News

Employers in Ontario should review their employment contracts in light of recent case law addressing the enforceability of termination clauses.

In Waksdale v. Swegon North America Inc., 2020 ONCA 391 (“Waksdale”), the Ontario Court of Appeal  clarified the rule for interpreting termination provisions in an employment contract. The Court found that employment contracts, including termination provisions, must be read as a whole. Applying this reasoning, the Court set aside an otherwise enforceable without-cause termination provision because the for-cause provision did not comply with the Employment Standards Act (“ESA”). This has been characterized as a harsh decision, since it allows for an entire termination clause to be voided even if the offending term is not in issue.

Waksdale was recently followed by the Ontario Superior Court of Justice in Sewell v. Provincial Fruit Co. Limited, 2020 ONSC 4406 (“Sewell”).

The plaintiff in Sewell was employed in a senior sales role for six months, at which point he was terminated by the defendant employer without cause. The employer paid the plaintiff two weeks’ salary and benefits, consistent with the employment contract and the requirements of the ESA. The plaintiff brought a summary judgment motion seeking, among other relief, a declaration that the termination clause in the employment contract was unenforceable.

The plaintiff’s employment contract contained for-cause and without-cause termination provisions. The for-cause provision allowed the employer to terminate the plaintiff at any time and without notice. The without-cause provision entitled the employer to terminate the plaintiff at any time as long as the employer paid a combination of notice and severance pay.

The Court held that the termination clause violated the ESA for two reasons:

1. The without-cause provision combined notice and severance pay, which violated the ESA requirement to pay both notice and severance; and

2. The for-cause provision contracted around the ESA requirement to provide notice except in cases where the employee engaged in “wilful misconduct”.

Applying Waksdale, the Court found that the invalid for-cause provision rendered the entire termination clause unenforceable. Even though the for-cause provision was not at issue (since the plaintiff was dismissed without cause), the Court reaffirmed that employment contracts must be read as a whole and that they should be set aside if any of the terms are in contravention of the ESA. Accordingly, the Court concluded that the employment contract was void, and that the plaintiff was entitled to reasonable notice of four months under the Common Law, rather than two weeks under the ESA.

Implications for Employers

Employers should review their employment contracts to ensure that their termination provisions comply with the minimum ESA requirements. Specifically, employers should confirm that their termination clauses provide employees with appropriate notice and that they do not combine notice and severance pay entitlements. Since leave to appeal to the Supreme Court of Canada was recently refused in Waksdale, the Court of Appeal’s reasoning represents the current state of the law in Ontario.

Questions? Contact David Cherepacha or Ava Kanner

The Suite Life Continues: An Overview of Laneway Housing and Garden Suites in Toronto’s Residential Neighborhoods

On July 28, 2020, Toronto City Council adopted the Expanding Housing Options in Neighbourhoods work plan that aims to increase “missing middle” housing options in Toronto (report here). The term “missing middle” refers to housing types ranging from duplexes to low-rise apartments and includes laneway and secondary suites within the City of Toronto’s (the “City”) existing neighbourhoods. The work plan also promotes exploring opportunities for inclusionary zoning and dwelling room protection. This work plan follows Bill 108’s changes to the Planning Act, which require municipalities to introduce secondary suite provisions to their zoning by-laws and official plans.

Since this aspect of Bill 108 came into effect on September 3, 2019, the City has adopted Official Plan Amendments 403 and 460 as well as Zoning By-laws 810-2018 and 1210-2019 to permit the creation and construction of laneway suites in specified zones under the City’s Zoning By-law. With over 150 laneway suite applications submitted as of September 2020, the City has initiated a review of another form of secondary suite under this work plan – the garden suite.

Laneway Housing

A laneway suite is a “self-contained residential unit located on the same lot as a detached house, semi-detached house, townhouse or other low-rise dwelling.” Laneway suites are typically located in the rear yard next to a public laneway and are generally smaller in scale and completely detached from the main house on the lot.

