Before: The Honourable Madam Justice Boyd

Reasons for Judgment

(In Chambers)

Counsel for Petitioner:	E.N. Kornfeld and H. Silber
Counsel for the Respondent:	J.G. Yardley
Date and Place of Hearing:	November 18, 2005
	Vancouver, B.C.

Introduction:

[1] The petitioner, Royal City Jewellers & Loans Ltd., (“Royal City”) seeks a declaration that the City of New Westminster Bylaw No. 6408, 1997, A Bylaw to Regulate Second Hand Dealers within the City of New Westminster, (the “Bylaw”) is ultra vires the powers and authority of the Corporation of New Westminster (the “City”) by the Community Charter S.B.C. 2003, c. 26, or any other enactment. The City opposes the application and seeks a dismissal of the application with costs.

Preliminary Objection:

[2] By way of preliminary objection, City’s counsel, Mr. Yardley, submits the Court ought not to exercise its discretion in granting any remedy under Rule 10 since this Bylaw, like many others involving the regulating and licensing of businesses, is presently undergoing a review. A report concerning the new proposed Bylaw was put before the City’s Municipal Council on October 3, 2005. It was resolved that the City staff ought to consult with local pawnbrokers and second hand dealers regarding the proposed new Bylaw. Since it is expected that the new Bylaw will be passed by late January 2006 he submits that, whatever the result here, this matter can not be resolved in this hearing since yet another Bylaw will soon be in place, with presumably different issues raised.

[3] In support of his position he relies on the decision of Skipp L.J.S.C. (as he then was) in Three Stars Investments Ltd. v. Narod Developments Ltd. [1981] B.C.J. No. 112 (B.C.S.C.), in which it was held that it is inappropriate to proceed by way of petition under Rule 10(1)(b) where, “a decision will not end the matter, but requires further proceedings to be pursued”.

[4] While it may be the new Bylaw will raise new issues to be resolved, I do not agree that based on the materials presently before the Court “a decision will not end the matter”, at least regarding this Bylaw. Presumably the broad issues raised and addressed here will be of some assistance in guiding municipal staff in ensuring the future Bylaw falls within its proper constitutional parameters. Thus I will not accede to the preliminary objection raised.

Background Facts:

[5] Royal City describes itself as the largest pawnbroker in British Columbia and likely the largest pawnbroker in Canada. It has operated as a family-owned business since it was established some 49 years ago. The current general manager and director, Mr. Bernard Isman, is the founder and first President of the British Columbia Pawnbroker’s Association and has served as an officer of that association since 1994.

[6] Since 1997, Royal City, like all other licensed pawnbrokers and second hand dealers in the municipality, has been subject to Bylaw No. 6048. The relevant sections of that Bylaw provide as follows:

4. Every Second Hand dealer must keep and use in his business a book or a computer record, known as the Second Hand Dealers’ Register, containing in the English language the following:

(i) a correct account and description of each Second Hand Article bought, taken in trade, barter or pawn, or otherwise received in the course of business, including all descriptive marks, the make, model and serial numbers, be they stamped, engraved or on a label, and any other letters, numbers or names, or combinations thereof, on each article;

(ii) the precise minute, hour, and day of the receipt of each article;

(iii) the full name, address, and description of the person from whom the second hand article is received or bought, and confirmation of same by picture identification including the type and serial or registration number other identification used;

(iv) whenever possible, the make, description, and provincial licence number of any motor vehicle used for delivery of such Second Hand Articles received or bought, with the exception of those persons who arise via public transit or taxi cab; in such cases as the Second Hand Dealer is operating a drive-in facility, such as a scrap yard or junk yard, the recording of vehicle descriptive information shall be mandatory;

(v) in cases where only a single item is exchanged, the exact price paid for that item. In cases of multiple items exchanges to a total of less than $400, a total price only will be required. In cases where the total price exceeds $400, the price paid for each Second Hand Article will be required.

(vi) the name, initials or staff number of the staff person who takes in the item; and

no Second Hand Dealer shall permit any page or any entry made in the Register to be erased, obliterated, defaced or removed.

