R. v. Greenbaum, [1993] 1 S.C.R. 674

Morris Greenbaum Appellant

v.

Her Majesty The Queen, ex rel. William

Andrews, Inspector, City of Toronto Respondent

and

Municipality of Metropolitan Toronto Intervener

Indexed as: R. v. Greenbaum

File No.: 22506.

1992: December 4; 1993: February 25.

Present: La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory, McLachlin and Iacobucci JJ.

on appeal from the court of appeal for ontario

Municipal law ‑‑ Municipal by‑laws ‑‑ Validity ‑‑ Metro by‑law prohibiting exposing of goods on road allowance without a licence ‑‑ Whether by‑law ultra vires municipality in that it is not authorized by enabling legislation ‑‑ Municipality of Metropolitan Toronto By‑law 211‑74, s. 11 ‑‑ Municipal Act, R.S.O. 1990, c. M.45, ss. 102; 210, paras. 73, 140; 314(1), para. 1.

Appellant sold T‑shirts on a street corner in Toronto and was charged with unlawfully exposing goods on a Metro road allowance without lawful authority contrary to s. 11 of Metro By‑law 211‑74. Through By‑law 97‑80, Metro delegated to the city of Toronto the authority to license the use of sidewalks and untravelled portions of Metro roads. Pursuant to this delegated authority, Toronto By‑law 618‑80 provides for licensing of sidewalk use to owners or occupiers of abutting property. Since appellant does not own or occupy property adjoining the corner he could not apply for a licence. He was convicted of the by‑law offence and his conviction was upheld by the District Court. The Court of Appeal, in a majority judgment, dismissed his appeal.

Held: The appeal should be allowed. The appellant's conviction should be set aside and an acquittal entered instead.

Municipalities are entirely the creatures of provincial statutes and can therefore exercise only those powers which are explicitly conferred on them by provincial statute. A court should look to the purpose and wording of the provincial enabling legislation when deciding whether or not a municipality has been empowered to pass a certain by‑law. The by‑laws themselves are to be read to fit within the parameters of the empowering provincial statute where they are susceptible to more than one interpretation. Courts must be vigilant, however, in ensuring that municipalities do not impinge upon the civil or common law rights of citizens in passing ultra vires by‑laws.

Section 11 of Metro By‑law 211‑74 is ultra vires the municipality in that it is not specifically authorized by provincial enabling legislation. The by‑law does not by wording or purpose regulate or prohibit sales by retail on the highways, even under a liberal interpretation, and is therefore not authorized by s. 210, para. 73 of the Municipal Act. Nor is it authorized by s. 210, para. 140, since its purpose is not to prohibit or abate public nuisances. Further, the effect of the by‑law is to prohibit conduct which may not amount to a public nuisance. Section 314(1), para. 1 of the Municipal Act empowers municipalities to pass by‑laws for prohibiting or regulating the obstructing, encumbering, injuring or fouling of highways, but it does not authorize a by‑law drawn in terms as broad as have been used in s. 11 of Metro By‑law 211‑74. Sidewalks are a public location of community interaction, and are used for many laudable purposes which fall within the definition of exposing any article on a Metro road allowance but do not constitute obstructions or encumbrances under the common understanding of these terms. Finally, Metro cannot have recourse to s. 102 of the Municipal Act as authority for the by‑law, since this is a general power of a residual nature.

For the reasons given in R. v. Sharma, Metro By‑law 97‑80 and City of Toronto By‑law 618‑80 are also ultra vires the municipalities on the basis that they contain discrimination not authorized by provincial enabling legislation. While the municipality was given a general power to regulate, it was not absolutely necessary to the exercise of the licensing power to draw a distinction between free‑standing street vendors and owners/occupants of abutting property such that the power to draw such a distinction must be inferred from the enabling legislation by necessary inference or implicit delegation.

Cases Cited

Applied: R. v. Sharma, [1993] 1 S.C.R. 000; referred to: R. v. Varga (1979), 1979 CanLII 1715 (ON CA), 51 C.C.C. (2d) 558; Montréal (City of) v. Arcade Amusements Inc., 1985 CanLII 97 (SCC), [1985] 1 S.C.R. 368; City of Hamilton v. Hamilton Distillery Co. (1907), 1907 CanLII 1 (SCC), 38 S.C.R. 239; City of Verdun v. Sun Oil Co., 1951 CanLII 53 (SCC), [1952] 1 S.C.R. 222; McKay v. The Queen, 1965 CanLII 3 (SCC), [1965] S.C.R. 798; Merritt v. City of Toronto (1895), 22 O.A.R. 205; Morrison v. Kingston (1937), 1937 CanLII 131 (ON CA), 69 C.C.C. 251.

