Repeal of Toronto's Harmonized Zoning By-law
By Jason Park
On August 27th, 2010, the City of Toronto enacted Zoning By-law 1156-2010, more commonly known as the new City of Toronto Harmonized Zoning By-law (the "New By-law"). The New By-law was supposed to harmonize the various zoning regulations contained in the 43 bylaws which governed the 6 former area municipalities now comprising the City of Toronto. Unfortunately, this harmonization process took away many landowners' existing zoning rights and became a significant barrier for the redevelopment of many properties in the City of Toronto. As a result, there were 694 appeals filed against the New By-law to the Ontario Municipal Board ("OMB").
In light of the fact that there were a significant number of appeals, the City's Building Division had to apply the provisions of both the old bylaws and the New By-law in determining whether a building permit should be issued for a particular development. This is because, under the Planning Act, once the appeals are resolved, the New Bylaw would be deemed to have been in force as of the day it was passed [i.e., August 27th, 2010], even though it could take years to resolve all of the outstanding appeals. This meant property owners needed to comply with both the old provisions and the provisions set out in the New By-law, thereby creating a huge headache for many landowners. In many cases, landowners were required to make applications to the Committee of Adjustment for minor variances to the New By-law even though they completely complied with the zoning provisions in place prior to the adoption of the New By-law. Other landowners seeking to redevelop their properties had to seek variances from both the old by-laws and the New By-law. In many of these cases, the number of variances required from the New Bylaw greatly exceeded those required from the old by-law provisions.
The City's Planning Division attempted to address some of the issues raised in the appeals by adopting various amendments to the New By-law. This was unusual since the New By-law was not in force and effect. In fact, the OMB has not even scheduled a first prehearing with respect to these 694 appeals.
Prior to adopting amendments to the New Bylaw, the City was required, under the Planning Act, to hold a public meeting. At that public meeting, held on March 24th, 2011 before the City's Planning & Growth Management Committee, a number of appellants and other interested parties came out in full force, requesting that City Council repeal the New Bylaw. City Council, at its meeting on April 12th and 13th, 2011, directed that notice be given of a special public meeting of the Planning & Growth Management Committee to hear representations concerning the repeal of the New By-law. At that May 10th, 2011 special public meeting, the Committee resoundly recommended that City Council repeal the New By-law and all subsequent amendments to the New By-law.
The Committee also recommended that City Council direct the Chief Planner and Executive Director, City Planning, to conduct consultations with appellants to the New By-law and report back to the Planning & Growth Management Committee at its meeting of October 6th, 2011. They further recommended that City Council request the Committee to schedule a public meeting at its November 8th, 2011 meeting, for the purpose of considering whether to adopt the New By-law with any proposed revisions resulting from the consultations with appellants and City Councillors (the "Revised New By-law"), so that the Revised New By-law could then be considered for adoption by City Council on February 6th, 2012.
At the meeting held on May 17th, 18th and 19th, 2011, City Council ultimately agreed to repeal the New By-law.
What does this mean?
Unfortunately, property owners may not be totally free of the grasp of the New By-law yet. The City has provided notice with respect to the repeal of the New By-law. There are some lawyers, including some City of Toronto lawyers, who think that the repeal of the New By-law is also appealable to the OMB. Many lawyers are of the opinion that this position is erroneous since a repealing by-law is not considered a zoning bylaw, passed under Section 34 of the Planning Act, based on previous court decisions, including Re Cadillac Development Corp. Ltd. and City of Toronto,  1 O.R. (2d) 20 and the OMB decision in Re Hamilton (City) Official Plan Amendment 12 and Zoning By-laws 84-46 and 88- 86 (1989), 23 O.M.B.R. 476. If an appeal is filed with respect to the repealing by-law, this matter will have to be addressed, either at the OMB or in the courts, before property owners will no longer be subject to the New By-law.
