Halifax Regional Council decided to sell a surplus school property, but initially did not allow local community non-profit groups to make submissions before selling it to a developer – and for a price that was significantly below the market value of the property. Community groups were later able to make proposals, but as part of the RFP for private developers. Four community groups challenged the decision to sell the property to JONO Developments. The council rescinded that decision pending review of the sale process, but subsequently upheld the award to JONO. The community groups then sought judicial review: North End Community Health Association v Halifax (Regional Municipality), 2012 NSSC 330.
MacAdam J held that the municipality owed a duty of fairness to the community groups; this required the municipality to follow its own process and afford local community groups the right to make submissions before other parties were asked to submit bids. Failure to follow an established procedure was a violation of procedural fairness and the legitimate expectations of the community groups. It wasn’t necessary to show that the latter had actually relied on the fact that the procedure would be followed; as long as there is a procedure, it must be followed. The community groups were also successful in demonstrating that the municipality had breached its governing legislation in approving a sale at a price that was significantly below market value. The standard of review of the council’s decision was correctness, the judge concluded, although he thought the determination of price was to be reviewed on a standard of reasonableness. The sale price was clearly unreasonable, given that it was $1 million less than market value and evidence that JONO was prepared to pay market value if need be. On a correctness standard, the sale could not be upheld because the governing legislation provides that a sale of surplus property at less than market value may be made only to a non-profit organisation.
[Link available here].