Her Majesty the Queen ex Rel. The Regional Municipality of York v. Tsui

[Indexed as: R. v. Tsui]

Ontario Reports

Court of Appeal for Ontario

Doherty, Pepall and Hourigan JJ.A.

March 22, 2017

135 O.R. (3d) 1 | 2017 ONCA 230

Case Summary

Constitutional law — Distribution of legislative authority — By-laws

The pith and substance of a section of a municipal by-law regulating hours of operation of body rub parlours is business licensing. A justice of the peace and the Court of Justice erred in finding that the section was criminal in pith and substance and therefore ultra vires the municipality. A municipality has authority to enact a by-law that serves to suppress conditions likely to produce crime so long as it is tied to a provincial head of power. A municipality is entitled to target a specific crime in enacting conditions to suppress crime. A municipality acts within its powers in seeking to protect citizens from nuisance through regulation of hours of operation of body rub parlours.

The applicant operated a body rub parlour. He was charged with contravening the provisions of a municipal by-law which regulate the hours of operation of body rub parlours. He brought an application challenging the constitutionality not only of that provision, but also of a provision in the by-law which dealt with dress in body rub parlours. The justice of the peace found that both provisions were in pith and substance criminal and therefore ultra vires the municipality. The Ontario Court of Justice affirmed that decision. The municipality appealed.

Held, the appeal should be allowed.

As the applicant was not charged with contravening the dress provision, the justice of the peace had no jurisdiction to decide whether that provision was constitutional. However, reference could be had to the entire by-law, including the dress provisions, so as to characterize and ascertain the purpose and effect of the subsections under which the applicant was charged and their constitutionality.

The justice of the peace and OCJ appeal judge erred in ignoring significant intrinsic evidence and in relying on irrelevant extrinsic evidence. The pith and substance of the hours of operation provision, and that of the by-law as a whole, was business licensing. The impugned provision fell within the province's authority over licences under s. 92(9) of the Constitution Act, 1867 and property and civil rights in the province under s. 92(13). The provision was also aimed at the curtailment of nuisance, for which there was evidentiary support, and at suppressing conditions that are conducive to crime. Suppression of crime is a valid municipal objective so long as it is tied to a provincial head of power. In legislating to suppress crime, a municipality may target a specific crime rather than crime in general. The municipality was acting within its powers when it sought to protect citizens from nuisance through regulation of the hours of operation of body rub parlours.

Authorities Cited

Key Cases:

Chatterjee v. Ontario (Attorney General), 2009 SCC 19; Goodwin v. British Columbia (Superintendent of Motor Vehicles), 2015 SCC 46; R. v. Banks, 2007 ONCA 19

Other cases referred to:

1270627 Ontario Ltd. v. Kanata (City); Adult Entertainment Assn. of Canada v. Ottawa (City), 2007 ONCA 389; Alberta (Attorney General) v. Moloney, 2015 SCC 51; Bédard v. Dawson; Bedford v. Canada (Attorney General), 2013 SCC 72; Canada Post Corp. v. Hamilton (City), 2016 ONCA 767; Canadian Federation of Agriculture v. Quebec (Attorney General); Canadian Western Bank v. Alberta, 2007 SCC 22; Koumoudouros and Municipality of Metropolitan Toronto (Re); Pimenova v. Brampton (City); Prince Edward Island (Secretary) v. Egan; Proprietary Articles Trade Assn. v. Canada (Attorney General); Quebec (Attorney General) v. Canada (Attorney General), 2015 SCC 14; R. v. Dyck, 2008 ONCA 309; R. v. Keshane, 2012 ABCA 330; R. v. Lieberman; R. v. Morgentaler; R. v. Westendorp; Reference re: Adoption Act (Ont.); Reference re Assisted Human Reproduction Act, 2010 SCC 61; Reference re: Firearms Act (Can.), 2000 SCC 31; Rio Hotel Ltd. v. New Brunswick (Liquor Licensing Board); Ross v. Ontario (Registrar of Motor Vehicles); Sharlmark Hotels Ltd. and Municipality of Metropolitan Toronto (Re); Smith v. St. Albert (City), 2014 ABCA 76

Statutes Referred To

Constitution Act, 1867, 30 & 31 Vict., c. 3, ss. 52, 91(27), 92(9), (13), (15), (16)

Criminal Code, R.S.C. 1985, c. C-46, ss. 174, 210, 212(1)(j) [rep.], 213(1)(c) [rep.]

Highway Traffic Act, R.S.O. 1990, c. H.8

Liquor Licence Act, R.S.O. 1990, c. L.19

Municipal Act, R.S.O. 1990, c. M.45 [repealed by S.O. 2001, c. 25], s. 252.2(1)

Municipal Act, 2001, S.O. 2001, c. 25, ss. 148(4), 150(1), (2), (3), 151(1), 429

Provincial Offences Act, R.S.O. 1990, c. P.33, s. 139

Safe Streets Act, 1999, S.O. 1999, c. 8

APPEAL

From the order of Gorewich J. of the Ontario Court of Justice dated July 9, 2015 affirming the decision of Justice of the Peace Shousterman, 2013 ONCJ 643.

Chris G. Bendick, for appellant.

Alan N. Young, for respondent.

Daniel Huffaker, for intervenor Attorney General of Ontario.

The judgment of the court was delivered by

PEPALL J.A.:

A. Introduction

[1] This appeal involves a constitutional battle over a municipal by-law and a body rub parlour. The City of Vaughan passed By-law 315-2005 regulating the operation of body rub parlours in its jurisdiction. The respondent, Eric Tsui, owns and operates a body rub parlour that is licensed by the City of Vaughan. He was charged with contravening that section of the by-law governing operating hours.

[2] Tsui challenged the by-law on the basis that it was unconstitutional. He argued that the by-law was outside of the municipality's jurisdiction because it constituted criminal law. Specifically, Tsui submitted that the by-law's provisions governing dress were a prohibition against nudity and the hours of operation provision was a prohibition against prostitution.

[3] A justice of the peace accepted Tsui's arguments and held that, in pith and substance, the by-law's provisions relating to hours of operation and dress were criminal in scope and invaded federal authority. As such, she struck the provisions as being ultra vires the municipality.

[4] The Ontario Court of Justice dismissed the city's appeal. Leave to appeal having been granted, the city now appeals to this court.

[5] The Attorney General of Ontario intervened in the appeal to challenge the Ontario Court of Justice's treatment of the scope of the provincial power to legislate to suppress conditions conducive to crime.

[6] For the reasons that follow, I would allow the appeal and order a new trial.

B. Background Facts

(1) History of the by-law

[7] About 20 years ago, body rub parlours were not permitted under the City of Vaughan's comprehensive zoning by-law. In 1997, the city considered the licensing and regulation of body rub parlours. In April 1997, city council directed staff to prepare a first report on suggested ways to control body rub parlours within the municipality and then, in March 1998, requested a second report on the potential implementation of a licensing by-law.

[8] Council directed that the proposed by-law governing body rub parlours include restrictions on hours of operation. Residents had complained about possible illegal activity being undertaken at body rub parlours and the negative impact on surrounding areas. The hours of operation restriction would reduce the risk of illegal activity, which would in turn decrease the nuisance that such illegal activities created for surrounding businesses and residents.

[9] Council's minutes of September 28, 1998 described some of this background, and addressed a September 23, 1998 report authored by Councillor Bernie Di Vona. The report that was reproduced in part in the minutes stated:

A strong and growing concern has been raised by many residents in Woodbridge regarding the presence of "massage parlours" within industrial/commercial areas and most importantly, with the number of massage parlours that are opening, three have recently opened in Ward 3 (East Woodbridge). With many of these "new" massage parlours, their advertisements have included sexually explicit disclosure of the female anatomy leading one to conclude that the massage parlour may not carry out the use of a "personal use" establishment as desired by the City of Vaughan By-law.

