JUDICIAL REVIEW OF MODERN MUNICIPALITIES: RETHINKING VIRES REVIEW.

• Author: Brook, Ted
• Position: Canada

I INTRODUCTION 69 I. The "Modern Municipality" 71 II. Part of a Broader Trend towards deference in Canadian administrative law 75 II THE DOCTRINE OF ULTRA VIRES 76 III A PROBLEMATIC APPROACH 78 I. A Broader Trend 78 IV TWO OBJECTIONS 88 I. First Objection- Prior Jurisprudence 88 II. Second Objection--Lack of Expertise 92 V A TRULY BENEVOLENT APPROACH 95 VI CONCLUSION 96 I INTRODUCTION

Municipalities are creatures of statute. Unlike their provincial and federal counterparts, municipal governments have no constitutional status, but may only exercise the powers conferred upon them by statute. Like all administrative decision-makers--the myriad tribunals, commissions and boards that comprise the Canadian regulatory state--municipalities are subject to judicial review and correction.

This paper focuses on a subset of judicial review of municipal decision-making, namely review for ultra vires or vires review. When a decision-maker, municipal or otherwise, steps outside its delegated authority or moves beyond the scope its powers, its actions are ultra vires. To act ultra vires is to act without jurisdiction. This paper argues that the approach taken in Ontario to the vires review of municipal by-laws diverges considerably from the modern approach to municipal powers embraced by the Supreme Court of Canada.

Consider the following two examples of municipal by-laws that were struck down as ultra vires. In 2011, the City of Toronto enacted By-law No. 12347-2011, banning the possession, sale and consumption of shark fin soup or shark fin products within city limits. (1) In 2012, the City of Ottawa, enacted By-law No. 2012-147, codifying its Urban Design Guidelines for Low Rise Infill Housing and applying them to the zoning of new houses. (2) Both by-laws were challenged as ultra vires a municipality. Toronto did not fare well in court. In 2012, the Ontario Superior Court struck down By-law No. 12347-2011 as ultra vires. (3) Ottawa has been more successful so far. (4)

These two examples are fairly straightforward. Neither raises a truly novel point of law, and while both drew considerable public attention, neither presents an extraordinary set of facts. A City passes a by-law, residents challenge the by-law, and the court reviews the by-law. (5) Nevertheless, these cases should give us pause to think. Municipalities are democratic institutions and the Supreme Court has held that their decisions are owed deference from the courts. (6) If municipal by-laws attract deference, why did the Court in Toronto's case, and the Board in Ottawa's, make no mention of reasonableness? If municipalities are administrative actors, why did neither the Court nor the Board undertake a standard of review analysis? Are municipalities exempt from Dunsmuir v New Brunswick? (7) Does the doctrine of ultra vires replace the normal approach to judicial review for municipalities?

These cases and the questions they raise reflect a problem with the judicial review of municipal by-laws in Ontario. A fissure has emerged in the caselaw, with the Supreme Court of Canada on one side and the courts of Ontario on the other. The Supreme Court's vision of "the modern municipality" has not been fully embraced by the Ontario Court of Appeal and the Ontario Superior Court in regards to vires review. Moreover, the Supreme Court's continued emphasis since Dunsmuir on the need for deference has been heeded sporadically in disputes over the interpretation of municipal powers. (8)

In Ontario, the doctrine of ultra vires has become an enclave of correctness, shielding an older way of thinking about judicial review from the developments of Dunsmuir and its progeny. This paper argues that we must stop thinking about ultra vires as a standalone source of illegality, but instead approach the doctrine through Dunsmuir and the standard of review analysis. Only then will cities like Ottawa and Toronto receive the level of deference befitting a modern Canadian municipality.

