Court of Queen’s Bench of Alberta

Citation: Smith v. St. Albert (City), 2012 ABQB 780

Date: 20121221Docket: 1203 11336

Registry: Edmonton

Between:

Ronald Smith and the Chad Smoke Shop 420 Ltd.

Plaintiffs- and -

The City of St. Albert

Defendant

_______________________________________________________

Reasons for Judgmentof the

Honourable Mr. Justice T.D. Clackson_______________________________________________________

I. Facts and Circumstances

[1] The City of St. Alberta appears to have been concerned about stores opening in the Citythat sold items that might be used by persons involved with narcotics. On November 8, 2011, theCity passed a resolution requiring its administration to:

. . . bring forward recommendations by December 19, 2011, of all recommendedpolicy and/or bylaw amendments (and a schedule thereof) for Council’sconsideration with respect to the selling of paraphernalia by local businesses thatis best connected to the illegal drug industry.

[2] On July 22, 2011, prior to the passage of this resolution, the City Mayor wrote to themayors of some other cities and towns in the greater Edmonton area as follows:

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Below is a resolution recently passed by St. Albert City Council with respect tospecific businesses within our eight communities:

“Administration propose to Council by October 31, 2011 every possiblemeasure that can be taken within the City of St. Albert to control orprohibit the selling of paraphernalia by local businesses that is bestconnected to the illegal drug industry.

This shall include but not be limited to:

Police involvementBusiness licensing options including Business License BylawLand planning/zoning and the Land Use BylawInspection requirementsAge restrictionsAdvertising limitationsUnique feesNAICS classification opportunitiesDrug Dog sniffing”

I would appreciate knowing your experience with this type of retail business; interestinglynow moving out from “big-city” Alberta to smaller cities and towns.

I encourage you to visit your Smoke Shop; you may be surprised.

I realize that some may suggest that this is legal. Our Council wishes to deal with everyfacet of this matter short term and into the future such that the municipality may addressit to the best of our capability.

This motion was passed unanimously by our Council and our police and staff will beworking on this. As you can surmise, we are serious about this matter.

I look forward to hearing from you.

[3] The agenda report for the City dated November 8, 2011, makes the following referencesto explain the issue:

Notice of Motion

On November 8, 2011, Mayor Crouse made the following notice of motion:

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That Administration bring forward recommendations by December 19,2011 of all recommended policy and/or bylaw amendments (and aschedule thereof) for Council’s consideration with respect to the selling ofparaphernalia by local businesses that is best connected to the life galdrug industry.

Administration’s Understanding of intent of the Motion:

It is Administration’s understanding that this motion if passed is intended torequire a comprehensive report and strategy (including any proposed policy orbylaw amendments) by December 19, 2011 on the topic of the selling ofparaphernalia connected to the illegal drug industry. This report would be broughtforward for Council’s consideration and approval.

Operational or Organizational Impacts If Motion is Approved:

The City Solicitor will prepare a detailed report and strategy for Council’sconsideration on December 19, 2011.

Financial Implications of Motions:

None.

BACKGROUND:

On May 11, 2011, Legal Services provided a confidential response to aninformation Request on the topic of “Can the City refuse to issue business licensesor permits to applicants whose intention is to sell items that can and are deemed tobe used for illegal drug use?”

On June 6, 2011, Business and Strategic Services provided a confidentialmemorandum to Council responding to three questions, including: Identify anypotential fees that may be charged to businesses that sell products like glass pipes;Determine what North American Industry Classification System (NAICS) codesother cities may use for these kinds of businesses; and Identify if a NAICS codecan be used as the basis for an additional license fee for businesses in that sector.

On July 4, 2011 Council passed resolution C445-2011 that requiredadministration provide a report on “every possible measure that can be takenwithin the City of St. Albert to control or prohibit the selling of paraphernalia bylocal businesses that is best connected to the illegal drug industry...”. This reportwas to be provided by October 31, 2011, and on October 24, 2011, Legal Services

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provided a confidential report to Council addressing the requirements ofresolution C445-2011.

[4] From that it appears that the City’s Mayor was presuming that the City could legislate toprohibit or control such businesses when he wrote his letter. The letter’s reference to a pastresolution must relate to the resolution identified in the agenda report as having been passed onJuly 4, 2011.