5. Every Second Hand Dealer must produce immediately, upon request, during business hours, the Second Hand Dealers’ Register for inspection by the Chief Constable or any Constable and, upon request, give the Second Hand Dealers’ Register for inspection elsewhere or for use as evidence in Court. Under some circumstances, at the discretion of the Chief Constable or the Constable requiring such evidence, an exact photocopy or printout of the specific page or pages of the Register, signed and dated by the Chief Constable or the Constable as an exact copy of the register, may be sufficient for investigative or Court purposes. In addition, every Second Hand Dealer must keep within his shop any Second Hand Dealer’ Register that contains any entries which are less than 24 months old.

…

8. In addition to the Second Hand Dealer’s Register, for each business day ever Second Hand Dealer shall complete a form in accordance with Schedule “A” to this bylaw which shall include all of the information included within the Second Hand Dealer’s Register as set-out in Section 4. Each completed from shall then be delivered to the Chief Constable no later than 09:30 a.m. of the business day following the business day for which the form has been completed. The Chief Constable may designate the format for the transfer of this information and may direct that it be communicated to his office by means of the Internet, fax or other telecommunications system. In any such case that the Chief Constable directs the information be transmitted via computer media, he may also direct the program which will be utilized in order to ensure unanimity between all Second Hand Dealers.

[7] While Royal City does not object to the collection of the information and the maintenance of the Second Hand Dealers’ Register, as required by s. 4 of the Bylaw, it objects to the delivery of that information to the police as required by Sections 5 and 8. Royal City says that its business fills a long established historical gap in the market, providing short-term loans to borrowers who have lower and more uncertain incomes who are thus less likely or less able to obtain short term financing from larger financial institutions. The majority of its loans are under $200.

[8] Mr. Isman deposes that currently Royal City makes annual loans totalling $13 million on the security of goods valued at approximately $55 million. Of that amount, he says the annual value of the goods actually found to be or suspected by the police to be stolen property totals less than $10,000, representing loans of approximately $2 million. Applying a second measure, he says that Royal City makes an average of 65,000 individual loans per annum with an average of 2.5 items per loan offered as security or 162,500 items. Of that total, he says that each year the police seize approximately 20-25 items as suspected stolen property. Accordingly, he concludes that only approximately 1/70^th of 1% of those items annually pawned with the petitioner are either stolen property or suspected of being stolen—a total of .0070 of all items pawned. Based on his own experience and that of the various pawnbrokers’ associations, he concludes “there is no widespread epidemic of trading in stolen goods through a pawnbroker”.

[9] Mr. Isman’s evidence is challenged by Sergeant Doug Fisher, a police officer with the Vancouver Police Department who is in charge of the Anti-Fencing Unit. He insists the pawn/second hand industry “has a significant link with crime and criminality” and that “effective investigation of property crime requires access to second hand transactions by information management tools designed to support the analytical and investigative requirements and needs of police officers”.

[10] Apart from their disagreement concerning whether there is any connection between the pawn/second hand industry and criminal activity, they also disagree as to which is the appropriate computer database system which ought to be adopted for police investigation work. Mr. Isman supports the adoption of the L.E.A.D.S. Online system (LEADS) whereas Sgt. Fisher suggests the adoption of the XTRACT system, presently used by the Vancouver Police Department.

[11] In the case of the LEADS system, the particulars of pawn or second hand transactions are reported electronically daily to LEADS (a U.S. based company) and may be accessed by law enforcement agencies under contract with LEADS, which allows law enforcement agencies to obtain the description of the merchandise. However, it is only if there is a suspected crime involving such merchandise that the law enforcement agencies are permitted access to the particulars of the person who sold or pawned the merchandise.

[12] In the case of the XTRACT system, using data on the Vancouver Police Department controlled computers, the police are automatically able to compare CPIC and PRIME-BC stolen item databases against the full database of second hand items to present investigators with daily potential matches. Contrary to the LEADS’ one day lag in “alerting” functionality, the XTRACT system allows police to effect an immediate arrest or initiate surveillance immediately.

Issues:

[13] The petitioner has raised multiple grounds of challenge which raise the following issues:

1. Is the City legislating criminal law? In other words is the pith and substance of the Bylaw criminal law such that it falls within federal jurisdiction and is therefore ultra vires the power of the Province and thus ultra vires the powers of the municipality?

