Hughes v. Liquor Control Board of Ontario

Hughes v. Liquor Control Board of Ontario Collection Decisions of the Court of Appeal Date 2019-04-17 Neutral citation 2019 ONCA 305 Docket numbers C65262, M49666 Judges Hoy, Alexandra; Simmons, Janet M.; Pardu, Gladys I. Subject Civil Decision Content COURT OF APPEAL FOR ONTARIO CITATION: Hughes v. Liquor Control Board of Ontario, 2019 ONCA 305 DATE: 20190417 DOCKET: C65262 & M49666 Hoy A.C.J.O., Simmons and Pardu JJ.A. BETWEEN David Hughes and 631992 Ontario Inc. Plaintiffs (Appellants) and Liquor Control Board of Ontario, Brewers Retail Inc. (carrying on business as "The Beer Store"), Labatt Breweries of Canada LP, Labatt Brewing Company Limited, Molson Coors Canada Inc., Molson Canada 2005 and Sleeman Breweries Ltd. Defendants (Respondents) Proceedings under the Class Proceedings Act, 1992 Paul Bates, Linda Visser and Tyler Planeta, for the appellants Kent Thomson, Matthew Milne-Smith and Michael Lubetsky, for the respondent Liquor Control Board of Ontario Michael Eizenga, Ranjan Agarwal and Ilan Ishai, for the respondent Brewers Retail Inc. Jeff Galway and Nicole Henderson, for the respondent Labatt Brewing Company Limited Adam Ship, for the respondents Molson Coors Canada Inc. and Molson Canada 2005 Michael S. Dunn and Ravi Amarnath, for the intervener Attorney General of Ontario Aaron Dantowitz and Justin Safayeni, for the Law Foundation of Ontario Heard: January 28-29, 2019 On appeal from the order of Justice Paul M. Perell of the Superior Court of Justice, dated March 15, 2018, with reasons reported at 2018 ONSC 1723, and from the costs order, dated August 14, 2018, with reasons reported at 2018 ONSC 4862. Pardu J.A.: A. overview [1] Following summary judgment motions that were heard over four days, the motion judge dismissed the appellants’ proposed class action. [2] The appellants are an individual beer consumer and the licensed restaurant he operates. In their action, the appellants took issue firstly with a “Framework Agreement” between the respondents, the Liquor Control Board of Ontario (“LCBO”, the “Board”) and Brewers Retail Inc., signed on June 1, 2000, which they allege violated s. 45(1) of the Competition Act, R.S.C., 1985, c. C-34, and secondly with a surcharge that Brewers Retail Inc. levied on licensees (essentially, persons such as restaurants and pubs licensed under the Liquor Licence Act, R.S.O 1990, c. L. 19 to sell beer), which they allege violated the the Liquor Control Act, R.S.O. 1990, c. L.18. [3] The appellants’ claim arising out of the Framework Agreement requires a consideration of what is known as the “regulated conduct defence” as it applies to a provincially regulated defendant. Broadly speaking, in that context, the defence insulates the defendant from criminal liability if the legislation governing the regulated defendant (in this case, the Liquor Control Act) is constitutionally valid, it directs or authorizes the defendant to engage in the impugned conduct, and the law providing for criminal liability (in this case, the Competition Act) leaves room for the regulated activity to operate without being criminalized. As the motion judge explained, the regulated conduct defence is fundamentally a principle of statutory interpretation. [4] In summary, the appellants advanced four claims: 1. The respondents conspired to divide the beer market between them. The conspiracy is embodied in the Framework Agreement and continues to this day. This conduct violated s. 45(1) of the Competition Act, both as in effect in June 2000, and as amended effective March 2010, and entitled the appellants to sue for damages under s. 36(1) of the Competition Act. The appellants also pled the civil tort of conspiracy, relying on the same violation of the Competition Act. 2. Brewers Retail Inc. charged licensees five percent more for beer than it charged consumers, in violation of the Liquor Control Act, which requires uniform prices for beer throughout Ontario, and the beer respondents (Labatt Breweries of Canada LP, Labatt Brewing Company Limited, Molson Coors Canada Inc. and Molson Canada 2005, which in the aggregate owned 90% of Brewers Retail Inc. at the relevant time[1]) were unjustly enriched by this surcharge. 3. The LCBO’s conduct in entering into the Framework Agreement amounted to the novel tort of misconduct by a civil authority entitling the appellants to damages. 4. Ontario’s legislative efforts to retroactively authorize the Framework Agreement amount to an impermissible, ultra vires intrusion upon the federal criminal law and trade and commerce powers. [5] The respondents moved for summary judgment, dismissing the appellants’ action. The motion judge granted the respondents’ motions and dismissed the appellants’ action on the following grounds: 1. Both versions of s. 45 of the Competition Act leave leeway for activity regulated under the Liquor Control Act to operate without criminal liability: Hughes v. Liquor Control Board of Ontario, 2018 ONSC 1723, at paras. 