[5] In its report to Council on December 19, 2011, the City’s administration advised asfollows:

The Criminal Code of Canada prohibits the manufacturing, promotion or sale ofinstruments for illicit drug use, yet given the difficulty in demonstrating the intentof the manufacturer, promoter or seller, this prohibition is ineffective at curbingtrade in goods or devices that may be used in conjunction with illicit drugconsumption — pipes, scales, grinders and similar items. Not surprisingly,vendors contend that the devices are not illegal and often include with those itemsthe express disclaimer that they are for use in conjunction with tobacco or legalherb” smoking.

Municipal bylaw jurisdiction

In reference to a municipality’s jurisdiction to curtail trade in certain goods oritems, the Municipal Government Act of Alberta (“MGA”) indicates as follows:

7 A council may pass bylaws for municipal purposes respecting thefollowing matters:

(a) the safety, health and welfare of people and the protection ofpeople and property;

(e) businesses, business activities and persons engaged in business;

8 Without restricting section 7 a council may in a bylaw passed under thisDivision

(a) regulate or prohibit;

(b) deal with any development, activity, industry, business or thing indifferent ways, divide each of them into classes and deal with eachclass in different ways;

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640(1) A land use bylaw may prohibit or regulate and control the use anddevelopment of land and buildings in a municipality.

Although municipalities are seemingly equipped with a wealth of power to controlthe proliferation of certain activities within its jurisdiction via the above-notedprovisions, it is well recognized that jurisdictional and constitutionalconsiderations, and the related legal challenges, fetter the exercise of that power.Nonetheless, the likelihood and success of a challenge varies depending on themeasures taken to curtail the impugned activity under the circumstances.

. . .

Municipal enforcement personnel have engaged local RCMP personnel indiscussions about what particular goods and practices that, if available orpracticed in conjunction with one another as a single place of business, may havethe cumulative effect of encouraging the use and trade of illicit drugs. With thatinformation, while keeping in mind the ever-present potential for legal challenge,Council might consider amending the BLB by:

1. defining each of the following items as a “restricted product”

- any product that displays a marijuana plant or leaf- any device intended to facilitate smoking activity, including pipes

(metal I glass blown, plastic, wood), water bongs and vaporizers- any type of grinder, electric or manual- any type of digital weigh scales- detoxifying products (including drinks, pills or other products) that

are marketed for masking drug effects or making such effectsundetectable through tests

2. prohibiting in a single business location or under a single business licensethe display or offer for sale of restricted products from 3 or morecategories thereof,

3. prohibiting the sale of any restricted product to minors;

4. requiring that the display of any restricted product be completely obscured fromoutside the place of business.

Notwithstanding the foregoing, Council should note the following:

• Bylaw restrictions of the nature proposed in this report will apply to allretailers including big box stores and pharmacies. As indicated below

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under the land use section of this report, it is difficult to justify an attemptto distinguish from larger retailers those smaller retailers that “specializein these products, given that strictly speaking, their inventory is notregulated.

• Some individuals who carry prescriptions for legalized marijuanaproducts. It would be appropriate to assume that some products notedabove are sold to those individuals.

A final comment on the notion of advertising restrictions: invariably, advertisingrestrictions facing court challenge will fail the first test of constitutionality. Thatis, attempts to restrict advertising in any manner (notwithstanding the content) areusually declared in the first instance to violate the advertiser’s right of free speech.The second part of the constitutional validity test asks whether the restrictions aresufficiently justifiable given the objectives, however this initial, almost certainassessment is what sets advertising restrictions apart from those restrictions of thenature referred to above. Therefore, Administration is reluctant to proposeadvertising restrictions in an attempt to manage this issue.

[6] In its report to Council on March 19, 2012, the City’s administration advised as follows:

Report Summary:

On December 19, 2011, City Council directed Administration to bring forwardbylaw amendments that would serve to discourage trade in consumer goodstypically associated with illicit drug use. Bylaw 9/2012 and Bylaw 10/2012 arepresented as a collection of those draft amendments in addition to otheramendments that acid to the regulatory powers of the license inspector under thecurrent Business License Bylaw.

[7] The relevant provisions of the amendment to the Business Licencing Bylaw are asfollows:

. . .

