Provincial Property Services Ltd. V. Province of Nova Scotia

Provincial Property Services Ltd. V. Province of Nova Scotia Court Supreme Court Date 2024-12-17 Citation 2024 NSSC 394 Docket HFX No. 532227, HFX No. 532227 Judge/Registrar/Adjudicator Keith, John A. (Honourable Justice) Document Type Decision Decision Content SUPREME COURT OF Nova Scotia Citation: Provincial Property Services Ltd., v. Province of Nova Scotia, 2024 NSSC 394 Date: 20241217 Docket: HFX No. 532227 Registry: Halifax Between: Provincial Property Services Ltd. Appellant v. His Majesty the King in Right of the Province of Nova Scotia Respondent DECISION Judge: The Honourable Justice John A. Keith Heard: July 22, 2024, in Halifax, Nova Scotia Final Written Submissions: August 6, 2024 Counsel: Andrew Christofi, for the Appellant Josh Judah, for the Respondent By the Court: INTRODUCTION [1] The Appellant, Provincial Property Services Limited (“PPS”), is a Nova Scotia company that paints road marks and provides certain snow clearing services in Halifax Regional Municipality. It owns the following three properties: 1. 217 Bluewater Road, Halifax Regional Municipality; 2. 671 – 674 Hammonds Plains Road, Halifax Regional Municipality; and 3. 296 Bluewater Road, Halifax Regional Municipality. [2] Between 2016 and 2023, the Respondent Province of Nova Scotia (“Nova Scotia”) successfully prosecuted PPS for multiple breaches of Nova Scotia’s Building Code Act, R.S.N.S. 1989, c. 46, as amended, or related land development laws. By way of summary: 1. PPS was convicted twice in 2016 for the development at 217 Bluewater Road. The first conviction resulted in a fine of $20,000 and was not appealed. The second conviction led to a fine of $30,000 and was unsuccessfully appealed (2021 NSSC 62); 2. PPS was convicted once in 2019 for the development at 671 – 674 Hammonds Plains Road. This conviction led to a fine of $80,000 and was not appealed; and 3. PPS was convicted twice in 2023 for the development at 296 Bluewater Road. PPS pleaded guilty in both cases. As to the first conviction, Judge Borden (as he then was) imposed a total fine of $86,250 ($75,000 plus an $11,250, or 15%, victim surcharge). As to the second conviction, Judge Lenehan imposed a total fine of ($150,000 plus a $22,500, or 15%, victim surcharge). [3] In this proceeding, PPS appeals the fine ($172,500) imposed in connection with the final conviction listed above. More specifically, PPS appeals the fine imposed for the second violation of the Building Code Act at 296 Bluewater Road where PPS pleaded guilty to unlawfully occupying a commercial/industrial building without first obtaining an occupancy permit. [4] PPS narrows the issues on appeal to the following: The Judge erred in principle by: 1. Improperly simplifying (or speculating as to) when it is necessary to obtain a building permit and, as well, the general knowledge of the community at large around this issue; and 2. Improperly failing to consider market rental rates for the property in question when considering an appropriate fine for the admitted violation; and 3. PPS concludes that these errors led the Judge to overemphasize the goal of deterrence in sentencing and, in turn, impose an exceeding harsh fine. [PPS Written Submissions at paras. 19 – 29.] 4. The Judge erred in principle by failing to properly appreciate and consider the intertwined nature of the offences leading to both the first conviction and the second conviction. In particular, PPS argues, the two convictions related to contemporaneous problems which occurred at same time and involved the same property. PPS concludes that this failure to locate these two convictions in time and place resulted in the second fine being comparatively, excessively harsh (double the first fine). [PPS Written Submissions at paras. 30 – 34.] [5] PPS asks that this Court intervene to correct this error and reduce the appropriate fine to $80,000.00 or such other amount as this Court deems just. Nova Scotia opposes the request. STANDARD OF REVIEW AND RELATED LAW [6] The parties agree that sentencing decisions are accorded a high degree of deference. In R v. Hynes, 2022 NSCA 51, the entire appellate panel (Beveridge J.A., Farrar J.A., and Bryson J.A.) jointly wrote at para. 16 that: Appeal courts are required to defer to lawful sentences imposed by trial judges unless the sentence is demonstrably unfit or they made an error in principle that materially impacted the type or length of the sentence imposed (R. v. Lacasse, 2015 SCC 64, at para. 11; R. v. Parranto, 2021 SCC 46, at para. 30). [7] In this case, PPS relies upon the second limitation to the deference extended sentencing judges. It says that the sentencing judge’s reasons contained errors in principle that materially impacted the sentence. [8] PPS summarizes the applicable standard of review on appeal at paras. 