Is a business licence being renewed, revoked or granted? Turns out it matters

The petitioner operated a masonry business in the City of Kelowna. Since 1995, the petitioner had a home-based business (minor) licence. In 2016, the City issued bylaw offence notices on the basis that the property was being used by the petitioner beyond the permitted uses and the property was a nuisance to neighbours. However, the notice was put on hold since the petitioner and the City agreed on a plan for the petitioner to address the City’s concerns.

In December 2020, the City’s business licence manager informed the petitioner that its business licence would not being renewed for 2021. The petitioner argued the business licence manager’s decision was unlawful because he did not have the delegated authority to revoke a licence (only to grant a licence). The court agreed. The court rejected the respondent’s argument that the business licence manager was merely making a decision whether to grant a licence. The court found that only City Council had the authority to revoke a licence. In addition, and in any event, the court also found that the decision to revoke the licence was unreasonable and the petitioner’s rights of procedural fairness were breached.

Administrative law – Decisions reviewed – Municipal Council – Permits and licences – Renewal of business licence – Revocation – Judicial review – Discretion of delegated authority – Procedural requirements and fairness – Standard of review – Reasonableness – Remedies – Mandamus

M. Weiss Masonry Inc. v. Kelowna (City), [2021] B.C.J. No. 2148, 2021 BCSC 1946, British Columbia Supreme Court, October 5, 2021, G.C. Weatherill J.

The petitioner operated a masonry business that was incorporated in 1995. The business was owned and operated by Martin Weiss. Mr. Weiss resided on a 10-acre parcel of farmland (the “Property”) located in the City of Kelowna (the “City”).

In 1995, when Mr. Weiss incorporated the business, he applied for and received a business licence for a “home-based business (minor)” from the City pursuant to the relevant Zoning Bylaws. The licence specified that the business must be secondary to the residential use of the building and “no aspects of the business operations shall be detectable from outside the property”. Business licences issued by the City are for one calendar year term. The City required payment of a renewal fee on an annual basis. Once paid, the City issued a business licence for the next calendar year.

In 2015, a City bylaw inspector attended the Property and raised concern that the petitioner’s commercial business activities were being conducted on the Property beyond the permitted use under the business licence, were visible and a nuisance. In December 2016, the City issued an Offence Notice to the petitioner on the basis that the Property was being use for all business activities related to the petitioner’s business (including masonry, excavating and vehicle storage) and the Property was a visual nuisance to neighbours.

There was some communication between Mr. Weiss and the City after the notice was sent. A meeting was held in May 2018, during which there was a discussion about the need for Mr. Weiss to have a plan and timeline to bring the Property into compliance with the City bylaws. While the City continued to monitor the situation, it had no communication with Mr. Weiss after the May 2018 meeting. In the meantime, the City continued to renew the petitioner’s business licence each calendar year.

On December 7, 2020, the City (through its Business Licence Manager, Greg Wise) wrote to Mr. Weiss and advised that the petitioner’s business licence would not be renewed for 2021. The stated basis was that the conditions of the business licence had not been met.

The petitioner brought a petition seeking an order of mandamus under section 2 of the Judicial Review Procedure Act, R.S.B.C. 1996, c. 241. The petitioner argued that the City’s decision not to renew its licence was unlawful for three reasons:

1. Mr. Wise’s decision amounted to a “revocation” of an existing business licence and was beyond his delegated authority;
2. The revocation was made without reasonable cause; and
3. The petitioner’s rights to procedural fairness were breached because he was never provided notice or an opportunity to be heard prior to the revocation decision.

The court found in favour of the petitioner on all issues.

The City admitted that Mr. Wise did not have the delegated authority to cancel or revoke an existing business licence. That decision could only be made by City Council. However, the City argued that because a business licence period is for one year, the issuance of a business licence each year is “in effect” the granting of a new licence. The City said Mr. Wise (as the business licence manager for the City) did have the delegated authority under section 12.1 of the Business Licence Bylaw to grant a licence.

The court disagreed with the City’s interpretation of Mr. Wise’s decision. The court concluded that Mr. Wise’s delegated authority was limited to the granting of an initial business licence and that, once granted, it is renewed annually provide the renewal fee is paid and can only be revoked by the City Council (section 12(g), Business Licence Bylaw). At its core, the court found that Mr. Wise’s determination that the petitioner’s licence would not be renewed was a decision to revoke a business licence, which he did not have the delegated authority to do. Instead, the matter had to be referred to City Council for a determination of this type of decision.

The court pointed to the City’s own previous letters, which was consistent with this position. For example, the City had previously advised Mr. Weiss that without full cooperation and compliance in relation to the previous bylaw notice, “your business licence will be reviewed by City Council requesting it be cancelled”. In other words, the City’s own correspondence suggested that it knew City Council only had the authority to revoke the licence. Since Mr. Wise did not have the delegated authority to revoke the business licence, his decision was found to be unlawful.

Although this was sufficient to dispose of the petition, the court went on to consider the two other arguments advanced by the petitioner.

The court found that the City’s letter of December 7, 2020, in which it purported to revoke the petitioner’s business licence, provided no reason or explanation for the decision. Instead, the court found that the decision was based on old information and evidence regarding the uses being made at he Property, even though Mr. Weiss said he complied with the conditions of the licence. The court concluded that the City’s decision was based on nothing other than “assumptions, conjecture and inadmissible hearsay”. The City did not have cause and the decision was unreasonable.

The court also found that the petitioner’s rights to procedural fairness were breached. In short, the City’s December 7, 2020 came “out of the blue”. While concerns had been raised in 2016 and a meeting took place in May 2018, no communication was received by the petitioner from the City after that. In the meantime, the City continued to renew the petitioner’s business licence. The court found that the City failed to provide the petitioner with an opportunity to be heard prior to making its decision on December 7, 2020, which was a breach of the most basis principles of procedural fairness. This decision by the court appeared to be largely drive by the inconsistency in the City’s actions and its silence before making the decision in December 2020.

In the end, the court granted the petitioner’s request for an order in the nature of mandamus requiring the City to renew the petitioner’s business licence upon payment by the petitioner of the annual renewal fee. However, the court noted that its decision did not usurp the City’s authority to revoke the business licence if a legitimate reason under the relevant bylaws arose.

This case was digested by Adam R. Way, and first published in the LexisNexis® Harper Grey Administrative Law Netletter and the Harper Grey Administrative Law Newsletter. If you would like to discuss this case further, please contact Adam R. Way at [email protected].

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