In a decision that will be of interest to developers and others whose interests may be affected by zoning decisions of local governments, the B.C. Court of Appeal recently reaffirmed the duty of fairness owed to interested parties when such decisions are made.  The Court also provided some guidance as to what is required of local governments in order to meet that duty.

At issue in Fisher Road Holdings Ltd. v. Cowichan Valley (Regional District), 2012 BCCA 338 was the validity of a down-zoning amendment bylaw passed by the Cowichan Valley Regional District (“CVRD”) which changed the zoning of certain property owned by the Petitioner Fisher Road from “Light Industrial I-1” to “Light Industrial-Limited I-1C.”  The effect of the amendment was to remove composting, recycling and auto wrecking as possible uses on the subject property.

Prior to the amendment, Fisher Road operated a composting business on the property under a Solid Waste Management Licence issued by the CVRD.  In October 2009, Fisher Road applied to the CVRD to amend its licence in order to permit it to expand its composting business and to add a recycling business on its property.  In response to that application, the CVRD established a citizen’s advisory committee to review and make recommendations to its Director of Engineering concerning the application and it retained an environmental consultant to conduct an environmental review of Fisher Road’s existing and proposed operations.  The CVRD was aware of public concerns about the smell emanating from such businesses and possible contamination of groundwater.

In conjunction with Fisher Road’s application to amend its licence, the CVRD required it to hold a public meeting which occurred on May 20, 2010 with about 200 people in attendance.  Most of those in attendance were opposed to an expansion of the operations permitted under Fisher Road’s licence.  A report about the meeting was prepared by a CVRD staff member and presented to the CVRD’s Electoral Area Services Committee.  The report noted the concerns raised by area residents and suggested that it was unlikely that the smells emanating from the industrial uses and the threat to groundwater could ever be controlled or eliminated.  As a result of that report, the Committee proposed the down-zoning amendment bylaw and on June 23, 2010, the CVRD introduced and gave first and second reading to the bylaw.

On October 13, 2010, the consultant retained by the CVRD produced a draft report which was provided to Fisher road for comment.  A final version of the report was issued on November 23, 2010 and was posted on the CVRD’s website (the “Environmental Report”).

On November 19, 2010 the CVRD issued a Notice of Public hearing respecting the proposed bylaw.  The Notice indicated that a copy of the proposed bylaw and relevant supporting information was available for review at its offices.

On November 25, 2010 a second public meeting was held concerning Fisher Road’s licence amendment application.  At the meeting the Environmental Report was presented and discussed.  Following the meeting, the citizen’s advisory committee issued a report recommending that the CVRD not approve any expansion of Fisher Road’s operations until contamination of groundwater in the area had been fully investigated and the source of the contamination identified.  That recommendation came out of the Environmental Report.

On November 30, 2010, the CVRD held a public hearing into the bylaw amendment.  During the course of the public hearing, the Chair advised attendees that all of the file information relevant to the amendment was available at the back of the room.  Neither the Environmental Report nor the report of the citizen’s advisory committee was included in the available materials.

On February 9, 2011, the CVRD gave third reading to the down-zoning bylaw and on March 9, 2011 the bylaw was adopted.  The third reading of the bylaw was based in part on the Environmental Report and the report of the citizen’s advisory committee.

Fisher Road filed a Petition seeking to quash the bylaw on the ground that the CVRD, in adopting the bylaw, failed to comply with the terms of the Local Government Act R.S.B.C. 1996, c. 323 and that it breached the requirements of procedural fairness and natural justice.  In particular, Fisher Road argued that the CVRD failed to disclose to the public at the public hearing all material relevant to the bylaw, specifically the two reports referred to above.

The duties a local government in connection with zoning bylaws are set out in s. 890 of the Local Government Act which stipulates that, subject to certain limited exceptions, a local government  shall not adopt a zoning bylaw without first holding a public hearing for the purpose of allowing the public to make representations on the proposed bylaw.  Section 890 further requires that all persons whose interest in property is affected by the proposed bylaw must be afforded a reasonable opportunity to be heard or to present written submissions concerning the bylaw.

Numerous authorities have held that in order for members of the public to meaningfully participate in a public hearing into a proposed bylaw, they must have the opportunity in advance to examine and consider not only the terms of the bylaw under consideration but also all reports and other information relevant to the approval or rejection of the bylaw.  The central issue in the case therefore was whether Fisher Road was afforded that opportunity.

In the Supreme Court (2011 BCSC 1540), Fisher Road’s Petition was rejected.  The Judge noted that the case was complicated somewhat because there were two parallel procedures ongoing-the licence amendment application and the bylaw procedure.  He also acknowledged that two key pieces of information-the Environmental Report and the citizen’s advisory committee report were missing from the materials made available to the public in connection with the bylaw.  Nonetheless, he concluded that Fisher Road, as the primary party affected by the bylaw, had ample opportunity to review and provide input to both of those reports.  It had in fact been provided with the Environmental Report in draft and hade made submissions before that report was finalized.  The Judge held further that interested members of the public would have been aware of the parallel processes and had the opportunity to attend the public meetings at which the Environmental Report was considered.  That report was also available on the CVRD website.

In the circumstances, the Judge found that the CVRD conducted the public hearing into the bylaw in accordance with the terms of the Local Government Act and in a fair manner.

Fisher Road appealed and the Court of Appeal disagreed with the conclusion of the Supreme Court Judge.  According to Mr. Justice Hinkson, who wrote for the Court, the issue was not whether the two reports had been disclosed to Fisher Road, as clearly they had been.  Rather, the issue was whether the CVRD made it clear to Fisher Road and to other members of the public that the reports would be relied upon by the CVRD in deciding whether or not to pass the bylaw.

In Justice Hinkson’s view, anyone reading the Notice of Public hearing concerning the bylaw or attending the public hearing would have concluded from the absence of any reference to the reports that they in fact were not going to be considered by the CVRD vis-à-vis the bylaw.  Without knowing that the reports were to be considered, Fisher Road and other members of the public could not prepare an intelligent or reasoned response to those reports in the context of the bylaw.  Justice Hinkson further held that the Supreme Court Judge erred by conflating the two separate public processes and by assuming that what was relevant to the licence amendment application would be understood by the public to be relevant to the bylaw amendment process as well.  Once it was accepted that the reports were in fact material to the CVRD’s consideration of the bylaw, the failure to disclose the reports in the bylaw process constituted a breach of the requirements of procedural fairness.

It can be argued that the decision of the Court of Appeal represents a triumph of form over substance in that there is little doubt, as found by the Supreme Court  Judge, that Fisher Road participated extensively in both of the parallel processes and had ample opportunity to address the issues raised in the two reports.  Nonetheless, the Court’s decision underscores the need for local governments to scrupulously adhere to the requirements of the Local Government Act and to the principles of procedural fairness when enacting bylaws affecting the interests of local businesses and members of the public generally.