Hudson's Bay Company ULC v. Ontario (Attorney General)

Ontario Reports

Ontario Superior Court of Justice

Divisional Court, Penny, Emery and Favreau JJ.

December 23, 2020

154 O.R. (3d) 103 | 2020 ONSC 8046

Case Summary

Administrative law — Judicial review — Regulations — Applicant having to close its department stores pursuant to regulation to address COVID-19 pandemic — Big box stores selling groceries allowed to remain open — Applicant arguing that distinction was irrational and seeking judicial review of regulation — Application dismissed — Impugned [page104] provision authorized by grant of authority in enabling statute and related to purpose of statute to balance public health and safety measures with economic concerns — Emergency Management and Civil Protection Act, R.S.O. 1990, c. E.9 — Reopening Ontario (A Flexible Response to COVID-19) Act, 2020, S.O. 2020, c. 17 — Rules for Areas in Stage 1, O. Reg. 82/20, Sch. 2, s. 2(1)3.

Statutes — Interpretation — Regulations — Applicant having to close its department stores pursuant to regulation to address COVID-19 pandemic — Big box stores selling groceries allowed to remain open — Applicant arguing that distinction was irrational and seeking judicial review of regulation — Application dismissed — Impugned provision authorized by grant of authority in enabling statute and related to purpose of statute to balance public health and safety measures with economic concerns — Emergency Management and Civil Protection Act, R.S.O. 1990, c. E.9 — Reopening Ontario (A Flexible Response to COVID-19) Act, 2020, S.O. 2020, c. 17 — Rules for Areas in Stage 1, O. Reg. 82/20, Sch. 2, s. 2(1)3.

In March 2020, as a result of the outbreak of the COVID-19 pandemic, the provincial government declared a state of emergency under the Emergency Management and Civil Protection Act ("EMCPA"). All non-essential businesses were ordered to be closed shortly thereafter. The government subsequently set out a regulatory framework to determine staged control measures to allow for the reopening of businesses and services in the province. Restrictions and business closures varied by region and changed with the evolution of the pandemic. In November 2020, the City of Toronto and Peel Region were placed into Stage 1 of Regulation 82/20 under the Reopening Ontario (A Flexible Response to COVID-19) Act ("ROA"), which imposed maximum control measures. York and Windsor-Essex regions moved to Stage 1 in December. Under Stage 1, big box stores not selling groceries were not allowed to open, whereas big box stores selling groceries were allowed to remain open and sell merchandise other than just groceries. The applicant operated 12 department stores in Toronto and Peel, and four stores in York and Windsor-Essex. The applicant did not sell groceries, so those stores were required to close. The applicant believed that the distinction was irrational and caused it economic hardship. It applied for judicial review of the provision of Regulation 82/20, which prevented box stores not selling groceries from reopening.

Held, the application should be dismissed.

The impugned provision was authorized by the grant of authority in the ROA and was related to the purposes of that Act. Regulation 82/20 was originally made under the EMCPA, which gave the Lieutenant Governor in Council very broad powers to make orders in the context of an emergency for the purpose of protecting the health and safety of Ontarians, including the power to close businesses. The ROA ended the declaration of emergency under the EMCPA, but the intent of the ROA was clearly for the Province to maintain existing orders and amend them as necessary, as if the EMCPA were still in effect, depending on the state of the pandemic in different parts of the province. As with the EMCPA, the purpose of the ROA was to give the Lieutenant Governor in Council broad discretion to make orders to reduce or mitigate public health risks while balancing the goal of reopening the economy. Regulation 82/20 had been amended multiple times since it first came into force. The version being challenged was consistent with both the terms and underlying purposes of the ROA, and was therefore permissible. Allowing big box stores selling groceries to remain open was not about making items such as clothes and furniture available to the public, but rather was about giving the public [page105] access to additional retail venues for buying groceries. The wisdom and efficacy of that policy was certainly open to question, but it was not for the court on judicial review to make determinations about the wisdom or efficacy of policy choices. The operation of the regulation and its effect may have appeared unfair to the applicant, but unfairness was not a legal ground to challenge the regulation. The ROA did not preclude consideration of, or distinctions based on, essential goods or services. The applicant argued that the respondent had put forward no evidence to justify the distinction, but there was no statutory requirement on the government to provide evidence to justify the effectiveness of its policy choices.

Katz Group Canada Inc. v. Ontario (Health and Long-Term Care), [2013] 3 S.C.R. 810, [2013] S.C.J. No. 64, 2013 SCC 64, 366 D.L.R. (4th) 62, 451 N.R. 80, J.E. 2013-2036, 312 O.A.C. 169, 235 A.C.W.S. (3d) 547, EYB 2013-229518, 2013 CCLG para. 25-455, 2013EXP-3752, 58 Admin. L.R. (5th) 173, apld

Canada (Minister of Citizenship and Immigration) v. Vavilov, [2019] S.C.J. No. 65, 2019 SCC 65, 2020EXP-27, 441 D.L.R. (4th) 1, 59 Admin. L.R. (6th) 1, 69 Imm. L.R. (4th) 1, EYB 2019-335761, consd

British Columbia Ferry Corp. v. M.N.R., [2001] F.C.J. No. 722, [2001] 4 F.C. 3, 2001 FCA 146; Tesla Motors Canada ULC v. Ontario (Ministry of Transportation) (2018), 144 O.R. (3d) 701, [2018] O.J. No. 4394, 2018 ONSC 5062, 20 C.E.L.R. (4th) 342, 295 A.C.W.S. (3d) 659 (S.C.J.), distd