Even once the issue of whether or not the repealing by-law can be appealed to the OMB has been resolved, we strongly recommend all clients continue to monitor this matter as City Council has requested a very tight timeframe for the Revised New By-law to be developed and adopted by City Council. Any future appeal rights can only be preserved if the necessary submissions have been made by property owners or their counsel, such as FMC has done in the past. In the end, many of the offending provisions contained in the New By-law may remain in the Revised New Bylaw, currently scheduled to be adopted by City Council in February 2012, and action will likely need to be taken.
Recent Case Law Confirms the Heavy Burden on Developers to Strictly Comply with REDMA Obligations to Amend and Deliver Disclosure Statements when there is a Change in a Material Fact
By Andrew Prior
Two recent cases in British Columbia have confirmed that the Real Estate Marketing Act, S.B.C. 2004, c.41 (REDMA) imposes a significant compliance burden on developers with respect to delivering amended disclosure statements.
Although the British Columbia Supreme Court's decision in Watson v. Havaday Developments Inc. 2011 BCSC 505 ("Watson") does not add to our substantive understanding of REDMA, it demonstrates the importance for a developer to maintain sufficient proof that an amendment has been delivered to existing purchasers.
In Watson, a purchaser alleged that he did not receive the third amendment that extended the completion date and accordingly did not have to close on the new completion date. Although the developer did not retain evidence of delivery, it claimed that it must have delivered the third amendment by email, as that was its internal 'practice'. In finding that the contract was unenforceable, the Court held that there was insufficient evidence to establish receipt and that reliance on 'practice' in the circumstances was insufficient. As a material fact (the completion date) was never corrected prior to the termination of the contract by the developer, the contract was unenforceable and the deposit was ordered returned to the purchaser.
Watson confirms that a developer is well advised to ensure that how it delivers an amendment as well as the actual proof of delivery, is well documented.
The Reasons for Judgment were also released in the much anticipated Pinto v. Revelstoke Mountain Resort Limited Partnership 2011 BCCA 210 ("Pinto") appeal.
In Pinto, the Court of Appeal was asked to consider whether the developer's failure to deliver copies of four amendments to the initial disclosure statement rendered two contracts of purchase and sale unenforceable. The Court of Appeal was further asked to consider whether the delivery of an unfiled 'Consolidated Disclosure Statement' which reflected the changes contained in the four amendments would suffice to cure the failure to deliver the four amendments. The developer had lost on both these questions in the court below.
The facts in Pinto were relatively straightforward and involved two purchasers. The developer in question had properly provided the initial disclosure statement to the two purchasers at the time they entered into their respective contracts of purchase and sale. However, in the following two years the developer filed seven further amendments, of which only three were provided to the two purchasers. When the seventh amendment was provided, the developer also delivered a 'Consolidated Disclosure Statement' which, although it had not been filed with the Superintendent of Real Estate, accurately summarized the disclosure as of that date. Prior to the completion date, two purchasers took the position that the developer had failed to deliver four of the amendments "within a reasonable time" as is required by subsection 16(1)(b) of REDMA and that accordingly the contracts were rendered unenforceable pursuant to section 23 of REDMA.
Notwithstanding this notice, the developer took no steps to deliver the four undelivered amendments and, when the completion date passed, took the position that the purchasers had breached the contracts, entitling the developer to terminate the contracts and retain the deposits. The two purchasers sued to recover their deposits.
In upholding the decision of the court below, the Court of Appeal held that the failure to deliver the four amendments within a reasonable time rendered the two contracts unenforceable. Moreover, the Consolidated Disclosure Statement could not be relied on to cure this defect as it did not clearly identify the amendments (in that it summarized a number of prior amendments); was not filed with the Superintendent of Real Estate; and was not provided within a reasonable time (as the first undelivered amendment was filed some twelve months prior to the purchasers receiving the Consolidated Disclosure Statement).
Although Pinto does not provide any meaningful guidance on what will be considered a "reasonable time" for delivery, it does seem clear that, notwithstanding even a minor amendment, a delay of close to a year in delivery will, in most circumstances, render a contract unenforceable. It also appears clear that relying on a 'Consolidated Disclosure Statement' is risky and should be avoided. As such, developers must ensure that their internal sales staff (or the company they retain to oversee the process) has in place suitable procedures to ensure compliance with REDMA. Taken with Watson, it can be expected that the developer will be held to a fairly strict standard in showing compliance with REDMA for the purposes of delivering disclosure statement amendments and that relying only on "common practice", without reference to documentary evidence, could prove problematic should a purchaser challenge the enforceability of a contract.
