Recovery of Unlawfully Imposed Fees; Has the Other Shoe Dropped?

 By
James Yardley
Barrister & Solicitor
jgy@murdymcallister.com
April 9, 2009

       In 2007, we reported on the decision of the Supreme Court of Canada in Kingstreet Investments v. New Brunswick, 2007 SCC 1.  In that case, the Court held that money collected by a government under a law that was beyond the constitutional jurisdiction of that government could be recovered as a matter of right by those who paid it.  This reversed a longstanding position against such recovery that was based, in part, on the “fiscal chaos” that could result to government if it had to remit large amounts of unlawfully collected fees and taxes.   

        While Kingstreet applied to a relatively narrow situation, we noted in our earlier bulletin that it was clearly conceivable that the case could be applied to justify recovery of fees and taxes that were unlawfully collected for reasons other than lack of constitutional jurisdiction.  Such an outcome appears to have occurred in the March 2009 decision of the B.C. Supreme Court in Barbour v. University of British Columbia, 2009 BCSC 425.  In Barbour, UBC was challenged over its collection of over $4 million in fines and related fees and charges collected under its parking regulations.  There was little dispute over the underlying facts; the main issue was whether UBC’s parking regulation was lawful under its enabling statute, the University Act.  Thus, the situation was similar to a case in which it is alleged that a local government bylaw that imposes fees or charges is ultra vires the Community Charter or Local Government Act.  The Court in Barbour concluded that UBC did not have statutory authority to collect the fines, and could not find any other legal basis for it to do so.  Thus, the fines were ordered to be refunded.              

        The potentially large size of the amount to be refunded reflects the fact that the claim was brought as a class action.  However, the actual amount to be returned will be based on factors that include relevant limitation periods.  UBC has not yet indicated if it will appeal the decision.              

        The decision is significant because it increases the potential exposure faced by local governments when their bylaws are challenged; rather than just facing the possibility that a bylaw will be quashed, the possibility now exists that a refund of some or perhaps all of any fees and charges collected under the bylaw could be ordered.  While limits may be placed on recovery by limitation periods, the decision appears to have parallels that can be applied to local government defendants, and  seems to open the door to the fiscal chaos that appears to be of less concern to the courts than was previously the case.  

This client bulletin is intended to provide commentary on issues that may be of interest or legal significance to local governments in British Columbia.  The comments reflect the views of the individual author and are not intended to provide legal advice or establish a legal retainer.  For specific advice or information, please directly contact the author noted at the head of the client bulletin.  If you wish to be added to or removed from the distribution list for Murdy & McAllister client bulletins, or if you have any comments, please contact James Yardley at 604-689-5263, or jgy@murdymcallister.com.  

© 2009 Murdy & McAllister