Other cases referred to

Roncarelli v. Duplessis, 1959 50 (SCC), [1959] S.C.R. 121, [1959] S.C.J. No. 1, 16 D.L.R. (2d) 689; West Fraser Mills Ltd. v. British Columbia (Workers' Compensation Appeal Tribunal), [2018] 1 S.C.R. 635, [2018] S.C.J. No. 22, 2018 SCC 22, 421 D.L.R. (4th) 191, [2018] 6 W.W.R. 211, 9 B.C.L.R. (6th) 1, 2018 CLLC para. 210-040, 291 A.C.W.S. (3d) 456, EYB 2018-294347, 2018 CSHG para. 96,203, 2018EXP-1418, 2018EXPT-1031, 33 Admin. L.R. (6th) 209; Wildlands League v. Ontario (Lieutenant Governor in Council) (2016), 134 O.R. (3d) 450, [2016] O.J. No. 5230, 2016 ONCA 741, 2 C.E.L.R. (4th) 217, 270 A.C.W.S. (3d) 774, 402 D.L.R. (4th) 738

Statutes referred to

Canadian Charter of Rights and Freedoms

Emergency Management and Civil Protection Act, R.S.O. 1990, c. E.9, ss. 7.0.1, 7.0.2, (1), (2), (3), (4), 7.2(3), (7)

Excise Tax Act, R.S.C. 1985, c. E-15 [as am.]

Public Transportation and Highway Improvement Act, R.S.O. 1990, c. P.50 [as am.]

Reopening Ontario (A Flexible Response to COVID-19) Act, 2020, S.O. 2020, c. 17 [as am.], ss. 2, (1), 3, 4(1), (2), (3)1., (6), 17

Rules and regulations referred to

Declaration of Emergency, O. Reg. 50/20 [rep.]

Rules for Areas in Stage 1, O. Reg. 82/20 [as am.], Sch. 2 [as am.], ss. 2(iii) [rep.], 2(1)3. [rep.], 2.5 [rep.], 10

Rules for Areas in Stage 3, O. Reg. 364/20 [as am.]

Stages of Reopening, O. Reg. 363/20 [as am.]

Application for judicial review of a regulatory provision.

Jonathan C. Lisus, Rahool P. Agarwal, James Renihan, Zain Naqi and Carter Liebzeit, for applicant.

Richard Ogden, Heather McIvor and Domenico Polla, for respondent.

[page106]

BY THE COURT: --

Overview

[1] On December 18, 2020, we dismissed this application for judicial review with reasons to follow. These are the reasons.

[2] In response to the COVID-19 pandemic, Ontario has made a series of regulations that set out measures restricting the operation of retail businesses. The most restrictive measures are those in place for regions in Stage 1 and are set out in O. Reg. 82/20 under the Reopening Ontario (A Flexible Response to COVID-19) Act, 2020, S.O. 2020, c. 17 ("ROA"). Under O. Reg. 82/20, businesses in the regions of Ontario that are designated as being under Stage 1 are to be closed unless they are specifically listed in Sch. 2 of the regulation.

[3] The applicant, Hudson's Bay Company ULC Compagnie de la Baie D'Hudson SRI ("HBC"), challenges s. 2(1)3., Sch. 2, of O. Reg. 82/20, which provides that "discount and big box retailers selling groceries" are permitted to open. HBC argues that this provision draws an irrational distinction between its stores and stores such as Walmart because, other than selling groceries, the types of merchandise both stores sell is essentially the same. This allows big box stores to sell all lines of merchandise while HBC, which sells the same type of merchandise, except for groceries, must stay closed. This is causing economic hardship to HBC and its employees. HBC argues that this distinction is impermissible, and that this court should grant a remedy that would allow HBC's 16 stores currently in Stage 1 regions to re-open.

[4] Absent a Canadian Charter of Rights and Freedoms challenge, the focus of judicial review of a regulation is narrow. It is not the role of the court to decide whether s. 2(1)3., Sch. 2, of O. Reg. 82/20 is effective, overly broad or unduly restrictive. These are policy choices made by the Ontario government during extraordinary times. The court's role is limited to determining whether the provision at issue is authorized by the ROA, which it clearly is. The purpose of the ROA is to balance public health and safety measures with economic concerns during the current pandemic.

[5] O. Reg. 82/20 sets out the restrictions imposed on the parts of Ontario with the highest rates of COVID-19. In those areas, Ontario's objective is to significantly limit contacts between people for the purpose of reducing the spread of COVID-19 while giving Ontarians access to essential goods such as groceries. Requiring HBC to keep its stores closed to the public while allowing discount and big box stores that sell groceries to open is consistent with these purposes.

[6] We see no basis to grant the application. [page107]

Background

State of emergency and business closures in Ontario

[7] On March 17, 2020, Premier Doug Ford declared an emergency under s. 7.0.1 of the Emergency Management and Civil Protection Act, R.S.O. 1990, c. E.9 ("EMCPA") in response to the COVID-19 outbreak. O. Reg. 50/20 under the EMCPA implemented the declaration of emergency and stated that the COVID-19 outbreak "constitutes a danger of major proportions that could result in serious harm to persons".