15 – 18 of its written submissions. Nova Scotia agrees with the standard of review as presented by PPS (Nova Scotia’s Written Submissions at para. 56). In short, the parties agree that: 1. An error in principle is a question of law which, in turn, is measured against a standard of correctness on appeal. 2. An error in principle will fall below the standard of review on appeal (i.e. correctness) if, for example: a. The sentencing judge failed to consider a relevant factor or erroneously characterized a particular fact as an aggravating or mitigating factor. As a result, the sentencing judge imposed an unjustifiably harsh fine; or b. The sentencing judge failed to properly weigh or balance certain relevant factors; c. By over-emphasizing one factor or not giving enough weight to another, the sentencing judge exercised his discretion unreasonably; or d. The unreasonable exercise of discretion materially impacted the sentence imposed. See also R v. Lecasse, 2015 SCC 64, at paras. 41 - 44. See also R v. Friesen, 2020 SCC 9, at para 26. ANALYSIS Issue 1: Improper Speculation Around (Or Improperly Simplifying) The Need for Building Permits [9] PPS focusses on the following passage from the sentencing judge’s oral decision: Everybody who is building anything knows that you have to get permits through the Municipality. Geez, if you want to do renovations in your own home and it costs more than $5,000 you’ve got to get a permit. If you want to build a shed in your back yard you’ve got to get a permit. If you want to change the deck on the back of your house you’ve got to get a permit. If there's any plumbing or elec – plumbing – any plumbing work that’s going to be changed in your house, you need to get a permit. The Appellate states that this extract regarding the general community’s state of knowledge around building permits or when a building permit is required is not a relevant factor. By incorporating an irrelevant factor into his reasons, PPS continues, the sentencing judge was led to unjustifiably exaggerate the need for deterrence (i.e. use the sentencing process as a means of ensuring public awareness that these violations will not be tolerated). [10] PPS further points out that the reference to $5,000 as a minimum threshold value for obtaining a building permit is incorrect and neither mentioned in the Nova Scotia Building Code Regulations or the applicable By-Laws (PPS Written Submissions at para. 25). [11] An appeal court must ensure that a judge’s reasons are “properly scrutinized” (R v. Sheppard, 2002 SCC 26, at para 46, emphasis in original). To that end, a judge’s reasons are viewed as a whole and in their entire context and having regard to the record. Moreover, an appeal court does not “finely parse” a judge’s decision in a determined hunt for error (R. v. G.F., 2021 SCC 20, at para. 69) [12] Respectfully, when the sentencing judge’s decision is put in context, it becomes clear that the comments regarding building permit requirements (and the public’s knowledge of those requirements) related to minor construction projects (e.g. building a shed or a deck) – far removed from the significant commercial construction which PPS had undertaken at 296 Bluewater Road. More importantly, and while the sentencing judge’s comments may have been somewhat offhanded, they were obviously designed to highlight a much more significant and appropriate point that was relevant to sentencing. Namely, the facts surrounding PPS’s conviction and PPS’s state of mind – not some more ambiguous assessment of the general public’s knowledge of building codes. Thus, the sentencing judge emphasizes that PPS was engaged in building a large commercial building and it knew a building permit was required in the circumstances. Indeed, PPS was actively engaged in ongoing discussions with the compliance officials regarding this issue. All of this becomes clear when the impugned comments are not examined in isolation but, instead, placed within their proper context. A more contextual and complete review of the sentencing judge’s comments on this point would read: And this structure was constructed without the necessary permits. The company is responsible for making sure that this is done. Everybody who is building anything knows that you have to get permits through the Municipality. Geez, if you want to do renovations in your own home and it costs more than $5,000 you’ve got to get a permit. If you want to build a shed in your back yard you’ve got to get a permit. If you want to change the deck on the back of your house you’ve got to get a permit. If there's any plumbing or elec – plumbing – any plumbing work that’s going to be changed in your house, you need to get a permit. It’s no different with companies. Every