The city has lost its bid to ban Uber from operating in Toronto.

In a decision handed down late Friday, Superior Court Judge Sean Dunphy rejected its request for an injunction, ruling that the California-based company does not need a licence to operate under current bylaws.

The act of ordering a ride with the Uber smartphone app is automated and involves software downloaded ahead of time, Dunphy ruled, so drivers don’t “accept” communication from passengers. Accepting calls to arrange transportation does require a licence but “Uber does not do that,” his 30-page ruling finds.

The iTaxiworkers Association, a major taxi drivers’ union, said it was “deeply disappointed” with the ruling. “This will continue to hurt the front line drivers and the taxi industry. We urge City Council to take immediate measures to ensure fairness for the 10,000 licensed taxi drivers of the City,” wrote Amarjeet Kaur Chhabra, the union’s executive director, in an email.

Uber Canada general manager Ian Black called the decision “a great win for the 5,000 drivers who need this flexible earning opportunity to make a living, and the 300,000 riders who rely on them” in an emailed statement. The mayor’s office said it would invite representatives from both sides in for a meeting to seek “mutually agreeable solutions.”

Uber, which began operating in Toronto in 2012, had steadfastly insisted it did not need to be regulated, because it was merely a technology company linking riders with drivers.

Taxi companies and the city of Toronto argued otherwise, saying Uber was acting like a taxi brokerage, finding taxis and drivers for passengers.

However, just weeks before the city’s injunction hearing was scheduled to begin, Uber applied for a taxi brokerage licence – though it has refused to apply for limousine licence, saying the city’s rules don’t meet Uber’s business model.

During the June 1 and 2 court court hearing, Uber’s lawyer Julie Rosenthal argued that Uber doesn’t need to be licensed as a taxi brokerage because it doesn’t actually dispatch taxis. Much of her argument hinged on the definition of the word, “accept,” as in accept a ride.

But city lawyer Michele Wright disputed the argument, noting Uber continues to find a driver if the first one rejects it, so it is in the business of dispatching drivers. Uber collects payments and has the power to suspend or boot passengers or drivers off the platform, she added, in an argument the judge rejected.

“If ‘accepts’ were read as broadly as the City suggests, then unintended consequences would abound. Such a definition would capture any telephone carrier since they are in the business of connecting calls and some of the calls they connect are certainly to request a taxicab or limousine transportation,” Dunphy ruled.

With files from Betsy Powell and Vanessa Lu.

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