Toronto Taxi Alliance Inc. et al. v. City of Toronto

[Indexed as: Toronto Taxi Alliance Inc. v. Toronto (City)]

49 O.R. (3d) 33

[2000] O.J. No. 2430

Court File No. 646/99

Ontario Superior Court of Justice Divisional Court Southey, Coo and Somers JJ. June 27, 2000

Charter of Rights and Freedoms -- Equality rights -- Discrimination -- Municipal by-law regulating taxi-cab business requiring individual owners to attend mechanical examinations of their vehicles in person -- Corporate and partnership owners permitted to have designated custodian attend vehicle examination -- Provision requiring personal attendance by individual owners having effect contrary to equality provisions of Charter -- Municipal Act, R.S.O. 1990, c. M.45, ss. 232, 257.2(1), (2) -- Canadian Charter of Rights and Freedoms, s. 15.

Municipal law -- By-laws -- Validity -- By-law regulating taxi-cab business requiring individual owners to attend mechanical examinations of their vehicles in person -- Corporate and partnership owners permitted to have designated custodian attend vehicle examination -- Provision requiring personal attendance by individual owners having effect contrary to equality provisions of Charter -- Municipal Act, R.S.O. 1990, c. M.45, ss. 232, 257.2(1), (2) -- Canadian Charter of Rights and Freedoms, s. 15.

Under By-law 20-85 of the City of Toronto, individual licensed owners of taxi-cabs are required to attend at the mechanical examination of their vehicle, which occurs three times a year, in person. In contrast, owners who are partnerships or corporations are permitted to appoint designated custodians who may attend on behalf of the owner. The purpose of the attendance provision of the by-law was to encourage owners of vehicles to take steps to keep their vehicles in good condition. The applicant T Inc., a corporation with the object of promoting the best interests of members of the taxi-cab business, and the applicant S, a 71-year-old owner of two taxicabs, brought proceedings to challenge the validity of the personal attendance requirement in the by-law on the grounds that (a) it lacked enabling authority; (b) it was enacted in bad faith for an illegitimate ulterior purpose; (c) it was vague and uncertain; (d) it was contrary to the equality rights guaranteed by s. 15 of the Canadian Charter of Rights and Freedoms; and (e) its penal provisions were contrary to the principles of procedural fairness.

Held, the application should be granted.

The impugned provision was neither vague nor uncertain, and ss. 232, 257.2(1) and (2) of the Municipal Act provided legislative authority for its enactment. There was no contravention of the principles of procedural fairness and the applicants did not establish that the provision was enacted in bad faith or for an illegitimate ulterior purpose, nor was it shown that the legislative intent for the provision involved discrimination against individual taxi-cab owners as a class. However, the provision did discriminate against individual owners who are unable to attend at the inspection garage or who would have great difficulty in attending. The effect of the impugned provision was discriminatory against the aged and the infirm and others who could not reasonably attend in person. The by-law contained no provision for relieving against the impugned provision on compassionate or any other grounds. Although the administrative discretion in the enforcement of the by-law might result in a reasonable limit on the equality right enshrined in s. 15 of the Charter, it was not a reasonable limit prescribed by law as required by s. 1 of the Charter. Moreover, it could not reasonably be said that the presence of the owner at the vehicle inspection was necessary for the achievement of the objective of the legislative scheme, and the discriminatory effect of the by-law could be avoided through less intrusive provisions. The result was that the attendance provision was invalid for breach of the Charter.

APPLICATION to strike out a provision in a municipal by-law.

Statutes referred to Canadian Charter of Rights and Freedoms, ss. 1, 15 Municipal Act, R.S.O. 1990, c. M.45, ss. 232, 257.2(1), (2)

George H. Rust-D'Eye and Barnet H. Kussner, for applicants. Ansuya Pachai, for respondent.

The judgment of the court was delivered by

[1] SOUTHEY J.: -- Taxi-cabs in Toronto are required by City by-law to undergo a mechanical examination three times a year. The applicants challenge the validity of a provision in the taxi-cab by-law requiring licensed owners of taxi-cabs who are individual persons to attend in person at each mechanical examination. Owners who are partnerships or corporations are permitted under the by-law to appoint designated custodians, whose attendance at the examinations on behalf of the owners is accepted as sufficient. Owners who are individual persons are not empowered under the by-law to appoint such designated custodians.

