1515545 Ontario Limited carrying on business as Fasinations, Paul Moberly and Gabriella Majororos v. The Corporation of the City of Niagara Falls, The Regional Municipality of Niagara Police Services Board and Niagara Police Officer Todd Anderson

[Indexed as: 1515545 Ontario Ltd. v. Niagara Falls (City)]

78 O.R. (3d) 783
[2006] O.J. No. 70
Docket: C43535

Court of Appeal for Ontario,
Weiler, Rosenberg and LaForme JJ.A.
January 12, 2006

Charter of Rights and Freedoms -- Search and seizure -- Plaintiffs bringing action alleging that municipal by-law regulating body-rub parlours violated s. 8 of Charter and seeking declaration and damages -- Motions judge erring in granting City's motion for summary judgment dismissing action -- Plaintiffs raising triable issue with respect to whether by- law authorized warrantless search and whether it was justified under s. 1 of Charter -- Canadian Charter of Rights and Freedoms, s. 8.

Municipal law -- By-laws -- Validity -- Colourability -- Body-rub parlour owners bringing action for declaration that municipal by-law regulating body rub parlours constituted colourable attempt to prohibit such places and was invalid -- Motions judge erring in granting City's motion for summary judgment dismissing action -- Plaintiffs raising triable issue with respect to colourability.

The plaintiffs owned a body-rub parlour. They brought an action seeking a declaration that a municipal by-law purporting to provide for the regulation, licensing and governing of body- rub parlours was a colourable attempt to prohibit body-rub parlours and was therefore invalid. They also alleged that the City had an ultra vires purpose in passing the by-law, asserting that the underlying real intention of the City was directed at the plaintiffs. They sought damages for the torts of misfeasance in public office and intentional interference with economic interests. They also alleged that the by-law violated their rights under ss. 8 and 9 of the Canadian Charter of Rights and Freedoms and sought a remedial order under s. 24(1) of the Charter. The City brought a motion for summary judgment dismissing the action. The motion was granted. The plaintiffs appealed.

Held, the appeal should be allowed in part.

Having raised the possibility that the City had an ultra vires purpose in passing the by-law, the appellants had to address two issues in response to the summary judgment motion. First, they had to adduce sufficient evidence to call into question the real purpose of the City. Second, they had to demonstrate that the factual circumstances that they said supported colourability had not already been decided in another case. The City had the onus of proving that there was no genuine issue for trial. The appellants did in fact adduce evidence which the motions judge failed to examine and place in its proper context, thus erring in her application of the summary judgment test. While it could be argued that the evidence was of marginal weight at best, it was nevertheless sufficient to disclose a triable issue at the summary judgment stage of proceedings. The "similar" cases relied upon by the City might well be distinguishable at trial. The plaintiffs' colourability claim raised triable issues.

The torts of misfeasance in public office and interference with economic interests required that the City engaged in unlawful conduct, unrelated to the validity of the by-law. The appellants' evidence in support of the alleged unlawful conduct amounted to no more than bald allegations and innuendo. They did not raise a triable issue with respect to those tort claims.

It would be open to the court to find that the by-law authorizes a warrantless search. If so, the provisions are presumptively unreasonable. On the summary judgment motion, the City adduced no evidence to rebut the presumption of unreasonableness. In limited circumstances, damages may be available under s. 24(1) of the Charter against a legislative body for violating Charter rights through enactment of unconstitutional legislation. It could not be said at this stage that the s. 8 Charter argument had no hope of success at trial. The appellants had raised triable issues in relation to s. 8 of the Charter, and the motions judge erred in striking out that claim. The by-law did not, on its face, authorize an arbitrary detention. The motions judge was correct to strike out the claim as it relates to s. 9 of the Charter.

APPEAL by the appellants from the summary judgment of Walters J. (2005) 2005 10893 (ON SC), 75 O.R. (3d) 151, [2005] O.J. No. 1349 (S.C.J.) dismissing an action.