Laneway suites are growing in popularity as a means of bringing “gentle density” to established single-family neighbourhoods. With the Covid-19 pandemic changing the way people work and live, they have opened a new world of opportunities for homeowners, including intergenerational living spaces, home offices and many more uses that can be customized into the design. Numerous properties are eligible for a laneway suite as-of-right, often requiring only a minor variance application.

Laneway suites provide homeowners and renters a number of benefits including:

• Allowing a more affordable form of housing in established neighbourhoods;
• Making use of existing infrastructure and social services;
• Bringing gentle intensification into predominantly low-density neighbourhoods with minimal disruption;
• Creating housing flexibility potential for the main house; and
• Allowing for customization to fit to homeowners’ needs.

Unfortunately, there are restrictions to where a laneway suite can be built:

• They are limited to neighbourhoods that are serviced by laneways – predominantly in Old Toronto and East York;
• The property’s backyard has to be of a sufficient depth to accommodate a laneway suite – a rear yard lot line minimum of 3.5 m backing onto a laneway;
• They are fairly expensive to build;
• There are existing limitations including a side yard setback of 45 cm to facilitate EMS access;
• They often require tree removal; and
• Requirements that the utilities and servicing be connected from the main house.

While laneway suites are a step forward in diversifying Toronto’s housing stock, they are limited to certain geographic neighbourhoods, making them unachievable for those that live outside the prescribed neighbourhoods. In response, the City has commenced a garden suites review. This review will look at the findings of the laneway suites initiative to help incorporate garden suites as-of-right into established Neighbourhoods in the city.

Financial Incentives

While secondary suite options such as laneway suites might be a more affordable way to acquire another piece of the residential property market in Toronto, they still come at a price of approximately $350/sf, making them quite an investment. In an attempt to encourage the construction and popularity of these residential rental properties, the City has introduced two incentive programs to encourage homeowners to look into adding laneway suites to their backyard.

1. Development Charges Deferral Program for Ancillary Dwelling Units

The City has waived development charges (“DCs”) for eligible homeowners that build a laneway suite in their rear yard that conforms with applicable zoning and other by-laws. Homeowners must apply for a building permit and enter into a DC deferral agreement with the City. However, if the new lot is severed through a plan of subdivision, consent or condominium within 20 years of the issuance of the building permit, this will trigger payment of the previously deferred DCs.

2. Affordable Laneway Suites Program

Eligible property owners looking to develop a laneway suite can receive a forgivable loan of up to $50,000 from the City, which will be forgiven 15 years from the date of the first tenant occupying the laneway suite. One caveat with this program is that the rent charged for the laneway suite cannot exceed the City’s average market rent as prescribed by bedroom type at any time during the 15 year affordability period.

Garden Suites

Garden suites are similar in form and function to laneway suites and will generally be located in the rear yard of detached houses, semi-detached houses, townhouses or other low-rise dwellings. One difference between garden suites and laneway suites is that the main property is not required to be located on a laneway, making garden suites more flexible for lots and neighbourhoods within the city. A homeowner may build any detached-accessory-dwelling-unit in their backyard and it may be considered a garden suite, subject to Zoning By-law considerations. This new housing type will create 10 times the potential for development of residential lots in the City’s neighbourhoods. This is a significant increase compared to those that currently qualify for laneway suites.

The City will initiate consultations with interested stakeholders on potential permissions for garden suites in Q1 of 2021 and is aiming to report to the Planning and Housing Committee with recommendations by the end of Q2 2021.

Conclusions

By allowing regular homeowners to diversify existing housing stock themselves through a minimally disruptive development, secondary suites offer a unique opportunity for many families to customize their properties to their particular needs. It is an opportunity to maximize the use of existing infrastructure and services, and to ensure that residential neighbourhoods continue to thrive for generations to come. While the garden suites review is still in its early developments, we will continue to monitor the “suite” future of secondary housing in Toronto.

Should you have any questions, the Davies Howe LLP team would be happy to discuss the various secondary suite options and how they affect your land development.