221-30. Accordingly, the regulated conduct defence is available if the legislation governing the industry in question expressly or by necessary implication directs or authorizes the defendant to engage in the impugned conduct: Hughes, at para. 220. The alleged violation of the Competition Act was within the powers and rights conferred upon the LCBO and Brewers Retail Inc. under the Liquor Control Act: Hughes, at para. 240. In any event, s. 10(3) of the Liquor Control Act, as amended by the Building Ontario Up Act (Budget Measures), 2015, S.O. 2015, c. 20, Sched. 20, s. 8, enacted in August 2015, declared expressly with retroactive effect that the LCBO was deemed to have been directed and Brewers Retail Inc. was deemed to have been authorized to implement the Framework Agreement in 2000: Hughes, at para. 241. Accordingly, the regulated conduct defence insulated the respondents from liability for damages under the Competition Act: Hughes, at paras. 237-47. 2. The Liquor Control Act authorized differential prices for licensees and consumers, thus providing a juristic reason for the differential pricing. In any event, s. 3(1.1) of the Liquor Control Act, as amended by the Building Ontario Up Act (Budget Measures), 2015, s. 3(4), provided that the powers of the LCBO “are deemed always to have included” the power to implement a price differential for licensees and consumers, provided that those prices are charged uniformly for each of the two distribution channels (i.e. a distribution channel for retail consumers and a distribution channel for licensees) across the province. 3. The LCBO exercised its statutory authority in compliance with the authority given to it by the Liquor Control Act and in a reasonable manner, as a matter of administrative law. Therefore, even if the tort of misconduct by a civil authority existed in Ontario, the appellants would not have been entitled to damages under that tort. 4. The retroactive legislation sanctioning the conduct complained of in the action was a lawful exercise of the province’s undoubted ability to regulate the sale of alcoholic beverages in the province. [6] The appellants challenge each of these findings. They also seek leave to appeal from the costs award in favour of the respondents. [7] I would dismiss the appeal and deny leave to appeal the costs award for the reasons that follow. B. ANALYSIS (1) Allocation of beer sales as between the LCBO and Brewers Retail Inc. pursuant to the Framework Agreement [8] The appellants argue that the regulated conduct defence requires identifying legislative authority that specifically permits the impugned conduct; in their view, the Liquor Control Act, as in effect in June 2000, did not specifically authorize the alleged market conspiracy. Further, they argue that, even if intra vires of Ontario, retroactive legislation cannot be considered in determining the application of the regulated conduct defence. Accordingly, they argue, the motion judge erred in dismissing their action based on the Framework Agreement. [9] I agree with the motion judge that the Liquor Control Act authorized the impugned conduct and that the regulated conduct defence insulated the respondents from liability under the Competition Act arising out of the Framework Agreement. [10] Below, I first provide some brief historical background about the arrangements between the LCBO and Brewers Retail Inc., and the Framework Agreement, and then set out the relevant portions of s. 45 of the Competition Act (as in effect in June 2000 and as amended effective March 2010). I will explain why the motion judge concluded that s. 45 provides leeway for the operation of the regulated conduct defence. Next, I consider the jurisprudence regarding the nature of the authorization or direction required for the regulated conduct defence to apply, set out the relevant portions of the Liquor Control Act in effect in June 2000, and consider those provisions in light of the applicable test. Finally, I address the appellants’ argument that retroactive legislation cannot be considered in determining the application of the regulated conduct defence. (a) Alcohol Distribution in Ontario and “leeway” in s. 45 of the Competition Act [11] As the motion judge observed, the LCBO was established by the government of Ontario in 1927 after the repeal of prohibition. It is a Crown agency wholly owned by Ontario and is required to abide by policy decisions and directives of the government. The government has exercised tight control over the sale of alcoholic beverages. At the same time as the LCBO was established, the Ontario government, in consultation with the brewing industry, set up a single distribution system for beer manufactured in Ontario, through what is now Brewers Retail Inc., which was authorized to operate government stores for the sale of beer