Cases referred to

Canada v. Saskatchewan Wheat Pool, 1983 21 (SCC), [1983] 1 S.C.R. 205, 143 D.L.R. (3d) 9; Comité paritaire de l'industrie de la chemise v. Potash, 1994 92 (SCC), [1994] 2 S.C.R. 406, [1994] S.C.J. No. 7, 61 Q.A.C. 241, 115 D.L.R. (4th) 702, 168 N.R. 241, 21 C.R.R. (2d) 193, 4 C.C.E.L. (2d) 214, 91 C.C.C. (3d) 315 (sub nom. R. v. Potash, Comité paritaire de l'industrie de la chemise v. Sélection Milton); Global Securities Corp. v. British Columbia (Securities Commission), [2000] 1 S.C.R. 494, [2000] S.C.J. No. 5, 2000 SCC 21, 74 B.C.L.R. (3d) 1, 185 D.L.R. (4th) 439, 252 N.R. 290, [2000] 5 W.W.R. 1; Gutierrez v. Tropic International Ltd. (2002), 2002 45017 (ON CA), 63 O.R. (3d) 63, [2002] O.J. No. 3079, 3 B.L.R. (3d) 18 (C.A.); Hunter v. Southam Inc., 1984 33 (SCC), [1984] 2 S.C.R. 145, 33 Alta. L.R. (2d) 193, 11 D.L.R. (4th) 641, 55 N.R. 241, [1984] 6 W.W.R. 577, 9 C.R.R. 355, 27 B.L.R. 297, 14 C.C.C. (3d) 97, 2 C.P.R. (3d) 1, 41 C.R. (3d) 97, 84 DTC 6467 (sub nom. Southam Inc. v. Director of Investigation and Research of Combines Investigations Branch); Kovinic v. Niagara Falls (City), [1999] O.J. No. 2322, 3 M.P.L.R. (3d) 285 (S.C.J.); Mackin v. New Brunswick (Minister of Finance), [2002] 1 S.C.R. 405, [2002] S.C.J. No. 13, 245 N.B.R. (2d) 299, 209 D.L.R. (4th) 564, 282 N.R. 201, 636 A.P.R. 299, 91 C.R.R. (2d) 1, 2002 SCC 13, 17 C.P.C. (5th) 1 (sub nom. Rice v. New Brunswick); Odhavji Estate v. Woodhouse, [2003] 3 S.C.R. 263, [2003] S.C.J. No. 74, 233 D.L.R. (4th) 193, 312 N.R. 305, 2003 SCC 69, 19 C.C.L.T. (3d) 163, 11 Admin. L.R. (4th) 45 (sub nom. Odhavji Estate v. Metropolitan Toronto Police Force); Ontario Adult Entertainment Bar Assn. v. Toronto (Municipality) (1997), 1997 14486 (ON CA), 35 O.R. (3d) 161, [1997] O.J. No. 3772, 151 D.L.R. (4th) 158, 46 C.R.R. (2d) 133, 118 C.C.C. (3d) 481, 42 M.P.L.R. (2d) 1, 11 C.R. (5th) 180 (C.A.) [Leave to appeal to S.C.C. refused with costs [1997] S.C.C.A. No. 594], affg (1995), 1995 10668 (ON SC), 26 O.R. (3d) 257, [1995] O.J. No. 3219, 12 a9 D.L.R. (4th) 8, 86 O.A.C. 161, 101 C.C.C. (3d) 491, 32 C.R.R. (2d) 352, 29 M.P.L.R. (2d) 141, 58 A.C.W.S. (3d) 681, 29 W.C.B. (2d) 128 (Div. Ct.); Pimenova v. Brampton (City), [2004] O.J. No. 2450, [2004] O.T.C. 492, 49 M.P.L.R. (3d) 1, 132 A.C.W.S. (3d) 267 (S.C.J.); R. v. Morgentaler, 1993 74 (SCC), [1993] 3 S.C.R. 463, [1993] S.C.J. No. 95, 125 N.S.R. (2d) 81, 107 D.L.R. (4th) 537, 157 N.R. 97, 349 A.P.R. 81, 85 C.C.C. (3d) 118, 25 C.R. (4th) 179; R. v. Musiej, [2003] O.J. No. 5783 (C.J.); R. v. Theofilaktidis, [2004] O.J. No. 5968, 2004 ONCJ 427; Reach M.D. Inc. v. Pharmaceutical Manufacturers Association of Canada (2003), 2003 27828 (ON CA), 65 O.R. (3d) 30, [2003] O.J. No. 2062, 227 D.L.R. (4th) 458, 25 C.P.R. (4th) 417, 17 C.C.L.T. (3d) 149 (C.A.); Rio Hotel Ltd. v. New Brunswick (Liquor Licensing Board), 1987 72 (SCC), [1987] 2 S.C.R. 59, [1987] S.C.J. No. 46, 81 N.B.R. (2d) 328, 44 D.L.R. (4th) 663, 77 N.R. 104, 205 A.P.R. 328, 58 C.R. (3d) 378; Three Rivers District Counsel v. Bank of England (No. 3), [2000] 2 W.L.R. 1220, [2001] 2 All E.R. 513 (H.L.) [page785]

Statutes referred to

Canadian Charter of Rights and Freedoms, ss. 1, 8, 9, 24(1) Competition Act, R.S.C. 1985, c. C-34 Criminal Code, R.S.C. 1985, c. C-46 Municipal Act, 2001, S.O. 2001, c. 25, ss. 150(8) [as am.], 151 Municipal Act, R.S.O. 1990, c. M.45 [rep.]

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 20.04(1) [as am.]

Authorities referred to

Hogg, P.W., Constitutional Law of Canada, looseleaf (Toronto: Carswell, 2004)

David H. Stratas, Guy Ungaro and Brad Elberg, for appellant.
George H. Rust-D'Eye, for respondent The Corporation of the City of Niagara Falls.

The judgment of the court was delivered by

[1] LAFORME J.A.:-- This is an appeal from a decision to grant the respondents' motion for summary judgment. This appeal will, of necessity, briefly consider legal principles in connection with the doctrine of colourability regarding the legislative jurisdiction of a municipality and its possible liability for certain torts. Nevertheless, this appeal is only about whether the motions judge properly dismissed the appellants' claims pursuant to a summary judgment motion. That is, whether there were no genuine issues of material fact that required a trial.

