Shell Canada Products Ltd. v. Vancouver (City), [1994] 1 S.C.R. 231
Shell Canada Products Limited Appellant
v.
City of Vancouver Respondent
and
The Attorney General of Canada, the Attorney General for Ontario and the Attorney General of Quebec Interveners
Indexed as: Shell Canada Products Ltd. v. Vancouver (City)
1993: April 27; 1994: February 24.
Present: Lamer C.J. and La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory, McLachlin, Iacobucci and Major JJ.
on appeal from the court of appeal for british columbia
Municipal law ‑‑ Municipal resolutions ‑‑ Validity ‑‑ Vancouver passing resolutions that it would not do business with Shell until Shell "completely withdraws from South Africa" ‑‑ Whether actions of city council as embodied in resolutions reviewable ‑‑ Whether resolutions ultra vires city in that they do not relate to a municipal purpose ‑‑ Whether resolutions constitute unauthorized discrimination ‑‑ Vancouver Charter, S.B.C. 1953, c. 55.
The appellant is a subsidiary of Shell Canada Ltd. and is involved in retail and wholesale marketing of petroleum products in Vancouver. It was periodically invited to tender bids for municipal contracts to supply petroleum products until Vancouver City Council passed resolutions that the City would not do business with Shell Canada "until Royal Dutch/Shell completely withdraws from South Africa". Vancouver purchases petroleum products from another company which, through one of its subsidiaries, also does business with South Africa. The British Columbia Supreme Court quashed the resolutions as being ultra vires the municipality. The Court of Appeal reversed the judgment.
Held (Lamer C.J. and L'Heureux‑Dubé, Gonthier and McLachlin JJ. dissenting): The appeal should be allowed.
Per La Forest, Sopinka, Cory, Iacobucci and Major JJ.: In passing the resolutions the City was clearly purporting to exercise its statutory powers, and such exercise is reviewable to the extent of determining whether the actions are intra vires. Generally, a municipal authority is authorized to act only for municipal purposes. Municipal purposes include those that are compatible with the purpose and objects of the enabling statute. Any ambiguity or doubt is to be resolved in favour of the citizen, especially when the grant of power contended for is out of the usual range. The explicit purpose of the resolutions at issue here is to influence Shell to divest itself of its South African holdings by expressing moral outrage against the apartheid regime and to join the alleged international boycott of its subsidiaries and products until Shell "completely withdraws from South Africa". Vancouver was seeking to use its powers to do business to affect matters in another part of the world, a purpose which is directed at matters outside the City's territorial limits. Under the Vancouver Charter, Council "may provide for the good rule and government of the city". This places a territorial limit on Council's jurisdiction. While Council can have regard for matters beyond its boundaries in exercising its powers, any action taken in so doing must have as its purpose benefit to the citizens of the City. The Charter expressly provides for activities in which Council may engage outside the City's limits even when such activities clearly redound to the benefit of its inhabitants. The sections of the Charter which give the City power to engage in commercial, industrial or business undertakings, acquire such personal property as may be required for its purposes, and "do all such things as are incidental or conducive to the exercise of the allotted powers" are general sections found in most if not all municipal Acts which must be construed subject to the limitations imposed by the purpose of the statute as a whole. Any powers implied from their general language must be restricted to municipal purposes and cannot extend to include the imposition of a boycott based on matters external to the interests of the citizens of the municipality.
Even if there were a municipal purpose, the resolutions constitute unauthorized discrimination. While discrimination for commercial or business reasons is a power that is incidental to the powers to carry on business or acquire property, considerations relating to the political policy of a foreign state are not so essential to the exercise of enumerated powers as to be implied. Discrimination of the kind involved here is not only not authorized by the Vancouver Charter, but arguably is prohibited by it.
Per Lamer C.J. and L'Heureux‑Dubé, Gonthier and McLachlin JJ. (dissenting): The doctrine that procurement powers are immune from judicial review should not apply to municipalities. If a municipality's power to spend public money is exercised for improper purposes or in an improper manner, the conduct of the municipality should be subject to judicial review. While it is important that abuses of power are checked, however, it is also important that the courts not unduly confine municipalities in the responsible exercise of the powers which the legislature has conferred on them. Courts must respect the responsibility of elected municipal bodies to serve the people who elected them and exercise caution to avoid substituting their views of what is best for the citizens for those of municipal councils. In cases where powers are not expressly conferred but may be implied, courts must be prepared to adopt the "benevolent construction" which this Court referred to in Greenbaum, and confer the powers by reasonable implication. Such a generous, deferential approach to municipal powers will aid the efficient functioning of municipal bodies and avoid the costs and uncertainty attendant on excessive litigation. It is also arguably more in keeping with the true nature of modern municipalities, and with the flexible, more deferential approach this Court has adopted in recent cases to the judicial review of administrative agencies.
The resolutions not to do business with Shell until it stops trading with South Africa can clearly be defended under the City's power to engage in commercial and business activities. Improper purposes cannot be said to have rendered the otherwise legitimate decision invalid, since the City's motives did not exceed the powers conferred on it. The Vancouver Charter empowers Council to "provide for the good rule and government of the city". Council may properly take measures related to fostering and maintaining a sense of community identity and pride, and among such measures may be found community expression of disapproval or approval of different types of conduct. Provisions in municipal Acts for the "good government" or general welfare of the citizens, far from being mere surplusage, originated in the desire of legislatures to prevent the decisions of municipal councillors being struck down by the courts. Furthermore, many other municipalities interpret their mandate broadly.
The resolutions discriminate against Shell, but that discrimination is authorized by the Vancouver Charter. While discrimination in the granting of licences, taxes and municipal privileges is generally viewed as requiring express authorization by the empowering legislation, the presumption regarding the exercise of a municipality's business powers is that the municipality has the power to make distinctions between citizens and firms on a wide variety of grounds. The power to discriminate in the exercise of municipal business powers is thus readily inferred from general language authorizing a city to do business and to act for the good rule and government of the city. This language encompasses not only the provision of basic services to the inhabitants of the municipality, but extends to the expression by the city on behalf of its citizens of approval or disapproval of conduct, whether within the city or outside its boundaries.
While the resolutions may have an international aspect, they are in pith and substance municipal legislation and hence constitutional. With respect to s. 2(b) of the Canadian Charter of Rights and Freedoms, assuming a corporation can invoke the right of free expression, the infringement alleged is so trivial as not to merit serious scrutiny.
Cases Cited
By Sopinka J.
Followed: R. v. Lewisham London Borough Council, ex parte Shell UK Ltd., [1988] 1 All E.R. 938; distinguished: Hignell v. City of Winnipeg, 1933 469 (MB KB), [1933] 3 W.W.R. 193; referred to: Roncarelli v. Duplessis, 1959 50 (SCC), [1959] S.C.R. 121; R. v. Big M Drug Mart Ltd., 1985 69 (SCC), [1985] 1 S.C.R. 295; Welbridge Holdings Ltd. v. Metropolitan Corporation of Greater Winnipeg, 1970 1 (SCC), [1971] S.C.R. 957; Wiswell v. Metropolitan Corporation of Greater Winnipeg, 1965 106 (SCC), [1965] S.C.R. 512; R. v. Greenbaum, 1993 166 (SCC), [1993] 1 S.C.R. 674; Rogers v. City of Toronto (1915), 1915 496 (ON SC), 33 O.L.R. 89; City of Toronto v. Miller Paving Ltd. (1964), 1964 611 (ON CA), 49 D.L.R. (2d) 214, leave to appeal refused, [1965] S.C.R. ix; R. v. Sharma, 1993 165 (SCC), [1993] 1 S.C.R. 650; Gershman v. Manitoba Vegetable Producers' Marketing Board, 1976 1093 (MB CA), [1976] 4 W.W.R. 406; Re Taylor and the City of Winnipeg (1896), 1896 114 (MB QB), 11 Man. R. 420; Re Gulf Canada Ltd. and City of Vancouver (1981), 1981 712 (BC SC), 130 D.L.R. (3d) 146.
By McLachlin J. (dissenting)
Haggerty v. City of Victoria (1895), 4 B.C.R. 163; Rogers v. City of Toronto (1915), 1915 496 (ON SC), 33 O.L.R. 89; Re Midnorthern Appliances Industries Corp. and Ontario Housing Corp. (1977), 1977 1081 (ON SC), 17 O.R. (2d) 290; Transhelter Group Inc. v. Committee on Works and Operations (1984), 1984 3700 (MB CA), 27 M.P.L.R. 244; Re Webb and Ontario Housing Corp. (1978), 1978 1490 (ON CA), 93 D.L.R. (3d) 187; Prysiazniuk v. Regional Municipality of Hamilton‑Wentworth (1985), 1985 2162 (ON SC), 10 O.A.C. 208; Re Ainsworth Electric Co. and Board of Governors of Exhibition Place (1987), 1987 4317 (ON SC), 58 O.R. (2d) 432; Associated Respiratory Services Inc. v. British Columbia (Purchasing Commission) (1992), 1992 1041 (BC SC), 70 B.C.L.R. (2d) 57; Peter Kiewit Sons Co. v. Richmond (City) (1992), 11 M.P.L.R. (2d) 110; Merritt v. City of Toronto (1895), 22 O.A.R. 205; City of Hamilton v. Hamilton Distillery Co. (1907), 1907 1 (SCC), 38 S.C.R. 239; Re Howard and City of Toronto (1928), 1928 427 (ON CA), 61 O.L.R. 563; Associated Picture Houses, Ltd. v. Wednesbury Corp., [1948] 1 K.B. 223; Kuchma v. Rural Municipality of Tache, 1945 27 (SCC), [1945] S.C.R. 234; R. v. Greenbaum, 1993 166 (SCC), [1993] 1 S.C.R. 674; City of Prince George v. Payne, 1977 161 (SCC), [1978] 1 S.C.R. 458; Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., 1979 23 (SCC), [1979] 2 S.C.R. 227; Bell Canada v. Canada (Canadian Radio‑television and Telecommunications Commission), 1989 67 (SCC), [1989] 1 S.C.R. 1722; National Corn Growers Assn. v. Canada (Import Tribunal), 1990 49 (SCC), [1990] 2 S.C.R. 1324; Domtar Inc. v. Quebec (Commission d'appel en matière de lésions professionnelles), 1993 106 (SCC), [1993] 2 S.C.R. 756; Teamsters Union, Local 938 v. Massicotte, 1982 18 (SCC), [1982] 1 S.C.R. 710; Galloway v. Mayor and Commonalty of London (1866), L.R. 1 H.L. 34; Lamb v. Town of Estevan (1922), 16 Sask. L.R. 220; Re Burns and Township of Haldimand (1965), 1965 171 (ON CA), 52 D.L.R. (2d) 101; R. v. Lewisham Borough Council, ex parte Shell UK Ltd., [1988] 1 All E.R. 938; Thorne's Hardware Ltd. v. The Queen, 1983 20 (SCC), [1983] 1 S.C.R. 106; Mounterbrooke Inc. v. City of Montreal, 1960 249 (QC CS), [1963] R.L. 28; Re Foster and Township of Raleigh (1910), 22 O.L.R. 26; Smith v. White City (Village) (1989), 1989 5082 (SK QB), 81 Sask. R. 79; Baird v. Corporation of the District of Oak Bay (1982), 21 M.P.L.R. 278; Wheeler v. Leicester City Council, [1985] A.C. 1054; R. v. Sharma, 1993 165 (SCC), [1993] 1 S.C.R. 650; Roncarelli v. Duplessis, 1959 50 (SCC), [1959] S.C.R. 121; Hignell v. City of Winnipeg, 1933 469 (MB KB), [1933] 3 W.W.R. 193.
