2813127 Ontario Inc. v. His Majesty the King, 2023 ONSC 808
CITATION: 2813127 Ontario Inc. v. His Majesty the King, 2023 ONSC 808
DIVISIONAL COURT FILE NO.: DC-22-155-JR
DATE: 2023/02/02
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
LEDERER, LOCOCO, WILLIAMS JJ.
BETWEEN:
2813127 ONTARIO INC.
Applicant
– and –
HIS MAJESTY THE KING IN RIGHT OF ONTARIO as represented by the MINISTER OF HEALTH
Respondent
Obaidul Hoque, for the Applicant
Andi Jin, for the Respondent
HEARD by video conference: December 6, 2022
REASONS FOR JUDGMENT
WILLIAMS J.
Overview
[1] The applicant 2813127 Ontario Inc. operates a gas station and convenience store in St. Catharines. The applicant purchased the property in February 2021. After the purchase, it made a considerable investment in improvements. The business began to operate in December 2021. Two mortgages are registered against the property.
[2] In October 2022, the applicant was served with a notice of prohibition under s. 22 of the Smoke-Free Ontario Act, 2017, S.O. 2017, c. 26, Sched. 3, (the “SFOA, 2017”). The notice prohibits the sale, storage or delivery of any tobacco products at or to the property until April 25, 2023, a period of six months.
[3] The notice was based on two convictions for tobacco sales violations against the owner of the convenience store business that had previously operated on the property. The convictions were dated November 16, 2020 and April 29, 2021. The convictions were under s. 3(1) of the SFOA, 2017, which prohibits the sale or supply of any tobacco, vapour or prescribed product or substance to a person under the age of 19.
[4] The applicant seeks an order quashing or setting aside the notice of prohibition.
The positions of the parties
[5] The applicant argues that the notice of prohibition is arbitrary and unfair. The applicant also argues that imposing a penalty without giving it an opportunity to defend itself is a breach of the principles of natural justice.
[6] The applicant argues that it has never been convicted of a tobacco sales violation and it had no notice of the convictions against the previous operator of the store.
[7] The applicant also argues that punishing it for offences committed by another person is disproportionate.
[8] The respondent, the Minister of Health, says the SFOA, 2017 requires the Minister to issue a notice of prohibition when certain conditions are satisfied. It submits that the conditions were satisfied in this case. The Minister says the prohibition is mandatory and automatic. The Minister acknowledges that the applicant was not convicted of any tobacco sales offences and accepts that the applicant did not know about the convictions before it purchased the property.
[9] The Minister argues that, in circumstances such as those of the applicant, the automatic prohibition is intended to require prospective owners or operators of tobacco retail locations to make up-front inquiries about convictions for tobacco sales offences. The Minister submits that those convicted of tobacco sales offences should not be permitted to avoid a prohibition by transferring their business to a different owner or operator. The Minister says it does not have the ability to monitor whether transfers of tobacco retail locations are legitimate or intended to avoid a prohibition, whereas legitimate would-be purchasers or operators have a strong incentive to find out, before taking on a business, whether there have been prior convictions against the current owner or operator.
The Issues
[10] This application for judicial review raises the following issues:
What is the appropriate standard of review?
Was the Minister entitled to impose an automatic prohibition on the sale, storage and distribution of tobacco products at or to the applicant’s premises in circumstances where the applicant had no connection to the tobacco sales offences that triggered the notice of prohibition?
Was the notice in breach of the principles of natural justice and procedural fairness?
Analysis
Issue #1: Standard of review
[11] There is a presumption that the standard of review for an administrative decision is reasonableness: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653, at paras. 23-24. Matters that involve statutory interpretation are not treated uniquely and, as with other questions of law, may be evaluated on a reasonableness standard. (Vavilov, at para. 115.) I do not agree with the applicant’s submission that the interpretation of the legislation at issue is of such “fundamental importance and broad applicability” (Vavilov, at para. 59) that respect for the rule of law would require the application of the standard of correctness in this case.
