DATE: 20010104

DOCKET: C34635

COURT OF APPEAL FOR ONTARIO

CATZMAN, BORINS and FELDMAN JJ.A.

BETWEEN:

BODY RUBS OF ONTARIO INC. ) Gabrielle Kramer, ) for the appellant Applicant ) (Appellant) )

–and– ) Olivio Fatigati, ) for the respondent THE CORPORATION OF THE CITY ) OF VAUGHAN ) Respondent ) (Respondent) )

) Heard: October 19, 2000

On appeal from the judgment of Justice Joan L. Lax dated July 13, 2000.

BY THE COURT:

[1] On January 25th, 1999, the Corporation of the City of Vaughan (“Vaughan”) passed Licensing By-law 30-99 respecting the licensing, regulating and inspecting of body rub parlours and those engaged in the business of providing body rubs in body rub parlours (“the licensing bylaw”). On the same day, Vaughan enacted complementary Zoning By-law 31-99 (“the zoning bylaw”).

[2] Sections 5 and 10(m) of the licensing bylaw provide:

5. No person shall own or operate a Body Rub Parlour in the City of Vaughan and no attendant shall perform or provide a body rub at a body rub parlour, except in the areas designated as “subject lands” in Schedule 1 and Schedule 2 of this By-law.

10(m). The premises for which the body-rub licence is required shall be subject to the following criteria:

i) the maximum gross floor area of the body-rub parlour shall be no more than 150 square metres;

ii) a maximum of one body-rub parlour per lot; and

iii) when a body-rub parlour is located in a multi-unit building, it shall not exceed 15% of the gross floor area of the multi-unit building.

[3] The appellant brought an application for an order declaring the licensing bylaw to be ultra vires and to be null and void ab initio on the ground that the effect of the licensing bylaw was the virtual prohibition of body rub parlours in Vaughan and that, while the municipality had the legislative authority to regulate the operation of body rub parlours, it did not have the legislative authority to prohibit their operation.

[4] Lax J. found that the licensing bylaw was valid and did not have a prohibitory effect. She dismissed the application with costs. This is an appeal from her order.

[5] It was common ground between the parties that:

(1) municipalities cannot act except in accordance with statutory authority;

(2) body rub parlours are a lawful business;

(3) s.224 of the Municipal Act, R.S.O. 1990, c.M.45, empowers a municipality to license, regulate and govern body rub parlours and to define the areas of the municipality in which body rub parlours may or may not operate;

(4) the right to regulate does not include the right to prohibit; and

(5) the licensing bylaw permits body rub parlours to locate anywhere in Vaughan, without geographical restriction, where (to a maximum of 30% of the gross floor area) they are an accessory use to the office of such registered health professionals as physicians, nurses, chiropractors, massage therapists, dieticians, physiotherapists and others.

[6] The appellant did not argue that Vaughan enacted the licensing bylaw in bad faith. Rather, its position (described in argument as “effects-based”) was that, under the guise of regulation, the provisions of the licensing bylaw set out above had the effect of virtually prohibiting body rub parlours in Vaughan and was therefore ultra vires the municipality.

[7] In upholding the validity of the licensing bylaw, Lax J. wrote:

[4] In a nutshell, the applicant’s case is that at the time of the passage of the by-law, there were limited vacancies in the geographical areas designated by the by-law which meet the requirements of the by-law as to maximum gross floor area and the requirement that there be only one parlour per lot. It presented evidence from a realtor who surveyed existing units of 1600 square feet that were vacant and for sale or lease and found that there was only one building that had vacant space to accommodate a 1600 square foot tenant, would lease to a tenant seeking this amount of space and would lease to a body parlour. In other words, the relocation opportunities are constrained by the low vacancy rate. It submits that the City ought to have taken account of vacancy data before passing a by-law where relocation is constrained by a low vacancy rate. It submits that the City’s failure to take account of vacancy data has resulted in it passing a by-law with a prohibitory effect and therefore, one which is ultra vires.