company that is building knows that you have to go through an approval process. You have to get permission. You have to submit plans. You have to get everything approved and, while you are constructing, you need to have inspections done at certain stages of the construction so that things can be signed off on. And in this case there were all kinds of interventions, people talking, suggesting you know you’ve got to – anyways, that you weren't complying. [Emphasis added.] [13] In addition, deterrence is clearly a valid and important objective on sentencing in these circumstances. Having been convicted on multiple Building Code Act violations in the past, PPS invited (and the sentencing judge appropriately considered) the need to forcefully communicate the importance of compliance with all statutory and regulatory requirements and the seriousness of PPS’s breaches. [14] Overall, the comments in question were subsumed within (and overtaken by) a broader, more important, and relevant consideration on sentencing. I do not find that the concerns raised by PPS on this issue reveal an exaggerated view of deterrence in the circumstances or otherwise impacted the sentence. In so far as the impugned comments raised a concern around deterrence, I also do not find that the sentencing judge’s comments reveal an unreasonable weighing or balancing of that objective in the circumstances. [15] I would dismiss this ground of appeal. Issue 2: Improper Disregard of Market Rent When Assessing an Appropriate Fine for Violating the Building Code Act [16] At the initial hearing: 1. PPS presented an email dated April 17, 2023, from Aaron Ferguson, Vice President, Commercial Real Estate, Sales & Leasing, Colliers to PPS. The email purports to quantify the “potential rental value of the main building at 296 Bluewater Road”. It stated: Total ground level area is approximately 11,600 sq ft Income Office: 2200 sf x $ 12.50 psf = $27,500.00 Warehouse/storage: 9400 sf x $ 5.00 psf = $47,000.00 Total gross income $74,500 Expenses Property Taxes: $53,994.18 Insurance: $6,192.00 Net annual income: $14,314.82 *Whereas PPM is the tenant for the majority of space, all other operating costs are covered by them. The net benefit to PPS is $14,314.82 annually. 2. Based on this information, PPS argued before the sentencing judge that an appropriate fine would be $50,000 because …if [the space] had been rented out to a third party, that in total 9,400 square feet, 2,200 of which is office space, the office space could have been rented out for 47 – er for 27, 5 [$27,500] annually and then the warehouse and storage component for 47,000. 3. The total of these two figures is $74,500. If you then subtract property taxes and insurance, the net annual income is $14,314.82 which, PPS pointed out, is less than half what it proposes is a just and equitable fine ($50,000). [17] The sentencing judge rejected this submission. In its written submissions on appeal, PPS refers to the following statement from his oral reasons: The value of renting the property is neither here nor there. It was an illegally-constructed building at that time. It hadn't been following permits. You couldn’t rented [sic] it out if you wanted to. [18] On appeal, PPS argues that: The Learned Sentencing Judge’s decision not to consider a market assessment of rent, as submitted by the Appellant, disconnected his analysis of the appropriate quantum of fine to impose from the circumstances of the offence, and could only have encouraged him to overemphasize deterrence as an aspect of sentencing. [19] Respectfully, the sentencing judge’s decision neither reveals nor compels an exaggerated view of deterrence on this issue of market rent and did not otherwise impact the sentence. I also do not find that the sentencing judge’s comments demonstrate an unreasonable weighing or balancing of deterrence as an objective in sentencing. My reasons include: 1. The sentencing judge was correct in his conclusion that the property could not be rented out because it was occupied by a subsidiary of PPS called Provincial Pavement Markings Incorporated (“PPM”). 