[12] The applicant has raised a procedural fairness argument. The court’s task is to determine whether the required level of procedural fairness has been accorded in the circumstances of the case. The test for evaluating procedural fairness was set out in Baker v. Canada (Minister of Citizenship and Immigration) 1999 699 (SCC), [1999] 2 S.C.R. 817 at paras. 23 – 27. Baker identified and described five factors to be considered: the nature of the decision being made, and the process followed in making it; the nature of the statutory scheme and the terms of the statute pursuant to which the body operates; the importance of the decision to the individual affected; the legitimate expectations of the person challenging the decision; and the choice of procedure selected by the agency.
Issue #2: Was the Minister entitled to impose an automatic prohibition in the circumstances?
The substance of a reasonableness review
[13] The review of a decision based on the standard of reasonableness requires an assessment of whether there is justification, transparency and intelligibility within the decision-maker’s reasoning and whether the decision falls within a range of possible, acceptable outcomes that are defensible in respect of the facts and the law. (Vavilov, at para. 86.)
[14] The applicant for judicial review bears the burden of showing that the decision was unreasonable.
[15] The court charged with a reasonableness review must defer to any reasonable interpretation of the legislation, even if other reasonable interpretations may exist. Judicial deference in such instances is itself a principle of modern statutory interpretation. (McLean v. British Columbia, 2013 SCC 67 at para 40; Vavilov, at para. 235.)
The history of the legislation at issue
[16] The notice of prohibition was served on the applicant under the Smoke-Free Ontario Act, 2017. The SFOA, 2017 and its predecessor acts are public health legislation intended to reduce the harms of smoking and vaping. A key focus of the legislation is to prevent minors from smoking by restricting their access to tobacco products. (R. v. Pourlotfali, 2016 ONCA 490, 132 O.R. (3d) 136, at para. 32.)
[17] Under s. 22(2) of the SFOA, 2017, the Minister is required to send a notice of prohibition to the person who owns or occupies a place where repeat convictions of tobacco sales offences have occurred within the past five years. Section 22(2) reads as follows:
(2) On becoming aware that all of the following conditions have been satisfied, the Minister shall send a notice of the prohibition imposed by subsection (4) to the person who owns or occupies the place and to all wholesalers and distributors of tobacco in Ontario:
An owner of the business that operates or operated in the place has been convicted of a tobacco sales offence committed in the place.
During the five years preceding the conviction referred to in paragraph 1, the same owner of the business that operates or operated in the place, or a different owner of a business that operates or operated in the place, was convicted of a tobacco sales offence committed in the place.
The period allowed for appealing the conviction referred to in paragraph 1 has expired without an appeal being filed, or any appeal has been finally disposed of.
[18] Section 22(3) of the Act states that the notice shall specify the date on which it is to take effect.
[19] Section 22(4) provides that during the applicable period (see below), (a) no person shall sell or store tobacco in the place where the tobacco sales offences were committed; and (b) no wholesaler or distributor shall deliver tobacco to the place or have it delivered there.
[20] The “applicable period” referred to in s. 22(4) is specified in s. 22(5). It is:
(a) the six months that follow the date specified in the notice referred to in subsection (2), if there are only two convictions of tobacco sales offences committed in the same place during the five-year period referred to in subsection (2);
(b) the nine months that follow the date specified in the notice, if there are only three convictions of tobacco sales offences committed in the same place during the five-year period referred to in subsection (2); and
(c) the 12 months that follow the date specified in the notice, if there are four or more convictions of tobacco sales offences committed in the same place during the five-year period referred to in subsection (2).
[21] The SFOA, 2017 is the third in a series of statutes with the same goal of reducing the harm caused by tobacco products. The first statute in the series was the Tobacco Control Act, 1994, S.O. 1994, c. 10. The second was the Smoke-Free Ontario Act, S.O. 1994, c. 10.
[22] The three statutes all included an automatic prohibition against sales, storage and delivery of tobacco in the event of more than one conviction for a tobacco sales offence.
[23] Under the first of the three statutes, the Tobacco Control Act, 1994, the notice of prohibition could only be sent to the owner or occupier of a retail business if there were convictions against that owner or occupier.
