When Regulatory Authorities Decide Against Enforcement Action

AS PREVIOUSLY PUBLISHED IN THE RURAL VOICE: 

A recent decision of the Superior Court of Justice considered whether the Court, at the behest of a private citizen, could compel a regulatory authority to take enforcement action against another private citizen when the regulatory authority had failed to do so on its own.  In the case before the Court, a local Conservation Authority had issued a permit to landowners to build a residential dwelling on their property.  The permit application included a grading plan that addressed stormwater management on the property through an existing swale.  When the landowners applied to the Municipality for a building permit, a different grading plan featuring a retaining wall rather than a swale was proposed.  The building permit was granted and the Conservation Authority was not notified of the grading plan change and a revised permit from the Authority was not sought.

Following construction of the residence, including the retaining wall, an immediate neighbour of the landowners notified the Conservation Authority of the deviation from the original grading plan.  The neighbour was concerned that the historic grading of the landowners’ property included the swale that directed water between the landowners’ property and the neighbour’s property.  The retaining wall now blocked movement of water from the neighbour’s property onto the landowners’ property. 

The Conservation Authority conducted a site visit and confirmed that the lot grading did not follow the approved permit.  The Authority notified the landowners that the property was in violation of the permit.  The landowners then submitted an updated site plan with a letter from a Professional Engineer stating his opinion that the revised grading plan was in conformity with the Municipality’s design criteria.  The Conservation Authority reviewed the additional information and ultimately determined that the construction undertaken by the landowners on their property satisfied the requirements of the Conservation Authorities Act and regulations.

The Authority notified the neighbour in writing that it was satisfied that the landowners’ construction work complied with the legislation and that no enforcement action would be taken.  The neighbour applied to the Court for an order compelling the Conservation Authority to direct the landowners to comply with the Authority’s original permit.  The Authority opposed the neighbour’s application.  The landowners were not parties to the application.

In considering the neighbour’s request, the Court first reviewed whether the Conservation Authority has the legal authority to order the landowners to comply with the permit.  The Court found that there was nothing in the Conservation Authorities Act that provided the Authority with the power to issue an order requiring compliance with the permit now that the construction was complete.  The Court noted that a Conservation Authority is a “creature of statute”.  Whatever authority the Conservation Authority does have must be found in legislation or regulations.  While the Conservation Authority could have issued a stop work order prior to the completion of the work, such an order would now be moot.

However, the Conservation Authority could charge the landowners with an offence under the Conservation Authorities Act for failing to abide by the conditions of the permit.  Although the Court decision does not refer to this, if the landowners were prosecuted and convicted of having failed to comply with the permit, the Court would have the authority to order the landowners to take corrective action.  That corrective action could include removal of the retaining wall and restoration of the swale.  The Court found that the exercise of enforcement tools by the Authority, whether a stop work order or a prosecution, is discretionary. 

The Court then considered whether it should review and modify the Conservation Authority’s discretionary decision not to pursue action against the landowners.  The Court accepted that the neighbour, whose property was potentially affected by stormwater runoff from the landowners’ property, was an interested person who had standing to ask the Court to intervene.  The test to be applied on the review of the action (or inaction) of the Authority is one of reasonableness – “the reviewing court must consider only whether the decision made by the administrative decision maker – including both the rationale for the decision and the outcome to which it led – was unreasonable.”  The onus was on the neighbour to establish that the Conservation Authority’s decision not to pursue enforcement action was unreasonable.

The neighbour’s request for review was denied.  The Court found that the Conservation Authority had provided its reasons to the neighbour for not pursuing enforcement action, which is usually a requirement for a decision to be reasonable.  The Authority had explained to the neighbour that staff had reviewed the updated grading plan and determined that it addressed stormwater and drainage on the landowners’ property and was in conformity with the legislation.  The Court did not go behind those determinations.  The question for the Court on review was whether the decision not to take enforcement action was reasonable.  The Court concluded that the decision not to enforce, which was a discretionary decision to be made, was reasonable and did not override any mandate of the Conservation Authority: “The mandate to act in accordance with public safety and environmental protection does not require conservation authorities to act in every instance where there is non-compliance with conditions of a permit.”

Read the decision at: 2026 ONSC 60 (CanLII). 