2. The sentencing judge was justified in observing that the evidence presented by PPS to demonstrate the rental value of the property was “neither here nor there” (sentencing judge’s words) for at least three important reasons: 3. PPS’s evidence regarding market rent was deficient in two respects: a. It does not accord with reality, as the sentencing judge noted. PPS did not actually lease the property. Rather, it allowed its subsidiary, PPM, to occupy the property. b. PPM did not pay any form of rent or compensation for occupying the premises. Or, more accurately, there is not evidence of any such payment. In short and, in reality, the rental value of the property for PPS was zero which is obviously no basis for determining the appropriate amount for a fine in the circumstances. On this point, the fact that PPM applied for the subject building permit on behalf of its parent company (PPS) is germane; 4. The email from Aaron Ferguson of Colliers is an extremely cursory opinion with no supporting information or citations upon which the accuracy or legitimacy of the opinion might be reasonably scrutinized. I recognize that the rules of evidence must necessarily be loosened in sentencing. For example, probation officers will often summarize an offender’s history, current circumstances, and future prospect without being subjected to the stringent application of the rules of evidence. At the same time, a basic modicum of support should be offered in support of these types of financial opinions. Put slightly differently, companies convicted of breaching the Building Code Act cannot demand that the Court accept these types of bald opinions at face value, without any form of scrutiny whatsoever; 5. The true financial value of the illegally occupied property was not some hypothetical market rent paid by a notional tenant, as proposed by PPS. Rather, it was the commercial benefits acquired by PPS for having its subsidiary occupy the premises. Assuming for the purposes of the argument that this is an appropriate factor in determining an appropriate fine, it is incumbent upon the convicted entity (PPS in this case), to provide a full financial picture of the businesses which operate on the property. This financial information could include corporate records confirming the relationship between the parent company and its subsidiary, tax returns, financial statements, general ledger reports, invoices etc. In this case, none of this information was provided to the sentencing judge; and 6. The sentencing judge’s comments should be put in their proper context. Immediately after making this statement regarding market rent, the sentencing judge continued: I can't ignore the previous history of the company. The fine that is appropriate is not the minimum, which is basically what the company is asking me to do, is impose the minimum fine. And that's not appropriate, not for a company that, in recent years, with the same players apparently, continued to not comply with the permit process with the Municipality. In other words, the sentencing judge did not focus on, or unreasonably exaggerate, the importance of deterrence in the circumstances. Repeated offences gave rise to justifiable and legitimate grounds to impose a fine which reflected the objectives of deterrence. However, the sentencing judge’s comments also reflect a concern for denunciation as a legitimate sentencing objective in the circumstances. Attached at Schedule “A” is a brief summary of the history regarding PPS’s interaction with building officials and a related failure to comply with the Building Code Act over a period of years and involving multiple structures. It demonstrates a troubling history of non-compliance and shows that an emphasis on deterrence and denunciation was appropriate in the circumstances. At the same time, it should be said, the sentencing judge consciously recognized and examined the necessity for restraint. It is evident in his reasons that the sentencing judge confronted, wrestled with, and balanced these various concerns. He said: When imposing penalties, there is the necessity for restraint. I don’t want to do something that will cripple an ongoing enterprise but there is also – the proportionality here is the moral blameworthiness. While this company – you can't really talk about moral blameworthiness for a company but the blameworthiness here is high, given the record, especially the record where very same people were being involved. If you had an independent contractor working for a company and that person is involved in every violation that has been prosecuted previously, then perhaps that’s somebody that you should be wary about having as an independent contractor. The fine has to be, I agree with both counsel, more than a license to ignore the permit requirements or the cost of doing business. The penalty that I impose here has to send – not only send a message to Provincial Property Services but it has to send a message to other similar companies doing business in the Municipality and wanting to either build or renovate their premises to have respect for the permit process. [20] In reaching this decision, I am also mindful of this Court’s decision in R v. Saberi, 2017 NSSC 34, where Jamie Campbell, J. wrote at para. 17: Offences under the Building Code Act are public welfare or regulatory offences. Deterrence is a paramount consideration in determining a fit sentence. The fine must be substantial enough to warn others that the offence will not