Prince George (City of) v. Payne, [1978] 1 SCR 458

Supreme Court of Canada

Prince George (City of) v. Payne, [1978] 1 S.C.R. 458

Date: 1977-05-17

The Corporation of the City of Prince George Appellant;

and

Joseph E. Payne Respondent.

1976: December 13, 14; 1977: May 17.

Present: Laskin C.J. and Ritchie, Dickson, Beetz and de Grandpré JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR BRITISH COLUMBIA

Municipal corporations—Refusal of business licence—Council not empowered to refuse licence on basis it seeks to protect community’s moral welfare—Municipal Act, R.S.B.C. 1960, c. 255, s. 455, as amended by 1964, c. 33, s. 35; 1968, c. 33, s. 122.

Respondent applied to the appellant corporation for a business licence permitting the respondent to conduct an adult boutique. Council of the corporation passed a resolution withholding the licence. Respondent was given an opportunity to show cause why the licence should not be withheld. By a two-thirds vote, as required by s. 455 of the Municipal Act, R.S.B.C. 1960, c. 255, Council rejected a resolution to grant the licence. Moral implications would seem to have been the determining consideration of Council.

A motion for an order quashing the resolution and for a writ of mandamus to compel issuance of the licence was dismissed. This judgment was reversed on appeal to the Court of Appeal. The corporation appealed to this Court.

Held: The appeal should be dismissed.

The discretion contained in s. 455, wide as it is, must be exercised judicially. It is not a judicial exercise of discretion to rest decision upon an extraneous ground. The common law right of the individual freely to carry on his business and use his property can be taken away only by statute in plain language or by necessary implication.

The power to refuse a licence, embodied in s. 455, is undoubtedly phrased in broad terms. It is limited only by the stricture that the granting or renewal of a licence shall not be unreasonably withheld. Nonetheless, the section must be construed and applied in conformity with the Municipal Act within which the section is found and the relevant authorities. Save for s. 870(n) respecting prevention of vice and s. 870(m) referring to posters tending to corrupt or demoralize, the Act does

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not authorize moral evaluation by city councils. Sections 870(n) and (m) do not assist the appellant.

In exercising its licensing function, Council passed a resolution the effect of which was to refuse a licence to a particular land use. That was not a judicial exercise of Council’s function. A statutory power conferred upon a municipal council to make by-laws for regulating and governing a trade does not, in the absence of an express power of prohibition, authorize the making it unlawful to carry on a lawful trade in a lawful manner.

Council of the appellant corporation did not have statutory power to prohibit the trade which the applicant sought to conduct. Council was empowered by s. 455 to refuse a licence “in any particular case” but those words do not mean and cannot be so construed to extend to any particular type of business. They do not suggest a blanket right to prohibit generally so‑called “adult boutiques” which are not ex hypothesi illegal. The words “particular case” mean peculiar to the applicant and not to the type of business which he wishes to conduct.

Sunshine Valley Co-operative Society v. City of Grand Forks, [1949] 1 W.W.R. 165; Regina ex rel. Canadian Wire-Vision Ltd. v. City of New Westminster (1965), 53 W.W.R. (N.S.) 373, aff’d. 54 W.W.R. (N.S.) 238; Active Trading v. City of New Westminster, [1974] 5 W.W.R. 354, distinguished; Wilcox v. Township of Pickering, [1961] O.R. 739; Tresnak v. City of Oshawa, [1972] 1 O.R. 727; Re Smith and Municipality of Vanier (1972), 30 D.L.R. (3d) 386, followed; Municipal Corporation of the City of Toronto v. Virgo, [1896] A.C. 88, applied; Brampton Jersey Enterprises Ltd. v. The Milk Control Board of Ontario (1955), 1 D.L.R. (2d) 130, referred to.

APPEAL from a judgment of the Court of Appeal for British Columbia[1], allowing an appeal from a judgment of Fulton J. Appeal dismissed.

M.H. Thomas, for the appellant.

J.D. McAlpine and W.R. Hibbard, for the respondent.

The judgment of the Court was delivered by

DICKSON J.—The issue in this appeal is whether a municipal council is empowered to refuse a business licence on the basis that it seeks to protect the community’s moral welfare.

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I

On October 5, 1974, Joseph E. Payne applied to the City of Prince George, in British Columbia, for a business licence permitting him to conduct under the firm name of Garden of Eden an adult boutique at 230 George Street in that city. The property was zoned C1—Commercial Comprehensive Core—and its intended use did not breach the zoning by-law of the City. The City Clerk advised Mr. Payne by letter, dated October 23, 1974, that on instructions of the City’s Mayor the matter had been referred to Council at their meeting on October 21, and that Council had unanimously passed a resolution to withhold the licence under s. 455 of the Municipal Act, R.S.B.C. 1960, c. 255. That section, the application of which is central to this appeal, reads:

455. Notwithstanding anything contained in this Act or in the by-laws of the municipality, the Council may, upon the affirmative vote of at least two-thirds of all the members, refuse in any particular case to grant the request of an applicant for a licence under this Division, but the granting or renewal of a licence shall not be unreasonably refused.

