Court of Appeal Confirms Municipal Authority to Negotiate Water Services

In East Hants (Municipality) v. Nova Scotia (Utility and Review Board), 2020 NSCA 41, the Court of Appeal confirmed a municipality’s authority to negotiate a water service agreement with a developer in the context of an application for subdivision approval. The Court of Appeal also confirmed that the Nova Scotia Utility and Review Board (the “Board”) has no jurisdiction to interfere in this process.

Facts

The case involved a developer who applied for tentative subdivision approval.  For the development in question, the Municipality’s Subdivision Bylaw required the Municipality to enter into an agreement with the developer with respect to water services.  During negotiations to reach an agreement the developer said it wanted to connect water laterals directly to the Municipality’s transmission main.  The Municipality offered to do so if the developer paid $78,600, representing the cost the developer would “avoid” by not having to construct its own transmission main.  The developer took the position that it had the right to connect to the Municipality’s main at no cost.

Nova Scotia Utility and Review Board

The developer filed a complaint with the Board under the Public Utilities Act (“PUA”).  The Municipality argued that the Board had no jurisdiction to determine the complaint because the Municipality was acting in its capacity as a municipality under its Subdivision Bylaw and not as a “public utility” under the PUA.

The Board held that it had jurisdiction, heard the complaint and found the Municipality’s proposed charge of $78,600 was unauthorized.  The Municipality appealed.

Court of Appeal

The Court of Appeal overturned the Board’s decision.  It confirmed that the Board’s powers are limited to those expressly or impliedly conferred by statute.  It found that the negotiations occurred within the subdivision process where the Municipality was acting in its capacity as a municipality, and not as a public utility.  The Board had no jurisdiction to hear the complaint because the Municipality was not operating under the PUA.

The Board’s jurisdiction in subdivision matters is limited to hearing appeals of decisions to refuse subdivision applications on grounds that the decision does not comply with the subdivision bylaw. Outside of such an appeal the Board has no authority to inject itself into the subdivision process.

Conclusion

This is an important decision for municipalities.  Where a subdivision bylaw allows, it confirms a municipality’s authority to freely negotiate water service arrangements with developers without interference from the Board.