be tolerated and must not appear to be a mere licence fee for illegal activity [emphasis added]. [21] Respectfully, I am unable to conclude that the sentencing judge failed to properly weigh or balance relevant factors, leading to an unreasonable exercise of discretion which, in turn, impacted the sentencing decision. [22] I would dismiss this ground of appeal. Issue 3: Failure to consider that the offences leading to PPS’s two convictions in respect of 395 Bluewater Road (and PPS’s fourth and fifth convictions overall) occurred at the same time and that this overlap in time should have led to a lower fine. Instead, the sentencing judge improperly treated the fourth conviction as an aggravating factor. [23] Counsel for PPS argues at paras 31 – 33 of its factum: The Appellant’s conduct in respect of its most recent conviction (on February 22, 2023, a $75,000 fine plus 15 percent victim fine surcharge for no occupancy permit) was also in respect of the property. There were two accessory structures that were built on the property without permits at the same time as the building was built. The timing of this particular conduct was also noted in the decision of the Honourable Judge Perry Borden (as he then was) on that matter. Judge Borden’s decision was appended to the Crown’s sentencing brief. The Learned Sentencing Judge made reference to this prior conviction in his decision. However, he did not note that the two matters were contemporaneous in time. The Appellant respectfully submits that the Learned Sentencing Judge may have proceeded as if the conduct underlying the prior conviction temporally preceded the conduct that formed the subject matter of the guilty plea in this matter. That scenario could only be seen as more aggravating than the one which actually occurred. [24] Counsel says that the contemporaneous timing of the two offences was a relevant factor that ought to have been considered. If that had occurred, counsel concludes, the amount of the fine would have been reduced. [25] Respectfully, this final argument does not give rise to a sustainable error. My reasons include: 1. The offences which were the subject matter of the fourth conviction are neither concurrent nor reasonably connected to one another. To the extent they intersect, it is only because PPS committed multiple, different violations of the Building Code Act at the same time. I note that the two offences involve two entirely different structures on the same parcel of the land. Judge Borden’s decision regarding PPS’s fourth conviction related to a smaller gravel storage shed that PPS constructed without even requesting a building permit and, it should be added, was already under investigation for building another, larger storage building on site as well as violations in respect of the main commercial building on sit. It is this main commercial building that is the subject matter of this appeal; 2. The guilty plea which preceded now Chief Judge Borden’s sentencing decision arose only because a building official happened to conduct an inspection related to a number of other Building Code Act violations which are at issue and happened upon the newly built, illegal gravel storage shed; and 3. While the Building Code Act violations resulting in the fourth conviction may have overlapped in time with the Building Code Act violations in this proceeding, it bears emphasizing that this overlap exposes a more serious underlying problem: new, deliberate, and compounding violations of the Building Code Act were occurring during the course of an ongoing investigation. These are factors that bear upon sentencing – and they clearly neither soften nor diminish the offender’s blameworthiness. If anything, it is an aggravating factor because it reveals a capacity to brazenly disregard or, more generously, points to an offender who very severely underestimates the importance of an ongoing process designed to promote the safe construction and occupation of buildings. In any event, this issue does not expose an appealable error that would have a material effect on sentencing. [26] I would dismiss this ground of appeal. CONCLUSION [27] I have reviewed the grounds of appeal separately and have also considered their cumulative effect on the sentencing judge’s decision. I am unable to discern an error that might be reversible or corrected on appeal. [28] The appeal is dismissed. Keith, J. Schedule “A” July 11, 2016 First Conviction (217 Bluewater Rd.): PPS pleaded guilty to unlawfully constructing a building within an existing buffer zone without a development permit. PPS was fined $20,000 and ordered to bring the building in compliance by August 11, 2016. 