The letter of October 23 also informed Mr. Payne that he would be given an opportunity to appear before Council on November 4 and show reason why his licence should not be withheld. On that date he attended council meeting with one Kelly Covin, President of Garden of Eden Boutique Ltd. Mr. Covin furnished the councillors with information respecting the proposed business, following which the matter was laid over to the next council meeting, to be held two weeks later. At that later meeting a representative of the Prince George Ministerial Association addressed Council and likened the products of the adult boutique to heroin and other cultural poisons. In the debate which followed one of the aldermen declined to peruse the catalogues depicting the items to be sold in the boutique, concluding “from what I see on the streets, this town doesn’t need any instruction in this matter.” Another alderman observed “I guess you’d have to say I carry my narrow-mindedness to Council with me” while a third, who also opposed the granting of the licence, stated that a community “has to take a stand on the matter,”

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and went on to observe that “some of this sex is better left in the barnyard.” One of the aldermen favouring the granting of the licence noted that a boutique of like nature was operating in Victoria, British Columbia, and that persons under 19 were precluded from entering. Two aldermen voted in favour of the resolution to grant the licence while four aldermen, being two-thirds of the members as required by s. 455 of the Municipal Act, voted against the resolution. The licence was denied.

The moral implications, not the physical implications, would seem to have been the determining consideration of Council.

II

Mr. Payne thereafter moved in the Courts for an order quashing the resolution and for a writ of mandamus to compel issuance of the licence. Mr. Justice Fulton, before whom the matter first came, dismissed the motion. He held that the Prince George Council, in refusing to grant the licence, had acted on grounds of public policy, in the maintenance and protection of moral standards in Prince George. He concluded that the words of s. 455 of the Municipal Act conferred upon a municipal council authority to consider the moral welfare of the municipality in exercising a discretion for or against a licence application.

Mr. Payne appealed the judgment of Mr. Justice Fulton and the appeal was heard by Branca, McIntyre and Carrothers JJ.A. The Court divided. Mr. Justice Branca would have dismissed the appeal and upheld the conclusion of Mr. Justice Fulton. In doing so, he chose very narrow ground, which in argument in this Court counsel for the City of Prince George did not attempt to defend, holding that the licence refusal was only in reference to the address, 230 George Street. He conjectured that Council might well issue a licence for another location for the same business and the refusal therefore could not be regarded as an act of

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prohibition. The ratio of his judgment is to be found, I think, in the following passage:

In this appeal the appellant has submitted that the action of Council constituted a prohibition of a particular type of business and added that there was no express statutory power to prohibit the lawful type of business proposed to be carried on. I cannot agree. I construe the resolution of Council as only a refusal to grant a licence to the applicant to the address at 230 George Street in the City of Prince George. It may well be that Council had not the power to prohibit this type of business but specifically Council had the power to refuse a licence at that address as that power is expressly given by statute.

As I have indicated, counsel for the City did not regard the action of the Council as involving only a refusal of a licence for the location at 230 George Street. He took the position that the licence was not being refused because it related to any particular location or because of anything derogatory to the applicant as a person. His argument proceeded on the broad basis that Council was empowered to refuse a licence to any particular business and it was not unreasonable for Council to act in defence of the moral quality of the City.

Mr. Justice McIntyre in the Court of Appeal agreed with Mr. Justice Fulton that the Council of Prince George in refusing the licence had acted to protect public morals but, differing from Mr. Justice Fulton, he was of opinion that Council’s view that the moral welfare of the community required protection was an alien and irrelevant consideration in deciding whether a business licence should be granted or withheld. To withhold a licence on other than licensing considerations would be to withhold the licence unreasonably, in his view. Mr. Justice Carrothers described the so-called “marital aids” to be vended by the proposed adult boutique as encompassing “a wide range of masturbatory and erotic devices and substances not entirely consistent with heterosexual activity let alone conducive to or in furtherance of connubial bliss” and to his mind there was a genuine basis for concern by the Council to protect the public interest. Refusal of the licence was not activated, in his opinion, by capricious motives or unduly rigorous moral concepts. Notwithstanding, Mr. Justice Carrothers regarded the denial of licence as intended not

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simply as a refusal to a particular applicant for a particular location, but as a general prohibition against a particular type of business throughout the City of Prince George and therefore incompatible with the licensing function. Leave to appeal to this Court was granted by the British Columbia Court of Appeal.

