Uber Canada Inc. v. Surrey (City)

2020 BCSC 173 Uber Canada Inc. v. Surrey (City)

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Uber Canada Inc. v. Surrey (City), 2020 BCSC 173 Date: 20200207 Docket: S200984 Registry: Vancouver Between: Uber Canada Inc. Plaintiff And City of Surrey Defendant Before: The Honourable Madam Justice Jackson Oral Reasons for Judgment Counsel for the Plaintiff: M.A. Feder, Q.C. A. Cocks P. Williams Counsel for the Defendant: J. Yardley S. Dubinsky P.C.M. Huynh Place and Date of Trial/Hearing: Vancouver, B.C. February 5, 2020 Place and Date of Judgment: Vancouver, B.C. February 7, 2020 Table of Contents I. INTRODUCTION. 3 II. BACKGROUND. 3 III. THE APPLICABLE LEGAL FRAMEWORK. 6 A. Is there a high probability that if the injunction is not granted, the anticipated activity will occur imminently or in the near future?. 6 B. Is there a serious question as to whether the Uber has a right that would be breached by the anticipated activity?. 7 C. Weighing the likelihood of irreparable harm to Uber, does the balance of convenience favours granting the injunction?. 11 IV. CONCLUSION. 13 THE COURT: This decision was delivered in the form of Oral Reasons. The Reasons have since been edited for publication. I. INTRODUCTION [1] Uber Canada Inc. ("Uber") brings this application seeking an interlocutory quia timet injunction enjoining and restraining the City of Surrey ("Surrey") from fining, ticketing, or otherwise sanctioning Uber and

drivers for functioning in Surrey without a business license, pending the disposition of this action, the issuance of ridesharing licenses in Surrey, or further order of this Court. II. BACKGROUND [2] In September 2019, the Passenger Transportation Act, S.B.C. 2004, c. 39 (the "Act"), was amended to permit transportation network services ("TNS"). The Act defines TNS as "services respecting the connection of drivers of passenger directed vehicles with passengers who hail and pay for the services through the use of an online platform". TNS are often referred to as ride hailing or ridesharing. The legislative amendments were preceded by seven years of study and public consultation on the concept of ride hailing and regulation of TNS in British Columbia. As part of the legislative amendments, the mandate of the Passenger Transportation Board (the "Board") was expanded to enable it to make licensing decisions with respect to TNS. [3] Once the legislative amendments came into effect, Uber applied to the Board for a passenger transportation license that permits TNS (a "TNS License") to allow it operate ride hailing services (the "Uber Application"). On January 23, 2020, the Board granted the Uber Application which permitted Uber to operate TNS throughout the Lower Mainland, including Surrey, and Whistler. [4] Beginning on January 24, 2020, Uber started facilitating transportation

network services and drivers began transporting riders in Surrey. [5] On the same day, the current mayor of Surrey, Doug McCallum, posted a statement on Surrey's website in which he stated: The approval of ride hailing companies in Metro Vancouver by the [Board] does not change my position on this issue. What continues to be my chief concern is the unfair advantage that has been created without any regard as to how it will impact those who are employed in the taxi industry. It is no secret that a large percentage of cab drivers live in Surrey and the modest wages they earn go to support their families. As residents and as my constituents, it is my duty to do what I can to ensure that these jobs are not lost due to an unfair advantage that has been arbitrarily put in place. The taxi industry meets the needs of all its passengers by having vehicles for hire that can accommodate people of all abilities. Until I am assured that a level playing field is established, I will not be supporting the issuing of ride hailing business licenses. [6] That same Friday afternoon, Kim Marosevich, Surrey's acting Manager of Public Safety Operations, telephoned Michael van Hemmen, head of Western Canada Operations and Public Affairs at Uber, and Morva Rohani, one of Mr. van Hemmen's colleagues. During the phone call, Ms. Marosevich advised Uber that there was no business license in Surrey for

which Uber could apply. [7] Later that same afternoon, Ms. Marosevich left a voicemail confirming that Surrey would commence bylaw enforcement action at 12:00 a.m. on Saturday, January 25, 2020, if Uber did not cease its availability in Surrey. [8] Ms. Marosevich's voicemail was swiftly followed by an email to Mr. van Hemmen and Ms. Rohani from Robert Costanzo, Surrey's General Manager of Corporate Services, confirming that Surrey would fine Uber and drivers if they continued to operate within Surrey without a business license issued by Surrey. Mr. Costanzo's email included the following: It has come to [Surrey's] attention that UBER has commenced transportation network services (TNS) in Surrey without obtaining authority from [Surrey]. Please be advised that the City of Surrey Council has not yet provided its official position on how it wishes to deal with TNS and that a decision in this regard will be made by late February/early March 2020. Until a decision is made by Surrey Council, UBER cannot operate within Surrey's municipal boundaries without a Surrey business license. Should UBER not adhere to [Surrey's] requirements, you will face a $500.00 fine per day against the UBER organization and a $500.00 fine per vehicle offence. [9] Mr. van Hemmen had two further telephone calls with Mr. Costanzo later that same evening, in which Mr. Costanzo confirmed that there was no

