Shell Canada Products Ltd. v. Vancouver (City)

Shell Canada Products Ltd. v. Vancouver (City)
Collection
Supreme Court Judgments
Date
1994-02-24
Report
[1994] 1 SCR 231
Case number
22789
Judges
Lamer, Antonio; La Forest, Gérard V.; L'Heureux-Dubé, Claire; Sopinka, John; Gonthier, Charles Doherty; Cory, Peter deCarteret; McLachlin, Beverley; Iacobucci, Frank; Major, John C.
On appeal from
British Columbia
Subjects
Municipal law
Notes
SCC Case Information: 22789
Decision Content
Shell Canada Products Ltd. v. Vancouver (City), [1994] 1 S.C.R. 231
Shell Canada Products Limited Appellant
v.
City of Vancouver Respondent
and
The Attorney General of Canada,
the Attorney General for Ontario and
the Attorney General of Quebec Interveners
Indexed as: Shell Canada Products Ltd. v. Vancouver (City)
File No.: 22789.
1993: April 27; 1994: February 24.
Present: Lamer C.J. and La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory, McLachlin, Iacobucci and Major JJ.
on appeal from the court of appeal for british columbia
Municipal law ‑‑ Municipal resolutions ‑‑ Validity ‑‑ Vancouver passing resolutions that it would not do business with Shell until Shell "completely withdraws from South Africa" ‑‑ Whether actions of city council as embodied in resolutions reviewable ‑‑ Whether resolutions ultra vires city in that they do not relate to a municipal purpose ‑‑ Whether resolutions constitute unauthorized discrimination ‑‑ Vancouver Charter, S.B.C. 1953, c. 55.
The appellant is a subsidiary of Shell Canada Ltd. and is involved in retail and wholesale marketing of petroleum products in Vancouver. It was periodically invited to tender bids for municipal contracts to supply petroleum products until Vancouver City Council passed resolutions that the City would not do business with Shell Canada "until Royal Dutch/Shell completely withdraws from South Africa". Vancouver purchases petroleum products from another company which, through one of its subsidiaries, also does business with South Africa. The British Columbia Supreme Court quashed the resolutions as being ultra vires the municipality. The Court of Appeal reversed the judgment.
Held (Lamer C.J. and L'Heureux‑Dubé, Gonthier and McLachlin JJ. dissenting): The appeal should be allowed.
Per La Forest, Sopinka, Cory, Iacobucci and Major JJ.: In passing the resolutions the City was clearly purporting to exercise its statutory powers, and such exercise is reviewable to the extent of determining whether the actions are intra vires. Generally, a municipal authority is authorized to act only for municipal purposes. Municipal purposes include those that are compatible with the purpose and objects of the enabling statute. Any ambiguity or doubt is to be resolved in favour of the citizen, especially when the grant of power contended for is out of the usual range. The explicit purpose of the resolutions at issue here is to influence Shell to divest itself of its South African holdings by expressing moral outrage against the apartheid regime and to join the alleged international boycott of its subsidiaries and products until Shell "completely withdraws from South Africa". Vancouver was seeking to use its powers to do business to affect matters in another part of the world, a purpose which is directed at matters outside the City's territorial limits. Under the Vancouver Charter, Council "may provide for the good rule and government of the city". This places a territorial limit on Council's jurisdiction. While Council can have regard for matters beyond its boundaries in exercising its powers, any action taken in so doing must have as its purpose benefit to the citizens of the City. The Charter expressly provides for activities in which Council may engage outside the City's limits even when such activities clearly redound to the benefit of its inhabitants. The sections of the Charter which give the City power to engage in commercial, industrial or business undertakings, acquire such personal property as may be required for its purposes, and "do all such things as are incidental or conducive to the exercise of the allotted powers" are general sections found in most if not all municipal Acts which must be construed subject to the limitations imposed by the purpose of the statute as a whole. Any powers implied from their general language must be restricted to municipal purposes and cannot extend to include the imposition of a boycott based on matters external to the interests of the citizens of the municipality.
Even if there were a municipal purpose, the resolutions constitute unauthorized discrimination. While discrimination for commercial or business reasons is a power that is incidental to the powers to carry on business or acquire property, considerations relating to the political policy of a foreign state are not so essential to the exercise of enumerated powers as to be implied. Discrimination of the kind involved here is not only not authorized by the Vancouver Charter, but arguably is prohibited by it.
Per Lamer C.J. and L'Heureux‑Dubé, Gonthier and McLachlin JJ. (dissenting): The doctrine that procurement powers are immune from judicial review should not apply to municipalities. If a municipality's power to spend public money is exercised for improper purposes or in an improper manner, the conduct of the municipality should be subject to judicial review. While it is important that abuses of power are checked, however, it is also important that the courts not unduly confine municipalities in the responsible exercise of the powers which the legislature has conferred on them. Courts must respect the responsibility of elected municipal bodies to serve the people who elected them and exercise caution to avoid substituting their views of what is best for the citizens for those of municipal councils. In cases where powers are not expressly conferred but may be implied, courts must be prepared to adopt the "benevolent construction" which this Court referred to in Greenbaum, and confer the powers by reasonable implication. Such a generous, deferential approach to municipal powers will aid the efficient functioning of municipal bodies and avoid the costs and uncertainty attendant on excessive litigation. It is also arguably more in keeping with the true nature of modern municipalities, and with the flexible, more deferential approach this Court has adopted in recent cases to the judicial review of administrative agencies.
The resolutions not to do business with Shell until it stops trading with South Africa can clearly be defended under the City's power to engage in commercial and business activities. Improper purposes cannot be said to have rendered the otherwise legitimate decision invalid, since the City's motives did not exceed the powers conferred on it. The Vancouver Charter empowers Council to "provide for the good rule and government of the city". Council may properly take measures related to fostering and maintaining a sense of community identity and pride, and among such measures may be found community expression of disapproval or approval of different types of conduct. Provisions in municipal Acts for the "good government" or general welfare of the citizens, far from being mere surplusage, originated in the desire of legislatures to prevent the decisions of municipal councillors being struck down by the courts. Furthermore, many other municipalities interpret their mandate broadly.
The resolutions discriminate against Shell, but that discrimination is authorized by the Vancouver Charter. While discrimination in the granting of licences, taxes and municipal privileges is generally viewed as requiring express authorization by the empowering legislation, the presumption regarding the exercise of a municipality's business powers is that the municipality has the power to make distinctions between citizens and firms on a wide variety of grounds. The power to discriminate in the exercise of municipal business powers is thus readily inferred from general language authorizing a city to do business and to act for the good rule and government of the city. This language encompasses not only the provision of basic services to the inhabitants of the municipality, but extends to the expression by the city on behalf of its citizens of approval or disapproval of conduct, whether within the city or outside its boundaries.
While the resolutions may have an international aspect, they are in pith and substance municipal legislation and hence constitutional. With respect to s. 2 (b) of the Canadian Charter of Rights and Freedoms , assuming a corporation can invoke the right of free expression, the infringement alleged is so trivial as not to merit serious scrutiny.
Cases Cited
By Sopinka J.
Followed: R. v. Lewisham London Borough Council, ex parte Shell UK Ltd., [1988] 1 All E.R. 938; distinguished: Hignell v. City of Winnipeg, [1933] 3 W.W.R. 193; referred to: Roncarelli v. Duplessis, [1959] S.C.R. 121; R. v. Big M Drug Mart Ltd., [1985] 1 S.C.R. 295; Welbridge Holdings Ltd. v. Metropolitan Corporation of Greater Winnipeg, [1971] S.C.R. 957; Wiswell v. Metropolitan Corporation of Greater Winnipeg, [1965] S.C.R. 512; R. v. Greenbaum, [1993] 1 S.C.R. 674; Rogers v. City of Toronto (1915), 33 O.L.R. 89; City of Toronto v. Miller Paving Ltd. (1964), 49 D.L.R. (2d) 214, leave to appeal refused, [1965] S.C.R. ix; R. v. Sharma, [1993] 1 S.C.R. 650; Gershman v. Manitoba Vegetable Producers' Marketing Board, [1976] 4 W.W.R. 406; Re Taylor and the City of Winnipeg (1896), 11 Man. R. 420; Re Gulf Canada Ltd. and City of Vancouver (1981), 130 D.L.R. (3d) 146.
By McLachlin J. (dissenting)
Haggerty v. City of Victoria (1895), 4 B.C.R. 163; Rogers v. City of Toronto (1915), 33 O.L.R. 89; Re Midnorthern Appliances Industries Corp. and Ontario Housing Corp. (1977), 17 O.R. (2d) 290; Transhelter Group Inc. v. Committee on Works and Operations (1984), 27 M.P.L.R. 244; Re Webb and Ontario Housing Corp. (1978), 93 D.L.R. (3d) 187; Prysiazniuk v. Regional Municipality of Hamilton‑Wentworth (1985), 10 O.A.C. 208; Re Ainsworth Electric Co. and Board of Governors of Exhibition Place (1987), 58 O.R. (2d) 432; Associated Respiratory Services Inc. v. British Columbia (Purchasing Commission) (1992), 70 B.C.L.R. (2d) 57; Peter Kiewit Sons Co. v. Richmond (City) (1992), 11 M.P.L.R. (2d) 110; Merritt v. City of Toronto (1895), 22 O.A.R. 205; City of Hamilton v. Hamilton Distillery Co. (1907), 38 S.C.R. 239; Re Howard and City of Toronto (1928), 61 O.L.R. 563; Associated Picture Houses, Ltd. v. Wednesbury Corp., [1948] 1 K.B. 223; Kuchma v. Rural Municipality of Tache, [1945] S.C.R. 234; R. v. Greenbaum, [1993] 1 S.C.R. 674; City of Prince George v. Payne, [1978] 1 S.C.R. 458; Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227; Bell Canada v. Canada (Canadian Radio‑television and Telecommunications Commission), [1989] 1 S.C.R. 1722; National Corn Growers Assn. v. Canada (Import Tribunal), [1990] 2 S.C.R. 1324; Domtar Inc. v. Quebec (Commission d'appel en matière de lésions professionnelles), [1993] 2 S.C.R. 756; Teamsters Union, Local 938 v. Massicotte, [1982] 1 S.C.R. 710; Galloway v. Mayor and Commonalty of London (1866), L.R. 1 H.L. 34; Lamb v. Town of Estevan (1922), 16 Sask. L.R. 220; Re Burns and Township of Haldimand (1965), 52 D.L.R. (2d) 101; R. v. Lewisham Borough Council, ex parte Shell UK Ltd., [1988] 1 All E.R. 938; Thorne's Hardware Ltd. v. The Queen, [1983] 1 S.C.R. 106; Mounterbrooke Inc. v. City of Montreal, [1963] R.L. 28; Re Foster and Township of Raleigh (1910), 22 O.L.R. 26; Smith v. White City (Village) (1989), 81 Sask. R. 79; Baird v. Corporation of the District of Oak Bay (1982), 21 M.P.L.R. 278; Wheeler v. Leicester City Council, [1985] A.C. 1054; R. v. Sharma, [1993] 1 S.C.R. 650; Roncarelli v. Duplessis, [1959] S.C.R. 121; Hignell v. City of Winnipeg, [1933] 3 W.W.R. 193.
Statutes and Regulations Cited
Canadian Charter of Rights and Freedoms, ss. 2 , 15 .
Constitution Act, 1867, s. 91(2) .
Local Government Act 1972 (U.K.), 1972, c. 70, s. 135.
Municipal Act, R.S.B.C. 1979, c. 290, s. 223.
Race Relations Act 1976 (U.K.), 1976, c. 74, s. 71.
Vancouver Charter, S.B.C. 1953, c. 55, ss. 137 [rep. & sub. 1965, c. 68, s. 18; am. 1974, c. 104, s. 30], 148, 151, 153, 188, 189, 190, 199, 203, 272 [am. 1977, c. 40, s. 52; am. 1985, c. 89, s. 5].
Authors Cited
Arrowsmith, Sue. Government Procurement and Judicial Review. Toronto: Carswell, 1988.
Makuch, Stanley M. Canadian Municipal and Planning Law. Toronto: Carswell, 1983.
McDonald, Ann. "In the Public Interest: Judicial Review of Local Government" (1983), 9 Queen's L.J. 62.
Rogers, Ian MacFee. The Law of Canadian Municipal Corporations, 2nd ed. Toronto: Carswell, 1971 (looseleaf).
APPEAL from a judgment of the British Columbia Court of Appeal (1991), 57 B.C.L.R. (2d) 345, 81 D.L.R. (4th) 353, [1991] 6 W.W.R. 319, 6 M.P.L.R. (2d) 109, 3 B.C.A.C. 310, 7 W.A.C. 310, supplementary reasons (1991), 58 B.C.L.R. (2d) 285, 84 D.L.R. (4th) 157, [1991] 6 W.W.R. 325, 6 M.P.L.R. (2d) 109, at p. 116, 3 B.C.A.C. 310, at p. 314, 7 W.A.C. 310, at p. 314, reversing a decision of Maczko J. (1990), 46 B.C.L.R. (2d) 346, 70 D.L.R. (4th) 374, 49 M.P.L.R. 185, quashing resolutions passed by the City of Vancouver. Appeal allowed, Lamer C.J. and L'Heureux‑Dubé, Gonthier and McLachlin JJ. dissenting.
David W. Donohoe and John G. Mendes, for the appellant.
Terrance R. Bland, for the respondent.
Yvonne E. Milosevic, for the intervener the Attorney General of Canada.
M. David Lepofsky, for the intervener the Attorney General for Ontario.
Françoise Saint‑Martin, for the intervener the Attorney General of Quebec.
The reasons of Lamer C.J. and L'Heureux-Dubé, Gonthier and McLachlin JJ. were delivered by
McLachlin J. (dissenting) -- This appeal raises the issue of whether the elected representatives of a municipality may vote to refuse to give the municipality's business to a firm because of the conduct of the firm outside the municipality.
The facts are simple. In 1989 the Council of the City of Vancouver passed two resolutions (the "Resolutions"): first, not to do business with Shell Canada and Royal Dutch/Shell as long as Shell continues to do business in South Africa; and second, to declare the City a "Shell Free" zone until such time as Shell should disinvest from South Africa. At the time, apartheid was the legal regime in South Africa. The legalized discrimination which that regime sustained was abhorrent to many Canadians. Nations throughout the world had imposed trade embargoes against South Africa in protest against the regime. Canada was among those nations. Shell, however, continued to do business with South Africa, supplying it with fuel and other products vital to its economy. In particular, Shell was exporting sulphur to South Africa through the port of Vancouver. Many Vancouverites found this conduct to be offensive.
A delegation of citizens made representations to City Council seeking support for a boycott against Shell. On September 12, 1989, Council considered the matter. The councillors heard representations from people supporting the boycott. It also heard representations and received a brief from Shell Canada's representative, arguing against the boycott. Council was told that approximately 30 cities had adopted a preferential purchasing policy boycotting Shell products. After hearing both sides of the issue, the elected representatives of the government of the City of Vancouver passed the Resolutions impugned on this appeal.
The City's refusal to do business with Shell, standing alone, is not attacked, nor could it be. The City undoubtedly possesses a general power to buy its fuel from whomever it chooses. It is the reasons or motives for choosing not to deal with Shell which are attacked. They are attacked on the ground that they relate to the conduct of Shell outside the City, and hence to matters that are irrelevant to municipal concerns. The decision not to deal with Shell, valid in itself, is said to become invalid because it was made for purposes which are beyond the power of the City.
As will become apparent, I take the view that this case requires us to consider the appropriate approach to judicial review of municipal decisions. Broadly speaking, two approaches may be drawn from the cases: a narrow confining approach, and a broader more deferential approach. My colleague Justice Sopinka, as I understand his reasons, takes a narrow view of municipal powers and a strict approach to judicial review of municipal decisions. I advocate a more generous view of municipal powers and a more deferential approach to judicial review. In my view, the latter approach is the better of the two, having regard both to the authorities and to the modern conception of cities and municipalities.
Like Sopinka J., I view the central questions on this appeal as whether the Resolutions are beyond the powers of the City of Vancouver, and whether the Resolutions constitute unauthorized discrimination. Before considering these specific issues, however, I think it appropriate to address the availability of review in this case and the standard to be applied.
A. The Availability and Standard of Judicial Review
1. Are the Resolutions Subject to Judicial Review?
The first Resolution embodies a decision not to do business with Shell. The second declares Vancouver "Shell Free" until Shell disinvests from South Africa. While the second Resolution is more vague than the first, the gravamen of Shell's complaint is that the City voted not to do business with it. The complaint, in essence, is that the City voted not to enter into contracts for the purchase of fuel with Shell.
There is a long line of cases in Canada holding that the purchasing decisions of a municipality, referred to as the procurement power, are immune from judicial review: Haggerty v. City of Victoria (1895), 4 B.C.R. 163 (S.C.); Rogers v. City of Toronto (1915), 33 O.L.R. 89 (H.C.); Re Midnorthern Appliances Industries Corp. and Ontario Housing Corp. (1977), 17 O.R. (2d) 290 (Div. Ct.); Transhelter Group Inc. v. Committee on Works and Operations (1984), 27 M.P.L.R. 244 (Man. C.A.). The assumption that government procurement is immune from judicial review rests on the traditional view that contract law is wholly in the realm of private law: S. Arrowsmith, Government Procurement and Judicial Review (1988), at pp. 10-21.
In more recent times, however, some courts have been willing to review governmental contractual powers: Re Webb and Ontario Housing Corp. (1978), 93 D.L.R. (3d) 187 (Ont. C.A.); Prysiazniuk v. Regional Municipality of Hamilton-Wentworth (1985), 10 O.A.C. 208 (Div. Ct.). Others have maintained the principle of immunity from review: Re Ainsworth Electric Co. and Board of Governors of Exhibition Place (1987), 58 O.R. (2d) 432 (Div. Ct.); Associated Respiratory Services Inc. v. British Columbia (Purchasing Commission) (1992), 70 B.C.L.R. 57 (S.C.); Peter Kiewit Sons Co. v. Richmond (City) (1992), 11 M.P.L.R. (2d) 110 (B.C.S.C.).
Against allowing judicial review of the purchasing power of governments is the argument that these are matters of private law. According to the private law of contract, each person, individual or corporate, has the right to contract with whom it chooses, and on the terms it chooses. The courts have not restricted this freedom of contract, but confine themselves to enforcement and interpretation of contracts. It has been said that a public body which seeks to procure goods or services is in the same position as any private individual or corporation which seeks to contract with another party. Vickers J. expressed this opinion in Peter Kiewit Sons, supra, where he held that the ordinary rules of private law apply to the public contracting process, and that judicial review does not lie for commercial decisions of public authorities. He explained (at p. 120) that "it would be inappropriate to allow both a public law and a private law remedy in situations involving government contracts where no particular procedure is prescribed by statute or regulation". Adding weight to the argument that government purchasing decisions should be immune from judicial review is the potential for excessive litigation, which may in turn result in significant inconvenience to the public through a disruption of the procurement process.
In favour of allowing judicial review of the procurement or purchasing power of governments is the argument that while this principle is valid for private contracts, the public nature of municipalities renders it inapplicable to them. As Arrowsmith states, supra, at p. 14, "there are many considerations applicable to public bodies and not to private which may justify different treatment of the two, even when engaged in similar activity". The most important difference is the fact that municipalities undertake their commercial and contractual activities with the use of public funds. Another consideration justifying different treatment of public contracting is the fact that a municipality's exercise of its contracting power may have consequences for other interests not taken into account by the purely consensual relationship between the council and the contractor. For example, public concerns such as equality of access to government markets, integrity in the conduct of government business, and the promotion and maintenance of community values require that the public procurement function be viewed as distinct from the purely private realm of contract law. Finally, it must be remembered that municipalities, unlike private individuals, are statutory creations, and must always act within the legal bounds of the powers conferred upon them by statute. In particular, council members cannot act in pursuit of their own private interests, but must exercise their contractual powers in the public interest.
On balance, it is my view that the doctrine of immunity from judicial review of procurement powers should not apply to municipalities. If a municipality's power to spend public money is exercised for improper purposes or in an improper manner, the conduct of the municipality should be subject to judicial review.
2. The Proper Scope of Judicial Review
Judicial review of municipal decisions is necessary. It is important that municipalities not assume powers which have not been conferred on them, that they not violate civil liberties, that disputes between them and other statutory bodies be resolved, and that abuses of power are checked. On the other hand, it is important that the courts not unduly confine municipalities in the responsible exercise of the powers which the legislature has conferred on them.
The two different approaches to construction of municipal powers alluded to earlier confronts us at this point: see A. McDonald, "In the Public Interest: Judicial Review of Local Government" (1983), 9 Queen's L.J. 62, at p. 64. The first approach is the narrow construction -- pro-interventionist approach, expressed by the Ontario Court of Appeal in Merritt v. City of Toronto (1895), 22 O.A.R. 205, at p. 207:
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.
The second approach is typified by the oft-cited decision City of Hamilton v. Hamilton Distillery Co. (1907), 38 S.C.R. 239, at p. 249. It was there held:
In interpreting this legislation I would not desire to apply the technical or strict canons of construction sometimes applied to legislation authorizing taxation. I think the sections are, considering the subject matter and the intention obviously in view, entitled to a broad and reasonable if not, as Lord Chief Justice Russell said in Kruse v. Johnson [[1898] 2 Q.B. 91], at p. 99, a "benevolent construction," and if 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.
This more liberal approach to statutory construction of municipal enabling statutes is also reflected in Re Howard and City of Toronto (1928), 61 O.L.R. 563, at p. 575, where the Ontario Court of Appeal held the following:
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. . . .
. . .
The question of the relative balance of convenience or detriment to different persons is a matter which the Legislature has committed to the consideration and determination of the municipal council, and their judgment on that question, if bona fide exercised in what they believe to be the public interest, will not be interfered with by the Court. . . .
The classic enunciation of the second, more generous and flexible approach is that of Lord Greene M. R. in Associated Picture Houses, Ltd. v. Wednesbury Corp., [1948] 1 K.B. 223 (C.A.), at p. 228:
It is not to be assumed prima facie that responsible bodies like the local authority in this case will exceed their powers [and] . . . the court . . . must not substitute itself for that authority.
Judicial intervention, said Lord Greene, would be justified where there was evidence of bad faith or absurdity, where the decision was unreasonable in the sense that no reasonable authority could ever have come to it. But, he said at p. 230, "to prove a case of that kind would require something overwhelming. . . .".
This Court has pronounced, on at least one occasion, in favour of a generous approach to the construction of municipal powers. In Kuchma v. Rural Municipality of Tache, [1945] S.C.R. 234, a by-law closing a road was challenged, inter alia, on the ground that it was not in the public interest. A unanimous Court upheld the by-law, stating, per Estey J. (at p. 243):
Upon the question of public interest, courts have recognized that the municipal council, familiar with local conditions, is in the best position of all parties to determine what is or is not in the public interest and have refused to interfere with its decision unless good and sufficient reason be established.
In R. v. Greenbaum, [1993] 1 S.C.R. 674, in a passage cited on this appeal by Sopinka J., Iacobucci J., speaking for the Court, commented (at p. 687) that:
Municipalities are entirely the creatures of provincial statutes. Accordingly, they can exercise only those powers which are explicitly conferred upon them by a provincial statute.
However, the same reasons (at p. 688) advocated a "benevolent construction" of the provincial enabling legislation, quoting the foregoing passage from City of Hamilton v. Hamilton Distillery Co.
The weight of current commentary tends to be critical of the narrow, pro-interventionist approach to the review of municipal powers, supporting instead a more generous, deferential approach: S. M. Makuch, Canadian Municipal and Planning Law (1983), at pp. 5-6; McDonald, supra; Arrowsmith, supra, at p. 219. Such criticism is not unfounded. Rather than confining themselves to rectification of clear excesses of authority, courts under the guise of vague doctrinal terms such as "irrelevant considerations", "improper purpose", "reasonableness", or "bad faith", have not infrequently arrogated to themselves a wide and sweeping power to substitute their views for those of the elected representatives of municipalities. To the same effect, they have "read in" principles of statutory construction such as the one which states that a by-law cannot affect "common law rights" unless the statute confers authority to do so "in plain language or by necessary implication"; City of Prince George v. Payne, [1978] 1 S.C.R. 458, at p. 463. The result is that, to quote McDonald (at p. 79), "despite the court's protestations to the contrary, they do, in fact, interfere with the wisdom which municipal councils exercise".
Recent commentary suggests an emerging consensus that courts must respect the responsibility of elected municipal bodies to serve the people who elected them and exercise caution to avoid substituting their views of what is best for the citizens for those of municipal councils. Barring clear demonstration that a municipal decision was beyond its powers, courts should not so hold. In cases where powers are not expressly conferred but may be implied, courts must be prepared to adopt the "benevolent construction" which this Court referred to in Greenbaum, and confer the powers by reasonable implication. Whatever rules of construction are applied, they must not be used to usurp the legitimate role of municipal bodies as community representatives.
Such an approach serves a number of purposes which the narrow interventionist approach does 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. This is important to the continued healthy functioning of democracy at the municipal level. If municipalities are to be able to respond to the needs and wishes of their citizens, they must be given broad jurisdiction to make local decisions reflecting local values.
Second, a generous approach to municipal powers will aid the efficient functioning of municipal bodies and avoid the costs and uncertainty attendant on excessive litigation. Excessive judicial interference in municipal decision-making can have the unintended and unfortunate result of large amounts of public funds being expended by municipal councils in the attempt to defend the validity of their exercise of statutory powers. The object of judicial review of municipal powers should be to accord municipalities the autonomy to undertake their activities without judicial interference unless clearly warranted.
Thirdly, a generous approach to municipal powers is arguably more in keeping with the true nature of modern municipalities. As McDonald asserts (supra, at p. 100), the municipal corporation "has come a long way from its origins in a rural age of simple government demands". She and other commentators (see Makuch and Arrowsmith) advocate that municipal councils should be free to define for themselves, as much as possible, the scope of their statutory authority. Excessive judicial interference in the decisions of elected municipal councils may, as this case illustrates, have the effect of confining modern municipalities in the straitjackets of tradition. This rationale for a restrained approach to judicial intervention in the decisions of municipal bodies is eloquently set out by McDonald (at pp. 100-101):
Once elected . . . the council is entrusted with responsibility for governing, not just in the interest of those who elected them, but in the interest of the community generally, that is, in the public interest. This is a fairly vague and controversial concept, however. It is a generalized judgment of what is best for individuals, as a part of a community. From the perspective of particular individuals and interest groups, the public interest may be conceived differently and, as amongst them, views of the public interest will inevitably conflict. A council making its decision on the public interest will identify and weigh a wide variety of competing considerations: the demands of various interested parties, the advice of its experts, data from its own research resources. And it will undoubtedly be influenced by the preferences expressed by the electorate. The decision is ultimately a matter of choice and what a council decides is necessarily its own collective perception of the public interest.
The voters of a community give their elected council members the final judgment in this controversy. Whether the councillors are right or wrong in their judgment depends on the vantage point of the person making this assessment, but in any event, this is the decision they were elected to make. There may, in fact, be no right or wrong in the matter. Persons displeased with a council's decision have "a remedy at the polls". [Footnote omitted.]
It is not the court's function to make these decisions -- either directly or indirectly. Primary responsibility for deciding the welfare of the community belongs to the municipal corporation. If the courts take upon themselves the judgment of the rightness or wrongness of council's decisions in these matters, they, as a body having no connection with local inhabitants, usurp the choice which the inhabitants conferred, by democratic process, on the council. If the courts are to interfere in this process, they must have a positive justification for doing so and that justification must relate to their own peculiar nature and function. [Emphasis in original.]
Finally, the broader, more deferential approach to judicial intervention in the decisions of municipalities is more in keeping with the flexible, more deferential approach this Court has adopted in recent cases to the judicial review of administrative agencies: Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227; Bell Canada v. Canada (Canadian Radio-television and Telecommunications Commission), [1989] 1 S.C.R. 1722; National Corn Growers Assn. v. Canada (Import Tribunal), [1990] 2 S.C.R. 1324; Domtar Inc. v. Quebec (Commission d'appel en matière de lésions professionnelles), [1993] 2 S.C.R. 756. The Court has repeatedly stressed the need for sensitivity to context and to the special expertise of tribunals. Where such expertise is established, deference may be warranted even to a tribunal's interpretation of its statutory powers: Teamsters Union, Local 938 v. Massicotte, [1982] 1 S.C.R. 710. There can be little justification for holding decisions on the welfare of the citizens by municipal councillors to a higher standard of review than the decisions of non-elected statutory boards and agencies.
