Can a municipality refuse a business licence to an adult boutique on the basis of protecting the community's moral welfare?

Counsel for the petitioner placed considerable reliance on Prince George v. Payne, 1977 CanLII 161 (SCC), [1978] 1 S.C.R. 458, [1977] 4 W.W.R. 275, 2 M.P.L.R. 162, 75 D.L.R. (3d) 1, 15 N.R. 386 [B.C.]. There the municipality had refused a business licence to an "adult boutique" on the basis of protecting the community's moral welfare. It was held that the Prince George city council lacked statutory power to prohibit the trade which the applicant sought to conduct and that the power to refuse refuse a licence under the relevant provision of the Municipal Act did not confer "a blanket right to prohibit generally so-called 'adult boutiques' which are not exhypothesis illegal" (at p. 8). The Prince George case did not involve a challenge to the validity of a by-law. As Dickson J. (now C.J.C.) pointed out, there was no by-law capable of supporting the decision to refuse a licence. The issue related to council's discretionary power and, specifically, to whether council had exceeded its jurisdiction by resting its decision upon an extraneous ground. It was held that in purported exercise of its licensing function council had passed a resolution the effect of which was to refuse a licence to a particular land use.