SUPREME COURT OF NOVA SCOTIA

Citation: North End Community Health Association v. Halifax (Regional Municipality) , 2012 NSSC 92

Date: 20120302 Docket: 376190 Registry: Halifax Between: The North End Community Health Association, the Richard Preston Centre for Excellence Society, and the Micmac Native Friendship Society Applicants v. Halifax Regional Municipality Respondent v. JONO Developments Ltd. Interested Party

LIBRARY HEADING

Judge: Heard: Written Decision: Subject: Summary:

The Honourable Justice Michael J. Wood February 16, 2012, in Halifax, Nova Scotia March 2, 2012 Judicial Review - Stay of Proceedings The applicant community groups are seeking judicial

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review of the decision of HRM to sell the former St. Patricks Alexandra School to JONO Developments Ltd. They have made a motion for an interim stay of the HRM decision. Issue: (1) Should the applicants be required to provide an undertaking to pay damages as a condition of the stay? Should an interim stay be granted in the circumstances? CPR 7.28 provides authority to grant a stay in a judicial review proceeding. That rule does not require an applicant to give an undertaking and the Court was not prepared to impose that requirement on these applicants. The test to be applied on a motion for a stay has three components - whether there is a serious question to be tried, whether the applicants will suffer irreparable harm and where the balance of convenience lies between the parties. The Court was satisfied that the threshold requirement of a serious question was met. It also concluded that the applicants would suffer irreparable harm if a stay was not granted and the School conveyed to JONO. The overall balance of convenience favoured the applicants, and so a stay was granted.

(2) Result:

THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT'S DECISION. QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET.

SUPREME COURT OF NOVA SCOTIA

Citation: North End Community Health Association v. Halifax (Regional Municipality), 2012 NSSC 92

Date: 20120302 Docket: Hfx No. 376190 Registry: Halifax

Between: The North End Community Health Association, the Richard Preston Centre for Excellence Society, and the Micmac Native Friendship Society Applicants v. Halifax Regional Municipality Respondent v. JONO Developments Ltd. Interested Party

Judge: Heard: Written Decision: Counsel:

The Honourable Justice Michael J. Wood February 16, 2012, in Halifax, Nova Scotia March 2, 2012 Ronald A. Pink, Q.C., for the Applicants Jocelyn M. Campbell, Q.C., for the Respondent William L. Ryan, Q.C., for the Interested Party

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By the Court: [1] In June, 2011, Halifax Regional Municipality (HRM) issued a request for proposals (RFP) for the sale of three surplus school properties, one of which was the former St. Patricks Alexandra School, located on Maitland Street (the School). [2] The applicants were interested in acquiring the school property to use as a facility to provide their programs and services to members of the north end Halifax community. They all submitted proposals in response to the RFP. [3] In December, 2011, HRM decided to accept the proposal submitted by JONO Developments Ltd. and sell the School to it. On January 10, 2012, HRM Council passed a motion to rescind the earlier decision to sell the School to JONO. By further motion on January 24, 2012, HRM Council once again decided to sell the School to JONO as the highest scoring proponent under the RFP. [4] The applicants have commenced these proceedings to set aside the decision to sell the School in order to give them a further opportunity to negotiate with HRM. [5] On February 1, 2012, Duncan J. of this Court, granted the applicants emergency motion for an interim stay of the HRM decision to sell the School to JONO. This decision deals with whether to continue that stay until the judicial review application is dealt with later this year. [6] This motion raises the following issues: 1. Should the applicants be required to provide an undertaking to pay for any damages which HRM may suffer as a condition of obtaining a stay? Have the applicants shown that there is a serious question to be tried with respect to their judicial review? If a stay is not granted, will the applicants suffer irreparable harm?

2.

3.

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4.

Which of the parties will suffer the greater harm if they are not successful on this motion?

