Developer's cost claims raise fears of legal chill

Potential OMB decision could make community groups wary of opposing development plans

Feb 10, 2008 04:30 AM

feature writer

Plans call for 473 new homes to be built in the village of Hillsdale, northwest of Barrie.


When a developer wanted to more than double the size of her village, Tanya Mullings did what she had never done before she got involved.

She joined Concerned Residents of Hillsdale, a group that saw the proposal for 473 new homes in the community northwest of Barrie as too big and out of place.

"It really doesn't fit," says Mullings, 43, who provides daycare services. "It's like moving a subdivision in Barrie to the middle of the country."

Last month, Concerned Residents took their battle to the Ontario Municipal Board and became, critics say, the first victims of an alleged attempt to stifle ratepayer opposition to development projects.

Anxiety for Mullings' group came from another part of Simcoe County, where Kimvar Enterprises, a subsidiary of Markham-based Geranium Corp., won OMB approval for a $1 billion resort development on Lake Simcoe.

In late December, the company then asked the board to order ratepayers opposing the project, and their lawyers, to pay $3.6 million in legal fees and consulting costs for an OMB hearing that lasted almost four months.

The claim believed to be the highest in board history has sparked calls for the provincial government to intervene. Critics argue the unprecedented amount sought will scare off ratepayers from opposing developments across the province.

It certainly chilled Concerned Residents of Hillsdale (CROH). Group member Diana Spear described news of the $3.6 million claim as "the last straw" for a group realizing it needed tens of thousands of dollars to mount an effective OMB case, yet unable to even afford a lawyer.

Increasing concern was the fact that Hillsdale Land Corp., the developer in the project, is also a subsidiary of Geranium. When OMB hearings began Jan. 7, Concerned Residents of Hillsdale gave up its status as a party opposing the development.

"CROH felt intimidated by the Hillsdale Land Corporation," Mullings told the provincially appointed board, which adjudicates land-use disputes. "CROH felt it had to soften its position to protect residents from litigation."

The adjudicator informed Mullings that costs are not given automatically, and almost always require inappropriate behaviour at hearings. Mullings wasn't reassured. The board spent the next four days listening mainly to the developer's plan modified in a deal with Springwater Township and approved it with an oral ruling Jan. 11.

Although different in nature, critics compare the $3.6 million claim's impact to what in the U.S. are denounced as "strategic lawsuits against public participation," or SLAPP, used to dissuade citizens from opposing projects in front of government bodies.

Says Rick Smith, head of an environment group fighting the Lake Simcoe development: "If this cost application goes through, there isn't a citizen on God's green Earth that will ever go to the OMB ever again. This is blatant bullying on the part of Geranium and the provincial government cannot allow this to continue."

Smith notes the company has launched four separate lawsuits, including two for libel, against opponents of the proposed resort.

Representatives for Kimvar and Geranium firmly reject allegations the companies are trying to stifle opposition.

"Chill is in the eye of the beholder," says company spokesperson, Jim Maclean, noting Geranium significantly modified the Lake Simcoe proposal after public consultations.

"This is not a big bad developer," adds Geranium's lawyer, David Miller, of Aylesworth law firm. "This is a developer that's doing its best to comply with the rules, with the science, with the geography, with the people, with the First Nations with everyone."

Smith's Environmental Defence, a Toronto-based group that helped finance the Innisfil District Association, the ratepayers Geranium is pursuing for costs, wants the province to apply for party status at the OMB cost hearing and argue against the $3.6 million claim. "$3.6 million is an unprecedented demand and would rightly terrify any ordinary citizen. One suspects, therefore, that's what it was intended to do," says lawyer Clayton Ruby, who represents the environment group.

The provincial government has an obligation to ensure the OMB operates democratically, he adds.

"Otherwise it's a fraud," Ruby says. "You don't expect crushing costs awards that frighten everyone so they never take part in the process ... this then becomes a developers playpen, where only the rich kids get a chance to play."

Adam Grachnik, press secretary for Municipal Affairs Minister Jim Watson, who is responsible for the OMB, did not respond to voice mail requests for an interview.