Individuals have expressed that they have found large groups of adult males frequent some establishments mostly in the early morning hours. Should "ladies of the night" be operating in these establishments, the hours of restriction by-law will take the "night away from the ladies of the night" in Vaughan for the massage parlours.

Individuals operating close to a "massage parlour", have expressed outrage that they cannot go out during their lunch to shop, walk or go to a restaurant, without being propositioned.

Businesses have expressed to me and also to Vaughan Council, at a recent Public Hearing that they are concerned with the possible establishment of a massage parlour.

The City of Vaughan has asked for a police investigation and it has been expressed that the investigation is continuing and that additional evidence from new massage parlours has been provided. Since the investigation of over 40 massage parlours, and the opening of three new massage parlours in Ward 3, the urgency exists that we move quickly and decisively.

It is a well known fact that specific types of businesses move from a highly regulated area to a low regulated area.

(a) The 1999 by-law

[10] On January 25, 1999, council passed a stand-alone body rub parlour licensing by-law, 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 "1999 by-law"). The preamble to the 1999 by-law stated:

WHEREAS section 224 of the Municipal Act, R.S.O. 1990 c. M.45 ("the Act" as amended) authorizes the Council to pass by-laws for licensing, regulating, governing, classifying and inspecting body rub parlours and for revoking or suspending any such license and for limiting the number of licenses to be granted;

AND WHEREAS Part XVII.I of the Municipal Act authorizes the Council to pass by-laws for licensing, regulating and governing any business carried on within a municipality and includes the authority for Council to enact legislation with regard to persons who provide services in connection with any such businesses;

AND WHEREAS the Council deems it advisable, having regard to, among other matters, the health, welfare and safety of those within its jurisdiction, to enact a by-law to license, regulate, govern and inspect body rub parlours, and activities carried on in the business of the operation of body rub parlours.

[11] The 1999 by-law addressed all manner of matters associated with the licensing and regulation of body rub parlours, including the design of premises, designated areas, signs and advertisements and hours of operation. This 1999 by-law was the predecessor to the substantially similar by-law that is in issue on this appeal.

(b) The zoning by-law

[12] At about the same time it passed the 1999 by-law, the city passed by-law 31-99. It designated commercial/industrial areas with low visibility to the general public as areas where body rub parlours could operate. Adult entertainment parlours (strip clubs) and adult video stores were also permitted in these areas.

(c) The 2001 consolidated by-law

[13] On January 15, 2001, the city passed by-law 2-2001, which consolidated all city licensing by-laws for all business categories, including body rub parlours, into one licensing by-law. This by-law revised the hours of operation of establishments that served liquor to provide for a 2:00 a.m. closing, so as to ensure compliance with s. 148(4) of the Municipal Act, 2001, S.O. 2001, c. 25, which prohibits a municipality from regulating the hours of operation of a business that sells liquor under the authority of a licence issued under the Liquor Licence Act, R.S.O. 1990, c. L.19. Such businesses included adult entertainment parlours, which sell liquor, but did not include body rub parlours, which do not. The hours of operation applicable to body rub parlours remained the same as those prescribed in the 1999 by-law.

(d) The 2005 by-law

[14] In 2005, the city's Committee of the Whole (Working Session) (a committee comprised of the mayor and city councillors but not a meeting of council) met to address investigation and enforcement processes and recommendations made by the Commissioner of Legal Services in conjunction with the city's senior manager of enforcement services. One of the topics addressed related to body rub parlours. The April 26, 2005 minutes of that meeting included a report, which stated:

Although this is a matter that is covered in the Licensing By-law, the topic needs to be discussed separately. The City of Vaughan currently has 23 body rub parlours of which only 5 are licensed. This kind of business has been known to employ young girls and immigrant women and usually operates as a front to prostitution. The conditions inside these operations are generally poor. In the past, special projects have been successful in closing some of these establishments down permanently, but as one closes it seems like another opens.

York Regional Police investigate these establishments and those in the other municipalities for Criminal Code and by-law violations. City of Vaughan Licensing Enforcement has been dedicating two days per month to enforcement of this industry.

York Regional Police have expressed concern that without targeted enforcement of this industry, the crime associated with body rub parlours will escalate and the potential for homicides such as what happened in Markham a year ago will increase. They have also written a letter complaining about the lack of enforcement of Body Rub operations by the City of Vaughan.

This is an area which needs dedicated staff to work towards the goal of eliminating illegal body rub parlours and demonstrate that commitment to York Regional Police.

[15] Attached to the report was a February 21, 2005 letter to the Vaughan city clerk from the York Regional Police expressing concern about enforcement of Vaughan's body rub parlour by-law and illegal body rub establishments.

[16] Council received the report for information purposes, but did not act on the recommendations as they related to body rub parlours.

[17] On December 12, 2005, the city replaced By-law 2-2001 with By-law 315-2005 (the "2005 by-law"), as the former was set to expire on January 30, 2006 due to the five-year sunset provision then contained in the Municipal Act, 2001. The 2005 by-law was essentially a re-enactment of By-law 2-2001. Indeed, council minutes dated November 21, 2005 state: "The proposed comprehensive Licensing By-law for the upcoming five years contains few substantive amendments." However, as newly required by the Municipal Act, 2001, it contained an explanation of why the municipality was licensing and imposing conditions on various classes of businesses. Under the heading "Reasons for Licensing and Imposing Conditions on Classes of Businesses", those for body rub parlours and attendants were described in council minutes dated November 21, 2005:

Health and Safety: to encourage safe, proper operational and/or business practices, including but not limited to compliance with health regulations, building code requirements, fire code requirements and liquor regulations; to conduct police background checks of principals and attendants, attendant age checks and any applicable medical reviews; to ensure proper record keeping, including proper records of appointments, bookings and arrangements for services;

Consumer Protection: to ensure compliance with all applicable regulations, including but not limited to health requirements and regulations, age restrictions and ensuring attendants are adequately clothed to protect clients from improper exposure, etc.;

Nuisance Control: to ensure compliance with zoning requirements, noise control and other related requirements.

[18] The 2005 by-law is the enactment in issue on this appeal. Section 13 of the 2005 by-law governs body rub parlours.

(2) Charge under appeal

[19] As mentioned, Tsui was charged with contravening s. 13.0(1)(h) of the 2005 by-law, which governs the operating hours of a body rub parlour. Section 13.0(1)(h) provides:

No Body Rub Parlour Owner or Operator may permit a Body Rub Parlour to open or to remain open for business except in compliance with the provisions of section 13.4 respecting "Hours of Operation".

[20] Section 13.4(1) provides:

No Body Rub Parlour shall be open to the public and no Owner or Operator of a Body Rub Parlour may permit services to be provided and no Attendant at a Body Rub Parlour may provide services, except on the following days and between the following hours:

(a) Monday to Friday from 9:00 a.m. to 10:00 p.m. of the same day;

(b) Saturday from 9:00 a.m. to 6:00 p.m. of the same day;

(c) Sunday from 10:00 a.m. to 5:00 p.m. of the same day.

These provisions governing hours of operation are substantially identical to those contained in ss. 4(j) and 11 of the original 1999 by-law.

[21] Since 2005, from time to time, the by-law has been amended. At the times of the enactments of the 1999 by-law and the 2005 by-law, the maximum penalty was $25,000 for an individual and $50,000 for a corporation. Although the legislature gave municipalities the power to enact a penalty of imprisonment for a term not exceeding one year, neither the 1999 by-law nor the 2005 by-law contained such a provision.

[22] Tsui was charged with permitting a body rub parlour to be open outside permitted times on July 8, 2012. The certificate of offence stated that the fine was $400.

