10 LEXPERT MAGAZINE
|
JULY 2019
HUGHES AND 631992 ONTARIO INC.
V. LIQUOR CONTROL BOARD
OF ONTARIO ET AL.
DECISION DATE: APRIL 17, 2019
On December 12, 2014, an action cap-
tioned David Hughes and 631992 Ontario
Inc. v. Liquor Control Board of Ontario,
Brewers Retail Inc., Labatt Breweries of
Canada LP, Molson Coors Canada and Sl-
eeman Breweries Ltd. No. CV-14-518059-
00CP was commenced in Ontario.
Brewers Retail Inc. (operating as the
Beer Store) and its then shareholders, as
well as the Liquor Control Board of Ontar-
io ("LCBO"), were named as defendants in
the action. e plaintiffs (a beer consumer
and the restaurant he owns) alleged Brew-
ers Retail Inc. and the LCBO improperly
entered into an agreement to fix prices and
allocate markets for the sale and distribu-
tion of beer in Ontario to the detriment of
licensees and consumers.
e plaintiffs further alleged that Brew-
ers Retail Inc. and its brewer shareholders
were unjustly enriched for breach of the
Uniform Price Rule of the Liquor Con-
trol Act. e plaintiffs sought to have the
claim certified as a class action on behalf of
all Ontario beer consumers and licensees
and, among other things, damages in the
amount of $1.4 billion.
Brewers Retail Inc. operates according
to the rules established by the Government
of Ontario for the regulation, sale and dis-
tribution of beer in the province. Prices are
independently set by each brewer and are
approved by the LCBO, the Crown agency
empowered by provincial legislation to
control virtually every aspect of the sale
and delivery of liquor in Ontario. As such,
all of the defendants believed the claim was
without merit.
Motions for summary judgment were
heard in the Ontario Superior Court of
Justice. On March 15, 2018, the plaintiffs'
motion for summary judgment was dis-
missed. e defendants' motions for sum-
mary judgment were granted, and the ac-
tion was entirely dismissed.
e plaintiffs appealed the dismissal or-
der and, along with the Law Foundation of
Ontario, sought leave to appeal the order
to pay costs to the defendants of approxi-
mately $2.4 million in total.
ONTARIO APPELLATE COURT DECISION
On April 17, 2019, the Court of Appeal for
Ontario dismissed the appeal and upheld
the summary dismissal of the proposed
class action.
e Court of Appeal agreed with the
motion judge that, pursuant to the regu-
lated conduct defence, the plaintiffs' vari-
ous Competition law claims were without
merit – even before the Province enacted
retroactive legislation that expressly autho-
rized the LCBO and Brewers Retail Inc. to
specifically enter into the 2000 framework
that was the basis for the plaintiff 's claim.
In finding that the regulated conduct
defence applied, the Court of Appeal re-
jected the plaintiffs' argument that the
regulated conduct defence is not avail-
able to defend civil claims under section
36 of the Competition Act. e Court of
Appeal agreed with the motion judge and
defendants that if the regulated conduct
defence is available as a defence to a pros-
ecution under s. 45(1) of the Competition
Act, the defendant's conduct is not con-
trary to the criminal conspiracy provi-
sions and therefore cannot form the basis
for a civil claim under s. 36.
With respect to the plaintiffs' unjust en-
richment claim against the Beer Store and
the brewers, the motion judge had agreed
with the defendants that the law always
permitted the charging of different beer
prices between licensees and retail home
consumers, which was a complete answer
to that claim. To the extent there was any
doubt about that, the legislature clarified
the law in 2015 through a valid declaratory
amendment to the Liquor Control Act.
e Court of Appeal upheld the motion
judge's decision, finding that the 2015 leg-
islative amendments were valid, had retro-
active effect, and removed any doubt that
different prices for beer could be charged
to licensees, as long as prices within each
channel were uniform across the province.
e Court of Appeal also denied leave to
appeal the summary judgment costs award.
e Court reiterated that leave to appeal
costs awards should be granted sparingly
and only in obvious cases where there are
strong grounds that the judge erred in exer-
cising his or her discretion. e Court held
that the motion judge did not fail to consid-
er any relevant factor, that a reasonable liti-
gant would expect the defendants to devote
significant resources to respond to a $2- bil-
lion claim alleging a criminal conspiracy,
and that this was therefore not a case that
warranted granting leave to appeal.
Bennett Jones LLP was counsel to
Brewers Retail Inc., with a team including
Michael Eizenga, Randal Hughes, Ranjan
Agarwal, Preet Bell, and Ilan Ishai.
Siskinds LLP was counsel to the
plaintiffs, with a team that included Lin-
da Visser, Tyler Planeta, and Paul Bates
(Bates Barristers).
Stockwoods LLP was counsel to the Law
Foundation of Ontario, with a team includ-
ing Aaron Dantowitz and Justin Safayeni.
Counsel to the Liquor Control Board
of Ontario was Davies Ward Phillips
& Vineberg LLP, with a team including
Kent E. omson, Matthew Milne-Smith,
Michael H. Lubetsky, John Bodrug and
Anthony M. C. Alexander.
Blakes, Cassels & Graydon LLP was
counsel to Labatt Brewing Company Limited
with a team that included Jeff Galway, Cath-
erine Beagan Flood, and Nicole Henderson.
Counsel to Molson Coors Canada and
The Ontario Court of Appeal dismisses a proposed class action against Brewers Retail and the LCBO
on allegations of price-fixing; in Québec, two recent decisions found newly enacted provisions
of the Québec Consumer Protection Act to be constitutionally inapplicable and inoperative
for telecommunications services providers facing charges of penal offences.
BIG SUITS
RECENT LITIGATION OF IMPORTANCE
DEADLINE
GOES HERE
