On Friday the BC Court of Appeal (the “BCCA”) released its decision Vancouver (City) v Pender Lodge Holdings Ltd., 2024 BCCA 37. This decision considered bylaws adopted by the City of Vancouver (the “COV”) to limit rent increases between tenancies in privately-owned residential units designated as single room accommodation (the “Bylaws”). The Bylaws were challenged by private owners of buildings in the COV composed of single room accommodation units (the “Landlords”). The Landlords argued that when the COV enacted the Bylaws, it exceeded its legislative jurisdiction to regulate business licensing. Both the lower court and the BCCA agreed with the Landlords and quashed the Bylaws.

Drouillard Lawyers represented the Rental Housing Council of BC dba LandlordBC (“LandlordBC”). LandlordBC intervened in the appeal on the application of the legal principle of subsidiarity to the question of whether the COV had the legislative authority to enact the Bylaws. The Court of Appeal accepted the argument of LandlordBC and the respondents that subsidiarity had no application in this case. Subsidiarity had no application to this matter because it does not give a municipality jurisdiction that it does not already have pursuant to its enabling legislation.

The full decision can be found on the BCCA’s website and is linked here.

Legislative Framework: Residential Tenancy Act and the Vancouver Charter 

Residential tenancies in privately-owned residential accommodations are regulated in British Columbia by the provincial Residential Tenancy Act, SBC 2002, c 78 (the “RTA”). Rental increases for residential tenancies are regulated by Part 3 of the RTA. Part 3 does not explicitly address rent increases between tenancies. It only explicitly regulates – and limits – rental increases during tenancies. This means that there is no limit to how much a landlord can increase the rent for a given residential unit between tenancies.

The COV is empowered to create bylaws regulating business licensing pursuant to the Vancouver Charter, SBC 1953, c 55 (the “Vancouver Charter”). The Vancouver Charter gives the COV authority to enact bylaws to regulate business licensing within the city. Sections 272(1)(a) and (f) of the Vancouver Charter permit the COV to make bylaws licensing any person carrying on any business, trade, profession or other occupation, except to the extent that the person is subject to regulation by some other statute (“Section 272”).

The COV created the Bylaws pursuant to its business licensing power in Section 272.

COV’s Argument that it had Authority to Enact the Bylaws

The COV argued because Section 272 allows it to make bylaws licensing business activities to the “extent that the person is subject to regulation by some other statute”, as long as there was no conflict between the Bylaws and the RTA the COV was acting within its scope of authority. The COV argued that a landlord could comply with both the RTA and the Bylaws – compliance with one regulatory scheme did not lead to non-compliance with the other.

Courts in British Columbia have held that if there is no conflict between a municipal enactment and provincial legislation, the municipality is acting appropriately within its sphere of jurisdiction. This is known as the possibility of dual compliance test.

However, the conclusion that the possibility of dual compliance is the appropriate test for determining municipal jurisdiction was made with respect to different empowering legislation in relation to a different municipality, not the COV or the Vancouver Charter.

Landlords’ Argument that COV did not have Authority to Enact the Bylaws

The Landlords argued that regulating business licensing to the “extent that the person is subject to regulation by some other statute” pursuant to Section 272 meant that the COV could not regulate with respect to matters already regulated by another statute with respect to the same subject matter for the same purpose. This is known as the predominant purpose or the “pith and substance” test.

The Landlords argued that the COV did not have the authority to enact the Bylaws because the predominant purpose or the “pith and substance” of the Bylaws was regulating rent increases for residential tenancies. Landlords in British Columbia are already subject to regulation with respect to the same subject matter for the same purpose pursuant to the RTA.

Intervener Arguments

Several groups intervened in the appeal. In addition to LandlordBC, the Eastside SRO Collaborative Society, the Tenant Resource Advisory Centre, Community Legal Assistance Society, and Together Against Poverty Society intervened in the appeal.

The Tenant Resource Advisory Centre, Community Legal Assistance Society, and Together Against Poverty Society argued that the BCCA was required to recognize housing as a core Canadian and international value which must be considered when the court interpreted Section 272.

The Downtown Eastside SRO Collaborative Society argued that subsidiarity, or the principle that the level of government closest to the affected constituents is often best positioned to respond to local issues (in this case, homelessness in the COV), favoured a broad interpretation of Section 272 such that the Bylaws were within the COV’s legislative jurisdiction.

LandlordBC and the respondents argued that the principle of subsidiarity had no application to this matter, because subsidiarity does not give the COV legislative authority where it can’t already be found in the Vancouver Charter. LandlordBC argued in the alternative that if subsidiarity does have application in his case, it does not always mean a municipality, rather than the province, is better able to respond to a given issue such as homelessness. With respect to the housing crisis and homelessness, LandlordBC argued that the province is better positioned to create regulations combined with appropriate financial supports and funding to implement these regulations to address the housing crisis.

The BCCA ultimately concluded that although the housing crisis and homelessness are of significant social concern, the appeal was focused only on the question of the COV’s legislative power pursuant to Section 272. Therefore, the broader issues of housing affordability, the efficacy of governments’ responses to housing, or the impact of the current rental situation on people with marginal incomes were not matters the BCCA had jurisdiction to consider in this appeal.

With respect to subsidiarity, the BCCA agreed that this legal principle had no application to this case, because it does not give the COV legislative authority that is not present in the Vancouver Charter.

Court’s Analysis and Conclusions

The BCCA concluded that the wording of Section 272 meant that the Bylaws had to be considered using a pith and substance or predominant purpose analysis. This meant that the COV should have identified the predominant purpose of the Bylaws, and then considered whether the businesses that would be bound by the Bylaws were already regulated under another statute in relation to the same subject matter for the same purpose.

The BCCA held that if the COV had engaged in this analysis, it would have been clear that in BC, landlords of privately-owned residential tenancy buildings are already subject to rent control regulation by the RTA. The COV cannot enact bylaws that regulate this same subject matter for that same purpose.

The BCCA concluded that the COV’s interpretation of its power to enact the Bylaws pursuant to Section 272 was not consistent with the text, context, and purpose of that section and the proper remedy was to quash the Bylaws.

Impact of this Appeal Decision

The BCCA’s conclusion that the COV may not create bylaws if another statute already regulates in relation to the same subject matter for the same purpose significantly limits the COV’s ability to create bylaws designed to impact residential tenancies. If a matter is already regulated by the RTA, then the COV will not be able to use its business licensing powers to supplement that regulation, even if it would be possible for a regulated party to comply with both the RTA and the COV bylaw.