APPLICABLE LAW [7] Civil Procedure Rule 7 deals with judicial review applications. Rule 7.28 sets out the discretion of a judge to issue a stay of a decision until the judicial review is concluded. It provides as follows:
Stay pending judicial review or appeal 7.28 (1) A judge may stay a decision under judicial review or appeal and any process flowing from the decision until the determination of the judicial review or appeal. (2) A motion for a stay must be made at the same time as the motion for directions, unless a judge orders otherwise. (3) The motion must be made by notice of motion in accordance with Rule 23 Chambers Motion, although it is mentioned in the notice of appeal or notice for judicial review. (4) motion for a stay. A judge may grant an interim stay until the hearing of a

(5) The judge may grant any order, including an injunction, as may be necessary to effectively stay a decision.

[8] The parties have agreed that the legal test to be applied on the stay motion is the one adopted by the Supreme Court of Canada in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311. The Court outlined the three components of the analysis in the following passage from paras. 77-81:
77 As indicated in Metropolitan Stores, the three-part American Cyanamid test should be applied to applications for interlocutory injunctions and as well for stays in both private law and Charter cases. 78 At the first stage, an applicant for interlocutory relief in a Charter case must demonstrate a serious question to be tried. Whether the test has been satisfied should be determined by a motions judge on the basis of common sense

Page: 4 and extremely limited review of the case on the merits. The fact that an appellate court has granted leave in the main action is, of course, a relevant and weighty consideration, as is any judgment on the merits which has been rendered, although neither is necessarily conclusive of the matter. A motions court should only go beyond a preliminary investigation of the merits when the result of the interlocutory motion will in effect amount to a final determination of the action, or when the constitutionality of a challenged statute can be determined as a pure question of law. Instances of this sort will be exceedingly rare. Unless the case on the merits is frivolous or vexatious, or the constitutionality of the statute is a pure question of law, a judge on a motion for relief must, as a general rule, consider the second and third stages of the Metropolitan Stores test. 79 At the second stage the applicant must convince the court that it will suffer irreparable harm if the relief is not granted. Irreparable refers to the nature of the harm rather than its magnitude. In Charter cases, even quantifiable financial loss relied upon by an applicant may be considered irreparable harm so long as it is unclear that such loss could be recovered at the time of a decision on the merits. 80 The third branch of the test, requiring an assessment of the balance of inconvenience, will often determine the result in applications invoking Charter rights. In addition to the damage each party alleges it will suffer, the interest of the public must be taken into account. The effect a decision on the application will have upon the public interest may be relied upon by either party. These public interest considerations will carry less weight in exemption cases than in suspension cases. When the nature and declared purpose of legislation is to promote the public interest, a motions court should not be concerned whether the legislation actually has such an effect. It must be assumed to do so. In order to overcome the assumed benefit to the public interest arising from the continued application of the legislation, the applicant who relies on the public interest must demonstrate that the suspension of the legislation would itself provide a public benefit. 81 We would add to this brief summary that, as a general rule, the same principles would apply when a government authority is the applicant in a motion for interlocutory relief. However, the issue of public interest, as an aspect of irreparable harm to the interests of the government, will be considered in the second stage. It will again be considered in the third stage when harm to the applicant is balanced with harm to the respondent including any harm to the public interest established by the latter.

[9] Although they agree on the law, the parties disagree on the application of these principles to the circumstances under consideration.

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[10] In addition to saying that the applicants have not met the requirements for a stay in accordance with the RJR-MacDonald criteria, HRM says that failing to provide an undertaking to be responsible for any damages suffered by it is also fatal to the applicants motion. ANALYSIS First Issue: Should the applicants be required to provide an undertaking to pay for any damages which HRM may suffer as a condition of obtaining a stay?

