Preston (Town) v. Langs, [1972] SCR 686

Supreme Court of Canada

Preston (Town) v. Langs, [1972] S.C.R. 686

Date: 1972-03-30

The Corporation of the Town of Preston (Defendant) Appellant;

and

Thomas W. Langs (Plaintiff) Respondent.

1971: November 4, 5; 1972: March 30.

Present: Martland, Judson, Ritchie, Spence and Laskin JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Municipal law—By-laws—Sewer rating by-law passed after work authorized by agreement with Ontario Water Resources Commission and completed—Subsequent approval of Ontario Municipal Board—Validity of by-law—The Municipal Act, R.S.O. 1960, c. 249, s. 380(2)—The Ontario Water Resources Commission Act, R.S.O. 1960, c. 281, s. 41.

By-law 2068 of the Town of Preston imposed a sewer rate upon the owners of land fronting on a particular road in the town to defray in part the cost of the work. The Court of Appeal, reversing the judgment at trial, declared the by-law invalid for lack of approval of the Ontario Municipal Board as required by s. 380(2) of The Municipal Act before the authorization of the work. On appeal to this Court the municipality contended that its procedure throughout was valid and in accordance with s. 41 of The Ontario Water Resources Commission Act, R.S.O. 1960, c. 281, and that the judgment at trial should be restored.

Held (Laskin J. dissenting): The appeal should be allowed.

Per Martland, Judson, Ritchie and Spence JJ.: Prior to 1957, the only authority for the imposition of a sewer rate upon owners or occupants of land to be benefited was to be found in s. 380(2) of The Municipal Act. In that year, The Ontario Water Resources Commission Act was re-enacted by 1957, c. 88, and s. 41(1) (2) (3) appeared in the Act for the first time. The result of this re-enactment was to provide a second source of municipal jurisdiction to impose sewer rates on particular land and the power was no longer confined to s. 380(2).

The Court of Appeal, however, appeared to have taken the view that s. 380 of The Municipal Act was

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the governing enactment and that s. 41 of The Ontario Water Resources Commission Act did not relax the requirements of s. 380. There were two objections to such a finding. First, it ignored the opening words of s. 41(1) that the council of the municipality that has entered into an agreement with the Commission under s. 39 may by by-law… provide for imposing… a sewer or water works rate… Second, by s. 41(3), the application of s. 380 of The Municipal Act is expressly made subject to s. 41 and is to apply mutatis mutandis. There is no conflict between s. 41 and s. 380(2), and the sewer rating by-law may be passed after the work has been authorized by the agreement with the Commission and completed, and the approval of the Municipal Board may be given subsequently.

Per Laskin J., dissenting: The submission that the mutatis mutandis application of s. 380 of The Municipal Act to s. 41 of The Ontario Water Resources Commission Act carries the obligation of proper authorization of the work, which is not satisfied merely by execution of the agreement with the Commission but requires the enactment of a rating by-law at or before the same time, was not accepted. However a second ground of objection was fatal to the by-law in question. A municipality’s powers to authorize a sewer work, or to enter into an agreement with the Commission to have the latter construct a sewer work for it, are powers that look to a work to be constructed. Section 41 does not authorize a municipality retroactively to validate a completed work which it had no power to construct without a supporting agreement.

APPEAL from a judgment of the Court of Appeal for Ontario[1], allowing an appeal from a judgment of Lacourciere J. Appeal allowed, Laskin J. dissenting.

J.T. Weir, Q.C., and B. Findlay, for the defendant, appellant.

John Sopinka, for the plaintiff, respondent.

The judgment of Martland, Judson, Ritchie and Spence JJ. was delivered by

JUDSON J.—The issue in this appeal is whether By-law 2068 of the Town of Preston is valid. This

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by-law imposed a sewer rate upon the owners of land fronting on Industrial Road in the Town of Preston of 37 cents per foot frontage per annum for 24 years to defray in part the cost of the work. The Court of Appeal, reversing the judgment at trial, declared the by-law invalid for lack of approval of the Ontario Municipal Board as required by s. 380(2) of The Municipal Act before the authorization of the work. In this appeal the municipality contends that its procedure throughout was valid and in accordance with s. 41 of The Ontario Water Resources Commission Act, R.S.O. 1960, c. 281, and that the judgment at trial should be restored.