Statutes and Regulations Cited
Canadian Charter of Rights and Freedoms, ss. 2, 15.
Constitution Act, 1867, s. 91(2).
Local Government Act 1972 (U.K.), 1972, c. 70, s. 135.
Municipal Act, R.S.B.C. 1979, c. 290, s. 223.
Race Relations Act 1976 (U.K.), 1976, c. 74, s. 71.
Vancouver Charter, S.B.C. 1953, c. 55, ss. 137 [rep. & sub. 1965, c. 68, s. 18; am. 1974, c. 104, s. 30], 148, 151, 153, 188, 189, 190, 199, 203, 272 [am. 1977, c. 40, s. 52; am. 1985, c. 89, s. 5].
Authors Cited
Arrowsmith, Sue. Government Procurement and Judicial Review. Toronto: Carswell, 1988.
Makuch, Stanley M. Canadian Municipal and Planning Law. Toronto: Carswell, 1983.
McDonald, Ann. "In the Public Interest: Judicial Review of Local Government" (1983), 9 Queen's L.J. 62.
Rogers, Ian MacFee. The Law of Canadian Municipal Corporations, 2nd ed. Toronto: Carswell, 1971 (looseleaf).
APPEAL from a judgment of the British Columbia Court of Appeal (1991), 1991 5726 (BC CA), 57 B.C.L.R. (2d) 345, 81 D.L.R. (4th) 353, [1991] 6 W.W.R. 319, 6 M.P.L.R. (2d) 109, 3 B.C.A.C. 310, 7 W.A.C. 310, supplementary reasons (1991), 58 B.C.L.R. (2d) 285, 84 D.L.R. (4th) 157, [1991] 6 W.W.R. 325, 6 M.P.L.R. (2d) 109, at p. 116, 3 B.C.A.C. 310, at p. 314, 7 W.A.C. 310, at p. 314, reversing a decision of Maczko J. (1990), 1990 1180 (BC SC), 46 B.C.L.R. (2d) 346, 70 D.L.R. (4th) 374, 49 M.P.L.R. 185, quashing resolutions passed by the City of Vancouver. Appeal allowed, Lamer C.J. and L'Heureux‑Dubé, Gonthier and McLachlin JJ. dissenting.
David W. Donohoe and John G. Mendes, for the appellant.
Terrance R. Bland, for the respondent.
Yvonne E. Milosevic, for the intervener the Attorney General of Canada.
M. David Lepofsky, for the intervener the Attorney General for Ontario.
Françoise Saint‑Martin, for the intervener the Attorney General of Quebec.
The reasons of Lamer C.J. and L'Heureux-Dubé, Gonthier and McLachlin JJ. were delivered by
McLachlin J. (dissenting) -- This appeal raises the issue of whether the elected representatives of a municipality may vote to refuse to give the municipality's business to a firm because of the conduct of the firm outside the municipality.
The facts are simple. In 1989 the Council of the City of Vancouver passed two resolutions (the "Resolutions"): first, not to do business with Shell Canada and Royal Dutch/Shell as long as Shell continues to do business in South Africa; and second, to declare the City a "Shell Free" zone until such time as Shell should disinvest from South Africa. At the time, apartheid was the legal regime in South Africa. The legalized discrimination which that regime sustained was abhorrent to many Canadians. Nations throughout the world had imposed trade embargoes against South Africa in protest against the regime. Canada was among those nations. Shell, however, continued to do business with South Africa, supplying it with fuel and other products vital to its economy. In particular, Shell was exporting sulphur to South Africa through the port of Vancouver. Many Vancouverites found this conduct to be offensive.
A delegation of citizens made representations to City Council seeking support for a boycott against Shell. On September 12, 1989, Council considered the matter. The councillors heard representations from people supporting the boycott. It also heard representations and received a brief from Shell Canada's representative, arguing against the boycott. Council was told that approximately 30 cities had adopted a preferential purchasing policy boycotting Shell products. After hearing both sides of the issue, the elected representatives of the government of the City of Vancouver passed the Resolutions impugned on this appeal.
The City's refusal to do business with Shell, standing alone, is not attacked, nor could it be. The City undoubtedly possesses a general power to buy its fuel from whomever it chooses. It is the reasons or motives for choosing not to deal with Shell which are attacked. They are attacked on the ground that they relate to the conduct of Shell outside the City, and hence to matters that are irrelevant to municipal concerns. The decision not to deal with Shell, valid in itself, is said to become invalid because it was made for purposes which are beyond the power of the City.
As will become apparent, I take the view that this case requires us to consider the appropriate approach to judicial review of municipal decisions. Broadly speaking, two approaches may be drawn from the cases: a narrow confining approach, and a broader more deferential approach. My colleague Justice Sopinka, as I understand his reasons, takes a narrow view of municipal powers and a strict approach to judicial review of municipal decisions. I advocate a more generous view of municipal powers and a more deferential approach to judicial review. In my view, the latter approach is the better of the two, having regard both to the authorities and to the modern conception of cities and municipalities.
Like Sopinka J., I view the central questions on this appeal as whether the Resolutions are beyond the powers of the City of Vancouver, and whether the Resolutions constitute unauthorized discrimination. Before considering these specific issues, however, I think it appropriate to address the availability of review in this case and the standard to be applied.
A. The Availability and Standard of Judicial Review
1. Are the Resolutions Subject to Judicial Review?
The first Resolution embodies a decision not to do business with Shell. The second declares Vancouver "Shell Free" until Shell disinvests from South Africa. While the second Resolution is more vague than the first, the gravamen of Shell's complaint is that the City voted not to do business with it. The complaint, in essence, is that the City voted not to enter into contracts for the purchase of fuel with Shell.
There is a long line of cases in Canada holding that the purchasing decisions of a municipality, referred to as the procurement power, are immune from judicial review: Haggerty v. City of Victoria (1895), 4 B.C.R. 163 (S.C.); Rogers v. City of Toronto (1915), 1915 496 (ON SC), 33 O.L.R. 89 (H.C.); Re Midnorthern Appliances Industries Corp. and Ontario Housing Corp. (1977), 1977 1081 (ON SC), 17 O.R. (2d) 290 (Div. Ct.); Transhelter Group Inc. v. Committee on Works and Operations (1984), 1984 3700 (MB CA), 27 M.P.L.R. 244 (Man. C.A.). The assumption that government procurement is immune from judicial review rests on the traditional view that contract law is wholly in the realm of private law: S. Arrowsmith, Government Procurement and Judicial Review (1988), at pp. 10-21.
In more recent times, however, some courts have been willing to review governmental contractual powers: Re Webb and Ontario Housing Corp. (1978), 1978 1490 (ON CA), 93 D.L.R. (3d) 187 (Ont. C.A.); Prysiazniuk v. Regional Municipality of Hamilton-Wentworth (1985), 1985 2162 (ON SC), 10 O.A.C. 208 (Div. Ct.). Others have maintained the principle of immunity from review: Re Ainsworth Electric Co. and Board of Governors of Exhibition Place (1987), 1987 4317 (ON SC), 58 O.R. (2d) 432 (Div. Ct.); Associated Respiratory Services Inc. v. British Columbia (Purchasing Commission) (1992), 1992 1041 (BC SC), 70 B.C.L.R. 57 (S.C.); Peter Kiewit Sons Co. v. Richmond (City) (1992), 11 M.P.L.R. (2d) 110 (B.C.S.C.).
Against allowing judicial review of the purchasing power of governments is the argument that these are matters of private law. According to the private law of contract, each person, individual or corporate, has the right to contract with whom it chooses, and on the terms it chooses. The courts have not restricted this freedom of contract, but confine themselves to enforcement and interpretation of contracts. It has been said that a public body which seeks to procure goods or services is in the same position as any private individual or corporation which seeks to contract with another party. Vickers J. expressed this opinion in Peter Kiewit Sons, supra, where he held that the ordinary rules of private law apply to the public contracting process, and that judicial review does not lie for commercial decisions of public authorities. He explained (at p. 120) that "it would be inappropriate to allow both a public law and a private law remedy in situations involving government contracts where no particular procedure is prescribed by statute or regulation". Adding weight to the argument that government purchasing decisions should be immune from judicial review is the potential for excessive litigation, which may in turn result in significant inconvenience to the public through a disruption of the procurement process.
In favour of allowing judicial review of the procurement or purchasing power of governments is the argument that while this principle is valid for private contracts, the public nature of municipalities renders it inapplicable to them. As Arrowsmith states, supra, at p. 14, "there are many considerations applicable to public bodies and not to private which may justify different treatment of the two, even when engaged in similar activity". The most important difference is the fact that municipalities undertake their commercial and contractual activities with the use of public funds. Another consideration justifying different treatment of public contracting is the fact that a municipality's exercise of its contracting power may have consequences for other interests not taken into account by the purely consensual relationship between the council and the contractor. For example, public concerns such as equality of access to government markets, integrity in the conduct of government business, and the promotion and maintenance of community values require that the public procurement function be viewed as distinct from the purely private realm of contract law. Finally, it must be remembered that municipalities, unlike private individuals, are statutory creations, and must always act within the legal bounds of the powers conferred upon them by statute. In particular, council members cannot act in pursuit of their own private interests, but must exercise their contractual powers in the public interest.
On balance, it is my view that the doctrine of immunity from judicial review of procurement powers should not apply to municipalities. If a municipality's power to spend public money is exercised for improper purposes or in an improper manner, the conduct of the municipality should be subject to judicial review.
2. The Proper Scope of Judicial Review
Judicial review of municipal decisions is necessary. It is important that municipalities not assume powers which have not been conferred on them, that they not violate civil liberties, that disputes between them and other statutory bodies be resolved, and that abuses of power are checked. On the other hand, it is important that the courts not unduly confine municipalities in the responsible exercise of the powers which the legislature has conferred on them.
