a conversion can occur. [ 41 ] In determining whether a major retail use is permitted in an Employment Area in Toronto, the Board had to interpret the Toronto Official Plan. The purpose of an Official Plan is to set a framework of goals, objectives and policies to guide land use planning decisions ( Niagara River Coalition , supra , at para. 42 ). Therefore, as the Divisional Court stated in Bele Himmell Investments Ltd. v.

Mississauga (City) , 1982 CarswellOnt 1946 , an Official Plan must be given “a broad liberal

interpretation with a view to furthering its policy objectives” (at para. 23). [ 42 ] Policy 5.6.1 of the Toronto Official Plan requires that the Plan “be read as a whole to understand its comprehensive and integrative intent as a policy framework for priority setting and decision making.” Policy 5.6.3 provides that while the shaded text is to be considered the policies of the Official Plan, unshaded text and sidebars give context and background and assist in understanding the intent of the policies. [ 43 ] The Board read the Official Plan as a whole, as it was required to do, in order to determine how large scale, stand-alone retail stores were dealt with. It took notes of a

section of the Plan called the “Future of Retailing”, where the commentary states, “Large scale, stand-alone retail stores or ‘power centres’ that attract significant traffic are limited to major streets in Employment Areas and Mixed Use Areas ” (Official Plan, p. 3-33). [ 44 ] Then in Policies 4.6.3, 4.6.4, and 4.6.5, large scale, stand-alone retail stores and power centres are discussed.

The commentary before these policies speaks of the need for special locational limitations for places of worship, post-secondary institutions, recreation and entertainment facilities, and large scale, stand-alone retail stores in the Employment Areas (Official Plan, p. 4-12). [ 45 ] Large scale, stand-alone retail stores and power centres are not permitted in Regeneration Areas (Policy 4.7.3), although those existing prior to the approval of this Official Plan are permitted (Policy 4.7.4). [ 46 ] The Board then focused in on Policies 4.6.3, 4.6.4 and 4.6.5 and reasonably read them together and in light of the history in Policy 4.6.4.

In contrast, the City’s approach is to read Policy 4.6.4 in isolation and in what appears to be a more technical manner. [ 47 ] For example, the City focuses on the words “consideration may be given to permitting”. What the City leaves out is the word “also” before the word “be” in Policy 4.6.4.

The use of “also” suggests that Policy 4.6.4 is linked back to Policy 4.6.3, as the Board concluded. [ 48 ] The Board concluded that Policy 4.6.3 sets out a process to obtain permission for retail stores on major streets that form the boundaries: a zoning by-law amendment must first be obtained, and permission will require consideration of the impact on transportation and other economic activities in the area. [ 49 ] In the Board’s view, Policy 4.6.4 provides another mechanism to obtain permission for large scale, stand-alone retail stores

but for locations on other major streets. The process and considerations are not the same. This time there is a need to obtain an Official Plan amendment, and the criteria are more stringent.

The applicant must demonstrate that the development will not undermine the stability of the Employment Area, that there is sufficient transportation capacity, and the economic health of nearby shopping districts will not be affected. [ 50 ] Having read the Official Plan as a whole, the Board concluded that the principle of major retail use is “established, authorized or contemplated” in the Employment Areas on major streets in Toronto’s Official Plan. Policy 4.6.4 then governs the implementation of large scale, stand-alone retail uses.

Therefore, the respondent’s application, if successful, would not result in a conversion of Employment Area lands pursuant to the Growth Plan because it would not introduce a major retail use on lands where such use was prohibited, excluded or not contemplated. [ 51 ] The Board’s decision is entitled to deference from this Court. The Board’s reasons are detailed and intelligible, and they justify the conclusion reached.

When the Official Plan is read as a whole, and Policy 4.6.4 is read in context, the Board’s conclusion - that major retail use is established, authorized or contemplated in the Employment Areas, subject to locational limitations - falls within a range of reasonable outcomes. Conclusion [ 52 ] Therefore, the appeal is dismissed. Costs to the respondent are fixed at $10,000 for the motion for leave to appeal and $15,000 for the appeal payable by the City. The Board does not seek costs and none are awarded. Swinton J. Nadeau J. Harvison Young J. Released: November 29, 2010 CITATION: The City of Toronto v.

Home Depot Holdings Inc., 2010 ONSC 6071 COURT FILE NO.: 527/09 DATE: 20101129 ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT SWINTON, Nadeau AND HARVISON YOUNG JJ. BETWEEN:

THE CITY OF TORONTO Appellant - and - HOME DEPOT HOLDINGS INC. Respondent REASONS FOR JUDGMENT Swinton J. Released: November 29, 2010