When you (or the person you're quoting) defines their version of 'legal', then someone might be able to give you a useful answer. The first question is: By 'legal' do you mean no sort of law exists to prohibit what you/we are doing, or just no criminal law? The second would be: By 'legal' do you mean a Court of real authority has ruled that the laws do not prohibit what you/we are doing?
Courts have ruled that a handjob can be a sex act for money > an act of prostitution > therefore the place, and all in it could be charged under the bawdy-house parts of the Criminal Code. That would qualify the HJ as illegal in my books, although it's actually the managing, working in or being a customer in the place that's the offence.
One judge in one court ruled one time that the Crown hadn't proven the one HJ was ordered up, bought and specifically paid for, and that judge was willing to see it as an act of enthusiastic and spontaneous mutual pleasure with no fee of its own, and so decided there'd been insufficient proof of sex-for-money for a bawdy-house charge to stick. While it's some comfort, no one can use that ruling to force other judges to see your particular HJ the same way. Keep your fingers crossed when your lawyer tries it; better she should bargain you out.
But then there's still all the prohibitted by the bylaw stuff you, she or the management maybe getting up to. Like nekkidness, touching nipples, really naughty bits and the like (and do note that to keep up with this one, you'll have to know just what kind of license the place has, or doesn't have, and what city you're in). A bylaw is a law, one common definition of 'illegal' is doing stuff that a law says you mustn't. That includes most of the fun stuff, even if the HJ itself is left to the federal Criminal Code. Of course, most bylaws are treated by most people as kinda sketches of how it's supposed to work, with bearable penalties (at least if it's not your business) so you can read your version of illegal that way. Like parking in the No Stopping zone 'it was just for a sec officer'. But that doesn't make them legal.
If the answers were as simple as your question, lawyers would be paid like fast-food servers.