(h) “restricted product” means any of the following:

(i) a product that displays a marijuana plant,

(ii) a device intended to facilitate smoking activity, including a pipe (metal /glass blown, plastic, wood), water bong or vaporizer,

(iii) a type of grinder (electric or manual),

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(iv) a type of digital weigh scale,

(v) a detoxifying product (including a drink, pill or other product) marketedfor masking drug effects or making such effects undetectable throughtests; (BL9/2012)

[8] The applicant sells a variety of items which could be captured by the category; “restrictedproducts”. The applicant’s affidavit discloses that the applicant opened its doors in St. Albert inApril 2011, as the Chad Smoke Shop 420 Ltd. The applicant swears that upon learning of theCity’s action relative to the amendment to the Business Licencing Bylaw, he wrote to a Cityemployee seeking guidance as to how the applicant might comply. Three days later the City sentthe applicant a notice to comply which basically reiterated the contents of the Business LicencingBylaw as amended. The notice advised that the applicant’s premises would be physicallyinspected on May 15, 2012, to ensure that the applicant had complied with the notice.

[9] On May 15, 2012, inspection took place and a violation ticket pursuant to s. 14.1(1) of theamended bylaw was issued to the applicant.

[10] On May 18, 2012, the City issued a notice to the applicant advising that effective May 26,2012, the City was immediately “seizing” the business licence of the applicant and effectiveMay 26, 2012, the licence would stand suspended for a period of five days. The notice alsoadvised of a right to appeal this action to the “Appeal Committee”.

[11] The applicant disputes the alleged violation and a trial in the Provincial Court of Albertais pending. The applicant appealed the seizure/suspension to the Appeal Committee and thatappeal is also pending. In the meanwhile, the Appeal Committee has stayed the enforcement ofthe seizure/suspension of the applicant’s licence on certain conditions.

[12] Additionally, pursuant to s. 536(1)(a) of the Municipal Government Act, RSA 2000 c. — 26, the applicant applies to this court to quash the bylaw’s 9/2012 and 10/2012.

[13] Section 536(1)(a) provides:

536(1) A person may apply to the Court of Queen’s Bench for

(a) a declaration that a bylaw or resolution is invalid . . .

II. Issues

[14] The applicant argues:

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1. That the bylaws are ultra vires the City’s jurisdiction because the bylaws are inpith in substance legislation in relation to criminal law.

2. That the bylaws unconstitutionally interfere with the applicant’s freedom ofexpression contrary to s. 2(b) of the Charter of Rights and Freedoms.

3. That the bylaws unconstitutionally encroach upon the principles of fundamentaljustice contrary to s. 7 of the Charter.

4. That the bylaw unconstitutionally discriminates against small business ownerscontrary to s. 15 of the Charter.

III. Discussion

A. Are the impugned bylaws ultra vires?

[15] Ross, J. in HMQ v. Keshane, 2011 ABQB 525 upheld in the Court of Appeal 2012ABCA 330 at paras. 13 through 15 outlined the steps which must be taken in a pith andsubstances analysis. I cannot improve upon what she said:

[13] The first step in determining whether a legislative provision is ultra viresunder the Constitution Act, 1867, ss. 91 and 92 is to determine its “matter” orcharacterize the “pith and substance” of the provision: Reference re AssistedHuman Reproduction Act, 2010 SCC 61 at paras 19, 189 & 192, [2010] 3 SCR457 (“Assisted Human Reproduction Reference”); Quebec (Attorney General) vCanadian Owners and Pilots Association, 2010 SCC 39 at para 16, [2010] 2SCR 536 (“COPA”); Quebec (Attorney General) v Lacombe, 2010 SCC 38 atpara 20, [2010] 2 SCR 453 (“Lacombe”). Another way of describing this is toidentify the “mischief” that a law was designed to address: Reference re FirearmsAct (Can), 2000 SCC 31 at para 17, [2000] 1 SCR 783 (“Firearms Reference”).The second step is to determine which level of government has jurisdiction toenact laws in relation to this matter: Assisted Human Reproduction Reference atpara 19; Lacombe at para 24.

[14] When a particular provision within a statute is challenged, the focus is onthe subject of the impugned provision: COPA at para 15; Canada (AttorneyGeneral) v Canadian National Transportation Ltd, [1983] 2 SCR 206 at 270, 3DLR (4th) 16.

. . .