Let me say, at the outset, that one might well be inclined to support Council’s evident distaste with sex businesses. But it is no part of a Court’s task to determine the wisdom of Council’s decision, assuming a power to deny the licence inhered in the Council. The Court’s sole concern is whether the Council acted within the four corners of its jurisdiction. The discretion contained in s. 455, wide as it is, must be exercised judicially. It is not a judicial exercise of discretion to rest decision upon an extraneous ground. The common law right of the individual freely to carry on his business and use his property can be taken away only by statute in plain language or by necessary implication.

The power to refuse a licence, embodied in s. 455 of the Municipal Act of British Columbia, is undoubtedly phrased in broad terms. It is limited only by the stricture that the granting or renewal of a licence shall not be unreasonably withheld. Nonetheless, the section must be construed and applied in conformity with the Municipal Act within which the section is found and the relevant authorities.

The Courts are loathe to interfere with decisions made in good faith by statutory bodies, the members of which are voted or appointed to office because others have confidence in their experience and integrity. But when such bodies err by acting in excess of their statutory powers, the Courts will control them.

III

Section 870(n) of the Municipal Act provides that the Council of a municipality may by by-law prevent vice, drunkenness, profane swearing, or

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indecent, obscene or grossly insulting language or other immorality and indecency. That section does not assist the City in the present proceedings because there is no such by-law.

Part X of the Municipal Act is entitled “Licensing and Regulating.” Section 458 of that part provides that the Council may by by-law delegate to any official designated in the by-law the power to grant a licence where he is satisfied that the applicant has complied with the by-laws of the municipality regulating building, zoning, health sanitation and business. There is no mention of moral considerations.

Division (4) of Part X, entitled “Regulation of Business” is important as indicating a limited power of regulation and an even more limited power of prohibition. Section 458M (1) states that the Council may by by-law regulate the carrying on of business within the municipality, to the extent not inconsistent with the Municipal Act or any other Act, for the purpose of protecting the public or preventing or minimizing nuisances and misleading business practices. Council, by s. 458N, is empowered by by-law to prohibit (a) the operating of any public show, exhibition, carnival or performance and (b) the operation of any public poolroom, billiard-hall, cabaret, skating rink, bowling-alley, dance-hall or other place of amusement.

Zoning is covered in Part XXI of the Act. By means of a zoning by-law the Council may regulate the use of land and building and such regulation includes the power to prohibit any use or uses in any specified zone or zones. In making such regulations the Council is to have due regard to, amongst other things, the promotion of the health, safety, convenience and welfare of the public. A public hearing, with due notice and an opportunity to be heard, must precede the adoption of a zoning by-law.

Section 870 contains lengthy and detailed provision whereby the Council may by by-law prevent and abate nuisances and disturbances; prohibit the posting of placards or advertising which is indecent or may tend to corrupt or demoralize; prohibit the

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carrying on of any noxious or offensive trade, business or manufacture. Section 871 empowers the Council by by-law to prohibit certain activities such as the keeping of kennels or bee-keeping or mushroom growing.

The powers are spelled out in the greatest detail and in every case are exercisable only by by-law. Save for s. 870(n) respecting prevention of vice and s. 870(m) referring to posters tending to corrupt or demoralize, the Act does not authorize moral evaluation by city councils. Sections 870 (n) and (m) do not assist the City, which must fall back upon s. 455.

IV

Section 455 and kindred legislation have been judicially considered in a number of the cases. The three cases which feature prominently in the judgments in the Courts below are Sunshine Valley Co-operative Society v. City of Grand Forks[2]; Regina ex rel. Canadian Wire-Vision Limited v. City of New Westminster[3] and Active Trading v. City of New Westminster[4]. In the Sunshine Valley Co-operative Society case, the members of the society were Doukhobors who had opposed to them other sects known as the Sons of Freedom. The Co-operative Society carried on a wholesale flour and feed business in the business centre of the City of Grand Forks. The premises were destroyed by a massive explosion and fire. On the following morning the Society applied for a renewal of its trade licence which was refused. The City Council acted pursuant to a section of the Municipal Act similar to all intents to the present s. 455. In upholding the refusal, Sloan C.J.B.C., delivering the judgment of the Court, said, p. 167:

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It is the prerogative of the council to make the decision one way or the other provided its discretion is exercised within the limitations imposed by law and is not activated by indirect or improper motives or based upon irrelevant or alien grounds or exercised without taking relevant facts into consideration.