Smith says he'll also call on the province to pass anti-SLAPP legislation. In the U.S., where such lawsuits are far more common, about half of the states have anti-SLAPP statues, according to the Denver-based SLAPP Resource Center.

Kimvar/Geranium is asking for costs partly because opponents gave their witnesses inaccurate information and failed to show them reports and evidence from experts, Miller says.

"They just wasted a huge amount of time and there's consequences to that," he says.

"We don't know if the OMB will award any costs," Miller adds. "But if they were awarded, is it because Geranium is big and powerful or because the other guys were wrong? Sometimes you're just wrong."

If built as planned, the 235-hectare resort will include 1,600 residential units, 400 hotel rooms, a golf course, conference centre and 1,000-slip marina. The OMB described the project as "good planning" and dismissed concerns that it was too big and a threat to the lake's environment.

Geranium spokesman Maclean says the company showed good faith by significantly reducing the number of residential units after public consultations, and including an 87-hectare stretch of protected land.

Since the development battle began five years ago, Kimvar/Geranium has launched four civil lawsuits, seeking more than $100 million in damages. Defendants include two lawyers and two investment bankers, all opponents of the resort project, accused of conspiring to fraudulently boost the price of land the developer needed. They deny the allegations.

The developer also has launched libel suits against ratepayers' president Don Avery for a news release denouncing the project, and against Kelly Clarke, another ratepayers' representative, for a letter she wrote to Innisfil's municipal clerk.

"Freedom of speech doesn't mean you can say whatever you want. It means you can say whatever you want that's not libelous," says lawyer Miller, rejecting any comparison between Geranium's legal actions and SLAPP lawsuits.

Neither Avery nor the ratepayers' group's lawyer, David Donnelly, responded to requests for interviews.

The OMB doesn't keep separate statistics on either requests for costs or the number of times they're awarded, says board spokesperson Karen Kotzen. News reports have put the highest cost award ever given by the board at $831,000 in 2002.

"Costs are frequently requested but rarely awarded," writes Bruce Krushelnicki, Burlington's director of planning and author of the book, A Practical Guide to the Ontario Municipal Board, published last year.

Krushelnicki, whose 13 year-career as an OMB adjudicator ended in 2004, says costs are awarded in less than 2 per cent of cases, usually for "patently unreasonable behaviour" during hearings. Most awards are "nominal or symbolic amounts unrelated to the real expenses incurred." The OMB held 1,836 hearings in the 2005-2006 fiscal year.

"The board has made it clear that there is always a concern that an award of costs against one of the parties can have a `chilling' effect. In other words, the mere threat of costs may have the effect of intimidating inexperienced persons," Krushelnicki writes.

Indeed, the OMB's rules flatly state: "There must be no threats to potential appellants that costs will be requested. This could prevent opponents who have different but sincerely held opinions from exercising their right to appeal."

Real estate adviser Art McIlwain, with Toronto's Geneden Property Service Corp., argues that while the chances of losing an action for costs are remote, the cost of defending against it can be financially ruinous.

John Crispo, a Clearview Township councillor in Simcoe County, insists the threat of costs played a role in a ratepayers' group "caving" into a plan to double the size of Creemore, a rural community of 500 homes.

The Creemore Area Residents Association (CARA), which for months led a well-organized and well-funded battle to reduce by half the size of the development, suddenly agreed to the 498 homes proposed, with slight modifications to the plan.

CARA's representatives refuse to discuss the settlement until the OMB hands down its written decision. Ian Rowe, a lawyer representing Clearview Township which supported the development refused to comment, except to note that the agreement with the ratepayers' group specifically states that no party will seek costs.

"The threat is so intimidating," says Crispo, former dean of the University of Toronto's faculty of management.

"The whole purpose of this stuff is to instill citizen chill."

Audrey Bennett, director of provincial planning at the municipal affairs ministry, says concerns about cost claims were rarely mentioned during public consultations for OMB reforms implemented last year.

But back in Hillsdale, Mullings says the board, which she alleges is already biased in favour of appellants with deep pockets and high-priced lawyers, shouldn't have the power to level costs on ordinary citizens.

"I don't think that a group that is trying to have a say on a development in its community should be penalized," she says.