COURT FILE NO.: 377/06
DATE: 20061214
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
E. MACDONALD, AITKEN AND sWINTON JJ.
B E T W E E N:
DURHAM RAPID TAXI INC., AJAX TRANSPORTATION SERVICES LTD. LINCOLN TAXI AND PEOPLE’S TAXI
Applicants
- and -
THE TOWN OF AJAX
Respondent
Andrew J. Roman and Margaret R. Sims, for the Applicants
Cameron Murkar, for the Respondent
HEARD at Toronto: October 20, 2006
SWINTON J.:
[1] The applicants have brought an application for judicial review to quash the issuance of nine new taxicab owner licences by the Town of Ajax (“the Town”) in June 2006. At issue is the authority to issue these licences, given the wording of a resolution of the Town Council and given the Request for Proposal (“RFP”) process used to select the recipient of the licences.
Statutory Framework
[2] The Municipal Act, S.O. 2001, c. 25 (“the Act”) provides for the licensing of businesses, including taxicabs (see ss. 150, 155, 156, 159, and 160). It grants the power to award or deny licences to a local municipality and provides limited powers to the municipality to pass by-laws for specific purposes related to its licensing function – namely health and safety, nuisance control, and consumer protection (s. 150(1) and (2)).
[3] Section 5(1) of the Municipal Act provides that the powers of a municipality shall be exercised by its council. Pursuant to s. 5(3), a municipal power shall be exercised by by-law unless the municipality is expressly authorized to do otherwise.
[4] Pursuant to s. 150(3), any by-law licensing or imposing any condition on a business must include an explanation as to the reason why the municipality is licensing or imposing the conditions and how that reason relates to the purposes under s. 150(2) of the Act. In addition, before a municipality passes a by-law under this section, except in the case of an emergency, it shall hold at least one public meeting at which any person attending can make representations in respect of the matter.
Background Facts
[5] In May 2005, the Town passed a new taxi by-law, By-law No. 63-2005, with respect to licensing, regulating and governing taxicab drivers and taxicab owners. One provision of the by-law increased the number of taxicab licences from 30 to 40 in number (s. 8.2). The by-law also requires applicants for a licence to appear before a Licensing Officer and to provide certain documentation and satisfy a number of requirements (see ss. 9.1 to 9.6).
[6] Under the previous by-law, the names of potential applicants were maintained on a waiting list, and licences were granted to qualified applicants on the basis of seniority on the list. However, on March 7, 2006, the Town released an RFP for taxicab services for the Town. The RFP was for the award of nine additional taxicab owner licences (“taxi licences”). According to Derek Hannan, Manager of By-law Services, the Town was concerned about the quality of the existing taxi services. The new by-law and the RFP process were implemented in an effort to improve the overall functioning of the taxi business and the level of service for residents of Ajax.
[7] In the RFP process for the taxi licences, the Town used a standard municipal RFP form normally used for purchasing goods and services, although with some modifications. As a result, the RFP form contains a number of provisions which seem irrelevant and confusing in the exercise of a licensing function.
[8] The RFP form speaks of the proposed price for the service offered. It also states that the lowest price will not necessarily be accepted. However, the price for taxis is governed by a tariff found in a schedule to the taxi by-law. The RPF also required a $5,000 bid deposit from each proponent, although the by-law itself sets out an application fee of $250.00 for an owner’s licence.
[9] The Terms of Reference attached to the RFP form stated that the Licensing Officers will award nine taxi plates to proponents “who have been evaluated as the highest scoring Proponent offering the best and most comprehensive business plan for this service provision”. It stated that the Town “reserves the right to determine, in its sole and unfettered discretion, non-performance of the Contract, including the level of quality of equipment or services provided and further reserves the right to cancel any or all of the Contract if the Licencee fails to correct deficiencies within 30 days written notice.” It also stated that any material contravention of the contract resulting from the RFP will result in the cancellation of this contract and the revocation of issued licences. However, in the case of the taxi licences, no contract is signed by the municipality, and the by-law itself sets out a process for revocation or suspension of a licence.
[10] The Terms of Reference allocated 10 of 100 potential points to qualifications – that is, experience in the provision of taxicab services. Ninety of 100 points were assigned to “description of proposed services/business plan”. This included description of the management and ownership structure; affiliations with other taxicab companies; taxicab related convictions; a detailed service plan including age, quantity and types of vehicles, vehicle identification such as colours and logos, proposed location of dispatch office, service levels, quantity and experience of drivers, and methods of prioritizing dispatch; potential partnerships; driver training; and a marketing plan for the Ajax marketplace. No explanation was provided as to the weighting of these components of the service or business plan.
