Casual legal: No free ride
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made to provide current and accurate information, changes to the law may cause the information in this article to be outdated
By Justine Fay
Reynolds Mirth Richards Farmer LLP
Alberta Municipalities Casual Legal Service Provider
In a recent Alberta case, the Alberta Court of King's Bench confirmed that a municipality can enforce a developer's contractual commitment to contribute to the cost of road improvements associated with a development project.
The dispute arose from the development of a bareland condominium and seasonal RV park. As part of a 2010 Development Agreement, the developer agreed to contribute toward road improvement costs that would be necessitated by increased traffic created by the development. A 2018 amending agreement confirmed the developer’s contributions to the cost of paving the road at issue.
After the municipality completed the work, the developer argued that the road improvement obligation exceeded the municipality’s authority under the Municipal Government Act and was therefore unenforceable. The developer also sought reimbursement of payments already made. The Court rejected the developer’s arguments.
First, the Court held that s. 651 of the MGA authorizes municipalities to impose an agreement for developers to pay the costs of road improvements as a condition of subdivision approval.
Second, the Court held that even if the municipality could not have compelled such a requirement through the subdivision approval process, that would not invalidate a separate, voluntarily negotiated contract. The developer had signed the Development Agreement before subdivision approval was granted, proceeded with the development, and never appealed the subdivision approval conditions. The Court found that a challenge to the legality of those conditions should have been brought through the statutory appeal process at the time, not after the developer had received the benefit of the approval.
The Court ordered the developer to pay the municipality the principal amount of $1.49 million, plus contractual interest and solicitor-and-own-client enforcement costs.
To access Alberta Municipalities Casual Legal Helpline, Alberta Municipalities members can call toll-free to 1.800.661.7673 or email casuallegal [at] abmunis.ca (casuallegal[at]abmunis[dot]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] abmunis.ca (riskcontrol[at]abmunis[dot]ca), or call 310.MUNI (6864) to speak to Alberta Municipalities Risk Management staff. Any Regular or Associate member of Alberta Municipalities can access the Casual Legal Service.