business license available in Surrey for which Uber can apply. In a newspaper article dated January 26, 2020, Mr. Costanzo is quoted as having made similar comments, namely that "City staff has contacted Uber and advised that Surrey city council has not yet provided its official position on how it wishes to deal with ride-hailing business licenses" and "[u]ntil a decision is made, ride-hailing companies are precluded from operating within Surrey's boundaries". Mr. Costanzo filed an affidavit in these proceedings and did not dispute the statement attributed to him in the article. [10] On Saturday, January 25, 2020, Mr. Costanzo prepared and sent an internal email to Mayor Doug McCallum and the City of Surrey councillors, cc'd to a number of people including Ms. Marosevich. In the email, Mr. Costanzo acknowledged that municipalities do not have the authority to ban the ridesharing industry. However, he went on to state: It is reasonable for the city to not allow ride hailing in the city for a limited period of time to afford council a reasonable opportunity to consider amendments to the business license bylaw and/or to consider how council wishes to proceed with regulating the industry as per the above. Until then, staff will not issue licenses to a ride hailing company. Any ride hailing company that operates with in Surrey without a business license may be fined. [11] On January

27, 2020, at 3:00 p.m., Mayor McCallum held a press conference. A transcript of that press conference was prepared and was part of the evidence before me at this hearing. At the press conference Mayor McCallum stated "On Friday, Uber was notified by the city to stop operations within Surrey boundaries until council has taken a decision on how it wishes to deal with ride hailing business licenses." Mayor McCallum expressed support for ride-hailing on the condition that it "be on a level playing field with the taxi industry". [12] On January 28, 2020, at 11:00 a.m., Mr. van Hemmen and Mr. Costanzo spoke again by telephone. Mr. Costanzo advised Mr. van Hemmen that Surrey had not ticketed Uber or drivers the previous day, and would not issue tickets or warnings in return for Uber not commencing court proceedings. Mr. van Hemmen advised Mr. Costanzo that Uber would not commence court proceedings if there were no tickets or warnings issued and there was a public statement made confirming there would be no tickets or warnings issued to drivers. [13] Soon after, Mr. Costanzo telephoned Mr. van Hemmen and confirmed that Surrey would commence issuing tickets that day. [14] Uber immediately appeared in court the same day seeking to have its application heard on short notice. Legal counsel for Surrey attended and opposed Uber's application. Uber's application seeking a quia timet

injunction was filed the following day with a hearing date of February 4, 2020. [15] Surrey has now issued tickets to Uber and its affiliated drivers, for breaching s. 3 of City of Surrey, By-law No. 13680, Business License By-Law, (1999). At this hearing, Surrey maintains its view it has a right to continue to issue those tickets. III. THE APPLICABLE LEGAL FRAMEWORK [16] The test for a quia timet injunction is set out in this Court's decision in XY, Inc. v. IND Lifetech, Inc., 2008 BCSC 1215 at para. 70: to obtain a quia timet injunction restraining a particular anticipated activity, [the plaintiff] must show (1) that there is a high probability that if an injunction is not granted, the anticipated activity will occur imminently or in the near future, (2) that there is a serious question as to whether [the plaintiff] has a right that would be breached by the activity and (3) that the balance of convenience, weighing the likelihood of irreparable harm to the plaintiff, favours granting the injunction. [17] This Court has jurisdiction to order an injunction where it is just and equitable to do so. This is confirmed by s. 39(1) of the Law and Equity Act, R.S.B.C. 1996, c. 253, and R. 10-4 of the Supreme Court Civil Rules, B.C. Reg. 168/2009. A. Is there a high probability that if the injunction is not granted, the anticipated activity will occur imminently or in the near