[8] On March 23, 2020, Ontario ordered the closure of all non-essential businesses as of March 25, 2020. The closures were implemented through O. Reg. 82/20 made under the EMCPA.

[9] Since that time, the restrictions and business closures in Ontario have varied by region and changed with the evolution of the pandemic.

[10] On April 27, 2020, Ontario introduced "A Framework for Reopening our Province", which was meant to allow for the reopening of businesses and services in Ontario in stages. Stage 1 is the most restrictive and Stages 2 and 3 gradually move to fewer restrictions.

[11] On May 18, 2020, changes to O. Reg. 82/20 allowed retail stores in Ontario with external entrances to reopen to the public, as long as they complied with various restrictions, such as limiting the number of people admitted and implementing social distancing measures.

[12] On June 24, 2020, Toronto and Peel entered Stage 2, which permitted indoor shopping centres to reopen.

[13] The ROA came into force on July 24, 2020. At that point, the declaration of emergency under the EMCPA was revoked, but all orders and regulations made under the EMCPA were continued under the ROA. The stated purpose of the ROA was to move toward reopening Ontario while retaining the flexibility to adapt to changing circumstances in different regions over time.

[14] On September 28, 2020, the Premier announced that Ontario was in a second wave of the COVID-19 outbreak.

[15] On October 10, 2020, Toronto and Peel region were placed in a "Modified Stage 2", which shut down indoor dining but allowed retail stores to stay open.

[16] On November 3, 2020, Ontario introduced a "Colour-Coded Framework" that provides for the designation of regions based on five colour stages: Green-Prevent, Yellow-Protect, Orange-Restrict, Red-Control and Grey-Lockdown. Ontario designated Peel Region in the Red category on November 5, 2020, and [page108] Toronto in the Red category on November 14, 2020. At that point, retail stores were still allowed to stay open.

[17] On November 20 and 21, 2020, Ontario amended its framework to include lockdown measures that apply in Stage 1 Grey-Lockdown regions. On November 23, 2020, Ontario amended O. Reg. 82/20, limiting the types of retail stores allowed to open in Stage 1 areas.

[18] Toronto and Peel region were moved to Stage 1 on November 23, 2020. York and Windsor-Essex regions moved to Stage 1 on December 14, 2020.

[19] Under the amendments made on November 23, 2020, in Stage 1 regions, big box stores that do not sell groceries are no longer allowed to open. However, big box stores such as Walmart and Costco that sell groceries are allowed to open and to sell all types of merchandise, not just groceries.

Impact of restrictions on HBC

[20] HBC operates 12 department stores in Toronto and Peel region, and four stores in York and Windsor-Essex regions. HBC stores sell products such as clothes, cosmetics, kitchen supplies, housewares, small appliances, linens, toys, confection and seasonal items.

[21] HBC stores are classified as "department store" retailers by Statistics Canada. Walmart is also classified as a department store.

[22] On March 17, 2020, HBC voluntarily closed all its stores in Ontario in response to the COVID-19 pandemic. As of March 25, 2020, HBC was required to keep its stores closed in accordance with Ontario's closure of non-essential businesses.

[23] In the period between March through May 2020, HBC lost 90 per cent of total sales compared to the sales in the same months in 2019.

[24] On May 22, 2020, HBC reopened all its stores in Ontario. It was permitted to do so because its stores have external entrances.

[25] On November 23, 2020, after Toronto and Peel region moved into Stage 1, HBC was required to close its 12 stores in those regions, and on December 14, 2020, it was required to close its four additional stores in York and Windsor-Essex regions.

[26] HBC's evidence on the application is that it has had to lay off over 3,000 employees since the lockdown began. It also anticipates significant economic harm given that the December shopping season usually represents 15 per cent to 20 per cent of its sales. [page109]

Procedural history

[27] HBC commenced the application for judicial review on December 10, 2020. That day, the parties participated in a case conference with Corbett J. The hearing was scheduled on an expedited basis to be heard by a panel of the Divisional Court on December 17, 2020.

[28] HBC served and filed its application record over the weekend of December 12-13, 2020. The record contains extensive affidavit evidence.

[29] HBC served and filed its factum on December 15, 2020. In its factum, HBC took the position that, since it had not received Ontario's responding record, it intended to seek interim relief on December 17, 2020, rather than arguing the application on its merits.

[30] Ontario served and filed its responding record and factum on December 16, 2020. Ontario's factum addressed both the merits of the application and the motion for interim relief.

[31] Late on December 16, 2020, HBC served and filed a reply factum.

[32] At the beginning of the hearing on December 17, 2020, HBC's counsel advised that his client was no longer seeking interim relief and that he was prepared to argue the merits of the application for judicial review. Counsel for Ontario agreed with this approach. The matter was heard and taken under reserve on that basis.

[33] Following oral argument, on the morning of December 18, 2020, the court received a request from counsel for HBC for permission to answer two questions that the panel had asked during the hearing. We granted permission and received the written answers.

[34] Late on the afternoon of December 18, 2020, the court released its decision dismissing the application for judicial review with reasons to follow.