[5] There are a number of answers to this argument. First, the evidence presented by the applicant ignores that there are locational opportunities in larger buildings within the two designated areas that can be subdivided to create separate units for use by body parlours. Presently, one body rub-parlour has applied for a building permit that will allow it to create a separate unit out of a larger unit within one of the designated areas. Second, the data compiled by the applicant is not strictly vacancy data. There is no indication as to how many of the vacant units meet the gross floor area requirements of the by-law, but are unavailable because the landlord prefers to rent to another kind of tenant. There is evidence that at least two landlords would not rent to a body rub parlour. I do not see how the municipality can be held responsible for this. It seems to me that on this evidence, the prohibitory effect, if any, is being driven by the marketplace and not by the by-law.

[8] The evidence before me demonstrates that the City properly assessed relocation opportunities for body rub parlours before it enacted this by-law. At the time the by-law was enacted, relocation opportunities existed and they continue to exist. Vacancy rates are not the same as relocation opportunities. Vacancy rates are affected by market conditions and are variable. A municipality cannot be a guarantor of market conditions. Nor can it force the market to behave in a certain way. I was referred to no authority for the proposition that a municipality must ensure that market conditions are favourable to a particular business before it passes a by-law. Yet, this is the implication of the applicant’s argument. It would impose on a municipality a commercial duty that it is neither equipped, nor required to perform. It is not the responsibility of a municipality to monitor marketplace conditions or provide for commercial arrangements before exercising valid legislative powers. In my view, this by-law does not have a prohibitory effect, either in its intent or in its effect.

[8] In our view, the findings in these paragraphs are supported by the evidence that was put forward by Vaughan on the application before Lax J.

[9] Vaughan’s evidence was given in the affidavit of Robert Gibson and on the cross-examination on his affidavit. Mr. Gibson is the planner, in Vaughan’s employ, who developed the size and locational criteria that appear in the licensing and zoning bylaw. In his affidavit and cross-examination, Mr. Gibson deposed that:

(a) beginning in March 1998, Vaughan conducted an extensive staff review regarding the implementation of a body rub parlour licensing by-law pursuant to s.224 of the Municipal Act;

(b) in June 1998, Vaughan directed its staff to review and report on the zoning issues related to body-rub parlours;

(c) in November 1998, Vaughan held a statutory public hearing to identify issues relating to body rub parlours and received and heard submissions from interested persons, including the appellant and body rub parlour owners;

(d) after a review of current surveys, studies and employment and assessment data described in his affidavit, Mr. Gibson identified two areas which, according to the criteria established in his review, were appropriate for the location of body rub parlours and which became the two areas designated in the licensing bylaw; and

(e) Vaughan has received an application for a body rub parlour licence in a building in one of the designated areas and for a building permit to subdivide the building to create a unit that would meet the space requirements for body rub parlours.

[10] The findings of a judge of first instance, even in cases where no oral evidence is heard, are entitled to deference from an appellate court: Equity Waste Management of Canada v. Halton Hills (Town) (1997), 35 O.R. (3d) 321 (C.A.) at 334; Gottardo Properties (Dome) Inc. v. Toronto (City) (1998), 162 D.L.R. (4th) 574 (C.A.) at 591. It was open to Lax J. to accept, as she did, the evidence of Vaughan in making the findings set out in paragraph 7, above, and we see no basis on which we could properly interfere with those findings.

[11] The appellant’s attack on the licensing bylaw was not founded on improper planning principles or allegations of bad faith, Rather, the objection was that the effect of the licensing bylaw was a virtual prohibition of body rub parlours in Vaughan because, from a commercial point of view, there were insufficient locations within the two designated areas in which owners and landlords of buildings would be prepared to accommodate existing and future body rub parlours. Assuming that this characterization is accurate, the material in the record makes clear that the cause of the insufficient locations is not the licensing bylaw but rather the apparent unwillingness of current landlords in the designated areas to lease space, or to subdivide and lease space, to body rub parlours. On this subject, we specifically agree with Lax J. that Vaughan was under no legal obligation to ensure that there were favourable market conditions or favourable commercial arrangements in place for a particular business before it could effectively exercise its statutory authority to pass a licensing bylaw to regulate that business.

[12] The appeal is dismissed with costs.

Released: MAC JAN 04 2001 Signed: “M.A.Catzman J.A.”

“S. Borins J.A.”

“K. Feldman J.A.”