Sumac v Kawartha Lakes: A Caution to Municipalities

November 17th, 2015 by

A recent decision from the Divisional Court states that once a project has been approved by a provincial or federal body, if a municipality chooses to in some way interfere with or pass a by-law or resolution in order to hamper that project’s progress, it runs the risk of having it’s by-law or resolution quashed by the courts.

The Municipal Act, 2001 permits a municipality to enact by-laws dealing with matters that fall within its jurisdiction. It is possible that such by-laws conflict with a provincial or federal Act, or an instrument (which could be an order, licence or approval), made under a provincial or federal Act. In the case of such a conflict, section 14 of the Municipal Act, 2001 provides that the by-law would be without effect as it would be seen as ultra vires. Section 14 goes on to note that a conflict would include an instance where the by-law frustrates the purpose of the federal or provincial Act, regulation, or instrument. The court can also quash municipal by-law or resolution if it finds that city council passed them in bad faith.

In Wpd Sumac Ridge Wind Inc v Corporation of the City of Kawartha Lakes, the plaintiff (“Sumac”) asked the court that a municipal resolution passed by the City of Kawartha Lakes be quashed because it was both ultra vires, and it was passed in bad faith.

In December 2013 Sumac had obtained a Renewable Energy Approval (REA) from the Ministry of the Environment. The REA gave Sumac permission to construct five industrial wind turbines in the City of Kawartha Lakes.

However, in early 2014, and after a few requests by the City of Kawartha Lakes that the Province not let any industrial wind turbine projects, including the Sumac project, be approved, City Council for the City of Kawartha Lakes adopted a resolution stating that any requests by Sumac “for property access and/or other vehicular traffic to support wind turbine development be refused.” Sumac maintained that it could not complete the industrial wind turbine project without receiving permission from the City of Kawartha Lakes to open and use a particular road.

When determining whether or not to quash the resolution, the court examined the purpose of the legislative instrument – in this case, the REA – and whether the resolution by the City of Kawartha Lakes frustrated that purpose. The court found that the purpose of the REA is to “authorize the ‘construction, installation, operation, use and retiring of [the] Class f’ Sumac Ridge Wind Project.” (41) The court also found that the REA contemplated a specific road as being of crucial importance to the project and that refusing to allow Sumac to use that road, the City of Kawartha Lakes’ resolution frustrated the purpose of the REA. The court had the resolution quashed.

Once it decided that the resolution should be quashed because it was ultra vires, the court went on to determine whether it should also be quashed because the City of Kawartha Lakes acted in bad faith when it passed the resolution. After reviewing the City of Kawartha Lakes’ actions leading up to, during, and after the REA, the court found that there was “no doubt that the Resolution was an attempt to stop the Sumac Ridge project and was not a legitimate exercise of municipal jurisdiction over roadways.”(73) The court saw this as constituting bad faith and that the resolution should be quashed on that basis as well.

It now appears that Kawartha Lakes council has given the green light to the city solicitor to appeal the decision. If that appeal does indeed take place, municipalities will surely be paying close attention. Until then, municipalities should take note of this decision and be cautious if they hope to exercise their municipal powers to thwart projects that have been permitted by provincial or federal Acts, regulations, or instruments.

If you are encountering difficulties similar to that of  Sumac at the hands of a municipality, or have any other concerns regarding development approval and support, Devry Smith Frank LLP’s Planning and Development Practice Group has the experience and knowledge to help guide you.

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