Screening out the scheme in expropriation compensation

AS PREVIOUSLY PUBLISHED IN THE RURAL VOICE: 

According to the “Pointe Gourde” principle in expropriation law, “compensation for the compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition.”  If the expropriating authority’s reason for taking the property (the “scheme”) actually enhances the market value of the property, the property owner does not get to rely on the enhanced value in the calculation of compensation payable: the property owner is not entitled to a windfall.  In determining the value of the property taken, the scheme must screened out – “screening out the scheme”.  This common law principle has been codified in Section 14(4)(b) of the Expropriations Act in Ontario, which provides that no account shall be taken of “any increase or decrease in the value of land resulting from the development or the imminence of the development in respect of which the expropriation is made or from any expropriation or imminent prospect of expropriation”.

The Pointe Gourde principle is taken from a 1945 case of the same name heard before the Judicial Committee of the Privy Council in the UK.  The case involved the expropriation of land in Trinidad for use as a quarry from which stone would be taken to construct a nearby naval base.  The compensation owing to the owners was to reflect the “value of the quarry as a going concern”.  The quarry owners argued that the value of their quarry should include consideration of the higher profits they would make because their stone was to be used for the naval base.  The Judicial Council, which was the highest court for cases from Trinidad (as it was at one time the highest court for Canadian cases), decided against the quarry owners.  The increase in the market value of the property was due entirely to the expropriating authority’s plan to build the naval base.  The expropriating authority benefitted from securing a nearby and accessible source of a large quantity of stone (the quarry), but without the plan for the naval base construction this did not increase the market value of the property taken.

The expropriation “scheme” to be screened out in determining value, or “development” as used in the Expropriations Act, refers not only to a specific project or initiative, such as the construction of the naval base in Pointe Gourde, but to the full set of government actions, plans and policies leading to a taking of property in connection with the project or initiative.  This was discussed in a 2025 decision of the Ontario Land Tribunal (“OLT”) arising from the expropriation of land for the new Ontario Line subway line in Toronto.  The OLT was tasked with determining the market value of the land expropriated for the subway line project: “what a reasonably informed person would pay for the property based upon the property’s highest and best use (“HBU”) at the time using the knowledge available to the person as at the valuation date”.  In accordance with Section 14(4)(b) of the Expropriations Act, the OLT was barred from considering any change in value resulting from the planned subway line development itself.  Indeed, the OLT found that it could not consider any change in value resulting even from the provincial government’s announcement of the Ontario Line project several years earlier in 2019.  That announcement was effectively the “scheme” to be screened out of the compensation analysis.

The OLT also clarified that both sides – the expropriating authority and the property owner – share the responsibility of assisting the tribunal in determining how the scheme affected the market value of the property taken.  The owner must show that its proposed valuation is not based on a highest and best use for the property that relies on factors related to the scheme.  If the expropriating authority challenges the proposed valuation because it is influenced by the scheme, the authority bears a “positive obligation” to put forward evidence of how the scheme has affected the proposed valuation.

In the Ontario Line case, the property owner claimed compensation based on highest and best use of its property being a high-density mixed-use high-rise tower including residential and commercial uses.  The expropriating authority argued that the development potential of the property that would allow for the owner’s proposed highest and best use actually depended on the Ontario Line scheme.  In other words, without the proposed transit project (the expropriating authority argued unsuccessfully that the transit project pre-dated the 2019 announcement and that the Ontario Line was part of a scheme stretching back over 20 years), the level of density of development on the property suggested by the owner could not be achieved.  The OLT disagreed, concluding that the owner’s proposed site density (highest and best use) was consistent with approvals for other developments in the area and did not depend on the Ontario Line transit project.  As noted by the OLT, the expropriating authority failed to show what specific increase or decrease in value resulted from the Ontario Line project:

The Tribunal recognizes that the requirements of section 14(4)(b) of the Act are often not easy to apply in expropriation proceedings.   As already noted, the reality is that there may be simply no way for either Party to empirically demonstrate whether there was “increase or decrease in value” resulting from the Expropriation.  The situation might have been quite different if, for example, the Claimant had relied on a particular development approval by the City where the City’s staff had made it clear in writing that their approval was predicated on the impacts of the Scheme – or conversely, where City’s planners had written that the Scheme was not considered at all. However, no such specific evidence exists in this case.

Read the decision at: 2025canlii50810 OLT.

Drainage Referee rules CPR not exempt from Drainage Act assessment

AS PREVIOUSLY PUBLISHED IN THE RURAL VOICE: 

The history of Ontario's Drainage Act stretches back to 1834 with the enactment by the Upper Canada Legislature of “An Act to regulate Line Fences and Watercourses”.  The legislation is provincial and predates Canada’s Confederation in 1867 by over three decades.  Under the British North America Act, 1867, the foundational law passed by British Parliament to create the Dominion of Canada, the federal Parliament was given jurisdiction over interprovincial undertakings (connecting provinces or going beyond the limits of the province) including railways.  And so arose what should have been an age-old constitutional question: are interprovincial railways like CP and CN subject to the provincial Drainage Act?  Are they obligated to pay assessments for municipal drains?