The Canadian Wire Vision case stands for the proposition that in exercising the power conferred by s. 455 the council of a municipality may discriminate between applicants for a licence to operate a business but the power to discriminate must be exercised judicially. The case is not of great assistance. In Active Trading the applicant had applied to the municipality for a licence to operate a scrap metal business or junk yard. Refusal was sought to be justified on the authority of a section of the zoning by-law of the City which the British Columbia Courts held to be ultra vires. Alternatively, it was contended that Council acted properly under s. 455 of the Municipal Act in rejecting the licence application. Taggart J.A. in delivering the judgment of the British Columbia Court of Appeal noted that the section conferred broad powers on Council but that those powers must be exercised within the general scope of its licensing powers. Because Council had acted upon zoning rather than licensing considerations, the resolution refusing the licence was quashed. The judge of first instance had directed the issuance of a writ of mandamus. The Court of Appeal set aside that direction and permitted the applicant to proceed either upon its old application or to submit a new application for a business licence.

More apposite than the authorities to which I have referred is the decision of McRuer C.J.H.C. in Wilcox v. Township of Pickering[5], in which the application was for a mandamus directed to the Township of Pickering to issue a licence to the applicant to permit him to operate a salvage yard. The Township had passed a by-law precluding any person from operating a salvage yard without first having taken out a licence. Section 396 of the

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Municipal Act, R.S.O. 1960, c. 249, permitted passage of by-laws for licensing, regulating and governing salvage shops. By s. 247 the granting or refusing of a licence to carry on a particular business was in the discretion of Council; Council was not bound to give a decision for refusing a licence nor was its action open to question or review by any Court. The main question which arose in the case was whether the Municipal Council, by the exercise of its licensing powers, could restrict land use pending passage of a restrictive by-law. It was argued on behalf of the municipality that the Council had an unlimited discretion to refuse a licence on any ground and that the Court could not inquire into the matter. That, in effect, is the submission of counsel for the City in the present case. Chief Justice McRuer concluded his judgment in these words, p. 745:

My conclusion is that it is not within the power of the Municipal Council to refuse to grant a licence with the sole object of restricting the user of land. As I said in effect in the Cities Service case, it would give to municipalities the power in the guise of licensing to restrict the use of land which is a power that is exercised with many safeguards to the rights of the proprietor of the land.

In Tresnak v. City of Oshawa[6], an application was made for a licence to operate a public hall for the purpose of staging strip-tease shows. Council of the City of Oshawa refused the licence, believing shows of this type to be immoral, and wishing to protect citizens therefrom. Galligan J. held that in so doing Council exceeded its jurisdiction. See also Re Smith and Municipality of Vanier[7], where Pennell J. directed the issuance of an order of mandamus where the Council was induced to refuse the application for a licence to operate a public hall on grounds of morality.

V

In the case at bar, the Council of the City of Prince George sought to prohibit land use through the mechanism of a licensing regulation. The

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action was not related to a particular person or to a particular location. In exercising its licensing function, Council passed a resolution the effect of which was to refuse a licence to a particular land use. In my opinion, that is not a judicial exercise of Council’s function. It has long since been decided, in Municipal Corporation of the City of Toronto v. Virgo[8], that a statutory power conferred upon a municipal council to make by-laws for regulating and governing a trade does not, in the absence of an express power of prohibition, authorize the making it unlawful to carry on a lawful trade in a lawful manner. Argument in this Court proceeded on the basis that the proposed trade was lawful and for the purposes of this appeal I assume it to be so.

The Prince George Council, in my opinion, did not have statutory power to prohibit the trade which the applicant sought to conduct. Council was empowered by s. 455 to refuse a licence “in any particular case” but those words do not mean and cannot be so construed to extend to any particular type of business. They do not suggest a blanket right to prohibit generally so‑called “adult boutiques” which are not ex hypothesi illegal. The words “particular case” mean peculiar to the applicant and not to the type of business which he wishes to conduct.

Interdiction of particular types of business is carried out by zoning or other by-laws in pursuance of clear authority in the Municipal Act. Perusal of the Act makes it clear that when the legislature intended to give power to restrict land use or to prevent or prohibit a particular type of business activity it did so in express words. Municipal officers are not given a discretion whether, as a matter of policy, one type of lawful business can be carried on within a municipality while another cannot. See Brampton Jersey Enterprises Ltd. v. Milk Control Board of Ontario[9].

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VI

The facts are capable of raising an issue over the application of natural justice rules. Before giving the applicant a hearing Council decided against the application. The applicant was then called upon to show reasons why the licence should not be withheld. One of the aldermen decided to refuse the application without perusing the catalogues depicting the items to be sold. The applicant was denied an opportunity to speak in reply to the representative of the Prince George Ministerial Association. Interesting questions arise as to burden and audi alterem partem but I do not deem it necessary to consider them in view of the conclusion which I have reached on other aspects of the case.

For the foregoing reasons, I would dismiss the appeal, with costs.

Appeal dismissed with costs.

Solicitors for the appellant: Thompson & McConnell, White Rock.

Solicitors for the respondent: J.D. McAlpine & Assoc, Vancouver.