Municipalities and Fairness for Latecomers: BC Court of Appeal confirms procedural fairness applies to municipalities making decisions about latecomer charges

Under the British Columbia Local Government Act, a municipality that imposes infrastructure building requirements on a developer may require another developer who benefits from the infrastructure (called the “latecomer”) to pay a portion of the construction costs.^[1] This payment is known as a latecomer charge. Latecomers typically have virtually no input into the charges and little recourse for disputing the charges.

Last week, the British Columbia Court of Appeal in Ironclad Developments Inc. v. West Kelowna ^[2] released a decision clarifying when municipalities owe latecomers a duty to make fair decisions about latecomer fees, and what that duty requires.

Background

Ironclad involved two developers of neighbouring projects in West Kelowna (the “City”). The City required the latecomer to pay a latecomer charge initially estimated to be $362,000. The developer building the infrastructure incurred significantly higher costs than anticipated. The City retained a firm of quantity surveyors to review the costs and proceeded to impose a latecomer charge of almost $750,000 – more than double the original estimate.

Among other things, the latecomer argued that the procedure was unfair because it was not given an opportunity address and critique the other developer’s costs and the quantity surveyor’s report before the charge was imposed.

Procedural fairness applies to administrative decisions, not legislative decisions

Municipalities do not have a duty of procedural fairness when making legislative decisions. The same is not true of administrative decisions, which give rise to a duty to ensure a fair procedure.^[3]

The Court undertook a comprehensive review of the law, and set out a list of considerations that must be weighed collectively to determine whether a municipality’s decision is legislative, and therefore not subject to a requirement that it be made fairly:

1. The decision is general in nature;
2. The decision is based on broad considerations of public policy;
3. A mechanism of political accountability exists in respect of the decision; and
4. Adversely affected interests are numerous, diverse, or diffuse (spread over many people).^[4]

The decision surrounding the latecomer charge amount was administrative

The Court analyzed the provisions of the Local Government Act, which allow a City to recover the costs of the infrastructure through taxes or fees, or through latecomer charges. The Court noted that the City’s decision to adopt a bylaw and policy whereby the City delegated power to an approving officer to enter into latecomer agreements with developers and impose latecomer charges – rather than collecting the costs through taxes or fees – was legislative in nature. However, the Court concluded that the City’s decision to impose the larger latecomer charge on the latecomer in this instance was administrative and had to be made fairly on the basis that:

1. The decision was not general in nature because only a single latecomer was required to pay the expenses to a neighbouring developer;
2. The decision was not based on broad considerations of public policy because it relied on a factual assessment of the reasonableness of the latecomer costs;
3. The decision was not made by a political body elected by City Council, it was a decision made by an approving officer employed by the municipality; and
4. The interests affected by the decision were not numerous, diverse, and diffuse.^[5]

Fairness requirements

The City took the position that under the Local Government Act, the responsibility for the determination of latecomer payments fell on the City, acting reasonably, not on developers or latecomers. It argued that the City retaining an independent surveyor who confirmed the reasonable costs was sufficient, and therefore, that it had acted fairly.

The Court concluded that the City had breached its duty of fairness by making a decision to impose an obligation on the latecomer to pay almost $750,000 without first (i) informing the latecomer of the costs claimed by the developer building the infrastructure, (ii) informing the latecomer of the surveyor’s analysis, and (iii) considering the latecomer’s submissions on both, particularly when the City considered the other developer’s submissions.

Key takeaways

The analysis of whether a decision about the imposition or amount of latecomer fees is legislative or administrative – and therefore whether it attracts a duty of procedural fairness – is contextual and case-dependent. However, following the Court’s decision in Ironclad, latecomers (and other developers who build infrastructure for which they may be owed latecomer fees) are in a better position to argue that municipalities owe a duty of fairness to them in respect of these decisions. This is particularly so where municipalities delegate authority to an approving officer to make decisions about latecomer fees for specific projects.

This decision also clarifies what the duty of procedural fairness requires. Even if an independent party – such as the surveyor in Ironclad – finds a charge to be reasonable, a municipality’s duty of procedural fairness will likely require it to provide latecomers (and developers building the infrastructure) with an opportunity to be informed and provide comments before municipalities make decisions respecting the amount, and possibly allocation, of latecomer fees.

Beyond latecomer charges, the decision also provides a useful articulation of the factors to consider when determining if any decision of a municipality is legislative or administrative.

^[1] Local Government Act, RSBC 2015, c 1, ss 507-508.

^[2] Ironclad Developments Inc. v. West Kelowna (City), 2025 BCCA 191 [Ironclad].

^[3] Ironclad, citing Canada (Attorney General) v Mavi, 2011 SCC 30 at paras 38-39.

^[4] Ironclad, at para 25.

^[5] Ironclad, at para 40.