Positions of the Parties

[35] HBC argues that O. Reg. 82/20 is ultra vires the ROA. Specifically, HBC argues that the distinction drawn between big box stores that sell groceries and big box stores that do not sell groceries is irrational because it allows stores that sell the same types of products as HBC to continue selling those products only because they also sell groceries. HBC also argues that, given that O. Reg. 82/20 is now continued as a regulation under the ROA, the closure of businesses can no longer be based on whether a business offers an essential service or not. Finally, HBC argues [page110] that the evidence does not support the need to close its stores; there is no evidence that COVID-19 is more likely to be transmitted in its stores than in the other retail stores that are allowed to remain open.

[36] In response, Ontario argues that the closure of big box stores that do not sell groceries is permitted by the wording and purpose of the ROA. The ROA is meant to provide a flexible approach to opening and closing businesses during the pandemic, and the closure of department stores that do not sell groceries in areas with a higher incidence of COVID-19 is a policy choice permitted by the ROA. The court should not assess whether this policy choice is effective or wise.

General Principles Applicable to Determining whether a Regulation is Ultra Vires

[37] The test for challenging a regulation as ultra vires is well settled. In Katz Group Canada Inc. v. Ontario (Health and Long-Term Care), [2013] 3. S.C.R. 810, [2013] S.C.J. No. 64, 2013 SCC 64, at para. 24, the Supreme Court of Canada held that a "successful challenge to the vires of regulations requires that they be shown to be inconsistent with the objective of the enabling statute or the scope of the statutory mandate". The court went on to provide a number of general principles that apply when a court is asked to determine whether a regulation is ultra vires:

(a) Regulations are presumed to be valid. This means that challengers have the burden of demonstrating that the regulations are invalid. In addition, courts are to favour an interpretation that "reconciles the regulation with its enabling statute so that, where possible, the regulation is construed in a manner which renders it intra vires" (para. 25) [emphasis in original].

(b) "Both the challenged regulation and the enabling statute should be interpreted using a 'broad and purposive approach . . . consistent with this Court's approach to statutory interpretation generally'" (para. 26).

(c) Judicial review of a regulation is usually restricted to the issue of whether the regulation is inconsistent with the purpose of the enabling statute or whether a condition precedent was not met before the regulation was made (para. 27).

(d) Courts are not to assess the policy merits of a regulation or to decide whether it is "necessary, wise, or effective in practice" (para. 27). [page111]

(e) The motives for making a regulation are irrelevant (para. 27).

(f) Under-inclusiveness is not a valid ground for challenging a regulation as ultra vires (para. 40).

(g) Regulations must be "irrelevant""extraneous" or completely inconsistent with the statutory purpose to be found ultra vires. It would take an "egregious" case to strike a regulation down as ultra vires (para. 28).

[38] The principles in Katz have been consistently followed: see, for example, West Fraser Mills Ltd. v. British Columbia (Workers' Compensation Appeal Tribunal), [2018] 1 S.C.R. 635, [2018] S.C.J. No. 22, 2018 SCC 22, at para. 12; and Wildlands League v. Ontario (Lieutenant Governor in Council) (2016), 134 O.R. (3d) 450, [2016] O.J. No. 5230, 2016 ONCA 741, at paras. 41-47.

[39] HBC argues that the Supreme Court of Canada's decision in Canada (Minister of Citizenship and Immigration) v. Vavilov,[2019] S.C.J. No. 65, 2019 SCC 65, has changed the test for challenging regulations and that courts must now assess regulations on a standard of reasonableness. There is no support for this argument in Vavilov or in any decision since its release. In Vavilov, at para. 111, the Supreme Court refers to Katz when describing the constraints on the power to make a regulation as precluding an authority from adopting an interpretation of the grant of power "that is inconsistent with applicable common law principles regarding the nature of statutory powers". This does not suggest that a reasonableness standard applies to the contents of the regulation or that the test set out in Katz was in any way changed.

[40] When arguing that the court should apply greater scrutiny of O. Reg. 82/20 than the Supreme Court of Canada envisioned in Katz, HBC also relies on s. 7.2(7) of the EMCPA. That section states that "[n]othing in this Act affects the rights of a person to bring an application for the judicial review of any act or failure to act under this Act". In our view, that provision does not assist HBC. It simply confirms the right of a party affected by an order or decision made under the EMCPA to seek judicial review. It does not state or suggest that the legal analysis applicable to the vires of a regulation made under the Act would be any different than at common law.

[EMCPA](https://www.canlii.org/en/on/laws/stat/rso-1990-c-e9/latest/rso-1990-c-e9.html), ROA and [O. Reg. 82/20](https://www.canlii.org/en/on/laws/regu/o-reg-82-20/latest/o-reg-82-20.html)

[41] In accordance with the principles in Katz, assessing whether the regulation at issue is ultra vires is a two-step process. The first step is to determine the purpose and scope of the [page112] authority under the enabling statute. The second step is to assess whether the regulation is authorized by the statute, including whether it falls within its purposes. These are matters of statutory interpretation.

[42] Schedule 2 of O. Reg. 82/20 sets out the types of businesses that can stay open when a region of the province is in Stage 1. HBC takes issue with s. 2(1)3., Sch. 2 of the regulation that permits "discount and big box retailers selling groceries" to stay open. In particular, it argues that the inclusion of "selling groceries" creates an arbitrary distinction. Without that distinction, HBC would be allowed to open.

[43] Consistent with the principles reviewed above for assessing the vires of a regulation, s. 2(1)(3)., Sch. 2, of O. Reg. 82/20 cannot be read in isolation. It must be understood in the context of the EMCPA, the ROA and the regulations made, continued and amended under those statutes since the beginning of the pandemic.

