The lessons of OK v. Highlands

  • May 30, 2022
  • Christopher Wirth and Alex Smith

In O.K. Industries Ltd. v. District of Highlands, 2022 BCCA 12, the British Columbia Court of Appeal (“BC Court of Appeal”) applied a correctness standard of review to a question falling outside the recognized categories of exceptions to the presumption of reasonableness, making it the first time a court has done so since the Supreme Court of Canada’s decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 (“Vavilov”).

Background

In Vavilov, the Supreme Court of Canada confirmed the presumption that administrative decisions are to be judicially reviewed under the “reasonableness” standard, subject to certain enumerated exceptions. These exceptions can be broadly placed into two categories: (1) where the legislature indicates that a different standard will apply; and (2) where the rule of law requires that the more stringent “correctness” standard be applied.

Within the second category, the Court recognized three types of questions for which the rule of law would require the correctness standard to be applied: (1) constitutional questions; (2) general questions of law that are of central importance to the legal system as a whole; and (3) questions related to the jurisdictional boundaries between two or more administrative bodies, however, the Court did not “definitively foreclose the possibility” that another category could be recognized in exceptional circumstances where the rule of law justifies a correctness review.

Facts

The respondent, O.K. Industries Ltd. (“OKI”), is engaged in the business of industrial quarrying and road paving on Vancouver Island. In January 2015, it purchased approximately 65 acres of vacant, unimproved land from the Province of British Columbia, with the intention of establishing a rock quarry. The land is located in the District of Highlands (the “District”). The District is a municipal corporation created under the Community Charter, S.B.C. 2003, c. 26.

In 2016, the District refused an application by OKI to rezone the lands for Industrial/Commercial use. On March 24, 2017, OKI applied to the BC Minister of Mines, Energy and Petroleum Resources for a permit to operate a rock quarry. The District (and others) opposed the application. On March 18, 2020, following a review and consultation process, a Senior Mines Inspector granted OKI a permit permitting the operation of the rock quarry.

On April 23, 2020, the District informed OKI that it was required to comply with the District’s bylaws despite the issuance of the quarry permit and, on October 3, 2020, after OKI began removing some trees on the land, a Bylaw compliance officer for the District issued a cease work order on the basis that OKI’s activities required a tree cutting permit. OKI then filed a petition on October 8, 2020, seeking orders under the Judicial Review Procedure Act, R.S.B.C. 1996, c. 241 (the “JRPA”), including an order in the nature of certiorari staying the cease work order and a declaration that the District’s bylaws did not apply to OKI’s activities authorized by the permit.

The British Columbia Supreme Court’s decision

The BC Supreme Court characterized the dispute as a question of whether the Province has exclusive jurisdiction over quarries and mines such that the District’s bylaws were inapplicable to OKI’s mining activities authorized by the mines permit and held that the “jurisdictional boundaries” exception to the presumption of reasonableness applied, meaning the standard of review was correctness.

The Court applied the “impossibility of dual compliance” test from 14957 Canada Ltée (Spraytech, Société d’arrosage) v. Hudson (Town), 2001 SCC 40 (“Spraytech”), as well as the BC Court of Appeal’s decision in Cowichan Valley (Regional District) v. Cobble Hill Holdings Ltd., 2016 BCCA 432 (“Cobble Hill”), which it interpreted as establishing that the province has exclusive jurisdiction over all activities authorized by a mines permit that fall within the definition of “mine” and “mining activity” under the Mines Act. After considering these cases and the District’s cease work order on the correctness standard of review, the Court held that the District’s bylaws did not apply to OKI’s mining activities, and accordingly granted an order in the nature of certiorari staying the cease work order issued to OKI on October 3, 2020. For the sake of completeness, the Court also applied the reasonableness standard of review, and found that it led to the same result. The District appealed this decision to the BC Court of Appeal.