under the Liquor Control Act. The LCBO stores, in contrast, focused on wine and spirits. [12] It was common ground that prior to the Framework Agreement, the LCBO operated two types of stores: (i) “Ordinary Stores”, which operated in communities where Brewers Retail Inc. operated outlets and; (2) “Combination Stores”, which operated in smaller communities where Brewers Retail Inc. did not operate outlets. The Framework Agreement provided that, in its Ordinary Stores, the LCBO would not sell beer in packages greater than six containers and that the LCBO would not sell any beer product that was exclusively sold by Brewers Retail Inc. Even before the Framework Agreement was signed, government policy did not generally allow LCBO Ordinary Stores to sell beer in packages greater than six packs, and gave Brewers Retail Inc. the right to sell beer in 12-pack and 24-pack formats. Both before and after the Framework Agreement, the LCBO could not sell beer to licensees that was available for purchase at Brewers Retail Inc. The motion judge concluded, at para. 283, that the Framework Agreement did not materially change anything, but rather “essentially continued market practices that had existed for decades.” [13] The appellants allege that the formalization of this arrangement, in the Framework Agreement, violated s. 45(1) of the Competition Act as in effect in June 2000, and as subsequently amended effective March 2010. In June 2000, the following version of s. 45(1) was in effect: 45 (1) Every one who conspires, combines, agrees or arranges with another person (a) to limit unduly the facilities for transporting, producing, manufacturing, supplying, storing or dealing in any product, (b) to prevent, limit or lessen, unduly, the manufacture or production of a product or to enhance unreasonably the price thereof, (c) to prevent or lessen, unduly, competition in the production, manufacture, purchase, barter, sale, storage, rental, transportation or supply of a product, or in the price of insurance on persons or property, or (d) to otherwise restrain or injure competition unduly, Is guilty of an indictable offence and liable to imprisonment for a term not exceeding five years or to a fine not exceeding ten million dollars or to both. [Emphasis added.] [14] The relevant portions of the present version of the Competition Act, as amended by the Budget Implementation Act, 2009, S.C. 2009, c. 2, s. 410, provides as follows: 45 (1) Every person commits an offence who, with a competitor of that person with respect to a product, conspires, agrees or arranges (a) to fix, maintain, increase or control the price for the supply of the product; (b) to allocate sales, territories, customers or markets for the production or supply of the product; or (c) to fix, maintain, control, prevent, lessen or eliminate the production or supply of the product. (2) Every person who commits an offence under subsection (1) is guilty of an indictable offence and liable on conviction to imprisonment for a term not exceeding 14 years or to a fine not exceeding $25 million, or to both. … (7) The rules and principles of the common law that render a requirement or authorization by or under another Act of Parliament or the legislature of a province a defence to a prosecution under subsection 45(1) of this Act, as it read immediately before the coming into force of this section, continue in force and apply in respect of a prosecution under subsection (1). [Emphasis added.] [15] Section 36(1) of the Competition Act provides that “[a]ny person who has suffered loss or damage as a result of (a) conduct that is contrary to any provision of Part VI…” may sue for and recover damages from the person who engaged in the conduct. The versions of s. 45(1) at issue are in Part VI of the Competition Act. Thus, the appellants rely on conduct that constitutes an indictable offence to ground their claim against the respondents for damages. [16] At least in the context of provincially regulated conduct[2], for the regulated conduct defence to be available, the law providing for criminal liability (in this case, s. 45(1) of the Competition Act) must leave room for the regulated activity to operate without being criminalized. The motion judge held that the version of s. 45(1) in effect until March 2010, signaled, through the use of the word “unduly” that the regulated conduct defence was available. As he explained, conduct authorized by valid provincial or federal legislation is deemed to be in the public interest and cannot constitute an “undue” limit on competition under the Competition Act: Hughes, at para. 221; A.G. Can v. Law Society of B.C., [1982] 2 S.C.R. 307 [Jabour], at p. 354. [17] The motion judge also held that s. 45(7) of the Competition Act that came into effect in March 2010 preserved the regulated conduct defence: Hughes, at para. 226. Finally, he found that the regulated conduct defence is available to defend civil claims under s. 36 of the Competition Act, as well as criminal proceedings under s. 45: Hughes, at paras. 