[23] Tsui was not charged under s. 13.0(1)(o) or (p), which deal with dress in body rub parlours. Section 13.0(1)(o) provides that every attendant at a body rub parlour shall be clothed in a manner in which such person's pubic area and buttocks, and in the case of a woman, also her breasts, are completely covered by an opaque material. Section 13.0(1)(p) provides that every attendant shall ensure that every customer in a body rub parlour is clothed in a manner in which such person's pubic area and in the case of a woman, also her breasts, are completely covered by an opaque material.

[24] Tsui brought an application before a justice of the peace requesting that all of s. 13 or, in the alternative, ss. 13.0(1)(h) and 13.4, be declared invalid on the basis that the pith and substance of the provisions is criminal in scope and therefore ultra vires the municipality's legislative competence.

[25] The justice of the peace did not quash all of s. 13. She did quash ss. 13.0(1)(h) and 13.4 dealing with hours of operation and, although Tsui had not been charged with contravention of the dress provisions, she also quashed s. 13.0(1)(o) and (p) dealing with dress.

[26] The city appealed to the Ontario Court of Justice, and the Ontario Court appeal judge ("OCAJ") dismissed the city's appeal.

(3) Reasons of the justice of the peace

[27] The justice of the peace commenced her analysis by acknowledging that there was no dispute that the city was entitled to license and regulate body rub parlours. She determined that, with the exception of the provisions governing dress (s. 13.0(1)(o) and (p)) and hours of operation (ss. 13.0(1)(h) and 13.4), the pith and substance of s. 13 was the regulation of a business, which falls within s. 92 of the Constitution Act, 1867.

[28] In contrast, the justice of the peace held that the provisions relating to dress and hours of operation were, in pith and substance, criminal. She therefore held that those provisions were ultra vires the municipality.

[29] In analyzing the dress provisions, she rejected the city's submission that they addressed health and safety and consumer protection concerns. Rather, she concluded that they amounted to an attempt to regulate nudity. As such, they amounted to criminal law and were ultra vires the city.

[30] She then turned to the hours of operation provisions. She considered the evidence of Joseph Chiarelli, a city manager responsible for the development, administration and enforcement of city by-laws, including the 2005 by-law.

[31] Chiarelli's evidence was that the hours of operation provisions were created in response to "complaints from residents regarding possible illegal activity being undertaken at body rub parlours, and the negative impact that it was having on surrounding areas". The city's rationale behind the hours of operation restriction was that it would "reduce the risk of illegal activity, which would in turn decrease the nuisance that such illegal activities created for surrounding businesses and residents".

[32] The justice of the peace inferred that the "illegal activity" referred to prostitution, although she subsequently observed that prostitution is legal in Canada, and that "nuisance concerns were to be addressed through curtailing illegal activity". She relied on the 2005 report to council that described the concerns of York Regional Police and the need for enforcement of body rub parlours. She acknowledged, however, that it was unclear whether these concerns related to unlicensed establishments only or to all body rub parlours, be they legal or illegal.

[33] She identified one objective of the impugned by-law as being to combat neighbourhood disruption and disorder. This was accomplished by relocating body rub parlours to industrial lands in the city and setting up adult entertainment districts which would, among other things, encompass body rub parlours. This was done, she reasoned, to remove prostitution and other sex-related activities from residential neighbourhoods. She determined that another objective of the by-law was to safeguard the health and safety of the public by requiring individuals working in body rub parlours to be healthy and of a minimum age.

[34] The justice of the peace noted that as far back as 1998, city council had indicated that the purpose of imposing hours of operation in the by-law was to take the "night away from the ladies of the night". This addressed prostitution, conduct that was traditionally criminal. She relied on the February 21, 2005 letter from the York Regional Police and Chiarelli's evidence, which referenced the September 28, 1998 council minutes and the 2001 by-law, to support her conclusion that the hours of operation provision was an attempt to regulate morality. As the zoning by-law had required body rub parlours to relocate to industrial areas with other adult entertainment businesses, she concluded that the city's claim of nuisance was muted.

[35] She held that the city had entered into criminal law and the hours of operation provision was ultra vires the city. The justice of the peace also noted that the hours of operation provisions were "unfairly discriminatory" because strip clubs are permitted to stay open until 2:00 a.m., whereas body rub parlours must close at 10:00 p.m.

[36] The justice of the peace then considered the double aspect doctrine, but determined that it was inapplicable.

[37] Having concluded that the dress and hours of operation provisions were ultra vires the city, the justice of the peace invoked s. 52 of the Constitution Act, 1867 and quashed ss. 13.0(1)(h), (o), (p) and 13.4 of the 2005 by-law.

(4) Appeal to the Ontario Court of Justice

[38] The Ontario Court of Justice dismissed the city's appeal. The OCAJ agreed with the justice of the peace's analysis and determined that she was correct in quashing the dress and hours of operation provisions of the 2005 by-law on the basis that, in pith and substance, they amounted to criminal law and were therefore ultra vires the city.

[39] The OCAJ found that the justice of the peace had correctly rejected the city's submission that the by-law was enacted to regulate nuisance and health and safety. He held that the justice of the peace did not err in relying on the extrinsic evidence in reaching her conclusion that the purpose of the hours of operation and dress provisions was to prohibit prostitution.

[40] The OCAJ rejected the city's submission that the 2005 by-law was a lawful exercise of its delegated provincial authority to suppress conditions that may lead to crime. At para. 95, the OCAJ noted: "When the dominant feature of legislation is criminal, the authority of provincial power to suppress the conditions that may lead to crime is eliminated." The OCAJ distinguished Chatterjee v. Ontario (Attorney General), 2009 SCC 19 because it involved legislation aimed at the general suppression of crime, as opposed to the singling out of a particular offence (in this case, prostitution).

[41] The OCAJ reviewed the history and context of the legislation and observed that there was a clear connection between the enactment of the by-law and the desire to eliminate prostitution. He noted the references in the extrinsic evidence to "ladies of the night" and to body rub parlours operating as fronts for prostitution, as well as the letter from the York Regional Police enlisting the city's help in enforcing the body rub parlour licensing regime.

[42] He referenced the maximum fine of $100,000, which he concluded reinforced the justice of the peace's conclusion that the effect of the by-law is to stiffen, supplement or replace the criminal law.

[43] The OCAJ also observed that there was only one report addressing nuisance concerns. It was from 1999, and, since then, there had been no evidence of nuisance concerns. He agreed that nuisance concerns would be "muted" because body rub parlours are confined to industrial areas.

[44] Moreover, at para. 96, he echoed the justice of the peace's concerns and questioned how it could be said that nuisance caused by body rub parlours, which serve no alcohol, is such that they must close by 10:00 p.m., whereas the nuisance caused by adult entertainment establishments, which do serve alcohol, is either minimal or non-existent such that they are allowed to stay open until 2:00 a.m.

[45] He stated, at para. 96:

It is reasonable to conclude, as did the Justice of the Peace in the case at bar, that the enforcement and crackdown of 2006 was not caused by nuisance concerns but rather as a result of pressure from the York Regional Police who were unequivocal in what they were targeting.

[46] Citing the Ontario Court of Justice's decision in 1270627 Ontario Ltd. v. Kanata (City), the OCAJ held that a law will not be upheld if there is a disassociation between the law and its reported objective. He likened the facts in this case to those in R. v. Westendorp, where the Supreme Court held that a by-law prohibiting a person from being on the street for the purposes of prostitution was ultra vires the City of Calgary.

[47] In conclusion, the OCAJ found that the justice of the peace did not err in finding that in pith and substance, the impugned by-law provisions amounted to criminal law and therefore were ultra vires the city.

