Court Rejects Retailer’s Challenge of Ontario’s COVID-19 Legislation
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We had previously written about an Ontario case, in which a court refused to allow a retailer to remain open pending a full hearing, after it was forced to shut down by the government due to the COVID-19 pandemic.

While awaiting the hearing on the main application, the retailer had sought temporary relief to keep its showrooms open, but the court refused the request.

The retailer is a large home appliance retailer, with 29 showroom/retail stores in six provinces; it mainly sells refrigerators, freezers, ranges, cooktops, ovens, microwaves, kitchen ventilation appliances, dishwashers, washing machines, dryers, air conditioners, barbeque grills and other household appliances. 

Walk-in sales at the retailer’s showrooms account for approximately 80% of its sales. Its projected sales for the month of December were approximately $18 million in Ontario and $27 million Canada-wide. Several of its Ontario showrooms had been shutdown by government officials due to the COVID-19 pandemic.

When the main application was heard five days after the retailer’s motion for interlocutory relief was denied, at issue was Ontario Regulation 82/20 (the “Regulation”) which, subject to certain exceptions, prohibited retail stores from allowing customers into their showrooms in Toronto and Peel beginning on November 23, 2020. 

The application before the court was a matter of statutory interpretation and of statutory application. While the retailer did not challenge the legislation itself, it sought: 

  1. A final declaration that it may open for business during the lockdown stage of the COVID-19 pandemic because it was a “hardware store” for the purposes of the Regulation; 
  2. In the alternative, a final declaration that it may open for business because it was part of the supply chain for construction as set out in the Regulation; 
  3. In the further alternative, a final declaration that it may open for business on the basis that it supplied business and services that had been declared essential outside of Ontario with support, products supplies, systems or services necessary to operate.

In response, the Ontario government argued that the retailer was not within the category of businesses that were permitted to be open for retail sales to the public under legislation.

Court Rules Against Retailer

In conducting its analysis, the court first explained that, pursuant to the Legislation Act, legislation must be interpreted as being remedial and must be given such fair, large and liberal interpretation as best ensures the attainment of its objects.

Rejecting the retailers main argument, the court stated:

“In the immediate case, applying the principles of statutory interpretation, there is no ambiguity about what the Legislature meant or intended to mean when it specified that a “hardware store” in a lockdown zone may remain open for retail sales to the public. The Legislature intended the words “hardware store” to be read, which is to say be understood, in their ordinary sense. The Legislature did not prescribe a special meaning to the words “hardware store” and just used those words in their conventional everyday sense.

In just referring to a hardware store without defining it, the Legislature meant a retail store that a person through common experience and observation would recognize as a retail hardware store. If you asked a child to go to a hardware store, he or she would not go to [the retailer’s] store. A person would not identify, label, or name [the retailer] a hardware store, and, truth be told, [the retailer] has not and would not describe itself as a hardware store, if it was not compelled by its urge to provide retail sales of appliances to the public, notwithstanding that its showrooms are in a lockdown area.

[The retailer] argues that a hardware store sells appliances and that appliances are hardware and, therefore, it is a hardware store. The fallacy in that argument is that a retail store that sells hardware is classified as much by what it does not sell as much as by what it does sell. It is the overall mix of goods that identifies a store as a hardware store. [The retailer] may sell appliances, which may fairly be called a type of hardware, but it does not sell building materials (lumber, masonry), construction hardware (nails, screws, etc.), fasteners, hand tools, power tools, plumbing supplies, electrical supplies, cleaning products, small housewares, utensils, and sanitation supplies, all of which will be found in a conventional hardware store.”

As a result, the court rejected the retailer’s first ground of relief.

The court further rejected the retailer’s second and third grounds of relief for substantially the main reasons.

As a result, the application was dismissed.

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Baker & Company has adopted all of the COVID-19 safety precautions and vulnerable employees have been invited to work from home. We are fully operational and continue to work on client assignments. Where possible, meetings are being held via video link or by telephone conference.

At Baker & Company, we provide responsive, strategic, and pragmatic business and legal solutions to our clients. Our corporate and commercial law team has dealt with all kinds of issues in courts across Ontario and has significant experience at both the trial and appellate levels. To hear more about how we can help, call us at 416-777-0100 or contact us online.

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