222-30. The appellant does not seriously challenge these findings on appeal, and I agree with the motion judge that, as a matter of statutory interpretation, the regulated conduct defence is available to defend civil claims under s. 36 of the Competition Act arising out of conduct allegedly contrary to s. 45(1). If the regulated conduct defence is available to a defendant under s. 45(1), the defendant’s conduct is not contrary to s. 45(1). [18] With this background, I will now turn to the relevant jurisprudence regarding the nature of the authorization required for the application of the regulated conduct defence and consider the relevant portions of the Liquor Control Act that insulate the respondents from liability in the case at bar. (b) Authorization for the regulated conduct defence under the Liquor Control Act (i) Jurisprudence on “authorization” and the regulated conduct defence [19] The Supreme Court’s decision in Jabour is the controlling authority. In Jabour, the court reviewed a number of cases in which provincially authorized supply management systems for agricultural and other products have been exempted from the operation of a predecessor to the Competition Act, and concluded, at p. 354: The courts in these cases have said in various ways that compliance with the edicts of a validly enacted provincial measure can hardly amount to something contrary to the public interest. Since all the cases examined above approach the CIA on the basis of a criminal charge, actually or potentially arising under it, the element of public interest was always present. In Can. Breweries, the Court proceeded on the basis that the word “unduly” in s. 32 connotes substantially the same meaning as the more general words in the same statute “operated or is likely to operate to the detriment or against the interest of the public”. Even the 1975 amendments to s. 32, by the addition of subs. 1.1, did not remove “unduly” from the operative provision, s. 32(1). So long as the CIA, or at least Part V, is styled as a criminal prohibition, proceedings in its implementation and enforcement will require a demonstration of some conduct contrary to the public interest. It is this element of the federal legislation that, these cases all conclude, can be negated by the authority extended by a valid provincial regulatory statute. [Emphasis added.] [Citations omitted.] [20] In Jabour, the Law Society disciplined a lawyer for advertising, characterizing that action as “conduct unbecoming a member of the Society” contrary to the Legal Professions Act, R.S.B.C. 1960, c. 214. Although the Law Society’s enabling legislation did not specifically authorize it to prohibit advertising by lawyers, the general power it had to govern the legal profession in the public interest and decide what was “conduct unbecoming” a lawyer was sufficient to constitute “authority extended by a valid provincial regulatory statute” (Jabour, at p. 354) and insulate its activities from the reach of the predecessor to the Competition Act: Jabour, at p. 341. [21] Similarly, in Industrial Milk Producers Assn. v. British Columbia (Milk Board), [1989] 1 F.C. 463, at pp. 478-79, the court held that provincial authority for the regulatory regime, which would permit the operation of the regulated conduct defence, could be express or implied. The court found that the Milk Board’s authorization to allocate quotas and control the marketing of milk was much more specific than the broad authority provided to the Law Society in Jabour to govern the legal profession in the public interest: Milk Board, at p. 478. Milk Board described the authority granted to the Law Society in Jabour as a “very open ended and general” grant of statutory authority that could benefit from the leeway extended by the federal legislation and enable the regulated conduct defence to operate: Milk Board, at p. 478. [22] In support of their argument that the regulated conduct defence has no application unless the impugned conduct is specifically authorized by the legislative regime, the appellants rely on Fournier v. Mercedes-Benz Canada, 2012 ONSC 2752. At para. 58, the court indicated, “[i]n order for the regulated conduct exception or defence to apply, the actions in question must have been directed or authorized by the statute or regulation.” In the absence of “any express provision or necessary implication in the regulatory regime that would authorize or direct them to engage in the conduct” complained of, the respondents were unable to rely on the regulated conduct defence: Fournier, at para. 58 (emphasis added). I understand the appellants to argue that the word “express” indicates that specificity is required. [23] In my view, Fournier does not articulate a more restrictive test than Jabour. Rather, it clarifies that the “authority” required can be express or can be found in a statute by “necessary implication”. That authority may be articulated in general terms, as in Jabour, or in very specific terms, as in the present case, provided that that authority is expressed or given by necessary implication. The level of specificity that the appellants argue Fournier suggests is needed is more restrictive than the test described in Jabour, which, as I have said, is the controlling authority. Jabour did not require the same level of specificity that the appellants suggest is needed to invoke the regulated conduct defence. In Jabour, the Supreme Court rejected the argument of the Attorney General of Canada that the absence of a specific statutory provision authorizing the Law Society to regulate advertising by lawyers deprived the Law Society of the regulated conduct defence; further, the court did not agree with the conclusion of the trial judge that the absence of a specific implicit authorization in the Legal Professions Act meant that there was no scope for the application of the regulated conduct defence: Jabour, at pp. 331, 341, 354. In Jabour the legislation in issue gave Benchers the express power to determine what amounted to conduct unbecoming a member of the Law Society, that is to say “any matter, conduct, or thing that is deemed in the judgment of the Benchers to be contrary to the best interest of the public or of the legal profession, or that tends to harm the standing of the legal profession”: Legal Professions Act, s. 1. This provision did not specifically give the Benchers the power to control advertising by lawyers. [24] I do note that Jabour considered whether the conduct of a regulator was authorized. Arguably, more specific authority might be required to provide immunity where only the conduct of a “regulatee” (a person regulated by the regulator) and not also the regulator is at issue. But that is an issue for another day. Here, the impugned conduct involves an arrangement between the regulator, the LCBO, and a regulatee, Brewers Retail Inc. [25] While the appellants rely on Fournier to argue that the direction or authorization must be specific, they take issue with Fournier’s holding, adopted by the motion judge, that the direction or authorization may be by necessary implication, and need not be express. I agree with the motion judge that the direction or authorization may be by necessary implication. The purpose of the regulated conduct defence and the leeway granted under the Competition Act is to allow room for implementation of provincial public policy expressed in legislative form. Both an express grant of authority and a grant of authority by necessary implication advance those provincial legislative interests and I see no reason to distinguish between them for the purposes of the regulated conduct defence. It is not a difference of substance from an express grant of authority where, as a matter of statutory interpretation, it must necessarily be implied that the legislature gave a regulatory body authority to engage in the impugned conduct in order to advance legislative goals. [26] The appellants also argue that the use of the word “authorization” in s. 45(7) imports a requirement that the conduct prohibited by the Competition Act be specifically authorized by the regulatory legislation. [27] I do not accept this argument. Section 45(7) of the Competition Act provides that the rules and principles of common law that render a requirement or authorization by or under an Act of a provincial legislature a defence to a prosecution under the Act continue in force. Jabour was decided before s. 45(7) was enacted. As I have indicated earlier, Jabour demonstrates that a general authority such as that given to a law society to regulate the conduct of its members may enable the regulated conduct defence to operate. There is nothing in the language of s. 45(7) that suggests a legislative intention to change the common law interpretation of “authority”, rather, the expressed intention is to preserve the common law. As indicated in Jabour, at p. 354 culpability under the federal legislation can be “negated by the authority extended by a valid provincial regulatory statute”. There is no basis to conclude that s. 45(7) was intended to narrow the scope of the meaning of “authority” or “authorization”. [28] This legislative expression of the regulated conduct defence earlier articulated in Jabour did not alter the degree of specificity of the legislative authorization required to allow the defence to operate. [29] I turn then to an examination of the authority granted to the LCBO under the Liquor Control Act at the time of the Framework Agreement. (ii) The authority granted under the Liquor Control Act [30] As previously indicated, I agree with the motion judge that the Liquor Control Act at the time of the Framework Agreement authorized the respondents to engage