C. Scope of the Appeal

[48] To reiterate, Tsui was charged with contravening s. 13.0(1)(h) of the 2005 by-law by permitting a body rub parlour to be open outside of the permitted times, which are set out in s. 13.4. He was not charged with contravening either of the dress provisions found in s. 13.0(1)(o) and (p). Accordingly, we must address the preliminary question of whether this court should limit the scope of the appeal to the provisions of the 2005 by-law under which Tsui was actually charged.

[49] This court limited the scope of an appeal in similar circumstances in R. v. Banks, 2007 ONCA 19, a case involving charges of "squeegeeing" contrary to the Safe Streets Act, 1999 and the Highway Traffic Act. In the absence of a live controversy, this court limited the appeal's scope to the challenge of the constitutionality of the provisions of the provincial statutes under which the appellants were actually charged. In doing so, Juriansz J.A. noted, at para. 25, that "[m]aking unnecessary pronouncements about the constitutionality of legislative provisions is an unwarranted exercise of judicial power". However, the parties were able to rely on the entire statute to assist in discerning the purpose and effects of the particular provisions in controversy.

[50] Here, counsel for Tsui acknowledges that Tsui was only charged under the operating hours provision of the 2005 by-law and conceded that there was no jurisdiction for the justice of the peace to decide the dress provision. However, he also submitted that the dress provisions were relevant to the characterization of the by-law.

[51] I propose to proceed on a basis similar to that adopted by this court in the Banks decision. As such, while only ss. 13.0(1)(h) and 13.4 of the 2005 by-law dealing with hours of operation are in issue, reference may be had to the entire by-law, including the dress provisions, so as to characterize and ascertain the purpose and effect of the subsections under which Tsui was charged and their constitutionality.

D. Issues

[52] Pursuant to s. 139 of the Provincial Offences Act, R.S.O. 1990, c. P.33, an appeal lies from the Ontario Court of Justice to this court, with leave, on special grounds, upon any question of law alone. On September 18, 2015, Sharpe J.A. granted leave to appeal the decision of the OCAJ on three questions of law. These questions are at issue on this appeal:

(i) Did the OCAJ err in his consideration of the "pith and substance" of the by-law by focusing exclusively on the extrinsic evidence and failing to engage in the exercise of characterizing the purpose and effect of the provision of the by-law as it was enacted?

(ii) Did the OCAJ err by failing to give proper scope to the municipal objective of legislating to suppress conditions likely to produce crime?

(iii) Did the OCAJ err by holding that, in legislating conditions to suppress crime, a municipality cannot target a specific crime but must aim at crime in general?

E. Discussion

[53] First, I will address the standard of review, followed by a discussion of the constitutional framework, the municipal context and the relevant criminal law provisions. Lastly, I will address the three questions of law at issue in this appeal.

(1) Standard of review

[54] The standard of review on questions of constitutional interpretation is correctness. That said, the Supreme Court in Bedford v. Canada (Attorney General), 2013 SCC 72 established that absent reviewable error in the trial judge's appreciation of the evidence, an appellate court should not interfere with the trial judge's conclusions on social, legislative or adjudicative facts: Bedford, at paras. 49 and 56.

(2) Constitutional framework

[55] The fundamental issue raised by this appeal involves a division of powers analysis. Was the enactment of the 2005 by-law within the city's jurisdiction? Put differently, are the by-law provisions ultra vires the city because they relate to a subject matter that is within the exclusive jurisdiction of Parliament under the Constitution Act, 1867?

[56] The Constitution Act, 1867 gives Parliament exclusive legislative authority over criminal law (with the exception of the constitution of courts of criminal jurisdiction) under s. 91(27). The provinces are given exclusive legislative authority over (i) "Shop, Saloon, Tavern, Auctioneer, and other Licences in order to the raising of a Revenue for Provincial, Local, or Municipal Purposes" under s. 92(9); and (ii) property and civil rights in the province under s. 92(13). Thus, the provinces have authority to regulate the conduct of most businesses and recreation in the province: see P.W. Hogg, Constitutional Law of Canada, loose-leaf (2016-Rel. 1), 5th ed. (Toronto: Carswell, 2007), at pp. 18-19. That authority extends to the imposition of limits on the hours of operation of commercial establishments: R. v. Lieberman. Under s. 92(15) of the Constitution Act, 1867, the provinces also have the authority to impose punishment by fine, penalty or imprisonment for the purpose of enforcing otherwise valid provincial laws.

[57] The Supreme Court has provided considerable guidance on how to proceed with a division of powers analysis.

(a) Pith and substance

[58] The first step is to determine the "matter" of the legislation in issue. The analysis involves an examination of (i) the purpose of the enacting body and (ii) the legal effect of the law: Reference re: Firearms Act (Can.), 2000 SCC 31, at para. 16. This exercise is traditionally known as determining the law's "pith and substance": Chatterjee, at para. 16.

(i) Purpose

[59] The purpose of the enacting body is determined by examining both intrinsic and extrinsic evidence: R. v. Keshane, 2012 ABCA 330, at para. 21, leave to appeal to S.C.C. refused.

[60] Intrinsic evidence consists of the content of the enactment itself. In Chatterjee, Binnie J. observed, at para. 17: "While the court is not bound by a purpose clause when considering the constitutional validity of an enactment, a statement of legislative intent is often a useful tool . . .".

[61] Extrinsic evidence, such as legislative debates or Hansard, may also be relevant in determining the purpose of the enacting body, but the evidence must be reliable and should not be given undue weight. The Supreme Court addressed this point in Firearms Reference, at para. 17:

A law's purpose is often stated in the legislation, but it may also be ascertained by reference to extrinsic material such as Hansard and government publications. . . . While such extrinsic material was at one time inadmissible to facilitate the determination of Parliament's purpose, it is now well accepted that the legislative history, Parliamentary debates, and similar material may be quite properly considered as long as it is relevant and reliable and is not assigned undue weight . . . Purpose may also be ascertained by considering the "mischief" of the legislation -- the problem which Parliament sought to remedy.

[62] Importantly, the purpose of the enacting body must not be confused with the enacting body's motive, or with the motive of any individual member: see Canada Post Corp. v. Hamilton (City), 2016 ONCA 767, at para. 40; Quebec (Attorney General) v. Canada (Attorney General), 2015 SCC 14, at paras. 35-38.

(ii) Legal effect

[63] When examining the legal effect of the enactment, the court looks at how it affects the rights and liabilities of those subject to its terms and the actual or predicted practical effect of the law: R. v. Morgentaler, at pp. 482-83 S.C.R.

(b) Assignment to a head of power

[64] Once the pith and substance has been identified, the second step in the analysis is to assign the matter of the challenged legislation to a head of power under either ss. 91 or 92 of the Constitution Act, 1867.

[65] A good deal of overlap between property, an area of provincial jurisdiction, and crime, an area of federal jurisdiction, may be expected. In Chatterjee, at para. 24, Binnie J. explained this overlap by quoting from p. 403 S.C.R. of Reference re Adoption Act (Ont.):

[W]hile, as subject matter of legislation, the criminal law is entrusted to the Dominion of Parliament, responsibility for the administration of justice and, broadly speaking, for the policing of the country, the execution of the criminal law, and the suppression of crime and disorder, has from the beginning of Confederation been recognized as the responsibility of the provinces.

[66] An example of this overlap is found in Bédard v. Dawson. There, the Supreme Court upheld the validity of a provincial law that authorized a judge to close a common bawdy house for up to one year, notwithstanding the prohibition in the Criminal Code against keeping a common bawdy house. The court held that the impugned law dealt with property and civil rights by providing for the suppression of a nuisance. In concluding that the law was within the province's jurisdiction, Idington J. stated, at p. 684 S.C.R.:

[I]t is the duty of the legislature to do the utmost it can within its power to anticipate and remove, so far as practicable, whatever is likely to tend to produce crime[.]