It is desirable to set out in some detail the steps taken by the municipality to authorize and collect for this work. On November 7, 1960, the corporation gave first and second reading to Bylaw 2067, which provided for the execution of agreements with the Ontario Water Resources Commission for the construction of this sewer. The by-law was given third and final reading on February 24, 1961.

The first of these agreements, dated December 6, 1960, provided for the retention of consulting engineers for the preparation of working plans and specifications.

On June 29, 1961, the Ontario Municipal Board approved the undertaking and authorized the corporation to execute the second agreement set out in By-law 2067. The agreement was executed on July 6, 1961, and provided for the construction of sewage works project 61‑S‑75(2) and for maintenance and operation of the project. While the Commission was responsible for the construction, management and control, the corporation agreed, in accordance with s. 40 of The Ontario Water Resources Commission Act to repay the Commission its total cost over a period of thirty years.

On November 7, 1960 (when the corporation gave first and second reading to By-law 2067)

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the corporation also gave first and second reading to By-law 2068, when it provided that:

NOW THEREFORE the Council of the Corporation of the Town of Preston enacts as follows:

1. There is hereby imposed pursuant to Section 41 of The Ontario Water Resources Commission Act, 1957, as amended, and Section 389 of the Municipal Act, upon the owners or occupants of land who derive or will or may derive benefit from the said project, a sewer rate sufficient to pay 100 per cent of the annual payments to the Commission required to be made under Clause (A) of paragraph 1 of Subsection (1) of Section 40 of The Ontario Water Resources Commission Act, 1957, as amended, and under paragraph 2 of that Subsection.

2. The lands in respect of which such owners or occupants are deemed to derive benefit from this project are all lands within the Municipality.

3. The sewer rate shall be imposed for a period of 30 years commencing in 1962 and shall be computed by a combination of the following methods:

(a) A foot frontage rate of 37 cents per foot on the lands designated in paragraph 2 which front on or abut on the streets or parts of streets described in Schedule “A” to this By-law, or connect to the sewers constructed thereon.

(b) A mill rate on the assessed value of the lands designated in paragraph 2.

Schedule “B” to the Sewer Rate By-law 2068 reads as follows:

Estimated Annual O.W.R.C. Charges

Interest (Present estimate 5.5%).....................................................................	$4,290.00
Debt Retirement (30 years)..............................................................................	1,560.00
Reserve..............................................................................................................	600.00
	$6,450.00

Estimated Revenue

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The application by the Corporation of the Town of Preston for approval of its proposed Bylaw 2068 was not heard by the Ontario Municipal Board until October 16, 1961. The Board reserved its decision. On October 24, 1961, the Corporation was advised that the application had been dismissed without written reasons.

Nothing further happened until November 9, 1966, when the Board gave a new appointment for a hearing. On January 5, 1967, A.H. Arrell, Vice-Chairman of the Municipal Board, attended at Council Chambers of the Town of Preston for the purpose of conducting a hearing of this application. His report contains a concise summary of the practical problem, the position taken by the adversaries and their arguments in support. I set it out in full:

As set forth above proposed By-law 2068 was given first and second reading on the 7th day of November, 1960. The purpose was to assist in financing the construction of a trunk sewer on Industrial Road from Bishop Street to Eagle Street. The purpose of the sewer was to develop an industrial area on both sides of Industrial Road. The rate set forth in the proposed by-law is 37 cents per foot frontage for 30 years commencing in the year 1962. The evidence would indicate that this would cover a little over 55% of the actual cost of constructing the sewers and the balance would be borne by the municipality. The sewers are oversize in order to take care of future developments. In addition to the frontage rate any person connecting with the sewers will have to pay a surcharge on his water bill in order to pay for the construction and maintenance of the sewage disposal plant, in accordance with the town’s general rating by-law.

An application was made to this Board for approval of this by-law in 1961 at which time the application was dismissed. The sewer was constructed under the provisions of The Ontario Water Resources Commission Act, R.S.O. 1960, Chapter 281, Section 39, pursuant to an agreement between the Commission and the municipality.