Part II outlines the Supreme Court's approach to the judicial review of municipal by-laws, explaining how McLachlin CJC's dissenting opinion in Shell Canada Products Ltd v Vancouver (City) ushered in a new way of thinking about local government. (9) Part III reviews the history of the doctrine of ultra vires and its application to municipal by-laws in Ontario. Part IV explains why the way Ontario courts are applying the doctrine of ultra vires fails to comport with the Supreme Court's "truly deferential" approach to judicial review. Part V, addresses two possible criticisms of the paper's argument. Part VI concludes by considering the practical implications of approaching ultra vires through the Dunsmuir standard of review analysis and how this may change the way that municipal lawyers challenge and defend by-laws in the future.

1. THE "MODERN MUNICIPALITY"

   For most of the twentieth century, Canadian administrative law was encumbered by two conflicting visions of the municipality and its place within the legal system. (10) On one hand, pro-interventionist courts adopted a narrow approach to municipal powers, emphasizing that, as creatures of statute, municipalities must be held to the four corners of their jurisdiction. These courts were greatly influenced by John Forest Dillon, a prominent American legal writer and jurist who advocated for the strict construction of municipal grants of power. (11) An early example of the strict approach is the 1895 case, Merritt v City of Toronto. (12) After the City refused Merritt an auctioneering license because of his "reputation for bad character," Merritt challenged the decision on the grounds that the City's power to regulate auctioning did not include the power to refuse licenses on moral grounds. The Ontario Court of Appeal agreed. Writing for the Court, Osler JA stated that "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." (13)

   On the other hand, many courts adopted a flexible, generous approach to the review of municipal powers. In 1907, in City of Hamilton v Hamilton Distillery Co, (14) the Supreme Court of Canada adopted the "benevolent construction" approach articulated by Lord Russell CJ of the Queen's Bench in Kruse v Johnson. (15) Writing for the Supreme Court, Davis J rejected counsel's argument in favour of narrow construction: "I would not desire to apply the technical or strict canons of construction sometimes applied to legislation authorizing taxation.... [I] f 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." (16)

   These two approaches developed in parallel for years. In 1906, in Ottawa Electric Light Company v The City of Ottawa, the Ontario Court of Appeal endorsed a principle of strict construction. (17) In 1929, in Re Howard and City of Toronto, the Ontario Court of Appeal rejected the principle of strict construction completely, holding that "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." (18) In 1976, in Re Christie Taxi and Doran, the Ontario Court of Appeal took a strict approach, holding that the power to regulate taxi cabs did not include the power to regulate the financial arrangements between taxi cab owners and taxi cab drivers. (19) Similarly, in 1981, in City of Montreal v Civic Parking Centre, the Supreme Court adopted the principle of strict construction. (20) In 1993, in R v Greenbaum, Iacobucci J advocated for the deferential approach but arguably applied the strict construction approach instead. (21)

   This century-long duel came to an end in the 1994 decision of Shell. (22) In a powerful dissenting opinion, McLachlin J (as she was then) advocated for the more flexible, deferential approach. Justice McLachlin criticized the majority for perpetuating an outdated way of thinking about local government. (23) "Municipal bodies," she wrote, have a responsibility "to serve the people who elected them and [courts must] exercise caution to avoid substituting their views of what is best for the citizens for those of municipal councils." (24) Justice McLachlin explained how the benevolent approach served a number of purposes which the narrow approach did 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.... Second, a generous approach to municipal powers will aid the efficient functioning of municipal bodies and avoid the costs of uncertainty attendant on excessive litigation.... Thirdly, a generous approach to municipal powers is arguably more in keeping with the true nature of modern municipalities.... Finally, the broader, more deferential approach to judicial intervention... is more in keeping with the flexible, more deferential approach this Court has adopted in recent cases to the judicial review of administrative agencies. (25)

   Although Justice McLachlin's opinion did not carry the day in Shell, her vision of the "modern municipality" spurred a shift toward the more generous review of municipal action. Six years later, Major J cited McLachlin J's dissent with approval in Nanaimo (City) v Rascal Trucking Ltd, holding that "[m]unicipal councillors are elected by the constituents they represent and as such are more conversant with the exigencies of their community than are the courts." (26) In R v Guignard, LeBel J cited both Nanaimo and McLachlin J's dissent in Shell, stating that the Supreme Court "has often reiterated...