While the Pinto decision at the Court of Appeal level does confirm a few important practice points, a number of significant questions have remained unanswered, which will no doubt form the basis of future litigation. These include:
- Does a developer have to deliver an amendment that does not address a "material fact" as that term is defined under REDMA?
- Would the 'Consolidated Disclosure Statement' have been accepted if it had been filed with the Superintendent of Real Estate and then delivered within a reasonable time?
- Can a developer use a 'Consolidated Disclosure Statement' with a new purchaser, assuming it has otherwise been filed?
- Would the result have been different if the amendments had been delivered prior to the developer terminating the contracts – what is meant by a "reasonable time"?
Should there be any concern about whether or not these questions apply to a given development, a developer would be well advised to seek legal advice.
Commercial Real Estate Joint Ventures Are Not All Created Equally
By Don Kowalenko
Depending on who is using the term, the scope of what is meant by "joint venture" (or "JV") varies considerably. This variation is largely thanks to the inconsistent usage of the term in federal and provincial legislation and regulation. While all agree a JV describes a relationship rather than a distinct legal entity (though some statutes deem it to be so), the accountant and tax lawyer will be fairly certain that it refers narrowly to what we in the real estate industry know as a co-tenancy (or co-ownership). But our real estate law rarely uses the term JV and, when it does, rarely equates it with only a co-tenancy. More likely, the term JV is used in our industry more broadly as an umbrella for the full menu of legally recognized business relationships between two or more parties that can facilitate their ownership, direct or indirect, of concurrent interests (not necessarily identical in nature) in the same commercial real estate asset. Thus, a real estate JV can be established not only as a co-tenancy (co-ownership), but also using the vehicle of a corporation, a partnership, a limited partnership, or a trust. Less common, it can also be structured in the context of a leasehold (such as a ground lease) or even a loan (such as a participating mortgage).
A JV is governed (and sometimes created) by some type of joint venture agreement ("JVA").
No matter what it is called, the JVA will typically be recognized under real estate law as either a shareholders agreement, partnership agreement, limited partnership agreement, co-owners' agreement, trust agreement, ground lease or participating loan agreement.
Each form of real estate JV has its own advantages and disadvantages in terms of control, liability, liquidity, financing, accounting and taxation. Furthermore, the law has developed quite differently for each of these legal entities. Consequently, it is seldom a good idea to try to "blend" two or more of these distinct and common legal entities into a single "hybrid" JV entity under a single JVA. However, it sometimes makes a great deal of sense to "stack" a number of the above legal entities within a single JV to achieve a combination of their respective advantages. A well structured JV may therefore have a number of interrelated but distinct JVAs.
Structuring a JV so that fulfills the parties' respective commercial real estate investment goals can become a multi-disciplinary exercise that requires the commercial real estate lawyers to involve their tax, corporate and commercial colleagues, as well as perhaps the parties' accountants. Because this can cause initial delay and expense, JV parties are sometimes inclined to only "bring in the lawyers" once the form of the JV and basic terms of the JVA have been hammered out. This can backfire and ultimately cost one or more of the joint venture parties many multiples of the time and costs saved. Therefore, the lawyers should ideally be involved in the JV structuring discussions as early as possible.
Once the best JV structure is selected, the lawyers can properly paper it with one or more tailor-made JVAs to best achieve the "win/win" that got the JV parties talking in the first place.
Recent Highlights for the National Real Estate Group at FMC
The first half of 2011 has been another successful 6 months for FMC's National Real Estate Group in serving our clients. A sample of some of the significant matters we have assisted our clients with and other highlights are as follows:
- Represented The Manufacturers Life Insurance Company, as Lender, in the context of an Assumption of Loan in the amount of $36 million by 9198 9541 Québec Inc, as purchaser, Pricewaterhousecoopers Inc. acting as receiver of 9145 8794 Québec Inc., as vendor, Société Immobilière SYM Inc. and Quebec Apartment Properties Inc., as guarantors, regarding the sale of, inter alia, an immovable held in co ownership being Phase I of seniors apartment complex known as "Domaine des Forges" and bearing civic number 269 boulevard Sainte Rose in the City of Laval, Province of Québec. Closed on April 8, 2011 with a team that included Pierre Grenier, Yan Besner, Robert Béland and Sofia Ruggiero.