2. If not, is the Bylaw ultra vires the municipality, as being outside the authority delegated by the Province to the municipality pursuant to s. 59 of the Community Charter, S.B.C. 2003, c. 26?

3. If not, do the provisions of the Bylaw nevertheless violate citizens’ rights of privacy protected by the Personal Information and Privacy Act or the Personal Information Protection Act?

4. If not, does the Municipality’s provision of the information in question constitute an illegal search and seizure of information, contrary to s. 8 of the Charter of Rights and Freedoms?

1. Is the City legislating criminal law?

[14] Before commencing this exercise, it must be acknowledged that certain principles of interpretation must be applied in scrutinizing a statute which empowers a local government. The parties agree that as dictated by the Supreme Court of Canada in United Taxi Drivers’ Fellowship of Southern Alberta v. Calgary (City) (2004) 46 M.P.L.R. (3d) 1 (S.C.C.), the Courts must take a broad, purposive approach when interpreting statutes which empower local governments. The onus is on the party alleging a bylaw is ultra vires to show a lack of authority on the part of a municipality and not on the municipality to show it is intra vires. (Kuchma v. Tache [1945] S.C.R. 234, at ¶ 12).

[15] The starting point is a consideration of the Community Charter (supra). Section 1(2)(a) provides:

the Provincial Government recognizes that municipalities require (a) adequate powers and discretion to address existing and future community needs...

[16] Further Section 3 provides:

The purposes of this Act are to provide municipalities and their councils with

(a) a legal framework for the powers, duties and functions that are necessary to fulfill their purposes,

(b) the authority and discretion to address existing and future community needs, and

(c) the flexibility to determine the public interest of their communities and to respond to the different needs and changing circumstances of their communities.

[17] Section 4(1) repeats the principle of interpretation noted earlier:

The powers conferred on municipalities and their councils by or under this Act or the Local Government Act must be interpreted broadly in accordance with the purposes of those Acts and in accordance with municipal purposes.

[18] Section 7 states:

The purposes of a municipality include

…

(b) providing for services, laws and other matters for community benefit,

….

(d) fostering the economic, social and environmental well-being of its community.

[19] Section 8 deals generally with the authority of municipalities to regulate businesses:

8 (6) A council may, by bylaw, regulate in relation to business.

[20] The term “regulate” is defined in Section 1 as follows:

includes authorize, control, inspect, limit and restrict, including by establishing rules respecting what must or must not be done, in relation to the persons, properties, activities, things or other matters to be regulated.

[21] Finally, I turn to s. 59 which deals specifically with a municipality’s power to impose requirements on second hand dealers, including that they notify the City’s Chief Constable after purchasing, taking in or receiving used or second hand goods. It provides:

A council may, by bylaw, do one or more of the following:

(b) In relation to person engaged in the business activity of purchasing, taking in barter or receiving used or second hand goods,

(i) require such persons, after purchasing, taking in or receiving used or second hand goods, to notify the chief constable who has jurisdiction in the municipality within the time period established by the bylaw….

(my emphasis)

[22] As I understand it, the petitioner submits, relying on the decision of the Provincial Court of New Brunswick in Fredericton (the City of) v. The Re-Purchase Shop (Unreported December 3, 2004), (hereinafter referred to as “Re-Purchase Shop”), that Sections 5 and 8 of the subject Bylaw, which require disclosure of the recorded information to the police, are ultra vires the City as being an encroachment on the federal criminal law jurisdiction.

[23] In Re-Purchase Shop, the pawnbroker dealer challenged the constitutionality of the municipal by-law, which like the Bylaw in issue, required the pawnbroker to submit a report to the Chief of Police or his designate of all transactions involving goods received by the dealer during the previous seven days. While the dealer was apparently content to collect the information in the ordinary course of business as required by s. 5(1) of the by-law, he refused to provide the report to police, as required by s. 5(4) of the by-law. The Court rejected the municipality’s submission the criminal aspect of the by-law was merely ancillary and that the main intent of the by-law was to deal with property (and the re-unification of the property with its rightful owner). Cumming P.C.J. concluded at ¶ 4-5:

The sole purpose of this subsection is to facilitate criminal investigations. Given the contents of Subsection 5(1) there can be no other conclusion. The purpose is to require pawnbrokers to act, for all intents and purposes, as agents of the police. It forces the pawnbroker to provide information to the police for the purpose of the police investigating criminal offences which would not otherwise be available to the police outside the search warrant framework. This is not an ancillary aspect of the by-law, a ‘side effect’, so to speak, of a valid enactment relating to property and civil rights. It is the purpose of the subsection.

