The exercise of a local government’s discretion to issue a development permit is a limited one. A local government may only exercise its discretion to grant or refuse a development permit based upon the guidelines set out in its Official Community Plan, and cannot act upon “extraneous considerations”. Additionally, while it is well understood that a local government must give reasons for refusing a development permit, a recent decision of the B.C. Supreme Court confirms that in some circumstances at least the courts will look behind the reasons given and will not hesitate to find that in fact, the local government has based its decision on improper considerations.
In 0742848 B.C. Ltd. v. Squamish (District) 2011 BCSC 747, the petitioner applied for a development permit for the placement of a modular home on its property – the lands were within a development permit area established under section 919.1(1)(a) of the Local Government Act (protection of the natural environment, its ecosystems and biological diversity). The area was not designated as a development permit area under section 919.1(1)(b) (protection of development from hazardous conditions). The area where the petitioner wanted to place the home lay beside the Squamish River, and was outside the part of the property protected by a dike. The development permit guidelines contained references to the siting of buildings so as to respect natural vegetation, and contained rather vague references to requiring setbacks beyond that set out in the Zoning Bylaw where recommended by senior levels of government such as the Department of Fisheries and Oceans. The guidelines also referred to minimizing construction of buildings and placement of fill in recognition of the area’s function as a floodway. When the application was brought before Council, the recommendation from District staff was to issue the permit. Staff advised Council that the flood hazard issue would be dealt with through the building permit process. However it was clear from the record of Council’s discussion that Council’s overwhelming concern was the fact that the home was to be placed outside of the area protected by the dike. The application was referred back to staff to address what Council suggested to be non-compliance with the guidelines referred to above (impact on natural vegetation, and minimizing construction within the floodway). The Court concluded that Council’s initial rejection was due to flood hazard concerns.
When the application came back to Council for a second time, it was again rejected. This time the Council gave more detailed reasons for finding that the application did not comply with the guidelines – the formal reasons as set out in the Council resolution did not refer to the flood hazard issue. Somewhat tellingly, two members of Council mentioned the flood hazard concern in the debate on the motion. Council did not offer detailed reasons for disagreeing with the staff recommendation to issue the permit. No new information was before Council the second time the application was considered. The Court held that in these circumstances, Council’s real reasons continued to be an extraneous concern about flood hazard, and that the reasons set out in the resolution had been contrived. As a result the Court held that Council had acted without jurisdiction.
The Court went on to hold that even if Council acted within its jurisdiction, its decision was unreasonable and should be set aside. The Court rejected the argument that the Council acted within its authority by, in effect, specifying an area that was to remain free of development (as referred to in section 920(7)(a) of the Local Government Act). The powers under section 920(7) were to be read in the context of the statutory scheme, and authorized conditions where a permit was issued, but did not take the place of the applicable guidelines. Citing the Supreme Court of Canada’s decision in Dunsmuir v. New Brunswick, 2008 SCC 9, the Court held that the decision of Council did not “fall within a range of possible, acceptable outcomes which are defensible in respect of the facts and law”. Further, the Court held that there would be no purpose in remitting the matter back to Council for consideration. The appropriate remedy was to order Squamish to issue the permit.
This decision indicates that the courts will look behind the reasons for refusing a development permit when assessing the “reasonableness” of the local government’s decision, or when determining whether the local government acted without jurisdiction in refusing the permit. Certainly, a council or regional district board is entitled to disagree with the recommendations of staff and is not bound to follow those recommendations slavishly. But where the local government is asked to consider a development permit application, rejecting staff’s recommendation to issue the permit without engaging in a thoughtful analysis of the applicable guidelines, and failing to articulate reasons that are rationally based on the guidelines, carries significant risk.