COURT OF APPEAL FOR ONTARIO

2013 ONCA 300

DATE: 20130508

DOCKET: C56299

Doherty, Cronk and Lauwers JJ.A.

BETWEEN

2211266 Ontario Inc. O/A Gentlemen’s Club

Applicant

(Appellant)

and

The Corporation of the City of Brantford

Respondent

(Respondent in appeal)

Myron W. Shulgan, for the appellant

Kimberly A. Farrington, for the respondent

Heard: April 29, 2013

On appeal from the judgment of Justice D. Chappel of the Superior Court of Justice, dated October 16, 2012.

By the Court:

I. Introduction

[1] This appeal concerns a municipality’s powers under the Municipal Act, 2001, S.O. 2001, c. 25 (the “Act”) to impose licensing requirements on the owners and operators of adult entertainment parlours and those persons who perform live performances of an adult nature within those facilities.

[2] The appellant, 2211266 Ontario Inc., operates a facility in the City of Brantford under the name of the “Gentlemen’s Club”. In February 2012, it applied to the Superior Court of Justice for orders declaring invalid various parts of the City’s adult live entertainment licensing by-law, enacted under the Act as Chapter 329 of the City’s Municipal Code (the “By-law”).

[3] As relevant to this appeal, the appellant attacked the validity of ss. 329.4.1 and 329.4.2 of the By-law, which require the owners and operators of adult live entertainment parlours to be licensed, and ss. 329.4.7 and 329.4.9 of the By-law, which require “entertainers” who perform live performances of a specified nature in such facilities to be licensed (collectively, the “Licensing Provisions”). The appellant argued that the Licensing Provisions exceed the City’s statutory licensing and by-law making authority.

[4] The Licensing Provisions read as follows:

329.4.1 Licence – required

No person shall operate, engage in or carry on the occupation or business of an adult live entertainment parlour unless he or she first obtains a licence under this Chapter to do so.

329.4.2 Operator – licence – required

In the event that an owner does not personally operate the adult live entertainment parlour, the owner shall not permit any person other than an operator licensed under this Chapter to operate the adult live entertainment parlour.

329.4.7 Entertainer – not to perform in unlicensed facility

No entertainer shall perform in an adult live entertainment parlour which has not been licensed under the provisions of this Chapter.

329.4.9 Entertainer – licence – required

No person shall perform as an entertainer unless he or she obtains a licence under this Chapter to do so.

[5] The application judge dismissed the appellant’s application concerning the Licensing Provisions on two bases. She held: (1) that the Licensing Provisions are a valid exercise of the City’s authority under the Act to implement a licensing system in connection with matters relating to health, safety and the well-being of persons in the municipality; and (2) in any event, the Licensing Provisions fall within the City’s statutory authority under the Act to license businesses.

[6] Accordingly, by judgment dated October 16, 2012, the application judge dismissed the appellant’s application regarding the validity of the Licensing Provisions.

[7] The appellant appeals. For the reasons that follow, we conclude that the appeal must be dismissed.

II. General Licensing Authority of Municipalities

[8] Section 8(3)(c) of the Act grants municipalities the power to create a system of licenses respecting any matter over which a municipality has by-law making authority under ss. 10 and 11 of the Act. Section 8(1) of the Act directs an expansive interpretation of the scope of this power, “so as to confer broad authority on the municipality to enable the municipality to govern its affairs as it considers appropriate and to enhance the municipality’s ability to respond to municipal issues”.

[9] Section 10(2) of the Act specifies those matters in respect of which a municipality like the City may pass by-laws. These include, among other matters: (1) the health, safety and well-being of persons (s. 10(2).6); (2) protection of persons and property, including consumer protection (s. 10(2).8); and (3) business licensing (s. 10(2).11).

[10] In addition, s. 151(5) of the Act provides:

Subsections (1) to (4) [concerning business licensing systems] apply with necessary modifications to a system of licences with respect to any activity, matter or thing for which a by-law may be passed under sections 9, 10 and 11 as if it were a system of licences with respect to a business. [Emphasis added.]

[11] Thus, municipalities enjoy a broad licensing authority under the Act. Contrary to the appellant’s submission in its factum, this authority is not confined to licensing businesses, trades and occupations. Sections 8(3) and 10(2) of the Act contain no such restriction. Instead, the power to pass by-laws respecting “business licensing” is but one of the matters identified in s. 10(2) as a legitimate subject matter for the discretionary exercise of a municipality’s by-law making authority. Moreover, by the combined operation of ss. 10(2) and 151(5) of the Act, by-laws may be passed creating a system of licenses with respect to “any activity, matter or thing” under s. 10(2) “as if it were a system of licences with respect to a business”.

