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On April 12, 2021, Bill 257 received royal assent. Bill 257 was introduced on March 4, 2021 under the Supporting Broadband and Infrastructure Expansion Act, 2021 with three Schedules. Schedule 1 expediates the delivery of broadband projects of provincial significance. Schedule 2 amends the Ontario Energy Board Act, 1998 by adding a new part which applies to development of electricity infrastructure for purposes other than generation, transmission, distribution, consumption, sale or demand management of electricity, if the development is specified by regulations. However most notably, Schedule 3 adds three new subsections to section 47 of the Planning Act regarding Ministerial Zoning Orders (“MZOs”), which came into force upon receiving royal assent. To learn more about MZOs, see our previous blog post. Ultimately, the Minister’s decision to issue an MZO no longer requires consistency with the provincial policy statements in effect at the time of the Minister’s decision, mainly, the Provincial Policy Statement, 2020 (the “PPS”). This subsection will apply retroactively, however, the Greenbelt Area is exempt from this exception, meaning that any proposed MZO on Greenbelt Area, will still have to be consistent with the PPS.

For more information, please do not hesitate to reach out to the lawyers at Davies Howe LLP.

In the recent decision of C.M. Callow Inc. v. Zollinger, 2020 SCC 45 (“Callow”), the Supreme Court of Canada reaffirmed the principles relating to the duty of honest contractual performance, as set out in Bhasin v. Hrynew, 2014 SCC 71 (“Bhasin”). This duty requires contracting parties to be honest with each other in performing their contractual obligations, and to not lie or knowingly mislead each other about matters directly linked to the performance of the contract. Although contracting parties have no duty to disclose material information, the Supreme Court in Callow confirmed that knowingly misleading another party is not confined to direct lies and can include silence in some circumstances.

Summary of the Case

The plaintiff in Callow entered into two seasonal maintenance contracts with the defendant condominium corporations: a winter maintenance contract and a summer maintenance contract. The winter maintenance contract covered the period from November 2012 to April 2014. One of the provisions of the winter maintenance contract permitted the defendants to terminate the contract for any reason by providing ten days’ written notice. The defendants made the decision to terminate the winter maintenance contract during the spring of 2013, but decided not to notify the plaintiff of this decision until September 2013. In the meantime, the defendants engaged in discussions with the plaintiff regarding the renewal of the winter maintenance contract and led the plaintiff to believe that they were satisfied with the plaintiff’s services and that the contract was likely to be renewed. As a result, during the summer of 2013, the plaintiff performed extra work related to the summer maintenance contract, hoping that it would act as an incentive for the defendants to renew the winter maintenance contract.

After notice of the termination was given, the plaintiff sued the defendants alleging that they had acted in bad faith and had breached the duty of honest contractual performance. The trial judge found that the defendants had “actively deceived” the plaintiff between the time the termination decision was made in the spring of 2013 and the time when notice was given in September 2013. The Court of Appeal reversed the trial judge’s decision and concluded that the trial judge had improperly expanded the duty of honest contractual performance beyond the terms of the winter maintenance contract. The plaintiff appealed to the Supreme Court of Canada.

The majority of the Supreme Court held that the defendants knowingly misled the plaintiff in the manner in which it exercised the termination clause in the winter maintenance contract, which amounted to a breach of the duty of honest contractual performance. In reaching this conclusion, the Court confirmed that the question of whether or not a party has “knowingly misled” another party is a highly fact-specific determination, and can include lies, half-truths, omissions and even silence, depending on the circumstances. Although the defendants had a right to terminate the winter maintenance contract, that right had to be exercised honestly and in good faith. Through its actions, the defendants gave the plaintiff the false impression that the winter maintenance contract would be renewed. Upon realizing that the plaintiff was under this false impression, the defendants had an obligation to correct the misapprehension. By deliberately choosing to remain silent, the Court found that the defendants breached the duty to act honestly.

Key Takeaways

 Although the facts of Callow make it quite clear that the defendants knowingly and intentionally misled the plaintiff, in other circumstances it might be more difficult to assess on the facts whether the duty of honest contractual performance has been breached. As a result, Callow appears to inject some commercial uncertainty into the area of contract law because it may be difficult for a party to know when another party is under a mistaken impression, and when it is obliged to take proactive steps to correct a misapprehension. Accordingly, the Supreme Court’s decision makes it imperative that parties to a contract act honestly.

The Government of Ontario has proposed changes to the Expropriations Act that, if implemented, will have a significant impact on claims by expropriated landowners. As of March 23, 2021, these changes have survived Second Reading.

Interest rates

Under the current legislation, an expropriated owner is entitled to be paid interest on the compensation for the market value of the expropriated lands and on any amount paid for injurious affection.  Interest is paid at the rate of 6% a year, calculated from the date the owner ceases to reside on or make productive use of the lands.  In certain situations, the amount of interest can be significant.

The rate was set in the late 1960’s when 6% was a standard rate of interest for a mortgage and people could earn interest by simply depositing money into a bank account.  We can refer to those as “the good old days”.

Bill 245 proposes to amend subsection 33(1) of the Expropriations Act to provide for annual rates of interest to be determined by regulation.  At the moment, we do not know how the legislator will deal with the transition provisions for expropriations that predate the change but we can be assured that, going forward, the rate will be much lower than 6%.