[24] The relevant section of the Tobacco Control Act, 1994 was s. 16(2), which reads as follows:
(2) On becoming aware that the following conditions have been satisfied, the Minister of Health shall send a notice of the prohibition imposed by subsection (4) to the person and to all wholesalers and distributors of tobacco in Ontario:
The person has been convicted of a tobacco sales offence committed in a place owned or occupied by the person.
The person was convicted of another tobacco sales offence committed in the same place during the five years preceding the conviction referred to in paragraph 1.
The period allowed for appealing the conviction referred to in paragraph 1 has expired without an appeal being filed, or any appeal has been finally disposed of.
[25] The Tobacco Control Act, 1994 was amended in 2006. The new version of the legislation provided that the owner or occupier of a tobacco retail location would be subject to the automatic prohibition if there were repeat convictions at that place by “any person.” At that time, the name of the legislation was changed to the Smoke-Free Ontario Act. The relevant section of the Act was s. 16.2, which read as follows:
(2) On becoming aware that all of the following conditions have been satisfied, the Minister shall send a notice of the prohibition imposed by subsection (4) to the person who owns or occupies the place and to all wholesalers and distributors of tobacco in Ontario:
Any person has been convicted of a tobacco sales offence committed in a place owned or occupied by the person.
Any person was convicted of another tobacco sales offence in the same place during the five years preceding the conviction referred to in paragraph 1.
The period allowed for appealing the conviction referred to in paragraph 1 has expired without an appeal being filed, or any appeal has been finally disposed of.
[26] In 2300246 Ontario Inc. v. Ontario, 2014 ONSC 6958, the Ontario Superior Court granted an application for judicial review brought by the owner of a tobacco retail location that found itself in shoes similar to those of the applicant before us. The owner of a supermarket had received a notice of prohibition based on the convictions of two of its employees and the employee of a previous owner/operator of the business. Then, in 2015, in Joshi v. Ontario, 2015 ONSC 1001, 125 O.R. (3d) 384 (Div. Ct.), this court granted a similar application, brought by the operators of a business which had received a notice of prohibition because of convictions against employees of a previous, unrelated operator.
[27] Both courts pointed to discrepancies in the legislation. Both observed that s. 16(5) of the Smoke-Free Ontario Act, which was titled “applicable period”, and which set out the duration of the prohibition that would apply, referred only to “the person” who had been convicted, and not to “any person”, as in ss. 1 and 2 of s. 16(2) of the Act (see above). Both courts noted that the Act and its regulation required a sign to be posted at a place subject to a prohibition, stating that “[w]e (emphasis added) were convicted…”, strongly suggesting that the current owner or operator, and not a past owner or operator of the business had been convicted of a tobacco sales offence. In Joshi, Swinton J., for this court, concluded that s. 16 of the Smoke-Free Ontario Act was not clearly drafted and that the Minister had erred in holding that the automatic prohibition applied to the applicants, who had never been convicted of a tobacco-related sales offence.
The new legislation
[28] The legislation at issue in this application, the SFOA, 2017, came into force in October 2018. This latest version of the legislation appears intended to address squarely the observations of the courts in 2300246 Ontario Inc. and Joshi. The SFOA, 2017, unlike its predecessors, provides that the convictions triggering the notice of prohibition may be against an owner of a business that operates (present tense) in a place or the owner of a business that operated (past tense) in a place where a tobacco sales offence was committed. Unlike s. 16(5) of the predecessor legislation, the Smoke-Free Ontario Act, the comparable section in the SFOA, 2017, s. 22(5), does not tie the applicable duration of a prohibition to “the person” who was convicted. Instead, it uses the passive voice and refers to the number of convictions (e.g. “if there are only two convictions”), but does not refer to any person who was convicted. Further, the sign required by the regulation under the SFOA, 2017 states that tobacco products were sold to minors “at this place”; it no longer states that “[w]e were convicted”.
[29] The applicant acknowledges that the legislation has been amended since 2300246 Ontario Inc. and Joshi were decided but argues that the effect of the current legislation is as unfair as its predecessor. The applicant argues that, like its predecessor, the current version of the legislation has resulted in, to quote from Joshi at para. 41, “a serious financial penalty for persons who have never been convicted of a tobacco-related sales offence, have never been associated with a person who has been convicted of such an offence and have no knowledge of the prior offences.”