[Emergency Management and Civil Protection Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-e9/latest/rso-1990-c-e9.html)

[44] O. Reg. 82/20 was originally made under the EMCPA after Ontario declared a state of emergency in response to the COVID-19 pandemic.

[45] Section 7.0.1 of the EMCPA gives the Premier of Ontario the power to declare an emergency, including to "reduce or mitigate a danger of major proportions that could result in serious harm to persons or substantial damage to property".

[46] Once the Premier declares an emergency, s. 7.0.2(1) of the EMCPA gives the Lieutenant Governor in Council ("LGIC") significant powers to make orders "to promote the public good by protecting the health, safety and welfare of the people of Ontario". Orders made by the LGIC can take the form of a regulation.

[47] Section 7.0.2(2) of the EMCPA gives the LGIC the power to make orders "that the Lieutenant Governor in Council believes are necessary and essential in the circumstances to prevent, reduce or mitigate serious harm to persons or substantial damage to property".

[48] Section 7.0.2(3) places limitations on the orders the LGIC can make, including that orders can only apply to areas of Ontario where the order is necessary and that they only be in effect for as long as necessary.

[49] Section 7.0.2(4) sets out the types of orders the LGIC can make, which include "Closing any place, whether public or private, including any business, office, school, hospital or other establishment or institution" (emphasis added). [page113]

[50] Section 7.2(3) of the EMCPA applies to all orders made under the Act and provides that an order made under s. 7.0.2(4) "may be general or specific in its application".

[51] Therefore, the EMCPA gives the LGIC very broad powers to make orders in the context of an emergency for the purpose of protecting the health and safety of Ontarians. These powers include the power to close businesses.

[Reopening Ontario (A Flexible Response to COVID-19) Act, 2020](https://www.canlii.org/en/on/laws/stat/so-2020-c-17/latest/so-2020-c-17.html)

[52] The ROA came into force on July 24, 2020.

[53] Section 17 of the ROA terminates the COVID-19 declaration of emergency.

[54] However, s. 2(1) of the ROA provides that all orders made under s. 7.0.2 of the EMCPA at the time the ROA came into force are continued.

[55] Section 3 of the ROA gives the LGIC the power to extend orders made under the EMCPA for 30-day periods.

[56] Section 4(1) of the ROA gives the LGIC the power to amend orders continued under s. 2 "in a way that would have been authorized under section 7.0.2 of the Emergency Management and Civil Protection Act if the COVID-19 declared emergency were still in effect and references in that section to the emergency were references to the COVID-19 pandemic and its effects".

[57] Section 4(2) states that amendments can only be made if they relate to "the subject matters listed in subsection (3)". The subject matters listed at s. 4(3)1. include "Closing or regulating any place, whether public or private, including any business, office, school, hospital or other establishment or institution" (emphasis added).

[58] Section 4(6) of the ROA specifies that "for greater certainty" the power to amend orders permits the LGIC to "[i]mposemore onerous or different requirements, including in different parts of the Province" (emphasis added).

[59] Accordingly, while the ROA ended the declaration of emergency under the EMCPA, the intent of the ROA was clearly for the province to maintain existing orders and amend them as necessary, as if the EMCPA was still in effect, depending on the state of the pandemic in different parts of the province. The power to amend includes the power to close businesses and to impose more onerous requirements.

[60] As with the EMCPA, the purpose of the ROA is to give the LGIC broad discretion to make orders that reduce or mitigate the public health harm Ontarians face during the pandemic, while balancing the goal of reopening the economy. In particular, these [page114] provisions disclose a clear objective to confer on Ontario the power to balance the competing demands of responding to the COVID-19 pandemic and its effects and the needs of the economy and businesses in Ontario. The ROA discloses, as one of its objects, the conferral of the power to prohibit, reduce or regulate face-to-face interactions indoors or in close quarters if necessary, to reduce the risk of community-based transmission of the disease. Under existing orders at the time of the ROA enactment, the provision of essential goods was recognized as an important consideration. A regulation that is reasonably related to these objectives is valid.

[O. Reg. 82/20](https://www.canlii.org/en/on/laws/regu/o-reg-82-20/latest/o-reg-82-20.html) and other relevant regulations

[61] O. Reg. 82/20 was first made on March 23, 2020 under s. 7.0.2 of the EMCPA. O. Reg. 82/20 has been amended 21 times since it first came into force. It is not necessary to go through all the iterations of O. Reg. 82/20, but it is helpful to look at the versions that have affected HBC before looking at the current version challenged on this application.

[62] The first version of O. Reg. 82/20 came into force on March 24, 2020, and was titled "Order Under Subsection 7.0.2(4) -- Closure of Places of Non-Essential Businesses". The preamble to the regulation stated that "the temporary closure of places of non-essential business is necessary to help protect the health and safety of the people of Ontario in response to the declared emergency". The regulation stated that it applied generally throughout Ontario. Schedule 1 required that all businesses not listed in Sch. 2 be closed. Schedule 2 was titled "Essential Businesses" and listed the businesses allowed to open as including grocery stores, convenience stores, pet supply stores, pharmacies and hardware stores. There was no reference to discount stores and big box stores selling groceries in that version of the regulation. No big box stores, including HBC's stores, were allowed to open under this first iteration of O. Reg. 82/20.

