Bylaws frequently come under the microscope of judicial scrutiny. A recent decision of Justice Underhill of the BC Supreme Court provides clarity on the proper judicial standard of review of local government bylaws by reconciling and reading together the Supreme Court of Canada’s 2012 decision in Catalyst Paper Corp. v. North Cowichan (District), 2012 SCC 2,  which considered, prior to the Supreme Court of Canada’s 2019 revision of the standard of review framework in Canada (Minister of Citizenship) v. Vavilov, 2019 SCC 65, the meaning of a reasonableness review in the context of local government bylaws.

In Tantalus at Paradise Valley Inc. v. Squamish (District), 2025 BCSC 1599, two developers brought a challenge to the District of Squamish’s rezoning bylaw, alleging that it was both unreasonable and adopted in a procedurally unfair manner. There was some disagreement between the petitioners and the District as to whether Catalyst Paper and Vavilov could be read together, and in particular about the continued application of the test set out in para. 24 of Catalyst: “only if the bylaw is one no reasonable body informed by these factors could have taken will the bylaw be set aside”.

Justice Underhill noted key differences between the two decisions but found that the two decisions can and should be read together to provide a framework for the reasonableness review of municipal bylaws.

One key difference is that Catalyst Paper, which was consistent with the jurisprudence to that date, was focused on the outcome of the decision-making process. Conversely, in the later decision in Vavilov, the Court confirmed that that the reasonableness review looks at both a decision-maker’s reasoning process and the outcome.

Justice Underhill set out three key principles that emerge from reading both Catalyst Paper and Vavilov together, as follows:

• Broad local government discretion: When reviewing decisions by municipal bodies, courts must be mindful of the wide variety of factors that are properly taken into account in such decisions. Review for reasonableness is concerned with the justification, transparency, and intelligibility of a decision, and whether it is justified in relation to the relevant factual and legal constraints. Reasonableness is a single standard of review that takes colour from its context. Judicial review of municipal bylaws must reflect the broad discretion that is typically accorded to local governments in delegated legislation. The nature of the decision-making process is legislative, rather than quasi-judicial. In reviewing bylaws, courts must approach the task against the backdrop of the wide variety of factors that elected councillors may legitimately consider.

• Using context when no formal reasons: In the absence of formal reasons, it is necessary to look to a broader record and context to ascertain the reasoning process. In this case, that would include, among other things, the transcript of Council’s debate preceding the adoption of the Rezoning Bylaw, the final staff report, and the various documents referred to therein, including expert consulting reports and so on.

• Might need to only focus on outcome: There will be cases, as the Court noted in Vavilov, where the record and larger context do not shed much light on the reasoning process, such as cases involving a “vires” challenge to bylaws (i.e., a challenge to the municipality’s authority to adopt a given bylaw, which may not be an issue that the municipality explicitly considered during the adoption process). In those cases, it will be necessary to look to the particular “legal constraints” at play, and to have a larger focus on the outcome. In this case, Justice Underhill found the record and larger context did provide some insight into the reasoning process, such that the reasonableness review could consider both the reasoning process and outcome.

Ultimately, Justice Underhill did not explicitly provide a view as to whether the Catalyst Paper standard (“only if no reasonable municipal body could have adopted this bylaw will it be set aside”) remains intact after Vavilov. But, in reading Catalyst Paper together harmoniously with Vavilov, the standard is probably best thought of as a question of whether the process undertaken in adopting the bylaw, and the outcome of the bylaw, are among a set of potentially reasonable avenues that a local government might undertake, even if not necessarily the most “ideal” or preferred avenue in the opinion of the sitting court. The takeaway is that deference will be paid by the courts in scrutinizing local government bylaws, and they will need to do their best to review these legislative decisions when no formal reasons and, sometimes, little about the reasoning process are available to be scrutinized.

Josh Krusell

Josh Krusell is the Managing Partner of Litigation with SMS. He regularly acts on behalf of local governments in complex liability actions, construction and insurance claims, contractual and regulatory disputes, administrative proceedings, and land use and injunction-related matters.