911 Cost Recovery "Fee" is Unauthorized Tax

In judgment made on July 10, 2012, the BC Supreme Court quashed a City of Nanaimo bylaw because a "fee" under the bylaw was found to be a tax that the City was not permitted to levy. The decision, which is posted on the BC Supreme Court website, illustrates the unlawfulness of charging a fee to one person for a service when the recepient of the service is someone else.

In this recent case, the City of Nanaimo intended to off-set the cost of operating a 911 call answer centre by charging $30 to wireless telephone service providers (WSPs) for every call made by a customer of that WSP to the call answer centre. Although a municipality may charge fees to defray the cost of a call centre service, there must be a reasonable nexus between the fee paid and the service provided. The court found that in this case the charge was beyond the City's powers because the $30 charge did not relate to the service provided to the WSPs, that service being the opportunity for the WSPs to give their customers access the 911 call answer centre. Rather, the court found the $30 charge related to the service that is provided to the public, that service being the response to each 911 call. The Court noted that this unauthorized tax was evident in the fact that a WSP would be charged more if its own customers made more 911 calls, even though that WSP itself did not receive any greater service from the City than an WSP whose customers made fewer 911 calls. This case is a reminder to municipalities to be careful in imposing fees, taxes and penalties, as the legal authority for each of these sources of revenue differs significantly.