[63] On May 18, 2020, O. Reg. 82/20 was amended. Schedule 2 was still titled "Essential Businesses", but it expanded the businesses that were allowed to open. It continued to apply throughout Ontario. Section 2(iii) of Sch. 2 provided that "Businesses that primarily sell food, beverages and consumer products necessary to maintain households and businesses including . . . Discount and big box retailers selling groceries" were allowed to open. HBC stores were not allowed to open under this provision. However, HBC was allowed to open its stores under s. 2.5 which allowed the opening of "Businesses that engage in the retail sale, or rental, of items to the public, that have a public entrance that opens onto [page115] a street or exterior sidewalk and that are in compliance with section 2 of Schedule 3."

[64] On June 11, 2020, O. Reg. 82/20 was amended again as Ontario introduced the concept of reopening businesses in stages. The title of the regulation was amended to "Order Under Subsection 7.0.2(4) of the Act -- Stage 1 Closures", and it now applied to specifically listed regions which included Toronto, Peel, Windsor-Essex and York regions. Otherwise, ss. 2(iii) and 2.5 of Sch. 2 remained in place.

[65] The version of O. Reg. 82/20 in place from July 15, 2020 to November 21, 2020 was stated to be made under the ROA. It is titled "Rules for Areas in Stage 1". It no longer lists the areas to which it applies, but rather refers to the areas listed in O. Reg. 363/20. Schedule 2 is now titled "Businesses That May Open". Otherwise, s. 2(iii) of Sch. 2 still allowed "discount and big box retailers selling groceries" in Stage 1 regions to be open. It also allowed other retail businesses that had doors opening to the outside to be open.

[66] On November 23, 2020, O. Reg. 82/20 was amended again. This is the version with which HBC takes issue. Schedule 2 continues to be titled "Businesses that May Open". Section 2 of Sch. 2 is titled "Retailers" and provides that the following retail businesses are allowed to open:

2. The following businesses that engage in retail sales to the public:

3. Supermarkets, grocery stores and indoor farmer's markets that primarily sell groceries.

4. Convenience stores.

5. Discount and big box retailers selling groceries.

6. Hardware stores.

7. Safety supply stores.

8. Pharmacies.

9. Stores, other than stores described in section 3, that sell liquor, including beer, wine and spirits.

(Emphasis added)

[67] Other businesses that are allowed to open include car dealerships (by appointment only), garden centres and shopping malls for the purpose of accessing retail stores listed in s. 2.

[68] O. Reg. 82/20 no longer contains a provision allowing businesses to open if they have an external entrance. However, s. 10 provides that businesses not allowed to open for retail sales can sell to members of the public by alternate methods such as curbside pick-up. [page116]

[69] To complete this overview of the regulatory scheme, it is important to note that, on June 11, O. Reg. 263/20 was passed to address the restrictions for Stage 2 regions, which are less onerous than Stage 1 restrictions. On July 13, 2020, O. Reg. 364/20 came into force to address restrictions for Stage 3 regions, which again are less onerous than Stage 1 and 2 restrictions. O. Reg. 363/20 came into force on July 13, 2020. It lists the regions in Ontario and their respective stages of opening. It has been amended many times. On November 23, 2020, it was amended to list Toronto and Peel region as being under Stage 1 Restrictions. On December 14, 2020, Windsor-Essex and York regions were added as being under Stage 1 restrictions.

Section 2(1)3., Schedule 2, [O. Reg. 82/20](https://www.canlii.org/en/on/laws/regu/o-reg-82-20/latest/o-reg-82-20.html) is Consistent with the Purposes of the ROA

Consistent purpose and scope

[70] Based on this review of the EMCPA, the ROA and O. Reg. 82/20, it is evident that the current version of O. Reg. 82/20, including s. 2(1)3., Sch. 2, is authorized by the statutory grant of authority. The ROA continued all orders made under the EMCPA that addressed the COVID-19 pandemic. The ROA permits the LGIC to amend the regulations as if the EMCPA were still in effect, including by making them more onerous. And the ROA specifically confers the power to close any business. The November 23, 2020 version of O. Reg. 82/20 is consistent with both the terms, and the underlying purposes, of the ROA. It is, therefore, a permissible amendment.

[71] The overall purpose of the ROA is to provide a flexible approach to balancing the health and safety of Ontarians during the pandemic against the province's economic and business interests. O. Reg. 82/20 falls within a scheme the province created that allows for different regions of the province to be under different restrictions, depending on the severity of the pandemic in a particular region. O. Reg. 82/20 contains the most restrictive and onerous conditions. It is evident that the intent of the regulation is to impose more restrictive closures than in areas that are less affected by COVID-19. The listed retailers allowed to open under s. 2 of Sch. 2 on their face offer goods that are necessary, such as groceries and pharmaceuticals. It is clear, therefore, that the essential nature of a good or service is a factor underpinning the regulation. In this context, the inclusion of "discount and big box retailers selling groceries" is not about making items such as clothes and furniture available to members of the public. Rather, it is about giving members of the public access to additional retail [page117] venues for buying groceries. This restriction may be overly inclusive in the sense that it allows people to go to certain types of retail stores in Stage 1 areas to buy more than necessary goods but, on its own, this does not mean that the provision does not fall within the purposes of the ROA. Rather, as the Supreme Court said in Katz, such arguments go to the wisdom or efficacy of a given measure.

[72] The wisdom and efficacy of a policy that enables big box stores which happen to sell groceries to remain fully open, and thus generate more in-store customer traffic than would otherwise be the case, is certainly open to question. The logic of reducing community transmission, while allowing people living in lockdown zones to purchase essential services such as groceries, would seem to suggest that only those services deemed essential should be offered for sale and that, subject to social distancing and other protective measures, where possible the public should only be permitted entry into those areas of a mixed retail establishment where the essential services are sold. We agree with HBC to this extent: one effect of s. 2 of Sch. 2 seems to result in permitting behaviour that is inconsistent with the broader policy goal of reducing community transmission in lockdown zones while permitting the in-store sale of essential items.

[73] As mentioned at the outset, it is not the role of the court on judicial review to make determinations about the efficacy or wisdom of policy choices otherwise within the scope of the LGIC's executive authority. And it is certainly not within the purview of the court to potentially make the problem worse by, as HBC urges us to do, ordering the removal of the "selling groceries" limitation under s. 2 of Sch. 2 altogether. Even if we agreed with HBC that s. 2 of Sch. 2 is beyond the jurisdiction of the LGIC under the ROA, it is by no means clear that the appropriate response would be for the court to open up the exemption to all retailers, whether they sell groceries or not. Legitimate policy choices might equally include narrowing or eliminating the exemption itself. Those are decisions for the government, not the court, to make.

The distinction between HBC and big box stores that sell groceries is not impermissible

[74] HBC argues that, as a matter of law, the LGIC cannot make invidious distinctions not expressly rooted in the enabling legislation. In this respect, HBC relies heavily on the decision of the Federal Court of Appeal in British Columbia Ferry Corp. v. M.N.R., [2001] F.C.J. No. 722, 2001 FCA 146, [2001] 4 F.C. 3 and Tesla Motors Canada ULC v. Ontario (Ministry of Transportation) [page118] (2018), 144 O.R. (3d) 701, [2018] O.J. No. 4394, 2018 ONSC 5062 (S.C.J.), a decision of Myers J. sitting as a single judge of the Divisional Court on an urgent application. HBC argues that the distinction in s. 2 of Sch. 2, which permits only big box stores which happen to sell groceries to remain fully open for business, is irrational and falls outside the purposes of the ROA.

[75] The BC Ferry case involved a fuel tax refund under the federal Excise Tax Act,R.S.C., 1985, c. E-15 ("ETA"). The ETA permitted the Governor in Council to make regulations designating certain classes of goods as ship's stores for use on board a conveyance that would be entitled to benefit from the fuel tax refund. The regulation under challenge, in essence, permitted ship operators on the Great Lakes and upper St. Lawrence to enjoy the benefit of the rebate while ship operators elsewhere could not. In dispute was the scope and purpose of the ETA provisions granting the regulation-making power in question.

[76] The Minister of National Revenue argued that the purpose of the regulation was to incentivize ship operators to purchase fuel from Canadian as opposed to foreign suppliers. The Federal Court of Appeal found, however, that this could not be the purpose of the enactment or the regulation because the regulation did not, in fact, serve that purpose. For example, ships out of Vancouver had the same access to foreign ports as ships in the Great Lakes, yet did not benefit from the rebate. "At best", the court found at para. 28, the regulations were "designed to give a fiscal preference" to ship operators in certain areas of the country compared to those in certain other areas. The conferral of fiscal benefits based on geographic location was not, the court held, within the scope or purpose of the ETA and its regulation-making power.

[77] Thus, the decision in BC Ferry turned on an express finding, having regard to the specific Act and regulation in question, that the true purpose of the regulation was not authorized by the enabling statute.

[78] In Tesla, the government decided to cancel a subsidy program under the Public Transportation and Highway Improvement Act, R.S.O. 1990, c. P.50 for the purchase of electric cars. There was a two-month transition period before the program came to an end. However, Tesla was singled out for special treatment. Every other electric car dealer was able to utilize the transition period and qualify for the subsidy. Tesla was not, allegedly because it was not a "franchised automobile dealer" in Ontario. After careful analysis of the government's policy and its underlying purposes, Myers J. held, at para. 61, that the means of implementing the government's policy -- singling out Tesla for special, [page119] adverse treatment -- were "unrelated to the achievement of the supposed policy goal" or "any purpose under the Public Transportation and Highway Improvement Act". "Therefore" he held"it cannot stand".

[79] Thus, as in BC Ferry, the conclusion of the court in Tesla turned on a close analysis of the purposes of the legislation and the decision being challenged and whether the decision fell within the scope of the enabling regulatory scheme's purpose. Tesla is a classic example of the application of the famous words of Rand J. in Roncarelli v. Duplessis, 1959 50 (SCC), [1959] S.C.R. 121, [1959] S.C.J. No. 1, where he wrote at p. 140 S.C.R.:

In public regulation of this sort there is no such thing as absolute and untrammelled "discretion", that is that action can be taken on any ground or for any reason that can be suggested to the mind of the administrator; no legislative Act can, without express language, be taken to contemplate an unlimited arbitrary power exercisable for any purpose, however capricious or irrelevant, regardless of the nature or purpose of the statute . . . "Discretion" necessarily implies good faith in discharging public duty; there is always a perspective within which a statute is intended to operate; and any clear departure from its lines or objects is just as objectionable as fraud or corruption.

[80] These cases, although raising somewhat analogous issues, do not really assist the applicant's argument. Both cases involve principles that are not actually in dispute. Both cases are entirely consistent with the law and approach to the problem of jurisdiction in assessing the validity of regulations laid down in Katz and Wildlands, among others, relied on by the respondent. Both cases emphasize the importance of a close analysis of the alignment of purpose between the enabling legislation and the challenged regulation. Unlike in BC Ferry and Tesla, in this case, the purpose and powers of the ROA are very much aligned with the scope of O. Reg. 82/20 and in particular, s. 2 of Sch. 2. And, unlike the situation in Tesla (and in Roncarelli), HBC conceded that s. 2 of Sch. 2 was not motivated by an improper purpose or to target or single out HBC.

[81] The ROA is designed to implement its purpose of allowing the LGIC to reopen, or close, various segments of the Ontario economy to protect the health and safety of people in different parts of the province during the pandemic, as and when the need arises. The ROA does not require declarations of emergency to exercise this authority as the flexibility is built into its legislative design. The argument HBC makes that O. Reg. 82/20 is irrational or arbitrary because it differentiates between big box retailers that sell groceries and those that do not must be viewed from the perspective of whether the regulation is consistent with the purpose of the ROA. The operation of O. Reg. 82/20 [page120] and its effect may seem unfair to HBC and other retailers that do not sell groceries, but unfairness is not a legal ground to challenge this regulation.

The [ROA](https://www.canlii.org/en/on/laws/stat/so-2020-c-17/latest/so-2020-c-17.html) does not preclude the closure of HBC's stores

[82] HBC also argues that the basis for the distinction between retailers selling groceries and those not selling groceries (i.e., that selling groceries is an essential service thereby justifying an exemption from a general ban on in-store retail operations) is no longer available to the government under the November 22, 2020 version of O. Reg. 82/ 20. In particular, HBC argues that, once the regulation falls under the ROA rather than the EMCPA, there is a presumption that retailers should be allowed to open given that Sch. 2 of O. Reg. 82/20 no longer refers to "essential services". These arguments are without merit.

[83] It is simply not true that the ROA precludes consideration of, or distinctions based on, essential goods or services. Orders containing such distinctions were continued under the ROA. The ROA permits amendment of such provisions as if the EMCPA were still in effect and in a way that makes them even more onerous. Even the most cursory examination of Sch. 2 shows that, although the term "essential business" is no longer used, most of the exempt businesses listed are tied in some way to what could reasonably be considered the provision of essential goods or services.

Ontario is not required to put forward evidence of the purpose and efficacy of [O. Reg. 82/20](https://www.canlii.org/en/on/laws/regu/o-reg-82-20/latest/o-reg-82-20.html)

[84] Finally, HBC argues that Ontario has put forward no evidence to justify the distinction in s. 2 of Sch. 2 permitting big box stores which happen to sell groceries to remain fully open while retail stores which do not sell groceries cannot remain open to customers at all. In contrast, HBC argues that its own evidence demonstrates that there is no higher risk for people entering its stores than entering other big box stores.

[85] HBC filed extensive evidence on the application, including evidence aimed at demonstrating the unfairness and ineffectiveness of the regulatory provision under challenge. For example, HBC's record includes evidence about the relatively small proportion of floorspace in discount and big box stores allowed to open dedicated to merchandising groceries as compared to other merchandise. It also includes evidence that the known risks of COVID-19 transmission in retail stores are low, and no higher in HBC's stores than in other big box stores that sell groceries. [page121]

[86] In contrast, Ontario's record contains two relatively brief affidavits. One affidavit was sworn by a Toronto Medical Officer of Health who explains her support for the lockdown restrictions given the significant increase in rates of COVID-19 in Toronto. She makes the point that although known transmissions from shopping in retail stores may be low, the source of almost a third of community-based transmissions are simply "unknown". The other affidavit was sworn by an Assistant Deputy Minister with the Ministry of the Solicitor General who provides a brief history of the measures implemented by Ontario.

[87] HBC's evidence about whether the continued closure of its stores as compared to big box stores or discount stores is effective, is irrelevant. As held in Katz, the effectiveness or wisdom of the regulation is irrelevant. Contrary to HBC's argument, the court in Katz did not rely on evidence to find that the regulations at issue were valid or justified. Rather, the evidence addressed the historical context in which the regulations were made. The court explicitly stated that it was not the court's role to decide whether the regulations would achieve their goals or fix the historical problem addressed by the regulations.

[88] Determining the vires of a regulation is an exercise of statutory interpretation. Evidence may be helpful to understanding the factual context in which the regulation was made, but, absent a statutory requirement to do so, governments have no obligation to provide evidence to justify the effectiveness of their policy choices. In this case, s. 2(1)3., Sch. 2, O. Reg. 82/20 is intra vires. It is authorized by the grant of authority in the ROA and it is related to the purposes of the Act.

Conclusion

[89] For the reasons above, the application for judicial review is dismissed.

[90] As of the time of release of these reasons, we had not yet received the parties' final submissions on costs. This shall be addressed by delivery of Ontario's cost summary within three business days, or within the same time frame, notification from the parties that the matter of costs has been resolved.

Application dismissed.

End of Document