Canada: Court Says Innovation Has Outpaced The Law: Uber Is Not Subject To Toronto's Taxi Regulations

Last Updated: July 23 2015
Article by Kathleen Higgins and Erika Lambert

Is the transmission of digital requests for Uber pick-ups the same as "accepting requests" for taxis or "accepting calls" for limousines? In the recent ruling in City of Toronto v. Uber Canada Inc. et al., 2015 ONSC 3572 , the Ontario Superior Court of Justice has decided it is not. On July 3, 2015, Justice Dunphy of the Ontario Superior Court of Justice denied the City of Toronto's application for an injunction restraining Uber from operating within City limits.


Uber's mobile app, a peer-to-peer ridesourcing service that connects riders and drivers, was initially launched in San Francisco in June 2010. Since then, Uber's app has been launched in more than 300 cities worldwide, including the City of Toronto. The app's rapid expansion has directly challenged existing taxi and limousine regulations, and a number of cities have sought injunctions to restrain Uber from operating within their limits.1

The City's Application

The City of Toronto applied to the Ontario Superior Court of Justice for an injunction restraining Uber Canada Inc. and its affiliates, Uber B.V. and Rasier Operations B.V., from operating an unlicenced taxicab brokerage and an unlicensed limousine service company in the City of Toronto, contrary to the City of Toronto Municipal Code (the "Code"). The key question for the court was whether Uber Canada Inc., Uber B.V. or Rasier Operations B.V. could be considered a "taxicab broker" or a "limousine service company" within the meaning of the Code. The Code defines "taxicab broker" as "any person who accepts requests in any manner for taxicabs used for hire". It defines "limousine service company" as "any person or entity which accepts calls in any manner for booking, arranging or providing limousine transportation".

The Court's Decision

Justice Dunphy noted that none of the Uber companies named as respondents in the City's application transmit the data which connects Uber riders with Uber drivers: this is done by an American company named Uber Technologies Inc. which was not named in the application. He further found that, even if the named Uber companies did transmit this data, this automated transmission did not equate to "accepting requests" for taxicabs, or "accepting calls" for limousines within the meaning of the Code.

In Justice Dunphy's view, the word "accept" necessarily implies an element of decision and discretion being consciously exercised. If the word "accept" could be equated to the word "transmit" or "relay" as the City of Toronto argued, wireless telephone carriers who transmit calls for taxicabs and limousines and automated services such as "#taxi" would be considered "taxicab brokers" and "limousine service companies" and would be obligated to obtain licences to operate as such. He concluded that this sort of over-broad regulation was neither contemplated nor intended when the Code was drafted and the word "accept" was likely selected in lieu of the words "transmit" or "relay" to exclude such businesses from the scope of the Code's taxicab and limousine regulations.

Ultimately, the decision is about a narrow issue of statutory interpretation of the Code. But the decision also considers how innovation has outpaced the law. Justice Dunphy acknowledged that the City was in a tough position, "caught between the Scylla of the existing regulatory system, with its numerous vested interests characterized by controlled supply and price" on the one hand, and thousands of consumers/voters who do not wish to see the "competition genie forced back into the bottle", on the other. However, he nonetheless concluded that the Code does not obligate any of the named Uber companies to obtain a licence to operate in the City. In his words, "[w]hile the City made much in argument of its "walk like a duck" metaphor, the simple fact of the matter is that it does not require ducks to be licensed".

The City's Reaction

The City has 30 days to appeal the decision, but in the meantime Council for the City recently adopted a resolution directing City staff to review Uber and similar technologies, including the interests of the public in the technologies and their impacts on the current taxicab industry, and report back to Council with respect to:

  1. what by-law changes are necessary to bring new and emerging technologies into regulation as part of the City's for-hire ground transportation industry;
  2. how the City can ensure public safety and consumer protection are maintained;
  3. how the City can ensure a level playing field is established and maintained with respect to commercial insurance, driver training, equality of fares and other licensing issues; and
  4. ensure the recommended changes are reviewed at least every five years, or when deemed necessary before that time.

Staff are expected to present their recommendations to Council in September. We would expect that the regulatory regime recommended by staff at the City will no doubt be reviewed carefully by other cities who have Uber and other ridesourcing services within their limits.


1 For example, see the recent case of City of Edmonton v. Uber Canada Inc. 2015 ABQB where the court determined that Uber was not operating a taxi brokerage business in contravention of City bylaws.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Kathleen Higgins
Erika Lambert
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