[12] In this case, the application judge held that the By-law is “a valid exercise of the respondent municipality’s jurisdiction under ss. 8(3) and 10(2)(6) of the Act to implement a system of licensing in connection with matters relating to health, safety and the well-being of persons in the municipality”.

[13] We agree. As noted by the application judge, both the preamble and the content of the By-law reveal that it is aimed at the promotion of these legitimate municipal purposes. In addition, in our view, the authority to pass the By-law could also be anchored in the objectives of s. 10(2).8 of the Act – protection of persons and property, including consumer protection – and s. 10(2).11 – business licensing.

[14] On this ground alone, the appellant’s attack on the validity of the Licensing Provisions fails. As the By-law reflects the valid exercise by the City of its licensing authority under ss. 8(3) and 10(2) of the Act, it follows that the Licensing Provisions, which form part of the overall licensing system established by the By-law, are similarly valid.

III. Specific Business Licensing Authority of Municipalities

[15] In addition to the general authority of municipalities under s. 8(3) of the Act to pass by-laws pertaining to any matter delineated in s. 10(2) of the Act, s. 151(1) of the Act furnishes municipalities with express statutory authority to provide for a system of licences with respect to a business. The word “business” is defined expansively under s. 150 of the Act, and includes: “(a) trades and occupations; (b) exhibitions, concerts, festivals and other organized public amusements held for profit or otherwise”, among other things.

IV. Licensing Provisions

[16] In this case, the application judge held that, apart from its by-law making authority under ss. 8(3) and 10(2) of the Act, the City is also empowered to license adult live entertainment parlours and entertainers under the business licensing provisions of the Act. We agree.

[17] Section 154 of the Act contemplates that, without limiting a municipality’s by-law making authority under ss. 9, 10 and 11 of the Act, a local municipality may implement a licensing system concerning “adult entertainment establishments” under the authority of s. 151 of the Act. Under s. 154(2)(a), the term “adult entertainment establishment” is defined as including “any premises or any part of them ... if, in the pursuance of a business, – (a) goods, entertainment or services that are designed to appeal to erotic or sexual appetites or inclinations are provided in the premises or part of the premises”.

[18] The appellant accepts that the City had the authority to pass the By-law under its s. 151 business licensing authority. However, the appellant argues in its factum, in effect, that the By-law is invalid because, in respect of adult live entertainment parlours, it fails to define a class of business, calling, trade or occupation by reference to a commercial activity or work, instead imposing a licensing requirement on any premises “within which individuals engage in any activity, a principal feature or characteristic of which is nudity or partial nudity” (emphasis added). This, the appellant contends, is tantamount to impermissibly imposing a licensing requirement based on a “dress code”.

[19] In our view, this argument fails. As the application judge observed, the current Act does not require that a municipal licensing system apply to a specific type, category or class of business, trade or occupation.

[20] Under s. 8(4) of the Act, a municipal by-law passed under s. 10(2) “may be general or specific in its application and may differentiate in any way and on any basis a municipality considers appropriate”. In contrast, under s. 10(2) of the predecessor version of the Act, a municipality was empowered to differentiate in its by-laws concerning different persons or businesses only “if the persons or businesses constitute different classes of persons or businesses defined in the by-law”: Municipal Act, 2001, S.O. 2001, c. 25, am. to 2004. Section 10(2) of the former statute was replaced in 2007 by s. 8(4) of the current Act. For this reason, as the application judge noted, the appellant`s reliance on this court’s decision in 679619 Ontario Limited v. Windsor (City) (2006), 210 O.A.C. 37 is misplaced – that case concerned the former version of the Act.

[21] As a result, as the application judge observed, the relevant question under the current Act regarding a municipality’s business licensing authority is whether the licensing system in question “applies to a business in general or in a general sense to trades and occupations”.

[22] In the case of the City’s By-law, there can be no doubt that this requirement is met. The By-law’s operator licensing requirements under ss. 329.4.1 and 329.4.2 apply only to those who operate premises for a commercial purpose. For example:

(1) the operator Licensing Provisions (ss. 329.4.1 and 329.4.2 of the By-law) apply only to the “occupation or business” of an “adult live entertainment parlour”; and

(2) the phrase “adult live entertainment parlour” is defined under s. 329.1.1 of the By-law as “any premises in which or in part of which, in pursuance of a trade, calling, business or occupation, a live performance of an adult nature is provided” [Emphasis added.]