 On Friday, February 5, 2021 Kim Beckman and Alex Lusty presented a paper at the Ontario Bar Association’s Institute Series on Building Communities. The paper, which can be found here , traces changes made to the development charge framework in Ontario and reviews the new community benefits charge regime ushered in by the enactment of the More Homes, More Choice Act, 2019 and the COVID-19 Economic Recovery Act, 2020. The paper also begins the important conversation on the practical implications in store for municipalities and developers under the new paradigm.

The City of Toronto Releases Community Benefits Framework Report

The City of Toronto (the “City”) released the report, “Advancing Community Benefits Framework” on January 13, 2021 (the “Report”). The Report summarizes the City’s plan to move the Community Benefits Framework forward and continue to create inclusive social and economic development opportunities throughout the City. The Report will be considered by City Council on February 2, 2021.

The Framework focuses on achieving supplementary community benefits that produce social and economic development opportunities that can be enforced through existing municipal authority or levers. Examples of these benefits include workforce development and social procurement. This is a separate community benefits framework from a community benefits charge under the Planning Act.

Ultimately, the Report recommends that City Staff report back to the Economic and Community Development Committee in Q3 of 2022 with a progress update on the design and pilot testing of the Framework implementation models.

Current and Planned Initiatives

The Framework was adopted by City Council on July 16, 2019, although some of the initiatives were commenced earlier. The City currently has four active community benefit initiatives:

1. Social Procurement Policy and Program – helps include workforce development and supply chain diversity requirements in select procurement contracts;
2. Housing Now Initiative – large-scale affordable housing development projects;
3. Rexdale-Casino Woodbine Community Benefits Agreement – contract with One Toronto Gaming that contains a range of community benefits; and
4. Manufacturing, Innovation and Technology Program – provides aid to property-tax rebate recipients including local employment requirements attached to each agreement.

These four initiatives have produced over 120 contracts for community benefits. Additionally, there are at least 10 new community benefit initiatives currently being reviewed by the City. Some of these upcoming initiatives include Metrolinx Expansion Projects, Don Summerville Revitalization and Waterfront Toronto – Quayside.

This increase in demand for community benefits and the necessity of equitable economic recovery from COVID-19 has created an urgent need for additional staffing resources and time to develop the back-end infrastructure to support the Framework.

The next stage of implementation will therefore include creating coordinated system approaches to local and social hiring pathways; disaggregated data collection and tracking; and creating “How To” protocols to guide the City and its stakeholders. The City will also attempt to better define equity-seeking populations, establish processes to set hard targets, development mechanisms to expand the pool of diverse and local suppliers and strengthen engagement with employers and industry leaders to forecast opportunities.

The City of Toronto (the “City”) is recommending a city-wide approach to the identification and listing of multiple properties for inclusion on the City’s Heritage Register. The approach builds on the City’s evolving and strategic use of Historic Context Statements to guide the identification of cultural heritage resources. The proposed process, methodology and recommended properties for listings were brought to the Toronto Preservation Board (“TPB”) on November 30, 2020. The TPB recommended that the revised reports be adopted by the Toronto and East York Community Council on December 2, 2020 and City Council on December 16, 2020 (here). City Council has since adopted the proposals without amendment (here).

Current Process

Currently, city heritage staff undertake heritage surveys in tandem with planning studies to identify properties of potential heritage value. The staff then recommend that an area be studied further or receive immediate protection. Because this approach only conducts heritage surveys where a planning study is already prioritized (in areas with high growth potential), the City claims that this will make the listing process more effective.

Proposed Process

City Council mandated City Planning to launch the Toronto Heritage Survey in 2019. The goal was to create a city-wide strategy that constitutes good planning, operational efficiency and greater predictability by creating a systematic study throughout the City, rather than listing on a case-by-case basis. The Survey results are used to provide an understanding of the historical evolution of the City and its neighbourhoods. The register is publicly accessible online with advanced search functions (register search).