[2] The provision requiring such attendance in person is contained in Schedule 8 to By-law No. 20-85 originally enacted by the Municipality of Metropolitan Toronto.

[3] The applicant Toronto Taxi Alliance Inc. is a corporation whose principal object is promoting the best interests of taxi- cab owners, brokerages, fleet owners and agents. The brokerages it represents provide dispatch services for approximately 2,300 out of the approximately 3,500 taxi-cabs licensed by the City. It also is the designated agent, as distinct from designated custodian, for approximately 700 taxicabs. More than one third of the owners represented by the Alliance are individuals, with the balance being corporations.

[4] The applicant Zahakos operates a corporation which owns and leases a number of taxi-cabs. The applicant Helen Silver is 71 years of age. She is the licensed owner of two taxicabs. She inherited the licences from her husband, the late Jack Silver, who died in 1997 after working for 40 years in the taxi-cab industry. The applicant Helen Silver has never driven a cab and is physically unable to run a taxi-cab business herself. She relies on the income derived from leasing her two taxi-cabs as her pension to fund her retirement.

[5] The factum of the applicants lists a number of other aged or infirm persons who rely on the income received from taxi-cab licences owned by them.

[6] The requirement for attendance "in person", which I shall refer to as the "impugned provision", is found in s. 45 of Schedule 8 to By-law 20-85. That section and the portions of Part XIV of By-law 20-85, which are relevant to the determination of the application, are as follows:

45(1) Except when an owner submits his or her taxicab for examination before a licence is issued therefor, every owner shall attend in person, and not by an agent, at each scheduled or rescheduled mechanical examination of his or her taxicab conducted pursuant to subsection 44(1) of this Schedule.

(2) Where an owner fails to attend in person at a mechanical examination in accordance with subsection (1) of this section, the taxicab shall not be inspected and the owner shall reschedule the mechanical examination within three days of the original examination date.

(3) Where an owner fails to reschedule a mechanical examination and attend in person at such rescheduled mechanical examination in accordance with subsections (1) and (2) of this section, the Municipal Licensing and Standards Division shall remove such owner's plate from the taxicab and the plate shall not be returned until such time as the owner submits his or her taxicab for examination and attends in person at such examination.

58(1) Subject to sections 59, 60 and 61, this section applies to every person licensed as the owner of a Standard taxicab.

(2) Every owner who is an individual person shall maintain custody and control over his taxicab and shall not delegate this responsibility.

(3) Every owner which is a partnership shall designate one of the partners who is an individual person to be responsible for maintaining custody and control over its taxicab on behalf of the partnership and such partner shall not delegate this responsibility.

(4) Every owner which is a corporation shall designate one of its officers or employees to be responsible for maintaining custody and control over the said taxicab on behalf of the corporation and such officer or employee shall not delegate this responsibility.

[7] Part XV, containing s. 59, deals with Designated Agents.

[8] Part XVI contains s. 60, under which taxi-cabs may be leased. Part XVII contains s. 61, the relevant portions of which read as follows:

61(1) Every owner shall:

(a) ensure that every driver, lessee, designated custodian, designated agent, and every other person involved in the operation of his taxicab complies in full with the requirements imposed by this By- law in respect of such taxicab;

(b) maintain knowledge at all times of the identity of any person having custody of or control over his taxicab;

The Issues

[9] Mr. Rust D'Eye opened by referring to para. 2 of his factum. Under the heading "Application in a Nutshell", the following submissions are made with respect to the impugned provision:

2. The Applicants will show that there is no legitimate authority, purpose, function or reason for this requirement, and that the provision should be quashed and declared to be of no force and effect, on the following grounds:

(a) that it lacks the requisite enabling authority under the licensing provisions in the Municipal Act;

(b) that it was not enacted for its stated purpose but rather for an illegitimate ulterior purpose, and thereby constitutes bad faith and unlawful discrimination against individual taxicab owners;

(c) that it is unduly vague and uncertain from a municipal law standpoint;

(d) that it contravenes the equality rights guaranteed to the Applicants and others under the Canadian Charter of Rights and Freedoms (the "Charter") by having a disparate impact on the disabled and the elderly contrary to section 15 of the Charter, in a manner that cannot be justified under section 1 of the Charter; and

(e) that the penal sanction of licence suspension in the event of non-compliance, without affording the affected party the right to a hearing, is contrary to principles of procedural fairness.

