A Regulator’s Public Interest is Not Unrestricted

There is significant debate amongst regulators as to the public interest they serve. Typically this debate occurs when engaging in strategic planning or policy making.

However, in Powerhouse Corporation v. Registrar of Alcohol, Gaming and Racing, 2021 ONSC 4116 (CanLII), https://canlii.ca/t/jgdwp Ontario’s Divisional Court added a statutory interpretation component to the discussion. In that case an establishment’s liquor licence prevented amplified sound outside that would disturb the neighbours. If the establishment sought a variance of the restrictions, the onus would be on the applicant to demonstrate the reasonableness of the request and only one such application could be made every two years. The establishment arranged for a new corporate entity to apply for a new licence where the onus would be on those wanting to restrict the licence to establish a lack of public interest.

The decision turned on the wording of a provision that read as follows:

the licence is not in the public interest having regard to the needs and wishes of the residents of the municipality in which the premises are located

In opposing the application entirely, the city argued that the public interest included preventing applicants from circumventing the limitations on applications to vary existing conditions by having the application brought by a new corporation designed to achieve the same outcome. The Court rejected this argument. It held that the term “public interest” needed to be interpreted in accordance with the surrounding language of the provision. Under this provision the public interest was focussed on the needs and wishes of the community rather than a desire to prevent legal manoeuvres. The Court said:

The LAT’s [appeal tribunal’s] caution properly reflects the Supreme Court of Canada’s concern that “public interest” conditions in administrative enabling legislation not be given overly expansive interpretations that would give a board “total discretion over its limitations” ….

The Court did say that another provision of the Act, dealing with “reasonable grounds for belief that the applicant will not carry on business in accordance with the law and with integrity and honesty” could have been available if raised. In addition, the Court held that the history of noisy sound justified maintaining the restriction on amplified sound for the entity, just like it existed for the existing establishment.

The case does illustrate, however, that regulators need to interpret the public interest that they serve in accordance with the language and intent of their enabling legislation.

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