Court of Appeal for Ontario

Date: 20230510 Docket: COA-22-CV-0017

Roberts, Miller and Coroza JJ.A.

Between

The Corporation of the Municipality of Leamington Applicant (Respondent)

and

Oscar David Gutierrez Ramirez Respondent (Appellant)

Counsel: Raymond Colautti, for the appellant Jameson Pritiko, for the respondent

Heard: May 1, 2023

On appeal from the judgment of Justice Kirk W. Munroe of the Superior Court of Justice, dated August 7, 2022, with reasons reported at 2022 ONSC 4751.

Reasons for Decision

[1] The appellant appeals the permanent stay of the operation of his tavern, the Paradise Night Club (“the Paradise”), granted pursuant to s. 440 of the Municipal Act, 2001, S.O. 2001, c. 25, for operating without a business licence issued by the respondent.

Background

[2] Prior to the issuance of the permanent injunction under appeal, the appellant had operated the Paradise under a valid liquor licence issued by the province since 2011. In 2019, the respondent enacted Business Licensing By-law 05-19 (“the Business By-law”) that prohibits the operation of any business without a licence issued by the respondent, except for those businesses that the Business By-law expressly exempts.

[3] The appellant’s application for a business licence for an “eating establishment” was denied on March 29, 2021, as was his subsequent appeal to the Appeal Committee on May 31, 2021. His second licence application for a “general business” that he submitted on February 1, 2022 was refused on July 20, 2022.

[4] On October 28, 2021, the appellant was charged under the Provincial Offences Act, R.S.O. 1990, c. P.33, with operating a business without a licence, contrary to s. 9 of the Business By-law. This charge is pending in the Ontario Court of Justice. The relevant provision of s. 9 of the Business By-law reads that “No person shall: (a) operate a Business … (i) without a Business License”.

[5] With respect to the order under appeal, on August 7, 2022, the application judge allowed the respondent’s application for a permanent injunction restraining the appellant from continuing to operate the Paradise without a license under the Business By-law. The application judge found that the appellant knowingly operated a business without a business licence contrary to s. 9 of the Business By-law and that “[s]imply stated, this continuing operation of this business without a business license is illegal.” He declined to exercise his residual discretion not to grant the requested permanent injunction because he found no exceptional circumstances existed.

[6] On November 1, 2022, the Divisional Court allowed the appellant’s application for judicial review of the Appeal Committee’s decision and remitted the appeal for a rehearing: Paradise Night Club v. Municipality of Leamington, 2022 ONSC 6118. The rehearing is also pending.

[7] On November 29, 2022, this court dismissed the appellant’s motion for a stay pending appeal.

Issues

[8] The appellant submits that the application judge made three reversible errors in granting the permanent injunction:

i. he erred in holding that the Business By-law applied to and prohibited the appellant’s business from operating without a business licence issued by the respondent;

ii. he erred in failing to conclude that under the guise of requiring a business licence for a tavern, the Business By-law directly or indirectly prohibits or attempts to regulate the sale of alcoholic beverages, which is within the exclusive jurisdiction of the Alcohol and Gaming Commission of Ontario under the Liquor Licence and Control Act, 2019, S.O. 2019, c. 15, Sched. 22;

iii. he erred in awarding a permanent injunction where exceptional circumstances existed.

[9] We are not persuaded by these submissions and dismiss the appeal.

(i) The appellant’s business is clearly covered by the Business By-law

[10] The appellant’s business is a “Business” as defined in the Business By-law. Section 1 of the Business By-law broadly stipulates that: “‘Business’ shall mean any business wholly or partially carried on within the Municipality” (emphasis added). Exceptions to this definition are set out in s. 1, as well as in s. 8 of the Business By-law. The appellant’s business is not one of the listed exceptions.

[11] We do not accept the appellant’s submissions that Schedule 1 to the Business By-law sets out an exclusive list of the businesses that must be licensed and since the operation of a “tavern” is absent from that list, the Business By-law does not apply to the Paradise.

[12] Respectfully, the appellant’s reading of Schedule 1 is too narrow and is inconsistent with other provisions of the Business By-law, including the expansive definition of “Business” in Section 1. Importantly, “Business” expressly incorporates different types of businesses, such as “trades and occupations”, “exhibitions, concerts, festivals and other organized public amusements held for profit or otherwise”, and the “display of samples, patterns or specimens of goods for the purpose of sale and hire” that are not listed in Schedule 1. When Schedule 1 is read in the context of the Business By-law as a whole, it is clear that it relates to a subset of businesses that have additional requirements for the application process. This is the only interpretation that makes sense in light of the broad general definition provision, as well as, for example, s. 23(g) of the Business By-law that provides for requirements in the application process for businesses set out in Schedule 1 that are in addition to requirements for all applications, and Schedule 4 that sets out the expiry dates for Schedule 1 businesses as well as “[a]ll other businesses”. This is also consistent with the appellant’s second licence application that was for “general business”.

