Damages Claim Relating to a Zoning Error Dismissed for Failing to Establish a Private Law Duty of Care Where Only a Public Duty Existed

The BC Supreme Court recently dismissed an action brought against the Regional District of Okanagan-Similkameen (the “RDOS”) by a land owner and developer seeking lost profits and other damages relating to the alleged frustration of his attempts to move forward with a planned large-scale development. Jeff Locke and Josh Krusell of Stewart McDannold Stewart successfully defended the RDOS in this proceeding. The developer’s claim largely related to the decision of the RDOS Board to down-zone the subject property after it was discovered that the property had been inadvertently up-zoned years earlier.

The Court’s decision, cited as 0956375 B.C. Ltd. v Regional District of Okanagan-Similkameen, 2020 BCSC 743, addresses several legal issues relevant to local governments, including:

  • A public law duty of care vs. a private law duty;
  • Solicitor-client privilege over legal advice received pertaining to a matter ultimately going before a Board or Council at a public hearing;
  • The ability of local governments to correct an error in zoning; and
  • The tort of misfeasance of public office.

The Facts

In this case, an RDOS employee incorrectly entered the zoning information for the subject property into an administrative aspect of the RDOS’s zoning map database that was not accessible to the public nor part of the official zoning bylaw. The RDOS later undertook a formal Repeal and Re-enactment (R&R) process of all of its land use bylaws in order to address administrative deficiencies, with the intention that no substantive change of zoning designation would be made for any property within the RDOS. However, the latent error in the RDOS’s zoning map database manifested itself in the zoning map that was adopted by the RDOS Board as part of the R&R zoning bylaw. This had the effect of up-zoning the subject property from large, rural holdings (LH) to multi-residential use (RM1).

When the property owner later applied for development permits for a multi-residential development, the RDOS became aware of the zoning error and ultimately held a public hearing where the Board voted to downzone the property back to its prior large holdings designation.

Private vs. Public Law Duties of Care

The developer alleged that the RDOS owed him a private law duty “to conduct a fair and transparent process for the consideration of rezoning the Property from RM1 to LH” including a duty to disclose the legal advice received by the Board relating to the zoning error and the upcoming hearing to potentially down-zone the property. Further, the developer alleged that the RDOS owed a private law duty of care to provide “correct zoning information” which it failed to do in representing on its post-R&R zoning map that the property was “correctly zoned RM1”. For breach of these private law duties, the developer sought damages for monies spent in pursuance of developing the property and for lost profits as a result of not being able to complete and sell the planned development.

In this case, the Court found that any analogous duties of care to the subject circumstances had been rejected by the Supreme Court of Canada in Welbridge Holdings Ltd. v. Greater Winnipeg, [1972] 3 WWR 433. The Supreme Court of Canada stated there that there is no private law duty of care in public hearings and that the appropriate remedy is the administrative remedy of judicial review, and not a claim in damages;  nor was a private law duty owed to individuals who relied on an invalid bylaw. The B.C. Supreme Court found that, by analogy, the RDOS did not owe a private law duty of care regarding its validly adopted zoning bylaw that contained an error in zoning.

Even if there had been no analogous cases, the Court would have also declined to recognize a new duty of care. The Court noted that proximity was the critical factor in establishing a new duty and that it had not been established. Particularly, the Court noted the lack of direct interactions between the parties and that the effect of downzoning on the property owner was no different than might have been against any other property owner.

Further, even if there had been sufficient proximity, a new duty of care would still not have been recognized because of concerns about indeterminate liability, the availability of judicial review as a remedy, and because the proposed private duty would conflict with a local government’s public duty to zone properties while considering the public interest.

Solicitor-Client Privilege Over Legal Advice Provided to a Board or Council

The plaintiff also argued that the RDOS was negligent during the downzoning process because the RDOS failed to reveal to the property owner the legal advice it had received on the property’s correct zoning. The RDOS continued to maintain this privilege throughout trial. The Court noted that solicitor-client privilege is to be “as near to absolute as possible” and that the Community Charter expressly permits legal advice to be received in confidence. Therefore, considerations of procedural fairness for public hearings did not require the disclosure of documents subject to solicitor-client privilege to the property owner or others.

Correcting a Zoning Error

 The Court also noted that the RDOS was “acting in the public interest and for the public good” when correcting the zoning error by downzoning the property. The Court recognized that the incorrect zoning was simply an error and that the RDOS viewed it as inconsistent with overall RDOS policy and land use objectives. To recognize a private duty of care to, essentially, maintain the RM1 zoning would create a conflict with the public duty owed by the RDOS to implement zoning bylaws to achieve public policy and land use objectives.

Misfeasance of Public Office

The developer also alleged that the RDOS had committed the tort of misfeasance of public office, sometimes also referred to as abuse of office, by engaging in deliberate, unlawful conduct in the exercise of public functions in a manner likely to injure the plaintiff.

The Court found that a claim for misfeasance in public office must specifically include the alleged wrongdoing public official as a defendant and that failure to do so is fatal to any claim. As the plaintiff had only named the RDOS as a defendant, and had not claimed against any individual persons, the Court dismissed this aspect of the claim without much further analysis.