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[15] A pith and substance analysis looks at both the purpose of the legislationand its effect. In order to implement this, Lebel, J in Kitkatla Band v BritishColumbia (Minister of Small Business, Tourism and Culture), 2002 SCC 31 atparas 53 - 54, [2002] 2 SCR 146 (“Kitkatla”) suggests that:

First, to determine the purpose of the legislation, the Court may look at both intrinsicevidence, such as purpose clauses, or extrinsic evidence, such as Hansard or the minutesof parliamentary committees....Second, in looking at the effect of the legislation, the Court may consider both its legaleffect and its practical effect. In other words, the Court looks to see, first, what effectflows directly from the provisions of the statute itself; then, second, what “side” effectsflow from the application of the statute which are not direct effects of the provisions ofthe statute itself.

[16] In this case as in Keshane, the intrinsic purpose of the bylaw must be gleaned from theprovisions of the amending bylaw as well as the bylaw it amended.

[17] The Business Licencing Bylaw is about licencing. It does not purport to regulate the saleof goods or services, nor does it purport to control the manner in which a business operates withthe exception of pawn shop businesses. The amendments to the Business Licencing Bylawaffected by amending bylaw 9/2012, regulate both what is sold and the manner in which thebusiness conducts itself in relation to restricted products. Intrinsically, the amendments compelthe conclusion that certain products and certain businesses selling those products in a certain waycannot lawfully operate in St. Albert.

[18] The extrinsic evidence of the purpose of the amending bylaw is available in thelegislative history and actions of the City in implementing and enforcing the bylaw, both in thiscase and generally. The letter the City’s Mayor sent to other municipalities is also extrinsicevidence of purpose. The extrinsic evidence offered in the proceeding makes it plain the Citywanted to prohibit the sale of items which could serve to promote or facilitate the illegalproduction and/or consumption of narcotics. The content of the Mayor’s letter coupled with theCouncil’s agenda report of December 19, 2011, in the section entitled “Report: FederalJurisdiction Criminal Code” leave room for no other conclusion. The City argues that thepurpose of the amending bylaw is to promote the safety, health and welfare of its citizens. Thatjustification is not mentioned even once in the legislative history leading up to the amendingbylaw’s passage. There is no doubt that such a purpose would fall within the legitimate sphere ofprovincial authority. However, it is unclear how this bylaw would achieve that purpose. Nor is itclear how that purpose justifies control of the applicant’s business but not others which mayengage in exactly the same activity. The amending bylaw’s purpose is to prevent the easypurchase of numerous items which may be used by purchasers in a criminal way. It extends notjust to its citizens, but to any person who may be minded to so act.

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[19] The Criminal Code of Canada insofar as is relevant, provides that:

462.1 In this Part,

“consume”

“consume” includes inhale, inject into the human body, masticate and smoke;

“illicit drug”

“illicit drug” means a controlled substance or precursor the import, export, production,sale or possession of which is prohibited or restricted pursuant to the Controlled Drugsand Substances Act;

“illicit drug use”

“illicit drug use” means the importation, exportation, production, sale or possession of acontrolled substance or precursor contrary to the Controlled Drugs and Substances Act ora regulation made under that Act;

“instrument for illicit drug use”

“instrument for illicit drug use” means anything designed primarily or intendedunder the circumstances for consuming or to facilitate the consumption of anillicit drug, but does not include a “device” as that term is defined in section 2 ofthe Food and Drugs Act;

“literature for illicit drug use”

“literature for illicit drug use” means any printed matter or video describing ordepicting, and designed primarily or intended under the circumstances to promote,encourage or advocate, the production, preparation or consumption of illicit drugs;

“sell”

“sell” includes offer for sale, expose for sale, have in possession for sale anddistribute, whether or not the distribution is made for consideration.

462.2 Every one who knowingly imports into Canada, exports from Canada,manufactures, promotes or sells instruments or literature for illicit drug use isguilty of an offence and liable on summary conviction

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(a) for a first offence, to a fine not exceeding one hundred thousand dollars orto imprisonment for a term not exceeding six months or to both; or

(b) for a second or subsequent offence, to a fine not exceeding three hundredthousand dollars or to imprisonment for a term not exceeding one year orto both.