Statutes and Regulations Cited

Canadian Charter of Rights and Freedoms, s. 2(b).

City of Toronto By‑law 618‑80, s. 1(1).

Criminal Code, R.S.C., 1985, c. C‑46, s. 129.

Interpretation Act, R.S.O. 1990, c. I.11, s. 10.

Municipal Act, R.S.O. 1980, c. 302, ss. 1; 104; 210, paras. 66, 134; 309, para. 3; 315, para. 1.

Municipal Act, R.S.O. 1990, c. M.45, ss. 1; 102; 210, paras. 73, 140; 308, para. 3; 314(1), para. 1.

Municipality of Metropolitan Toronto Act, R.S.O. 1990, c. M.62, ss. 79, 84, 90.

Municipality of Metropolitan Toronto By‑law 97‑80, s. 1(1), Schedule "A".

Municipality of Metropolitan Toronto By‑law 211‑74, ss. 11, 11a.

Rules of the Supreme Court of Canada, SOR/83‑74, r. 32.

Authors Cited

Black's Law Dictionary, 6th ed. St. Paul, Minn.: West Publishing Co., 1990, "goods, wares, and merchandise".

Makuch, Stanley M. Canadian Municipal and Planning Law. Toronto: Carswell, 1983.

Rogers, Ian MacF. The Law of Canadian Municipal Corporations, vol. 1, 2nd ed. Toronto: Carswell, 1971.

APPEAL from a judgment of the Ontario Court of Appeal (1991), 1991 CanLII 8349 (ON CA), 44 O.A.C. 355, 77 D.L.R. (4th) 334, 62 C.C.C. (3d) 147, 3 C.R. (4th) 195, 3 M.P.L.R. (2d) 1, affirming a judgment of the District Court (1989), 47 M.P.L.R. 59, upholding the appellant's conviction by Kerr Prov. Ct. J. (1988), 6 W.C.B. (2d) 95, for violation of a municipal by‑law. Appeal allowed.

Frank Addario and Shaun Nakatsuru, for the appellant.

Beverley A. B. Simpson, for the respondent.

Robert Avinoam, for the intervener.

//Iacobucci J.//

The judgment of the Court was delivered by

Iacobucci J. -- This appeal concerns whether s. 11 of Municipality of Metropolitan Toronto By-law 211-74 is ultra vires the municipality in that it is not authorized by the Municipal Act, R.S.O. 1990, c. M.45.

The appellant also argued that his rights under s. 2(b) of the Canadian Charter of Rights and Freedoms had allegedly been violated by s. 11 of Metro By-law 211-74. The Court did not hear argument on the Charter question since the appellant failed to apply to the Chief Justice to state a constitutional question, as required by Rule 32 of the Rules of the Supreme Court of Canada, SOR/83-74, as amended. The appellant's motions to adjourn the hearing of the appeal and to apply for the stating of a constitutional question were dismissed on the understanding that the constitutional issues would be heard in a separate and later hearing if required. Because of the conclusion I have reached, such a hearing, in my view, will not be necessary. As a result, I make no comment on the analysis of the Charter issues undertaken by the courts below.

I. Facts

The appellant, Morris Greenbaum, sold T-shirts at the corner of Yonge and Bloor Streets in Toronto, Ontario. Both Yonge Street and Bloor Street are under the jurisdiction of the Municipality of Metropolitan Toronto ("Metro") and are within the boundaries of the area municipality of the city of Toronto. Section 11 of Metro By-law 211-74 contains a prohibition on placing or exposing goods, wares or merchandise, or articles of any kind, without lawful authority, on all road allowances under Metro's jurisdiction. Section 11a of Metro By-law 211-74 empowers certain area municipalities to set up a licensing system for the use of sidewalks and untravelled portions of Metro roads under which only owners or occupants of abutting property may apply to the relevant municipality for licences or leases. The city of Toronto was removed from the operation of s. 11a in 1978. In 1980, Metro passed By-law 97-80 which delegated the power to lease or license the use of sidewalks and untravelled portions of Metro roads, again only to owners or occupiers of property abutting the sidewalks, to the city of Toronto. The city of Toronto passed By-law 618-80 in accordance with this delegated power, providing for leasing or licensing of sidewalk use to owners or occupiers of abutting property.