Overview

[2] In January 2004, the appellants brought an action seeking a declaration that the City of Niagara Falls (the "City") By- law 2002-19710 was a colourable attempt to prohibit body-rub parlours and was therefore invalid. The City passed the by-law, purporting to provide for the regulation, licensing and governing of body-rub parlours. The appellants allege that the City's by-law is defective in that it is a colourable attempt to prohibit body-rub parlours and trenches on the federal government's criminal law power. [page786]

[3] Apart from the validity of the by-law, the appellants also allege that, as a consequence of the way that the City had directed the by-law to be enforced, the City committed the torts of misfeasance in a public office and intentional interference with economic interests. In addition the appellants allege that the by-law violates their rights under ss. 8 and 9 of the Canadian Charter of Rights and Freedoms and seek a remedial order pursuant to s. 24(1). The appellants also seek damages for these claims.

[4] In response, the City brought a motion for summary judgment. The motions judge granted the summary judgment motion and the appellants' action was dismissed in its entirety.

[5] Before moving on to my analysis, I wish to briefly address the following. First, although the appellants also alleged in their statement of claim that ss. 150(8)(e)(iii) and (iv) and ss. 151(1)(b) and 151(3) of the Municipal Act, 2001, S.O. 2001, c. 2511 are void, that claim was abandoned during oral argument.

[6] Second, apart from the claims pursuant to ss. 8 and 9, the claims for Charter relief in paras. 21 and 24 of the statement of claim were also abandoned during oral argument.

[7] Third, at para. 27 of the statement of claim, there is a claim for conspiracy to lessen competition under the Competition Act, R.S.C. 1985, c. C-34 that was not mentioned in argument. In my view, this claim cannot proceed. There is no tort of breaching a statute: see Canada v. Saskatchewan Wheat Pool, 1983 21 (SCC), [1983] 1 S.C.R. 205, 143 D.L.R. (3d) 9.

[8] As for the remainder of this appeal, for the reasons that follow, I would allow the appeal regarding the validity of the by-law, and s. 8 of the Charter. The appellants, in my view, have raised genuine issues for trial in connection with these actions. I would dismiss the balance of the appeal.

Background

[9] The appellant, 1515545 Ontario Limited ("Fasinations"), is the licensed owner of a body-rub parlour at 8700 Lundy's Lane in the City of Niagara Falls. Mr. Henry DiCienzo is president of the above corporation. Paul Moberly and Gabriella Majoros are employees of Fasinations.

[10] On January 12, 1998, the City passed Licensing By-law 98-05 providing for the regulation and inspection of body-rub [page787] parlours. On June 14, 1999, Taliano J., for several reasons, declared By-law 98-05 to be invalid.

[11] On January 22, 2001, the City enacted an interim control by-law, imposing a temporary freeze on body-rub parlour licenses in the City. This by-law, however, specifically excluded four locations from the freeze, including the appellants' premises at 8700 Lundy's Lane. At this time, Fasinations was not yet in operation or licensed by the City.

[12] On June 13, 2001, a building permit was issued for the Fasinations building at 8700 Lundy's Lane. On June 16, 2001, Mr. DiCienzo's application for a permit to expand the 8700 Lundy's Lane building was denied. On November 26, 2001, Mr. DiCienzo was licensed as a body-rub owner for Fasinations.

[13] On December 10, 2001, the interim control by-law was extended and the exemption with respect to 8700 Lundy's Lane was continued. Fasinations commenced business as a body-rub parlour in July 2002.

[14] On November 4, 2002, the City passed licensing By-law 2002-197, relating to live adult entertainment businesses. It contains a licensing requirement, certain qualifications for a licence, procedures for the consideration of the granting of a licence, grounds for refusal, revocation or suspension of a licence and certain requirements for the conduct of body-rub businesses and adult entertainment parlours.

[15] Between June 19, 2002 and December 5, 2003, the police inspected Fasinations some 30 times and charges were laid with respect to nine offences under the by-law. For purposes of the summary judgment motion, the City conceded that, as a result of the by-law and police enforcement, the plaintiffs had suffered a business loss.

The summary judgment motion

[16] The motions judge characterized the appellants' action as one founded on allegations that the City "was out to get them" and to drive them out of business. She noted throughout her reasons that there were no material facts in dispute, and summarized the evidence to be considered as:

(1) The Municipality passed, first an interim control by-law, and later By-law 2002-197.

(2) Carolyn Frazier, the sister-in-law of Mr. DiCienzo, was refused a license for a body-rub parlour.

(3) The plaintiffs were not permitted to expand the 8700 Lundy's Lane building. [page788]

(4) Fasinations is a legal non-conforming use.

(5) The City wants the by-law enforced by the police.

(6) The police have vigorously enforced the provisions of the by-law.

(7) The plaintiff's business has been adversely affected by the provisions of the by-law and the enforcement of same by the police.

[17] After reviewing the relevant law regarding summary judgment motions, the motions judge concluded that there were no genuine issues of material fact requiring a trial. She found that the appellants had not established that the claims advanced against the City had a real chance of success. The motions judge held that there were no grounds upon which By-law 2002-197 could be declared invalid. I disagree with the conclusions of the motions judge.

The Issues

[18] On a motion for summary judgment the responding party may not rely on its pleadings, but must provide specific facts by way of affidavit evidence: rule 20.04(1) [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194]. However, as this court held in Gutierrez v. Tropic International Ltd. (2002), 2002 45017 (ON CA), 63 O.R. (3d) 63, [2002] O.J. No. 3079 (C.A.), at para. 11:

The determination of credibility issues, the weighing of conflicting evidence, the making of factual findings and the drawing of factual inferences, other than where only one inference is reasonably available, are matters reserved for the trier of fact.

