On June 11, 2025 the BC Court of Appeal reversed the earlier decision of the BC Supreme Court in Ironclad Developments Inc. v. West Kelowna (City), 2024 BCSC 1285 (the “Ironclad BCSC” decision) which we wrote about here. The Court of Appeal found in its decision, cited as 2025 BCCA 191, that there was a duty of procedural fairness where Madam Justice Hardwick of the BCSC had not.

The Decision Below

The underlying dispute in Ironclad BCSC arose when a developer, WestUrban, received approval to develop a property in West Kelowna (the “City”) and the City required WestUrban to build “excess and extended services” (which can be roads, water, sewage, drainage facilities, etc. extending beyond the developer’s own property). The City had a latecomer fee regime in place to recover the construction costs of excess and extended services proportionally from nearby property owners who benefit from their construction (in the form of “latecomer fees”), and to compensate the developer previously directed to build them.

In this case, the largest portion of the construction cost was assigned to Ironclad, the developer-owner of a property adjacent to the property WestUrban was developing. A dispute arose regarding how the construction costs were calculated, and about Ironclad’s limited participation in the City’s determination of the amount of latecomer fees charged to Ironclad. Ironclad brought a court proceeding to have the City’s decision judicially reviewed.

We previously posted about Ironclad BCSC on July 25, 2024, summarizing the ruling as follows:

In her analysis, Hardwick J first reviewed the caselaw on distinguishing between legislative versus administrative government decisions. The distinction is important when a decision is alleged to be unfair. While administrative decisions must be made fairly if they affect the rights, privileges, or interests of a person, there is no duty to act fairly when governments make legislative decisions.

…

Hardwick J concluded that the latecomer fee regime is legislative rather than administrative.

…

City staff had given Ironclad the legitimate expectation of a certain process. Early on, the City provided Ironclad with the draft latecomer fee agreement it was intending to sign with WestUrban. For months the City corresponded with Ironclad regarding Ironclad’s concerns about not knowing how high the fee would ultimately be. When WestUrban submitted its final costs, Ironclad was again informed, and indicated its interest to have further input. However, the consultant’s report was immediately accepted by the City, leaving Ironclad no opportunity to respond to the increase in fees or to the consultant’s report. Hardwick J commented that, if the City had had a duty of procedural fairness, it would have been breached by this conduct. The City had created a legitimate expectation of Ironclad’s ongoing consultation and input, and then failed to fulfill the expectation.

…

In the result, the City’s decision to charge Ironclad nearly $750,000 in latecomer fees was upheld. It could not be quashed on the basis of failing to provide a fair process because latecomer fee decisions are not subject to procedural fairness duties.

On Appeal

Ironclad has now successfully appealed this ruling of the BC Supreme Court.

The Honourable Justice Gomery wrote the reasons for judgment on behalf of a unanimous panel of three Court of Appeal justices. The Court of Appeal accepted the finding of the BC Supreme Court that the City had treated Ironclad unfairly. However, on the appeal, the Court held that the City’s decision regarding the latecomer fee did attract procedural fairness duties, meaning that it was not permissible for the City to treat Ironclad unfairly in this context.

In the result, the Court of Appeal quashed the City’s decision to charge Ironclad nearly $750,000 in latecomer fees, and directed the City to “redetermine the amount of the [latecomer fee] following consideration of submissions by Ironclad” (para 69).

Legislative vs. Administrative Decisions

To reach its decision, the Court of Appeal revisited the distinction between legislative and administrative government decisions. Again, legislative decisions cannot be quashed based on a lack of procedural fairness, whereas administrative decisions can be. The Court first acknowledged that, “What makes a decision legislative is not always clear” (para 14).

Factors which do not determine the nature of a decision as either legislative or administrative include (paras. 15-17):

• The form of the decision – For example, just because a decision was made in the form of a City Council passing a bylaw, does not necessarily make it a legislative decision.

• The identity of the decision-maker – Municipal Councils and School Boards, for example, operate variously in both administrative and legislative capacities.

• The number of persons affected by the decision – A decision may still be a legislative one even where very few or just one person is affected.

Examples of decisions which the courts have already determined are legislative, i.e. attract no duties of fairness, include (para 21):

• A municipality deciding on a property tax rate;

• Federal Cabinet deciding to impose a telephone rate structure based on its statutory authority; and

• Provincial Cabinet deciding to issue an order-in-council suspending a union’s right to strike for 90 days, based on its statutory authority.

After reviewing caselaw and academic writing on the rationale for insulating legislative decisions from duties of fairness, the Court ultimately listed four features to be assessed together which indicate a decision is legislative (para 25):

1. The decision is general in nature;

2. The decision is based on broad considerations of public policy;

3. Mechanisms of political accountability exist in respect of the decision; and

4. Adversely affected interests are numerous, diverse, or diffuse.

The Court analyzed the City’s imposition of latecomer fees and determined that the decision was administrative, rather than legislative.

Takeaways for Local Governments

Despite the reversal of the lower court’s decision, our main takeaways remain essentially the same:

• All administrative decisions affecting the rights, privileges, and interests of persons must be made fairly;

• Sometimes the content of a right to procedural fairness is pre-determined, for example a bylaw may provide that a person whose permit is denied is entitled to have City Council reconsider the denial;

• Fairness rights may be inadvertently expanded by the conduct of local government staff, for example, by creating legitimate expectations of a certain level of participation or input in decision-making; and

• Uncertainty about procedural fairness entitlements should be addressed by consulting with legal counsel prior to issuing the decision.

To this list we add that the threshold question – whether any procedural fairness rights arise at all – will be addressed going forward by application of the four factors outlined by the Court of Appeal in Ironclad Developments Inc. v. West Kelowna (City), 2025 BCCA 191. Legal counsel can assist staff with the application of these four factors in particular situations as they arise.

Mel van Fram

Amelia (Mel) van Fram is an associate with SMS Law. Prior to law school, Mel worked for eight years for a large BC municipality, and she brings her commitment to serving local government and the public interest to her current legal practice.