Item - 2021.GL21.15

The General Government and Licensing Committee:

1. Requested the Executive Director, Municipal Licensing and Standards, in consultation with the Chief Building Official and other appropriate staff, to report to the General Government and Licensing Committee in the second quarter of 2021 on:

a. mechanisms to ensure co-ordination between departments to flag instances where businesses are operating without licences; and

b. mechanisms to increase penalties and enforcement, particularly in cases where public health or safety may be at risk.

The General Government and Licensing Committee recessed its public session to meet in closed session to consider this Item as it pertains to litigation, potential litigation or information subject to solicitor / client privilege.

This report responds to GL20.6, which requested the Executive Director, Municipal Licensing and Standards, to address the issue of how certain business establishments, such as an eating establishment, may operate without a business licence. The report presents an overview of business licensing, including the enforcement tools available to address businesses operating without a licence.

The City of Toronto has the authority to enforce licensing requirements for businesses and certain trades, occupations, and other for-profit businesses. Through the City of Toronto Act, 2006, the City has the ability to permit, prohibit, limit, and impose certain conditions on businesses. Typically, municipalities license businesses that are not licensed or otherwise governed by other levels of government and where there is a municipal purpose (such as consumer protection or public health and safety). The City currently licences a variety of different businesses, including eating establishments. Regulations for these businesses are predominantly laid out in Toronto Municipal Code, Chapter 545, Licensing.

Businesses operating without a licence may be identified through complaints and referrals, or through the course of an unrelated investigation. While it is the responsibility of a business owner to ensure adherence to municipal legislation (and by extension, provincial or federal legislation), upon notification of a potential unlicensed business, bylaw enforcement officers will begin an investigation, with a focus on education and compliance. In some cases, the business obtains a business licence, and the issue is resolved. In other cases, further enforcement action, such as notices to comply and charges, are required.

The Provincial Offences Act, 1990 and its regulations are the legislation under which bylaw offences are prosecuted. Part I (tickets) are available for less serious offences. When a ticket is issued, the recipient may choose to pay the fine (which is no more than $1000 and approved by the Ontario Ministry of the Attorney General) or dispute it by means of a trial. Part 3 (summons) are available for more serious offences and require the recipient to appear before a Justice of the Peace, as the ticket cannot be resolved through the payment of a set fine.

When a Part 3 (summons) is issued for an offence under Toronto Municipal Code, Chapter 545, Licensing, there is currently a maximum fine of $25,000 for an individual and $50,000 for a corporation.

Typically, when a business is charged for operating without a licence, the issue is resolved relatively quickly. For example, in the past four years, where a charge has been laid for operating without a licence, nearly 80 percent received a single charge and were brought into compliance. Additional charges are therefore required in limited circumstances.

If a business continues to operate without a business licence, there are limited tools for enforcement:

1.  The City can lay further charges against the business. Upon conviction under a Part 3 summons, the prosecutor can ask the Court to order that the premises be closed for a period not exceeding two years pursuant to s. 387 of the City of Toronto Act, 2006. If the court agrees to issue the closing order, the police are required by section 387 to bar entry to all entrances to the premises.

 
2.  The City (or a taxpayer) can commence a civil application in the Superior Court of Justice, seeking an order from the court under section 380 of the City of Toronto Act, 2006 restraining the contravention of a bylaw.

The City does not have the authority to close a business, solely on the basis that they do not have a licence.

Moreover, the Toronto Licensing Tribunal does not have jurisdiction over unlicensed businesses unless (and until) the business has applied for its licence.

As part of the ongoing review of business licensing, Municipal Licensing and Standards is reviewing broad authorities and tools to bring businesses into compliance, including aligning the penalties of Toronto Municipal Code Chapter 545, Licensing with those permitted by the City of Toronto Act, 2006 (that is, no more than $100,000). To further aid compliance efforts, Municipal Licensing and Standards is implementing additional case management functionality. This functionality more directly links complaints, notices to comply, and charges across multiple addresses, licences and clients. The enhancements also include a follow-up mechanism for charges to ensure compliance after conviction.

This report was prepared in consultation with Legal Services.