The two different approaches to construction of municipal powers alluded to earlier confronts us at this point: see A. McDonald, "In the Public Interest: Judicial Review of Local Government" (1983), 9 Queen's L.J. 62, at p. 64. The first approach is the narrow construction -- pro-interventionist approach, expressed by the Ontario Court of Appeal in Merritt v. City of Toronto (1895), 22 O.A.R. 205, at p. 207:
Municipal corporations, in the exercise of the statutory powers conferred upon them to make by-laws, should be confined strictly within the limits of their authority, and all attempts on their part to exceed it should be firmly repelled by the Courts.
The second approach is typified by the oft-cited decision City of Hamilton v. Hamilton Distillery Co. (1907), 1907 1 (SCC), 38 S.C.R. 239, at p. 249. It was there held:
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.
This more liberal approach to statutory construction of municipal enabling statutes is also reflected in Re Howard and City of Toronto (1928), 1928 427 (ON CA), 61 O.L.R. 563, at p. 575, where the Ontario Court of Appeal held the following:
What is or is not in the public interest is a matter to be determined by the judgment of the municipal council; and what it determines, if in reaching its conclusion it acted honestly and within the limits of its powers, is not open to review by the Court. . . .
The question of the relative balance of convenience or detriment to different persons is a matter which the Legislature has committed to the consideration and determination of the municipal council, and their judgment on that question, if bona fide exercised in what they believe to be the public interest, will not be interfered with by the Court. . . .
The classic enunciation of the second, more generous and flexible approach is that of Lord Greene M. R. in Associated Picture Houses, Ltd. v. Wednesbury Corp., [1948] 1 K.B. 223 (C.A.), at p. 228:
It is not to be assumed prima facie that responsible bodies like the local authority in this case will exceed their powers [and] . . . the court . . . must not substitute itself for that authority.
Judicial intervention, said Lord Greene, would be justified where there was evidence of bad faith or absurdity, where the decision was unreasonable in the sense that no reasonable authority could ever have come to it. But, he said at p. 230, "to prove a case of that kind would require something overwhelming. . . .".
This Court has pronounced, on at least one occasion, in favour of a generous approach to the construction of municipal powers. In Kuchma v. Rural Municipality of Tache, 1945 27 (SCC), [1945] S.C.R. 234, a by-law closing a road was challenged, inter alia, on the ground that it was not in the public interest. A unanimous Court upheld the by-law, stating, per Estey J. (at p. 243):
Upon the question of public interest, courts have recognized that the municipal council, familiar with local conditions, is in the best position of all parties to determine what is or is not in the public interest and have refused to interfere with its decision unless good and sufficient reason be established.
In R. v. Greenbaum, 1993 166 (SCC), [1993] 1 S.C.R. 674, in a passage cited on this appeal by Sopinka J., Iacobucci J., speaking for the Court, commented (at p. 687) that:
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.
However, the same reasons (at p. 688) advocated a "benevolent construction" of the provincial enabling legislation, quoting the foregoing passage from City of Hamilton v. Hamilton Distillery Co.
The weight of current commentary tends to be critical of the narrow, pro-interventionist approach to the review of municipal powers, supporting instead a more generous, deferential approach: S. M. Makuch, Canadian Municipal and Planning Law (1983), at pp. 5-6; McDonald, supra; Arrowsmith, supra, at p. 219. Such criticism is not unfounded. Rather than confining themselves to rectification of clear excesses of authority, courts under the guise of vague doctrinal terms such as "irrelevant considerations", "improper purpose", "reasonableness", or "bad faith", have not infrequently arrogated to themselves a wide and sweeping power to substitute their views for those of the elected representatives of municipalities. To the same effect, they have "read in" principles of statutory construction such as the one which states that a by-law cannot affect "common law rights" unless the statute confers authority to do so "in plain language or by necessary implication"; City of Prince George v. Payne, 1977 161 (SCC), [1978] 1 S.C.R. 458, at p. 463. The result is that, to quote McDonald (at p. 79), "despite the court's protestations to the contrary, they do, in fact, interfere with the wisdom which municipal councils exercise".
Recent commentary suggests an emerging consensus that courts must respect the responsibility of elected municipal bodies to serve the people who elected them and exercise caution to avoid substituting their views of what is best for the citizens for those of municipal councils. Barring clear demonstration that a municipal decision was beyond its powers, courts should not so hold. In cases where powers are not expressly conferred but may be implied, courts must be prepared to adopt the "benevolent construction" which this Court referred to in Greenbaum, and confer the powers by reasonable implication. Whatever rules of construction are applied, they must not be used to usurp the legitimate role of municipal bodies as community representatives.
Such an approach serves a number of purposes which the narrow interventionist approach does not. First, it adheres to the fundamental axiom that courts must accord proper respect to the democratic responsibilities of elected municipal officials and the rights of those who elect them. This is important to the continued healthy functioning of democracy at the municipal level. If municipalities are to be able to respond to the needs and wishes of their citizens, they must be given broad jurisdiction to make local decisions reflecting local values.
Second, a generous approach to municipal powers will aid the efficient functioning of municipal bodies and avoid the costs and uncertainty attendant on excessive litigation. Excessive judicial interference in municipal decision-making can have the unintended and unfortunate result of large amounts of public funds being expended by municipal councils in the attempt to defend the validity of their exercise of statutory powers. The object of judicial review of municipal powers should be to accord municipalities the autonomy to undertake their activities without judicial interference unless clearly warranted.
Thirdly, a generous approach to municipal powers is arguably more in keeping with the true nature of modern municipalities. As McDonald asserts (supra, at p. 100), the municipal corporation "has come a long way from its origins in a rural age of simple government demands". She and other commentators (see Makuch and Arrowsmith) advocate that municipal councils should be free to define for themselves, as much as possible, the scope of their statutory authority. Excessive judicial interference in the decisions of elected municipal councils may, as this case illustrates, have the effect of confining modern municipalities in the straitjackets of tradition. This rationale for a restrained approach to judicial intervention in the decisions of municipal bodies is eloquently set out by McDonald (at pp. 100-101):
Once elected . . . the council is entrusted with responsibility for governing, not just in the interest of those who elected them, but in the interest of the community generally, that is, in the public interest. This is a fairly vague and controversial concept, however. It is a generalized judgment of what is best for individuals, as a part of a community. From the perspective of particular individuals and interest groups, the public interest may be conceived differently and, as amongst them, views of the public interest will inevitably conflict. A council making its decision on the public interest will identify and weigh a wide variety of competing considerations: the demands of various interested parties, the advice of its experts, data from its own research resources. And it will undoubtedly be influenced by the preferences expressed by the electorate. The decision is ultimately a matter of choice and what a council decides is necessarily its own collective perception of the public interest.
The voters of a community give their elected council members the final judgment in this controversy. Whether the councillors are right or wrong in their judgment depends on the vantage point of the person making this assessment, but in any event, this is the decision they were elected to make. There may, in fact, be no right or wrong in the matter. Persons displeased with a council's decision have "a remedy at the polls". [Footnote omitted.]
It is not the court's function to make these decisions -- either directly or indirectly. Primary responsibility for deciding the welfare of the community belongs to the municipal corporation. If the courts take upon themselves the judgment of the rightness or wrongness of council's decisions in these matters, they, as a body having no connection with local inhabitants, usurp the choice which the inhabitants conferred, by democratic process, on the council. If the courts are to interfere in this process, they must have a positive justification for doing so and that justification must relate to their own peculiar nature and function. [Emphasis in original.]
Finally, the broader, more deferential approach to judicial intervention in the decisions of municipalities is more in keeping with the flexible, more deferential approach this Court has adopted in recent cases to the judicial review of administrative agencies: Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., 1979 23 (SCC), [1979] 2 S.C.R. 227; Bell Canada v. Canada (Canadian Radio-television and Telecommunications Commission), 1989 67 (SCC), [1989] 1 S.C.R. 1722; National Corn Growers Assn. v. Canada (Import Tribunal), 1990 49 (SCC), [1990] 2 S.C.R. 1324; Domtar Inc. v. Quebec (Commission d'appel en matière de lésions professionnelles), 1993 106 (SCC), [1993] 2 S.C.R. 756. The Court has repeatedly stressed the need for sensitivity to context and to the special expertise of tribunals. Where such expertise is established, deference may be warranted even to a tribunal's interpretation of its statutory powers: Teamsters Union, Local 938 v. Massicotte, 1982 18 (SCC), [1982] 1 S.C.R. 710. There can be little justification for holding decisions on the welfare of the citizens by municipal councillors to a higher standard of review than the decisions of non-elected statutory boards and agencies.
These considerations lead me to conclude that courts should adopt a generous, deferential standard of review toward the decisions of municipalities. To say this is not new. Lord Greene said it in Wednesbury, and his words have been oft-quoted in Canada. Nevertheless, many courts have continued to take a narrow, interventionist approach to municipal decisions. This has prompted some writers to argue for a "threshold" test for judicial interference. McDonald, for example, suggests (at p. 108) that the courts should "defer to the municipality to determine what the public interest requires in the implementation of the powers conferred on it", provided that the "municipal action can be rationally supported and is not in violation of any judicial interest in the matter". Expressing this notion another way, it could be argued, by analogy to judicial review of administrative tribunals, that unless a municipality's interpretation of its power is "patently unreasonable", in the sense of being coloured by bad faith or some other abuse, the interpretation should be upheld.
It may be that, as jurisprudence accumulates, a threshold test for judicial intervention in municipal decisions will develop. For the purposes of the present case, however, I find it sufficient to suggest that judicial review of municipal decisions should be confined to clear cases. The elected members of council are discharging a statutory duty. The right to exercise that duty freely and in accordance with the perceived wishes of the people they represent is vital to local democracy. Consequently, courts should be reluctant to interfere with the decisions of municipal councils. Judicial intervention is warranted only where a municipality's exercise of its powers is clearly ultra vires, or where council has run afoul of one of the other accepted limits on municipal power.
This must be the theme. Against this background, I turn to the grounds of review advanced on this appeal: (1) that the Resolutions were beyond the City's powers; and (2) that the Resolutions violate the rule against discrimination.
B. Were the Resolutions Beyond the City's Powers?
The City's powers are determined by the Vancouver Charter, enacted by the Legislature of British Columbia. Generally, the Council may provide for "the good rule and government of the city": s. 189. This is in accordance with the purpose generally ascribed to municipal legislation -- to promote the health, welfare, safety or good government of the municipality: I. M. Rogers, The Law of Canadian Municipal Corporations (2nd ed. 1971), at p. 387. Specifically, "the City has full power to engage in any commercial, industrial or business undertaking": s. 137(1). This power extends to doing anything which is related to the commercial or business undertaking: "The Council, in addition to the powers specifically allotted to it, shall have power to do all such things as are incidental or conducive to the exercise of the allotted powers": s. 199. The City also has the power to acquire personal property required for the purposes of the City: s. 190.