The appellant did not have a licence under City of Toronto By-law 618-80 to sell his T-shirts at the corner of Bloor and Yonge. He does not own or occupy property adjoining that corner and therefore could not apply for a licence. On December 19, 1987, the appellant was charged with unlawfully exposing goods, wares or merchandise on a Metro road allowance without lawful authority, contrary to s. 11 of Metro By-law 211-74. The appellant was convicted by Kerr Prov. Ct. J., and was fined $700 and placed on probation for two years: (1988), 6 W.C.B. (2d) 95. One of the terms of his probation was that he not carry on any street vending activity within Metropolitan Toronto for two years. He appealed his conviction and sentence to the District Court, where his appeal was dismissed by Herold Dist. Ct. J.: (1989), 47 M.P.L.R. 59. His appeal to the Ontario Court of Appeal was dismissed by Osborne J.A. and Dubin C.J.O., with Arbour J.A. dissenting, in reasons which also dealt with an appeal in R. v. Sharma: (1991), 1991 CanLII 8349 (ON CA), 44 O.A.C. 355, 77 D.L.R. (4th) 334, 62 C.C.C. (3d) 147, 3 C.R. (4th) 195, 3 M.P.L.R. (2d) 1.

This Court granted leave to appeal in both R. v. Sharma, [1991] 1 S.C.R. xiv, and the case at bar, [1991] 3 S.C.R. viii. The appeal in R. v. Sharma was heard on April 28, 1992. The hearing of the appeal in the case at bar was delayed and, at the request of counsel in the case at bar, this Court postponed releasing reasons in R. v. Sharma until after the hearing of the present appeal. The Court's decision in R. v. Sharma, [1993] 1 S.C.R. 000, released concurrently with these reasons*, set aside the convictions of the appellant Sharma for violation of a by-law and obstruction of a police officer under s. 129 of the Criminal Code, R.S.C., 1985, c. C-46. The Court found in R. v. Sharma that Metro By-law 97-80 and City of Toronto By-law 618-80 are ultra vires the municipalities in that they are discriminatory in the municipal law sense.

The Municipality of Metropolitan Toronto intervened in the case at bar in support of the respondent, the city of Toronto.

II. Relevant Legislation

Municipality of Metropolitan Toronto By-law 211-74:

11. No person shall, without lawful authority, place or expose goods, wares or merchandise or articles of any kind upon any metropolitan road allowance or hang or put up any goods, wares or merchandise, or other articles outside of any building so that the same shall project over any portion of a metropolitan road allowance.

11a (1) The council of each of the area municipalities set out in Schedule "A" to this By-law is hereby empowered to lease or license the use of sidewalks and untravelled portions of Metropolitan roads within those portions of such area municipality in which land may be used for commercial or industrial purposes, to the owners or occupants of adjoining property for such purposes as the said council may by lease or license permit, and for such consideration and upon such terms and conditions as may be agreed [Section 11a was added through Metro By-law 115-77.]

Schedule "A": the Borough of East York, the Borough of Etobicoke, the Borough of North York, the Borough of Scarborough, and the Borough of York

Municipality of Metropolitan Toronto By-law 97-80:

1. (1) Notwithstanding the provisions of By-law No. 211-74, as amended, the Council of each of the area municipalities set out in Schedule "A" to this By-law is hereby empowered to lease or license the use of sidewalks and untravelled portions of Metropolitan roads within those portions of such area municipality in which land may be used for commercial or industrial purposes to the owners in possession or the occupants of adjoining properties for the purposes of:

(a) display of merchandise;

(b) operation of boulevard cafes;

(c) installation of bicycle stands;

(d) holding of sidewalk sales.

Schedule "A": the city of Toronto, the city of North York

City of Toronto By-law 618-80:

1.(1) An owner or occupant of land used for commercial or industrial purposes which abuts on the sidewalk or untravelled portion of a Metropolitan road within the City of Toronto may apply to the Commissioner of Public Works and the Environment to lease or license the use of such sidewalk and untravelled portion of the Metropolitan road within the City of Toronto for the purposes of:

(a) display of merchandise;

(b) operation of boulevard cafes;

(c) installation of bicycle stands;

(d) holding of sidewalk sales.

Municipal Act, R.S.O. 1990, c. M.45:

102. Every council may pass such by-laws and make such regulations for the health, safety, morality and welfare of the inhabitants of the municipality in matters not specifically provided for by this Act as may be deemed expedient and are not contrary to law, and for governing the proceedings of the council, the conduct of its members and the calling of meetings.

103. By-laws may be passed by the councils of local municipalities:

104. For prohibiting or regulating sales by retail in the highways or on vacant lots adjacent to them and for regulating traffic in and preventing the blocking up of the highways by vehicles or otherwise.

105. For prohibiting and abating public nuisances.

106. By-laws may be passed by the council of every municipality:

107. For placing or permitting any person under such conditions as may be agreed upon to place, construct, install, maintain and use objects in, on, under or over sidewalks and highways under its jurisdiction, to permit any person to make, maintain and use areas under and openings in the highways and sidewalks, for prescribing the terms and conditions upon which the same are to be placed, constructed, installed, maintained or used and for making such annual or other charge for the privilege conferred by the by-law as it considers reasonable.

