Restricted Zoning: The BCCA Confirms Powers to Enact Rental-Only Bylaws Under the Local Government Act

March 21, 2024

Written By Mark V. Lewis, Alana Walter and Brienne Gloeckler

Last year, in V.I.T. Estates Ltd. v New Westminster (City), 2023 BCCA 183, the British Columbia Court of Appeal (BCCA) dismissed a challenge to a municipal bylaw that restricted zoning to residential rentals. The court found that the impugned rental-only zoning bylaw did not conflict with the Residential Tenancy Act (RTA) and was within the jurisdiction of the enacting municipality. Notably, the court also held that the RTA does not confer a right of occupation on owners of residential rental units.

Background

In an effort to preserve rental housing, the City of New Westminster (the City) adopted a bylaw (the Bylaw) that unilaterally rezoned certain residential buildings as “residential rental tenure” such that all units in the buildings could only be lawfully occupied by residential tenants who are unrelated to the owner of the unit. This prohibited owners from occupying their units in these buildings. The City purported to adopt the Bylaw pursuant to the Local Government Act (LGA), which authorizes municipalities to enact rental-only zoning bylaws.

Owners of units in six residential buildings that were subject to the Bylaw (the Owners) sought to have the Bylaw set aside or to obtain a declaration that the Bylaw did not affect their properties, on the basis that the Bylaw was:

• impermissibly vague due to internal contradictions;
• beyond the jurisdiction of the City to enact under the LGA; or
• inoperative because of conflicts with the RTA.

These arguments rested on an interpretation of the RTA that reads the legislation as providing a right to owners to occupy their property and that this right cannot be impinged on by any other law.

The Owners appealed the British Columbia Supreme Court’s dismissal of their petition, in which the court held that the Bylaw was within the City’s jurisdiction and thus, was not invalid.

The Court of Appeal Decision

The BCCA rejected all bases upon which the Owners challenged the Bylaw.

First, the court held that the Bylaw was not contradictory or confusing. The Owners argued that the Bylaw was contradictory and confusing because it required compliance with both the RTA and the Bylaw. The Owners claimed that the RTA and the Bylaw were inconsistent because the RTA provides owners of a unit, or their near relatives, a right to occupy the unit while the Bylaw prohibits occupation of the unit by anyone other than an unrelated tenant.

The court rejected the Owner’s interpretation of the RTA. The court determined that the RTA governs relations between a landlord and a tenant; it does not govern an owner’s land use rights. Rather, an owner’s right to occupy their property derives from the common law. As evidence of this, the court cited several examples where laws, such as a prohibition order or a civil injunction, could prevent an owner from occupying their unit. In these circumstances, the court explained, that there is no provision in the RTA that allows an owner to occupy their unit.

The court then affirmed that, to make a finding of inconsistency in this context, there must be an “operational inconsistency” between the Bylaw and the RTA. Given the holding that the RTA does not provide a right of occupation to owners, the court did not find an operational inconsistency between the two laws. Therefore, the court dismissed the argument that the RTA contradicts the Bylaw.

Further, the court held that the Bylaw did not cause confusion. Applying the standard of review articulated in Okanagan Land Development Corp v Vernon (City), 2012 BCCA 332, the court held that a reasonably intelligent person would be able to determine the meaning of the Bylaw and govern their actions accordingly. Since the court did not find that the Bylaw was contradictory or confusing, the Bylaw was not void for uncertainty nor was it inoperative due to conflicts with the RTA.

Second, the court held that the Bylaw was within the City’s jurisdiction. The Owners claimed that the LGA did not expressly confer on the City the power to interfere with statutory rights provided under the RTA. Given the finding that an owner’s right to occupy their unit does not derive from the RTA, the court held that nothing in the Bylaw changes the statutory rights provided by the RTA. Further, while the Bylaw does not interfere with rights conferred by the RTA, the court found that there is a clear intention in the LGA to permit such interference. Therefore, it was not unreasonable for the City to determine that the LGA provided it authority to enact the Bylaw.

As a result of rejecting the three claims raised by the Owners, the court ultimately determined there was no basis to set aside the Bylaw or declare it inoperative in relation to the Owners’ units.

Key Takeaways

This decision affirms that the RTA does not provide owners or landlords with the right to occupy their residential units. Rather, this right derives from the common law.

Further, this decision demonstrates that the right of owners to occupy their property can be impinged. However, while this decision affirms that municipalities are authorized by the LGA to adopt residential rental-only zoning bylaws, the court did not consider whether powers conferred on municipalities by other sources authorizes the adoption of such bylaws. For example, a challenge to a rental-only zoning bylaw made under the Vancouver Charter may have a different result, as this legislation grants the City of Vancouver different powers than other communities have under the LGA.

It is likely that the full scope of the power to enact rental-only zoning bylaws under the LGA will be fleshed out through further litigation, such as challenges to future rental-only zoning bylaws and challenges to the operation of the exemptions to rental-only zoning (i.e., the non-conforming form of tenure provisions in Division 14.1 of the LGA).

To discuss further implications of this decision or if you have any questions, please contact the authors of this blog or a member of our Commercial Real Estate group.

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