The Survey identifies sites with cultural heritage value according to a defined list of criteria. The first phase of the process focused on building resources and testing models prior to reporting back to Council. Planning Studies and Heritage Surveys were done for Midtown (King-Spadina); College Street (Huron to Bathurst); and Broadview Avenue (Danforth to O’Connor) identifying approximately 1500 properties as having potential heritage value.

City Council recently reviewed and adopted the following new studies that collectively list approximately 966 new properties:

All properties have been reviewed to confirm their cultural heritage value in consideration of the Ontario Heritage Act (the “Act”), Ontario Regulation 9/06 and Toronto’s Official Plan requirements for listing.

An owner who intends to demolish a non-designated but listed property, must notify the City within 60 days of their intention to demolish a structure. The owner will have to submit plans, as determined by City Council, for review by Heritage Planning. City Council then has a fixed period of time to decide whether the property meets the designation criteria under the Act and if it does, to issue a notice of intention to designate the property. The owner can reject the notice of intention by serving the clerk a notice of objection within 30 days.

Proposed Methodology

Under the Ontario Heritage Act, the City’s Register may contain property that has not been designated where the council of the municipality believes the property to be of cultural heritage value or interest. The Official Plan requires that the proposed properties be identified and evaluated to determine their cultural heritage value or interest. These cultural heritage values include design or physical value, historical or associative value and contextual value.

The City is now focusing on contextual value rather than historical and associative value as historical and associative value are not visually evident without an extensive evaluation process.

Two proposed methodologies are being discussed, both taking a contextual approach that will work together:

1. Historic Context Statements – this method is based on prevailing building types and common descriptions of each building type. It is similar to what has been used in the past but consolidates shared features and removes reference to terms more often used for designations under Part IV of the Ontario Heritage Act (e. a legal description of the property; name of the owner; and a statement explaining the cultural heritage value); and

2. Descriptive Listings – this method is an abbreviated version of the past approach and will be used where a Historic Context Statement has not been defined or where a property’s heritage value relates primarily to its design, physical, historical or associative values.

Davies Howe LLP would be happy to discuss this new Heritage Listing Process with you further.

Davies Howe has moved up in the 2020 Nova Res Urbis (NRU) rankings to clinch the #1 spot for law firms in the GTHA and retain the #3 spot for Toronto law firms.  We like it at the top!

It has been quite a year for everyone and a difficult one for many.  We at Davies Howe understand we are fortunate to have been able to keep working, and achieve these successes for our clients, during this terrible pandemic.  We look forward to a better, healthier, huggier 2021 for everyone.

Bill 229 was introduced on November 5, 2020 pursuant to the Protect, Support and Recover from COVID-19 Act (Budget Measures), 2020. The Bill passed its second reading on November 23, 2020 and is now before the Standing Committee for consultation and debate. The Bill proposes to amend over 44 Acts including the Conservation Authorities Act (the “CAA”) and the Planning Act. The changes to the Planning Act are minor, however, the proposed changes to the CAA significantly impact the land use planning regime. In particular, the changes affect an applicant’s appeal rights for development permits and associated fees. The proposed changes also impose decision-making timelines on Conservation Authorities and limit the role of Conservation Authorities in the municipal planning process. Many environmental groups and the group of Ontario’s Big City Mayors are opposed to several of the proposed changes to the Conservation Authorities Act.

Appeal Development Permits Decisions to the Local Planning Appeal Tribunal (“LPAT”)

Currently, a developer must receive a permit from the Conservation Authority for development activities in areas that are prohibited under the CAA. The Conservation Authority may approve or refuse the permit with or without imposing conditions. If the applicant is unhappy with the Conservation Authority’s decision, there is a limited right to appeal to the Mining and Lands Tribunal.

If approved, Bill 229 will repeal this section and replace it entirely. The new section would allow the applicant to choose between having the Minister review the Conservation Authority’s decision or appealing the decision directly to the LPAT.

