In recent years, the housing crisis in British Columbia has become a pressing issue for all levels of government.  In the recent case of Vancouver (City) v. Pender Lodge Holdings Ltd., 2024 BCCA 37, the Court considered whether a local bylaw restricting rent increases was within the local government’s authority.

Background

In 2021, the City of Vancouver (the “City”) passed a bylaw restricting landlords’ abilities to increase rental rates between tenancies in privately-owned and operated single room accommodation (SRA) buildings.  SRAs are a supply of rental housing in Vancouver that are often a last resort housing option for marginalized residents.  The bylaw was implemented in response to increasing rental rates and homelessness.

Two owners and operators of SRAs (the “SRA Owners”) challenged the bylaw.

Court’s Decision

At the Supreme Court level, arguments focused on the correct interpretation of section 272(1)(f) of the Vancouver Charter, which allowed for regulation of business licence holders, “except to the extent that the person is subject to regulation by some other Statute”.   The SRA Owners argued that this provision prevented the City from imposing additional rent control, as this subject matter was already regulated by the Residential Tenancy Act (the “RTA”).

The City argued that:

• its bylaws could overlap with provincial legislation, so long as it was not impossible for an individual to comply with both the local and provincial regulations; and
• Since the RTA was silent on rent control between vacancies, the municipality was free to regulate.

The judge disagreed, finding that section 272(1)(f) of the Vancouver Charter prohibited the City from using its business regulation powers to regulate persons who were already subject to Provincial regulation.  Accordingly, the Supreme Court agreed with the SRA Owners and struck down the bylaw.

The City appealed.

Court of Appeal

On appeal, the Court agreed with the lower Court’s interpretation of section 272(1)(f) of the Vancouver Charter that the City may regulate a business except to the extent that it regulated by another statute for the same predominant purpose.  As the Province had already established residential rental regulations under the RTA, and the City’s bylaw would have effectively subjected SRA Owners to being regulated twice on the same subject. Therefore, the bylaw was invalid, even if it was attempting to address compelling issues.  

Takeaways

It should first be noted that the restrictive language featured in the Vancouver Charter is absent from the Community Charter and Local Government Act.  Therefore, the Court’s ruling that residential rent cannot be regulated by the City of Vancouver is not necessarily applicable to other local governments.

However, on a broader basis, this decision reaffirms the importance of all local governments carefully assessing statutory authority before passing a bylaw.

What should a local government keep in mind when drafting bylaws? Consider these takeaways:

• the 2019 Supreme Court of Canada decision of Vavilov relaxed the judicial review standard applicable to a municipality’s authority to enact a bylaw. The new standard is whether the local government’s interpretation of their enabling statute is “reasonable”, in which case the bylaw is valid;
• although “reasonable” is a broad standard, the Vancouver decision reminds us that there are limits on the reasonable interpretation of municipal authority;
• municipal authority must be interpreted consistently with the text and intention of the empowering legislation, whether that is the Community Charter, Local Government Act, Vancouver Charter, or otherwise;
• overlapping local and provincial regulations may be permitted, however local regulatory powers will be limited if the provincial legislation suggests, whether explicitly or implicitly, that provincial regulations are exclusive or paramount.