[10] I shall deal with the submissions of the applicants in the same order.

(a) Lack of enabling authority

[10a] The general authority of the City to license and regulate businesses is contained in ss. 232 and 257.2(1) and (2) of the Municipal Act, R.S.O. 1990, c. M.45, as amended 1996, c. 1, Sch. M. The relevant provisions read:

232. The council of a local municipality may pass by-laws:

233. For licensing, regulating and governing teamsters, carters, owners and drivers of cabs, buses, motor or other vehicles used for hire or any class or classes thereof; for establishing the rates or fares to be charged by the owners or drivers of such vehicles for the conveyance of goods or passengers either wholly within the municipality or to any point not more than five kilometres beyond its limits, and for providing for the collection of such rates or fares; for limiting the number of cabs, buses, motor or other vehicles used for hire, or any class or classes thereof; and for revoking any such licence.

257.2(1) Subject to the Theatres Act and the Retail Business Holidays Act, the council of a local municipality may pass by-laws for licensing, regulating and governing any business carried on within the municipality.

[11] The impugned provision is part of a by-law regulating drivers of taxi-cabs and governing the taxi-cab business.

[12] The sections of the Municipal Act quoted above, in my judgment, contain authority to enact the impugned provision of by-law 20-85.

(b) Enacted in bad faith for an illegitimate ulterior motive

[12a] The impugned provision, which came into effect on May 12, 1999, resulted from a widely held belief that one of the reasons for the poor taxi-cab services that existed in Toronto was the failure of licensed owners to ensure that their cabs were in good condition. The owners remained responsible under the by-law for the condition of their vehicles, but vehicles were not being kept in good condition. Some owners, who were not actively engaged in the business, appeared to have no knowledge of the poor condition of their vehicle or vehicles. The purpose of the impugned provision was to require all owners to observe their vehicles on at least three occasions each year.

[13] The obvious hope of the drafters of the impugned provision was that an owner attending an examination in person and seeing a vehicle in an unsatisfactory condition would take steps to put the vehicle in good condition.

[14] Taxi-cab licences in Toronto have acquired considerable value. The result is that persons who are not active in the business, as drivers or otherwise, are able to earn income from their ownership of licences by leasing their vehicles or arranging for other persons to drive them. Such persons may have ceased to be active in the business because of age or infirmity. Some may have purchased or inherited their licences, without ever having been active in the business. For such persons, the licence is, in effect, a valuable investment. Some of such persons are retired and are able to spend part of the year in locations with a warmer climate than Toronto. It is a burden for such persons to travel a great distance to Toronto in order to attend an examination in person.

[15] The submissions of the applicants is that the purpose of the impugned provision is to remove from the business such passive or absentee licensees as owners of taxi-cab licences. That is the alleged ulterior motive and forms the basis of the allegation that the impugned provision was enacted in bad faith.

[16] The applicants have not convinced me that the principal object of the impugned provision was anything other than that of attempting to ensure that the taxi-cabs offered for service in Toronto would be in a satisfactory condition. The fact that the impugned provision may render it impossible or unacceptable for some absentee or passive owners to continue as owners of licences does not establish, in my judgment, that the motive behind its enactment was getting rid of absentee or passive owners.

[17] It would be possible for any owner who was determined not to attend the examination of his vehicle or vehicles to transfer his licence or licences to a corporation owned and controlled by him. Such corporate licensee could not attend in person, but could be represented at the examinations by a custodian designated under s. 58(4) of the by-law.