in the impugned conduct. [31] Historically, Ontario legislation governing the sale of alcohol has granted very wide authority to the LCBO. In R. v. Can Breweries Ltd., [1960] O.R. 601 (S.C.), at p. 614, the Supreme Court recognized that the Liquor Control Act then in force gave the LCBO “very wide and comprehensive control over every phase of the production and sale of beer in Ontario”. [32] The Liquor Control Act, as it appeared in June 2000, sets out the relevant powers and purposes of the Board in ss. 3(1) (a)-(j) and in (n): (a) to buy, import and have in its possession for sale, and to sell, liquor and other products containing alcohol and non-alcoholic beverages; (b) to control the sale, transportation and delivery of liquor; (c) to make provision for the maintenance of warehouses for liquor and to control the keeping in and delivery from any such warehouses; (d) to establish government stores for the sale of liquor to the public; (e) to authorize manufacturers of beer and spirits and wineries that manufacture Ontario wine to sell their beer, spirits or Ontario wine in stores owned and operated by the manufacturer or the winery and to authorize Brewers Retail Inc. to operate stores for the sale of beer to the public; (f) to control and supervise the marketing methods and procedures of manufacturers and of wineries that manufacture Ontario wine including the operation of government stores by persons authorized under clause (e); (g) subject to the Liquor Licence Act, to determine the municipalities within which government stores shall be established or authorized and the location of such stores in such municipalities; (h) to determine the classes, varieties and brands of liquor to be kept for sale at government stores and maintain standards therefor; (i) to fix the prices at which the various classes, varieties and brands of liquor are to be sold and, except in the case of liquor sold through an outlet designated by the Minister of National Revenue under the Excise Act (Canada) as a duty free sales outlet, such prices shall be the same at all government stores; (j) to determine the nature, form and capacity of all packages to be used for containing liquor to be kept or sold; … (n) to do all things necessary for the management and operation of the Board in the conduct of its business. [33] “Government store” means a store established or authorized under the Liquor Control Act by the LCBO for the sale of sprits, beer or wine and includes both LCBO stores and Brewers Retail Inc. stores: Liquor Control Act, s. 1. “Liquor” in the Liquor Control Act means spirits, wine and beer or any combination thereof: Liquor Control Act, s. 1; Liquor Licence Act, s. 1. [34] Section 3(1) of the Liquor Control Act expressly allows the LCBO to approve government stores for the sale of liquor, including beer, in LCBO stores and approve Brewers Retail Inc. outlets for the sale of beer. The Board is expressly given the power in s. 3(1)(h) to determine the classes, varieties and brands of liquor to be kept for sale at government stores. This express authority enables the Board to decide which products will be sold at LCBO stores and which products will be sold at Brewers Retail Inc. outlets. It enables the LCBO to decide that Brewers Retail Inc. outlets will sell 12 and 24-packs of beer, and that the LCBO will not sell beer to licensees which is also sold by Brewers Retail Inc. Subsection 3(1)(j) allows the Board to determine the capacity of all packages to be used for containing liquor. Given the near total control exercised by the LCBO over the sale of all liquor in the province, there is nothing to suggest a legislative intent to allow meaningful competition between Brewers Retail Inc., a corporation historically controlled by three large brewing corporations to whom the profits flow from the sale of beer, and the LCBO, whose profits flow to the government of Ontario. These provisions authorize the LCBO to allocate sales of beer as between LCBO stores and Brewers Retail Inc. outlets. (c) Retroactive legislation and the regulated conduct defence [35] Lest there be any doubt that the allocation of beer sales as between the LCBO and Brewers Retail Inc. was directed and authorized by the government of Ontario, in August 2015 the Ontario Legislature enacted s. 10(3) of the Liquor Control Act, as amended by the Building Ontario Up Act (Budget Measures), 2015, s. 8, in direct response to this litigation: The Board is deemed to have been directed, and Brewers Retail Inc. is deemed to have been authorized, to enter into the June 2000 framework in relation to the Crown’s or a Crown agent’s regulation and control of the sale of beer in Ontario. [36] This legislation is expressly indicated to have retroactive effect. It operates back in time to when the Framework Agreement was signed, “with the effect that the legislation in question is deemed to have always included this provision”: Régie des rentes du Québec v. Canada Bread Company Ltd., 2013 SCC 46, [2013] 3 S.C.R. 125, at para. 28. [37] In Régie des rentes du Québec, the court described the operation of retroactive legislation, at paras. 