This purpose and intent, in my opinion, makes Subsection 5(4) of the by-law criminal legislation, ultra vires the power of the municipality, and thus not enforceable….

[24] I am of course not bound by the decision of this Provincial Court. In any case, at least based on the enabling statutes in British Columbia, I reject the notion that the pith and substance of the subject Bylaw is criminal law. To the contrary, I accept the City’s submission that on a consideration of the provisions of the Community Charter, read in conjunction with the provisions of the Bylaw, it cannot be said that the Bylaw is in relation to criminal law, or that its pith or substance is merely to facilitate criminal investigations.

[25] Neither the Bylaw as a whole, nor Sections 5 and 8 in particular, have the purpose or effect of establishing criminal offences or establishing acts that are defined as criminal (R. v. Chung Chuck [1929] 1 D.L.R. 756 (B.C.C.A.)). Rather the Bylaw is directed at the investigation and prevention of crime. As noted in the authorities and ss. 7(a) and (d) of the Community Charter, the prevention of crime is an aspect of providing good government of the community and fostering the economic, social and environmental well-being of the community (Dawson v. Bedard [1923] 3 W.W.R. 412 (S.C.C.)).

[26] Even if the Bylaw involves matters which have an element of criminal behaviour—specifically the deterrence of criminal activity—this is not sufficient to bring it within the jurisdiction of Parliament (see Dawson (supra)). Finally, as Mazko J. noted in Perry v. Vancouver (City) (1990), 1 M.P.L.R. (2d) 69 at page 75, ¶ 18:

Even though provincial legislation may touch upon an area of criminal law, it may still be valid if its purpose is to prevent crime or to suppress the conditions which foster the development of crime.

…

The City is not required to prove that a particular activity contributes to crime, or, indeed that the measure taken will prevent crime.

[27] I find that the Bylaw only regulates aspects of the operation of second hand dealer businesses. It does not criminalize nor does it purport to criminalize any aspect of the actions of the petitioner or anyone else in terms of its purpose or effect. Rather, it is directed to the manner in which the second hand trade is carried on. (See Cal Investments Ltd et al. v. City of Winnipeg (1978), 6 M.P.L.R. 31; Re Moffat v. Edmonton (City) (1979) 99 D.L.R. (3d) 101; Eve Studio v. Winnipeg [1984] 4 W.W.R. 507; and 538745 Ontario Inc. v. Windsor (City) [1988], O.J. No. 133)).

[28] In the end result, I reject the petitioner’s submission that the impugned Bylaw is a matter of criminal law and therefore falls within Federal jurisdiction.

2. Is the Bylaw ultra vires as being outside the authority delegated to the Municipality under s. 59 of the Community Charter?

[29] The petitioner submits that while the Bylaw may have been properly created under the authority of s. 59 of the Community Charter, the latter statute goes no further than to provide the municipality with authority to pass a Bylaw whereby a second hand dealer is required to “notify” the municipality‘s Chief Constable of a second hand transaction and to prohibit the disposition of a second hand article during the period set out in the Bylaw. Beyond this, the petitioner says the City has no authority. Specifically it says the City has no authority under s. 59(b)(i) of the Community Charter to oblige the second hand dealers to become “agents of the police” responsible to provide the police with the name and address of the pawner or vendor and the financial particulars of the transaction.

[30] I reject this submission. I accept the City’s submission that in considering the meaning of s. 59(b)(i), the “guiding principle is the lawmaker’s intention” (City of Montreal v. 2952-1366 Quebec Inc., 2005 SCC 62). Rather than relying on the literal meaning of the language used, the meaning of the language must be determined by considering the purpose of the enactment.