(b)Payment of such annual or other charge and expense incurred by the municipal corporation in restoring the highway or sidewalk to its former condition may be enforced in like manner as taxes that are due and payable.

314.--(1) The councils of all municipalities may pass by-laws:

1. For prohibiting or regulating the obstructing, encumbering, injuring or fouling of highways or bridges.

III. Judgments in the Courts Below

1. Provincial Court of Ontario

There was no dispute that, if s. 11 of Metro By-law 211-74 was valid, the appellant was guilty of contravening it. Kerr Prov. Ct. J. held that s. 11 of Metro By-law 211-74 was intra vires in that it was passed pursuant to valid authority delegated to Metro by the Ontario Municipal Act (formerly R.S.O. 1980, c. 302). The relevant authorizing sections were ss. 210, para. 73, 210, para. 140 and 314(1), para. 1 (formerly ss. 210, para. 66, 210, para. 134 and 315, para. 1).

Section 210, para. 73 of the Municipal Act empowers a municipality to prohibit or regulate sales by retail in the highways. The provincial court judge followed an unnamed Court of Appeal decision to hold that highways includes sidewalks. He found that the omission of the word "sale" from s. 11 of Metro By-law 211-74, which refers to placing or exposing goods, wares or merchandise on Metro roads, did not render the by-law ultra vires since the municipality clearly envisaged that the goods would be placed or exposed for sale.

Section 210, para. 140 of the Municipal Act permits by-laws to be passed to prohibit or abate public nuisances. The court heard evidence that sidewalk displays have been a nuisance to shopkeepers and pedestrians, and made it difficult for emergency personnel to get past, and therefore held that s. 11 of Metro By-law 211-74 could have been validly passed pursuant to this section. The same reasoning applied to s. 314(1), para. 1, which permits municipalities to pass by-laws prohibiting or regulating the obstruction, encumbering, injuring or fouling of highways or bridges.

The appellant was convicted, and sentenced to a fine of $700 and two years' probation.

2. District Court of Ontario (1989), 47 M.P.L.R. 59 (Herold Dist. Ct. J.)

The appellant appealed to the District Court on the ground that ss. 11 and 11a of Metro By-law 211-74 were ultra vires either because they were not authorized by the Municipal Act or because they were discriminatory in the municipal law sense.

The court held first that by-laws should be given a liberal interpretation when applied to any particular fact situation. The court held that s. 210, para. 140 (formerly s. 210, para. 134) of the Municipal Act, which permits councils to pass by-laws prohibiting nuisances, did not authorize s. 11 of Metro By-law 211-74 since, on the whole, the purpose of the by-law was not to prohibit or abate public nuisances. Next, the court held that s. 314(1), para. 1 (formerly s. 315, para. 1) of the Municipal Act did authorize the by-law in question because that section authorizes municipalities to pass by-laws prohibiting obstructions and encumbrances on highways, which was the purpose of s. 11 of Metro By-law 211-74. Another section of Metro By-law 211-74, which deals with obstructions and encumbrances on Metro roads, is a general prohibition while s. 11 of Metro By-law 211-74 deals with a specific manifestation of this problem; the two are not incompatible. Section 210, para. 73 (formerly s. 210, para. 66) of the Municipal Act, allowing municipalities to prohibit or regulate sales by retail in the highways, also authorized s. 11 of By-law 211-74 since the reference to "goods, wares or merchandise" incorporated by necessary reference the concept of sale by retail into the by-law. The city of Toronto also raised s. 102 (formerly s. 104) of the Municipal Act as an authorizing section. This section allows municipalities to regulate in matters not specifically provided for in the Act for the health and safety of their inhabitants. The court held that, since it had found two specific sections which authorized the by-law, s. 102 could not authorize s. 11 of Metro By-law 211-74.

With respect to the issue of discrimination, the court held that a municipality may not discriminate amongst members of a class unless its enabling legislation empowers it to do so. The court held, however, that in the case at bar there were two classes of vendors in question: retail vendors in stores and street vendors. Since all street vendors were being treated equally by ss. 11 and 11a of Metro By-law 211-74, there was no discrimination on the face of the by-law.

The appellant's appeal against his conviction was accordingly dismissed.

3. Court of Appeal of Ontario (1991), 1991 CanLII 8349 (ON CA), 62 C.C.C. (3d) 147

The appellant's appeal to the Court of Appeal was heard in conjunction with the appeal in R. v. Sharma. Osborne J.A., Dubin C.J.O. concurring, pointed out that s. 11a of Metro By-law 211-74 has no application to the city of Toronto since the City does not appear in Schedule "A" to the by-law. However, this was of little practical consequence since the City has established a similar regulatory regime for licensing in City of Toronto By-law 618-80 through the exercise of power delegated to it in Metro By-law 97-80.

