Administrative law – Permits and licences – Compliance with legislation – Renewal of business licence – Illegal activities – Judicial review – Administrative decisions – Municipal councils – Hearsay evidence – Jurisdiction – Standard of review – Patent unreasonableness
Coquitlam (City) v. 517011 B.C. Ltd. (c.o.b. Ultimate Shiatsu),  B.C.J. No. 2682, British Columbia Supreme Court, November 24, 2003, Ballance J.
Since August 1999, Ultimate Shiatsu had operated a massage, shiatsu and acupressure business in Coquitlam. Ultimate Shiatsu’s last business licence expired on September 30, 2002 and the City refused to issue a fresh licence. Shortly after the expiration of Ultimate Shiatsu’s last business licence, the City informed Ultimate Shiatsu and its principal that it intended to hold a meeting to consider whether the City should refuse to issue a new business licence. Ultimate Shiatsu was advised that the City Council intended to hear and consider evidence at the hearing, including written and oral evidence of the RCMP, to determine whether Ultimate Shiatsu had engaged in “misconduct in respect of the past operations” warranting refusal to issue a new business licence. Prior to the meeting, counsel for the City provided Ultimate Shiatsu a report prepared by RCMP outlining the facts which led the RCMP to conclude that the true business conducted at Ultimate Shiatsu was that of prostitution. At the Council meeting, the Council also heard evidence from a witness who operates a hair dressing salon next door to Ultimate Shiatsu who advised the Council that men had mistaken her business for Ultimate Shiatsu and had asked her and her staff for sexual acts. Two days after the meeting, counsel for the City informed Ultimate Shiatsu that the City was refusing to issue a new business licence on the grounds that Ultimate Shiatsu had engaged in illegal activities on the premises and that the premises were not being used for the purpose for which they had been licensed.
Ultimate Shiatsu petitioned the court seeking an Order pursuant to section 2 of the Judicial Review Procedure Act, R.S.B.C. 1996, c. 241 that the City’s resolution to refuse to issue it a business licence be quashed and a declaration that such resolution was ultra vires the Local Government Act, R.S.B.C. 1996, c. 323. The City filed its own petition seeking a declaration that Ultimate Shiatsu was in breach of the City’s Trade Licensing Bylaw No. 49, 1972, as amended, as well as section 663 of the Local Government Act.
At the hearing of the petition, Ultimate Shiatsu asserted that there was a lack of relevant evidence before the City for it to reasonably decide whether or not to renew the business licence and that in reaching its decision, the City considered irrelevant and extraneous matters. The court reviewed section 659 of the Local Government Act which provides the City statutory authority to refuse to renew a business licence. Pursuant to this section an application for a business licence may be refused in any specific case but must not be “unreasonably refused”. The court stated that the discretion conferred upon the City by section 659 must be exercised within the limitations imposed by law and “not activated by indirect or improper motives or based upon irrelevant or alien grounds or exercised without taking relevant facts into consideration”, citing Sunshine Valley Co-operative Society v. City of Grandforks,  2 D.L.R. 51 (B.C.C.A.).
The court found that the applicable standard of review of an intra vires municipal decision is one of patent unreasonableness: Shell Canada Products Ltd. v. Vancouver (City),  1 S.C.R. 231.
In this case, the court noted that the chief complaint of Ultimate Shiatsu was that the City improperly relied on hearsay evidence of individuals with respect to the activities on their premises. The court held that it was well established that administrative tribunals, including municipal councils, are entitled to admit and rely upon hearsay evidence so long as the evidence is relevant to the issue at hand and its admission does not breach the rules of natural justice. The court found, based on the totality of the evidence, that the City Council had before it sufficient relevant evidence to reasonably support its decision that Ultimate Shiatsu’s premises were not being used for the purposes for which it had been licensed. The court further found that Ultimate Shiatsu had conducted its business in such a manner as to cause undue disturbance and disruption to the neighbouring hair salon. Therefore, the court held that the City Council had exercised its discretion under section 659 of the Local Government Act judiciously. In the result, the court dismissed Ultimate Shiatsu’s petition and allowed the relief sought by the City.
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