A Supreme Court judge has upheld the city and regional district’s right to raise water rates in the north part of Area D. File photo/Campbell River Mirror

Supreme Court judge upholds Campbell River and SRD rights to set water rates

Resident launched petition against both local governments after steep rate hike last year

A B.C. Supreme Court judge has dismissed an Area D resident’s case against the City of Campbell River and the Strathcona Regional District over water rate hikes.

Last summer, resident Robert Benoit launched a legal petition against the two local governments, suggesting the city, as the SRD’s bulk water supplier for the northern part of Area D, overstepped its power by charging excessive amounts, beyond the cost to supply water, in recent years.

Justice Young rendered her decision on Thursday, dismissing the application to set aside portions of the regional district bylaw governing the water rates. Ultimately, she found in the favour of the SRD’s right to establish bylaws to cover the charges for the service.

“I am satisfied that the SRD has the authority to establish and operate a water distribution service and to recover the costs of such service,” she stated.

The Mirror obtained a copy of her decision.

The judge was also satisfied the rates set out in the bylaw reflected the cost to provide the service, also pointing out the SRD does not have the power to change the rate it is charged by the city.

“Moreover, I have found … that the increased fee imposed … is linked to the historical and current cost of delivering water,” she added.

The lawsuit arose following an SRD board decision to dramatically boost the rates after years of running at a loss. This affected businesses, residents on meters and residents paying flat rates, who represent the majority in the area. The changes effectively doubled the rates.

RELATED STORY: Strathcona Regional District hikes water rates for rural area

Another question for the court was the legality of the arrangement in light of the fact that Area D Director Brenda Leigh had not signed off on the agreement, following the expiration of an agreement in 2012. As well, Benoit alleged there was a conflict of interest because the city, as a member of the SRD, has board members with an interest in reducing the deficit the city incurs from providing the service.

“The SRD has a choice: it can either purchase the water from Campbell River at this increased rate or it can build its own infrastructure and obtain its own water,” Young said.

Beyond this, Benoit was looking to have his legal costs covered, or at least that no costs be imposed against him.

The city’s position was that Benoit had no standing to challenge the sale price for bulk water because he is not a party to the agreement between it and the regional district, while the SRD argued it is lawfully providing a service and entitled to charge for that service.

The parties went to court in August and finished their submissions to Justice Young in Nanaimo Supreme Court in December.

RELATED STORY: Resident’s water rate case against City, SRD sneaks in under deadline

The judge also noted the court had the discretion to depart from an ordinary rule by which costs are awarded to the successful party. In this instance, she declined to impose costs against Benoit.

“In the circumstances of this case, I find that the parties should bear their own costs. The petitioner advanced a good-faith challenge to the impugned bylaws. The power of a municipality to enact a fee-setting bylaw that affects the cost of water for residents outside its boundaries is an important issue. The matter involved difficult legal questions of first impression, the significance of which extend beyond the immediate interests of the petitioner,” she said at the end of her legal decision.

The SRD issued a news release on Friday stating its legal costs are to be paid through the Area D water service as legislatively required. Chair Michele Babchuk was pleased to have the case finished.

“We are relieved to finally have closure on this so that we can move forward with investigating ways to provide a sustainable service to Area D residents,” she said. “This is likely to include infrastructure renewal, asset management and water conservation measures that will help us address any physical deficiencies in the system as well as mitigate rising costs in the future. Wherever possible, the SRD will continue its successful track record of sourcing grant funding to assist with capital costs and providing services that meet the needs and expectations of the community.”

The City of Campbell River also issued a statement including comments from Mayor Andy Adams, who highlighted the judge’s decision clarified the city has no obligation to subsidize the water supply to the SRD.

“Along with dismissing the petition, the BC Supreme Court judgment confirms that the city has the authority to set water rates charged outside city boundaries and that the rates are valid and lawful,” Adams said. “The city bylaw was approved by council as a matter of principle to offer services to neighbouring communities in a manner that is financially responsible and sustainable.”

The mayor added the city recognizes the Strathcona Regional District as a “valued government partner,” and with the resolution of the court case, it can commit to moving forward on other areas of mutual interest.

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