Having conferred these broad powers on City Council, the Vancouver Charter goes on to specifically state areas in which Council can differentiate or discriminate between groups or classes -- the areas of licensing and taxation: s. 203. Similarly, the grant of a special franchise, privilege, immunity or exception must be authorized by a by-law requiring the assent of the electors: s. 153.
The first Resolution in issue on this appeal, the Resolution not to do business with Shell until it stops trading with South Africa, clearly can be defended under the power of the City to engage in commercial and business activities. The City needs fuel. Fuel may be purchased from a variety of firms. This means that the City must of necessity discriminate between suppliers of fuel, as Sopinka J. concedes (at p. 282). The City and its agents doubtless make thousands of similar decisions each month, without any suggestion that the City must justify the reason why it chooses one firm over another.
The attack on this Resolution as well as on the second Resolution is based solely on the motives that led to its adoption. It is said the motives for choosing other companies over Shell are unrelated to the business of the City and that these improper purposes render the otherwise legitimate decision invalid.
At this point, we must inquire into the legal principles relevant to review of municipal decisions on the basis of motive. The actions of a statutory body or municipality can be said to be beyond its powers in one of two ways. First, it may be alleged that the action itself is beyond the authority's powers. Second, it may be alleged that while the action is within the municipality's powers, the purpose for which the action was taken was outside the municipality's powers, thereby rendering the action itself invalid. This case falls into the second category.
The law governing review under this head is sometimes referred to as the "doctrine of improper purposes". The rule was first set out in an expropriation case, Galloway v. Mayor and Commonalty of London (1866), L.R. 1 H.L. 34, per Lord Cranworth (at p. 43):
. . . when persons embarking in great undertakings, for the accomplishment of which those engaged in them have received authority from the Legislature to take compulsorily the lands of others, making to the latter proper compensation, the persons so authorized cannot be allowed to exercise the powers conferred on them for any collateral object; that is, for any purposes except those for which the Legislature has invested them with extraordinary powers.
This doctrine has been applied to municipalities as well as to administrative agencies: Lamb v. Town of Estevan (1922), 16 Sask. L.R. 220 (C.A.); Re Burns and Township of Haldimand (1965), 1965 171 (ON CA), 52 D.L.R. (2d) 101 (Ont. C.A.). Recently, in England, it was used to invalidate a by-law similar to the resolutions at issue on this appeal: R. v. Lewisham Borough Council, ex parte Shell UK Ltd., [1988] 1 All E.R. 938 (Q.B.D.).
Nevertheless, application of the doctrine of improper purposes to municipal authorities remains problematic. Municipal legislation is governmental legislation, effected by duly elected representatives. It is often difficult to determine precisely what considerations may have led to the passage of legislation. Even where the preamble or text purports to give reasons, votes may have been cast for quite different reasons. While administrative boards give reasons expressly explaining the basis of their decision, this is not the case for governmental bodies. Thus Dickson J. noted in Thorne's Hardware Ltd. v. The Queen, 1983 20 (SCC), [1983] 1 S.C.R. 106, at pp. 112-13: "governments may be moved by any number of political, economic, social or partisan considerations". He went on to state that as a general rule the motives of governments enacting subordinate legislation should not be inquired into.
A number of Canadian courts have rejected the notion that municipal legislation, short of evidence of bad faith, should be invalidated on the ground that it was passed for improper purposes, particularly in cases where the municipality can be seen as expressing the moral view of its citizens.
In Quebec, it has been held that in the absence of fraud, corruption or oppression, courts will not look behind a by-law to learn the motive: Mounterbrooke Inc. v. City of Montreal, 1960 249 (QC CS), [1963] R.L. 28. In Ontario, it was stated, per Middleton J., that "[w]ith regard . . . to all questions which arise regarding matters which have or are supposed to have some relation to morals or social questions, nothing could be more dangerous than any attempt to enter upon the motives and reasons which have actuated the legislative body": Re Foster and Township of Raleigh (1910), 22 O.L.R. 26, at p. 27.
More recently, in Smith v. White City (Village) (1989), 1989 5082 (SK QB), 81 Sask. R. 79 (Q.B.), it was said that the courts will not inquire into the motives that may have actuated council members in passing a by-law except where such motive has been evidenced by some overt act of bad faith. It was held that it was not bad faith when council, instead of granting a permit for a video arcade, adopted a by-law prohibiting arcades directed exclusively at the applicant. The court acknowledged the role of council in "reflect[ing] the conscience of the community" (p. 80).
On the basis of these Canadian authorities, a case might be made that the court on this appeal should not inquire into the motives of the City of Vancouver in deciding not to deal with Shell. That question, however, need not be decided on this appeal, since I am satisfied that in any event, the motives of the City of Vancouver cannot be said to have exceeded the powers which the Legislature has conferred on it.
The question is whether City Council's motives in this case fall outside the area of the City's legitimate concern. The Vancouver Charter empowers Council to "provide for the good rule and government of the city": s. 189. My colleague and I agree that this clause permits Vancouver City Council to enact measures for the benefit or welfare of the inhabitants of the City. We part company on what this phrase includes.
My colleague adopts a narrow view of the welfare of the inhabitants of the City. He asserts that the City's Resolutions effect a purpose "without any identifiable benefit to its inhabitants" (p. 280) and speaks of "matters external to the interests of the citizens" (p. 279). He appears to define "municipal purposes" essentially in terms of provision of basic services to the inhabitants of the City.
I would cast the proper functions of a municipality in a larger mould. The term "welfare of the citizens", it seems to me, is capable of embracing not only their immediate needs, but also the psychological welfare of the citizens as members of a community who have an interest in expressing their identity as a community. Our language recognizes this: we speak of civic spirit, of city pride. This suggests that City Council may properly take measures related to fostering and maintaining this sense of community identity and pride. Among such measures may be found community expression of disapproval or approval of different types of conduct, wherever it is found. The right of free expression, one of the most fundamental values of our society, may be exercised individually or collectively. Are the citizens of a city to be prevented from expressing through their elected representatives their disapproval of conduct which they feel to be improper? Are they to be forced to do business with a firm whose conduct they see as objectionable, simply because the conduct occurs outside the territorial boundaries of the city? Can the desire of the citizens' elected representatives to express their views on such matters and to withdraw support for the conduct to which they object by refusing to do business with its perpetrators be said to be totally unrelated to the welfare and interests of the citizens of the city? To all these questions I would answer no.
A number of considerations support this view. The first is the need, referred to earlier, to adopt a generous approach toward municipal legislation. Courts should not be quick to substitute their views for those of elected council members on what will best serve the welfare of the city's citizens. That is the responsibility of the elected councillors. Unless they have clearly gone beyond the city's powers, the courts should not interfere: Kuchma v. Rural Municipality of Tache, supra.
The second consideration supporting this view is the wording of the Vancouver Charter. As I read it, it amply supports a broad view of the City's proper concerns. The Council is to "provide for the good rule and government of the city": s. 189. These words are not restricted to the provision of services. They are broad enough to encompass expression of community concerns about what is happening outside the community's boundaries. Collective expression through elected representatives may be seen as a proper function of "government". As such, it falls within s. 189 of the Vancouver Charter. A broad approach to the powers of the City finds further support in s. 199, which allows Council "to do all such things as are incidental or conducive to the exercise of the allotted powers".
My colleague Sopinka J. dismisses these provisions as "general sections found in most if not all municipal Acts" which "must be construed subject to the limitations imposed by the purpose of the statute as a whole" (p. 278). He concludes that "[a]ny powers implied from their general language must be restricted to municipal purposes and cannot extend to include the imposition of a boycott based on matters external to the interests of the citizens of the municipality" (pp. 278-79). It seems to me that this reasoning begs the essential question: what are proper "municipal purposes"? What matters are truly "external to the interests of the citizens"? In determining the answers to these questions, it is important to recognize the changing nature and role of municipal government in Canada. As noted earlier, municipalities have evolved significantly over the last century, in both size and purpose. As Rogers states, supra, § 63.31, at p. 357: "Functions generally accepted as being within the purview of legitimate municipal endeavour today were not always so regarded . . .". Thus, even if the expression of collective values was not traditionally seen as a function of municipal authorities, the growing sophistication and stature of a contemporary city such as Vancouver requires that the scope of "municipal purposes" be determined with reference to this current reality.
Nor can I agree that the fact that the Vancouver Charter authorizes the City to participate in public works projects with other municipalities and to acquire property for City purposes indicates the intent that in no other cases may the Council consider matters or events outside the boundaries of the City. These provisions seem to me not to be directed at the issue of territorial boundaries, so much as to defining the sorts of activities the municipality can engage in, wherever they may take place.
Finally, I cannot agree with my colleague that the phrase "good rule and government of the city" (p. 278) places a territorial limit on the factors which Council may consider in making decisions which are within its express power to make. The phrase is capable of encompassing matters outside the City's boundaries, provided they relate to the welfare of its citizens.
The truth of the matter is that provisions in municipal Acts for the "good government" or general welfare of the citizens, far from being mere surplusage as my colleague suggests, found their origin in the desire of legislatures to prevent the decisions of municipal councillors being struck down by the courts. If the courts interpret them narrowly, they will defeat the very purpose for which these provisions were enacted. Rogers states, supra, § 63.35, at p. 364:
Undoubtedly the inclusion of "general welfare" provisions was intended to circumvent, to some extent, the effect of the doctrine of ultra vires which puts the municipalities in the position of having to point to an express grant of authority to justify each corporate act.
Even accepting that lower courts have held that these phrases must be read "subject to the general intent and purport of legislation respecting municipal institutions" (Rogers, supra, § 63.35, at p. 366), the fact remains that legislatures introduce clauses such as these for the very purpose of permitting municipalities themselves to decide what is in the best interests of their citizenry.
A third consideration supporting a broader view of the City's powers is the fact that many other municipalities interpret their mandate in similar terms. The City of Vancouver does not stand alone in its view that the welfare of its citizens extends to action based on the community's moral views about what may be happening outside the municipality. Council was advised, before adopting the Resolutions, that approximately 30 cities had adopted a preferential purchasing policy boycotting Shell products. The brief which Shell filed before City Council contains a copy of a publication which informs us that "[a] number of local governments in the US are relentlessly pursuing pledges they made a few years ago to stop doing business with companies that continue to sell to South Africa.... One such local government is Dade County, Florida, which includes the city of Miami." Clearly many municipalities share the view that the welfare of the citizens of a city extends to declining to do business with companies whose conduct the citizenry finds to be morally unacceptable.
