Executive Summary: Key Legal and Evidentiary Issues

• The court considered whether a municipality's sale of surplus land to a private buyer was subject to judicial review.
   
• Mootness became a central issue because the sale had already closed before the applicants brought their application.
   
• Justice Smith exercised discretion to decline ruling on the merits of the judicial review application.
   
• Jurisdictional limits arose over whether the Divisional Court could grant relief under section 273 of the Municipal Act.
   
• A related motion asked the court to review an earlier decision denying leave to register a certificate of pending litigation.
   
• Indefeasibility of title under the Land Titles Act restricted the court's ability to unwind the completed transaction.
   

Facts of the case

The applicants, 2417563 Ontario Inc. and 1063155 Ontario Inc., own two properties on Eastern Avenue in Brampton. The respondent 2581558 Ontario Inc. ("258") owns a property on Orenda Road. Between these properties sat a narrow strip of land once used for a railway siding under a 1956 agreement between Canadian National Rail Company and the City of Brampton. After CN stopped using the siding, City council authorized staff in June 2021 to terminate the CN agreement and begin declaring the strip surplus so it could be sold. Both 258 and the applicants expressed interest in purchasing the strip during 2021 and 2022, and both were told the termination process was ongoing. On May 25, 2023, the Commissioner advised the applicants that termination was "very close" and asked them to follow up in two weeks; instead, the applicants did not contact the City again until September 26, 2024, 16 months and one day later. Meanwhile, City staff continued discussions with 258. On April 18, 2024, the City issued public notice of a committee meeting to consider declaring the strip surplus, and on May 1, 2024, council passed a by-law approving the sale to 258 at fair market value. An appraisal valued the strip at $1,186,877 if sold as a single lot. The agreement of purchase and sale was executed on September 5, 2024, at a price of $1,058,500, and the transaction closed on November 29, 2024. The applicants launched their application on December 19, 2024, seeking to quash the by-law and set aside the sale, and separately moved under section 21(5) of the Courts of Justice Act to review a decision of Chang J., who had earlier denied them leave to register a certificate of pending litigation against the strip.

Policy and legislative provisions at issue

Several statutory provisions framed the dispute. Under section 6 of the Judicial Review Procedure Act, an application for judicial review must be brought before the Divisional Court. Sections 272 and 273 of the Municipal Act, 2001 draw a distinction between challenging a by-law for unreasonableness, which is barred, and challenging it for illegality, a remedy reserved to a single judge of the Superior Court rather than the Divisional Court panel. The by-law itself declared the strip "surplus to the requirements of the City" and approved its transfer to 258 "at fair market value on an as-is-where-is basis." The applicants also invoked section 21(5) of the Courts of Justice Act to seek review of Chang J.'s interim decision. Finally, the doctrine of indefeasibility of title under the Land Titles Act, discussed by Epstein J. in Durrani v. Augier, limited the court's power to rectify the land register once a bona fide purchaser for value had been registered.

Reasoning and analysis

Smith J. first addressed a jurisdictional problem: although the applicants sought relief under both the Judicial Review Procedure Act and section 273 of the Municipal Act, the Divisional Court's jurisdiction extends only to judicial review under the former, limited by section 272 of the latter, and it has no jurisdiction to grant relief under section 273. The court therefore proceeded only on the judicial review application. Turning to that application, Smith J. found that several factors favoured declining to consider its merits, drawing on the discretionary framework described in Yatar and Strickland v. Canada. The sale of the strip was of limited public character, resembling the kind of private transaction discussed in Highwood Congregation of Jehovah's Witnesses v. Wall, since it attracted no public response and involved a disused strip of interest only to the applicants and 258. The applicants' own delay weighed heavily against them: despite being told to follow up within two weeks, they did not do so for 16 months, during which the City proceeded with public notice, council approval, and a negotiated sale. By the time the application was filed, the transaction had already closed and been registered, raising mootness concerns, since no fraud was established and 258 qualified as an innocent bona fide purchaser for value protected by indefeasibility of title principles. Even assuming the sale could theoretically be undone, Smith J. concluded that the disproportionate consequences to 258, an innocent third party that negotiated in good faith, made any remedy inappropriate. On the CPL motion, Smith J. found no error in Chang J.'s conclusion that the applicants had not established a triable interest in land, since their application sought only to quash the by-law and undo the sale rather than assert a direct proprietary claim.

Ruling and overall outcome

The Divisional Court dismissed both the application for judicial review and the motion to review Chang J.'s decision. Smith J., with Shore and O'Brien JJ. concurring, exercised the court's discretion not to consider the merits of the judicial review application, finding that the private character of the transaction, the applicants' prolonged delay, the mootness resulting from the completed and registered sale, and the disproportionate impact on 258 all favoured declining relief. The City and 258 were therefore the successful parties. Pursuant to an agreement between the parties, the applicants were ordered to pay the City's costs of $70,000 all inclusive and partial indemnity costs of $35,000 to 258.