[11] Six proposals were received, although the proposal of the applicant Lincoln Taxi was rejected because it provided only an original proposal and did not include four photocopies, as required by the RFP.
[12] In a report dated May 4, 2006, M. De Rond, Ajax’s Director of Legislative and Information Services/Town Clerk, provided a staff report on the RFP to the General Government Committee of the Town. It set out the names of the remaining applicants for taxi licences, the criteria used by staff to select the successful proponent, and the relative weight given to the various criteria. For example, 10 points were allocated for a marketing plan and a further 10 points for a business plan, while 5 points were allocated for each of the following: proposed dispatch office, age of vehicles, condition and type of vehicles, and vehicle identification. The report recommended that Blue Line Durham Region Inc. (“Blue Line”) be selected for all the licences. Blue Line was a new entrant to the Ajax market.
[13] In a report dated Thursday, May 4, 2006, the General Government Committee made a number of recommendations to the Town Council, including a recommendation in item 5.2 that “council award nine regular Taxi Owner Plates to Blue Line Durham Region Inc.”
[14] On Monday May 8, 2006, Council passed two resolutions with respect to the General Government Report. It resolved to accept the Report with the exception of item 5.2. It then resolved to delete and replace the recommendation in item 5.2 with “That the Blue Line Durham Region Inc. Request for Proposal submission be accepted”. However, there was no resolution that actually approved or adopted item 5.2 in the report. Nevertheless, the nine licences were subsequently issued to Blue Line.
[15] While a number of taxi owners and drivers were at the meeting of Council, they were not allowed to make representations, as Council has a requirement of 48 hours notice from anyone wishing to address it. Given the timing of the decision of the General Government Committee, the applicants were not able to fulfill this requirement. Their request at the meeting that they be permitted to address Council was defeated by a vote of Council.
Issues
[16] There are four issues in this application:
What is the appropriate standard of review?
Was the issuance of the licences to Blue Line a nullity?
Was the RFP process lawful?
Was there procedural unfairness?
Issue No. 1: What is the appropriate standard of review?
[17] In United Taxi Drivers’ Fellowship of Southern Alberta v. Calgary (City), 2004 SCC 19, [2004] 1 S.C.R. 485 Bastarache J. held that the standard of correctness applies in determining whether a municipality has acted lawfully. He stated at para. 5:
The only question in this case is whether the freeze on the issuance of taxi plate licences was ultra vires the City under the Municipal Government Act. Municipalities do not possess any greater institutional competence or expertise than the courts in delineating their jurisdiction. Such a question will always be reviewed on a standard of correctness: Nanaimo (City) v. Rascal Trucking Ltd., [2000] 1 S.C.R. 342, 2000 SCC 13, at para. 29. There is no need to engage in the pragmatic and functional approach in a review for vires; such an inquiry is only required where a municipality’s adjudicative or policy-making function is being exercised.
[18] The central issue in this application is whether the RFP process was authorized under the Municipal Act or the Town’s taxi by-law. As the central issue is the Town’s delineation of its jurisdiction, the standard of review is correctness.
Issue No. 2: Was the issuance of the licences to Blue Line a nullity?
[19] Under the taxi by-law, the Licensing Officer exercises an administrative task, receiving and processing applications for licences and applying the criteria set out in the by-law to determine whether a licence should be issued. The Licensing Officer may make such investigations and inspections “necessary to determine whether an applicant meets the requirements of the By-law and all applicable laws” (By-law, s. 9.10). However, he or she exercises no discretion in awarding licences.
[20] It is the Town Council, pursuant to the Municipal Act, which has the power to award or deny licences (s. 150(1)). As the number of taxi owner licences was limited in the by-law and as a number of applicants sought those licences, it was necessary for the Town to determine a method for choosing among the applicants. In this case, the Town decided to use an RFP process to select the recipient of the new owner’s licences.
[21] However, the Town Council never exercised its discretion to choose Blue Line under the RFP process. Council’s resolution on May 8, 2006 amended the recommendation made by the General Government Committee. However, Council never passed a resolution that actually approved or adopted item 5.2 of the Committee’s report. Given that there was no decision by Council to choose Blue Line under the RFP process, the staff was not authorized to issue the licences to Blue Line. Therefore, the issuance was a nullity.
Issue No. 3: Was the RFP process lawful?
