Business Licence Refusal: How Detailed Must the Reasons Be?
The British Columbia Court of Appeal has just reversed a lower Court decision suggesting that, when refusing issuance or renewal of a business licence, a municipal Council must give detailed reasons for its decision. The decision must set out the background facts and the detailed reasons why the Council considered the refusal or non-renewal was justified in the circumstances. Thankfully, the Court of Appeal has recognized that municipal Councils are not Courts of law, and that it is unreasonable to expect municipal Councils to deliver their reasons with the same degree of detail and sophistication as a Judge might.

377050 B.C. Ltd. dba the Inter-City Motel v. Burnaby (City of) concerned a decision by Burnaby City Council to refuse the renewal of a business licence for the operation of a motel. In considering a staff recommendation that the licence renewal be refused, the City received a detailed report that included evidence from the RCMP as to alleged criminal activity on the premises, including prostitution and possible drug dealing. The business licence holder was provided with an opportunity to make representations to Council.

After its decision was communicated to the licence holder, the licensee’s solicitor requested reasons for the non-renewal of the licence, pursuant to section 60(1)(b) of the Community Charter. The written reasons provided referred to Council’s determination that reasonable cause existed, based on “poor management of the operation of the motel giving rise to concerns for public safety, the enjoyment of use of neighbouring properties, and the high demand for police services related to the business”.

On the licence holder’s application to the Supreme Court, the Justice hearing the case ordered that the matter be referred back to Burnaby Council for reconsideration. In making that order, the Justice was critical of the fact that a transcript of the closed meeting at which Burnaby Council had deliberated had not been available to the applicant. The Justice further found that the written reasons provided were not sufficient; he concluded that the reasons ought to have set out in some detail the relevant facts which supported Council’s decision and, as well, the reasons (in the sense of a cause, explanation or justification) for Council having come to its conclusion. In making his order, the Justice ordered that a transcript of any future deliberation of Burnaby Council on the matter be made available to the license holder.

In allowing the appeal, the Court of Appeal referred favourably to an earlier decision of the B.C. Supreme Court in 552197 B.C. Ltd. (dba Luxor Nite Club) v. City of Abbotsford. In that case, a Supreme Court Justice had considered the adequacy of City Council’s reasons for suspending a business licence. Although noting that the reasons were not comprehensive, the Court in that case had held:

However there is no doubt that the owners of the club were aware of the reasons for Council’s decision. The club had had lengthy dealings with the police and Council. The concerns of Council must have been well known to the operators of the club. There could not have been any mystery as to the reasons for the suspension. Courts give reasons to parties in order to ensure that they have a reasonable understanding of a decision. Accordingly, with respect, there is no merit to this argument.

In the Burnaby case, the Court of Appeal held that the approach taken in the Luxor decision was appropriate. The Court pointed out that the license holder clearly knew the issues that were troubling the City, and further found that the letter from Council provided adequate reasons. The Court of Appeal made this comment as well:

Municipal councils are not courts. Their reasons should not be scrutinized with the same criteria as judicial reasons. Decisions by council are made by a vote. The votes take into account the public interest. They also may reflect political considerations.

The Court also questioned the appropriateness of an Order requiring the Council to make available a transcript of a closed Council meeting.

This case is significant because it confirms that the sufficiency of reasons for cancellation or non-renewal of a business licence will be determined in the context of the history of dealings between the licence holder and the municipality. The case also recognizes the reality that a municipal Council makes its decisions based upon a vote, and that it is inappropriate to expect the same degree of detailed fact finding and analysis as one typically finds in a Court decision.

Although this decision is welcome, when cancelling or suspending a licence municipalities should still take care that, in all of the circumstances, the adequacy of Council’s reasons for its decision are not open to challenge.

Peter Johnson
Spring 2007

This article was published in Spring 2007 and may be superseded by changes in the law at a later date. It is for general information only. Specific legal advice should be obtained from a qualified lawyer.