The appellant argued that, by s. 11 of Metro By-law 211-74, Metro had assumed greater legislative powers than can be derived from the Municipal Act. Osborne J.A. held that Metro has a legitimate interest in keeping its roads and sidewalks unobstructed, which was the broad purpose of s. 11 of Metro By-law 211-74. He held that s. 11 of Metro By-law 211-74 was not authorized by s. 210, para. 73 (formerly s. 210, para. 66) of the Municipal Act, which refers to prohibiting retail sales in the highways. Rather, the section of the by-law in question was authorized by ss. 210, para. 140 and 314(1), para. 1 (formerly ss. 210, para. 134 and 315, para. 1) of the Municipal Act. Section 210, para. 140 authorizes municipalities to pass by-laws for the prohibiting and abatement of public nuisances; s. 314(1), para. 1 authorizes municipalities to pass by-laws prohibiting or regulating obstructions of and encumbrances on the highways. Metro delegated its statutory power under these sections of the Municipal Act to the city of Toronto when it enacted By-law 97-80. The city of Toronto exercised its delegated power and enacted By-law 618-80.

The appellant argued that the regulatory scheme set up through the combined effect of s. 11 of Metro By-law 211-74, Metro By-law 97-80 and City of Toronto By-law 618-80 was discriminatory in the municipal law sense in that it treated vendors within the same class differently without authority from the Municipal Act. Osborne J.A. held first, like Herold Dist. Ct. J., that street vendors are not in the same class as vendors who own or occupy property which abuts a sidewalk. The distinction between these two types of vendors is reasonable. Osborne J.A. distinguished the holdings of the Ontario Court of Appeal in R. v. Varga (1979), 1979 CanLII 1715 (ON CA), 51 C.C.C. (2d) 558, and of this Court in Montréal (City of) v. Arcade Amusements Inc., 1985 CanLII 97 (SCC), [1985] 1 S.C.R. 368, on discrimination in the municipal law sense since in those cases, unlike the case at bar, the by-laws did not treat all members of the same class equally. Accordingly, the appellant's appeal from his conviction was dismissed.

Arbour J.A. concurred in the holding that s. 11 of Metro By-law 211-74 was validly enacted pursuant to the power contained in ss. 210, para. 140 and 314(1), para. 1 of the Municipal Act. However, she dissented on the issue of whether or not the licensing scheme was discriminatory. Arbour J.A. noted that the appellant's argument was not that the distinction between store occupants and street vendors was irrational or unjust, but that it was illegal because it had no foundation in the Municipal Act. Arbour J.A. continued (at pp. 163-64):

It is a well established rule of administrative law that the power to enact by-laws does not include the power to enact discriminatory by-laws, unless the enabling legislation, directly or by necessary implication, provides for the discrimination....

The alleged discrimination in this case is discrimination in the administrative law sense, i.e., the drawing of a distinction by a subordinate authority that is not authorized by the enabling legislation.

She relied on the decision of this Court in Montréal (City of) v. Arcade Amusements Inc., supra, at p. 404, for this statement of the law.

She went on to find that the "creation by the by-law of two different classes of street vendors, even if reasonable in fact, is impermissible in law unless it is authorized by the Municipal Act" (p. 166). Nothing in the authorizing provisions (ss. 210, para. 140 and 314(1), para. 1 of the Municipal Act) "authorizes the drawing of a distinction between various classes of persons who may be permitted to expose their goods or merchandise on sidewalks" (p. 167). She continued (at p. 168): "[N]one of the provisions of the Municipal Act authorize, directly or by necessary implication, the distinction drawn in the by-laws between two classes of street vendors." Arbour J.A. concluded (at p. 169):

The clear purpose of all three by-laws is to provide a licensing system for the display of merchandise on metro roads in the City of Toronto. In my view, the illegal discrimination contained in the licensing system can only be corrected by striking down the prohibition contained in s. 11 of By-law 211-74. This was also the remedial approach taken against the offending provisions of the by-law in R. v. Varga, supra, at pp. 565-6 C.C.C., pp. 108-9 D.L.R.

For these reasons, I would conclude that s. 11 of Metro By-law 211-74, Metro By-law 97-80 and City of Toronto By-law 618-80 are ultra vires the powers conferred upon Metro and the City of Toronto by the Municipal Act and must be quashed.

