The appellant (the “Society”) was a non-profit society whose goal was to provide affordable, or “rent-geared-to-income” (“RGI”) housing in the city of Richmond, British Columbia. To that end, it acquired 15 strata units in a residential development project. As the rent from the 15 units could not cover the mortgage payments and other operating costs, a B.C. government organization (“BC Housing”) purchased six of the units from the Society and leased them back rent-free. The Minister’s delegate denied the Society’s application to be designated as a municipality pursuant to s. 259(1) on the ground that the government assistance to the Society in the form of the sale and lease-back arrangement was not government “funding” as required in the CRA published guidelines (in an information sheet) for when the Minister would designate an organization providing RGI housing as a municipality.
Before ordering that this denial of designation be remitted to a fresh delegate for redetermination, Grammond J stated (at paras. 25, 29):
This is an obvious case of fettering of discretion. Section 259 … simply does not lay out any criteria for the exercise of the Minister’s power to designate an entity as a municipality. By refusing to consider circumstances that fell outside the four corners of the information sheet, the Minister’s delegate essentially treated the latter as if it superseded the broad discretion granted by section 259 of the Act. …
As the Minister’s delegate fettered her discretion, the decision is unreasonable.
After noting that a regulation defining “government funding” for purposes of determining the relevant rebate rate for some of the non-municipal entities referred to in s. 259 was not relevant to designations as a municipality, Grammond J stated (at para. 39) that “[i]t is … difficult to see why the precise form of assistance matters and why creativity in structuring the relationship between government and providers of municipal services should be discouraged” and (at para. 40) that “no suggestion was made that designating the Society as a municipality would give rise to any form of tax unfairness.”