CASUAL LEGAL: Holding Developers to the Promises Made During Re-Zoning Applications

Attention: AMSC Members – Please distribute to all appropriate personnel

Holding Developers to the Promises Made During Re-Zoning Applications

By Sean Ward

Reynolds Mirth Richards Farmer LLP

AMSC Casual Legal Service Provider

A recent Alberta Court of Queen’s Bench decision shows there can be consequences for developers in failing to follow through on representations or promises made to community groups in order to gain their support for re-zoning applications.

In this case, a developer was seeking to re-zone three adjacent properties to allow for greater density. Although the zoning the developer was seeking under the municipality’s land use bylaw would allow for row housing, such developments faced significant opposition from community members. As a result, the developer confirmed to the community league in a written letter that if he received approval for his re-zoning application, he intended to construct 5 skinny homes on the lands; as opposed to his original plan that called for a four unit rowhouse on the corner, with two front back duplexes for the inner lots.

On the basis of that letter, the community league wrote a letter of support to the municipality for the re-zoning, specifically noting it was on the basis of the developer’s intent to construct five skinny homes on the parcels upon re-zoning. The municipality granted the re-zoning requested.

Subsequently, however, the developer transferred the lots to a new owner (though he remained involved with the new company), and there was no caveat registered against the lands restricting the form of development. The new owner submitted a development permit application to construct row housing on the lands, and as a permitted use in the new zoning, the municipality was left to approve the application.

The community league then launched legal action seeking an injunction to prevent the development of row housing contrary to the promises they received at the time of supporting the re-zoning application. The court accepted that although there was no written agreement between the parties, the agreement by the developer not to construct row houses in exchange for the community league’s support for the re-zoning application constituted a binding agreement, which was breached by the developer.

Although the court noted that the most equitable remedy for that breach would have been to restore the previous zoning, the court acknowledged that it had no ability to quash the municipality’s zoning bylaw, nor the development approval granted to the new owner. The court also declined to grant a permanent injunction that would have the effect of restricting development on those parcels to skinny homes, and to interfere in the land development and approval process. However, the court emphasized that the community league was entitled to some remedy to address the breach, and ensure developers could not breach such agreements with impunity. Accordingly, the developer was ordered to pay damages to the community league, in an amount the court would determine at a later date.

This serves as an important reminder that while contracts between developers and third parties about future development will not have the effect of binding or restricting development approvals issued by a municipality, developers may face consequences for breaching such agreements even after they have received the approvals they need from the municipality.

To access AMSC’s Casual Legal Helpline, AUMA members can call toll-free to 1-800-661-7673 or email casuallegal [at] amsc.ca and reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP. For more information on the Casual Legal Service, please contact riskcontrol [at] auma.ca, or call 310-AUMA (2862) to speak to AUMA’s Risk Management staff. Any Regular or Associate member of the AUMA can access the Casual Legal Service.

DISCLAIMER: This article is meant to provide information only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated.