Court of Queenâ€™s Bench of Alberta Citation: Smith v. St. Albert (City), 2012 ABQB 780
Date: 20121221 Docket: 1203 11336 Registry: Edmonton
Between: Ronald Smith and the Chad Smoke Shop 420 Ltd. Plaintiffs - and -
The City of St. Albert Defendant
_______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice T.D. Clackson _______________________________________________________
Facts and Circumstances
 The City of St. Alberta appears to have been concerned about stores opening in the City that sold items that might be used by persons involved with narcotics. On November 8, 2011, the City passed a resolution requiring its administration to: . . . bring forward recommendations by December 19, 2011, of all recommended policy and/or bylaw amendments (and a schedule thereof) for Councilâ€™s consideration with respect to the selling of paraphernalia by local businesses that is best connected to the illegal drug industry.  On July 22, 2011, prior to the passage of this resolution, the City Mayor wrote to the mayors of some other cities and towns in the greater Edmonton area as follows:
Below is a resolution recently passed by St. Albert City Council with respect to specific businesses within our eight communities: “Administration propose to Council by October 31, 2011 every possible measure that can be taken within the City of St. Albert to control or prohibit the selling of paraphernalia by local businesses that is best connected to the illegal drug industry. This shall include but not be limited to: Police involvement Business licensing options including Business License Bylaw Land planning/zoning and the Land Use Bylaw Inspection requirements Age restrictions Advertising limitations Unique fees NAICS classification opportunities Drug Dog sniffing” I would appreciate knowing your experience with this type of retail business; interestingly now 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 every facet of this matter short term and into the future such that the municipality may address it to the best of our capability. This motion was passed unanimously by our Council and our police and staff will be working on this. As you can surmise, we are serious about this matter. I look forward to hearing from you.  The agenda report for the City dated November 8, 2011, makes the following references to explain the issue: Notice of Motion On November 8, 2011, Mayor Crouse made the following notice of motion:
That Administration bring forward recommendations by December 19, 2011 of all recommended policy and/or bylaw amendments (and a schedule thereof) for Council’s consideration with respect to the selling of paraphernalia by local businesses that is best connected to the life gal drug industry. Administration’s Understanding of intent of the Motion: It is Administration’s understanding that this motion if passed is intended to require a comprehensive report and strategy (including any proposed policy or bylaw amendments) by December 19, 2011 on the topic of the selling of paraphernalia connected to the illegal drug industry. This report would be brought forward 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’s consideration on December 19, 2011. Financial Implications of Motions: None. BACKGROUND: On May 11, 2011, Legal Services provided a confidential response to an information Request on the topic of “Can the City refuse to issue business licenses or permits to applicants whose intention is to sell items that can and are deemed to be used for illegal drug use?” On June 6, 2011, Business and Strategic Services provided a confidential memorandum to Council responding to three questions, including: Identify any potential fees that may be charged to businesses that sell products like glass pipes; Determine what North American Industry Classification System (NAICS) codes other cities may use for these kinds of businesses; and Identify if a NAICS code can 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 required administration provide a report on “every possible measure that can be taken within the City of St. Albert to control or prohibit the selling of paraphernalia by local businesses that is best connected to the illegal drug industry...”. This report was to be provided by October 31, 2011, and on October 24, 2011, Legal Services
provided a confidential report to Council addressing the requirements of resolution C445-2011.  From that it appears that the City’s Mayor was presuming that the City could legislate to prohibit or control such businesses when he wrote his letter. The letter’s reference to a past resolution must relate to the resolution identified in the agenda report as having been passed on July 4, 2011.  In its report to Council on December 19, 2011, the City’s administration advised as follows: The Criminal Code of Canada prohibits the manufacturing, promotion or sale of instruments for illicit drug use, yet given the difficulty in demonstrating the intent of the manufacturer, promoter or seller, this prohibition is ineffective at curbing trade in goods or devices that may be used in conjunction with illicit drug consumption — pipes, scales, grinders and similar items. Not surprisingly, vendors contend that the devices are not illegal and often include with those items the express disclaimer that they are for use in conjunction with tobacco or legal herb” smoking. Municipal bylaw jurisdiction In reference to a municipality’s jurisdiction to curtail trade in certain goods or items, the Municipal Government Act of Alberta (“MGA”) indicates as follows: 7 A council may pass bylaws for municipal purposes respecting the following matters: (a)
the safety, health and welfare of people and the protection of people and property;
businesses, business activities and persons engaged in business;
8 Without restricting section 7 a council may in a bylaw passed under this Division (a)
regulate or prohibit;
deal with any development, activity, industry, business or thing in different ways, divide each of them into classes and deal with each class in different ways;
A land use bylaw may prohibit or regulate and control the use and development of land and buildings in a municipality.
Although municipalities are seemingly equipped with a wealth of power to control the proliferation of certain activities within its jurisdiction via the above-noted provisions, it is well recognized that jurisdictional and constitutional considerations, and the related legal challenges, fetter the exercise of that power. Nonetheless, the likelihood and success of a challenge varies depending on the measures taken to curtail the impugned activity under the circumstances. ... Municipal enforcement personnel have engaged local RCMP personnel in discussions about what particular goods and practices that, if available or practiced in conjunction with one another as a single place of business, may have the cumulative effect of encouraging the use and trade of illicit drugs. With that information, 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 â€œrestricted productâ€? -
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 effects undetectable through tests
prohibiting in a single business location or under a single business license the display or offer for sale of restricted products from 3 or more categories thereof,
prohibiting the sale of any restricted product to minors;
requiring that the display of any restricted product be completely obscured from outside the place of business.
Notwithstanding the foregoing, Council should note the following: â€˘
Bylaw restrictions of the nature proposed in this report will apply to all retailers including big box stores and pharmacies. As indicated below
under the land use section of this report, it is difficult to justify an attempt to distinguish from larger retailers those smaller retailers that “specialize in these products, given that strictly speaking, their inventory is not regulated. •
Some individuals who carry prescriptions for legalized marijuana products. It would be appropriate to assume that some products noted above are sold to those individuals.
A final comment on the notion of advertising restrictions: invariably, advertising restrictions facing court challenge will fail the first test of constitutionality. That is, attempts to restrict advertising in any manner (notwithstanding the content) are usually 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 are sufficiently justifiable given the objectives, however this initial, almost certain assessment is what sets advertising restrictions apart from those restrictions of the nature referred to above. Therefore, Administration is reluctant to propose advertising restrictions in an attempt to manage this issue. 
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 forward bylaw amendments that would serve to discourage trade in consumer goods typically associated with illicit drug use. Bylaw 9/2012 and Bylaw 10/2012 are presented as a collection of those draft amendments in addition to other amendments that acid to the regulatory powers of the license inspector under the current Business License Bylaw.
 The relevant provisions of the amendment to the Business Licencing Bylaw are as follows: ... (h)
“restricted product” means any of the following: (i)
a product that displays a marijuana plant,
a device intended to facilitate smoking activity, including a pipe (metal / glass blown, plastic, wood), water bong or vaporizer,
a type of grinder (electric or manual),
a type of digital weigh scale,
a detoxifying product (including a drink, pill or other product) marketed for masking drug effects or making such effects undetectable through tests; (BL9/2012)
 The applicant sells a variety of items which could be captured by the category; “restricted products”. The applicant’s affidavit discloses that the applicant opened its doors in St. Albert in April 2011, as the Chad Smoke Shop 420 Ltd. The applicant swears that upon learning of the City’s action relative to the amendment to the Business Licencing Bylaw, he wrote to a City employee seeking guidance as to how the applicant might comply. Three days later the City sent the applicant a notice to comply which basically reiterated the contents of the Business Licencing Bylaw as amended. The notice advised that the applicant’s premises would be physically inspected on May 15, 2012, to ensure that the applicant had complied with the notice.  On May 15, 2012, inspection took place and a violation ticket pursuant to s. 14.1(1) of the amended bylaw was issued to the applicant.  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 effective May 26, 2012, the licence would stand suspended for a period of five days. The notice also advised of a right to appeal this action to the “Appeal Committee”.  The applicant disputes the alleged violation and a trial in the Provincial Court of Alberta is pending. The applicant appealed the seizure/suspension to the Appeal Committee and that appeal is also pending. In the meanwhile, the Appeal Committee has stayed the enforcement of the seizure/suspension of the applicant’s licence on certain conditions.  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. 
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 . . .
The applicant argues:
That the bylaws are ultra vires the City’s jurisdiction because the bylaws are in pith in substance legislation in relation to criminal law.
That the bylaws unconstitutionally interfere with the applicant’s freedom of expression contrary to s. 2(b) of the Charter of Rights and Freedoms.
That the bylaws unconstitutionally encroach upon the principles of fundamental justice contrary to s. 7 of the Charter.