[19] The appellants' submissions, as I understand them, are that the motions judge made the following errors:

(1) She ignored and/or failed to examine relevant evidence. Furthermore, she failed to place the evidence in its proper context, consider it cumulatively and ask whether there were inferences a trial judge might draw that would raise a triable issue.

(2) She wrongly concluded that there was no genuine issue for trial concerning whether the by-law was in pith and substance "criminal law" or passed for an invalid purpose.

(3) She wrongly concluded that the provision in the by-law permitting warrantless entries by the police and encouraging [page789] them to exercise this power does not breach the appellants' rights under s. 8 of the Charter.

[20] I will deal with the various submissions advanced by the appellants under the separate headings of: (i) the validity of the by-law; and (ii) the tort claims. In my view, the answer to the various issues under these respective headings provides a complete answer to this appeal.

Analysis

[21] It is important to note again that the following analysis and decision is in the context of a motion for summary judgment by the City. In each prayer of relief in the action, the appellants assert that the underlying real intention of the City was directed at the appellants. Thus, each alleged cause of action required the motions judge to consider whether or not triable issues existed in that context. As I will demonstrate below, this analysis required a different approach than that taken by the motions judge.

(i) The validity of the by-law

[22] The motions judge found that there is nothing in By-law 2002-197 that goes beyond the regulation of any business that the municipality is authorized to regulate. At para. 28 of her reasons she states that:

Whether or not By-law 2002-197 is valid is an issue of law -- not fact -- for the court to determine. Invalidity does not mean unlawful.

[23] She appears to have limited her legal analysis to deciding whether the municipality had the right to impose such restrictions and pass the by-law that it did. In the end, she found that there was no evidence that the by-law was enacted for anything but valid objects, and that there is no conflict between the by-law and the Criminal Code, R.S.C. 1985, c. C-46.

[24] The appellants submit that the analysis undertaken by the motions judge was incomplete and, therefore, amounts to an error. They say that the impugned by-law is ultra vires the municipality because it is in pith and substance "criminal law". Therefore, they argue that the words, background, purposes and effects of the enactment must all have been examined in order to shed light on whether an enactment was passed for a colourable purpose.

(a) The colourability doctrine

[25] The colourability doctrine "is invoked when a statute bears the formal trappings of a matter within jurisdiction, but in reality is addressed to a matter outside jurisdiction": [page790] Peter W. Hogg, Constitutional Law of Canada, looseleaf ed. (Toronto: Carswell, 2004), at 15-18. Form alone will not be determinative of constitutional character; rather, the substance of the legislation must also be examined to determine the legislature's true purpose, or its pith and substance: R. v. Morgentaler, 1993 74 (SCC), [1993] 3 S.C.R. 463, [1993] S.C.J. No. 95, at p. 496 S.C.R.

[26] In determining legislative purpose, a court will first examine the four corners of the legislation. The presence of an invalid purpose will provide reason to question the legislation's validity on its face: R. v. Morgentaler, at p. 495 S.C.R.; Rio Hotel Ltd. v. New Brunswick (Liquor Licensing Board), 1987 72 (SCC), [1987] 2 S.C.R. 59, [1987] S.C.J. No. 46. If the court is satisfied as to the presence of an invalid purpose, the court can then look beyond the four corners of the legislative scheme when determining its pith and substance.

[27] In examinations of pith and substance, the court can look to the purposes of the statute, reliable extrinsic evidence, the effects of the statute and the manner in which the statute is administered: Global Securities Corp. v. British Columbia (Securities Commission), 2000 SCC 21, [2000] 1 S.C.R. 494, [2000] S.C.J. No. 5. Although, by and large, extrinsic evidence, especially as to any motive for passing the statute, will be of little assistance: Ontario Adult Entertainment Bar Assn. v. Toronto (Municipality) (1995), 1995 10668 (ON SC), 26 O.R. (3d) 257, [1995] O.J. No. 3219 (Div. Ct.), at p. 267 O.R., affd (1997), 1997 14486 (ON CA), 35 O.R. (3d) 161, [1997] O.J. No. 3772 (C.A.), at p. 167 O.R., leave to appeal refused, [1997] S.C.C.A. No. 594.

[28] In the end, a trier of fact will be called upon to decide whether the impugned by-law is either a valid municipal exercise or a colourable attempt to legislate on matters outside its legislative competence. That is, of course, beyond the scope of this appeal and I offer no opinion in that regard.

(b) Evidence regarding colourability

[29] The appellants' allege that the City had an ultra vires purpose. The basis for this allegation, comments and actions by City officials, rests primarily on extrinsic evidence that goes to municipal intent and the implications of enforcement. This would appear, on its face, to raise an issue for trial.

[30] Having raised this possibility, there are two issues that the appellants must address in response to the motion for summary judgment. First, the appellants must adduce sufficient evidence to call into question the real purpose of the municipality. Second, they must demonstrate that the factual circumstances that they say support colourability have not already been decided in another case. [page791]

[31] Summary judgment will not be granted unless the motions judge is satisfied that there is no genuine issue for trial. In this case, the City had the onus of proving that there was no genuine issue for trial. In response, the appellants adduced the following evidence:

-- An earlier body-rub parlour by-law of the City was declared invalid. The finding of invalidity related primarily to the lottery system used for the allocation of licences: Kovinic v. Niagara Falls (City), [1999] O.J. No. 2322, 3 M.P.L.R. (3d) 285 (S.C.J.).