[13] Accordingly, we conclude that the Business By-law applies to the appellant’s business and that he was required to have a licence issued by the respondent under the Business By-law to operate it.

(ii) The Business By-law does not prohibit or otherwise regulate the sale of liquor under the Liquor Licence and Control Act, 2019

[14] We do not accept the appellant’s submission that the Business By-law purports to prohibit or otherwise regulate matters exclusively covered under the Liquor Licence and Control Act, 2019.

[15] First, s. 151 of the Municipal Act clearly empowers the respondent to “provide for a system of licences with respect to a business”, including prohibiting “the carrying or engaging in the business without a licence”, as provided for in s. 9 of the Business By-law. This means that a business can be required to have more than one licence to operate – so the requirement for a business licence from the respondent does not detract from or change the requirement to have a liquor licence. Accordingly, the Business By-Law does not regulate matters exclusively covered by the Liquor License and Control Act, 2019.

[16] Further, the Business By-law does not purport to regulate aspects of the sale, consumption, distribution or possession of alcohol that are regulated by the Liquor Licence and Control Act, 2019. Nor does it impose any prohibited conditions or limitations as set out under s. 1 (a) and (e) of Licensing Powers, O. Reg. 583/06, under the Municipal Act, namely, under s. 1(a) “any condition with respect to the sale or service of liquor, as defined in the Liquor Licence and Control Act, 2019, as a requirement of obtaining, continuing to hold or renewing a licence issued by the municipality”; nor under s. 1(e) “as a requirement of obtaining, continuing to hold or renewing a licence, any condition respecting containers for alcoholic beverages, including a condition requiring the vendor of alcoholic beverages to establish, operate or maintain a system or facilities for the return of containers for alcoholic beverages”.

[17] That the refusal of a business licence may result in the closure of an establishment licensed to sell alcohol does not constitute the regulation of the sale of alcohol. The coordinate operation of various licences to regulate different aspects of a business is expressly recognized in s. 12 of the Business By-law:

The requirement of a Licence under this By-law is in addition to and not in substitution for any other requirement to obtain a license or licenses under any other federal or provincial regulation and does not relieve any party from its obligations to comply with any other law.

[18] Finally, the Liquor Licence and Control Act, 2019 regulates the sale, consumption, distribution and possession of alcohol but it does not purport to regulate all aspects of a place or the operation of a business where those activities occur. For example, s. 40(1) of the Liquor Licence and Control Act, 2019 specifically provides that a municipality may prohibit the sale or consumption of alcohol in recreational spaces.

[19] Accordingly, we reject this ground of appeal.

(iii) The permanent injunction was properly granted

[20] We see no basis to interfere with the application judge’s granting of a permanent injunction. The application judge properly applied the governing legal principles and considered and weighed all relevant factors.

[21] We are not persuaded by the appellant’s arguments about unfairness or irreparable harm. The appellant knowingly and unlawfully carried on business without a licence for several years until permanently restrained and enjoined by the order made by the application judge. The appellant’s clear and continuing breach of the Business By-law outweighed any issues of unfairness or irreparable harm to the appellant.

[22] As this court instructed in Newcastle Recycling Ltd. v. Clarington (Municipality), 204 O.A.C. 389 (C.A.), at para. 32, “Where a municipal authority seeks an injunction to enforce a bylaw which it establishes is being breached, the courts will refuse the application only in exceptional circumstances.”

[23] The application judge’s determination that there were no exceptional circumstances militating against the granting of the permanent injunction was based on his assessment of the evidence. His assessment is entitled to deference, absent error. We see none here.

[24] We do not agree that the Divisional Court’s decision changes this result. While the Divisional Court ordered a new appeal before the Appeals Committee because of procedural unfairness and the unreasonableness of the decision, it stopped short of finding bad faith and expressly refused to require the respondent to issue a business licence because, as it concluded, “[w]ith respect to remedy, this is not a case where a particular outcome is inevitable”: Paradise Night Club, at para. 4.

[25] This ground of appeal therefore fails.

Disposition:

[26] Accordingly, the appeal is dismissed.

[27] The respondent is entitled to its costs in the agreed upon amount of $10,000 plus HST, inclusive of all other amounts.

“L.B. Roberts J.A.”

“B.W. Miller J.A.”

“S. Coroza J.A.”