It was argued for the objectors that as the Board had not approved of proposed By-law 2068 before the works were authorized, Section 380(2) of The Municipal Act, R.S.O. 1960, Chapter 249, now

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precluded it from giving its approval. This subsection reads as follows:

“(2) Subject to the approval of the Municipal Board first being obtained, the council of a local municipality, in authorizing the construction of sewage works or water works, may by by-law provide for imposing upon owners or occupants of land who derive or will or may derive a benefit from the sewage works or water works a sewer rate or water works rate, as the case may be, sufficient to pay for the whole or such portion or percentage of the capital cost of the works as the by-law may specify, and, with the like approval, such by-law may from time to time be amended or repealed.”

Counsel for the applicant argued that since the work was authorized by the Commission, Section 380(2) could have no application and that under Section 41(1) of The Ontario Water Resources Commission Act, R.S.O. 1960, the by-law could be approved after the agreement was entered into and that subsection 3 of this section only indicated the type of rates the municipality could impose. Subsections (1) and (3) of this section are as follows:

“41.-(1) The council of a municipality that has entered into or proposes to enter into an agreement with the Commission under section 39 may by by-law subject to the approval of the Board, provide for imposing upon owners or occupants of land who derive or will or may derive a benefit from the project a sewer rate or water works rate, as the case may be, sufficient to pay the whole or such portion as the by-law may specify of the annual payments to the Commission required to be made under clause a of paragraph 1 and paragraph 2 of subsection 1 of section 40 and, with the like approval such by-law may from time to time be amended or repealed. R.S.O. 1960, c. 281, s. 41(1)”

“(3) Subject to this section, section 380 of The Municipal Act applies mutatis mutandis to sewer rates and sewage service rates imposed under this section.”

While it would not appear that the Board can make any binding legal decision on this point for administrative purposes I prefer the latter argument.

Since the previous hearing there can be no doubt that a substantial industrial development along this

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road has taken place. Land abutting this road would now appear to be worth about $3,000 per acre. Counsel for Thomas Langs, a farmer on this road, argued that the levy proposed would force his client to sell his land. However, a value of $3,000 per acre is several times what it would be worth as farm land and this value has been substantially contributed to by the expenditure which the municipality has made on this sewer. In my opinion, therefore, it is not unfair that he should have to pay this levy.

I am of the opinion that there is more merit to the objection raised by counsel for Modern Tools Company Limited which owns a substantial frontage on Industrial Road. His argument was that while land has been selling for substantial prices there has to date been only limited market and therefore this levy might force his client to sell at a substantial sacrifice.

There is no doubt that this project will make substantial contribution to the industrial assessment of the town and it would not seem unfair therefore, that the town should forget the proposed levies up to the present time. I therefore recommend approval of the proposed by-law if the term is changed from 30 years to 24 years with the first payment of the levy to be made in 1968. I recommend that there be no order as to costs.

On February 6th a formal order of the Board imposed the sewer rate referred to for a period of twenty-four years commencing in 1968. On February 20, 1967, By-law 2068, as amended by the Board, received its third reading and was finally passed by the corporation.

The Court of Appeal gave leave to appeal from the February 6th order of the Board but subsequently quashed the appeal for failure of the appellant Langs to comply with s. 95(2) of The Ontario Municipal Board Act, which required the giving of notice to the Board, within a specified time, of the setting down of the appeal (Re Langs v. Town of Preston[2]). The date of this judgment is October 25, 1967.

The next step was the issue of a writ in the Supreme Court of Ontario on July 8, 1968, which raised the issues now before us. The plaintiff is Thomas W. Langs, a substantial property owner.

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The main issue is the power of the municipality to pass the by-law imposing the sewer rate after the work had been authorized and completed. The ratepayer relied on s. 380(2) of The Municipal Act, R.S.O. 1960, as amended by 1962-63, c. 87, s. 17. The trial judge rejected this submission and held that s. 41 of The Ontario Water Resources Commission Act permitted the passing of the sewer rate by-law following the agreement with the Commission. He dismissed the action. The Court of Appeal accepted the ratepayer’s submission, allowed the appeal and quashed the by-law.