future? [18] As a preliminary point, both parties tendered evidence in the form of newspaper articles. I understand the purpose of those articles is not to prove the underlying truth of the statements attributed to representatives of either organization, but that they are offered as proof that the statements attributed to members or representatives of the organizations were in fact made. At the hearing neither party asserted that the statements attributed to members or representatives of their organization had not been made. Nonetheless, those articles do not play a significant role in my analysis. [19] I reject Surrey's argument that Uber cannot satisfy this branch of the test because it has already taken steps to ticket and fine Uber. Surrey began ticketing Uber and drivers on January 28, 2020, knowing Uber was trying to get before this Court to obtain injunctive relief to prevent the ticketing action at the very earliest opportunity, which Surrey opposed. I find it would be inequitable to now allow Surrey to rely on the fact that between that court appearance and the hearing some enforcement action was taken, as a basis for defeating Uber's application for a quia timet injunction. In any event, I find that each act of ticketing is a separate anticipated activity. [20] Representatives of Surrey indicated their intention to fine Uber and drivers if operations are undertaken in

Surrey pursuant to Uber's TNS License. Surrey has now done so. [21] The evidence does not provide any indication that Surrey intends to stop its actions. Indeed, its position at the hearing reflects that its intention remains unchanged. [22] On the basis of the evidence before me and the position advanced by Surrey at this hearing, I find there is a high probability that the anticipated ticketing activity will occur in the near future. B. Is there a serious question as to whether the Uber has a right that would be breached by the anticipated activity? [23] The burden on an injunction applicant at this stage is a relatively low one. Generally, the court must only be satisfied an applicant's grounds are not frivolous or vexatious: MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311 at 334 [RJR -- MacDonald] at 348; Wu v. Li, 2019 BCSC 1215 at para. 20. [24] However, Surrey argues the petitioners are seeking a mandatory injunction and that the merits of Uber's claim must therefore be held to and satisfy a higher threshold. [25] In R. v. Canadian Broadcasting Corp., 2018 SCC 5 at para. 18 [CBC], the Supreme Court of Canada modified the RJR -- MacDonald test when the relief sought is a mandatory interlocutory injunction: [18] In sum, to obtain a mandatory interlocutory injunction, an applicant must meet a modified RJR -- MacDonald test, which proceeds as follows: (1)

The applicant must demonstrate a strong prima facie case that it will succeed at trial. This entails showing a strong likelihood on the law and the evidence presented that, at trial, the applicant will be ultimately successful in proving the allegations set out in the originating notice; [26] At para. 17, Justice Brown discussed what is meant by a strong prima facie case: [17] This brings me to just what is entailed by showing a "strong prima facie case". Courts have employed various formulations, requiring the applicant to establish a "strong and clear chance of success"; a "strong and clear" or "unusually strong and clear" case; that he or she is "clearly right" or "clearly in the right"; that he or she enjoys a "high probability" or "great likelihood of success"; a "high degree of assurance" of success; a "significant prospect" of success; or "almost certain" success. Common to all these formulations is a burden on the applicant to show a case of such merit that it is very likely to succeed at trial. Meaning, that upon a preliminary review of the case, the application judge must be satisfied that there is a strong likelihood on the law and the evidence presented that, at trial, the applicant will be ultimately successful in proving the allegations set out in the originating notice. [Footnotes omitted.] [27] I disagree with Surrey that the relief sought by Uber is a mandatory injunction. I acknowledge distinguishing between mandatory and prohibitive injunctions can be difficult, and that the language used to describe the relief sought is not determinative. Instead, I am required to look past the form and the language, and identify the substance of what is being sought and what the practical consequences of the injunction are likely to be: CBC, at para.

16. However, Surrey did not describe any action it would be required to undertake in order to comply with the injunction sought by Uber. I conclude this branch of the test requires Uber to establish there is a serious question as to whether the Uber has a right that would be breached by the anticipated activity. [28] Surrey also argues this Court cannot assess whether there is sufficient merit to warrant an injunction because Uber has not particularized the causes of action upon which it intends to rely. However, R. 10-4(2) permits an application for a pretrial injunction to be made before the start of a proceeding. I also note there is nothing in the evidence to indicate (and Surrey does not suggest) that at any time before the hearing Surrey requested particularization of Uber's claims. At the hearing Uber submitted the circumstances of this case give rise to multiple causes of action, including unjust enrichment (which requires an enrichment and a corresponding deprivation without juristic reason), misfeasance of public office, derogation from grant, constructive expropriation and declaratory relief. However, the focus of the analysis at this stage is on whether there is a serious question as to whether the Uber has a right that would be breached by the anticipated activity; it is not to be approached as if it were a motion to strike for failing to disclose a reasonable

cause of action. I am satisfied the material presented is sufficient to enable me to assess whether there is a serious question as to whether Uber has a right that would be breached by the anticipated ticketing activity. [29] Along with the legislative amendments to the Act in September 2019, amendments were also introduced to the Motor Vehicle Act, R.S.B.C 1996, c. 318, the Local Government Act, R.S.B.C. 2015, c. 1, and the Community Charter, S.B.C. 2003, c. 26 (collectively, the "Municipal Provisions") by the Passenger Transportation Amendment Act, 2018, S.B.C. 2018, c.