2016 Second Conviction (217 Bluewater Rd.): In July 2016, PPS obtained a new development permit to renovate 217 Bluewater Rd, including the requirement to restore the 40-foot buffer. By August 11, 2016, and in compliance with the July 11, 2016, Order, PPS removed the part of the building that was within the buffer. However, PPS did not respect the 40-foot buffer zone. Instead, PPS resumed using the buffer zone for storage. In a contested hearing, Judge Lenehan found PPS guilty and imposed a $30,000 fine. PPS appealed the fine. August 29, 2017 PPS Acquires Ownership of 296 Bluewater Rd. These are the lands which are the subject matter of this appeal. At the time of purchase, the land is undeveloped. November 17, 2017 Construction Permit Application (296 Bluewater Road): PPS’s subsidiary (PPM) applies for a building permit at 296 Bluewater Rd. on behalf of PPS. The drawings included with the application show a two storey office building at the front of the property connected to a longer one-storey maintenance facility. December 13, 2017 Construction Permit 164458 Issued (296 Bluewater Road): PPS issued a construction permit to complete the proposed building. The permit was valid for 2 years. August 27, 2019 Third Conviction (671 – 674 Hammonds Plains Road): PPS is fined $80,000 for illegally operating a small industrial park on lands located at 671 – 674 Hammonds Plains Road. August 29, 2019 Public Complaint (296 Bluewater Rd.): A member of the public alleges non-compliance with approved construction permit. September 3, 2019 Stop Work Order (296 Bluewater Road): Building inspectors attend on site in response to a public complaint. At that time, it discovered that PPS had begun construction of a storage building on site, without any approved building permit. August 3, 2020 PPS began occupying the Main Facility without requesting a final inspection or obtaining an Occupancy Permit. September 1, 2020 Appeal Hearing for Second Conviction (217 Bluewater Road) February 19, 2021 Appeal of Second Conviction Denied (217 Bluewater Rd.): Arnold, J. dismisses appeal in Second Conviction. His decision is cited as R v. Provincial Property Services Inc., 2021 NSSC 62. March 31, 2021 HRM building inspectors attend on site and discover that PPS was now occupying the Main Facility without either requesting a final inspection or obtaining an Occupancy Permit. HRM ordered PPS to complete the inspection process and obtain an Occupancy Permit within 10 business days (i.e. by April 15, 2021). During this inspection, HRM building officials also discovered that: 1. PPS was now occupying the storage facility it began constructing in 2019 without a building permit being issued. PPS was ordered to complete the building permit application process; obtain the required Building Permit; complete the inspection process; and obtain the required Occupancy Permit within 10 business days (i.e. by April 15, 2021). 2. PPS had also now constructed another, new roofed storage building without applying for a construction permit. PPS was ordered to complete the building permit application process; obtain the required Building Permit; complete the inspection process; and obtain the required Occupancy Permit within 20 business days (i.e. by April 29, 2021). November 4, 2022 Fourth conviction (Accessory Buildings on 296 Bluewater Road): PPS pleads guilty to one of six counts related to the unlawful construction and occupation of the second, smaller accessory building at 296 Bluewater Rd. contrary to section 8(b) of the Building Code Act. This is the storage building discovered during the March 31, 2021, inspection (see above). The Crown did not pursue charges with respect to the first accessory building discovered during the September 3, 2019, inspection (see above). The guilty plea is accepted and the matter is adjourned for sentencing. February 22, 2023 Sentencing decision for fourth conviction related to the smaller accessory building discovered during the March 31, 2021, inspection (see above). The Crown sought $200,000 calculated on the basis of a penalty for 50 days in contravention of the Building Code Act – even though the actual contravention period was much greater. The Defence accepted a penalty period of 50 days but $1,000/day resulting in fine of $50,000. The Defence also requested that this amount be reduced further under section 2 of the Remission of Penalties Act. Judge Perry Borden (as he then was) imposed a fine in the total amount of $86,250 for broken down as follows: a penalty of $1,500 per day for 50 days ($75,000) plus 15% victim surcharge ($11,250). Judge Borden refused to exercise his discretion and remit any portion of the fine. December 5, 2023 Two weeks before trial, PPS pleads guilty to one count in the within prosecution. February 26, 2024 Judge Lenehan sentences PPS for its fifth conviction. He imposes a fine of $150,000 plus a 15% victim surcharge ($22,500) for a total of $172,500.