Further, Duff J. stated, at p. 684 S.C.R.:

The legislation impugned seems to be aimed at suppressing conditions calculated to favour the development of crime rather than at the punishment of crime. This is an aspect of the subject in respect of which the provinces seem to be free to legislate.

[67] Where measures enacted pursuant to a provincial power overlap with a federal power, the court must identify the "dominant feature" of the measure: Chatterjee, at para. 29. If the dominant feature is the subject matter of provincial authority, "[the enactment] will not be invalidated because of an 'incidental' intrusion into the field of criminal law": Chatterjee, at para. 29.

[68] Chatterjee dealt with a provincial civil forfeiture law that was enacted to compensate victims of crime and to deter crime. The former purpose was within provincial competence. The latter purpose was considered to be broad enough that both the federal and provincial governments could pursue it. In that case, the Supreme Court discussed the province's jurisdiction to suppress conditions likely to favour the commission of crimes. Binnie J. stated, at para. 40:

The Constitution permits a province to enact measures to deter criminality and to deal with its financial consequences so long as those measures are taken in relation to a head of provincial competence and do not compromise the proper functioning of the Criminal Code . . . .

There is no general bar to a province's enacting civil consequences to criminal acts provided the province does so for its own purposes in relation to provincial heads of legislative power.

[69] Further, in Goodwin v. British Columbia (Superintendent of Motor Vehicles), 2015 SCC 46, the Supreme Court affirmed, at para. 32: "[A] provincial statute will not invade the federal power over criminal law merely because its purpose is to target conduct that is also captured by the Criminal Code."

[70] As described by the intervenor, provincial laws have been upheld in a range of activities that are the subject of Criminal Code provisions. In addition to Bédard, other examples include banning nude entertainment in licensed establishments, notwithstanding the provisions in the Criminal Code regarding nudity (Rio Hotel Ltd. v. New Brunswick (Liquor Licensing Board), at pp. 63-65 S.C.R.); and requiring the registration of sex offenders, notwithstanding the provisions in the Criminal Code regarding sexual assault (R. v. Dyck, 2008 ONCA 309, at paras. 52, 59 and 60).

[71] Overlapping powers are often unavoidable. The "double aspect" doctrine acknowledges that some laws simultaneously have both a federal and a provincial purpose, roughly equal in importance, and both levels of government may legislate with respect to different aspects of the same matter. Provided that the federal and provincial laws do not conflict, that is, they are not contradictory, and that each law's purpose is anchored in an appropriate head of power, both laws will be deemed valid: Canadian Western Bank v. Alberta, 2007 SCC 22, at para. 30; Rio Hotel, at pp. 65-66 S.C.R.; Alberta (Attorney General) v. Moloney, 2015 SCC 51, at para. 15; Hogg, at pp. 15-12 to 15-14.

[72] Most importantly, a healthy approach to federalism mandates a presumption of constitutionality. The division of powers analysis is shaped by this principle.

[73] In summary, the pith and substance of the enactment is determined by examining its purpose and legal effect. The examination may include both intrinsic and extrinsic evidence. Only then is regard had to the heads of legislative competence. A province may legislate in relation to conduct that is encompassed by the Criminal Code, provided that the pith and substance of the law relates to a provincial head of power and the federal and provincial legislation do not conflict.

(3) Municipal context

[74] A by-law is a creature of a municipality. As a municipality's authority is delegated by the provincial legislature, a by-law must be rooted in provincial authority.

[75] As mentioned, under the Constitution Act, 1867, the province has legislative licensing authority to raise revenue for, among other things, municipal purposes. Both the Municipal Act and the Municipal Act, 2001 delegate authority to municipalities. The Municipal Act governed the passage of the original 1999 by-law, and the Municipal Act, 2001 was in place at the time of the enactment of the 2005 by-law dealing with the issues in this appeal.

[76] The Municipal Act, 2001 introduced some new provisions relevant to this case that were not contained in the Municipal Act. Although both statutes provided that a local municipality may license, regulate and govern any business wholly or partially carried on within the municipality, a limitation on this authority existed in s. 150(2) of the Municipal Act, 2001 that did not exist in the predecessor statute.

[77] Section 150(2) stated that except as otherwise provided, a municipality may only exercise licensing powers, including imposing conditions, for the purposes of health and safety, nuisance control or consumer protection. Section 150(3) stated that a by-law licensing or imposing any condition on any business was to include an explanation as to why the municipality was licensing or imposing the conditions and how that reason related to the purposes in s. 150(2).

[78] Both statutes also provided express power to local municipal councils to pass by-laws for the purposes of licensing, regulating, governing and inspecting body rub parlours, and for revoking or suspending any such licence.

[79] The statutes also provided that the power to license, regulate and govern a business included the power to impose conditions, including those restricting the hours of operation of the business.

[80] In light of these provisions, the city had the power to enact a by-law licensing and regulating body rub parlours. The city's authority extended to regulation of the premises, persons engaged in the business and closing times. Indeed, the parties did not dispute that the city is entitled to license and regulate body rub parlours for the purposes of promoting health and safety, effecting nuisance control or ensuring consumer protection.

[81] Finally, s. 429 of the current Municipal Act, 2001 prescribes a municipality's authority to establish fines for by-law offences. Although not the case in 1999 or 2005, a municipality now has the discretion to impose a fine of up to $100,000. This maximum fine is higher than the fine in force at the time relevant to the issue of constitutionality, as, contrary to the findings of the justice of the peace and the OCAJ, versions of the Municipal Act and the Municipal Act, 2001 that were in force when the 1999 by-law and the 2005 by-law were passed each provided for a maximum fine of $25,000 for an individual and $50,000 for a corporation.

(4) Relevant criminal law provisions

[82] As stated by Hogg in Constitutional Law of Canada, at pp. 18-3 to 18-5, Parliament's power to enact "criminal law" has proved very difficult to define. In Proprietary Articles Trade Assn. v. Canada (Attorney General), at p. 324 A.C., Lord Atkin advanced a definition of criminal law using the question, "Is the act prohibited with penal consequences?" However, subsequent jurisprudence considered this definition to be too wide; it had to be supplemented with a third ingredient. This ingredient was identified in Canadian Federation of Agriculture v. Quebec (Attorney General) (the "Margarine Reference") as being a typically criminal public purpose. In that case, Rand J. said, at p. 50 S.C.R., that a prohibition was not criminal unless it served "a public purpose which can support it as being in relation to criminal law". Safeguarding morality was one such purpose.

[83] In summary, to constitute criminal law, the impugned enactment requires a prohibition and a penal consequence. In addition, the prohibition has to serve a criminal public purpose.

[84] When the justice of the peace heard Tsui's application, this court had released its decision in Bedford. This court upheld the decision of the Superior Court of Justice declaring s. 212(1)(j) of the Criminal Code, which prohibited living off the avails of prostitution, unconstitutional, and striking "prostitution" from the definition of "common bawdy house" for the purposes of s. 210 of the Criminal Code.

[85] The Supreme Court agreed with that determination, except that it also found s. 213(1)(c) of the Criminal Code, which prohibited communicating in public for the purposes of prostitution, to be unconstitutional.

[86] Accordingly, at the time of the hearing, prostitution itself was not illegal, and prostitution was not contained in the definition of a common bawdy house. The latter was limited to the practice of acts of indecency.

[87] The Criminal Code does address nudity. Section 174 states that everyone who, without lawful excuse, is nude in a public place, or is nude and exposed to public view while on private property, whether or not the property is his or her own, is guilty of an offence punishable on summary conviction.

(5) Issue 1: The pith and substance of the by-law

(a) Positions of the parties

[88] The appellant submits that the OCAJ made three errors in considering the pith and substance of the 2005 by-law provisions.

