Neskonlith Indian Band v. The City of Salmon Arm et al., 2012 BCSC 499

Last week, in Neskonlith Indian Band v. The City of Salmon Arm et al., the Supreme Court of British Columbia answered a question which has loomed over local governments for some time: do local governments owe First Nations an independent constitutional and legal duty to consult and accommodate in good faith prior to making decisions which may impact aboriginal rights and title?  The court concluded that no such independent duty exists.

In the case, the Band sought to quash an environmentally hazardous area development permit issued by the City of Salmon Arm in late 2011 which permitted a developer to build a shopping centre on private land on the Salmon Arm delta and floodplain. The Band sought a declaration that the City owed the Band a duty to consult and accommodate prior to the issuance of any development permit.

The Band’s reserve bordered the downstream side of the development. The hazardous area designation meant that there was a risk of the environment harming the development (in this case by flooding), not the other way around.  However, the Band argued that if the development flooded in the future, necessary flood-control measures used to protect the development would damage the Salmon River delta, which was an area of high cultural and ethnobotanical importance to the Band.

The Band argued that the well-established constitutional duty of the Province to consult First Nations on decisions which might affect aboriginal rights and title, rooted in the “honour of the Crown”, was a duty which extended to local governments as decision-makers exercising delegated provincial authority. The City argued it could not “stand in the shoes” of the Crown for the purposes of a duty to consult.

The court reviewed a number of duty-to-consult cases, many of which only tangentially dealt with the issue of the whether a local government owes a constitutional duty to consult First Nations.  Nevertheless, the court extracted the following principles from the jurisprudence:

1)      The honour of the Crown is non-delegable and rests at all times with the Province.

2)      Procedural aspects of the duty to consult can be delegated to third parties, but for this to be done, the authority must be expressly or impliedly conferred by statute.

3)      A municipality has no independent duty to consult.

The Band conceded that there was no express or implied statutory authority requiring the City to engage in consultation with First Nations beyond what is required in s. 879 of the Local Government Act (relating only to OCP development). Instead, the Band argued the City owed an independent duty to consult—an argument which the court rejected.  The court specifically dismissed the Band’s argument that the duty to consult vests automatically with whoever is empowered to make decisions affecting aboriginal rights.

The court noted that, “in fulfilling its duty to consult, the Province can delegate aspects of consultation to municipalities.  But in all cases where consultation is inadequate, First Nations retain a remedy against the Crown as the “honour of the Crown,” and thus the final responsibility for ensuring that adequate consultation occurs, rests with the Crown.”  This suggests that the Crown likely will not be able to side-step or avoid its consultation obligations by simply delegating these obligations wholesale to a non-agent entity, such as a local government, since this would constitute an impermissible delegation of the “honour of the Crown.”  Even where procedural aspects of the duty to consult are delegated by statute (e.g. s. 879, LGA), the court’s reasoning suggests that ultimate responsibility for discharging the duty to consult still rests at the feet of the Province.

The court’s findings are good news for local governments.  They suggest that local governments cannot be treated as a mere extension of the Province in all situations for the purposes of engaging and fulfilling any constitutional duty to consult and accommodate First Nations.  Though this case is likely to be appealed, it offers some comfort for the time being that local governments will not—absent express or implied statutory authority—be expected to “stand in the shoes” of the Crown in the ongoing process of reconciling Crown interests with those of First Nations.

Holman Wang

604.215.0505

hwang@valkyrielaw.com

Canada (Attorney General) v. Bedford, 2012 ONCA 186

On March 26, 2012, in the case of Canada (Attorney General) v. Bedford, 2012 ONCA 186, the Ontario Court of Appeal struck down the Criminal Code provisions relating to bawdy houses,  effectively decriminalizing the operation of brothels.  The ruling has been suspended for one year, and will likely be appealed.  It also only applies in Ontario and is therefore not binding in British Columbia.  However, the decision serves as advanced warning of what may occur here.

The decision may raise important and complex issues for local governments.  Local governments may wish to consider now what are the implications for them of the potential decriminalization of prostitution and how they plan to approach it.

In the case, the applicants challenged sections 210, 212 and 213 of the Code (which made criminal offences of owning and working in a bawdy house, living on the avails of prostitution, and communicating in a public place for the purposes of prostitution) on the basis that the provisions contravened the guarantee of liberty and security of the person contained in section 7 of the Charter of Rights and Freedoms.

The court, in a lengthy decision, held that the prohibition on common bawdy houses for the purpose of prostitution is unconstitutional and must be struck down.  However, the court suspended the declaration of invalidity for 12 months to give Parliament an opportunity to redraft a Charter-compliant provision.  The court found that working inside is the safest way to sell sex but prostitutes who do so are subject to criminal sanction.  Thus, the ban on bawdy houses forced prostitutes to choose between their liberty interest and their personal security.  The court held that the purpose of the bawdy house provisions are to control public health and safety.  The court found that the provision was too broad because it applied equally to large, disruptive establishments and a sole prostitute working out of her own home.  The court found the legislation is most significantly overbroad in its extension to the prostitute’s own home for her own use: a single person discreetly operating out of her own home by herself would be unlikely to cause most of the public health or safety problems to which the legislation is directed.  Further, the court held that there was no suggestion that the broader public safety problems are associated with a single person, operating by herself, in her own premises.