These considerations lead me to conclude that courts should adopt a generous, deferential standard of review toward the decisions of municipalities. To say this is not new. Lord Greene said it in Wednesbury, and his words have been oft-quoted in Canada. Nevertheless, many courts have continued to take a narrow, interventionist approach to municipal decisions. This has prompted some writers to argue for a "threshold" test for judicial interference. McDonald, for example, suggests (at p. 108) that the courts should "defer to the municipality to determine what the public interest requires in the implementation of the powers conferred on it", provided that the "municipal action can be rationally supported and is not in violation of any judicial interest in the matter". Expressing this notion another way, it could be argued, by analogy to judicial review of administrative tribunals, that unless a municipality's interpretation of its power is "patently unreasonable", in the sense of being coloured by bad faith or some other abuse, the interpretation should be upheld.
It may be that, as jurisprudence accumulates, a threshold test for judicial intervention in municipal decisions will develop. For the purposes of the present case, however, I find it sufficient to suggest that judicial review of municipal decisions should be confined to clear cases. The elected members of council are discharging a statutory duty. The right to exercise that duty freely and in accordance with the perceived wishes of the people they represent is vital to local democracy. Consequently, courts should be reluctant to interfere with the decisions of municipal councils. Judicial intervention is warranted only where a municipality's exercise of its powers is clearly ultra vires, or where council has run afoul of one of the other accepted limits on municipal power.
This must be the theme. Against this background, I turn to the grounds of review advanced on this appeal: (1) that the Resolutions were beyond the City's powers; and (2) that the Resolutions violate the rule against discrimination.
B. Were the Resolutions Beyond the City's Powers?
The City's powers are determined by the Vancouver Charter, enacted by the Legislature of British Columbia. Generally, the Council may provide for "the good rule and government of the city": s. 189. This is in accordance with the purpose generally ascribed to municipal legislation -- to promote the health, welfare, safety or good government of the municipality: I. M. Rogers, The Law of Canadian Municipal Corporations (2nd ed. 1971), at p. 387. Specifically, "the City has full power to engage in any commercial, industrial or business undertaking": s. 137(1). This power extends to doing anything which is related to the commercial or business undertaking: "The Council, in addition to the powers specifically allotted to it, shall have power to do all such things as are incidental or conducive to the exercise of the allotted powers": s. 199. The City also has the power to acquire personal property required for the purposes of the City: s. 190.
Having conferred these broad powers on City Council, the Vancouver Charter goes on to specifically state areas in which Council can differentiate or discriminate between groups or classes -- the areas of licensing and taxation: s. 203. Similarly, the grant of a special franchise, privilege, immunity or exception must be authorized by a by-law requiring the assent of the electors: s. 153.
The first Resolution in issue on this appeal, the Resolution not to do business with Shell until it stops trading with South Africa, clearly can be defended under the power of the City to engage in commercial and business activities. The City needs fuel. Fuel may be purchased from a variety of firms. This means that the City must of necessity discriminate between suppliers of fuel, as Sopinka J. concedes (at p. 282). The City and its agents doubtless make thousands of similar decisions each month, without any suggestion that the City must justify the reason why it chooses one firm over another.
The attack on this Resolution as well as on the second Resolution is based solely on the motives that led to its adoption. It is said the motives for choosing other companies over Shell are unrelated to the business of the City and that these improper purposes render the otherwise legitimate decision invalid.
At this point, we must inquire into the legal principles relevant to review of municipal decisions on the basis of motive. The actions of a statutory body or municipality can be said to be beyond its powers in one of two ways. First, it may be alleged that the action itself is beyond the authority's powers. Second, it may be alleged that while the action is within the municipality's powers, the purpose for which the action was taken was outside the municipality's powers, thereby rendering the action itself invalid. This case falls into the second category.
The law governing review under this head is sometimes referred to as the "doctrine of improper purposes". The rule was first set out in an expropriation case, Galloway v. Mayor and Commonalty of London (1866), L.R. 1 H.L. 34, per Lord Cranworth (at p. 43):
. . . when persons embarking in great undertakings, for the accomplishment of which those engaged in them have received authority from the Legislature to take compulsorily the lands of others, making to the latter proper compensation, the persons so authorized cannot be allowed to exercise the powers conferred on them for any collateral object; that is, for any purposes except those for which the Legislature has invested them with extraordinary powers.
This doctrine has been applied to municipalities as well as to administrative agencies: Lamb v. Town of Estevan (1922), 16 Sask. L.R. 220 (C.A.); Re Burns