[11] HRM and JONO argue that an undertaking to pay damages is a precondition to the granting of a stay and the failure of the applicants to do so means that the motion must be dismissed. They refer to Civil Procedure Rule 41, which requires such an undertaking as part of a request for an interim or interlocutory injunction. [12] Civil Procedure Rule 7.28, which specifically deals with motions for a stay in a judicial review proceeding makes no mention of the requirement for an undertaking. HRM and JONO argue that it ought to be implied since the effect of a stay is similar to that of an injunction. [13] I do not accept the position of HRM and JONO on this issue. If the drafters of the Civil Procedure Rules had intended to make an undertaking a precondition to the grant of stay they would have said this, just as they did for the granting of an injunction. [14] The Supreme Court in RJR-MacDonald set out the test to be applied in granting a stay of proceedings. Although the Court adopted the injunction test from earlier decisions, they did not import any requirement for a undertaking with respect to damages. [15] HRM also submitted that the absence of an undertaking from the applicants was relevant to a consideration of the balance of convenience between the parties. I agree and will do so in the present case, as I believe that is the more appropriate way to deal with the issue.

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Second Issue:

Have the applicants shown that there is a serious question to be tried with respect to their judicial review?

[16] A party seeking a stay has the initial burden of satisfying the Court that there is some merit to their claim. This is a very low threshold and is met if the party can show a serious question to be tried. The Supreme Court of Canada in RJR-MacDonald described this part of the test in the following terms (at para. 50):
50 Once satisfied that the application is neither vexatious nor frivolous, the motions judge should proceed to consider the second and third tests, even if of the opinion that the plaintiff is unlikely to succeed at trial. A prolonged examination of the merits is generally neither necessary nor desirable.

[17] HRM argued that the threshold was higher and that the applicants were required to establish a strong prima facie case on the merits . This possibility was discussed by the Supreme Court in RJR-MacDonald at para. 56:
56 The suggestion has been made in the private law context that a third exception to the American Cyanamid serious question to be tried standard should be recognized in cases where the factual record is largely settled prior to the application being made. Thus in Dialadex Communications Inc. v. Crammond (1987), 34 D.L.R. (4th) 392 (Ont. H.C.), at p. 396, it was held that: Where the facts are not substantially in dispute, the plaintiffs must be able to establish a strong prima facie case and must show that they will suffer irreparable harm if the injunction is not granted. If there are facts in dispute, a lesser standard must be met. In that case, the plaintiffs must show that their case is not a frivolous one and there is a substantial question to be tried, and that, on the balance of convenience, an injunction should be granted. To the extent that this exception exists at all, it should not be applied in Charter cases. Even if the facts upon which the Charter breach is alleged are not in dispute, all of the evidence upon which the s. 1 issue must be decided may not be before the motions court. Furthermore, at this stage an appellate court will not normally have the time to consider even a complete factual record properly. It follows that a motions court should not attempt to undertake the careful analysis required for a consideration of s. 1 in an interlocutory proceeding.

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[18] This suggests that the Supreme Court was not satisfied that such an exception exists, but in any event it should not apply to Charter cases. This motion raises important public law issues with respect to the obligations of an elected municipal council. Although the facts may not be significantly in dispute, the legal issues certainly are. I do not think that this is an appropriate case to require the applicants to establish a strong prima facie case even if such an exception exists. [19] HRM also relies on the decision in Metz v. Saskatchewan Board of Education of the Prairie Valley School Division No. 208, (2007) SKQB 269, and in particular para. 22 of that decision which states as follows:
In Saskatchewan, this Court has stated in a number of cases where a mandatory injunction is being sought against a public authority plaintiffs must establish on the material filed that they have a strong prima facie case on the merits of the claim raised (authorities cited). The rationale for requiring the higher standard when seeking an injunction against a public authority is that the public authority represents the public interest, and should not be temporarily prevented from acting unless there is real merit to the claim being advanced. Usually in such cases the facts are not much in dispute. In those cases which present complicated factual or legal issues which do not lend themselves to a preliminary assessment, a lower standard of serious question to be tried may be appropriate.