IV. Analysis

Municipalities are entirely the creatures of provincial statutes. Accordingly, they can exercise only those powers which are explicitly conferred upon them by a provincial statute. The Ontario Interpretation Act, R.S.O. 1990, c. I.11, states:

10. Every Act shall be deemed to be remedial, whether its immediate purport is to direct the doing of anything that the Legislature deems to be for the public good or to prevent or punish the doing of any thing that it deems to be contrary to the public good, and shall accordingly receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Act according to its true intent, meaning and spirit.

As Davies J. wrote in his reasons in City of Hamilton v. Hamilton Distillery Co. (1907), 1907 CanLII 1 (SCC), 38 S.C.R. 239, at p. 249, with respect to construing provincial legislation enabling municipal by-laws:

In interpreting this legislation I would not desire to apply the technical or strict canons of construction sometimes applied to legislation authorizing taxation. I think the sections are, considering the subject matter and the intention obviously in view, entitled to a broad and reasonable if not, as Lord Chief Justice Russell said in Kruse v. Johnson [[1898] 2 Q.B. 91], at p. 99, a "benevolent construction," and if the language used fell short of expressly conferring the powers claimed, but did confer them by a fair and reasonable implication I would not hesitate to adopt the construction sanctioned by the implication.

Accordingly, a court should look to the purpose and wording of the provincial enabling legislation when deciding whether or not a municipality has been empowered to pass a certain by-law. As Ian Rogers has noted in The Law of Canadian Municipal Corporations (2nd ed. 1971), at p. 388, a somewhat stricter rule of construction than that suggested above by Davies J. is in order where the municipality is attempting to use a power which restricts common law or civil rights.

There is also the question of how the by-law itself should be interpreted when determining whether or not the by-law finds authority within a provincial statute. In City of Verdun v. Sun Oil Co., 1951 CanLII 53 (SCC), [1952] 1 S.C.R. 222, Fauteux J. wrote for the Court that "municipalities derive their legislative powers from the provincial Legislature and must, consequently, frame their by-laws strictly within the scope delegated to them by the Legislature" (p. 228). This is a statement of principle that a by-law which exceeds a municipality's jurisdiction ever so slightly will be declared ultra vires. As Stanley Makuch states in his Canadian Municipal and Planning Law, at p. 115:

The courts, as a result of this inferior legal position [of municipalities], have traditionally interpreted narrowly statutes respecting grants of powers to municipalities. This approach may be described as "Dillon's rule", which states that a municipality may exercise only those powers expressly conferred by statute, those powers necessarily or fairly implied by the expressed power in the statute, and those indispensable powers essential and not merely convenient to the effectuation of the purposes of the corporation.

With respect to the interpretation of by-laws in determining whether or not they are intra vires, this Court held in McKay v. The Queen, 1965 CanLII 3 (SCC), [1965] S.C.R. 798, at p. 803, that two rules of construction are of assistance. The first rule is that in interpreting general words and phrases, the meaning should be given to them which best suits the particular subject matter with reference to which the words are used. Cartwright J. stated for the Court (at pp. 803-4):

The second applicable rule of construction is that if an enactment, whether of Parliament or of a legislature or of a subordinate body to which legislative power is delegated, is capable of receiving a meaning according to which its operation is restricted to matters within the power of the enacting body it shall be interpreted accordingly. An alternative form in which the rule is expressed is that if words in a statute are fairly susceptible of two constructions of which one will result in the statute being intra vires and the other will have the contrary result the former is to be adopted.

Therefore, municipal by-laws are to be read to fit within the parameters of the empowering provincial statute where the by-laws are susceptible to more than one interpretation. However, courts must be vigilant in ensuring that municipalities do not impinge upon the civil or common law rights of citizens in passing ultra vires by-laws (see, e.g., Merritt v. City of Toronto (1895), 22 O.A.R. 205, at p. 207).

The impugned section of Metro By-law 211-74 reads as follows:

11. No person shall, without lawful authority, place or expose goods, wares or merchandise or articles of any kind upon any metropolitan road allowance or hang or put up any goods, wares or merchandise, or other articles outside of any building so that the same shall project over any portion of a metropolitan road allowance.

The respondent city of Toronto submits that authority for this section of Metro By-law 211-74 can be found in any of four sections of the Municipal Act. These four sections will be discussed in turn.