That the bylaw unconstitutionally discriminates against small business owners contrary to s. 15 of the Charter.
Are the impugned bylaws ultra vires?
 Ross, J. in HMQ v. Keshane, 2011 ABQB 525 upheld in the Court of Appeal 2012 ABCA 330 at paras. 13 through 15 outlined the steps which must be taken in a pith and substances analysis. I cannot improve upon what she said:  The first step in determining whether a legislative provision is ultra vires under the Constitution Act, 1867, ss. 91 and 92 is to determine its “matter” or characterize the “pith and substance” of the provision: Reference re Assisted Human Reproduction Act, 2010 SCC 61 at paras 19, 189 & 192,  3 SCR 457 (“Assisted Human Reproduction Reference”); Quebec (Attorney General) v Canadian Owners and Pilots Association, 2010 SCC 39 at para 16,  2 SCR 536 (“COPA”); Quebec (Attorney General) v Lacombe, 2010 SCC 38 at para 20,  2 SCR 453 (“Lacombe”). Another way of describing this is to identify the “mischief” that a law was designed to address: Reference re Firearms Act (Can), 2000 SCC 31 at para 17,  1 SCR 783 (“Firearms Reference”). The second step is to determine which level of government has jurisdiction to enact laws in relation to this matter: Assisted Human Reproduction Reference at para 19; Lacombe at para 24.  When a particular provision within a statute is challenged, the focus is on the subject of the impugned provision: COPA at para 15; Canada (Attorney General) v Canadian National Transportation Ltd,  2 SCR 206 at 270, 3 DLR (4th) 16. ...
 A pith and substance analysis looks at both the purpose of the legislation and its effect. In order to implement this, Lebel, J in Kitkatla Band v British Columbia (Minister of Small Business, Tourism and Culture), 2002 SCC 31 at paras 53 - 54,  2 SCR 146 (“Kitkatla”) suggests that: First, to determine the purpose of the legislation, the Court may look at both intrinsic evidence, such as purpose clauses, or extrinsic evidence, such as Hansard or the minutes of parliamentary committees. ... Second, in looking at the effect of the legislation, the Court may consider both its legal effect and its practical effect. In other words, the Court looks to see, first, what effect flows directly from the provisions of the statute itself; then, second, what “side” effects flow from the application of the statute which are not direct effects of the provisions of the statute itself.  In this case as in Keshane, the intrinsic purpose of the bylaw must be gleaned from the provisions of the amending bylaw as well as the bylaw it amended.  The Business Licencing Bylaw is about licencing. It does not purport to regulate the sale of goods or services, nor does it purport to control the manner in which a business operates with the exception of pawn shop businesses. The amendments to the Business Licencing Bylaw affected by amending bylaw 9/2012, regulate both what is sold and the manner in which the business conducts itself in relation to restricted products. Intrinsically, the amendments compel the conclusion that certain products and certain businesses selling those products in a certain way cannot lawfully operate in St. Albert.  The extrinsic evidence of the purpose of the amending bylaw is available in the legislative history and actions of the City in implementing and enforcing the bylaw, both in this case and generally. The letter the City’s Mayor sent to other municipalities is also extrinsic evidence of purpose. The extrinsic evidence offered in the proceeding makes it plain the City wanted to prohibit the sale of items which could serve to promote or facilitate the illegal production and/or consumption of narcotics. The content of the Mayor’s letter coupled with the Council’s agenda report of December 19, 2011, in the section entitled “Report: Federal Jurisdiction Criminal Code” leave room for no other conclusion. The City argues that the purpose of the amending bylaw is to promote the safety, health and welfare of its citizens. That justification is not mentioned even once in the legislative history leading up to the amending bylaw’s passage. There is no doubt that such a purpose would fall within the legitimate sphere of provincial authority. However, it is unclear how this bylaw would achieve that purpose. Nor is it clear how that purpose justifies control of the applicant’s business but not others which may engage in exactly the same activity. The amending bylaw’s purpose is to prevent the easy purchase of numerous items which may be used by purchasers in a criminal way. It extends not just to its citizens, but to any person who may be minded to so act.
