Pacific National Investments Ltd. v. Victoria (City) et al., (2000) 263 N.R. 1 (SCC)

• Judge: Gonthier, Iacobucci, Major, Bastarache, Binnie, Arbour and LeBel, JJ.
• Court: Supreme Court (Canada)
• Case Date: December 14, 2000
• Jurisdiction: Canada (Federal)
• Citations: (2000), 263 N.R. 1 (SCC);2000 SCC 64

Pacific Nat. Inv. v. Victoria (City) (2000), 263 N.R. 1 (SCC)

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[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2000] N.R. TBEd. DE.014

Pacific National Investments Ltd. (appellant) v. The Corporation of the City of Victoria (respondent)

The Corporation of the City of Victoria (appellant on cross-appeal) v. Pacific National Investments Ltd. (respondent on cross-appeal)

(27006; 2000 SCC 64)

Indexed As: Pacific National Investments Ltd. v. Victoria (City) et al.

Supreme Court of Canada

Gonthier, Iacobucci, Major, Bastarache, Binnie, Arbour and LeBel, JJ.

December 14, 2000.

Summary:

Control of land located around the City of Victoria's Inner Harbour was transferred to a Crown corporation (BCEC) for redevel­op­ment. Under a Master Agreement, BCEC developed a portion of the lands and sold the remaining 22 acres to a private developer (PNI). PNI's purchase was condi­tional on the City approving subdivision into five lots and rezoning the lands to permit, inter alia, construction of three storey struc­tures on two water lots. Subdivision approval and the required zoning were passed by City council in 1987. PNI first developed the three non-water lots. In 1993, the new City council rezoned the water lots to preclude residential devel­opment and limit buildings to one storey. PNI sued for breach of contract, alleging that the "down-zoning" breached the city's implied contractual obligations under the Master Agree­ment. Alternatively, PNI claimed restitution for unjust enrich­ment. A preliminary issue arose as to whether s. 108(2) of the Land Title Act operated to vest title to the two water lots in the Crown when PNI deposited its subdivi­sion plan at the land titles office.

The British Columbia Supreme Court, in a judgment reported [1996] B.C.J. No. 2523, held that s. 108(2) did not apply to vest title in the Crown. The court found the city liable for breach of contract, for breaching the implied term of the Master Agreement that the zoning would remain in place for a reasonable period of time. Although such an implied term could not bind future city councils to particular zoning, it did make the city liable if this contractual term was not honoured. The court did not deal with the alternate claim of restitution. The city appealed.

The British Columbia Court of Appeal, in a judgment reported 112 B.C.A.C. 161; 182 W.A.C. 161, allowed the appeal, set aside the trial judgment, and remitted the matter for trial on the unresolved restitution claim. The court affirmed that s. 108(2) did not apply to vest title in the Crown. A municipal council could not bind future councils. The court found that there was no implied term in the Master Agreement that zoning would not be changed within a reasonable period of time and any such agreement would likely be ultra vires. PNI appealed the dismissal of its breach of contract claim. The City cross-appealed the finding that s. 108(2) did not apply to vest title in the Crown.

The Supreme Court of Canada, Bastarache, Major and Binnie, JJ., dissenting, dismissed the appeal and the cross-appeal. First, the courts below correctly interpreted s. 108(2) as not applying to the two water-lots in question. The court held that the city had no capacity to make and be bound by the alleged contractual term. Even if such a term could be implied, it would be ultra vires and contrary to well-established public policy.

Contracts - Topic 2065

Terms - Implied terms - To achieve busi­ness efficacy - [See Municipal Law - Topic 1586 ].

Land Regulation - Topic 3213

Land use control - Development permits - Grounds for refusal - Rezoning - [See Municipal Law - Topic 1586 ].

Municipal Law - Topic 1586

Powers of municipalities - Exercise of powers - Prohibition against fettering of - A Crown corporation (BCEC) controlled land around the City of Victoria's Inner Harbour - Under a Master Agreement, BCEC developed a portion of the lands and sold the remaining 22 acres to a pri­vate developer (PNI) - PNI's purchase was conditional on City subdivision ap­proval (five lots) and rezoning permitting, inter alia, construction of three storey structures on two water lots - Subdivision approval and the required zoning were passed by City council in 1987 - PNI first developed the three non-water lots - In 1993, public pressure forced the new City council to rezone the water lots to preclude residen­tial development and limit buildings to one storey - PNI sued for breach of contract, alleging that the "down-zoning" breached the city's implied obligations under the Master Agreement not to change zoning within a reasonable period of time - The Supreme Court of Canada affirmed dis­missal of the contract claim - Munici­pal councils could not directly or indirectly fetter, by contract, the discretionary legis­lative powers of future municipal councils - The court stated that "the wording of the legislation, its history, consistent case law, and established public policy all support the conclusion that the municipality had no capacity to agree to an implied term such as PNI has argued. Whether such an implied term might or might not have made sense for business efficacy reasons, any such term was ultra vires and contrary to legislatively established public policy." -See paragraphs 30 to 74.