-- The clerk for the municipality gave evidence that the initial intent of the municipality was to get rid of all body-rub parlours. Also, he said that it was petitioning the provincial government to provide the municipality with the power to get rid of all parlours. Finally, he said that the municipality wanted to regulate the parlours in a way that prevented prostitution.

-- Letters from the Mayor were submitted that reaffirmed much of the clerk's evidence. The Mayor wrote a further letter where he said that the municipality was "putting a lot of pressure on these establishments and are taking whatever action we can (within the law) to get rid of them". In yet another letter he wrote that it was his "hope that eventually through strict surveillance and cooperation with the police authorities, charges can be laid and eventually licenses can be revoked" for the "three so-called legal operations".

[32] In my view, by failing to examine this evidence and place it in its proper context, the motions judge erred in her application of the summary judgment test. The motions judge, therefore, did not conduct her analysis on all of the facts before her when she concluded that there was no evidence. While it could be argued that this evidence is of marginal weight at best, it is nevertheless sufficient, in my view, to disclose a triable issue at the summary judgment stage of proceedings.

[33] I turn next to the factual circumstances. In this regard, the City submits that there "exists a long and established body of the Supreme Court of Canada and Ontario Court of Appeal jurisprudence dealing with municipal regulation of body-rub and adult entertainment parlours".

(c) Other similar cases

[34] The City argues that by-laws licensing and regulating body-rub parlours and adult entertainment parlours, which prescribe [page792] minimum standards of dress and prohibit sexual contact, have been consistently upheld as proper matters for municipal regulation at least since the decision of the Supreme Court of Canada in Rio Hotel Ltd. v. New Brunswick (Liquor Licensing Board), supra. In the Rio Hotel case, the court upheld provincial liquor licensing conditions relating to nudity and minimum standards of dress, finding that the legislation did not trench on matters under federal jurisdiction.

[35] Much of legislative intent is derived from the language of the particular statute, and, as I said, the first step is therefore to look within the four corners of the scheme. Judicial decisions on similar kinds of legislation will certainly provide guidance. Thus, if the impugned statute is on all fours with that of an existing precedent -- absent different extrinsic evidence of legislative intent -- there is little value in re-litigating the intent evinced by that language.

[36] The authorities raised by the City, in my view, do not definitively answer the issue of factual circumstances. Pimenova v. Brampton (City), [2004] O.J. No. 2450, 49 M.P.L.R. (3d) 1 (S.C.J.), R. v. Theofilaktidis, [2004] O.J. No. 5968, 2004 ONCJ 427 (C.J.) and R. v. Musiej, [2003] O.J. No. 5783 (C.J.) are the only cases that have dealt directly with similar by-laws on similar grounds. These were decisions of trial courts. One briefly decided that a similar by-law was intra vires the municipality by following Ontario Adult Entertainment, supra. Another allowed the by-law because the restriction on nudity was necessary to differentiate body-rub parlours from other forms of adult entertainment. The third found that the specific intent of that municipality was to criminalize body rub parlours and was ultra vires.

[37] The strongest case that the City relied on was Ontario Adult Entertainment. The by-law in that case dealt with lap dancing and evidence of the City of Toronto's intent in passing the by-law was given at trial. On appeal, this court held, at p. 271 O.R.:

In our opinion the pith and substance of the impugned by-law was the protection of health and safety of persons in adult entertainment parlours and the prevention of crime in licensed establishments. There may be a moral element in the effect of the by-law. Morality may be an ancillary purpose of a municipal by-law as long as morality is not the dominant purpose. In our view the applicant has failed to demonstrate that a moral concern was the dominant purpose of this by-law.

(Emphasis added)

[38] Thus, in Ontario Adult Entertainment this court rested its decision in part, on the lack of proof of a colourable purpose. Further, the intent was in part to prevent sexual assaults of the dancers and other situations that could lead to criminal activity. In contrast, [page793] in the within case the City is said to be attempting to restrict prostitution itself, a matter within the federal criminal law power, and not simply attempting to regulate conditions to prevent crime.

[39] In this case, while the City adduced some similar evidence of intent, it did not rebut any of the appellant's evidence of an invalid purpose. Rather, it relied almost exclusively on the argument that the courts have consistently upheld similar by-laws. Thus, the factual circumstances of this case, when examined through the lens of a trial, might well be distinguishable from those in Ontario Adult Entertainment.

[40] As I have already said, this court is not called upon, nor is it required, to resolve the issue of the by-law's validity in this appeal. It need only find that it is a triable issue that should be placed before a trial judge. Although a trial judge might ultimately find that there is insufficient evidence of colourable municipal purpose, or that like the Ontario Adult Entertainment case, morality is not the dominant purpose, in my view, both are triable issues.

