B.C. Court of Appeal upholds ruling quashing Vancouver rent control bylaw

B.C.'s highest court has ruled against the City of Vancouver in its effort to regulate rent increases between tenancies at single-room accommodations in the city.

Launched by the previous mayor and council in late 2021, the strategy involved amending a business licensing bylaw to prohibit landlords at privately owned single-room occupancy hotels from dramatically increasing the asking rent for a unit when a tenant moves out.

Two companies that own and operate SROs in the city challenged the bylaw, and the B.C. Supreme Court agreed, ruling in August 2022 that the city's decision to adopt the bylaw was "unreasonable."

In a decision issued Friday, the B.C. Court of Appeal upheld the lower court's decision. 

The city argued that the B.C. Supreme Court judge who heard the case interpreted the Vancouver Charter – the provincial legislation that gives the city its authority to regulate businesses – incorrectly.

The three-judge appeal panel unanimously disagreed, finding that the lower court judge was correct in her interpretation of the statute and the limitations it places on the city.

Duplicate regulation

Writing for the appeal panel, Justice Joyce DeWitt-Van Oosten described "the reasonableness of the council's interpretation of its own legislative authority" as "the critical issue" in the case.

While the Vancouver Charter gives the city the authority to regulate business and adopt licensing bylaws, it also places a limit on what those bylaws can include, according to the decision.

Specifically, the city can regulate a business "except to the extent that (the business) is subject to regulation by some other statute."

The city argued that this clause simply means that its bylaws cannot contradict provincial legislation, and that its bylaw – which imposed restrictions on rental units between tenancies, but not during them – did not do so.

The provincial Residential Tenancy Act prescribes rent controls that apply during tenancies, but does not limit how much landlords can increase rents when tenants move out and new tenants are moving in.

The city's bylaw was designed specifically to apply rent controls to SRO units during the gaps not covered by the Residential Tenancy Act.

The plaintiffs in the original case, referred to as the "respondents" throughout the appeal decision, argued that the city was interpreting its power too broadly when it designed the bylaw.

"The respondents argue that taken to its logical conclusion, the city’s jurisdictional view of its own regulatory authority, as made manifest when the bylaws were adopted, is a view that effectively allows the city to layer any requirements or restrictions in respect of residential tenancies 'intricately over the provisions of the (Residential Tenancy Act),' as long as they do not give rise to a direct contradiction," DeWitt-Van Oosten's decision reads.

The judge agreed with this perspective, finding that there is only one "reasonable" interpretation of the relevant provisions of the Vancouver Charter, and it doesn't allow for the city to fill in any and all perceived gaps in provincial legislation.

"This does not mean that once a senior level of government has elected to establish a regulatory presence in a subject area affecting businesses, the city is thereafter precluded from promulgating a bylaw that has implications for those same businesses in the same regulatory sphere," the decision reads.

"What (the Vancouver Charter section) prohibits is duplicate regulation that imposes obligations or restrictions on businesses in respect of the same subject matter for the same predominant purpose."

In this case, DeWitt-Van Oosten concluded, the city was attempting to regulate something – rent control – that the province had already specifically chosen to regulate. It was essentially duplicating the predominant purpose of the provincial law.

"Rent control is regulated under the (Residential Tenancy Act)." the decision reads. "The province has established a regulatory regime specific to that issue. The provincial regime reflects an intentional choice to tie rent to the renter, rather than the unit. The province has elected to engage in rent control, albeit in a different form than desired by the city."

Because the city council relied on a flawed interpretation of the Vancouver Charter when it adopted the bylaw, its decision was unreasonable and the bylaw was invalid, DeWitt-Van Oosten concluded.

City responds

In a statement, the city left open the possibility of a further appeal to the Supreme Court of Canada, but said it will be "taking the time necessary to determine next steps."

"The City of Vancouver is disappointed with the Court of Appeal’s decision," the statement reads.

"The city respects the judicial process and remains committed to addressing the urgent need for low-income housing and protecting low-income residents residing in SROs."

Notably, DeWitt-Van Oosten also acknowledged this "urgent need" in her decision, stressing early on that the policy objectives underlying the bylaw in question – namely, improving access to affordable housing in Vancouver – were not the subject of the appeal.

"The broader issues of housing affordability, the efficacy of governments’ responses to housing, past and present, or the impact of the current rental situation on people with marginal incomes are not matters the court has jurisdiction to consider," the decision reads.

The bylaw was adopted under the previous mayor and council, and the city's appeal of the initial B.C. Supreme Court decision was launched before current Mayor Ken Sim and his A Better City Vancouver party swept to power in the 2022 municipal election.

Asked whether the current mayor and council were supportive of the appeal and whether city staff would need direction from council to pursue the case further, the city simply noted that "council can instruct the city to commence or abandon any civil appeal."