Municipal Law - Topic 1636

Powers of municipalities - Delegation of powers - Prohibition against delegation of legislative powers - [See Municipal Law -Topic 1586 ].

Municipal Law - Topic 2361

Contracts by a municipality - Ultra vires contracts - General - [See Municipal Law - Topic 1586 ].

Real Property - Topic 5515

Title - Extinguishment of title - General -Deemed vesting of remainders in Crown - Section 108(2) of the Land Title Act pro­vided that "where the subdivided area shown in ... a subdivision ... plan deposited in the land title office ... adjoins land covered by water, and the land is included in the subdivider's indefeasible title and adjoins land [owned by the Province], the deposit shall be deemed to be a transfer in fee simple of the .... land to [the Province], and the title of the registered owner to the ... land covered by water shall be deemed to be extinguished" - A developer owned 22 acres subdivided into five lots, includ­ing two water lots - The Supreme Court of Canada affirmed that s. 108(2) did not apply to vest title in the Crown - Section 108(2), being confisca­tory legislation, was to be strictly inter­preted - The court agreed that s. 108(2) did not apply to lots created through sub­division, but only to other areas within the titled land that amounted to remainders - The two water lots, being part of the sub­divided area on the subdivi­sion plan, were not remainders and, ac­cordingly, not with­in the scope of s. 108(2) - See paragraphs 25 to 29.

Statutes - Topic 525

Interpretation - General principles - Con­fiscatory legislation - [See Real Property -Topic 5515 ].

Statutes - Topic 1203

Interpretation - Construction where mean­ing is plain - Typographical errors - The Supreme Court of Canada stated that "although there are statutes whose strict reading might make this more complicated, typographical errors in legislation should not ordinarily compel us to read statutes absurdly" - Accordingly, where a statute erroneously stated "enforceable against the covenantor", when it was clearly intended (and was subsequently amended) to read "binding on the covenantor", the court read the statute sensibly in accordance with its true intent - See paragraphs 39 to 40.

Cases Noticed:

Vancouver (City) v. Registrar Vancouver Land Registration District, [1955] 2 D.L.R. 709 (B.C.C.A.), refd to. [para. 18].

Ingledew's Ltd. v. Vancouver (City) (1967), 61 D.L.R.(2d) 41 (B.C.S.C.), refd to. [para. 18].

Leiriao v. Val-Bélair (Ville), [1991] 3 S.C.R. 349; 129 N.R. 188, refd to. [para. 26].

Hongkong Bank of Canada v. Wheeler Holdings Ltd., [1993] 1 S.C.R. 167; 148 N.R. 1; 135 A.R. 83; 33 W.A.C. 83, refd to. [para. 26].

M.J.B. Enterprises Ltd. v. Defence Con­struction (1951) Co. et al., [1999] 1 S.C.R. 619; 237 N.R. 334; 232 A.R. 360; 195 W.A.C. 360, refd to. [para. 30].

Canadian Pacific Hotels Ltd. v. Bank of Montreal, [1987] 1 S.C.R. 711; 77 N.R. 161; 21 O.A.C. 321, refd to. [para. 30].

Immeubles Port Louis Ltée v. Lafontaine (Village), [1991] 1 S.C.R. 326; 121 N.R. 323; 38 Q.A.C. 253, refd to. [para. 33].

Public School Boards Association (Alta.) v. Alberta (Attorney General) et al., [2000] 2 S.C.R. 409; 260 N.R. 127; 266 A.R. 201; 228 W.A.C. 201, refd to. [para. 33].

Nanaimo (City) v. Rascal Trucking Ltd., [2000] 1 S.C.R. 342; 251 N.R. 42; 132 B.C.A.C. 298; 215 W.A.C. 298, refd to. [para. 35].

R. v. Greenbaum (M.), [1993] 1 S.C.R. 674; 149 N.R. 114; 61 O.A.C. 241, refd to. [para. 35].

R. v. Sharma (D.), [1993] 1 S.C.R. 650; 149 N.R. 161; 61 O.A.C. 161, refd to. [para. 35].

Vancouver (City) v. B.C. Telephone Co., [1951] S.C.R. 3, refd to. [para. 45].

Martin Corp. v. West Vancouver (District) (1993), 85 B.C.L.R.(2d) 305 (S.C.), refd to. [para. 46].

Walmar Investments Ltd. v. North Bay (City), [1970] 1 O.R. 109 (C.A.), refd to. [para. 49].

Lawrason v. Dundas (Town) (1920), 18 O.W.N. 22, refd to. [para. 51].

Birkdale District Electric Supply Co. v. Southport (Corp.), [1926] A.C. 355 (H.L.), refd to. [para. 55].

Eastview (Town) v. Roman Catholic Epis­copal Corp. of Ottawa (1918), 44 O.L.R. 284 (C.A.), refd to. [para. 56].

Capital Regional District v. District of Saanich (1980), 115 D.L.R.(3d) 596 (B.C.S.C.), refd to. [para. 56].

Galt-Canadian Woodworking Machinery Ltd. v. Cambridge (City) (1982), 135 D.L.R.(3d) 58 (Ont. Div. Ct.), affd. (1983), 146 D.L.R.(3d) 768 (C.A.), refd to. [para. 56].