53. Section 124.2(5) of the Motor Vehicle Act states: (5) A municipality must not by bylaw under subsection (1) (a) regulate in relation to the number of passenger directed vehicles that may be operated under passenger directed vehicle authorizations or transportation network services authorizations, or (b) prohibit vehicles referred to in paragraph (a) from operating in the municipality, including, without limitation, by prohibiting the issuance of a licence to a person to operate a vehicle referred to in that paragraph for the sole reason that the person holds a licence, issued by another municipality, to operate the vehicle. [30] Surrey acknowledges the Municipal Provisions do not permit it to prohibit ride hailing. Nonetheless, it argues that the power to prohibit is inherent in the power to regulate, relying on Denman Island Local Trust Committee v. Ellis, 2005 BCSC 1238 at para. 53; aff'd 2007 BCCA 536. Surrey argues Uber believes its TNS License allows it to operate ridesharing in Surrey without a business license from Surrey. However, that understanding is misguided. Uber did not advance that argument at this hearing. Instead, what Uber argues, consistent with statements made by representatives of Surrey, is that there is no business license for which it can apply. In those circumstances, Uber argues Surrey has no right to issue offence notices to Uber or its affiliated

drivers for breach of Surrey's business bylaw. [31] In its submissions Surrey relies on Squamish (District) v. Great Pacific Pumice Inc. et al., 2003 BCCA 404 at para. 63, to support its argument that municipalities are permitted to regulate along side the province provided it does not create an operational conflict in doing so. However, in Squamish the Court found the municipality's actions neither created a conflict nor frustrated any provincial purpose. Where a bylaw frustrates a provincial purpose it may be invalid and of no effect: Community Charters.10; Peachland (District) v. Peachland Self Storage Ltd., 2012 BCSC 1872, at paras. 10 and 52-53. [32] Surrey has been attempting to ride two horses at once. It has told Uber there is no business license for which it can apply, yet it has been ticketing Uber for not having a business license. This has been happening against a backdrop of Surrey's stated intention to "not allow" ridesharing in Surrey, despite knowing it has no authority to prohibit it. [33] Recognizing that my examination of the merits of the case are preliminary, I find there a serious question as to whether the Uber has a right that would be breached by the anticipated ticketing activity by Surrey. C. Weighing the likelihood of irreparable harm to Uber, does the balance of convenience favours granting the injunction? [34] In considering where the balance of

convenience lies, I must determine whether Uber faces irreparable harm if the injunction is refused, or whether Surrey would suffer greater harm from the granting of the injunction. The factors I am to consider include those set out in Canadian Broadcasting Corp. v. CKPG Television Ltd., 64 B.C.L.R. (2d) 96 at 102 [CKPG Television], namely: the adequacy of damages as a remedy for the applicant if the injunction is not granted, and for the respondent if an injunction is granted; the likelihood that if damages are finally awarded they will be paid; the preservation of contested property; other factors affecting whether harm from the granting or refusal of the injunction would be irreparable; which of the parties has acted to alter the balance of their relationship and so affect the status quo; the strength of the applicant's case; any factors affecting the public interest; and any other factors affecting the balance of justice and convenience. [35] Neither of the parties suggested there were additional factors that should be taken into account. [36] These factors are not to be regarded as a "checklist", but rather are to be considered in a unified context: CKPG Television at 103. [37] Irreparable harm exists where damages would be "extremely difficult to quantify": Telus Communications Co. v. Rogers Communications Inc., 2009 BCSC 1610 at para. 45, aff'd 2009 BCCA 581. Uber argues