 

The British Columbia Court of Appeal’s decision

The BC Court of Appeal agreed with the lower court’s finding that the correctness standard of review applied, but it reached this conclusion for different reasons. The BC Court of Appeal disagreed with the lower court’s finding that the “jurisdictional boundaries” exception applied, citing Vavilov for the principle that in general, jurisdictional questions do not fall into a distinct category that attracts a correctness standard of review, due in part to the difficulties in distinguishing between exercises of delegated power that raise truly jurisdictional questions from those entailing “an unremarkable application of an enabling statute.”

Rather, the BC Court of Appeal found that the question at issue did not fit within the jurisdictional boundaries exception because it involved one administrative decision maker (the mines inspector exercising delegated authority under the Mines Act) and a legislative body (the District exercising delegated authority under the Community Charter), rather than two or more administrative tribunals. The case was not simply a jurisdictional question or a question of the interpretation of an enabling statute, as the vires of the District’s bylaws was not in issue. Rather, the issue was whether the bylaws apply to a quarry, in light of the interplay among the numerous provincial statutes governing the regulation of mines and mining activities and the regulatory authority of municipal governments.

Although the BC Court of Appeal did not find that the question at issue fit within any of the three recognized exceptions under the “rule of law” category identified in Vavilov, it nevertheless found that it fell under the overarching concept of a question for which the rule of law requires consistency and a final and determinate answer. The BC Court of Appeal emphasized that the question had significant legal consequences to the institutions of the provincial and municipal governments that purport to regulate mining resources in BC, although interestingly it did not consider in detail why the recognized “questions of central importance” exception did not apply.

The BC Court of Appeal also emphasized that the Supreme Court of Canada in Vavilov did not purport to set out every possible set of circumstances in which legislative intent or the rule of law will require a correctness standard of review, nor did it definitively foreclose the possibility of other categories being recognized as exceptions to the presumption of reasonableness, and held that this case was “one of the exceptional circumstances where the rule of law justifies a correctness review.”

Having determined that the correctness standard applied, the BC Court of Appeal considered and applied the principles in Cobble Hill and Spraytech, finding that while the District’s bylaws were valid, they were not applicable to OKI’s quarry operations. That being said, the BC Court of Appeal also noted that the myriad of provincial legislation considered in Cobble Hill did not usurp all municipal power to regulate matters discussed in the Community Charter. The broad legislative scheme in relation to mining established that the municipal authority is clearly circumscribed by the provincial interest, and the principles of municipal-provincial relations set out in the Community Charter require municipal governments to use their powers to regulate only truly local impacts arising from aggregate operations that are not otherwise addressed in the conditions attached to a mines permit. Accordingly, the District’s authority did not extend to prohibiting the operation of a quarry in respect of the activities authorized under a mines permit and the conditions under which they are to be carried out, and any bylaws that had such an effect were found to be inapplicable.

Accordingly, the appeal was allowed in part, but only to the extent that some of the declarations granted did not accurately reflect the limitations on the District’s authority (e.g. certain bylaws relating to soil deposit and removal, blasting, tree management, and building permits remained applicable). However the BC Court of Appeal upheld the order in the nature of certiorari staying the October 3, 2020 cease work order and the declarations that the District’s zoning bylaws did not extend to OKI’s quarry and mining activities as authorized in the mines permit. Like the lower court, the BC Court of Appeal also found that an application of the reasonableness standard of review would have produced the same result in this case.

Takeaways

Although the BC Court of Appeal did not recognize an entirely new categorical exception to the presumption of a reasonableness standard of review, it did confirm that an exception under the overarching “rule of law” category can be found even where the question at issue does not fit within any of the specific exceptions under that category as described in Vavilov. The decision also reflects the limited availability of the “jurisdictional boundaries” exception post-Vavilov. In this case, the BC Court of Appeal found that the complex interplay of a myriad of provincial statutes and the regulatory authority of municipal governments raised a question which had significant consequences to the institutions and governments that purport to regulate mining in BC, and that this was one of the exceptional questions for which the rule of law requires consistency and a final and determinate answer through a correctness standard of review. The impact of this case will be interesting to follow, as it could support a correctness standard of review under the broader “rule of law” category in other cases where the question at issue does not fit neatly within any of the recognized exceptions under that category.


Christopher Wirth is a partner, and Alex Smith is an associate with Keel Cottrelle LLP.