The applicant cannot use both routes unless the Minister does not conduct a review within 90 days after replying to the applicant’s request for review. Additionally, if the Conservation Authority does not make a decision within 120 days, the applicant may appeal directly to the LPAT. The LPAT has authority to take evidence, refuse the permit or order the authority to issue the permit with or without conditions. These proposed amendments also apply to a Conservation Authority’s decision to cancel a permit.

Reconsideration of Conservation Authority-Imposed Fee

A developer will now have the ability to appeal the administrative fee for a service provided by the Conservation Authority. An applicant who is charged a fee has always been able to apply to the Conservation Authority to reconsider the fee. Under the proposed amendments, if the Conservation Authority fails to make a decision in 30 days or if the applicant is unhappy with the decision to reconsider the fee, the applicant can pay under protest and appeal directly to the LPAT.

Conservation Authority can no longer participate in Planning Act Appeals

Planning Act amendments will expressly exclude Conservation Authorities from the definition of “public body”. This means that Conservation Authorities are no longer permitted to appeal a municipal council’s decision to the LPAT nor are they permitted to become a party to a Planning Act appeal.

Ministerial Ordered Permits

Bill 229 introduces a new section to the CAA that will allow the Minister to order a Conservation Authority to not issue a permit or a class of permits. The Minister may then issue the permit(s) themselves if certain criteria are satisfied. The Minister must give notice to certain parties after an order is made and post it on the Environmental Registry within 30 days of the decision being made. The Minister’s decision is final unless the Minister fails to make a decision on an application within 90 days, then the non-decision may be appealed to the LPAT.

Should you have any questions, the Davies Howe LLP team would be happy to discuss the Bill 229 amendments and how they affect your land development.

 Toronto City Council has passed a resolution to move ahead with adding all major application types to the online application submission portal by the end of this year. The pilot project started with site plan control applications and is now working on zoning amendment applications. The City’s C2K team is hoping for a full public launch in early to mid-2021.

Davies Howe LLP looks forward to working with its clients to assist in the virtual filing of more complex and additional types of land use applications in this new virtual era.

On September 18, 2020, Ontario Regulation 509/20 came into force under the Planning Act to support the implementation of community benefits charges (CBCs) and parkland regulation (found here). This starts the two-year transition period for municipalities to implement the new framework.

CBCs are to be implemented under the “new” section 37 of the Planning Act and will give municipalities the ability to fund various community services not otherwise covered by development charges. This new Regulation provides additional details to section 37 of the Planning Act by outlining the requirements of a municipal community benefits strategy, development exclusions, maximum charge percentage, notice requirements for passing CBC By-laws, minimum interest rate rules, appraisal report timelines and municipal reporting requirements. This Regulation supports the Housing Supply Action Plan created through More Homes, More Choice Act, 2019 (Bill 108) as well as the COVID-19 Economic Recovery Act, 2020 (Bill 197).

Exclusions from Community Benefit Charges (s.1)

The Regulation expands on section 37(4)(e) of the Planning Act by expressly excluding long-term care homes, retirement homes, universities and colleges, memorial homes, clubhouses or athletic grounds of the Royal Canadian Legion, hospices and non-profit housing from CBCs.

Community Benefits Strategy (s.2)

Section 37(9) of the Planning Act requires the municipality to prepare a CBC strategy. Section 2 of this Regulation outlines the requirements of the strategy as including the following:

• estimates of the anticipated amount, type and location of development and redevelopment with respect to which CBCs will be imposed;
• estimates of the increase in the need for facilities, services and matters attributable to the anticipated development and redevelopment to which the CBC By-law would relate;
• identify the excess capacity that exists in relation to the facilities, services and matters referred to in clause (b);
• estimates of the extent to which an increase in a facility, service or matter referred to in clause (b) would benefit existing development;
• estimates of capital costs necessary to provide the facilities, services and matters referred to in clause (b); and
• identify capital grants, subsidies and other contributions made to the municipality or that the council of the municipality anticipates will be made in respect of the capital costs referred to in clause (e).

