Mayor Dianne Watts of Surrey, B.C., says the revoking of a licence from a local sex shop has nothing to do with plans to build a new city hall nearby. ((City of Surrey))

The owner of a Surrey, B.C., sex novelty shop says he is giving up his months-long fight against the city to keep his store open.

The city revoked Tony Perry's business licence and says he should not have been given one for the adults-only outlet, Roxxy's, in the first place.

Perry insists he is a victim of Surrey's plan to move city hall to his neighbourhood.

'I don't think it's appropriate to have live sex acts in a theatre in the city.' — Dianne Watts, Surrey, B.C., mayor

Perry says his licence was pulled in March after he'd been in business for 25 years in Whalley, near the intersection of King George Highway and 108th Avenue.

A new city hall is expected to be completed in 2013. But it may have been Perry's defiant decision last November to open an unlicensed live-sex theatre adjacent to his retail shop that did him in.

In April, the city passed a bylaw banning adult sex novelty shops in Surrey.

"If they don't want me there, where they are planning on building the town centre and everything, I can understand that," Perry said. "Give me some other area to go in. They won't do that. That's where it gets puzzling."

Surrey Mayor Dianne Watts said Perry's licence was revoked because he was not following the rules and not because of any plans to relocate city hall.

"I don't think it's appropriate to have live sex acts in a theatre in the city," Watts said. "Like I said, we're on good solid ground and I'm sure [Perry] recognized that."

Perry said he doesn't agree and he's received a legal opinion that he could win his case if he pushed it through the courts.

"But you know, it could be a hollow victory," he said. "It could take you years. You know they'll stall you."

Perry said he expects other municipalities will give him the same unwelcome treatment, which he said isn't fair because his customers lose.

Perry owns eight other adult sex novelty shops in Metro Vancouver.

With files from the CBC's Meera Bains