[31] Section 59 of the Community Charter does not define “notify” nor does it otherwise prescribe what the Chief Constable is to be notified of. I am satisfied that the purpose of this notification requirement, however it is interpreted, is to protect the public interest. As the City’s counsel submits, the scope of the notification is for Council to determine, bearing in mind those portions of the Community Charter which address “existing and future public needs” (s. 3(b)), “municipal purposes” (s. 4(1)), and “fostering the economic, social and environmental well being of its community” (s. 7(d)). All of these factors must be considered in light of providing the municipal Council with the “flexibility to determine the public interest” (s. 3(c)).

[32] In my view since s. 59 of the Community Charter allows a municipality the general power to regulate business and to “require and prohibit” certain undertakings, including pawnbrokers and second hand goods operations, it follows that providing such establishments authority to “notify” the police must go beyond simply providing the police with a description of the goods taken in pawn. There is no basis for such a restrictive interpretation of s. 59, particularly when the local government is provided with jurisdiction to prevent crime (see Dawson (supra)).

3. Does the Bylaw offend the provisions of either the Personal Information and Privacy Act or the Personal Information Protection Act?

[33] The petitioner submits the City is a public body and thus governed by s. 26 of the Federal Freedom of Information and Protection of Privacy Act (“FIPPA”) R.S. c. 165. It submits that the Bylaw in issue conflicts with s. 26 of FIPPA which provides that:

No personal information may be collected by or for a public body unless

(a) the collection of that information is expressly authorized by or under an Act;

(b) that information is collected for the purposes of law enforcement, or

[34] The City submits that the collection of the information in issue is not governed by FIPPA, but rather by the Personal Information Protection Act (“PIPA”). The City relies on the reasoning of the Information and Privacy Commissioner in Order P05-02, Bull Housser & Tupper, [2005] B.C.I.P.E.D. No. 19, in which it was held that s. 3(2)(d) of PIPA is designed to dovetail PIPA’s scope with FIPPA’s, the Legislature’s intent being to avoid overlap between the two statutes. Section 3(2)(d) provides:

This Act does not apply to …(c) the collection, use or disclosure of personal information, if the federal Act applies to the collection, use disclosure of the personal information.

[35] In this case, I agree with the petitioner, that while the petitioner itself is not a public body, it is collecting the information in issue “on behalf of a public body” and is thus caught by FIPA. As in the Bull Housser decision, the personal information in the hands of the petitioner, is gathered for and on behalf of a public body—in this case, the City.

[36] In any event, I am not persuaded that the collection of the information in issue offends either statute.

[37] If FIPA applies, as I have found, then I nevertheless am satisfied the collection of the information in issue does not offend that Act. In my view, the information in issue may be collected, by virtue of falling within any one of the first two exemption categories set out in s. 26—that is the collection of the information is “expressly authorized by or under an Act” or the information is collected “for the purposes of law enforcement.”

[38] If the PIPA applies, then I am satisfied the petitioner may collect the personal information, even without consent, where the information “is required or authorized by law”, as provided by s. 12(1) (h) of that Act. Further, I note that Section 17 of the PIPA allows for disclosure of such personal information “for purposes that a reasonable person would consider appropriate in the circumstances and that ….are otherwise permitted under this Act”. Section 18(1)(j) allows for disclosure to a public body of personal information without consent, provided the disclosure concerns “an offence under the laws of Canada or a province, to assist in an investigation or the making of a decision to undertake an investigation” (my emphasis). Once again, s. 18(1)(o) allows such disclosure without consent provided “the disclosure is required or authorized by law”.

[39] I note that in Order P05-1, K.E. Gostlin Enterprises Limited, [2005] B.C.I.P.C.D. No. 17, the Privacy Commissioner considered Canadian Tire’s requirement that persons returning goods provide identifying personal information for the purpose of detecting and deterring the fraudulent return of goods. One of the issues was whether Canadian Tire’s practice and policy complied with s. 11 of the PIPA which provides:

…an organization may collect personal information only for the purposes that a reasonable person would consider appropriate in the circumstances and that…are otherwise permitted under this Act.