- Acted for GWL Realty Advisors Inc. in connection with all procurement, construction, development and leasing matters involved in The Great-West Life Assurance Company's successful award of a procurement tender by Public Works and Government Services Canada (PWGSC) for the redevelopment of 90 Elgin Street in downtown Ottawa and lease of the redeveloped building to PWGSC for 25 years;
- Acted for Lumiere Residences Inc. in connection with 350 condominium unit closings for the Lumiere Condominiums in downtown Toronto;
- Acting for Towers at Liberty Village Inc. with respect to 550 occupancy and upcoming final condominium unit closings in 2 high rise towers in the Liberty Village area in Toronto;
- Acting for Adelaide-Peter Residences Inc. in connection with the launch of its new 430 unit Peter Street Condominium project in downtown Toronto;
- Acted for the successful landowner with respect to a consent and minor variance application relating to the severance of a large site in downtown Toronto containing two office buildings, and currently acting for the landowner with respect to the potential sale of these office buildings;
- Acted for the vendor with respect to a completed sale of a large single-tenanted manufacturing facility in the City of Brampton;
- Acting for the purchaser respecting the purchase of two office buildings in mid-town Toronto;
- Acting for Mirvish Enterprises in obtaining development approvals for a mixed use project containing two residential towers of 47 and 42 storeys in height, together with retail and commercial space, and the new home of the Theatre Museum Canada;
- Acting for Ontario Realty Corporation in obtaining development approvals for the Seaton lands in the City of Pickering, planned to accommodate up to 70,000 residents and 35,000 jobs;
- Completed the sale of a tobacco processing and storage facility, and related assets and equipment, for the vendor, a Canadian subsidiary of an American client, involving numerous permit, approval and licensing requirements and environmental issues;
- Acted for the successful appellant landowner with respect to a rezoning appeal to the Ontario Municipal Board concerning permission for a place of worship use in an Employment Area in the City of Toronto;
- Acting for Chirolion Urban Corporation with respect to zoning and development approvals for a site located near the City of Pickering Town Centre.
- Concluded the successful sale of a major downtown Edmonton Hotel between our client, a U.S. owner, and a U.S. purchaser and a value in excess of US$25 million. The transaction involved, among other issues, a lengthy negotiation of a Purchase and Sale Agreement, the resolution of various and complex access and parking issues, the assumption of financing by the purchaser, and interaction with various Canadian and U.S. Counsel for the purchaser.
- Concluded the successful sale of raw lands valued in excess of $15 million from a private seller to a local municipality for the purposes of a major road extension. The transaction involved the negotiation and completion of the purchase of the lands by our client, a private land developer, from the private owner, and then sale of the lands by our client to the municipality in a flow through type of transaction.
- Our firm successfully concluded the organization of a limited partnership for the purposes of acquiring and moving forward with the commercial development of raw lands valued at approximately $10 million.
- Acting for a major retailer in the finalization and implementation of purchase and supplementary documents in relation to the establishment of a large warehouse/distribution facility on the outskirts of Calgary;
- Acted for a large institutional investor in the sale of an office/light industrial building in Edmonton;
- Represented the landlord in the granting of the largest office lease in downtown Edmonton in several years;
- Assisted a international wind power producer in amending their standard forms to create immediate and financeable real estate interests in land in Alberta;
- Represented an institutional investor in its investment in a development loan/option to purchase of a large national-anchored power centre in a mid-sized Alberta community.
- Counsel to a major real estate developer on development matters in connection with a mixed-use, multi-building community in Richmond, British Columbia intended to contain over 300 residential units and over 60,000 square feet of commercial space
About Fraser Milner Casgrain LLP (FMC)
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