Campus Counsel
Special Edition - April 2, 2009
ULTRA VIRES REVISITED, AGAIN
The principle of ultra vires has been a repeated topic in Campus Counsel newsletters. See our previous newsletters dated July 2001 and March 2005.
It is an issue which is of critical importance to institutions of higher learning. This has been driven home by the decision of Mr. Justice Goepel in Barbour v. The University of British Columbia, which was just released on March 30, 2009. While this decision is focussed on the ability of a university to levy parking fines against violators of its parking regulations, the decision has broader implications.
Natural persons who are mentally competent and of age can agree to pretty much anything which is not illegal. It is a basic principle of law that bodies corporate, such as business corporations or statutory bodies, such as colleges, institutes and universities, have only the authority to do those things which are permitted by their charter documents or, if they are created by statute, as permitted by their incorporating legislation. In other words, artificial entities do not have the powers of a natural person. The consequence is that if a corporation makes a commitment to do something or undertakes an action which is not permitted by its charter or incorporating statute, that commitment or action is ultra vires, or outside of its powers, and void and must be rescinded.
In the case of business corporations, this principle has been overridden by legislation. The business corporations statute universally says that a business corporation has the power of a natural person. Unfortunately, this is not the case for many statutory corporations. Notably, the University Act (British Columbia) sets out a long list of specific powers which are conferred on universities and, in Section 46.1 (effective April 1, 2005), also states:
"Subject to this Act and for the purposes of exercising its powers and carrying out its duties and functions under this Act, a university has the power and capacity of a natural person of full capacity".
This provision arguably does little to expand the powers of a university to do anything which it is not specifically permitted to do by the University Act unless such action is necessary for the performance of its duties and functions as mandated by that statute.
In the Barbour case, Mr. Barbour's car was towed by UBC because it had been parked contrary to UBC's parking regulations on several occasions and because he did not pay the fines which UBC levied as a result of these contraventions. Mr. Barbour was forced to pay the outstanding fines and towing charges in order to recover his car. Mr. Barbour started a class action against UBC on his own behalf and that of others who had paid parking fines to UBC to recover those fines.
There was no question that UBC is specifically permitted by the University Act to "control vehicle and pedestrian traffic on the university campus" and has other powers which permit it to manage the campus generally. The issue in contention was whether UBC had the power to levy fines or penalties and to refuse to release motor vehicles which it had impounded until the fines were paid. UBC conceded that the creation of parking offences and levying of parking fines was ultra vires of the public law powers conferred on it by the University Act. However, UBC argued that there were private law justifications which permit it to collect and retain the parking fines set out in its parking regulations. In essence, UBC argued that, by virtue of its parking regulations, individuals who park on its lands agree, as a matter of contract, to submit to fines if they violate the regulations. In the alternative, UBC argued that if individuals park their vehicles in violation of the parking regulations, they are trespassers, and as such are subject to the fines levied by UBC for such trespass.
The court held that UBC had the authority to regulate parking and to charge for parking services. UBC could tow vehicles which violate its rules, and charge for the cost of towing. What UBC did not have the power to do was charge fines or penalties for non compliance. If such action was ultra vires, UBC could not rely on contractual or tort law to justify its actions. As a result, the $4,000,000 in parking fines collected over the years from Mr. Barbour and other offenders of the UBC parking regulations were charged improperly and should be repaid.
We are told that UBC is appealing the Barbour decision. It is a matter of significant importance in relation to campus parking (and perhaps in relation to other areas where an institution charges fines, such as for late return of library books). But whether or not UBC is ultimately successful on the appeal, it would be in the interests of all universities and other institutions of higher learning not to have their general powers constrained in the manner now found in the University Act. In the writer's view, it serves little purpose to limit universities to the purposes of exercising their powers and carrying out of their duties and functions under their governing legislation. This qualification on their powers introduces an element of ambiguity and circularity. If the legislature deems it appropriate to limit the powers of an institution, such as to prevent the disposition of real property or the incurring of mortgage debt (both of which are also specifically subject to constraint under the University Act), the legislature should set out those limitations explicitly. The language in Section 46.1 of the University Act gives rise to uncertainty which could detrimentally affect the ability of institutions of higher learning to carry out activities which they now commonly undertake beyond the levying of fines on parking violators.
If you have any questions or comments about this article, please contact Brock Johnston at 604.643.3116 or rbj@cwilson.com or Larry Munn at 604.643.3160 or lm@cwilson.com.
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