26-28: [26] It is settled law in Canada that it is within the prerogative of the legislature to enter the domain of the courts and offer a binding interpretation of its own law by enacting declaratory legislation: L.-P. Pigeon, Drafting and Interpreting Legislation (1988), at pp. 81-82. As this Court acknowledged in Western Minerals Ltd. v. Gaumont, [1953] 1 S.C.R. 345, such forays are usually made where the legislature wishes to correct judicial interpretations that it perceives to be erroneous. [27] In enacting declaratory legislation, the legislature assumes the role of a court and dictates the interpretation of its own law: P.-A. Côté, in collaboration with S. Beaulac and M. Devinat, The Interpretation of Legislation in Canada (4th ed. 2011), at p. 562. As a result, declaratory provisions operate less as legislation and more as jurisprudence. They are akin to binding precedents, such as the decision of a court: P. Roubier, Le droit transitoire: conflits des lois dans le temps (2nd ed. 1993), at p. 248. Such legislation may overrule a court decision in the same way that a decision of this Court would take precedence over a previous line of lower court judgments on a given question of law. [28] It is also settled law that declaratory provisions have an immediate effect on pending cases, and are therefore an exception to the general rule that legislation is prospective. The interpretation imposed by a declaratory provision stretches back in time to the date when the legislation it purports to interpret first came into force, with the effect that the legislation in question is deemed to have always included this provision. Thus, the interpretation so declared is taken to have always been the law: R. Sullivan, Sullivan on the Construction of Statutes (5th ed. 2008), at pp. 682-83. [Citations in original.] [38] The appellants argue that the respondents should not be able to take advantage of the regulated conduct defence when the conduct in issue is retroactively sanctioned. I do not agree. 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. Further, there is no logical basis to treat Brewers Retail Inc. differently from the LCBO with respect to the market allocation agreement. They are opposite sides of the same transaction which benefits from the regulated conduct defence. (2) The price differential for beer sales to consumers and licensees [39] As I have indicated above, the appellants allege that the five percent surcharge Brewers Retail Inc. levied on licensees, as compared to consumers, violated the Liquor Control Act, as it appeared on June 2000. They claim that the beer respondents, which owned 90% of Brewers Retail Inc. at the time, were unjustly enriched by the collection of this surcharge. [40] The appellants argue that the motion judge erred in his interpretation of the Liquor Control Act, as it appeared on June 2000, and that, correctly interpreted, the surcharge violated that Act. Further, they argue that, even if constitutional, retroactive legislation cannot be considered when determining whether there was a juristic reason for a defendant’s enrichment. In their view, only legislation in effect at the time of the enrichment can provide a juristic reason. [41] The relevant statutory provision of the Liquor Control Act reads as follows: Power and purposes of Board 3.(1) The purposes of the Board are, and it has power, … (i) to fix the prices at which the various classes, varieties and brands of liquor are to be sold and, except in the case of liquor sold through an outlet designated by the Minister of National Revenue under the Excise Act (Canada) as a duty free sales outlet, such prices shall be the same at all government stores. [Emphasis added.] [42] The appellants’ argument is that the plain meaning of this provision requires that the same price be charged to all beer purchasers and that differential prices to licensees are not permitted. The respondents’ argument is that this provision was intended to require that no differential price be imposed according to the geographic location of the buyer and to eliminate higher costs for beer in Northern Ontario. In the respondents’ view, this provision does not prohibit differential pricing among classes, varieties and brands as long as the price for each is the same at all government stores (subject to the exception). Accordingly, just as the price for six packs of beer and 12-packs, for example, can diverge so long as the price for each is the same at all government stores, so can the price of liquor (which includes beer) intended for sale to each channel of consumer and licensee purchasers diverge. The respondents argue that this interpretation is consistent with decades of LCBO and Brewers Retail Inc. practice. They therefore submit that s. 3(1)(i) permits the LCBO to differentiate as to price between consumers and licensees. [43] The motion judge favoured the interpretation advanced by the respondents, and, at paras. 