[20] This decision involved an application for an interim injunction to restrain the School Board from closing a school and reallocating students. The Court concluded that there was a presumption that the public interest was represented by the Board, and on that basis, a higher standard should be applied to an assessment of the merits of the application. In my view, the decision to sell surplus property to a developer is much different than one involving the operation and management of public schools. The applicants here might argue that they are representing the public interest in attempting to require HRM to abide by their own policies. A public authority is not necessarily the sole representative of the broader public interest. [21] In my view, the threshold burden on the applicants is simply to establish that there is a serious question to be tried on the judicial review application.

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[22] The applicants do not claim that they have any vested right to acquire the School from HRM. Their judicial review is based upon the allegation that they were entitled to an opportunity to have their proposals considered by HRM separate and apart from commercial proposals, such as the one made by JONO. The applicants place considerable reliance on a document entitled Procedures for the Disposal of Surplus Schools, which was adopted by HRM Council on September 19, 2000 (the Disposal Procedure). [23] The Disposal Procedure outlines the steps to be followed by HRM in dealing with surplus schools, and these can generally be summarized as follows: 1. There is an initial assessment of the condition of the property and remedial work required. HRM Internal Business Units will be given an opportunity to indicate their interest in the property. If there are no internal proposals to be considered, any interest from community groups is to be considered. These groups are to be given ninety days to make a written proposal which will be evaluated. If no proposals from community groups are received or considered acceptable, the property will be put on the market for sale.

2.

3.

4.

[24] HRM concedes that the sale of the School to JONO was not done in accordance with the Disposal Procedure. They indicate that eighteen schools have been disposed of since it was adopted, and none have taken place in full compliance with that process. The applicants argue that procedural fairness requires that HRM comply with the Disposal Procedure and that they should have been given an opportunity to have their proposals considered separately and prior to a call for commercial proposals. They argue that there was a legitimate expectation that this procedure would be followed and rely on authorities, such as Attorney General of Hong Kong v. Shui, [1983] 2 A.C. 629 and Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817. [25] HRM says that the doctrine of legitimate expectations does not apply because the applicants were not aware of the Disposal Procedure during the RFP

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process and, therefore, could not have had any expectation that it would be followed. They distinguish the applicants case law on the basis that such knowledge is required. [26] The applicants agree that they were not aware of the Disposal Procedure prior to the RFP; however, they did obtain it prior to the January 24, 2012 decision to sell the School to JONO. The applicants requested that the process set out in the Disposal Procedure be followed, and HRM Council declined to do so. Ultimately Council repealed the Disposal Procedure. It remains a live issue as to whether this knowledge on the part of the applicants is sufficient to engage the legitimate expectation principles. [27] HRM also argues that informal policies are not binding on discretionary decision makers. They rely on a number of cases including Maple Lodge Farms Limited v. Canada, [1982] 2 S.C.R. 2 in support of that proposal. These cases can be distinguished on the basis that the Disposal Procedure was not simply an informal policy or guideline issued by HRM. It was passed pursuant to authority in the Halifax Regional Municipality Charter. [28] The HRM Charter includes the following provisions:
Resolutions, policies, by-laws 58 (1) The Council shall make decisions in the exercise of its powers and duties by resolution, by policy or by by-law. (2) The Council may exercise any of its powers and duties by resolution unless a policy or a by-law is required by an enactment. (3) The Council may exercise by by-law any of the duties and powers that it may exercise by resolution or policy. (4) The Council may exercise by policy any of the duties and powers that it may exercise by resolution. (5) The Council may make and carry out a contract, perform an act, do any thing or provide a service for which the Municipality or the Council is authorized by an Act of the Legislature to spend or borrow money.

Page: 10 Policies 59 (1) Before a policy is passed, amended or repealed the Council shall give at least seven days notice to all Council members. (2) The Council may adopt different policies for different areas of the Municipality. (3) In addition to matters specified in this Act or another Act of the Legislature, the Council may adopt policies on any matter that the Council considers conducive to the effective management of the Municipality.

