Civil Litigation

Beer Store faces tough task to win damages from province

By AdvocateDaily.com Staff

The Beer Store faces an uphill battle to win damages from the province following the cancellation of its beer distribution contract, says Toronto civil litigator Sarah O’Connor.

As CTV News reports, the Ontario government recently tabled legislation at Queen’s Park that would end its 10-year contract with the Beer Store, paving the way for grocery and convenience stores to sell alcohol.

According to the news outlet, that prompted the Beer Store’s lawyers to warn they are ready to challenge the bill and seek compensation on the basis that the proposed law is “unconstitutional and constitutes misfeasance in public office by certain ministers and officials involved.”

But O’Connor, principal of O’Connor Richardson Professional Corporation, tells AdvocateDaily.com that the Beer Store’s reliance on the tort of misfeasance in public office could be a problem.

“It’s a really tough tort to prove, which is going to make it hard for them to win in court,” she says.

The relatively new tort was formally recognized in 2003 following a landmark Supreme Court decision involving the estate of a man shot dead by police, which sued numerous officers for their conduct during the investigation of the killing.

According to the top court’s decision, the tort divides into two categories — one involving conduct specifically intended to injure a person or class of persons. The other involves public officers acting with knowledge both that are acting without authority, and that they are likely to injure the plaintiff.

The court found that misfeasance in public office is an “intentional tort” distinguished by:

  • deliberate, unlawful conduct in the exercise of public functions, and
  • awareness that the conduct is unlawful and likely to injure the plaintiff

“That’s a very high threshold for any plaintiff to meet,” O’Connor says.

Business groups have expressed alarm at the government’s move in the Beer Store case, complaining it will reduce certainty and deter investment in the province.

“You can see how it might reduce faith if the government can just pass legislation to nullify a binding contract,” O’Connor says, adding that there is plenty of recent precedent in the area.

Shortly after taking office, Premier Doug Ford’s administration cancelled a series of renewable energy contracts, promising legislative amendments to protect taxpayers from any costs incurred as a result.

And in a case involving the previous Liberal government, Ontario’s Court of Appeal recently dismissed a class action brought by restaurant and bar owners against the Liquor Control Board of Ontario and other parties, who they alleged conspired to distort the province’s beer market.

The plaintiffs in the case sued for damages under the Competition Act, alleging that a contract between the defendants, barring the LCBO from selling the most popular brands of beer in bulk directly to restaurants, bars, and other licensees, forced them to pay more than regular beer consumers.

Following the launch of the class action, the Liberal-controlled legislature amended Ontario’s Liquor Control Act (LCA) to retroactively relieve the defendants from liability for any alleged Competition Act breaches.

The appeal court panel upheld a motion judge’s summary dismissal of the claim, finding that the regulated conduct defence applied in this case, providing immunity from competition law where conduct is authorized by statute or regulation.

The version of the LCA in force at the time the contract was signed authorized the arrangement, the appeal court ruled. And in any case, the subsequent legislation successfully immunized the defendants.

“The purpose of extending that defence in the context of the Competition Act is to avoid criminalizing conduct that a province deems to be in the public interest. That same provincial public interest should be recognized whether it is expressed in legislation in force at the time of the impugned acts, or expressed in retroactive legislation,” the appeal court panel wrote.

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