Collecting Municipal Fees Under Controlled Substance Bylaws

By
James Yardley
Barrister & Solicitor
jgy@murdymcallister.com
April 14, 2009

        A recent decision of the B.C. Supreme Court supports local government efforts to recover the costs they incur when dealing with properties used in relation to controlled substances.  In Rastad Construction Ltd. v. Port Moody, the Petitioner company leased a portion of an industrial building to another company, which then subleased a portion of the premises to an individual who said he was going “to work on bio-diesel”.  A small enclosure in the premises was built for the individual.  Rastad visited the space once or twice a month to collect rent and look over things, but did not see anything of concern.  In May 2007, police found a metamphetamine lab in the enclosed space.  Because the chemicals used in such labs can be toxic and explosive, the site was cleaned up by the fire department and a hazardous environmental services contractor.  The cost to the City of the work exceeded $54,000, and was charged to Rastad under the City’s controlled substance bylaw.  Rastad paid the charges under protest, and challenged the invoice in court.                        

        Rastad argued that the decision to issue the invoice should be set aside on grounds that Port Moody breached procedural fairness by (1) not giving prior notice that the invoice was going to be issued to Rastad, (2) not permitting Rastad to raise a defence to the invoice, and (3) failing to give reasons for issuing the invoice.  Rastad also argued that the amount charged was unreasonable.   

        Port Moody’s bylaw requires owners “causing, permitting or allowing” their property to be used for the manufacture of controlled substances to pay the cost incurred by the City to remove equipment and materials related to those substances, and to place that cost onto property taxes.  Mr. Justice Butler of the B.C. Supreme Court held that the bylaw should be interpreted in a broad and purposive manner, and that a property owner would be liable under it not only if it was actively involved in causing, permitting or allowing a property to be used in connection with controlled substances, but also if the owner “acquiesced or failed to prevent such use of the property”, and that the bylaw did not require the City to show that the owner knew about the use.  While procedural fairness is owed to the owner, it is at the low end of the range.  In part, this was because Rastad would have had to pay to clean up the property in any event and, as a landlord, it had the theoretical ability to recover that cost from its tenant.  Mr. Justice Butler also concluded that there was no “moral stigma” attached to the imposition of the charges.  He further held that the urgency of the work justified not giving advance notice to the owner that the work would be done.  Justice Butler concluded that while procedural fairness required a procedure for appeal to be available to the owner, and that Port Moody’s bylaw did not contain such a provision, the City did advise Rastad that it could appeal to Council, but Rastad chose to not do so.              

        The decision in Rastad is helpful because it holds that municipalities have a broad power to recover costs incurred when dealing with controlled substance properties.  However, the decision also confirms that some procedural fairness is owed to property owners, including that they have the ability to appeal or seek some form of review of the fees charged by the local government.   Municipalities should also note that section 194 of the Community Charter provides that the refund of a fee is to occur by bylaw.