[29] Through this judicial review, the applicants are questioning whether HRM is entitled to ignore the Disposal Procedure even though it was formally adopted by HRM Council in accordance with the authority found in the HRM Charter. In my view, this is quite different than the situation where a decision maker issues policies and guidelines to assist applicants. I was not referred to any case law which dealt with a situation similar to the one that exists here where the policy at issue had a legislative basis. [30] The applicants also argue that the process of adopting the Disposal Procedure created something akin to a social contract between HRM and the public, which should be respected. This is a novel argument for which no authority was cited. [31] Despite the able submissions of counsel for HRM and JONO, I am not satisfied that the applicants claims are so lacking in merit that they could be described as frivolous and vexatious. [32] I find that the applicants have met the preliminary threshold of showing that they have a serious question to be tried, and as a result, I will consider the other aspects of the RJR-MacDonald test. Third Issue: If a stay is not granted, will the applicants suffer irreparable harm?

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[33] The second part of the RJR-MacDonald analysis is an assessment of whether the applicants will suffer irreparable harm if the stay is not granted. This concept was described by the Supreme Court of Canada at para. 59 of its decision:
Irreparable refers to the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other. ...

[34] It is clear from the submissions of HRM and JONO that if a stay is not granted, the property will be sold to JONO in short order. The effect of the conveyance will be to put the property beyond the control of HRM. In such circumstances, there would be nothing left for HRM and the applicants to discuss should the application for judicial review ultimately be successful. Counsel for the applicants submits that this alienation of the property by HRM would amount to irreparable harm, since it would deprive them of any meaningful opportunity to invoke the Disposal Procedure. [35] Counsel for HRM and JONO argue that the loss of an opportunity to potentially acquire property does not amount to irreparable harm. In support of this, they rely upon the Federal Court of Appeal decision in Musqueam Indian Band v. Canada, 2008 FCA 214. In that case, the applicant Indian Band sought an injunction restraining the Federal Government from selling two office buildings in Vancouver pending the outcome of a judicial review application. The Band argued that the Government had a duty to consult in good faith concerning the properties prior to any disposition taking place. The Court concluded that the injunction should not be granted, in part, because the Band would not suffer irreparable harm. [36] There are at least two important differences between the circumstances being considered by the Court in the Musqueam case and the present situation. In Musqueam, the agreement of purchase and sale for the buildings included a clause that permitted the Government to regain title in the event that the Band was determined to have an interest in the properties. In addition, the Band had not presented evidence that the character of the properties could change as a result of the transaction or that the land had any particular unique importance to them. In the present case, there is no provision that would allow HRM to reacquire title to the property from JONO should the judicial review be granted. In addition, the

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applicants have presented evidence that the existing school buildings were particularly well suited to be facilities for their expanding services. [37] The respondents argue that the applicants have not established that the School is sufficiently unique to meet the test of irreparable harm. They point out that the affidavits filed on behalf of the applicants describe the property as the best option, but not the only option for their ongoing operations. I think that this is over simplifying the detailed affidavits filed by the applicants. It is clear that there is a shortage of suitable premises in the neighbourhood served by the three applicants. Schools are not like other residential and commercial structures. They are designed and built to be public facilities and include meeting spaces, offices and recreational areas. The presence of a gymnasium is particularly attractive to the Micmac Native Friendship Centre. [38] In HRM schools only become available for acquisition after they are declared to be surplus by the School Board. This is likely to occur only once in a generation in most neighbourhoods. [39] According to the affidavit of Dr. Margaret Casey, the North End Community Health Association has been searching for a new location, without success, for the last seven years. [40] I am satisfied that if a stay is not granted, the School will be conveyed to JONO with no possibility of a reconveyance to HRM. As a result, there would be no effective remedy available to the applicants should they be successful in their challenge of HRMs decision to sell the property. This is sufficient to amount to irreparable harm, as it cannot be cured if the applicants are ultimately found to be correct. Fourth Issue: Which of the parties will suffer the greater harm if they are not successful on this motion?