I would allow the appeal and restore the judgment at trial dismissing the action. In my opinion, By-law 2068 was authorized by s. 41 of The Ontario Water Resources Commission Act set out above in the report of the Municipal Board. The key words are:

The council of a municipality that has entered into an agreement with the Commission under section 39 may by by-law, subject to the approval of the Board, provide for imposing upon owners or occupants of land who derive or will or may derive a benefit from the project a sewer rate or water works rate…

Prior to 1957, the only authority for the imposition of a sewer rate upon owners or occupants of land to be benefited was to be found in s. 380(2) of The Municipal Act, which is also set out in the report of the Municipal Board.

But there was a significant change in 1957. In that year, The Ontario Water Resources Commission Act was re-enacted by 5-6 Elizabeth II, c. 88, and s. 41(1) (2) (3) appeared in the Act for the first time. The result of this re-enactment was to provide a second source of municipal jurisdiction to impose sewer rates on particular land and the power was no longer confined to s. 380(2).

The Court of Appeal, however, appears to have taken the view that s. 380 of The Municipal Act is the governing enactment and that s. 41 of The Ontario Water Resources Commission Act does

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not relax the requirements of s. 380. There are two objections to such a finding. First, it ignores the opening words of s. 41(1) that the council of the municipality that has entered into an agreement with the Commission under s. 39 may by by-law… provide for imposing. a sewer or water works rate… Second, by s. 41(3), the application of s. 380 of The Municipal Act is expressly made subject to s. 41 and is to apply mutatis mutandis. My conclusion is that there is no conflict between s. 41 of The Ontario Water Resources Commission Act and s. 380(2), and that the sewer rating by-law may be passed after the work has been authorized by the agreement with the Commission and completed, and that the approval of the Municipal Board may be given subsequently.

The respondent, in this Court, as he had in the Court of Appeal, contended that the appellant had purported to authorize the construction of an illegal work, having failed to comply with the provisions of s. 64 of The Ontario Municipal Board Act, R.S.O. 1960, c. 274. The appellant’s position is that the agreement between the appellant and the Ontario Water Resources Commission was authorized by By-law 2067, which bylaw was approved by the Ontario Municipal Board. No appeal was taken from the order of the Board and no attack was made on the validity of By-law 2067 in these proceedings. The statement of claim is limited to a claim for a declaration that By-law 2068 is invalid. The trial judge said:

We are not concerned, however, in this action with the authorization of By-law 2067; this by-law is admittedly valid. It is the approval of the sewer rating by-law that is presently challenged.

I agree with the view expressed by Kelly J.A. in the Court of Appeal in respect of this submission:

The other ground of appeal, i.e., that in failing to comply with s. 64 of the Ontario Municipal Board Act, the municipality purported to authorize an unauthorized work, constitutes an attack on the validity of By-law 2067. The statement of claim does not

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directly attack the validity of By-law 2067. In the view I have taken of By-law 2068, it is unnecessary to deal with the validity of By-law 2067. I do not consider that in the absence of any prayer seeking a declaration as to its invalidity, the judgment in this action should attempt to establish its validity or invalidity. If the plaintiff feels he has a remedy in this regard he should seek it in ad hoc proceedings.

I would allow the appeal with costs both here and in the Court of Appeal, and restore the judgment at trial dismissing the action with costs.

LASKIN J. (dissenting)—By-law 2068 of the appellant municipality, “being a by-law with respect to sewer rates under s. 41 of The Ontario Water Resources Commission Act, R.S.O. 1960, c. 281, as amended, and s. 380 of The Municipal Act, R.S.O. 1960, c. 249, as amended”, was passed on third reading on February 20, 1967. It received its first two readings on November 7, 1960. In its then form it provided for the imposition of a prescribed sewer rate for a period of thirty years commencing in 1962. The required approval thereof by the Ontario Municipal Board, when in its form as a proposed by-law, was first refused in a decision communicated on October 24, 1961. After a hearing de novo on January 5, 1967, the Board adopted a recommendation of its vice-chairman, as permitted under its governing statute, and approved the proposed by-law on February 6, 1967, provided the sewer rate period was changed from thirty years to twenty-four years, with the first payment of the levy to be in 1968. This change was made in the proposed by-law and third reading followed.