The court held that the prohibition on living on the avails of prostitution infringes s. 7 of the Charter to the extent that it criminalizes non-exploitative commercial relationships between prostitutes and other people.  However, the court did not strike down that prohibition, but rather read in words of limitation so that the prohibition applies only to those who live on the avails of prostitution in circumstances of exploitation.  Finally, the court upheld the ban on communicating in public for the purpose of prostitution.

The court’s decision, if upheld and applied across Canada, will undoubtedly force local governments to become involved in the regulation of prostitution.  Areas for local governments to consider include licensing of businesses, regulation of uses through zoning, signage, and bylaw enforcement.  Financial planning and budgeting will also be necessary.  The decision also highlights a significant challenge.  The court’s reliance on safety and the finding that a single person discreetly operating out of her own home by herself would be unlikely to cause public health or safety problems has implications for local governments in terms of permitting and regulating home-based businesses.  Local governments must be careful not to infringe the Charter right of security, and must be careful to avoid encroaching on criminal law.

Gwendoline Allison
604.926.6681
gallison@valkyrielaw.com

Tips addressing five common issues which may arise during the tendering process.

Catalyst Paper Corporation v. North Cowichan (District) 2012 SCC 2

The Supreme Court of Canada (“SCC”) has, in its decision of January 20, 2012 affirmed the findings of the BC Supreme Court and BC Court of Appeal in upholding the District’s tax rate bylaw, which was challenged by Catalyst Paper Corporation (“Catalyst”) as being illegal, unreasonable and ultra vires.

Briefly, the facts of the case are that Catalyst operates a pulp and paper products mill in the District of North Cowichan and has been experiencing severe economic difficulties.  Residential properties in the District represent 90% of total property values in the District, but currently pay only about 60% of the total taxes collected by the municipality.  Approximately 37% of the taxes are currently paid by Catalyst as a “Major Industry” property owner, while consuming only 6% of municipal services.  Catalyst had lobbied for a reduction in its property taxes, including seeking an empirical assessment of property taxes based on consumption of municipal services. While providing a gradual reduction in the percentage of overall taxes paid by Catalyst since 2007, the District’s subsequent 2009 tax rates bylaw perpetuated the very high tax rate ratio between Residential and Major Industry classes.  Catalyst challenged the bylaw, arguing that the courts can set aside municipal bylaws on the ground that they are unreasonable, having regard to objective factors such as consumption of municipal services.  The District argued that the courts cannot overturn a bylaw simply because it places a disproportionate burden on a taxpayer.  Both the BC Supreme Court and Court of Appeal agreed with the District, and Catalyst further appealed to the highest level at the SCC.

In a unanimous judgement delivered by the Chief Justice, the SCC dismissed Catalyst’s appeal with costs, agreeing with the BC courts that the bylaw fell within a reasonable range of outcomes following a substantive judicial review of the bylaw on the standard of reasonableness.  The Chief Justice confirmed the following matters, all of which are important for a local government to keep in mind when exercising legislative power in passing bylaws:

• Subject to the s.165 financial plan, s.197 of the Community Charter confers an unfettered discretion in terms of the factors a local government can consider in fixing property tax rates (subject to property tax ratios and caps legislated in certain circumstances where the province considers these as important public policy objectives);
• Local governments passing bylaws are entitled to consider broader social, economic and political issues as well as the objective considerations bearing directly on the matter;
• The wide deference shown to local government councils does not mean that they have carte blanche;
• Bylaws must not exceed the purview of legislation that empowers a local government to pass bylaws;
• Local governments are not required to give formal reasons or lay out a rational basis for bylaws (but note: there must be sufficient evidence available to facilitate understanding of how and on what basis decisions are made);
• Local governments must adhere to appropriate processes and cannot act for improper purposes;
• Local government bylaws are subject to judicial review, in order to ensure the legality, reasonableness and fairness of the administrative process and its outcomes; and
• In judicial review, reasonableness is concerned with (a) the existence of justification, transparency and intelligibility within the decision-making process, and (b) whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law.

Finally, shortly before the SCC’s decision was delivered, Catalyst announced that, although it is not in bankruptcy, the company is seeking financial restructuring under the Canada Business Corporations Act and the US Bankruptcy Code.

Rina Thakar

Valkyrie Law Group LLP

604.633.1064

rthakar@valkyrielaw.com

Conflict of Interest under the Community Charter and Common Law

Given the recent civic elections this past November, conflict of interest rules may be a topic on the radar of many local government elected officials.  As such, the BC Supreme Court’s recent decision in Schlenker v. Torgrimson, 2012 BCSC 41 (“Torgrimson”) is timely, as it further clarifies the conflict rules pertaining to elected officials who are also members or directors of community organizations that may, in the future, have matters before the elected official’s council or board.