there are three types of irreparable harm it has suffered and will continue to suffer if the injunction is not granted: loss of revenue, loss of first-mover advantage, and damage to its reputation. [38] With respect to loss of revenue, Uber says it will seek restitution of Surrey's alleged illegal fines and to be compensated for lost profits. However, it argues there will be no reasonable way to estimate those lost profits. Uber argues Surrey's ticketing campaign, including its public statements regarding its intentions to ticket, were undertaken with the intent of deterring drivers from providing ridesharing services. [39] According to Uber, some drivers (from whom Uber earns its income, by charging them service fees for use of Uber's technology) will not use Uber's service due to Surrey's threats of ticketing. As Uber points out, no one will be able to determine how many trips with Uber were lost. [40] Uber also argues it will suffer irreparable harm in the form of a loss of first-mover advantage; it will lose the advantage of being the first and leading operator involved in TNS. Uber argues that similarly, the lost first-mover advantage will be impossible to quantify. [41] Finally, Uber argues it will suffer unquantifiable reputational harm if the injunction is not granted, particularly because of the media attention the Mayor's statements and Surrey's ticketing actions are

attracting. It submits its reputation as an entity that complies with regulatory obligations was a factor considered by the Board in approving its TNS License, and noted as much in its decision: [t]he Board placed considerable weight on the reports of other Canadian regulators confirming [Uber] has complied with regulatory requirements. On balance, the Board accepts that Uber's more recent operations have been relatively trouble-free as confirmed by the letters from the City of Ottawa in 2017, the Region of Waterloo in 2018, and the City of Mississauga in 2019. Uber has also provided copies of its licenses from Lethbridge, Airdrie, Toronto, Brampton, Calgary, Edmonton, Guelph, Hamilton, London, Oakville, Ottawa, Regina, Saskatoon, St. Albert, Vaughan, Windsor, Whitby, the County of Wellington, and the Provinces of Saskatchewan and Québec. There is no evidence of a lack of compliance with regulatory requirements in those jurisdictions. [42] Uber need not establish clear proof of irreparable harm. It is sufficient that there is doubt as to the adequacy of damages as a remedy: CKPG Television at 102. However, irreparable harm cannot be merely speculative: Vancouver Aquarium Marine Science Centre v. Charbonneau, 2017 BCCA 395 at para. 60. [43] I find Uber has established it will suffer irreparable harm in the form of unquantifiable loss of revenue if the injunction is not granted.

While I agree with Uber that Surrey's ticketing actions may damage Uber's reputation and adversely impact its position within the ridesharing market, particularly given ridesharing's infancy in British Columbia, based on the record before me I find those harms are, at this stage, speculative. [44] Conversely, if the injunction is granted, Surrey's losses would be restricted to lost fine revenue. Since Surrey advised Uber it would be making a decision on how it intends to deal with ridesharing businesses by late February/early March 2020, the potential harm Surrey may incur is likely to be of relatively short duration. Indeed, Surrey would effectively have the power to control the length of the interlocutory injunction, given that a term of the injunction sought by Uber is that it remain in effect until Surrey issues ridesharing licenses. [45] In assessing the balance of convenience I must also consider the public interest: CKPG Television at 102. [46] The Board, an expert tribunal charged with making decisions with respect to TNS Licenses, identified there was a public need for ridesharing services in its decision approving Uber's application for its TNS License. The Board found, based on "[multiple consultation reports and the Hansard debates relating to the Passenger Transportation Amendment Act], polling data from Vancouver and Surrey, and the evidence concerning experiences

in other Canadian jurisdictions" there was a public need for TNS in the Lower Mainland and Whistler. [Emphasis added] [47] I find the public interest favours granting the injunction. [48] Uber has indicated it is prepared to provide an undertaking as to damages, which also favours the granting of the injunction. [49] Further, it is Surrey's ticketing action that is attempting to alter the status quo. [50] For all these reasons, I find the balance of convenience favours Uber. IV. CONCLUSION [51] In conclusion, I find Uber has established there is a high probability that if the injunction is not granted the anticipated ticketing activity will occur in the near future, there is a serious question as to whether the Uber has a right that would be breached by the anticipated activity, and that the balance of convenience favours granting the injunction. [52] I find it is in the interests of justice for me to exercise my discretion to order the quia timet injunction. [53] Surrey argues that Uber does not have standing to obtain an injunction enjoining Surrey from ticketing drivers. However, I find Uber's interests are adversely affected by the threatened ticketing and fining activity against drivers. Therefore, I find Surrey has standing to pursue that element of the injunction in its relief sought. [54] Therefore, I order: Surrey is enjoined and restrained from fining, ticketing, or

otherwise sanctioning Uber and drivers (third party transportation providers who use their own vehicles to provide transportation services) for functioning in Surrey without a business license pending the disposition of this action, the issuance of ridesharing licenses in Surrey, or further order of this Court. [55] I make this order conditional on Uber executing an undertaking as to damages and delivering it to counsel for Surrey. [56] Costs for this application are payable by Surrey to Uber. "Jackson J."