Reimbursement of Costs

Under the current legislation, subject to certain exceptions, an expropriating authority must reimburse the reasonable costs incurred by an owner in making a claim for compensation. From the perspective of the owner, this is only fair because being forced to relinquish ownership of lands by a government authority should not result in costs being born by the owner.

We have expressed concern about the proposed revisions to the law because they appear to create the possibility that what will now be called the new Ontario Land Tribunal will have the power to award less than the actual reasonable costs incurred by a landowner.  From our perspective, this flies in the face of the goal of the Expropriations Act, which is to make the owner whole notwithstanding the exercise of the government’s power to expropriate.

We will continue to monitor these changes and update the blog as appropriate.

For more information, please contact Ava Kanner.

The Planning and Housing Committee recently considered a report regarding the Proposed Review of Parking Requirements for New Development in the City of Toronto (the “City”). This report responds to a need to update the zoning by-law regulations, which have not been reviewed since 2013, when Zoning By-law 569-2013 (the “By-law”) was adopted. Since then, the push for Transit Oriented Development (“TOD”) and Transit Oriented Communities (“TOC”) have sparked a demand to revaluate the way that land is currently used in the City and the modal future of our communities.

Straying away from the previous principle of establishing a minimum amount of parking per given land use, the City is instead proposing to establish a maximum amount of parking to increase efficiency in the development process. While the objective is to establish new maximums, parking minimums would remain for some requirements, such as accessible parking spaces.

Overview of the Proposed Review

The City will be conducting their review in 3 phases.

Phase 1 will focus on:

• Grouping land uses into categories with similar parking needs to reduce the number of different parking requirements;
• Developing new parking policy area boundaries near transit facilities and higher order transit to maximize the area of influence; and
• Developing an approach to adjust parking requirements automatically without requiring a zoning by-law amendment when new transit infrastructure is introduced to the area.

Primarily, the areas that will experience an increased use of maximums, and a reduction or total elimination of minimums, will be policy areas that are located near transit facilities and higher order transit. All other areas will still see a reduction in minimums, but will not be subject to imposed maximums. Further, the City will be looking at whether there is a need to increase visitor parking requirements, and potentially adjusting the calculations for required accessible parking to maintain their current levels.

 Phase 2 will include:

• Developing language in the By-law that will create a requirement for new parking spaces to be Electric-Vehicle ready, as current requirements do not provide sufficient space to accommodate charging equipment;
• Considering developing parking supply guidelines for City-led developments; and
• Identifying other mobility infrastructure that will be required if parking requirements are reduced or removed.

Last, Phase 3 will conclude with:

• Identifying other parking policies or regulations that will need to be revised along with the proposed changes to the By-law; and
• Developing a monitoring program to measure the effectiveness of the By-law and identify areas where further parking enforcement is needed.

Timeline

As this is a timely review, City staff have been asked to report back by the end of the year with recommendations. Engagement with stakeholders will be a key part of the project and will be happening during most of the year. Public and stakeholder consultation on Phases 1 and 2 are planned to begin in April/May 2021, followed by consultation on draft conclusions in September 2021, with the Final Report and Zoning By-law Amendment going to Council in November 2021.

During this review, other parking related work such as the Toronto Green Standards review and the Expanding Housing Options in Neighbourhoods will be reviewed and aligned with the City’s findings.

We will continue to monitor and provide updates on the Parking Requirements for New Developments review as it progresses. A presentation from City staff on the review is available here.

Two weeks after an announcement that the Minister of Municipal Affairs and Housing (the “Minister”) is seeking feedback on ways to expand the Greenbelt Area (found here), on March 4, 2021, the Provincial government introduced the Supporting Broadband and Infrastructure Expansion Act, 2021 (“Bill 257”). Among other things, Bill 257 proposes to add a new subsection to the Planning Act (the “Act”) which would also expand the Minister’s power to issue ministerial zoning orders (“MZOs”). The Bill’s first reading was carried on the same day (check its status here).  

Currently, the Minister has the authority to issue MZOs, however, pursuant to the Act, the Minister’s decision to zone land must be consistent with the provincial policy statements in effect at the time of their decision, mainly the Provincial Policy Statement, 2020 (the “PPS”). The Minister’s decision must also conform with provincial plans, including the Greenbelt Plan. MZOs are often used to speed up planning approvals for critical projects, such as the approval of long-term homes or affordable housing projects.

Bill 257 proposes to exempt MZOs from the requirement that the order be consistent with the PPS. Further, the exemption is proposed to apply retroactively so that no past, present or future MZOs would have the requirement to be consistent with the PPS. The Provincial government states that this will permit the Minister to take other considerations into account when making decisions, and that these changes would ensure that the Minister has the discretion and authority to provide complete support for critical projects. The government has recently increased its use of MZOs across the Province, causing stakeholder concern that this proposed change will allow the government to fast-track approvals in provincially significant areas, and override challenges that might arise when looking to develop on sensitive lands.

For further clarity, Bill 257 expressly exempts the Greenbelt Area from this exception. An MZO issued on land within the Greenbelt Area will still have to conform with the Greenbelt Plan. This is notable as the government remains firm on its promise to keep development out of the Greenbelt, as demonstrated by its undergoing consultation to expand this area.

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.