[89] First, he erred by relying almost exclusively on extrinsic evidence and failing to consider the intrinsic evidence. The intrinsic evidence included the general structure of the by-law, which revealed an intent to license and regulate businesses; and the by-law's purpose clause, which reflected a concern for the health, safety and welfare of city residents. The intrinsic evidence reveals that compliance with the hours of operation and dress provisions were conditions of holding a body rub parlour licence and that these provisions aimed to suppress conditions likely to produce criminal activity relating to the operation of a common bawdy house.

[90] Second, the OCAJ erred by considering irrelevant extrinsic evidence that deserved no weight. In particular, he should not have considered the report that referred to comments from the York Regional Police, which post-dated the original enactment of the substantially similar 1999 by-law. Further, he misapprehended the report authored by Councillor Di Vona that is referred to in council's minutes dated September 28, 1998.

[91] Finally, the OCAJ erred by failing to consider the legal effect of the hours of operation provisions. The restrictions imposed by the 2005 by-law were licensing requirements. They did not apply to the public at large. They were not prohibitive, but rather were preventative in nature, and there was also no conflict between the Criminal Code and the 2005 by-law.

[92] In contrast, Tsui submits that neither the justice of the peace nor the OCAJ erred in making their findings and conclusions, and deference is owed to their decisions.

[93] Tsui submits that intrinsic evidence was examined. This included the maximum fine for violating the by-law, which Tsui argues far exceeds regulatory fines for related conduct in other jurisdictions.

[94] Moreover, Tsui submits that in determining that the 2005 by-law had a criminal purpose, it was relevant to consider that the prior zoning of body rub parlours into industrial areas of the city effectively eliminated any nuisance concerns. Further, reliance was properly placed on the inexplicable distinction between body rub parlours and other adult entertainment establishments -- the latter can stay open until 2:00 a.m. and operate with no nudity restrictions. This distinction properly informed the OCAJ's assessment of whether the by-law was an attempt to supplement the criminal law. Furthermore, the dearth of evidence linking nudity in body rub parlours to the risk of communicable disease demonstrated that the restriction was a veiled attempt to supplement criminal prohibitions on nudity and common bawdy houses.

[95] Finally, the findings of fact made by both courts were amply supported by the extrinsic evidence of an improper purpose.

[96] As mentioned, the AG intervened in the appeal. Counsel confined his submissions to the issue of the scope of provincial -- and by extension, municipal -- authority to legislate to suppress conditions that are conducive to crime. In particular, the AG submits that the OCAJ erred to the extent that he held that provincial legislatures are limited to legislating to suppress conditions that are conducive to crime in general, and cannot legislate to suppress conditions that are conducive to a specific Criminal Code offence.

(b) Analysis of the pith and substance

[97] I would give effect to the city's position on pith and substance. The pith and substance of the hours of operation provision is business licensing, and the courts below erred in concluding otherwise. In doing so, they failed to consider the relevant intrinsic evidence, considered irrelevant extrinsic evidence and failed to consider the legal effect of the provision in issue.

(i) Failure to examine intrinsic evidence

[98] I agree with the city that the OCAJ overlooked the failure of the justice of the peace to consider the intrinsic evidence. This included the statement of legislative intent found in the by-law's preamble, the structure of the by-law itself and the absence of provisions containing characteristics of criminal law.

[99] At para. 88 of his reasons, the OCAJ observed that "the justice of the peace was clear, after assessing the real nature of the legislation, in ruling it was ultra vires". The difficulty with this statement is that the justice of the peace did not assess the legislation. Rather, she recited the two sections of the by-law dealing with hours of operation and then concentrated her analysis on extrinsic evidence relating to the by-law. Significantly in my view, nowhere does the justice of the peace discuss the preamble to the by-law, which identifies the licensing and regulatory purpose that underlies the enactment. To repeat, a statement of legislative intent, while not determinative, is a useful tool: Chatterjee, at para. 17. Here, the justice of the peace, and then the OCAJ, ignored this interpretative aid. Although form alone is not controlling, the intrinsic evidence must be examined: see Morgentaler, at para. 51. That did not occur here.

[100] An examination of the by-law's preamble reveals a stated purpose of licensing, having regard to health, safety, consumer protection and nuisance. The conditions of holding a body rub parlour licence include hours of operation and dress requirements. As with any other business regulated by a municipality, it is not surprising that hours of operation are encompassed by such a regulatory scheme. Regulating hours as a condition of licensing serves to address the parameters of the operation of a body rub parlour and eliminates late hours that may be conducive to crime associated with the operation of a common bawdy house. The provisions nullified by the justice of the peace were rationally connected to the city's stated objective, the elimination of nuisance associated with the operation of a common bawdy house. Neither judge addressed this stated purpose.

[101] In addition, neither the OCAJ nor the justice of the peace examined the structure of the by-law. The structure reflects a process designed to issue or refuse business licences and to monitor compliance with the terms of those licences. The hours of operation and dress requirements are conditions associated with holding a body rub parlour licence and also suppress conditions likely to produce criminal activity. They are similar to other provisions in the by-law which are anchored in the licensing of a business and are designed to curtail the nuisance caused by the presence of common bawdy houses by suppressing conditions likely to lead to the commission of crime. (See s. 13.3(1)(c) -- access to the body rub parlour shall be kept unlocked; s. 13.3(1)(d) no part of the body rub parlour shall be used as a dwelling or for sleeping purposes or contain therein a bed or other furniture which is commonly used or which may be used for sleeping purposes; and s. 13.3(1)(k) -- every door to a massage room must have windows of a size not less than 36 cm. by 36 cm.)

[102] An examination of the intrinsic evidence also reveals that the by-law contains no prohibition against prostitution or against keeping a common bawdy house within the city. The provisions amount to preventative measures. Moreover, the provisions do not apply to the public at large, but just to the regulated business.

[103] Tsui submits that the by-law's "extraordinary penalty", the prior zoning of body rub parlours into industrial areas of the city, and the city's inexplicable distinction between body rub parlours and other adult entertainment establishments reflect the intrinsic evidence and legal effect relied upon in the lower court decisions. Counsel relies on Morgentaler, in which the court spoke of fines ranging from $10,000 to $50,000 as being a reflection of a criminal law purpose.

[104] Dealing firstly with the penalty, I do not accept Tsui's submission. First, the city simply incorporated the quantum and language of the provincial statute into the various iterations of the by-law. Second, the significance of the dollar amount of the fines at issue in Morgentaler must be looked at in the context of that decision, which was decided over 20 years ago. Further, s. 429 of the Municipal Act, 2001 only now provides for a maximum fine of $100,000 for municipal offences. At the time of the original 1999 by-law and the 2005 by-law, the maximum fine was $50,000 for a corporation and $25,000 for an individual. Lastly, the prescribed penalties applied to all activities regulated under the 2005 by-law, not just the body rub parlour provisions. The prescribed penalties did not reflect a criminal law purpose.

[105] As for the location of body rub parlours in the city, the content of the original 1999 by-law and the 2005 by-law on operating hours and dress was identical. The nuisance at issue was described as being in "industrial/commercial" areas. The nuisance concern continued, despite the body rub parlours being situated in industrial areas. There was no evidence that suggested that nuisance found in any industrial/commercial area differed from that in an industrial area.

[106] Lastly, the distinction between body rub parlours and adult entertainment establishments reflected a jurisdictional limitation on the municipality's legislative authority. As the latter category of establishments carried liquor licences, the power to regulate their hours of operation rested with the province and not the municipality. Pimenova v. Brampton (City), a decision that both judges relied on, failed to recognize this limitation. The city was entitled to address nuisance concerns relating to the presence of body rub parlours by enacting provisions restricting hours of operation even though it could not do so with respect to adult entertainment establishments. To the extent it could reduce the community's nuisance concerns, it was open for the city to act.