[41] The third step in the RJR-MacDonald analysis involves a balancing of the inconvenience which will be suffered by the parties depending upon the decision on the stay motion and the ultimate outcome of the judicial review. This would include a consideration of the public interest and how it might be affected by the

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grant or refusal of the stay. This is also the part of the analysis where the absence of an undertaking to pay damages is taken into account. [42] The implications for the applicants should a stay not be granted have been reviewed in the discussion with respect to the existence of irreparable harm and will not be repeated here. [43] HRM points out that there are financial costs which will be incurred if the closing of the property transaction is delayed. There are various maintenance and carrying costs amounting to approximately $18,000.00 per month and, in addition, once JONO acquires the School it will be subject to assessment for property taxes. HRM estimates the lost tax revenue to be approximately $59,000.00 per annum. In the absence of an undertaking from the applicants, these expenses will be borne by the taxpayers of HRM. Counsel for HRM argues that it is contrary to the public interest for the taxpayers to bear this burden. [44] JONO Developments has threatened litigation against HRM if it fails to sell the School to it in a timely fashion. There is no signed agreement of purchase and sale between JONO and HRM, although that does not preclude the possibility that obligations may have arisen between those parties through the RFP process. There is insufficient information before me to determine whether there is any merit to the position advanced by JONO through its legal counsel. [45] I am not persuaded that the potential costs being incurred by HRM are sufficient to outweigh the harm to the applicants if the School is sold to JONO. In saying this I am taking judicial notice of the size of HRMs operations and its annual budget. [46] HRM also argues that a stay would be harmful to the integrity of its procurement procedures and, in particular, disposal of other school properties. It suggests that other transactions might be challenged for failure to follow the Disposal Procedure. I do not believe that this should be of significant concern since there is a very limited time frame within which judicial review applications must be made. For most, and perhaps all, other transactions this will have passed and so the likelihood of other similar applications being made is minimal.

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[47] There are comments in the affidavits filed by JONO indicating that it is unable to plan and undertake normal business operations until the status of its purchase of the School is resolved. That is certainly understandable, but that evidence does not tip the balance in favour of the respondents in considering the relative inconveniences. [48] Refusal of the stay will effectively deprive the applicants of any opportunity to have meaningful discussions with HRM concerning acquisition of the School even if they succeed on judicial review. It will also result in carrying costs being incurred by HRM which might ultimately have to be absorbed by taxpayers. Given the size of the Municipality and the length of time until the hearing, I do not consider this to be significant harm which would justify refusal of a stay. [49] If an undertaking to pay damages had been given it would have shifted the risk of the ongoing property expenses to the applicants. In the circumstances failure to do so is not sufficient to tip the balance of inconvenience in favour of HRM. CONCLUSION [50] This proceeding is based on the alleged failure of HRM to follow its own procedure for disposal of surplus school properties. The policy contemplated that community groups would have the first opportunity (after HRM itself) to make proposals for consideration. Only if such proposals were not acceptable, would HRM turn to commercial sale. With St. Pats Alexandra School, HRM called for contemporaneous proposals from community and commercial proponents, and evaluated the submissions using criteria that placed significant weight on financial terms. The applicant community groups did not do well in that comparison. [51] Whether HRM is required to follow its approved Disposal Procedure, and whether community groups can hold them accountable for not doing so, is an important issue for these applicants. It is also an important issue for the broader community. I am satisfied that the applicants ought to be given an opportunity to have a judge hear their arguments and answer their concerns. For the reasons outlined above, to refuse a stay would effectively deprive them of that opportunity.

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[52] Whether the applicants are ultimately successful remains to be seen. As outlined in the submissions of HRM on this motion, there are a number of significant legal arguments which will be advanced in opposition to the request for judicial review. [53] JONO Developments is an innocent party caught in the middle of an issue that it did not create. It responded in good faith to a public RFP issued by HRM. Its proposal was evaluated and accepted as offering the best overall value to the Municipality. The Court has significant sympathy for its position; however, that does not override the important questions which the applicants have raised.

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[54] The overall balance of convenience favours the applicants and, for this reason, I am prepared to continue the stay until the decision in the judicial review application has been issued.

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Wood, J.