Despite history having long ago set up the showdown between provincial interests in managing surface water and federal interests in moving freight and passengers across the country, the question of a federal railway’s responsibility to pay an assessment on a municipal drain was the subject of a hearing held before the Acting Drainage Referee in October, 2025.  The dispute centred on whether CP is constitutionally exempt from paying assessments levied under the Drainage Act for drainage works crossing its railway right-of-way.  CP was made aware by the Municipality of the proposed drainage works (involving lowering and increasing the capacity of an existing drain crossing the right-of-way lands), but CP elected not to participate in any of the Drainage Act proceedings and did not exercise any of its appeal rights (including with respect to the assessment of costs of the drain).  After the Municipality applied to the Referee for an order permitting the crossing of the CP right-of-way, CP served a Notice of Constitutional Question.

The evidence before the Referee was that until sometime in 2020, railways like CP and CN paid assessments under the Drainage Act and had for a century.  From 2020 forward, however, the railways have refused to pay assessments and have declined to accommodate municipal drainage projects under the Drainage Act unless the municipality accedes to the demands of the railways that they bear none of the costs.  The Referee noted that, as a result, many Drainage Act projects have not proceeded or have been deferred.  At least six municipalities have sued CP or CN for unpaid assessments.  Besides CP and the Municipality, the hearing involved several intervenors: the Attorney General of Ontario, CN, the Ontario Federation of Agriculture, and the Rural Ontario Municipal Association.

As noted by the Referee, the question of whether railways must pay Drainage Act assessments is an important one for rural municipalities:

Many of the affected municipalities are smaller, often rural communities with a limited municipal tax base. It is not just a matter of the railways targeting small municipalities that lack the resources to resist. Stormwater management in larger urbanized communities is typically handled through storm sewers in road allowances, which are financed by the municipality through general municipal taxation and/or development charges. Smaller rural municipalities depend upon the Drainage Act for their stormwater management and rural farm drainage to support their agribusinesses; these municipalities are otherwise hard-pressed to afford to provide the drainage works, much less absorb the cost of maintaining the Drainage Act infrastructure, if railway assessments were to evaporate.

The Referee’s conclusion on the constitutional question was that federally regulated railways are required to pay costs assessed to them for municipal drains in Ontario.  The Referee found that the Drainage Act’s assessment provisions do not “trench” on the protected core of federal railway jurisdiction. The Act is a law of general application, designed to allocate costs for local drainage works among all benefiting landowners, including railways. The assessment is akin to a local improvement levy or property tax, not a regulatory interference with railway operations. The Referee emphasized that federal undertakings are not “enclaves immune from provincial laws of general application,” and there is no precedent for immunity from such assessments.  Further, the Referee concluded that Drainage Act assessments do not impair the core of federal railway jurisdiction. The financial impact on CP is negligible compared to its revenues, and there is no evidence of operational impairment. The doctrine of interjurisdictional immunity (where federal undertakings are immune from provincial regulation) is to be applied with restraint and only in exceptional circumstances, which were not present in this situation.

The Referee also analyzed whether there is an operational conflict or frustration of federal purpose between the Drainage Act and federal statutes authorizing and governing interprovincial railways – the Transportation Act and the Railway Safety Act.  The Referee found that the provincial and federal legislative schemes can operate concurrently and complementarily.  The federal Transportation Agency’s authority is limited to apportioning costs for the physical crossing of the railway right-of-way, while the Drainage Act governs the broader watershed and cost allocation among all affected properties.  The Referee rejected CP’s argument that the federal scheme precludes provincial assessments, noting that the Drainage Act’s assessment of costs is a zero-sum exercise.  All landowners involved in the municipal drain are assessed their proportionate share of the costs.  If one owner doesn’t pay, the cost is thrust upon everyone else.

According to a news release published on December 5, 2025 by the Rural Ontario Municipal Association, CP plans to appeal the Referee’s decision.  More to follow.

Read the decision at: 2025 ONDR 12 (CanLII).

A new standard in fines for illegal woodlot clearing?

AS PREVIOUSLY PUBLISHED IN THE RURAL VOICE:

Recent decisions made by the Ontario Court of Justice in a Huron County case serve as a cautionary tale for farmers and landowners about the steep penalties that can follow illegal woodland clearing.  A farm corporation and its sole director were each convicted of two offences under the County’s Forest Conservation By-law: unlawfully destroying a woodland and failing to obey a stop work order. The case involved the clearing of approximately 6 to 7 acres of forest (about 2.75 hectares) on a farm property, estimated to involve the destruction of roughly 10,000 trees. The penalties imposed by the Court for the violations may be unprecedented for tree clearing by a rural landowner in Ontario. 