[107] Here, the justice of the peace, upheld by the OCAJ, failed to consider the intrinsic evidence and based her decision on extrinsic evidence. They failed to engage in the exercise of characterizing the purpose and effect of the by-law. While a court is entitled to examine extrinsic evidence, as discussed in the next section, it can be dangerous to simply rely on extrinsic evidence and such evidence must be relevant and should not be assigned undue weight: see Keshane, at para. 21.

(ii) Consideration of extrinsic evidence

[108] This brings me to the extrinsic evidence. In my view, the justice of the peace -- and subsequently, the OCAJ -- relied on irrelevant extrinsic evidence. Also, in considering whether the by-law was enacted to curb nuisance, the courts below misapprehended the evidence, resulting in reviewable error.

[109] First, there is no evidence that council ever adopted or acted on the 2005 report. Indeed, the evidence is to the contrary; it was simply received for information purposes. Second, there was no transcript of council's discussions, and so, apart from the fact that it was received only for information purposes and not adopted, the record is incomplete. As stated in Keshane, at para. 24, caution must be used in relying on extrinsic evidence where the extrinsic material cannot be assessed in the context of a complete record.

[110] In Pimenova, which the justice of the peace relied on, the state of the record was considerably different. There, the extrinsic evidence was a council report that was tabled immediately prior to the passage of the by-law amendments in issue. In any event, Pimenova was decided before Chatterjee, and the application judge in Pimenova did not consider the intrinsic evidence, the legal effect of the law or the suppression of crime as a legitimate municipal objective. Rather, the application judge's finding of unconstitutionality was largely based on the discriminatory distinction in the restrictions on the hours of operation relating to adult entertainment dance establishments, which, as discussed, a municipality had no legislative authority to regulate. As such, the decision is of limited assistance.

[111] Third, the language of the 2005 by-law on hours of operation and nudity mirrored that of the original 1999 by-law which predated the 2005 report. The judges ignored this temporal reality. Lastly, and in any event, council's motives -- or in this case, the motives of the York Regional Police -- should not be the focus of the pith and substance analysis: Canada Post, at para. 40.

[112] I also agree with the city that there was a misapprehension of the evidence. The contents of the Di Vona report that were reproduced in council's minutes of September 1998 concerned "the presence of [body rub] parlours within industrial/commercial areas" and the complaints generated as a result of these establishments. The justice of the peace reasoned, and the OCAJ agreed, that the nuisance concern was "muted" because the body rub parlours were being moved to industrial areas. This was a palpable and overriding error.

[113] The Di Vona report commences with: "A strong and growing concern has been raised by many residents in Woodbridge regarding the presence of [body rub] parlours within industrial/commercial areas." While some of the concerns expressed related to areas populated with shops and restaurants, they were not confined to those areas; industrial areas were included in the description, and the nuisance concern originated in those areas. There was no evidence that suggested that the description of industrial/commercial constituted a designation that differed from industrial. Furthermore, in his report, Di Vona was not proposing a prohibition against prostitution. "Taking the night away" simply removed late hours.

[114] Ultimately, the OCAJ and the justice of the peace's emphasis on the extrinsic evidence was misplaced. This is particularly so in light of their failure to adequately consider the relevant intrinsic evidence, as outlined above.

(iii) Legal effect

[115] Lastly, the OCAJ's acceptance of the justice of the peace's conclusion that the legal effect of the by-law was to "stiffen, supplement or replace the criminal law" cannot be sustained. The by-law provision under which Tsui was charged reflects no such thing. It merely prescribes the hours during which the business may operate -- a completely legitimate objective. Business licensing falls under a provincial head of power. As such, it was legitimate for the by-law as a whole to address the suppression of conditions likely to produce crime, a topic to which I turn to next.

(iv) Summary

[116] In summary, the justice of the peace and the OCAJ ignored significant intrinsic evidence and misapprehended the evidence. They failed to examine and characterize the purpose of the by-law and misstated the legal effect of the by-law provision in issue. The pith and substance of the hours of operation provision, and that of the 2005 by-law as a whole, is business licensing. The by-law is designed to regulate a business operating within its municipal borders. It was also aimed at the curtailment of nuisance, for which there was evidentiary support, and at suppressing conditions that are conducive to crime.

(6) Issue 2: Suppression of conditions likely to produce crime

(a) Positions of the parties

[117] The appellant submits that suppression of crime is a valid municipal objective. It must be tied to a provincial head of power -- in this case, a municipality's delegated authority to regulate conduct within licensed premises pursuant to s. 92(9) and (13). It argues that the OCAJ lost sight of the fact that the impugned provisions were also part of a business licensing regime, and therefore a municipality may regulate conduct within licensed premises pursuant to s. 92(9) and (13) even when that conduct is related to criminal law and morality: see Rio Hotel Ltd. The OCJA failed to give proper scope to the municipal objective of legislating to suppress conditions likely to produce crime.

[118] Further, to the extent there was any jurisdictional overlap, the provincial aspects of the 2005 by-law overwhelmingly outweigh the federal aspects. The dominant purpose of the by-law therefore relates to s. 92(9) and (13) of the Constitution Act, 1867, and the provisions are intra vires the city.

[119] Tsui responds by submitting that unlike provincial legislatures, pursuant to the Municipal Act, 2001, a municipality may only exercise its licensing powers for one of three purposes: health and safety, nuisance and consumer protection. For the 2005 by-law to have been validly enacted, both the restrictions imposed and the conditions of crime targeted must relate to one of these three purposes.

[120] The AG submits that as long as the pith and substance of the law relates to a provincial head of power, a province may validly legislate to suppress conditions of crime in relation to conduct that is also captured by an offence under the Criminal Code. Legislating to suppress conditions that are likely to favour the commission of crimes has repeatedly been held to be within provincial competence under s. 92(13) and s. 92(16) of the Constitution Act, 1867.

(b) Analysis of the city's authority to enact a by-law that serves to suppress conditions likely to produce crime

[121] To reiterate, a province may enact measures to deter criminality providing they are taken in relation to a head of provincial competence: Chatterjee. The 2005 by-law is anchored in the province's authority over property and civil rights (s. 92(13)) and licences (s. 92(9)). Together, these sections create a "power of regulation through licences": Smith v. St. Albert (City), 2014 ABCA 76, at para. 47. The province has delegated that authority to the municipality through the Municipal Act, 2001. Accordingly, as the subject matter of the 2005 by-law relates to a provincial head of power, namely, business licensing, it was open to the municipality to enact a by-law that serves to suppress conditions conducive to crime.

[122] An examination of the 2005 by-law as a whole reveals a licensing scheme of which the hours of operation and dress provisions are a part. The by-law establishes conditions designed to regulate businesses operating in the municipality. It defies reason that prescribed hours of operation would not be a legitimate condition for the licensing of a business.

[123] As for the dress provision, in Rio Hotel Ltd., the prohibition against nudity was a licensed condition in a by-law. The Supreme Court cited with approval the decision of Sharlmark Hotels Ltd. and Municipality of Metropolitan Toronto (Re). Although the Criminal Code included nudity provisions, the impugned by-law was upheld. Estey J. wrote, at pp. 73-74 S.C.R.:

The by-law may have been designed to create conditions to prevent crime or even as legislation relating to morality, but it nonetheless did not encroach on the forbidden field of criminal law. It is but another illustration of the subtle but discernible distinction between criminal legislation and regulation established to support and promote the operation of a valid provincial legislative object.

In each of the above-cited cases the provincial regulation in question was directed at the orderly operation of the licensed premise in question, be it a tavern, adult entertainment parlour, or a massage parlour. Conduct which would detract from the efficiency and orderliness of these operations was either the grounds for the cancellation of the licence or for process in the criminal courts of the provincial offence established in support of the provincial regulation.

The same holds true in this case.