Unlawful Discrimination Against Individual Taxi-cab Owners

[18] An owner who is a corporation cannot attend in person because of the nature of a corporation. There is no "person". But every corporate owner is required by s. 58(4) to designate one of its officers or employees to be responsible for maintaining custody and control over the licensed taxi-cab on behalf of the corporation in the same way as an owner who is an individual person is required to maintain such custody and control. It is part of the duties of the designated custodian of a corporate owner to attend the examination of the vehicle. Every person who is a partnership must designate one of the partners who is an individual person to be responsible for maintaining custody and control over its taxi-cab on behalf of the partnership. The partner thus designated must attend the examinations of the vehicle.

[19] In light of the foregoing requirements for corporations and partnerships, I am not persuaded that the legislative intent behind the impugned provision involved any unlawful discrimination against individual taxi-cab owners as a class.

[20] I shall consider the effect of the provision on some individual persons when I deal with the Charter argument.

(c) Undue vagueness and uncertainty

[21] The impugned provision is neither vague nor uncertain. It is quite clear as to what is required of an owner who is an individual person. Designated custodians of owners who are partnerships or corporations are responsible for maintaining custody and control of the taxi-cab of the partnership or corporation. They provide the "human face" of the corporation or partnership and they are required to attend the examination as being one of the acts that must be done by a human person on behalf of the corporation or partnership.

(d) Section 15 of the Charter

[21a] Section 15(1) of the Canadian Charter of Rights and Freedoms provides:

15(1) Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.

[22] The applicants accept that the impugned provision does not purport to discriminate against an identifiable group on an enumerated or analogous grounds in a manner contrary to s. 15(1) of the Charter. Their contention that rights under s. 15(1) have been violated is based on the effect of the impugned provision. Their allegation is that the effect of the impugned provision is to discriminate against individual owners who are unable to attend at the inspection garage in Scarborough, or have great difficulty in attending.

[23] Such inability or difficulty may be due to illness, mental or physical disability, or a residence distant from Toronto, such as Florida, for part of the year. The staff of the City's Taxi Industry Unit responsible for enforcing the by- law has developed policies ad hoc for dealing with individual owners who claim to be unable to attend an examination. Thus, owners who are physically incapable of attending and can establish that fact by a medical certificate are permitted to reschedule or make other arrangements, but they are dealt with on a case by case basis. The policy has been described as a managerial discretion type of policy. It is unwritten and could be changed from day to day.

[24] At the present time, physical incapacity, confirmed by a medical report, is the only ground accepted for rescheduling.

[25] The weakness in the City's case is that the by-law contains no provision for relieving against the impugned provision on compassionate or any other grounds. Although the exercise of administrative discretion in the enforcement of the by-law may result in a reasonable limit on the equality right enshrined in s. 15 of the Charter, it is not a reasonable limit prescribed by law as required by s. 1 of the Charter.

[26] The result is that s. 45 is invalid for breach of the Charter.

[27] Section 45 cannot be saved under s. 1 of the Charter because it cannot reasonably be said that the presence of the owner as an observer at the examination of the taxi-cab is necessary for the achievement of the objective of the legislative scheme, namely achieving reasonable taxi-cab quality. A less intrusive provision, which would not have a discriminatory effect on elderly or disabled owners, would be to require certification of fitness at a reasonably high level. The presence of the owner cannot reasonably be said to be necessary for an effective examination of a taxi-cab.

[28] The discriminatory effect of the by-law could also be avoided by permitting owners who are individual persons to appoint designated custodians, in the same way as corporations and partnerships are permitted to do.

[29] The effect of the impugned provision is discriminatory against the aged and the infirm and others who cannot reasonably attend in person. Section 45 of the by-law must be struck for that reason.

(e) Procedural Unfairness

[30] If the impugned provision were otherwise valid, I would not have acceded to the submissions of the applicants that it should have been set aside for procedural unfairness. I agree with Ms. Pachai that there would be no point in a hearing if s. 45 of the by-law were valid in its present form.

Result

[31] For the foregoing reasons an order will go striking out s. 45 of by-law No. 20-85. The applicants are entitled to their costs on a party and party basis, which I hereby fix at $10,000.

Order accordingly.