The farm corporation involved had filed a Notice of Intent under the Forest Conservation By-law for a selective harvest plan to remove dead ash trees. The plan was prepared by a professional forester and approved by the County’s forestry staff in accordance with the By-law.  During a site visit in early 2021, the County’s Forest Conservation Officer explicitly warned that the woodlot qualified as a protected “woodland” and could not be clear-cut for agriculture. Despite this warning, it was later discovered that between March and July 2023, the woodland was largely bulldozed and piled for removal. Upon spotting large piles of pushed-out trees on the site in June 2023, the County issued a Stop Work Order. However, when officials returned with a search warrant in August, they found the piles gone and evidence of recent burning – meaning the order had been ignored and the felled trees had been burned in the interim.

Estimates derived from GPS mapping and sample plots showed about 6.8 acres of woodland destroyed, representing an extrapolated 10,450 trees removed (the average between the high estimate of 15,200 and low estimate of 5,700 trees adopted by the Court). This comfortably met the Forest Conservation By-law’s definition of a protected “woodland” (land 1 ha or more with at least 1,000 trees per hectare). The Court found that the corporation and its director had “caused or permitted” the destruction of a woodland, and further had failed to comply with the stop work order by continuing clearing activities after it was issued. Convictions were registered against both the corporation and its director for both offences.

It is the sentencing decision of the Court that is the most noteworthy aspect of the case.  The Huron County Forest Conservation By-law includes remarkably strong penalty provisions. For a first offence, an individual is liable to a fine of up to $10,000 or $1,000 per tree, whichever is greater, and a corporation can be fined up to $50,000 or $5,000 per tree. With well over ten thousand trees removed in this case, the theoretical maximum fine ran into the millions of dollars. The prosecutor sought a total of $500,000 in fines, split between the two defendants. The defence requested a far lower penalty of around $70,000–$80,000 arguing mitigating factors such as the director’s advanced age, lack of prior record, and the fact that the same individual would ultimately pay both the corporate and personal fines.

After weighing the factors relevant to sentencing, the Court emphasized that deterrence and denunciation had to be the primary considerations for this kind of environmental offence. The Justice of the Peace noted there was little in the way of mitigating factors beyond the fact that these were first-time offenders. On the other hand, aggravating factors were plenty: the Defendants knew in advance the land couldn’t be cleared (from the 2021 forester’s plan and site meeting) yet went ahead anyway; a vast number of trees were destroyed; and the stop work order was flouted, effectively destroying evidence by burning the debris. In the words of the Justice of the Peace, the clearing and burning occurred “in full defiance” – conduct which “cannot be condoned by modest penalties.”

In the end, the Court fined the director $175,000 for the woodland destruction and $25,000 for the stop work order violation. The corporation was separately fined an additional $175,000 for the destruction and $25,000 for the stop work count. The fines combined total $400,000 – an enormous sanction in the context of farm tree-cutting cases. The Court also placed both defendants on probation for 2 years to ensure future compliance, including a condition not to commit the same offence again. The By-law also allows the court to order the offender to rehabilitate the land or replant trees, but in this case no replanting order was made.  The Defendants had sought an adjournment to explore a replanting plan (presumably to mitigate the fine amount), but no plan was put forward.  

The fines levied in this case appear dramatically higher than what has been seen in many past cases under tree protection by-laws, at least in rural areas. The clear message from the Court is that violating woodland protection rules cannot “be seen as a cost of doing business.” In other words, the fines are meant to hurt, not to be simply written off as a business expense. The Justice of the Peace explicitly stated that “other farmers and landowners must understand that if…a woodland is destroyed or…stop work orders are ignored, then there will be serious financial consequences.” 

If fines of the magnitude imposed in the Huron County case reflect a shift in thinking about penalties, then the days of “ask forgiveness, not permission” are gone when it comes to clearing woodlands. Violating a tree conservation by-law is not worth the risk. The Huron County prosecution, although it did involve a very large number of trees (estimated) is a stark example of how Ontario courts are prepared to hand down record-setting fines to protect the environment and drive the point home. Landowners are best advised to work within the law – consult with forestry officials, consider sustainable harvesting, or seek proper exemptions if available – rather than face the possible hefty consequences of illegal clearing.

Read the decision at: 2025 ONCJ 514 (CanLII).