Maximum Charge (s.3) and Appraisals (s.6)

Section 3 of the Regulation establishes the prescribed maximum rate for a CBC under subsection 37(32) of the Planning Act as 4%, meaning that the CBC payable in any particular case cannot exceed 4% of the value of the land as of the valuation date.

The owner of land proposing to develop a site can provide the municipality with an appraisal of the value of the site if they are of the view that the CBC exceeds what is legislatively permitted. Similarly, a municipality can provide the owner of the land with an appraisal if it disputes the owner’s appraisal. If the appraised values are within 5% of each other, the municipality must refund to the owner the difference between the amount of the CBC and the higher of the appraised values.  If the appraised values differ by more than 5%, a third appraisal is prepared. The Regulation establishes the following timeframes of these appraisals:

• If the owner disagrees with the charge, they pay the charge under protest and provide the municipality with an appraisal of the value of the land within 30 days;
• If the municipality disputes the owner’s appraisal report, they must provide the owner with their own appraisal within 45 days;
• If these appraisals differ by more than 5%, the owner can select an appraiser from the municipal list of appraisers who will then provide an appraisal within 60 days.

Municipality Reporting Requirements (s.7)

Municipalities are required to prepare and make available to the public annual reports that identify the balances of the CBC special account and the Parkland special account. The Regulation states that these reports must include details on the amounts spent, how capital costs not funded from the special account were funded, the amount borrowed from the account and the interest accrued on this amount.

Please contact us if you have any questions as to how this Regulation may apply to you and your development project.

On September 4, 2020, a staff report was released by the City of Toronto presenting draft inclusionary zoning Official Plan and Zoning By-law amendments for the purpose of public consultation.

Inclusionary zoning is a tool for municipalities to require new development or redevelopment to maintain a certain portion of residential units as affordable housing. As contemplated in Bill 108, the applicability of inclusionary zoning is limited to Protected Major Transit Station Areas (PMTSAs). These PMTSAs must be adopted by Council and approved by the Minister of Municipal Affairs and Housing.

Key components of the draft amendments include geographic application, the affordability period and the amount of units set aside. Geographically, inclusionary zoning will apply to areas defined as strong and moderate market areas within PMTSAs, as set out in this map.

The draft instruments require that 3-10% of the total residential gross floor area in a development be set aside as affordable housing for 99 years. The specific percentage is dependent on whether the development is in a strong or moderate market and the type of development. This range is currently being reviewed by City Planning to determine whether it can be increased. The City’s Planning and Housing Committee recommended increasing the range to 10-30% of the total residential gross floor area in a development. The matter will be considered by City Council on September 30, 2020 and final recommendations are targeted to be brought before the Committee in 2021. These requirements will be secured by agreements under subsection 35(2) of the Planning Act and will be registered on title.

Exemptions to Inclusionary Zoning

The Provincial Regulation 232/18 provides exemptions from inclusionary zoning, including where the proposed development contains fewer than 10 residential units. The draft Zoning By-law provides the following additional exemptions:

1. Development or redevelopment within the Downtown Secondary Plan or Central Waterfront Secondary Plan containing:
   1. Less than 100 residential units; and
   2. Less than 8000 square metres of residential gross floor area
2. Development or redevelopment outside the Downtown Secondary Plan or Central Waterfront Secondary Plan containing:
   1. Less than 140 residential units; and
   2. Less than 10,000 square metres of residential gross floor area
3. Development or redevelopment owned and operated by certain “non-profit housing providers”; or
4. Portions of development or redevelopment containing residential care homes or institutional student residences.

Transition Provisions

Notably, the proposed transition provisions in the draft Zoning By-law Amendment provide that it will not apply to a building or structure for which a complete application for a building permit, zoning by-law amendment, minor variance or site plan approval was filed prior to January 1, 2022. Minor variance applications are also excluded if based on a building permit application submitted before January 1, 2022.

See the City’s Draft OPA and ZBLA for more information.