The validity of the by-law was unsuccessfully attacked by an affected owner of land, but the judgment of Lacourciere J. dismissing his action was reversed by the Ontario Court of Appeal, speaking unanimously through Kelly J.A. It will help to focus on the legal issues raised by the further appeal to this Court if I set out the chronology of events relevant thereto. They have their

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setting in ss. 39, 40 and 41 of The Ontario Water Resources Commission Act which read as follows:

39 (1) Any one or more municipalities may apply to the Commission for the provision of and operation by the Commission of water works or sewage works for the municipality or municipalities.

(2) The Commission may thereupon furnish to such municipality or municipalities,

(a) an estimate of the cost of the project and such other information as the Commission may deem advisable;

(b) a statement of the terms and conditions upon which the Commission will complete and operate the project; and

(c) a form of agreement to be entered into between the municipality or municipalities and the Commission.

(3) The council of any municipality may by bylaw authorize the municipality to enter into such an agreement with the Commission and, subject to the approval of the Lieutenant Governor in Council, the Commission may enter into any such agreement with any municipality or municipalities and, when such an agreement has been entered into, the parties thereto have all such powers as may be necessary to carry out the provisions thereof or of any undertaking given pursuant thereto.

(4)…

(5) Where a municipality that proposes to enter into an agreement with the Commission is required to obtain the approval of the Board with respect to any aspect of the proposed project, the application for such approval shall be made by the Commission on behalf of the municipality.

40 (1) Every municipality that has entered into an agreement with the Commission under section 39 shall pay to the Commission the following sums or, where such agreement is with more than one municipality, or where the project requires more than one agreement at least one of which is with a municipality, its share as adjusted by the Commission of the following sums:

2. In each calendar year for such period of years as may be prescribed by such agreement, commencing not later than the fifth calendar year next following the date of completion of such project, such sum as would be necessary with interest compounded annually thereon at the rate of 3¼ per cent per annum to form at the expiry of such period of years a fund equal to the cost of such project.

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41 (1) The council of a municipality that has entered into or proposes to enter into an agreement with the Commission under section 39 may by by-law, subject to the approval of the Board, provide for imposing upon owners or occupants of land who derive or will or may derive a benefit from the project a sewer rate or water works rate, as the case may be, sufficient to pay the whole or such portion as the by-law may specify of the annual payments to the Commission required to be made under clause a of paragraph 1 and paragraph 2 of subsection 1 of section 40 and, with the like approval, such bylaw may from time to time be amended or repealed.

(1a) Where a by-law under subsection 1 imposes a sewer rate or water works rate upon owners or occupants of land, the council of the municipality may provide for commutation for payment in cash of the whole or any part of the rate imposed and may prescribe the terms and conditions thereof.

(2) The council of a municipality that has entered into or proposes to enter into an agreement with the Commission under section 39 may by by-law provide for imposing upon owners or occupants of land from which sewage is received, treated or disposed of or to which water is supplied through or by the project a sewage service rate or water service rate, as the case may be, sufficient to pay the whole or such portion as the by-law may specify of the annual payments to the Commission required to be made under clauses b and c of paragraph 1 of subsection 1 of section 40.

(3) Subject to this section, section 380 of The Municipal Act applies mutatis mutandis to sewer rates and sewage service rates imposed under this section.

(4) Every water works rate or water service rate imposed under this section shall, in so far as is practicable and subject to this section, be imposed in the same manner and with and subject to the same provisions as apply to a water works rate or sewage service rate, respectively, under section 380 of The Municipal Act, and that section applies mutatis mutandis to the imposition of such rates.