[30] The answer to any perceived unfairness lies in the legislature’s manifest intention, as a matter of policy, to allocate economic risk to any prospective purchaser or prospective operator of a tobacco retail location by providing a market incentive to undertake the due diligence necessary to avoid such an outcome. Any prospective purchaser or operator should inquire into whether there have been past convictions prior to finalizing its purchase or agreement to operate.
[31] The applicant acknowledged that the province’s Public Health Units are required to disclose publicly all convictions related to tobacco sales offences. It argued that, in this case, the Niagara PHU had failed to post on its website the convictions of the business that had previously operated from the applicant’s location until after the applicant’s purchase had been finalized. However, since it went on-line in 2018, the Niagara PHU website has included a disclaimer which states that prospective buyers of tobacco retail dealer premises are strongly encouraged to contact the local PHU to confirm premises conviction history. On cross-examination, the applicant’s principal admitted that he did not search on-line for tobacco sales convictions relating to the premises, he was not aware of the disclaimer on the Niagara PHU website, and he did not conduct any due diligence in respect of convictions relating to the premises or ask his lawyer on the purchase to do so.
[32] As this court noted in Joshi, at para. 20, the Supreme Court has repeatedly endorsed the purposive approach to statutory interpretation, which requires that the words of an Act be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. The court’s interpretation should comply with the legislative text, promote the legislative purpose and produce a reasonable and just meaning.
[33] In my view, the ordinary meaning of the words of s. 22 of the SFOA, 2014, read in context and in conjunction with the scheme and object of the Act and the intention of the legislature, supports the imposition of an automatic prohibition in this case. That the legislature intended the owner or occupier of a tobacco retail location to be subject to an automatic prohibition based on the convictions of a previous owner is evident from the plain wording of the legislation and its legislative history. The onus is on the purchaser of such a location to protect itself by making appropriate inquiries about convictions before finally committing to the purchase.
[34] The wording of the SFOA, 2017 not only entitles but requires the Minister to send a notice of prohibition upon becoming aware that the conditions in s. 22(2) have been met. It was not in dispute that the conditions in s. 22(2) were met in this case.
[35] The applicant also argued that the automatic prohibition should not apply because it did not receive notice at the time the offence was committed, as required by s. 22(6) of the SFOA, 2017. I agree with the Minister that the defence in s. 22(6) applies to a charge for a breach of the automatic prohibition under s. 22(4), and not to the automatic prohibition itself, and also that “the notice” in s. 22(6) refers to notice of the prohibition and not to notice of the charges or convictions against the previous owner.
Issue #3: Was there a breach of procedural fairness?
[36] Given the mandatory nature of the requirement to issue the notice of prohibition, I cannot accept the applicant’s argument that it should have been permitted to participate in the process culminating in the decision to issue the notice of prohibition. The Minister had no discretion in relation to the decision to issue the notice. Participation on the part of the applicant would have made no difference to the outcome.
Disposition
[37] The decision to issue the October 3, 2022 notice of prohibition was not arbitrary, unfair or based on an erroneous or unreasonable application of the provisions of the SFOA, 2017. The applicant was not denied procedural fairness.
[38] I would dismiss the application.
Costs
[39] The respondent said that if the application is dismissed, it would not seek costs.
[40] There shall be no costs to either party.
Williams J.
I agree, Lederer J.
I agree, Lococo J.
Released: February 02, 2023
CITATION: 2813127 Ontario Inc. v. His Majesty the King, 2023 ONSC 808
DIVISIONAL COURT FILE NO.: DC-22-155-JR
DATE: 2023/02/02
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
LEDERER, LOCOCO and WILLIAMS JJ.
BETWEEN:
2813127 ONTARIO INC.
Applicant
– and –
HIS MAJESTY THE KING IN RIGHT OF ONTARIO as represented by the MINISTER OF HEALTH
Respondent
REASONS FOR DECISION
Lederer J.
Lococo J.
Williams J.
Released: February 02, 2023