1. Section 210, para. 73

The first of these sections is s. 210, para. 73 (formerly s. 210, para. 66), which empowers a local municipality to prohibit or regulate sales by retail in the highways. Metro is a municipality, not a local municipality, which is defined in s. 1 of the Municipal Act, as a city, town, village or township. However, ss. 79 and 84 of the Municipality of Metropolitan Toronto Act, R.S.O. 1990, c. M.62, confer on Metro all the powers with respect to highways which are conferred by the Municipal Act on the local municipalities that compose Metro. The Provincial and District Courts found that the phrase "goods, wares or merchandise" in s. 11 of Metro By-law 211-74 incorporates by reference the concept of a sale by retail since the definition of "goods, wares, and merchandise" in Black's Law Dictionary is "A general and comprehensive designation of such chattels and goods as are ordinarily the subject of traffic and sale." If this is correct, s. 210, para. 73 of the Municipal Act would authorize s. 11 of Metro By-law 211-74 as a prohibition or regulation of street vending.

The Court of Appeal disagreed with this analysis. The Court of Appeal rejected s. 210, para. 73 as providing authority for s. 11 of Metro By-law 211-74 and I agree. The Court of Appeal held that the broad purpose of By-law 211-74 was not to prohibit or regulate street vending, but to prohibit or regulate road and sidewalk obstruction. The by-law does not refer to sales of goods, wares or merchandise, and such a term should not be read as incorporated by reference. It should be noted that the by-law also refers to exposing or placing "articles of any kind" on Metro roads. The Court of Appeal was correct in holding that, even under a liberal interpretation, s. 11 of Metro By-law 211-74 does not by wording or purpose regulate or prohibit sales by retail on the highways and is not authorized by s. 210, para. 73 of the Municipal Act.

2. Section 210, para. 140

The next section which the respondent claims provides authority for s. 11 of Metro By-law 211-74 is s. 210, para. 140 (formerly s. 210, para. 134), of the Municipal Act. Section 210, para. 140 empowers a municipality to pass by-laws abating or prohibiting public nuisances. The respondent and the intervener, the Municipality of Metropolitan Toronto, claim that street vendors are in fact a public nuisance as they interfere with the public use of the sidewalks. The intervener argues that s. 210, para. 140 gives the municipality the power to determine what constitutes a public nuisance in a specific instance which Metro did when it prohibited the placing or exposing of goods, wares or merchandise upon Metro road allowances without lawful authority. The appellant submits, on the other hand, that not all conduct prohibited by the by-law creates a public nuisance and the by-law is therefore too broad to fit within s. 210, para. 140 because individuals could be prosecuted under the by-law without having created or contributed to a public nuisance. On this matter, I would adopt the reasoning of the District Court where Herold Dist. Ct. J. held, at p. 65:

In my view of the evidence and considering the submissions of counsel, the fact that street vendors may on some occasions have been a nuisance is at best a matter of passing concern. One would, in my view, be striving too hard to find a pigeon-hole in which to put the by-law in question to have to rely on s. 120(134). It is not disputed that on occasion a nuisance may arise when the prohibited conduct is carried on but looking at the wording of the by-law as a whole I cannot agree that the purpose of the by-law was to prohibit or abate public nuisances. Accordingly, in my view s. 210(134) does not enable the by-law in question to have been passed by the municipality.

Further, the effect of the by-law is to prohibit conduct which may not amount to a public nuisance. With respect, the Ontario Court of Appeal was in error when it held that s. 11 of Metro By-law 211-74 was authorized by s. 210, para. 140 of the Municipal Act.

3. Section 314(1), para. 1

The respondent next relies on s. 314(1), para. 1 (formerly s. 315, para. 1) of the Municipal Act, which empowers municipalities to pass by-laws for prohibiting or regulating the obstructing, encumbering, injuring or fouling of highways. Both the respondent and the intervener claim that the purpose of the impugned by-law provision is to prevent the encumbering or obstruction of roads and sidewalks. The Court of Appeal also found that this was the purpose of the by-law. The respondent claims that street vendors create physical and visual obstructions with their carts and that the garbage left behind from their activities fouls the sidewalks, and that s. 11 of Metro By-law 211-74 is designed to prevent this.

The appellant argues that the section of the by-law in question is overly broad since it refers, among other things, to exposing any article on the sidewalks which may not encumber or obstruct the sidewalk. I agree with the appellant on this point.

Section 11 of Metro By-law 211-74 is extremely broad in its restrictive effects. Sidewalks are a public location of community interaction. Sidewalks are used for many laudable purposes, such as collections by the Salvation Army for the disadvantaged members of our society or the distribution of poppies for Remembrance Day, each of which falls within the definition of exposing any article on a Metro road allowance but which do not constitute obstructions or encumbrances under the common understanding of these terms. In my view, s. 314(1), para. 1 of the Municipal Act does not authorize a by-law drawn in terms as broad as have been used by Metro in s. 11 of Metro By-law 211-74.