[124] Contrary to Tsui's submissions, the suppression of conditions conducive to crime was reflected in the preamble and structure of the by-law, and in the relevant extrinsic evidence. There was also evidence to support the city's perception of nuisance. There is no requirement that a municipal council have "hard evidence" before passing a by-law; the evidence may be impressionistic rather than factual, and courts owe deference to municipalities "in the exercise of their valid regulatory powers on behalf of the citizens who elect them": see Adult Entertainment Assn. of Canada v. Ottawa (City), 2007 ONCA 389, at para. 30. Each level of government has a responsibility for its citizens. Here, the city was acting to protect its citizens from nuisance in the community. The presumption of constitutionality seeks to thwart the undermining of that objective.

[125] In any event, the dominant purpose of the provisions in issue do not amount to criminal law.

[126] First, as mentioned, the licensing conditions only apply to the licence holder for a body rub parlour, not to the public at large. It is not an enactment of general application. As in Smith, the conditions are part of a "larger, comprehensive regulatory scheme that establishes conditions for obtaining and maintaining business licences": at para. 50. Second, the purpose is to reduce nuisance by regulating body rub parlours so as to suppress conditions conducive to crime. The beneficiaries of the 2005 by-law are the citizens of Vaughan, not the victims of any crime. Third, as reflected in the general provisions of the licensing by-law, the penalty for operating outside of the prescribed hours is a fine and/or the suspension or revocation of the licence; there is no prohibition of any criminal act. There is also no duplication with the criminal law. The provisions are preventative, not prohibitive.

[127] The OCAJ erred by failing to give proper scope to the municipal objective of business licensing and legislating to suppress conditions likely to produce crime. The dominant purpose of the by-law provisions related to s. 92(9) and (13) of the Constitution Act, 1867 and were the proper subject matter of provincial authority. Further, there was evidence of nuisance to support the municipality's exercise of authority under the Municipal Act, 2001.

(7) Issue 3: A municipality may target a specific crime in enacting conditions to suppress crime

(a) Positions of the parties

[128] The appellant submits that the OCAJ erred in agreeing with the justice of the peace that in legislating conditions to suppress crime, a municipality cannot target a specific crime, but instead must target crime in general. This is contrary to the jurisprudence: see Smith, Keshane, Prince Edward Island (Secretary) v. Egan, Ross v. Ontario (Registrar of Motor Vehicles) and Goodwin.

[129] The AG supports the appellant's position on this issue and notes that Chatterjee did not stand for the proposition that provincial laws that suppress conditions conducive to particular crimes are ultra vires. Goodwin, which was decided after the judgment under appeal and is discussed below, is a complete answer to this issue.

[130] In oral argument, Tsui conceded that municipalities may target a specific crime. He submits, however, that if a province or municipality singles out a crime, there is a stronger inference that the enacting body is trying to suppress crime because of its criminal nature and not because of a secondary community impact. Tsui emphasizes that legislation to suppress the conditions conducive to crime must be anchored in a valid provincial head of power. There is no free-standing power to suppress crime.

(b) Analysis

[131] In my view, the OCAJ erred in determining that a municipality, in the exercise of provincial delegated authority, is limited to legislating to suppress conditions that are conducive to crime in general. The jurisprudence does not reflect such a conclusion.

[132] The OCAJ held that in Chatterjee, the legislation was aimed at the general suppression of crime -- no aim was taken at any particular category of criminal conduct. As such, he reasoned that the justice of the peace correctly concluded that the city was improperly targeting a specific crime, namely, prostitution.

[133] The key, as discussed, is that the exercise of provincial authority must engage, in pith and substance, a matter within provincial legislative competence. The legislation may then also suppress conditions conducive to crime. It matters not whether this extends to crime in general, or to a particular crime. The Supreme Court has not suggested such a limitation.

[134] Chatterjee must be read in context. It was addressing legislation aimed at a variety of unlawful activities -- hence the reference to crime in general. In addition, the court referred with approval to Egan and Ross, two decisions involving provincial legislation aimed at "deterring impaired driving, notwithstanding its status as a federal offence".

[135] More recently, in Goodwin, the Supreme Court stated, at paras. 29 and 32:

At the end of the day, the purposes and effects of a law must be considered together, rather than in isolation, to determine its pith and substance. No doubt the ARP [automatic roadside prohibition] scheme has incidental impacts on criminal law. No doubt it targets, in part, specific criminal activity and imposes serious consequences, without the protections attendant on criminal investigations and prosecutions. However, the consequences relate to the regulation of driving privileges. In my view, the chambers judge was correct in characterizing the pith and substance of the ARP scheme as "the licensing of drivers, the enhancement of highway traffic safety, and the deterrence of persons from driving on highways when their ability is impaired by alcohol".

Provincial drunk-driving programs and the criminal law will often be interrelated. Some provincial schemes have relied incidentally on criminal convictions. A number of provincial courts of appeal have also upheld schemes that are not dependent on criminal convictions but rely incidentally on Criminal Code provisions. This jurisprudence makes clear that a provincial statute will not invade the federal power over criminal law merely because its purpose is to target conduct that is also captured by the Criminal Code.

[136] It is evident from Goodwin that Tsui's submissions on this final issue must fail. Where the pith and substance of the legislation comes under a head of provincial authority, it may also aim to suppress conditions conducive to crime, even if those conditions relate to a specific Criminal Code offence. The OCAJ improperly narrowed the scope of provincial authority to legislate to suppress conditions conducive to crime.

F. Disposition

[137] In conclusion, for these reasons, the decisions of the OCAJ and the justice of the peace must be overturned. I would allow the appeal and order a new trial. None of the parties requested costs and none are ordered.

Appeal allowed.

Notes

1 Tsui was not charged under the by-law's dress provisions.

2 In the minutes, body rub parlours are described as "massage parlours".

3 Section 32 now provides that contravention of the 2005 by-law may lead to a fine of up to $100,000.

4 She stated that council's consideration of the report took place on May 9, 2005. There was no sworn evidence to this effect. Tsui was advised that a document entitled Extract from Council Meeting Minutes of May 9, 2005 was available online and he downloaded it from the city's website. As discussed, based on the sworn evidence of Chiarelli, council received this report, which was described in the minutes of the April 26, 2005 meeting of the city's Committee of the Whole (Working Session), for information purposes. Similarly, the justice of the peace's reliance on a May 25, 2005 report was based on the same online source.

5 As repealed by An Act to revise the Municipal Act and to amend or repeal other Acts in relation to municipalities, S.O. 2001, c. 25, s. 484.

6 See s. 252.2(1) of the Municipal Act and s. 150(1) of the Municipal Act, 2001. The Municipal Act, 2001 has since been amended. The authority for local municipalities to license businesses is in s. 151(1) of the current Municipal Act, 2001.

7 Sections 150(2) and 150(3) have since been repealed.

8 In addition, a special fine, designed to eliminate any economic advantage or gain from contravention of the by-law, may exceed the sum of $100,000. Cumulative daily fines may also exceed the sum of $100,000.

9 Although not referred to by the parties, Reference re Assisted Human Reproduction Act, 2010 SCC 61 addresses the scope of the criminal law power. However, this was in a regulatory context and no agreement on definition is reflected in the three sets of reasons. It would appear, though, that there is consensus that the three-part Margarine Reference test remains the starting point of the analysis. See the discussion by Patrick J. Monahan, Byron Shaw and Padraic Ryan, Constitutional Law, 5th ed. (Toronto: Irwin Law Inc., 2017), at pp. 349-50 and 361-62; and Hogg, at p. 18-8 to 18-8.1.

10 The Di Vona report, which describes the "presence of 'massage parlours' within industrial/commercial areas", was adopted by council on September 28, 1998, before the 1999 by-law was passed.

11 Later overturned by the Ontario Court of Appeal in Koumoudouros and Municipality of Metropolitan Toronto (Re).

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