The Ontario Water Resources Commission Act, as re-enacted in 1957, and as amended in 1958 enabled a municipality by agreement with the Commission, on prescribed terms as to repayment,

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to have the latter construct and operate water or sewage works for the municipality. Theretofore, such works had to be provided, if at all by the municipality itself, through the procedure set down in s. 380 of The Municipal Act, long in force in the province, if the whole or part of the cost was to be met by a rate upon benefiting owners. Section 380 is an elaborate code for raising the money and imposing the rates necessary to pay for a water or sewer project. For present purposes, it is enough to quote s. 380(2) which is in these words:

Subject to the approval of the Municipal Board first being obtained, the council of a local municipality, in authorizing the construction of sewage works or water works, may by by‑law provide for imposing upon owners or occupants of land who derive or will or may derive a benefit from the sewage works or water works a sewer rate or a water works rate, as the case may be, sufficient to pay for the whole or such portion or percentage of the capital cost of the works as the by-law may specify, and, with the like approval, such by-law may from time to time be amended or repealed.

Having decided to embark on a sewage project by agreement with the Commission, the municipality enacted By-law 2067 on February 24, 1961. Like By-law 2068, it received its first two readings on November 7, 1960. By-law 2067 authorized the municipality to execute an agreement with the Commission for preliminary planning and preparatory work in connection with the project, and to execute thereafter, subject to the approval of the Ontario Municipal Board, a construction agreement. The preliminary work agreement was dated December 6, 1960, and the construction agreement was executed on July 6, 1961. The Board’s approval to the latter agreement was given on June 29, 1961.

The work contemplated by the construction agreement was in fact begun before the enactment of By-law 2067 and was completed by April 2, 1961, before the required approval of the Board was given and before the agreement was executed. As is also evident from what has

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gone before, the work was completed before the enactment of By-law 2068 and before approval thereof by the Board. The approvals in question are prescribed by s. 64 of The Ontario Municipal Board Act, R.S.O. 1960, c. 274, which is as follows:

64 (1) Notwithstanding the provisions of any general or special Act, a municipality shall not,

(a) authorize; or

(b) exercise any of its powers to proceed with; or

(c) provide any moneys for,

any undertaking, work, project, scheme, act, matter, or thing, the cost or any portion of the cost of which is to be,

(d) raised in a subsequent year or years; or

(e) provided by the issue of debentures,

until the approval of the Board has first been obtained.

(2)…

(3) The passing of a by-law by a council to authorize or to exercise any of its powers to proceed with, or to provide any money for, any undertaking, work, project, scheme, act, matter or thing referred to in subsection 1 shall not be deemed to be in contravention of subsection 1 if such by-law contains a provision to the effect that the by-law shall not take effect until the approval of the Board under subsection 1 has been obtained.

What falls to be decided is, first, whether s. 41 of The Ontario Water Resources Commission Act enables a municipality to obtain approval for and pass its rating by-law after the project for which it imposes rates has been approved and, indeed, after the work involved has been completed. It is common ground that under s. 380 of The Municipal Act, a rating by-law must be enacted prior to or contemporaneously with the authorization of the work, the approval of the Board to the bylaw being first obtained. A second question raised in this appeal is whether the Board could lawfully give its approval to the rating by-law (assuming the first objection thereto fails) when it had previously rejected an application for approval. There was a third question brought to the Court’s attention by the appellant and argued by the respondent, which the former contended was not

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open on the pleadings. It related to By-law 2067, and involved the contention that the work provided for thereunder was never properly authorized by reason of non-compliance with s. 64 of The Ontario Municipal Board Act, and hence there was no lawful foundation for a rating bylaw.

Kelly J.A. in the Ontario Court of Appeal rejected the present respondent’s argument on the second question, relying in that connection on s. 42 of The Ontario Municipal Board Act, and held that the third was not open because it was in effect an attack on the validity of By-law 2067 and its validity had not been put in issue by the respondent. He did, however, rule against the municipality on the main question of the validity of Bylaw 2068 in the light of s. 41 and s. 380, in the following concluding reasons:

…I do not consider that s. 41 contemplates that the rating by-law may be passed after the work has been authorized. The work having been authorized on June 29, 1961, by By-law 2067, the rating by-law was not validly adopted since the approval of the Municipal Board to the rating by-law had not been “first” obtained as required by s. 380 (2).

