Superior Court of Justice - Ontario (Divisional Court)

CITATION: Holmesdale Investments Inc. v. City of Hamilton, 2011 ONSC 6523

COURT FILE NO.: DC-10-0229 JR

DATE: 2011-11-14

RE: Holmesdale Investments Inc. v. City of Hamilton

BEFORE: Justices Jennings, McCartney and Swinton

COUNSEL: Derek Collins, for the Applicant Justyna Boroch Hidalgo, for the Respondent

HEARD AT HAMILTON: October 27, 2011

ENDORSEMENT

Swinton J.

[1] The applicant, Holmesdale Investments Inc. (“Holmesdale”), seeks judicial review of a decision of the City of Hamilton (“the City”) dated December 24, 2009 not to process an application for renewal of a licence to operate a body rub parlour.

[2] Schedule 4 to the General Licensing By-law No. 07-170 (“General Provisions”) applies to body rub parlours. Pursuant to s. 5(6) of the Schedule, the transfer of the controlling interest in a corporation holding an owner’s or operator’s licence results in the termination of the licence. The provision states:

Where, by a transfer of existing shares, or by an issue of new or existing shares, the controlling interest in a corporation holding one or more owner’s or operator’s licences is determined by the Issuer of Licences to have changed hands, such licence or licences shall, notwithstanding any other provision of this By-law, be terminated forthwith, and the Issuer of Licences may issue a new licence or new licences upon payment of the prescribed fee.

[3] Holmesdale and Wladyslaw Kurpan held a Body Rub Parlour Owner Licence, No. 09-123617 1F, for an establishment at 754 Queenston Road. That licence would have expired December 10, 2009. However, on the death of Mr. Kurpan in April 2009, his individual licence expired by operation of s. 8(5)(b) of the General Provisions.

[4] Krystyna Kurpan, his wife, was the beneficiary of his estate, and she became the sole shareholder of Holmesdale in August 2009. Through correspondence from Henry Szpiech, her solicitor, the City was informed of the change in ownership of the corporation. An official of the City replied August 13, 2009, requesting information on the transfer of shares and a copy of Mr. Kurpan’s will.

[5] On November 2, 2009, Mr. Szpiech forwarded a Licence Renewal Notice in the name of Mr. Kurpan and Holmesdale to the City, along with the Director’s Resolution transferring ownership of the corporation to Mrs. Kurpan. The letter asked if additional information was required to transfer the licence into her name. A Corporation Profile Report was faxed to the City on November 22, 2009.

[6] On December 24, 2009, the City sent a letter stating that it would not process the application for renewal because the licence had expired pursuant to s. 8(5)(b) of the General Provisions and been terminated pursuant to s. 5(6) of Schedule 4. Moreover, there were no existing licences which the applicant could seek, given s. 3(5) of Schedule 4. It provides:

The total number of body-rub parlour licences to be granted under this Schedule shall be reduced from three, if a body-rub parlour licence expires without renewal by the licence holder or if a licence is otherwise surrendered or lawfully revoked, so that the number of licences is reduced to two.

[7] Because Holmesdale’s licence had terminated/expired, the number of licences was reduced to two, and there were no licences available. Therefore, pursuant to s. 4(1)(c) and 4(2) of the General Provisions, the issuer of licences was not authorized to process the application.

[8] The applicant seeks an order requiring the City to issue a licence to it or, in the alternative, to process its application for a licence. The applicant argues that s. 3(5) of Schedule 4 does not operate to reduce the number of licences, because the corporate licence has not expired, been surrendered or been lawfully revoked. Instead, it was “terminated”, and the last part of s. 5(6) gives the issuer the power to issue a new licence on termination under that subsection.

[9] This application for judicial review should be dismissed for a number of reasons.

[10] First, this Court has no authority to order that the City issue a licence to the applicant Holmesdale. As its licence was terminated in accordance with s. 5(6) of Schedule 4, it is not entitled to renew the licence. Moreover, Holmesdale is not entitled to a new licence, given that there has never been a proper application made for a new licence. In order to obtain a new licence, the applicant would have to appear in person, pay the prescribed fee and provide the required information, including a criminal records check. During the time Mrs. Kurpan was the controlling shareholder of the applicant, no such application was ever filed.

[11] In the alternative, the applicant seeks an order that the City process an application to renew or to issue a new licence. Again, Holmesdale has no licence that can be renewed. At most, an order could be made to the City to process an application for a new licence.

[12] However, there is no basis for this Court to order the City to process an application for a new licence. Mrs. Kurpan has never made a proper application for a licence. More significantly, Holmesdale now has a new controlling shareholder, Sherri Oliver, since sometime in 2010. She has never made an application for a licence and, indeed, has been operating the body rub parlour without a proper licence. Therefore, the applicant is not entitled to an order requiring the City to process an application for a new licence.

[13] The applicant argues that the City acted unfairly in failing to consider an application for a new licence, given that s. 5(6) states that the issuer may issue a new licence. However, the City acted in accordance with the General Provisions when the issuer refused to process an application because there was no licence available to issue.

[14] Pursuant to s. 3(5) of Schedule 4, the number of licences would be reduced by one if there was an expiry, surrender or lawful revocation. The applicant argued that a voluntary act was required by the licence holder before this section would operate. I disagree. The words “lawfully revoked” do not require some act of wrongdoing by the licence holder leading to a revocation. Those words logically include the situation here, where a licence was terminated automatically by operation of the by-law. Black’s Law Dictionary, 9th edition, defines revocation as “an annulment, cancellation or reversal, usu. of an act or power.” Holmesdale’s licence was lawfully revoked by the automatic termination on the transfer of control. Therefore, in accordance with s. 3(5), the number of licences was reduced.

[15] The applicant also argued that it was denied procedural fairness because it was not accorded a hearing before the licence was refused. There was no denial of procedural fairness here, as Mrs. Kurpan and Holmesdale were given an opportunity to provide information about the share transfer before the licence was terminated.

[16] For these reasons, the application for judicial review is dismissed. If the parties cannot agree on costs, they may make brief written submissions within 30 days of the release of this decision.

Swinton J.

Jennings J.

McCartney J.

Released: November 14, 2011