Court of Appeal Upholds Ucluelet’s Decision to Downzone a Developer’s Lands

A recent decision of the BC Court of Appeal affirms a local government’s authority to act quickly and in good faith to forestall development via downzoning of lands, and it clarifies the doctrine of “commitment to use” in respect of claims of an owner that it has already established a lawful non-conforming use.

In Onni Wyndansea Holdings Ltd. v. Ucluelet (District), 2023 BCCA 342, the Court dismissed an appeal by a developer, Onni Wyndansea Holdings Ltd. (“Onni”), seeking to quash zoning bylaws made by The District of Uclulet (the “District”) which downzoned its property and impeded its development plans or, in the alternative, seeking a declaration that Onni had a lawful non-conforming use for the property which would cause any downzoning to be inapplicable to its plans.

In 2005, the District amended its zoning bylaw to permit the development of a comprehensive resort on undeveloped land on the outskirts of Ucluelet that was previously within a rural zone. The development plan included the creation of a subdivision, construction of a hotel and golf course, and dedication of land to the public. In 2008, the subdivision of a parcel of the land was approved and work began by a previous owner to install services. That prior owner encountered financial difficulties in 2012 and the services were then decommissioned.

In 2021, the new owner, Onni, sought to reactivate the services and to proceed with the development in the subdivision. By this time, Onni had indicated its intention to depart from the comprehensive 2005 golf course plan for the surrounding land. When Onni submitted building permit applications for the strata lots within the subdivision, the District council adopted bylaws downzoning the lands to revert to rural zoning even more restrictive than the rural zoning in place prior to 2005. This prevented Onni from proceeding with its plan to develop strata lots within the subdivision in accordance with its building permit applications.

1. Allegations of bad faith and improper purposes

Onni alleged that the Mayor for the District had stated that the District “did not like the deal it had struck with the previous owner at the time of the original rezoning” and that the District could have required more land from the previous owner as part of that rezoning. Onni also alleged that in adopting the zoning amendments, Council wanted to control development on the lands owned by Onni and to stop it from developing or selling lots within the subdivision until the District secured more amenities from Onni.

The Court disagreed and found that the judge had drawn factual inferences about the Council’s motives that were reasonably available to her on the evidence before her. The Court upheld the factual findings that Council’s decision to act quickly to forestall development did not demonstrate bad faith and that the Council did not, nor could have, taken steps to prevent the sale of the strata lots in an attempt to extract more amenities. Rather, Council was concerned that Onni’s plans for the subdivision were not in accordance with its views of what was best for the community and had become divorced from the original comprehensive development plan for the lands. Those motives were not in bad faith nor for an improper purpose.

2. Were the zoning amendments unreasonable?

Onni also argued there were three reasons why Council’s decision to adopt the downzoning was unreasonable:

  1. it constituted an unjustified reversal of a longstanding practice of the District to allow the isolated development of the subdivision;
  2. the Council’s deliberations reflect an incoherent chain of reasoning; and
  3. the Council failed to consider the significant impact of the amending bylaws on Onni and the third party who purchased a strata lot in the subdivision in 2008.

With respect to prior “longstanding practice”, the Court found that judicial review is not likely to overturn a local government land use decision because of prior longstanding practice of the local government when the legislation gives authority to local governments to amend and repeal land use decisions. In any event, the Court also found that, on the facts, there was no longstanding practice of the District to allow the isolated development of the subdivision. The original upzoning of the property was for the entire comprehensive development, not just the portion of the subdivision. The District had never relieved Onni of the commitments made by the previous owner and it did not endorse Onni’s shift to developing the subdivision in isolation while abandoning the comprehensive development plan.

In relation to the allegation of “incoherent chain of reasoning”, Onni alleged that Council had ignored prior facts relevant to its decision. The Court disagreed and found that any facts Council did not explicitly refer to in arriving at its downzoning decision did not detract from its concerns that Onni and the prior owner had left a number of commitments unfulfilled and Onni had signified its intention to abandon the comprehensive 2005 plan.

As to the allegation that Council had failed to consider the significant economic impact on Onni and a strata lot purchaser, the Court found that the District had provided notice to any affected landowners and heard submissions from them in advance of voting on the downzoning. The Court upheld the long-standing principle that a land use decision is one made by balancing the interests of private owners against the broader public interest in finding the District was not beholden to avoiding economic harm to Onni and the strata lot purchaser.

3. Was there a lawful non-conforming use?

Finally, Onni argued that the installation of services to the subdivision was a “commitment to use” that would satisfy establishment of a lawful non-conforming use under s. 528 of the Local Government Act, meaning that the downzoning could not impede Onni’s continued development of the subdivision. The Court disagreed, finding that the original owner’s installation of the services was in respect of the comprehensive 2005 golf resort plan, and Onni could not rely on those services as being a commitment to the use of only the subdivision in isolation from the comprehensive 2005 golf resort plan.

Further, the Court noted that no work had been done on the strata lots which distinguished this case from Sunshine Coast (District of) v. Bailey, 1995 CanLII 570 (BC SC), where a lawful non-conforming use was found to exist where a majority of planned cottages had been constructed at the time the downzoning was enacted.