(ii) The tort claims

[41] Again relying on the seven material facts not in dispute as set out above, the motions judge held that these facts did not give rise to, or support a claim of, maliciousness, bad faith or unfairness on the part of the City. Specifically, she concluded that [at para. 27]:

If the City has properly enacted a by-law, the fact that the defendants or any other person might suffer economic loss because of compliance or enforcement does not give rise to a cause of action against the City. To satisfy a claim of interference with economic interest, the plaintiffs must prove that the defendant intended to injure the plaintiffs and the means employed by the defendant were unlawful (see Edgewater Helicopters Ltd. v. Salmon Arm (District), [1990] B.C.J. No. 2969, 1 M.P.L.R. (2d) 261 (S.C.). There is no evidence of their intent to injure, nor evidence of unlawfulness on the part of the City.

[42] The appellants argue that the motions judge failed to consider the evidence of intent required by two of these torts: misfeasance in a public office, and interference with economic interests. They submit that, while the motions judge alludes to intent in the above quoted passage, just as was the case in her analysis of the by-law's validity, she failed to consider all of the evidence when deciding whether or not there was a genuine issue for trial in connection with the tort claims. I disagree.

[43] The torts of misfeasance in a public office and intentional interference with economic interests can each be made out where [page794] the impugned actions were nonetheless made pursuant to a constitutionally valid law. Both torts require that the City has engaged in unlawful conduct. This unlawful conduct is not tied to the validity of the relevant statute; rather, it is concerned solely with the actions of the City: see Odhavji Estate v. Woodhouse, 2003 SCC 69, [2003] 3 S.C.R. 263, [2003] S.C.J. No. 74; and Reach M.D. Inc. v. Pharmaceutical Manufacturers Association of Canada (2003), 2003 27828 (ON CA), 65 O.R. (3d) 30, [2003] O.J. No. 2062 (C.A.).

[44] The tort of misfeasance in a public office is an intentional tort. Its distinguishing elements are, that the public officer: (i) must have engaged in deliberate and unlawful conduct in the exercise of public functions; and (ii) must have been aware that the conduct was unlawful and likely to injure the plaintiff. Unlawful conduct in this context may be satisfied in two ways. First, it may arise from the direct breach of a statute. Second, it can arise from acting in excess of powers granted or from the use of a valid power for an improper purpose: Odhavji, supra, at para. 24, referring to Three Rivers District Counsel v. Bank of England (No. 3), [2000] 2 W.L.R. 1220, [2001] 2 All E.R. 513 (H.L.), at p. 1269 W.L.R.

[45] Ordinarily, this tort focuses on the conduct of individual public officers. In this case, the appellants assert the somewhat novel proposition that a municipality can be liable for its allegedly tortuous conduct. They submit that the City used its powers to wage a campaign to shut down the appellants' business. Since the appellants have not pointed to a breach of any relevant statutory provision, their claim of unlawful conduct must rest on the theory that the City acted in excess of powers granted to it, or exercised its powers for an improper purpose. The appellants rely upon the following evidence. I set the evidence out below, along with my comments in italics:

(1) The City refused a licence to Mr. DiCienzo's sister-in-law to open a body-rub parlour on the basis that the true owner was Mr. DiCienzo. The City later frustrated the opening of the parlour by passing a freeze by-law. The first claim is a bald allegation in Mr. DiCienzo's affidavit and is inconsistent with other parts of the affidavit in which Mr. DiCienzo states that the business was set to open. There is no evidence as to the circumstances leading up to the freeze by-law and whether it was improperly used to target the sister-in-law's business. There is no evidence to support this claim. [page795]

(2) A later by-law was targeted at Fasinations, preventing it from expanding and causing it a competitive disadvantage. This is a bald allegation in Mr. DiCienzo's affidavit. There is no evidence to support this claim. There is no evidence as to how the by-law interfered with the business of Fasinations. Mr. DiCienzo merely asserts that he "feel[s]" this act was done deliberately as part of the overall process to force him to close his business. The subjective feelings of the affiant are not evidence.

(3) A uniformed police officer visited the premises 30 times over a six-month period and demanded everyone's identification, chased customers from the premises, and entered every room without knocking, causing embarrassment and humiliation. The City was aware of the police conduct because summonses were returned to the City for prosecution. The mere fact that the City was aware of conduct by other public officers does not constitute any evidence of unlawful conduct on the part of the City.

(4) In enforcing the latest by-law, the City focused completely on Fasinations virtually to the exclusion of all others, as evidenced by the places inspected and the charges laid. Again this is a bare allegation. There is no information provided as to the charges laid. The allegation that the City focused "completely" on Fasinations is inconsistent with the allegation that the focus was "virtually" to the exclusion of all others. There is no evidence that the other businesses were committing unlawful acts.

(5) In carrying out his enforcement act the police were agents of the City or at the very least, the police were acting at the strong encouragement and instigation of the City. The evidence relied upon is, first, the statement by the City Clerk that the City staff is committed to closing illegal operations, but requires the assistance of the Niagara Regional Police, who have been very cooperative, and second the statement by the Mayor that at recent meetings with the police authorities the so-called legal operations will be kept under strict surveillance "to expose the illegal activities that we are all very well aware are conducted at these operations". As to the first, one would expect the police authorities to cooperate with the civil authority in closing illegal operations. This allegation is no evidence of an unlawful act. As to the Mayor's statement, it must be read in context. This was part of a letter to an interested party in which the Mayor stressed [page796] that the City was committed to following lawful process. I see no evidence of an attempt by the City to act in excess of powers granted to it or that it exercised its powers for an improper purpose. To the contrary, the evidence in support of these bald allegations shows the City acting for proper purposes and no attempt to act in excess of its powers.