[23] This focus on commercial activity is consistent with the City’s statutory business licensing authority. Section 154(2)(a) of the Act defines the term “adult entertainment establishment” as premises in which specified activities are undertaken “in pursuance of a business”. Further, as the application judge noted, the definition of “business” under s. 150 of the Act is focused on various types of commercial activities, methods by which those activities are pursued, and entities or enterprises that pursue them.

[24] Thus, as the application judge indicated, in order to trigger the operator licensing requirements of the By-law, “the activity in question must therefore constitute part of a commercial activity occurring at the enterprise”.

[25] The appellant contends, however, that the definition of the phrase “live performance of an adult nature” under the By-law, which forms part of the definition of an “adult live entertainment parlour”, casts an overly broad and vague net, so as to capture any persons who engage in a live performance, exhibition or activity while nude or partially nude, even if no commercial purpose attaches to the performance, exhibition or activity. We disagree.

[26] The relevant definitions under the By-law read as follows:

329.1.1 Adult live entertainment parlour – defined

“adult live entertainment parlour” means any premises in which or in part of which, in pursuance of a trade, calling, business or occupation, a live performance of an adult nature is provided.

329.1.2 Live performance of an adult nature – defined

“live performance of an adult nature” means any performance; exhibition or activity designed to appeal to erotic or sexual appetites or inclinations. For purposes of this definition: “performance, exhibition, or activity designed to appeal to erotic or sexual appetites or inclinations” means a live performance, exhibition, or activity of which a principal feature or characteristic is the nudity or partial nudity of any person.

329.1.6 Entertainer – defined

“entertainer” means a person who performs a live performance of an adult nature within an adult entertainment parlour. [Emphasis added.]

[27] The application judge adopted the appropriate interpretive approach to these provisions. She held that the By-law definitions of “adult live entertainment parlour”, “entertainer” and “live performance of an adult nature” are linked and “must be considered together in order to properly interpret and understand the scope of the licensing requirements”.

[28] Having considered the relationship between these defined terms and their significance under the Licensing Provisions, the application judge rejected the appellant’s claim that the Licensing Provisions are overly broad or vague. She stated, at para. 32:

The question that must be determined is whether they apply in more general terms to individuals engaged in business, trades or occupations within adult entertainment parlours. I conclude that they do. The definition of “entertainer” in by-law 329.1.6 specifically refers to a person who performs a live performance of an adult nature “within an adult entertainment parlour” (emphasis added). This definition is therefore directly linked with the definition of “adult live entertainment parlour” in by-law 329.1.1, which as noted above includes as a key element that the live performance of an adult nature be provided in pursuance of a trade, calling or occupation. When these two definitions are read together, the logical conclusion which emerges is that the term “entertainer” does not extend to anyone who performs a live performance of an adult nature at an adult live entertainment parlour, but only to those individuals who do so in pursuance of a trade, calling, business or occupation. [Emphasis in original.]

[29] We agree with this interpretive conclusion, substantially for the quoted reasons of the application judge.

[30] It follows that, contrary to the appellant’s submission, persons who perform or participate in a performance at a facility while nude or partially nude other than in the course of a commercial activity related to adult live entertainment are not “entertainers” for the purpose of the Licensing Provisions. Although advanced by it in its factum, the City appeared to resile from this position during oral argument. In our view, this change in position was misconceived. We agree with the City’s original submission that the provisions of the By-law distinguish between entertainers who perform live performances of an adult nature in an adult live entertainment parlour for a commercial purpose, and those who do not. Only entertainers in the former category are subject to the Licensing Provisions of the By-law.

V. Conclusion and Disposition

[31] In summary, we agree with the application judge that the Licensing Provisions were validly passed by the City in the exercise of its general licensing and by-law making powers under the Act (ss. 8(3) and (10). We also agree that the City’s specific statutory business licensing power (ss. 150-154 of the Act), afforded further authority for the City’s passage of the Licensing Provisions and that this authority was validly exercised in the circumstances.

[32] Accordingly, the appeal is dismissed. The respondent is entitled to its costs of the appeal fixed, as agreed by counsel, in the total amount of $5,000, inclusive of disbursements and all applicable taxes.

Released:

“MAY -8 2013” “Doherty J.A.”

“DD” “E.A. Cronk J.A.”

“P. Lauwers J.A.”