[40] The Commissioner considered Canadian Tire’s policy and concluded at ¶ 59 and 60:

Here we have a retail organization facing ongoing challenges from attempted and successful fraudulent returns of goods, with the organization suffering losses each years due to fraudulent return of stolen goods. We also have collection and use of identifying information that is generally publicly available and non-sensitive in nature. That information is collected and used to detect and deter fraudulent returns of goods as part of its overall loss-reduction strategy. The evidence also shows that the organization does not disclose the personal information to anyone else, except to the police for fraud or theft investigations resulting from the organization calling in the police.

In light of these circumstances, I conclude that a reasonable person would consider the organization’s fraud and loss prevention purpose for collecting and using identifying personal information to be ‘appropriate in the circumstances’. … (b) that information is collected for the purposes of law enforcement, or (c) that information relates directly to and is necessary for an operating program or activity of the public body.

[41] Likewise, here, the City submits that in circumstances where it is difficult to trace, identify and verify lawful ownership and possession of goods for the purpose of commerce, the collection and disclosure of the personal information of a person having actual possession of the goods is “appropriate in the circumstances” and thus within the limitations of s. 11 of the PIPA. I agree with that submission and find that people buying goods from a licensed second hand dealer may reasonably expect that as a matter of licensing by a regulatory body, measures may be taken to ensure transactions and ownership in the goods is legitimate.

4. Are the provisions of the Bylaw inconsistent with s. 8 of the Charter of Rights and Freedoms?

[42] Lastly the petitioner submits the Bylaw in issue effectively authorizes an unreasonable search and seizure of personal information and is thus contrary to s. 8 of the Charter of Rights and Freedoms. The petitioner relies on the Court’s analysis in International Escort Services Inc. v. Vancouver (City) [1988] B.C.J. No. 2475.

[43] In International Escorts (supra), the City’s By-law required escort services to obtain licences from the City to operate and also required the escort service to maintain a list of all requests made for escort services, the date and time of the request, the name of the escort provided and the fee charged. The By-law also required the escort service to make this list available to any inspector or the Chief Constable for inspection upon request.

[44] Ultimately, Lysyk J. held the By-law did not amount to an illegal search or seizure, since the By-law “did not authorize a forced entry or a search of the premises or the removal of anything therefrom.”

[45] In contrast, in the case at bar, the petitioner stresses the Bylaw does allow an opportunity of entry on the petitioner’s premises and removal of records for criminal purposes. Section 7 of the Bylaw provides:

Every Second Hand Dealer shall maintain within his shop and must keep open all books and documents relative to the operation of the business during business hours for inspection by the Chief Constable or any Constable and, upon request, must give the books and documents, or in the case of records maintained on a computer base, an exact copy of the data base for inspection elsewhere or for use in Court…

[46] While the impugned Bylaw does allow for entry into and inspection and copying of the petitioner’s records, I am not satisfied the Bylaw can be said to be in violation of s. 8 of the Charter. Even assuming the City’s demands for production amount to a “seizure” of documents within the meaning of s. 8 (which I do not find), here the information contained in the records is not the kind of information which is subject to the protection of s. 8. As Sopinka J. noted in R. v. Plant [1993] 3 S.C.R. 281 (S.C.C.), in determining the parameters of “informational privacy”, the Court will consider a number of factors including:

…the nature of the information itself, the nature of the relationship between the party releasing the information and the party claiming its confidentiality, the place where the information was obtained, the manner in which it was obtained and the seriousness of the crime being investigated allows for a balancing of the societal interests in protecting individual dignity, integrity and autonomy with effective law enforcement….

[47] Adopting the “contextual approach” adopted in Plant (supra), it is notable that here, there is no evidence from any particular individual concerning any alleged violation of his rights under s. 8. There are no facts in this case on which to make such an analysis.

[48] In any case, if such an analysis were made, I would conclude that the manner by which the information is sought is minimally intrusive to the petitioner’s customers. As in Plant (supra), the information does not intrude into the “biographical core of personal information” of either the petitioner or its customers, or reveal “intimate details of the lifestyle and personal choices of the individual”. Thus no s. 8 protection is available.

Conclusion:

[49] In my view, the impugned Bylaw withstands each of the petitioner’s challenges. Accordingly, this proceeding is dismissed, with costs to City.

“M.E. Boyd, J.”
The Honourable Madam Justice M.E. Boyd

Citation:	*Royal City Jewellers & Loans v. New Westminster (City),*
	2006 BCSC 203