Kendrick v. Nelson (City) et al., [1997] B.C.T.C. Uned. 113; 31 B.C.L.R.(3d) 134 (S.C.), refd to. [para. 58].

New Brunswick (Attorney General) v. Saint John (City), [1948] 3 D.L.R. 695 (N.B.C.A.), refd to. [para. 59].

Wells v. Newfoundland and Board of Commissioners of Public Utilities (Nfld.), [1999] 3 S.C.R. 199; 245 N.R. 275; 180 Nfld. & P.E.I.R. 269; 548 A.P.R. 269, refd to. [para. 61].

Walker v. Mayor of Saint John (1872), 14 N.B.R. 143 (C.A.), refd to. [para. 62].

Wall and Redekop Corp. v. Vancouver (City) (1974), 16 N.R. 436 (B.C.C.A.), affd. (1975), 16 N.R. 435 (S.C.C.), refd to. [para. 64].

Dowty Boulton Paul Ltd. v. Wolverhamp­ton Corp., [1971] 2 All E.R. 277 (Ch.), refd to. [para. 65].

Shell Canada Products Ltd. v. Vancouver (City), [1994] 1 S.C.R. 231; 163 N.R. 81; 41 B.C.A.C. 81; 66 W.A.C. 81, refd to. [para. 65].

William Cory & Son Ltd. v. London Corp., [1951] 2 K.B. 476 (C.A.), refd to. [para. 65].

R. v. Dominion of Canada Postage Stamp Vending Co., [1930] S.C.R. 500, refd to. [para. 91].

Cressey Development Corp. v. Richmond (Township) (1982), 132 D.L.R.(3d) 166 (B.C.C.A.), refd to. [para. 100].

First City Development Corp. v. Durham (Regional Municipality) (1989), 41 M.P.L.R. 241 (Ont. S.C.), refd to. [para. 117].

Stourcliffe Estates Co. v. Bournemouth Corp., [1908-10] All E.R. 785 (C.A.), refd to. [para. 117].

Muskoka Mall Ltd. v. Huntsville, [1977] 3 M.P.L.R. 279 (Ont. H.C.), refd to. [para. 128].

Statutes Noticed:

Land Title Act, R.S.B.C. 1979, c. 219, sect. 23(1), sect. 108(2), sect. 215(1), sect. 215(3) [para. 22].

Municipal Act, R.S.B.C. 1979, c. 290, sect. 702A(3), sect. 702A(4) [para. 99]; sect. 287 [para. 93]; sect. 963, sect. 972(1) [paras. 22, 105]; sect. 980(5) [paras. 22, 101]; sect. 982(2) [paras. 48, 100].

Authors and Works Noticed:

British Columbia, Hansard, Legislative Debates, vol. 7, August 8, 1977, p. 4354 [para. 103].

Côté, Pierre-André, The Interpretation of Legislation in Canada (3rd Ed. 2000), pp. 390 [para. 40]; 482 [para. 26].

Hétu, Jean, Duplessis, Yvon, and Paken­haum, Dennis, Droit municipal: Principes généraux et contentieux (1998), p. 13 [para. 33].

Hogg, Peter W., Liability of the Crown (2nd Ed. 1989), p. 171 [para. 123].

Jones, David Phillip, and de Villars, Anne S., Principles of Administrative Law (3rd Ed. 1999), p. 181 [para. 57].

Macaulay, Robert M., and Doumani, Robert G., Ontario Land Development Legislation and Practice (1999), vol. 1 (1999 Looseleaf) (Release 3), p. 4-119 [para. 70].

Rogers, Ian MacF., Canadian Law of Planning and Zoning (1973) (2000 Looseleaf) (Release 3), para. 5.116 [para. 46].

Rogers, Ian MacF., The Law of Canadian Municipal Corporations (2nd Ed. 1971) (2000 Looseleaf) (Release 3), pp. 364 [para. 89]; 365 [para. 90]; 1036, 1051 [para. 92]; paras. 199.1 [para. 68]; 199.4 [paras. 51, 55].

Waddams, S.M., The Law of Contracts (3rd Ed. 1993), para. 554 [para. 123].

Counsel:

L. John Alexander and Charles Edward Hanman, for the appellant/respondent on cross-appeal;

Guy McDannold, for the respondent/ap­pellant on cross-appeal.

Solicitors of Record:

Cox, Taylor, Victoria, B.C., for the appel­lant/respondent on cross-appeal;

Staples McDannold Stewart, Victoria, B.C., fore the respondent/appellant on cross-appeal.

This appeal and cross-appeal were heard on May 25, 2000, before Gonthier, Iaco­bucci, Major, Bastarache, Binnie, Arbour and LeBel, JJ., of the Supreme Court of Canada.

On December 14, 2000, the judgment of the Supreme Court of Canada was delivered in both official languages and the following opinions were filed:

LeBel, J. (Gonthier, Iacobucci and Arbour, JJ., concurring) - see para­graphs 1 to 75;

Bastarache, J. (Major and Binnie, JJ., concurring), dissenting - see para­graphs 76 to 130.