[20] In my view the amending bylaw has the look and feel of morality legislation. What wasplainly in the mind of the City was illegal narcotics. The amending bylaw has the look and feel ofa statement that “this kind of thing isn’t going to happen in my City” and it is plainly designed toaddress the perceived enforcement difficulties associated with the Criminal Code provisionsrelating to items which might be considered drug paraphernalia. That is the reason given for theamending bylaw in the extrinsic materials. Furthermore, the solicitation of advice and opinions ofpolice buttress that conclusion.

[21] As a result, the intrinsic and extrinsic evidence supports the conclusion that the amendingbylaw is in pith and substance criminal law legislation.

[22] Continuing with the Kitkatla direction, and the need to consider the effects of thelegislation, Ross, J. in Keshane offered this at paras. 18 and 19:

[18] Legal effect refers to how the legislation affects the rights and liabilities ofthose subject to its terms, and is determined from the terms of the legislationitself: R v Morgentaler, [1993] 3 SCR 463 at para 25, 107 DLR (4th) 537(“Morgentaler”). On the other hand, evidence of practical effect:

... is not ... restricted to the four corners of the legislation ... the court "willlook beyond the direct legal effects to inquire into the social or economicpurposes which the statute was enacted to achieve", its background and thecircumstances surrounding its enactment ... and, in appropriate cases, willconsider evidence of the second form of "effect", the actual or predictedpractical effect of the legislation in operation (Morgentaler at para 26).

[19] “Merely incidental”effects do not affect a pith and substance analysis:COPA at para 18; Global Securities Corp v British Columbia (SecuritiesCommission), 2000 SCC 21 at para 23, [2000] 1 SCR 494. “The ‘dominantpurpose’ of the legislation is decisive. Its secondary objectives and effects have noimpact on its constitutionality”: Canadian Western Bank v Alberta, 2007 SCC 22at para 28, [2007] 2 SCR 3 (“CWB”). Thus, evidence of the practical effect of alaw may be of limited assistance. Practical effect is context dependant. In onecontext “practical effect may reveal the true purpose of the legislation”; inanother, “it may be incidental and entirely irrelevant even though it is drastic”:Morgentaler at para 31.

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[23] The legal effect of the amending bylaw is to prohibit certain items from being sold in acertain way and in a certain location. An enterprise which is of a certain size is not apparentlycaptured by the amending bylaw or at least not an intended target. An enterprise selling two orfewer of the restricted products is similarly exempted.

[24] The practical effect of the bylaw is to preclude the licencing or successful operation ofwhat have become colloquially known as bong or head shops. That is what the Mayor implicitlysuggested in his letter of July 22, 2011, to the mayors of the surrounding municipalities.

[25] It is possible that the health and welfare of St. Albert’s citizens may be improved by theeffect of the impugned bylaw in the sense that St. Albert residents may not have easy access tosome of the tools which may assist their involvement with narcotics, and because of that, theymay give up on such involvement. However, I think that indirect effect is quite uncertain.

[26] A further practical effect of the amending bylaw is that the delict addressed by ineffectiveCriminal Code prohibitions is more effectively addressed by the amending bylaw. Theimposition of criminal type consequences is a further tool to enhance effectiveness. Of course,criminal law type penalties are plainly within the authority of the province to enact, for alegitimate and constitutional provincial purpose.

[27] In my view, in legal effect and in practical effect, the impugned bylaw is about criminallaw, a power which is plainly beyond the competence of the municipality. Therefore, both interms of purpose and in terms of effect, the amending bylaw is legislation in relation to criminallaw. As such it is ultra vires the municipality and must be struck down.

[28] As a result of this conclusion, I find it unnecessary to address the other issues raised bythe parties relating to the Charter, constitutionality of the bylaw. Additionally, although theapplication of the applicants related to both amending bylaw 9/2012 and 10/2012, the latter is notspecifically challenged in this application and therefore, I make no finding as to itsconstitutionality.

[29] The parties may address the matter of costs on appointment.

Heard on the 30 day of October, 2012.th

Dated at the City of Edmonton, Alberta this 21 day of December, 2012.st

T.D. ClacksonJ.C.Q.B.A.

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Appearances:

Aleksandra SimiæBeaver Leebody Frank & Simiæ

for the Plaintiffs

Steven Phipps Fraser Milner Casgrain LLP

for the Defendant