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 Drugs and Substances Act; “illicit drug use” “illicit drug use” means the importation, exportation, production, sale or possession of a controlled substance or precursor contrary to the Controlled Drugs and Substances Act or a regulation made under that Act; “instrument for illicit drug use” “instrument for illicit drug use” means anything designed primarily or intended under the circumstances for consuming or to facilitate the consumption of an illicit drug, but does not include a “device” as that term is defined in section 2 of the Food and Drugs Act; “literature for illicit drug use” “literature for illicit drug use” means any printed matter or video describing or depicting, 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 and distribute, 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 is guilty of an offence and liable on summary conviction
for a first offence, to a fine not exceeding one hundred thousand dollars or to imprisonment for a term not exceeding six months or to both; or
for a second or subsequent offence, to a fine not exceeding three hundred thousand dollars or to imprisonment for a term not exceeding one year or to both.
 In my view the amending bylaw has the look and feel of morality legislation. What was plainly in the mind of the City was illegal narcotics. The amending bylaw has the look and feel of a statement that “this kind of thing isn’t going to happen in my City” and it is plainly designed to address the perceived enforcement difficulties associated with the Criminal Code provisions relating to items which might be considered drug paraphernalia. That is the reason given for the amending bylaw in the extrinsic materials. Furthermore, the solicitation of advice and opinions of police buttress that conclusion.  As a result, the intrinsic and extrinsic evidence supports the conclusion that the amending bylaw is in pith and substance criminal law legislation.  Continuing with the Kitkatla direction, and the need to consider the effects of the legislation, Ross, J. in Keshane offered this at paras. 18 and 19:  Legal effect refers to how the legislation affects the rights and liabilities of those subject to its terms, and is determined from the terms of the legislation itself: R v Morgentaler,  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 "will look beyond the direct legal effects to inquire into the social or economic purposes which the statute was enacted to achieve", its background and the circumstances surrounding its enactment ... and, in appropriate cases, will consider evidence of the second form of "effect", the actual or predicted practical effect of the legislation in operation (Morgentaler at para 26).  “Merely incidental”effects do not affect a pith and substance analysis: COPA at para 18; Global Securities Corp v British Columbia (Securities Commission), 2000 SCC 21 at para 23,  1 SCR 494. “The ‘dominant purpose’ of the legislation is decisive. Its secondary objectives and effects have no impact on its constitutionality”: Canadian Western Bank v Alberta, 2007 SCC 22 at para 28,  2 SCR 3 (“CWB”). Thus, evidence of the practical effect of a law may be of limited assistance. Practical effect is context dependant. In one context “practical effect may reveal the true purpose of the legislation”; in another, “it may be incidental and entirely irrelevant even though it is drastic”: Morgentaler at para 31.
 The legal effect of the amending bylaw is to prohibit certain items from being sold in a certain way and in a certain location. An enterprise which is of a certain size is not apparently captured by the amending bylaw or at least not an intended target. An enterprise selling two or fewer of the restricted products is similarly exempted.  The practical effect of the bylaw is to preclude the licencing or successful operation of what have become colloquially known as bong or head shops. That is what the Mayor implicitly suggested in his letter of July 22, 2011, to the mayors of the surrounding municipalities.  It is possible that the health and welfare of St. Albertâ€™s citizens may be improved by the effect of the impugned bylaw in the sense that St. Albert residents may not have easy access to some of the tools which may assist their involvement with narcotics, and because of that, they may give up on such involvement. However, I think that indirect effect is quite uncertain.  A further practical effect of the amending bylaw is that the delict addressed by ineffective Criminal Code prohibitions is more effectively addressed by the amending bylaw. The imposition 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 a legitimate and constitutional provincial purpose.  In my view, in legal effect and in practical effect, the impugned bylaw is about criminal law, a power which is plainly beyond the competence of the municipality. Therefore, both in terms of purpose and in terms of effect, the amending bylaw is legislation in relation to criminal law. As such it is ultra vires the municipality and must be struck down.  As a result of this conclusion, I find it unnecessary to address the other issues raised by the parties relating to the Charter, constitutionality of the bylaw. Additionally, although the application of the applicants related to both amending bylaw 9/2012 and 10/2012, the latter is not specifically challenged in this application and therefore, I make no finding as to its constitutionality. 
The parties may address the matter of costs on appointment.
Heard on the 30th day of October, 2012. Dated at the City of Edmonton, Alberta this 21st day of December, 2012.
T.D. Clackson J.C.Q.B.A.
Appearances: Aleksandra SimiĂŚ Beaver Leebody Frank & SimiĂŚ for the Plaintiffs Steven Phipps Fraser Milner Casgrain LLP for the Defendant
Published on Jan 11, 2013
Written decision from Judge Terry Clackson released Friday, Jan. 11, on changes to City of St. Albert's business licensing bylaw aimed at cr...