The City of Toronto’s ban on hookah lounges has survived a challenge at Ontario’s top court, paving the way for costly penalties against businesses still offering the water pipes.

A three-judge panel of the Ontario Court of Appeal has upheld a lower court decision rejecting lounge owners’ arguments that the city overstepped its powers and was unfairly putting them out of business.

City staff, who did not enforce the bylaw while it was under appeal, said Tuesday they will now begin taking action against lounges offering hookah. Owners risk tickets, summonses or hearings before a license tribunal.

Toronto city council passed the ban in December 2015 at the urging of the then-medical officer of health. He said pipes, burning tobacco or other substances including molasses, pose a health hazard to puffers and those inhaling second-hand smoke.

The bylaw prohibits the use of hookah devices in any city-licensed establishments.

Last October, Justice Robert F. Goldstein of Ontario Superior Court rejected the lounge owners’ challenge but added it was “unfortunate” council chose to ban, rather than regulate, hookah use.

The judge said the bylaw does not prevent bar owners from serving food and drink, that it was “beyond doubt” council passed the ban based on concerns for the health and safety of Torontonians, and that council had not overstepped its legislative powers.

The Court of Appeal agreed.

“There is no doubt that many hookah lounges will suffer economic harm as a result of the by-law and may no longer be economically viable, but it does not follow that this is the by-law’s purpose,” states the judgment released Tuesday and signed by judges Karen Weiler, Katherine van Rensburg and Grant Huscroft.

“The protection of public health and safety necessarily has economic impact on the operation of the appellants’ businesses, but that impact is incidental to, rather than determinative of, the purpose of the bylaw.”

The panel also found no reason to doubt Goldstein’s conclusion that the bylaw’s aim is protection of health and safety, or that the bylaw’s health goals conflict with those of the provincial Occupational Health and Safety Act.

Ryan Zigler, the lawyer for the lounge owners, said in an interview he is “disappointed” with the decision and will ask his clients if they want to seek leave to challenge Toronto’s ban at the Supreme Court of Canada.

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Rob Cunningham, senior policy analyst for the Canadian Cancer Society, called the ruling “an important victory for public health,” and predicted more Ontario municipalities will follow Toronto’s lead with hookah bans.

“Employees and customers should not be exposed to toxic and cancer-causing substances found in secondhand hookah smoke,” Cunningham wrote in an email. “Secondhand smoke is secondhand smoke. We strongly support the Toronto hookah bylaw and its health purpose.”