Finally, support can be found in the case law for the proposition that it is within the powers of Canadian municipal authorities to act for purposes that touch on matters outside their physical boundaries. In a case very like this one, Baird v. Corporation of the District of Oak Bay (1982), 21 M.P.L.R. 278, the British Columbia Supreme Court upheld a by-law providing for a referendum on nuclear disarmament. On my colleague's reasoning, the by-law would have been invalid, disarmament being a matter of national and international concern. Proudfoot J., however, held (at p. 280) that this was "a question that affects the municipality and with which the council has power to deal".
Against this Canadian authority stands the English case of R. v. Lewisham London Borough Council, ex parte Shell UK Ltd., supra. There the court quashed a decision by the Borough Council to boycott Shell's products with a view to improving race relations within the borough and to pressuring Shell to divest from South Africa. However, the case may be of limited assistance in the case at hand.
First, as my colleague Sopinka J. notes, that decision appears to be based on the restriction in England of municipal governments to purely narrow "regulatory" functions in implementation of the legislation of Parliament. This narrow role is reflected in the statutory regime under which all local governments in Britain must operate, a regime which is substantially different from that in issue in the case before us. For example, under s. 135 of the Local Government Act 1972 (U.K.), 1972, c. 70, all local authorities are required to make standing orders governing contract procedures, which in turn must make provision for the calling of tenders. As Southin J.A. noted in the court below, the Vancouver Charter contains no similar requirement that the City put out its requirements for goods to tender, and the City has not passed any by-law tying itself to any tendering scheme.
Second, in making its decision, the court in Lewisham left to one side the powers of the Borough Council to act for the "good government" of the borough or to do business. Rather, as the court noted, the whole argument was directed to the scope of s. 71 of the Race Relations Act 1976 (U.K.), 1976, c. 74, which places a duty on local authorities to take measures aimed at eliminating unlawful racial discrimination.
Finally, Lewisham seems to have turned, at least in part, on the perception that the borough was attempting to "punish" Shell; in doing this it was seen as exceeding its authority. The court relied on Wheeler v. Leicester City Council, [1985] A.C. 1054 (H.L.), where, contrary to its previous practice, a city council refused to allow a local rugby club which had visited South Africa to use the city's recreational grounds. The House of Lords held that it was unreasonable to punish the club for not conforming to the council's political beliefs. Significantly, the city's anti-apartheid policy itself was not attacked. It is doubtful that the Wheeler rationale of punishment could find any application to the Resolutions in the case before us. The Vancouver City Council does not appear to have been motivated by a desire to punish Shell. Nor was Shell deprived of a "right" or entrenched privilege.
Given these differences, the decision in Lewisham is of questionable assistance on this appeal. I prefer the view of Proudfoot J. in Baird, supra, that matters that transcend municipal boundaries may properly serve as motives for municipal decisions.
As discussed earlier, scholars are critical of the frequency with which courts disguise an assessment for reasonableness in the cloak of a review for vires. On one view of my colleague's reasons, they do this very thing. Sopinka J. correctly states that the reasonableness of the Resolutions is not in issue, only the power of the City to pass them (p. 274). Yet he goes on to hold that the Resolutions must fall because they are "based on matters external to the interests of the citizens of the municipality" (p. 279). But that is the very question at stake. What is external to the interests of the citizens? What, conversely, is in their interests? The City councillors, after hearing both sides, took one view -- a view which many other municipal councils have taken. My colleague takes another. In my view, it is the Council's judgment which should prevail. To repeat the words of Estey J. in Kuchma v. Rural Municipality of Tache, supra (at p. 243):
Upon the question of public interest, courts have recognized that the municipal council, familiar with local conditions, is in the best position of all parties to determine what is or is not in the public interest. . . .
In summary on the first issue, I am satisfied that the purposes of City Council in resolving not to do business with Shell were proper and fell within the powers of the City under the Vancouver Charter.
C. Are the Resolutions Invalid on the Ground of Discrimination?
The City has conceded that the Resolutions discriminate against Shell. The only issue is whether the discrimination is authorized by the Vancouver Charter.
The rule pertaining to municipal discrimination is essentially concerned with the municipality's power. Municipalities must operate within the powers conferred on them under the statutes which create and empower them. Discrimination itself is not forbidden. What is forbidden is discrimination which is beyond the municipality's powers as defined by its empowering statute. Discrimination in this municipal sense is conceptually different from discrimination in the human rights sense; discrimination in the sense of the municipal rule is concerned only with the ambit of delegated power.
It follows that when it is alleged that a municipality has improperly discriminated against a citizen, the question for the court is whether the discrimination was authorized by the statute from which the municipality draws its powers. If the legislation authorizes the impugned distinction, the rule is not breached: R. v. Sharma, 1993 165 (SCC), [1993] 1 S.C.R. 650. As my colleague Sopinka J. puts it, "[t]he appropriate question is whether discrimination is expressly or impliedly authorized" (p. 282).
Discrimination in the granting of licences, taxes and municipal privileges is generally viewed as requiring express authorization by the empowering legislation because of the presumption that the legislature intends all citizens to be treated equally on such matters. Therefore, unless the statute clearly provides the contrary, the municipality has no power to discriminate. The Vancouver Charter does so provide, in s. 203:
- Where and to the extent that the Council is authorized to regulate, license, or tax persons carrying on a business, trade, profession, or other occupation, it shall have the power to
(b)differentiate and discriminate between groups or classes both as to the amount of any licence fee or tax to be paid and the terms and conditions under which any group or class may or may not carry on the business, trade, profession, or other occupation;
The exercise of a municipality's business powers, however, stands on a different footing. Here the presumption is that the municipality has the power to make distinctions between citizens and firms on a wide variety of grounds. In exercising its business powers a municipality may -- indeed must -- discriminate between the multitude of parties with whom it may buy, sell and otherwise transact commerce. To require equal treatment would, apart from all other considerations, be practically unworkable. The affairs of a large city would grind to a halt if each transaction had to be scrutinized to ensure that it was equally open to everyone else in the business. Accordingly, the power to discriminate in the exercise of municipal business powers is readily inferred from general language authorizing a city to do business and to act for the good rule and government of the city. On this my colleague and I appear to agree. Sopinka J. accepts that discrimination could take place for commercial or business reasons (at p. 282) or for reasons "grounded in promoting the health, safety or welfare of the inhabitants of the City" (p. 282).
Since the question of municipal discrimination is essentially one of the municipality's power under its enacting legislation, it is hardly surprising that here, as in the discussion of the power of the municipality, the difference between my colleague Sopinka J. and myself lies in our different perceptions of the compass of the concept of promoting the health, safety or welfare of the inhabitants of the City. On the view I would take of that phrase, the concept encompasses not only the provision of basic services to the inhabitants of the municipality, but extends to the expression by the City on behalf of its citizens of approval or disapproval of conduct, whether within the City or outside of its boundaries. If this is accepted, it follows that the Resolutions can be justified on the ground that they fall within the powers of the City.
This reasoning is consistent with the decision of this Court in Roncarelli v. Duplessis, 1959 50 (SCC), [1959] S.C.R. 121. The basis of that decision, as Sopinka J. points out (at p. 276), was that the permit in question was quashed because it had been issued "for reasons which are unrelated to the carrying into effect of the intent and purpose of the Act" (p. 156, per Martland J.). That cannot be said in the case at bar, on the view I take of the case. I hasten to add that the result might be different if the reasons for the impugned act amounted to discrimination under either s. 15 of the Canadian Charter of Rights and Freedoms or a provision of the Human Rights Code, a question which does not arise on this appeal.
Once the Resolutions are found to be within the City's powers, one is led to the same conclusion on the issue of discrimination as that arrived at by the court in Hignell v. City of Winnipeg, 1933 469 (MB KB), [1933] 3 W.W.R. 193 (Man. K.B.). It was there held that the city was entitled to award contracts only to union shop employers on the ground that the council was entitled to show concern for wages paid within the city and to maintaining good relations with trade unions. If one concludes that Council in this case was entitled to consider the matters it did in arriving at its decision not to do business with the appellant, the same result follows.
It remains to consider s. 153 of the Vancouver Charter, which requires a special voter by-law before conferral of "any special rights, franchise, privilege, immunity, or exception beyond such as all others in the like case are entitled to . . . ". The Court of Appeal read this section as confined to "such things as an exclusive right to carry on a particular business within the City" (58 B.C.L.R. 285, at p. 287). Sopinka J., on the other hand, seems to read the section as prohibiting, at the very least, distinctions between fuel companies dealing with South Africa (at pp. 283-84). All such companies, on this interpretation, must be treated equally, barring special approval of the voters. The consequences of such a conclusion would be that a routine decision to contract for fuel to one firm rather than another for whatever reason would require specific approval of the voters in a voter by-law. The Court of Appeal's interpretation would seem to me to be the more reasonable one. I note additionally that the section is made subject to other provisions of the Vancouver Charter. On this basis, it might be argued that business and commercial decisions are exempted.
The Constitutional Questions
The appellant argues that the Resolutions infringe s. 91(2) of the Constitution Act, 1867, and s. 2(b) of the Canadian Charter of Rights and Freedoms.
Under s. 91(2) of the Constitution Act, 1867, it is argued that the Resolutions impinge upon exclusive federal jurisdiction over trade and commerce. I agree with Southin J.A. in the Court of Appeal below that while the Resolutions may have an international aspect, they are in pith and substance municipal legislation and hence constitutional.
Under s. 2(b) of the Charter, it is argued that the Resolutions impinge upon the appellant's freedom of opinion on the matter of continuing to do business with South Africa. I am of the view that, assuming a corporation such as Shell can invoke the right of free expression, the infringement alleged by it is so trivial as not to merit serious scrutiny. I agree with Southin J.A. that what the appellant was really complaining about was unequal treatment, a claim that would fall under s. 15 of the Charter if the type of discrimination there prohibited was established. That case, however, was not made, and need not be considered.
I would answer the constitutional questions in the negative.
Disposition
I would dismiss the appeal and answer the constitutional questions in the negative.
The judgment of La Forest, Sopinka, Cory, Iacobucci and Major JJ. was delivered by
Facts
This case concerns the validity of certain municipal resolutions (the "Resolutions") made in order to sanction Shell Canada Products for its commercial activities in South Africa. The appellant Shell Canada Products Ltd. is a Canadian company. It is a subsidiary of Shell Canada Ltd. (Shell Canada) which is indirectly controlled by the Royal Dutch Petroleum Company of the Netherlands and the Shell Transport and Trading Company, p.l.c., of the United Kingdom (the Royal Dutch/Shell Group). The Royal Dutch/Shell Group also indirectly controls "Shell South Africa".
