Ontario Court Dismisses Class Proceeding Related to Streetcar Construction

On April 6, 2011, Justice Paul Perell of the Ontario Superior Court of Justice dismissed a $100 million class proceeding against the Toronto Transit Commission (TTC) and the City of Toronto on the ground that the Ontario Municipal Board, and not the court, had exclusive jurisdiction over a claim for business losses related to the construction of the St. Clair Avenue West streetcar project.

The proceeding was brought by Curactive Organic Skin Care Ltd. as representative plaintiff for business owners along St. Clair Avenue West in Toronto.

The claim was related to the controversial construction of a dedicated streetcar right-of-way along St. Clair that physically separated the centre two lanes from the rest of the roadway.

The plaintiff claimed that the TTC and the City of Toronto were negligent in managing construction of the project, resulting in costs overruns, substantial construction delays, and ongoing disruptions to local businesses. The plaintiff also alleged abuse of public authority against the City, claiming that the City had engaged in a policy of “blockbusting” to intentionally cause harm to the affected businesses along St. Clair.

The TTC and the City successfully brought a pre-certification motion to have the action dismissed on the ground that the Ontario Municipal Board, and not the court, had exclusive jurisdiction over the claim.

Justice Perell held that the substance of the plaintiff's claim was for “injurious affection” because the alleged injury was an inevitable consequence of work which the TTC and the City were authorized by statute to undertake. Compensation for injurious affection is available under the Expropriations Act and falls within the exclusive jurisdiction of the Board.

Justice Perell held that the plaintiff was deprived of its cause of action in court and that its pleas of negligence and abuse of public authority were being used to disguise a claim for injurious affection.

The plaintiff is seeking to appeal the ruling to the Court of Appeal for Ontario.

Kathryn Chalmers and Patrick Duffy at Stikeman Elliott LLP acted for the TTC.

Graham Rempe of the City Solicitor's Office represented the City of Toronto.

Stephen Edell represented the plaintiff Curactive Organic Skin Care Ltd.