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An Ontario Superior Court judge has dismissed the City of Toronto’s attempt to shut down the ride-sharing company Uber.Kai Pfaffenbach/Reuters

An Ontario Superior Court judge has dismissed the City of Toronto's attempt to shut down ride-sharing company Uber.

After a month of deliberating, Justice Sean Dunphy delivered his ruling Friday, saying the city failed to prove that Uber has broken any bylaws or that it is operating an illegal taxicab company.

The decision strikes a blow to Toronto city officials and the taxicab industry and is likely to reverberate across Canada as cities struggle to regulate the ride-sharing service.

The company's UberX mobile app, which was the subject of the city's legal action, allows ordinary drivers to use their private vehicles to pick up paid fares. While the city argued in its case that this constituted an illegal taxi service, Justice Dunphy instead questioned whether the rules themselves have been sufficiently crafted. He took specific aim at the city's narrow definition of "taxicab service" and the fact that a taxi broker is defined only as a person who "accepts" requests for transportation – and not necessarily a person who arranges it.

"Have the city's regulations, crafted in a different era, with different technology in mind, created a flexible regulatory firewall around the taxi industry sufficient to resist the Uber challenge," he wrote in his decision, "or have they instead created the equivalent of a regulatory Maginot Line behind which it has retreated, neither confronting nor embracing the challenges of the new world of Internet-enabled mobile communications?"

In a statement, Uber Toronto's general manager Ian Black said he is pleased with the ruling.

"Our hope is that this decision helps further pave the way for ride-sharing regulations and we look forward to continuing our work with Mayor [John] Tory and Toronto City Council."

Already, Mr. Tory has said publicly that he supports creating new regulations to account for Uber-like technologies. Friday evening, his office issued a statement saying he intends to have the taxi industry and Uber meet with him together to come to a "mutually agreeable solution."

But he is likely to face strong opposition from at least a few members of council, as well as from the vocal taxi industry.

Earlier this week, a group of taxi-industry representatives gathered at City Hall to demand the mayor and police crack down on Uber, and threatened to stage a strike during the Pan Am Games if their demands are not met.

A spokeswoman for the city's licensing division said that officials are still reviewing the decision and will provide further comment next week.