The appellant carries on business within Vancouver through the retail marketing of petroleum products and runs approximately 24 service stations in the City. It also is involved in wholesale marketing through agents for retail distribution. Shell Canada also exports sulphur to South Africa, though it has actively supported a number of anti-apartheid initiatives. Prior to the Resolutions, the appellant would periodically be invited to tender bids for municipal contracts to supply petroleum products, and in 1988, for example, sales from emergency or "spot" purchases brought in roughly $20,000 in revenue to the appellant. Since the Resolutions at issue here were passed, the appellant has not been awarded any contracts from the City of Vancouver.
Chevron Canada Ltd., a subsidiary of Chevron Corporation, owns 50 percent of Caltex, a company which markets petroleum products in South Africa. The City of Vancouver purchases petroleum products from Chevron Canada Ltd. valued at approximately $1.2 million in 1988.
The Resolutions in issue were passed by the Vancouver City Council by a vote of 6 to 5 on September 12, 1989 and read as follows:
THAT WHEREAS the citizens of Vancouver recognize their collective responsibility as a community to express their repugnance of and moral outrage against the racist apartheid regime in South Africa and to take action to bring about the end of apartheid;
AND WHEREAS the system of apartheid in South Africa is a form of institutionalized racism which denies the majority of the population fundamental human rights including the right to participate in the political process;
AND WHEREAS apartheid further denies and limits the majority population's basic human and civil rights to employment, education, freedom of speech, press, and assembly, and a just legal system;
AND WHEREAS the City of Vancouver has by its previous actions affirmed its right to measure the moral character of its business relations in determining with whom it shall conduct business or permit to conduct business; and is now proposing to implement resolutions which while more broadly based may be implemented to require the City to selectively purchase from and contract with companies that do not do business in or with South Africa amongst other criteria;
AND WHEREAS Royal Dutch/Shell is a key multinational oil company which supplies fuel to the South African police and military, the brutal enforcers of apartheid;
AND WHEREAS Royal Dutch/Shell is the target of an international boycott of all of its subsidiaries and products because of its involvement in South Africa;
AND WHEREAS Royal Dutch/Shell and its majority owned Canadian subsidiary, Shell Canada, by definition and in accordance with its own and other data, does do business in and with South Africa, and through Shell Resources Canada exports sulphur through the port of Vancouver to South Africa;
THEREFORE BE IT RESOLVED THAT the City of Vancouver, henceforth, will not do business with Royal Dutch/Shell and Shell Canada until Royal Dutch/Shell completely withdraws from South Africa;
FURTHER BE IT RESOLVED THAT the City of Vancouver from this day forward is declared "Shell Free" until that time when Royal Dutch/Shell disinvests from South Africa.
In October of 1989, the appellant applied to the Supreme Court of British Columbia for an order quashing the Resolutions, alleging that the Resolutions were discriminatory, that they were ultra vires the authority of the municipality under the Constitution Act, 1867, that they violated the Vancouver Charter, S.B.C. 1953, c. 55, that they were vague and uncertain, and that they infringed s. 2 of the Canadian Charter of Rights and Freedoms. The Resolutions were quashed by an order of Maczko J. of the Supreme Court of British Columbia dated May 24, 1990: (1990), 1990 1180 (BC SC), 46 B.C.L.R. (2d) 346. The British Columbia Court of Appeal allowed the City of Vancouver's appeal on July 22, 1991: (1991), 1991 5726 (BC CA), 57 B.C.L.R. (2d) 345, with supplementary reasons issued on September 11, 1991: (1991), 1991 8361 (BC CA), 58 B.C.L.R. (2d) 285. On June 4, 1992, this Court granted leave to appeal: [1992] 2 S.C.R. x.
Relevant Statutory Provisions
Vancouver Charter, S.B.C. 1953, c. 55
(1) Except as otherwise provided, the powers of the city shall be exercisable by the Council. Without limiting the generality of the foregoing, and subject to any express limitation in this Act, the City has full power to engage in any commercial, industrial or business undertaking.
A by-law or resolution duly passed by the Council in the exercise of its powers, and in good faith, shall not be open to question in any Court, or be quashed, set aside, or declared invalid, either wholly or partly, on account of the unreasonableness or supposed unreasonableness of its provisions or any of them.
Any of the powers of the Council may be exercised by by-law. They may likewise be exercised by resolution in any case where a by-law is not specifically required, but
(a)a by-law shall not be subject to amendment by a resolution; and
(b)where the Council in the exercise of a power directs that a thing should or should not be done, and a fine or penalty is inflicted for failure to comply, the power shall be exercised by by-law.
Except as otherwise provided by this or some other Act, the Council shall not have the power to grant to any person any special rights, franchise, privilege, immunity, or exception beyond such as all others in the like case are entitled to, unless the granting of the same has been authorized by a by-law requiring the assent of the electors.
The Council may provide for the good rule and government of the city.
The Council may provide
(a)for acquiring such real property (within or without the city) and personal property as may be required for the purposes of the city;
The Council, in addition to the powers specifically allotted to it, shall have power to do all such things as are incidental or conducive to the exercise of the allotted powers.
Where and to the extent that the Council is authorized to regulate, license, or tax persons carrying on a business, trade, profession, or other occupation, it shall have the power to
(a)divide and subdivide such businesses, trades, professions, or other occupations into as many groups or classes as it sees fit, having regard to the number of persons engaged therein, the extent of the accommodation offered to the public, or on such other basis as the Council may think expedient;
(b)differentiate and discriminate between groups or classes both as to the amount of any licence fee or tax to be paid and the terms and conditions under which any group or class may or may not carry on the business, trade, profession, or other occupation;
(c)define any business, trade, profession, or other occupation;
(d)prohibit, but only by the unanimous vote of the members present.
- (1) The Council may from time to time make by-laws
(a)for providing for the licensing of any person carrying on any business, trade, profession, or other occupation;
(b)for fixing the fee for the granting of any permit or of any licence, which may be in the nature of a tax for the privilege conferred by it;
(c)for providing for enforcing payment of any licence fee, and for prohibiting any person from carrying on any business, trade, profession, or other occupation without first being licensed therefor;
(q)for providing that a licensee under this Part shall not refuse to sell any goods or furnish any service or accommodation to a person by reason only of such person's race, creed, colour, religion, sex, marital status, physical or mental disability, nationality, ancestry, place of origin or political beliefs.
Judgments Below
Supreme Court of British Columbia (Maczko J.)
Maczko J. began by noting that the respondent purchases approximately $1.4 million worth of petroleum products each year. One of its suppliers is Chevron Canada Ltd., which does business with South Africa through a subsidiary company. According to Maczko J. (at p. 347):
Shell was picked on as a symbol, and it is clear from the minutes of the council meeting that council realized that they were discriminating against Shell because it has business connections with South Africa's apartheid regime. It is clear that the council was motivated by a desire to make a symbolic gesture against international companies with business links in South Africa.
The City conceded that the Resolutions discriminate against the appellant, but argued that there was no legal or statutory prohibition against such discrimination. It contended that its actions were purely business in nature, and that in its corporate capacity, the respondent is not "constrained any more than any other business acting in that capacity" (p. 347). Maczko J. disagreed. He stated that the respondent is a statutory body acting under statutory constraints, and that on that basis, any business decisions that are unfair or unreasonable will be safe from attack only as long as they are made within the respondent's jurisdiction.
Maczko J. found that the respondent had sought to "use its statutory power to do business to affect matters in another part of the world" (pp. 348-49). He was of the view that doing so was not contemplated by the Vancouver Charter. The considerations underlying the Resolutions were "not relevant to the business of the city of Vancouver, as, for example, considerations of local commercial conditions and concern for local wage rates might be" (p. 349). According to Maczko J., the respondent could not deprive its citizens of ordinary rights or business opportunities merely because it perceives some wrong occurring in some other part of the world. Its commercial decision-making power as delineated in the Vancouver Charter does not allow for that. Relying upon the principles enunciated by this Court in Roncarelli v. Duplessis, 1959 50 (SCC), [1959] S.C.R. 121, Maczko J. held, at p. 351, that:
. . . the Vancouver Charter grants the city powers and obligations which are to be framed within the intent and purpose of that Act, namely, the government, administration and operation of the city of Vancouver. In my view, this does not include the governing of the state of South Africa.
The trial judge found persuasive the decision of the English Court of Queen's Bench in R. v. Lewisham London Borough Council, ex parte Shell UK Ltd., [1988] 1 All E.R. 938. The facts in that case were similar to those in the one at bar, and the English court held that although the decision of the Borough Council was not unreasonable as being beyond the scope of the Council's discretion, it had nonetheless been motivated by an "extraneous and impermissible purpose" (p. 952). Shell UK had done nothing unlawful, and to punish it for investing in South Africa was to act unfairly and in a manner which required the court to intervene.
Maczko J. held that the City had gone beyond the Vancouver Charter because it sought to use its power to affect matters in South Africa, not the City of Vancouver. He concluded his judgment by stating that although the respondent has a great deal of latitude in its business dealings, that does not extend to discriminating against a particular corporation for dealing with South Africa. To hold otherwise would mean that (at p. 353):
. . . on another day another council could discriminate against a corporation or a citizen because it is doing business with the United States or with a communist country, or, indeed, because its employees have been organized by a particular trade union. In refusing to do business with Shell, the council is not pursuing an interest which affects the business of running the city of Vancouver. It is pursuing a philosophical or political interest beyond that which the Charter contemplates.
The Resolutions were accordingly quashed.
Court of Appeal of British Columbia (Toy, Southin and Cumming JJ.A.)
Judgment was delivered by Southin J.A. She noted first that the Vancouver Charter contains no stipulation that the respondent put out its requirements for goods to tender, and that the respondent had not passed any by-law trying itself to a tendering scheme. The respondent delegates various purchasing powers to its civil service. In that context, the practical impact of the Resolutions was that those to whom authority has been delegated had had their authority limited.
Southin J.A. perused various provisions of the Vancouver Charter, and concluded that there was no express limitation on the respondent's commercial power. In her view (at p. 350):
All the powers of the Council are the gift of the Legislature of British Columbia. There is nothing to prevent the Legislature, if it deems it advisable, from inserting into the Vancouver City Charter a clause that all the powers conferred by it are to be exercised only for the purposes of the City of Vancouver as such and for no other purpose.
Hence, she held that the respondent (subject to any restraints that may be imposed by the Canadian Charter of Rights and Freedoms and conflict of interest principles) "may decline, for any purpose whatsoever, to purchase goods and services from anyone whom it pleases to put, for political reasons, on its own collective blacklist" (p. 350).
The appeal was accordingly allowed with costs.
Supplementary Reasons of the Court of Appeal
The supplementary reasons addressed three points: (1) whether the Resolutions because of their discriminatory nature were unlawful at common law or contrary to s. 153 of the Vancouver Charter; (2) whether they infringed s. 91(2) of the Constitution Act, 1867 relating to the regulation of international trade and investment; and (3) whether the Resolutions violated s. 2(b) of the Canadian Charter of Rights and Freedoms in that they infringed the appellant's freedom of opinion on continuing to do business with South Africa.