There is no doubt that s. 41 of The Ontario Water Resources Commission Act departs from the scheme of s. 380 of The Municipal Act if it permits a rating by-law to be passed after an agreement for a water or sewer project has been concluded between a municipality and the Commission. The appellant municipality contends that this follows from the opening words of s. 41 (1), which speaks of a municipal council “that has entered into… an agreement with the Commission under section 39”. Moreover, there would also be a departure from the scheme of s. 380 if authorization for a water or sewer project may be given under s. 41 after the project has in fact been completed. In so far as Ontario Municipal Board approval is necessary for the agreement itself (as to which see s. 39 (5) of The Ontario Water Resources Commission Act), the applicable

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provisions are to be found in s. 64 of The Ontario Municipal Board Act. They were formally satisfied in the present case because the project as set out in the agreement was approved before the execution of the agreement; and the record shows that the preliminary work agreement was also entered into with the approval of the Board.

The position of the appellant municipality is that on its analysis of s. 41 it is immaterial that the work contemplated by the agreement was begun or was completed before the agreement therefor was executed with Board approval, or before the rating by-law was enacted with Board approval. Issue is taken by the respondent with this position on two grounds. First, it is submitted that the mutatis mutandis application of s. 380 of The Municipal Act to s. 41 carries the obligation of proper authorization of the work, which is not satisfied merely by execution of the agreement with the Commission but requires the enactment of a rating by-law at or before the same time, especially in view of s. 64 of The Ontario Municipal Board Act which applies “notwithstanding the provisions of any general or special Act”. The second submission is that even in terms of s. 41 itself, the reference therein to an agreement under s. 39 is to an agreement looking to the construction and operation of works, and it is only “when such an agreement has been entered into [that] the parties thereto have all such powers as may be necessary to carry out the provisions thereof”, to quote from s. 39 (3).

I do not agree that the first of the above two objections is maintainable in a case where there is a properly approved and executed agreement relating to work to be constructed in pursuance thereof. The mutatis mutandis application of s. 380 does not warrant the subordination of s. 41 (1) to the exact scheme of s. 380 (2), and this would be the result if a rating by-law could not, with the previous approval of the Board, be enacted after the approval and execution of a construction agreement as aforesaid. If the agreement of July 6, 1961, is typical, it is clear that the ratepayers of the municipality would know at the

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time approval was sought for such an agreement what the likely cost of the project would be, and hence would not be ignorant of the sum that would have to be raised under a rating by‑law.

In my opinion, however, the second ground of objection is fatal to By-law 2068. The municipality can only proceed or act in accordance with the powers granted to it by statute. Its powers to authorize a sewer work, or to enter into an agreement with the Commission to have the latter construct a sewer work for it, are powers that look to a work to be constructed. It was not suggested, otherwise than by reliance on s. 41, that the municipality may retroactively validate a completed work which it had no power to construct without a supporting agreement. Since such an agreement would require Ontario Municipal Board approval, and interested parties would be entitled to make representations in connection with an application for approval, it would be incongruous to have a hearing and decision of approval respecting the merits of the construction of work that has already been completed. If this were the result, the ratepayers would have no previous opportunity to voice their views either on the agreement for a project or on the rating bylaw but would be faced with a total fait accompli.

I cannot read s. 41 as carrying the matter that far when it is viewed, as it must be, in the light of s. 39. The Board’s order of approval of June 29, 1961, nowhere suggests that it is related to a work already completed; in its terms, it relates to a work in prospect. I see nothing in s. 64 of its constituent Act that empowers the Board to give validity, by its approval, to an agreement which the municipality had no power to make. Indeed, s. 69 of that Act appears to me to deal squarely with the matter under discussion. So far as relevant, it provides that “when the Board has given its approval as required by section 64, the municipality may thereafter proceed in the manner and to the extent provided for by or consequent upon such approval…” (The italicizing is mine.) I relate this not to the mere passing of the rating by-law but to the prohibition in s. 64

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(1)(b) against proceeding with any work or project, the cost of which is to be raised in subsequent years, without the approval of the Board being first obtained.

It follows that By-law 2068 has no valid foundation and is hence without effect. This is enough to dispose of the appeal which I would dismiss with costs.

Appeal allowed with costs, LASKIN J. dissenting.

Solicitors for the defendant, appellant: Weir & Foulds, Toronto.

Solicitors for the plaintiff, respondent: Fasken & Calvin, Toronto.