At issue in Torgrimson was the conduct of two trustees of the Salt Spring Island Local Trust Committee (the “LTC”) who voted to provide money to two non-profit societies, of which they were directors and members.   The societies involved were the Water Council Society and Climate Action Council.  The monies granted to the societies were to be used for the purpose of undertaking various projects relating to water and climate concerns. The petitioners sought a declaration that the two elected officials be disqualified from office on the basis that they failed to disclose a direct or indirect pecuniary conflict of interest.  In the alternative, the petitioners sought an order that the elected officials’ offices be vacated on the basis that they were in a conflict of interest at common law (as a result of their association with the societies).

The petitioners’ arguments were dismissed.  With respect to the alleged pecuniary conflict of interest, the Court found there was no evidence to establish that the grants provided to the societies had the potential to affect the personal financial interests of the elected officials. Importantly, the elected officials, in their capacities as directors, had not received remuneration from either society.  With respect to the alleged common law conflict of interest, the Court considered the concern of the public at large with respect to water and climate issues on Salt Spring Island, as well as the acknowledgement of these issues in the LTC’s Official Community Plan, and found that there was no evidence to establish that the elected officials were voting to advance their own personal interests beyond the interests they had in common with other citizens in the community.

In its reasoning, the Court acknowledged that local government officials are often elected because of their involvement with certain local issues and matters (involvements which frequently entail association with community groups), and in doing so clarified that:

• an elected official’s membership in a group that has a matter before council or a board will not, in and of itself, be sufficient to create a pecuniary conflict of interest in the absence of evidence showing a link between the personal pecuniary interest of the elected official and the pecuniary interest of the group;

• while an actual pecuniary interest need not be established, there must be evidence of the potential to affect the elected official’s personal financial interest;

• a common law conflict of interest by association will not arise unless the interest is particular to the elected official, is not shared by and would not benefit others in the community, and, if the interest is particular to the elected official, a reasonably well-informed person would find that the elected official might be influenced in the exercise of public duty by his or her personal interest; and

• disqualification is a purely statutory remedy and therefore not available in respect of a common law conflict of interest.

Pam Jefcoat

Valkyrie Law Group LLP

604.263.4804

pjefcoat@valkyrielaw.com

GUILT BY ASSOCIATION?

Conflict of Interest under the Community Charter and Common Law

Given the recent civic elections this past November, conflict of interest rules may be a topic on the radar of many local government elected officials.  As such, the BC Supreme Court’s recent decision in Schlenker v. Torgrimson, 2012 BCSC 41 (“Torgrimson”) is timely, as it further clarifies the conflict rules pertaining to elected officials who are also members or directors of community organizations that may, in the future, have matters before the elected official’s council or board.

At issue in Torgrimson was the conduct of two trustees of the Salt Spring Island Local Trust Committee (the “LTC”) who voted to provide money to two non-profit societies, of which they were directors and members.   The societies involved were the Water Council Society and Climate Action Council.  The monies granted to the societies were to be used for the purpose of undertaking various projects relating to water and climate concerns. The petitioners sought a declaration that the two elected officials be disqualified from office on the basis that they failed to disclose a direct or indirect pecuniary conflict of interest.  In the alternative, the petitioners sought an order that the elected officials’ offices be vacated on the basis that they were in a conflict of interest at common law (as a result of their association with the societies). 

The petitioners’ arguments were dismissed.  With respect to the alleged pecuniary conflict of interest, the Court found there was no evidence to establish that the grants provided to the societies had the potential to affect the personal financial interests of the elected officials. Importantly, the elected officials, in their capacities as directors, had not received remuneration from either society.  With respect to the alleged common law conflict of interest, the Court considered the concern of the public at large with respect to water and climate issues on Salt Spring Island, as well as the acknowledgement of these issues in the LTC’s Official Community Plan, and found that there was no evidence to establish that the elected officials were voting to advance their own personal interests beyond the interests they had in common with other citizens in the community.  

In its reasoning, the Court acknowledged that local government officials are often elected because of their involvement with certain local issues and matters (involvements which frequently entail association with community groups), and in doing so clarified that:  

·         an elected official’s membership in a group that has a matter before council or a board will not, in and of itself, be sufficient to create a pecuniary conflict of interest in the absence of evidence showing a link between the personal pecuniary interest of the elected official and the pecuniary interest of the group;  

·         while an actual pecuniary interest need not be established, there must be evidence of the potential to affect the elected official’s personal financial interest;

·         a common law conflict of interest by association will not arise unless the interest is particular to the elected official, is not shared by and would not benefit others in the community, and, if the interest is particular to the elected official, a reasonably well-informed person would find that the elected official might be influenced in the exercise of public duty by his or her personal interest; and

·         disqualification is a purely statutory remedy and therefore not available in respect of a common law conflict of interest.

Pam Jefcoat

Valkyrie Law Group LLP

604.263.4804

pjefcoat@valkyrielaw.com