Southin J.A. found that s. 153 of the Vancouver Charter only contemplated such things as an exclusive right to carry on a particular business within the City. As such, it has nothing to do with the situation at bar. With respect to the common law, Southin J.A. was of the view that the Court had already answered that question in its first set of reasons. There was nothing in the Vancouver Charter stipulating that the respondent could not do what it did.
On the second issue, Southin J.A. held that the conduct of the respondent could not be said to impinge upon exclusive federal jurisdiction over trade and commerce. She further opined, at p. 288, that:
What the Council spends when it does business with someone on behalf of the citizens is money which is raised from the citizens by taxation imposed by the Council. The citizens chose that Council to do their spending for them. Such legislation would be a matter, in pith and substance, of s. 92(8), Municipal Institutions.
On the third issue, Southin J.A. stated that it was a nice question whether s. 2 of the Charter could be invoked by a corporation when the law which is attacked applies to corporations only, as one would have thought that a corporation, an artificial person, cannot have any "thought" or "religion" or "opinion" or "conscience". According to Southin J.A., the reason why a corporation was able to invoke s. 2 of the Charter in R. v. Big M Drug Mart Ltd., 1985 69 (SCC), [1985] 1 S.C.R. 295, was because the impugned legislation applied to individuals and corporations alike. As such, what was in issue there was the constitutionality of the law, and s. 52 of the Constitution Act, 1982 came into play. In this case, there was no "law". In the opinion of Southin J.A., what the appellant was really complaining about was the sort of discrimination described in s. 15 of the Charter, and it was not argued before the Court of Appeal that s. 15 confers rights on artificial persons.
Issues
Although the appellant attacked the Resolutions on a number of grounds, I propose to consider only two of them:
(1) Are the Resolutions beyond the powers of the City of Vancouver in that they do not relate to a municipal purpose? and,
(2) Do the Resolutions constitute unauthorized discrimination which is beyond the powers of the City of Vancouver?
The respondent raised a preliminary issue as to whether the actions of Council as embodied in the Resolutions are reviewable. I propose to deal with this issue first.
Reviewability
The respondent submits that the Resolutions are not law enacted by it pursuant to its legislative powers but rather an exercise of its corporate power and hence not reviewable by the court. A variant of this argument is that if the Resolutions are a legal emanation of Council, since the same result could have been achieved by simply refusing to deal with Shell in awarding contracts, the court should not interfere. This latter argument applies only to the first Resolution.
The powers of a municipality are classified for some purposes. The classifications include legislative functions, quasi-judicial functions and business functions. The nature of the function may affect the duties and liabilities of the municipality. Accordingly, it may be liable in contract or tort in respect of its business function but civil liability in respect of its legislative or quasi-judicial function is problematic. In its quasi-judicial function, Council may have a duty of fairness which does not apply in respect of the exercise of its legislative powers. See Welbridge Holdings Ltd. v. Metropolitan Corporation of Greater Winnipeg, 1970 1 (SCC), [1971] S.C.R. 957, and Wiswell v. Metropolitan Corporation of Greater Winnipeg, 1965 106 (SCC), [1965] S.C.R. 512. As creatures of statute, however, municipalities must stay within the powers conferred on them by the provincial legislature. In R. v. Greenbaum, 1993 166 (SCC), [1993] 1 S.C.R. 674, Iacobucci J., speaking for the Court, stated, at p. 687:
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.
It follows that the exercise of a municipality's statutory powers, whatever the classification, is reviewable to the extent of determining whether the actions are intra vires. Normally this is done by a motion to quash or a declaration of invalidity with respect to the act of Council which is impugned. The authorities referred to in argument do not support the contention that the exercise of business or corporate powers is immune from review.
The case of Rogers v. City of Toronto (1915), 1915 496 (ON SC), 33 O.L.R. 89, cited by the respondent on this point, stands for the proposition that the courts cannot assess the reasonableness of a particular exercise of municipal power. But the reasonableness of the Resolutions is not in issue here -- the issue is whether the City had the authority to pass them. More apt is the case cited by the appellant, City of Toronto v. Miller Paving Ltd. (1964), 1964 611 (ON CA), 49 D.L.R. (2d) 214 (Ont. C.A.), leave to appeal to this Court refused, [1965] S.C.R. ix. There, the municipality had passed a resolution requiring construction contractors to be unionized in order to be awarded city contracts. The Ontario Court of Appeal quashed the resolution on the basis that the city had no jurisdiction to pass the resolution and that it was discriminatory in the municipal law sense. This case supports the conclusion that the Resolutions in this case are subject to judicial review on the basis of jurisdiction.
Moreover, there does not appear to be any valid policy ground for providing such immunity. There is good reason to encourage municipalities to act within their statutory powers. An absence of judicial review would leave some ratepayers without an effective remedy. The suggestion that the only remedy is at the polls is of no value to the minority who would be left with no remedy and Council could continue to enlarge its statutory powers as long as it was able to retain its majority support. The public policy in favour of restricting a municipality to its statutory powers exists as much for the minority as for the majority.
The City of Vancouver took action herein by passing resolutions. Clearly this was a purported exercise of its statutory powers. Section 223 of the Municipal Act, R.S.B.C. 1979, c. 290, indicates that all powers of a council may be exercised by by-law or by resolution. Section 151 of the Vancouver Charter repeats this proviso, adding that the powers of Council may be exercised by resolution only where a by-law is not specifically required. A resolution is an act which binds Council and municipal officers and officials until repealed. See I. M. Rogers, The Law of Canadian Municipal Corporations (2nd ed. 1971), at pp. 406.8 and 406.9. In these circumstances, I do not appreciate the force of the argument that the respondent could have accomplished its purpose in some other fashion which would have been immune from judicial review. The respondent argues that it could simply have refused to deal with the appellant. I have difficulty envisaging how this would have been possible without direction from Council. An individual who wishes to engage in conduct and avoid scrutiny of his or her reasons or motives can simply decide to act in a certain fashion. A municipality cannot do this. Any policy or plan not to deal with the appellant would require a decision of Council. Any such decision must be grounded in a statutory power and, whatever its form, would be reviewable. In the absence of such a decision, any attempt to have the staff refuse to deal with the appellant on the basis of a "wink and a nod" would be vulnerable to attack on the basis of absence of authority from Council and would expose the staff to civil liability.
Impermissible Purpose
Generally, a municipal authority is authorized to act only for municipal purposes. In R. v. Sharma, 1993 165 (SCC), [1993] 1 S.C.R. 650, at p. 668, Iacobucci J., speaking for the Court, adopted the principle from S. M. Makuch, Canadian Municipal and Planning Law (1983), at p. 115, that as statutory bodies, municipalities
. . . 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.
The "purposes of the corporation" or "municipal purposes" are determined by reference to not only those that are expressly stated but those that are compatible with the purpose and objects of the enabling statute. In Roncarelli v. Duplessis, supra, at p. 156, Martland J., explaining why the actions of Duplessis exceeded his statutory powers, stated:
. . . it is my view that the discretionary power to cancel a permit given to the Commission by the Alcoholic Liquor Act must be related to the administration and enforcement of that statute. It is not proper to exercise the power of cancellation for reasons which are unrelated to the carrying into effect of the intent and purpose of the Act. The association of the appellant with the Witnesses of Jehovah and his furnishing of bail for members of that sect, which were admitted to be the reasons for the cancellation of his permit and which were entirely lawful, had no relationship to the intent and purposes of the Alcoholic Liquor Act. [Emphasis added.]
In Gershman v. Manitoba Vegetable Producers' Marketing Board, 1976 1093 (MB CA), [1976] 4 W.W.R. 406, the Manitoba Court of Appeal applied this reasoning in finding the actions of a public marketing board unlawful. The board had "blacklisted" an individual for, inter alia, non-payment of debts and thereafter cancelled the credit of the company for whom the individual worked for as long as it continued to employ him. In the course of its judgment the court stated that "public bodies must not use their powers for purposes incompatible with the purposes envisaged by the statutes under which they derive such powers" (at p. 415).
In most cases, as here, the problem arises with respect to the exercise of a power that is not expressly conferred but is sought to be implied on the basis of a general grant of power. It is in these cases that the purposes of the enabling statute assume great importance. The approach in such circumstances is set out in the following excerpt in Rogers, The Law of Canadian Municipal Corporations, supra, § 64.1, at p. 387, with which I agree:
In approaching a problem of construing a municipal enactment a court should endeavour firstly to interpret it so that the powers sought to be exercised are in consonance with the purposes of the corporation. The provision at hand should be construed with reference to the object of the municipality: to render services to a group of persons in a locality with a view to advancing their health, welfare, safety and good government.
Any ambiguity or doubt is to be resolved in favour of the citizen especially when the grant of power contended for is out of the "usual range". See Rogers, supra, at § 64.1, and Re Taylor and the City of Winnipeg (1896), 1896 114 (MB QB), 11 Man. R. 420, per Taylor C.J. In this regard I must respectfully disagree with the view expressed by Southin J.A. that in the absence of an express limitation on the respondent's commercial power it should not be interpreted so as to limit its exercise to municipal purposes.
I must, therefore, determine whether the Resolutions were passed for a municipal purpose. Their purpose is amply defined in the preambles and the operative parts of the Resolutions. The explicit purpose is to influence Shell to divest in South Africa by expressing moral outrage against the apartheid regime and to join the alleged international boycott of its subsidiaries and products until Shell "completely withdraws from South Africa". There is no mention as to how the good government, health or welfare of the City or its citizens is affected or promoted thereby. Specifically, there is no mention of any objective of improving relations among its citizens. In view of the detailed recital of the purposes of the Resolutions, no such implicit purpose can be read in. The fourth recital hints at the existence of a broader program to control with whom the City does business. It refers to doing business with South Africa as one of the criteria to be employed. There is, however, no evidence that such a program exists and, indeed, its existence is contradicted by the fact that the City continued to purchase from Chevron. I therefore agree with the trial judge that the respondent was seeking to use its powers to do business "to affect matters in another part of the world" (pp. 348-49), a purpose which is directed at matters outside the territorial limits of the City.