4. Section 102

The respondent argues that, if s. 11 of the by-law is not specifically authorized by any other section of the Municipal Act, it is authorized by s. 102, which is a general power to regulate for the health, safety, morals and welfare of inhabitants of the municipality. The Ontario Court of Appeal has held, and I agree, that there are many limits on this general power which is of a residual nature: "otherwise the result will be chaos" (Morrison v. Kingston (1937), 1937 CanLII 131 (ON CA), 69 C.C.C. 251, at p. 255). Latchford C.J.A. wrote for the Court of Appeal in Morrison v. Kingston, supra, at p. 255:

The first and most obvious limitation is found in the limitations imposed upon the power of the Province itself by the B.N.A. Act. The Province has not itself universal power of legislation, and its creature the municipality can have no higher power. A second and for many purposes a limitation of equally practical importance is that where the Provincial Legislature has itself undertaken to deal with a certain subject-matter in the interest of the inhabitants of the Province all legislation by the municipality must be subject to the provincial enactment. A third limitation is I think to be found in the express enactments of the Municipal Act. Very few subjects falling within the ambit of local government are left to the general provisions of s. 259 [now s. 102]. Almost every conceivable subject proper to be dealt with by a municipal council is specifically enumerated in the detailed provisions in the Act, and in some instances there are distinct limitations imposed on the powers of the municipal council. These express powers are, I think, taken out of any power included in the general grant of power by s. 259.

In the case at bar, s. 11 of Metro By-law 211-74 has as its purpose to prevent encumbrances and obstructions on the sidewalks. It must be authorized by s. 314(1), para. 1 if at all. If the by-law had as its purpose to regulate street vending, then it would have to be authorized by s. 210, para. 73. If the by-law had as its purpose to prohibit public nuisances, it would have to be authorized by s. 210, para. 140. Therefore, Metro cannot have recourse to s. 102 as authority for the by-law. In sum, s. 11 of Metro By-law 211-74 is ultra vires the Municipality of Metropolitan Toronto in that it is not specifically authorized by provincial enabling legislation.

For the reasons given by this Court in R. v. Sharma, Metro By-law 97-80 and City of Toronto By-law 618-80 are also ultra vires the municipalities on the basis that they contain discrimination, in the municipal law sense, not authorized by provincial enabling legislation. The respondent and the intervener in the case at bar raised two additional arguments with respect to implied authority for the discrimination.

First, the respondent advanced s. 308, para. 3 of the Municipal Act as authorizing the discrimination in the licensing by-laws. That section of the Municipal Act empowers municipalities to pass by-laws permitting people "to place, construct, install, maintain and use objects in, on, under or over sidewalks and highways under its jurisdiction, [and] to permit any person to make, maintain and use areas under and openings in the highways and sidewalks" and to charge fees for this use. Section 308, para. 3(b) provides that these fees are enforceable in the same manner as taxes that are due and payable. The respondent argues that the only taxes under the control of municipalities are realty taxes. The respondent therefore submits that the reference to making charges enforceable in the same manner as taxes shows that the Legislature anticipated a legal distinction between the rights of abutting store owners who pay realty taxes and street vendors who do not. I do not agree. Simply put, that the Legislature wished to give teeth to the municipalities' enforcement power over charges for sidewalk use cannot be read as implied authority to discriminate between property owners and free-standing street vendors.

Second, the respondent and the intervener argued that there is implied authority for the discrimination in that the municipality was given a general power to regulate and that it can accordingly make reasonable classifications within that regulatory scheme. The decision of this Court in Montréal (City of) v. Arcade Amusements Inc., supra, disposes of this argument. As Beetz J. wrote at p. 414:

Counsel for the City emphasized the amplitude of the City's general powers.... However, as can be seen on the face of these provisions, none of them expressly empowers the City to make distinctions based on age. It may well be that an authorization to make distinctions based on the age of children and adolescents would be useful to the City in exercising its general powers, and especially in exercising its power to adopt policing by-laws; but however useful or convenient such an authorization might be, I am not persuaded that it is so absolutely necessary to the exercise of those powers that it would have to be found in the enabling provisions, by necessary inference or implicit delegation.

I am not persuaded that, in the case at bar, to draw a distinction between free-standing street vendors and owners/occupants of abutting property was absolutely necessary to the exercise of the licensing power such that the power to draw such a distinction must be inferred from the enabling legislation (s. 90 of the Municipality of Metropolitan Toronto Act) by necessary inference or implicit delegation.

V. Disposition

For the foregoing reasons, I would allow the appeal, set aside the appellant's conviction and order that an acquittal be entered instead.

Appeal allowed.

Solicitors for the appellant: Nakatsuru & Doucette, Toronto.

Solicitor for the respondent: Dennis Y. Perlin, Toronto.

Solicitor for the intervener: H. W. O. Doyle, Toronto.

• See Erratum [1993] 1 S.C.R. iv