[46] In my view, the appellants' evidence in support of the element of unlawful conduct amounts to no more than bald allegations and innuendo in the affidavit of Henry DiCienzo, president of the appellant. The appellants have not produced evidence to show that there is a triable issue with respect to the tort of misfeasance in a public office.

[47] Regarding the tort of intentional interference with economic interests, this court recently examined the test for the tort in Reach M.D. Inc. v. Pharmaceutical Manufacturers Association of Canada, supra. In Reach M.D., Laskin J.A. held that to establish the tort, the appellant had to prove three elements: (i) that there was an intent to injure the plaintiff; (ii) that the defendant interfered with the plaintiff's business by illegal or unlawful means; and (iii) that as a result of the interference, the plaintiff suffered economic loss (para. 44).

[48] To support the claim for intentional interference with economic interests, the appellants relied upon the same evidence I have referred to above in respect of misfeasance in public office. In my view, the same result must follow and this claim must be struck out. The appellants have not adduced evidence of the essential element of illegal or unlawful means.

[49] As indicated, on this appeal the appellants only pursued the Charter claims relating to s. 8 (unreasonable search and seizure), and s. 9 (arbitrary detention). The motions judge had this to say about those claims [at para. 40]: "With respect to ss. 8 and 9 of the Charter, vis-à-vis the City, the right to be secure against unreasonable search and seizure and not be arbitrarily detained has not been engaged."

[50] The Charter claims are put on two footings. First, that the by-law itself is of no force and effect because it authorizes unreasonable search and seizure, and arbitrary detention. Second, the appellants Majoros and Moberly, employees of Fasinations, state that they were subjected to unreasonable searches and detentions by a police officer purporting to act to enforce the by-law.

[51] The by-law authorizes a warrantless entry and inspection in sweeping terms. See in particular s. 36(2) of the by-law reproduced in the Appendix. On its face, the by-law appears to authorize a warrantless search. [page797] In Hunter v. Southam Inc., 1984 33 (SCC), [1984] 2 S.C.R. 145, 14 C.C.C. (3d) 97, at p. 160 S.C.R., p. 109 C.C.C., Dickson J. held as follows:

A requirement of prior authorization, usually in the form of a valid warrant, has been a consistent prerequisite for a valid search and seizure both at common law and under most statutes. Such a requirement puts the onus on the state to demonstrate the superiority of its interests to that of the individual. As such it accords with the apparent intention of the Charter to prefer, where feasible, the right of the individual to be free from state interference to the interests of the state in advancing its purposes through such interference.

[52] It would be open to the court to find that s. 36(2) and related provisions authorize a warrantless search: see Comité paritaire de l'industrie de la chemise v. Potash, 1994 92 (SCC), [1994] 2 S.C.R. 406, [1994] S.C.J. No. 7, 91 C.C.C. (3d) 315, at pp. 322-23 S.C.R. If so, the provisions are presumptively unreasonable. It may be that the City can justify these powers as reasonable, or as a reasonable limit within the meaning of s. 1 of the Charter, as was done in Comité paritaire de l'industrie de la chemise v. Potash: see in particular pp. 324-29 S.C.R. of the reasons of La Forest J. On its motion, however, the City adduced no evidence to rebut the presumption of unreasonableness, and in fact made no submissions concerning the Charter issues in its factum in this court, other than to say that it cannot be held vicariously liable for the actions of the police authority.

[53] In limited circumstances, damages may be available as a remedy under s. 24(1) of the Charter against a legislative body for violating Charter rights through enactment of unconstitutional legislation. The availability of this remedy is admittedly rare and subject to stringent requirements as set out in Mackin v. New Brunswick (Minister of Finance); Rice v. New Brunswick, 2002 SCC 13, [2002] 1 S.C.R. 405, [2002] S.C.J. No. 13, 209 D.L.R. (4th) 564, at para. 79:

However, as I stated in Guimond v. Quebec (Attorney General), supra, since the adoption of the Charter, a plaintiff is no longer restricted to an action in damages based on the general law of civil liability. In theory, a plaintiff could seek compensatory and punitive damages by way of "appropriate and just" remedy under s. 24(1) of the Charter. The limited immunity given to government is specifically a means of creating a balance between the protection of constitutional rights and the need for effective government. In other words, this doctrine makes it possible to determine whether a remedy is appropriate and just in the circumstances. Consequently, the reasons that inform the general principle of public law are also relevant in a Charter context. Thus, the government and its representatives are required to exercise their powers in good faith and to respect the "established and indisputable" laws that define the constitutional rights of individuals. However, if they act in good faith and without abusing their power under prevailing law and only subsequently are their acts found to be unconstitutional, they will not be liable. [page798] Otherwise, the effectiveness and efficiency of government action would be excessively constrained. Laws must be given their full force and effect as long as they are not declared invalid. Thus it is only in the event of conduct that is clearly wrong, in bad faith or an abuse of power that damages may be awarded (Crown Trust Co. v. The Queen in Right of Ontario (1986), 26 D.L.R. (4th) 41 (Ont. Div. Ct.)).