Is this in relation to a municipal purpose? Clearly there is no express power in the Vancouver Charter authorizing the Resolutions and if they are valid the respondent must rely on such powers being implied. This requires a consideration of the relevant provisions of the Vancouver Charter on the basis of the principles outlined above. So far as the purpose of the Vancouver Charter is concerned it is perhaps best expressed in s. 189, which provides that "Council may provide for the good rule and government of the city". In this regard its purpose does not differ from the purpose generally of municipal legislation which, as stated above, is to promote the health, welfare, safety or good government of the municipality. This places a territorial limit on Council's jurisdiction. No doubt Council can have regard for matters beyond its boundaries in exercising its powers but in so doing any action taken must have as its purpose benefit to the citizens of the City. The Vancouver Charter is careful to expressly provide for activities in which Council is permitted to engage outside of its limits even when such activities clearly redound to the benefit of the inhabitants of the City. Such activities include participation in public works projects with other municipalities (s. 188) and acquiring property required for the purposes of the City (s. 190).
The respondent relied on several other sections of the Vancouver Charter to support the Resolutions. Section 137 gives the City power to engage in commercial, industrial or business undertakings; s. 190 empowers Council to acquire such personal property as may be required for the purposes of the City; and s. 199 allows Council "to do all such things as are incidental or conducive to the exercise of the allotted powers". These sections are general sections found in most if not all municipal Acts and must be construed subject to the limitations imposed by the purpose of the statute as a whole. Any powers implied from their general language must be restricted to municipal purposes and cannot extend to include the imposition of a boycott based on matters external to the interests of the citizens of the municipality.
This conclusion is supported by the decision in R. v. Lewisham London Borough Council, ex parte Shell UK Ltd., supra. In a situation very similar to the present one, the Borough Council decided to boycott Shell's products so as to pressure the company to divest from South Africa. The court held that one improper purpose (the desire to interfere with Shell's lawful trade with South Africa and to encourage a general boycott of Shell's business) required the decision to be quashed, despite there having been a second, proper purpose of a desire to foster better race relations in the borough. The respondent seeks to distinguish the case on the grounds that in England, there is no distinction between a borough's exercise of its regulatory versus its corporate powers as there is in Canada. As discussed earlier, I do not think that this distinction is meritorious when assessing whether a municipality acted for a purpose within its jurisdiction. I find this case to be highly persuasive. I recognize that the laws relating to municipal authority under Canadian law are different in some respects from the law governing boroughs in the United Kingdom, and thus this Court must be cautious in accepting any conclusion based on such difference. However, I am inclined to follow its very persuasive reasoning in determining whether the City's extraterritorial purpose to influence the South African political situation is impermissible and extraneous to the power of a municipality. This is especially so, given the parallel factual situations in the two cases. The respondent placed some reliance on one aspect of the decision in Lewisham, which held, inter alia, that one of the purposes of the policy adopted by the borough was to promote race relations and that this was a lawful purpose for the borough to pursue. This finding does not assist the respondent as this aspect of the policy was expressly authorized by s. 71 of the Race Relations Act 1976 (U.K.), 1976, c. 74, which provided as follows:
. . . to make appropriate arrangements with a view to securing that their various functions are carried out with due regard to the need --
(a)to eliminate unlawful racial discrimination; and
(b)to promote equality of opportunity, and good relations, between persons of different racial groups.
In summary on this point, applying the principles enunciated above, I have concluded, as did the trial judge, that the purpose of the Resolutions is to affect matters beyond the boundaries of the City without any identifiable benefit to its inhabitants. This is a purpose that is neither expressly nor impliedly authorized by the Vancouver Charter and is unrelated to the carrying into effect of the intent and purpose of the Vancouver Charter.
Discrimination
The conclusion that I have reached as to the absence of a municipal purpose is sufficient to dispose of this appeal, but, had I found such a purpose, I would affirm the decision of the trial judge on the second ground. In my view the Resolutions constitute unauthorized discrimination. The respondent has conceded that the Resolutions are intended to discriminate against the appellant and the only issue is whether such discrimination is authorized by the enabling legislation.
The Resolutions of the City of Vancouver are discriminatory in two ways. First, they discriminate against corporations which do business in South Africa and, second, against Shell vis-à-vis Chevron and vis-à-vis other corporations which also do business in South Africa. The trial judge made the following finding (at p. 347):
The city of Vancouver purchases approximately $1.4 million of petroleum products each year. One of the companies from which the city purchases is Chevron Canada Limited which through one of its subsidiaries also does business with South Africa. Shell was picked on as a symbol, and it is clear from the minutes of the council meeting that council realized that they were discriminating against Shell because it has business connections with South Africa's apartheid regime. It is clear that the council was motivated by a desire to make a symbolic gesture against international companies with business links in South Africa.
The trial judge noted that the respondent conceded at trial that the Resolutions discriminate against the appellant, but maintained that there existed no statutory bar to such discrimination in the municipality's business dealings and thus the Resolutions remained lawful. The Court has recently addressed itself to a similar issue in R. v. Sharma, supra. Iacobucci J., for the Court, stated at pp. 667-68:
I agree with Arbour J.A. that this case is governed by the decision of this Court in Montréal (City of) v. Arcade Amusements Inc., supra, with respect to the discrimination in the by-law scheme. In that case, the Court held that the power to pass municipal by-laws does not entail that of enacting discriminatory provisions (i.e., of drawing a distinction) unless in effect the enabling legislation authorizes such discriminatory treatment. See also Rogers, The Law of Canadian Municipal Corporations (2nd ed. 1971), at pp. 406.3-406.4:
It is a fundamental principle of municipal law that by-laws must affect equally all those who come within the ambit of the enabling enactment. Municipal legislation must be impartial in its operation and must not discriminate so as to show favouritism to one or more classes of citizens. Any by-law violating this principle so that all the inhabitants are not placed in the same position regarding matters affected by it is illegal.
The general principle does not apply where the enabling statute clearly specifies that certain persons or things may be excepted from its operation or expressly authorizes some form of discrimination.
Further on in the judgment, it was stated (at p. 668) that:
. . . the general reasonableness or rationality of the distinction is not at issue: discrimination can only occur where the enabling legislation specifically so provides or where the discrimination is a necessary incident to exercising the power delegated by the province (Montréal (City of) v. Arcade Amusements Inc., supra, at pp. 404-6).
In Sharma, a conviction under a by-law prohibiting free-standing street vendors found to be unlawful was set aside and an acquittal was entered.
In dealing with this issue, Southin J.A. in the Court of Appeal was of the view that the approach taken in respect of the first point also applied to the discrimination point. On this approach, there being nothing in the legislation prohibiting the Resolutions, they were valid. With respect, this approach is directly at variance with the decision of this Court in Sharma, supra, and the authorities referred to therein. The appropriate question is whether discrimination is expressly or impliedly authorized. The relevant sections to which I have already referred are ss. 137, 189, 190 and 199 of the Vancouver Charter. They authorize the municipality to engage in business undertakings, to acquire property, real and personal, required for the purposes of the City, to provide for good rule and government, and to do all such things as are incidental or conducive to the specified powers. Obviously in carrying on the business of the City or acquiring property from suppliers or vendors, the City must make choices that can be said to discriminate. Discrimination for commercial or business reasons is a power that is incidental to the powers to carry on business or acquire property. These activities could not be carried on without this power. Different considerations apply to discrimination for non-commercial, non-business reasons that are not grounded in promoting the health, safety or welfare of the inhabitants of the City. It cannot be said that considerations relating to the political policy of a foreign state are so essential to the exercise of enumerated powers as to be implied. Accordingly, ss. 137 and 190 do not assist the appellant. Sections 189 and 199 are general enabling sections which do not expressly or by implication authorize discrimination of the kind in question. As I explained, in dealing with impermissible purpose these sections must be applied having regard to the purpose of the enabling statute to confer power in furtherance of municipal purposes.
Finally, reliance was placed on Hignell v. City of Winnipeg, 1933 469 (MB KB), [1933] 3 W.W.R. 193 (Man. K.B.). In that case, the Manitoba King's Bench refused to interfere with the city's decision to discriminate and to award contracts only to union shop employers on the grounds that such a decision was within the municipality's jurisdiction. In distinguishing this Manitoba case, Maczko J. agreed that the aldermen of Winnipeg were entitled to show concern for wages paid within the city or for maintaining good relations with trade unions, but held that the considerations behind the present Resolutions were not relevant to the business of the City of Vancouver. It is sufficient to say that that case is wholly distinguishable from the present situation given the "extraterritorial" purpose here to influence the international political situation.
In my opinion, not only is discrimination of the kind involved in this case not authorized by the Vancouver Charter, but, arguably, it is prohibited by s. 153, which provides:
- Except as otherwise provided by this or some other Act, the Council shall not have the power to grant to any person any special rights, franchise, privilege, immunity, or exception beyond such as all others in the like case are entitled to, unless the granting of the same has been authorized by a by-law requiring the assent of the electors.
The appellant argues that this section bans the Council from singling Shell out absent any plebiscite. The Court of Appeal gave this short shrift in their supplementary reasons (at p. 287), stating that the section "contemplates such things as an exclusive right to carry on a particular business within the City. It has nothing to do with what the City did here".
I am not convinced that the section is deserving of such a narrow application. Even if the section is limited to granting exclusive rights to do business, it may be triggered by the Resolutions since their effect is to grant to other oil companies the power to do business with the City to the exclusion of Shell. The Resolutions are framed as prohibitions on doing business with Shell but they do indirectly have the effect of granting to some persons rights and privileges not enjoyed by all persons "in the like case". Even if one defines the class affected as narrowly as fuel companies dealing with South Africa, the municipality is still engaged in intra-group discrimination since it was doing business with another oil company with South African ties.
One could argue that the Resolutions in no way grant a privilege to do business and so s. 153 is not triggered. At most, the Resolutions deprive Shell of a privilege. However, such a distinction, between empowering and prohibitory enactments, would appear to be somewhat artificial and was not accepted by the British Columbia Supreme Court in Re Gulf Canada Ltd. and City of Vancouver (1981), 1981 712 (BC SC), 130 D.L.R. (3d) 146, which held that discrimination within a group (of service station companies) is not permitted even if that discrimination is effected by not granting a licence to one company.
It is not necessary to express any final conclusion on this question inasmuch as I have found that the Resolutions are not expressly or impliedly authorized by the Vancouver Charter.
Disposition
In view of the conclusions I have reached, it is unnecessary to deal with the constitutional questions. I would allow the appeal, set aside the judgment of the Court of Appeal and restore the judgment at trial, with costs to the appellant both here and in the Court of Appeal.
Appeal allowed, Lamer C.J. and L'Heureux‑Dubé, Gonthier and McLachlin JJ. dissenting.
Solicitors for the appellant: Clark, Wilson, Vancouver.
Solicitor for the respondent: The City of Vancouver Law Department, Vancouver.
Solicitor for the intervener the Attorney General of Canada: John C. Tait, Ottawa.
Solicitor for the intervener the Attorney General for Ontario: M. David Lepofsky, Toronto.
Solicitor for the intervener the Attorney General of Quebec: Françoise Saint‑Martin, Ste‑Foy.