[22] It might be said that the decision on the first issue is unduly technical, as it is evident that Council wanted the licences issued to Blue Line. Indeed, the members of Council were all members of the General Government Committee which recommended that Blue Line be awarded the licences.
[23] However, there is a further significant reason to grant this application for judicial review: the RFP process was not authorized by law, and it was unlawful, as it has added further qualifications for a licence beyond those set out in the by-law. By relying on the RFP process, the Town exceeded its jurisdiction, and therefore, for this reason as well, the decision to award the issuance of the licences to Blue Line is a nullity.
[24] Nowhere in the Taxi By-law is there mention of an RFP process as a means of determining those to whom taxicab owners’ licences will be awarded and issued. Nor is such a process contemplated by the Act.
[25] Counsel for the Town submitted that the Town has an implied power to choose a process to select among applicants for a limited number of licences, whether that process be a lottery, a seniority list or an RFP proposal. In support of this submission, he relied on the broad and purposive approach to the interpretation of municipal legislation adopted by the Supreme Court of Canada in cases such as United Taxi, supra (at paras. 6-7).
[26] It is true that the Supreme Court of Canada has held in United Taxi and other cases that courts should take a broad and purposive approach to the interpretation of legislation conferring powers on municipalities. However, in this case, the task of the Court is not to interpret the scope of the power conferred on municipalities to license taxi services. The issue here is whether the RFP process was authorized by the by-law.
[27] In the by-law considered in United Taxi, supra, there was specific provision for a lottery system to select among qualified applicants (at para. 4). In the by-law of the City of Oshawa provided at the hearing in this matter, there is provision for a “plate issuance eligibility list” or seniority list of applicants (see s. 7.2), as well as a discretion conferred on Council to depart from the plate eligibility list and to direct the issuance of accessible plates (s. 7.1.3.1).
[28] The RFP process adopted by the Town of Ajax set out a number of criteria and awarded points based on them, including the justification for additional plates, taxicab related convictions, description of vehicles, vehicle colours/logos, number and experience of drivers, proposed location of dispatch office, discussions with other potential partnerships, marketing plan and business plan. A number of those criteria were not specified in the taxi by-law. For example, the by-law does not require an applicant to submit a marketing plan or a business plan, nor to divulge possible partnerships. Moreover, while five points each were allocated to age, quantity and “condition and type” of vehicle, the by-law says nothing about the age, quantity or type of vehicles in determining whether a licence should be granted. Instead, the by-law requires the vehicle be safe, in good repair and in possession of a current mechanical safety certificate. As well, while five points were allocated to vehicle colours and logos, there is nothing in the by-law relating to colour or logos.
[29] Moreover, some of the conditions set out in the RFP seem to conflict with provisions of the by-law – for example, the bid deposit and the cancellation of contract provisions.
[30] Indeed, there may an issue as to whether it was lawful to consider the place of the dispatch office, given s. 150(12) of the Act, which prohibits a municipality from refusing to grant a licence for a business under this Part by reason only of the location of the business.
[31] The RFP process could not be a de facto amendment to the taxi by-law. It could not alter the requirements for taxi licences set out in the by-law or impose new conditions on taxi licences. If further criteria are to be taken into consideration in the awarding of a licence, the Town is required to set them out in the licensing by-law, and to ensure that they are addressed to the purposes set out in s. 150(2) of the Act, and enacted after a meeting with opportunity for public input.
[32] The RFP process used by the Town here took into account information and criteria that were not authorized by the by-law or the Act. As a consequence, the decision to award the licences to Blue Line on the basis of the RFP process is unlawful.
[33] Given this conclusion, it is not necessary to deal with the applicants’ alternative arguments based on lack of procedural fairness and the doctrine of legitimate expectations.
[34] The application for judicial review is granted. The licence issuance to Blue Line is unlawful and unauthorized. Therefore, the issuance of the licences is quashed.
[35] If the parties cannot agree on costs, the applicants may make written submissions within 21 days of the release of this decision, and the respondent may make submissions within 14 days thereafter.
Swinton J.
E. Macdonald J.
Aitken J.
Released: December 14, 2006
COURT FILE NO.: 377/06
DATE: 20061214
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
E. MACDONALD, AITKEN and sWINTON JJ.
B E T W E E N:
DURHAM RAPID TAXI INC., AJAX TRANSPORTATION SERVICES LTD. LINCOLN TAXI AND PEOPLE’S TAXI
Applicants
- and -
THE TOWN OF AJAX
Respondent
REASONS FOR JUDGMENT
SWINTON J.
Released: December 14, 2006