(Emphasis added)

[54] The appellants have adduced evidence that I have found sufficient to raise a triable issue that this by-law was enacted for a colourable purpose. It is open to the appellants to rely upon this evidence to show that the City did not act in good faith or abused its power. If so, then the appellants may be entitled to a s. 24(1) remedy in accordance with Mackin v. New Brunswick (Minister of Finance); Rice v. New Brunswick. Fasinations claims that by reason of the unreasonable search and seizure it has suffered damages through reduced business. The individual appellants claim that they have suffered invasion of their privacy and loss of income because of the unreasonable searches. In my view, the appellants have raised triable issues in relation to s. 8 of the Charter, and the motions judge erred in striking out that claim.

[55] The by-law does not on its face authorize an arbitrary detention. If the appellants have a claim based on s. 9 of the Charter, in my view, it must be because of the manner in which the by-law is enforced. That is an issue between the appellants and the other defendants. The motions judge was correct to strike out the claim as it relates to s. 9.

Disposition

[56] For the foregoing reasons, I would dispose of this appeal as follows:

(i) The claim that ss. 150(8)(e)(iii) and (iv) and ss. 151(1) (b) and 151(3) of the Municipal Act are void, and the claim for Charter relief, except for s. 8, are dismissed.

(ii) The claims for conspiracy to lessen competition under the Competition Act, misfeasance in public office, and interference with economic relations are dismissed.

(iii) As for the remainder of the appeal, I would allow the appeal and dismiss the motion for summary judgment.

[57] As success is divided, there will be no costs of the motion or the appeal.

Appeal allowed in part. [page799]

APPENDIX "A"

Licensing By-Law 2002-197, to provide for the licensing, regulating, governing, classifying and inspecting of body-rub parlours and a certain class of adult entertainment parlours. The relevant portions of the by-law are [set] out below.

1(1) In this by-law:

(jj) "specified body-areas" means one or more of the following:

i. in the case of a female person, her nipples, and areolae; and

ii. in the case of all persons, the pubic, perineal, perianal areas, the genitals, anus, and the buttocks;

(kk) "specified sexual activities" means one or more of the following:

actual or simulated sexual intercourse, masturbation, urination, defecation, ejaculation, sodomy, including bestiality, anal intercourse, oral sexual intercourse, physical stimulation of genital organs, and flagellation, bondage or torture in the context of a sexual relationship or activity.

Duty to Co-operate with Enforcement Officials

36(1) Every owner, operator, entertainer and body-rubber shall, during the operating hours of any adult business, and at all times when services are offered, available or provided therein, make available for inspection by the Clerk, a peace officer, the Medical Officer of Health, a provincial offences officer or a by-law enforcement officer the original of any document or record referred to in this by-law.

(2) Every owner and every operator of any adult business shall, at all times, whether or not during the hours of operation of the adult business, permit the entry by, and the inspection of all parts of the premises by any by-law enforcement officer, provincial offences officer, clerk, Medical Officer of Health or peace officer, and shall produce his or her licence issued in respect of the business to such officer upon demand therefor.

(3) No person shall obstruct or hinder the entry or the inspection of any adult business or any part thereof by any by-law enforcement officer, provincial offences officer, clerk, Medical Officer of Health or peace officer.

(4) No premises in which an adult business is located shall be constructed or equipped so as to hinder or prevent the enforcement of this by-law.

Attire -- cleanliness -- behaviour -- owner -- operator

50. Every owner, operator, body-rubber and entertainer shall, while engaged in his or her respective trade, calling business or occupation in an adult business, be neat and clean in his or her person and civil and well-behaved to members of the public with whom he or she is dealing. [page800]

Camera -- recording device -- prohibited -- exception

53. No owner or operator may use or permit to be used any camera or other photographic or recording device at an adult business by any person, but this paragraph shall not prohibit:

(a) the use of any camera or other device used by a public authority for the enforcement of the law; or

(b) the maintenance of a camera in the entrance or exit area of the premises, or any other portion of the premises generally accessible to the public, for security purposes only, provided that clear written notice of the existence of such cameras or devices is provided to all persons at their point of entry upon the premises.

Premise -- use of dwelling -- contained bed -- prohibited

56. No premises or part thereof used as an adult business shall be used as a dwelling or for sleeping purposes or contain therein any bed or other furniture which is commonly used or which may be used for sleeping purposes.

Schedule "B" -- To By-law No. 2002-197

Body-rubber -- customer -- body areas covered

7. Every body-rubber, every customer, and every other person at a body-rub parlour, shall be clothed in a manner by which such person's specified body areas are fully covered by opaque material.

Alcohol -- drugs -- use -- possession -- prohibited

8. No owner, operator or body-rubber shall take, consume or have alcohol or drugs in his or her possession in a body-rub parlour, nor shall the use of alcohol or drugs by him or her be apparent while that body-rub parlour is under his or her charge or when he or she is providing services therein, as the case may be.

Locking device -- on room -- prohibited

12. Save and except for one room designated by the owner or operator for use solely as an office, and used only for that purpose, and one room designated by the owner or operator solely as a storage room, and used only for that purpose, every owner or operator shall ensure that no means of access to any room, cubicle, enclosure or partitioned area in a body-rub parlour is equipped or constructed with a locking device of any kind or with any other device or structure which could delay or hinder anyone from entering, leaving or obtaining access to such area. [page801]