The Downtown Hamilton Money Mart in July 2017. Credit: Joey Coleman / The Public Record

Ontario’s Superior Court of Justice has upheld the City of Toronto’s payday loan zoning bylaw.

The Province of Ontario gave municipalities powers to regulate payday loan locations in January 2018. The City of Hamilton was the first to use the powers, passing a bylaw limiting payday loan shops to only one per ward.

Existing shops were grandfathered. This is why Cash Money could not relocate when Core Urban declined to renew its lease at 61 King Street East.

The City of Toronto quickly followed Hamilton and also imposed one location per ward restriction.

[Toronto’s bylaw states “as each ward exists on the date of enactment of this by-law,” meaning 44 wards.]

Pay2Day Inc. challenged the Toronto bylaw after being denied licenses to expand beyond its five existing Toronto locations.

In a 74-page ruling issued May 1st, Justice Marie-Andrée Vermette dismissed Pay2Day Inc.’s claims the municipal bylaw was beyond the power of the municipality, that the bylaw frustrated federal laws allowing payday loan operations, the bylaw was discriminatory, and that it would eventually have the effect of banning payday loan operations – prohibition not being a power given to municipalities.

Justice Vermette noted Section 347.1 of the Criminal Code states provinces can impose legislative measures ‘that protect recipients of payday loan and that provide for limits on the total cost of borrowing’ and that Ontario has given municipalities powers to protect borrows by limiting the number of locations.

“The purpose of section 347.1 is to allow payday loan agreements as long as borrowers are protected by provincial legislation. Limiting the number of payday loan establishments does not frustrate this purpose, especially in a situation where the provincial legislation authorizes municipalities to limit the number of payday loan establishments,” Justice Vermette wrote.

Justice Vermette upheld Toronto’s decision to allow no new payday loan retail locations, ruling the provincial legislation “should be broadly interpreted as including not only the power to set an express numerical limit, but also the power to impose conditions that lead to attrition, which is another way to limit the number of payday loan establishments in the City.”

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Published: May 6, 2023
Last edited: May 6, 2023
Author: Joey Coleman
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