257-59, of his reasons stated: [257] The approach to interpretation is teleological or purposeful and to interpret a statute, the words of the statute are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the statute, the object of the statute, and the intention of the legislator. [258] Following this purposefully approach to interpretation, I favour the interpretation advanced by the Defendants. Their interpretation is supported by: (a) the legislative history; (b) a proper contextual and purposeful reading of s. 3(1)(i); and (c) how the section has been interpreted and applied for decades by the parties subject to it, including the LCBO which is the regulator under the legislative scheme. [259] When interpreting a specialized public law statute, the public statements of the regulator about the scope of its home statute and the administrative practice and interpretation adopted by the regulator, while not determinative, are important factors to be weighed in interpreting the statute. [Footnotes omitted.] [44] I need not resolve this issue of statutory interpretation as the government of Ontario enacted s. 3(1.1) of the Liquor Control Act, as amended by Building Ontario Up Act (Budget Measures), 2015, s. 3(4), in 2015, which retroactively authorized the price differential in issue here: 3(1.1) The Board’s purposes and powers also include, and are deemed always to have included, the purpose and power to fix the prices at which the various classes, varieties and brands of liquor are to be sold, and such prices shall be the same at all government stores except, (a) liquor sold through an outlet designated by the Minister of National Revenue under the Excise Act (Canada) as a duty free sales outlet; and (b) liquor sold to holders of a licence under the Liquor Licence Act, which may be sold at a price that is different from the price at which it is sold to the general public. [Emphasis added.] [45] As indicated above, in relation to retroactive authorization of beer market allocation, this retroactive legislation declares what the law was. It deems that the law always included the right to price differentiate between licensee purchasers and members of the public. [46] I reject the appellants’ argument that juristic reason cannot be provided by retroactive legislation. This deeming provision supplies the juristic reason for the enrichment and puts an end to the appellants’ action for damages for unjust enrichment: Garland v. Consumers’ Gas Co., at para. 49. There is no doubt that retroactive legislation can defeat financial expectations based on the law in place before the retroactive amendment. (3) Misconduct by a civil authority [47] The appellants rely on Paradis Honey Ltd. v. Canada (Ministry of Agriculture and Agri-Food), 2015 FCA 89, [2016] 1 F.C.R. 446, leave to appeal refused, [2015] S.C.C.A. No. 227, at paras. 132-40, in which Stratas J.A. proposed that in claims for damages for misconduct by a civil authority, courts could grant relief where the civil authority acted unacceptably or indefensibly according to public law principles, and where the court decided in its discretion that an award of damages was appropriate. Even if this basis for liability were adopted in Ontario, relief would be unavailable to the appellants here because of the conclusions already expressed. The Framework Agreement allocating the beer market was authorized by statute, both the current and retroactive versions. The price differential was also authorized, at least by retroactive legislation. The conduct of the LCBO was reasonable in the public law sense, and there is no basis to say that it acted unacceptably or indefensibly. Indeed, the appellants acknowledge that if they are unsuccessful on their arguments regarding the allocation of beer sales under the Framework Agreement and the differential pricing, this ground of appeal cannot succeed. (4) Is the retroactive legislation ultra vires? [48] The appellants argue that s. 10(3) of the Liquor Control Act is outside the legislative competence of the government of Ontario, and that it amounts to an impermissible intrusion into the trade and commerce and criminal law powers exclusively reserved to the federal government. Further, the appellants submit in their factum that Ontario cannot dabble in legislation that has the express purpose of altering the competitive landscape of industry. [49] For ease of reference, I repeat, s. 10(3) of the Liquor Control Act, which reads as follows: The Board is deemed to have been directed, and Brewers Retail Inc. is deemed to have been authorized, to enter into the June 2000 framework in relation to the Crown’s or a Crown agent’s regulation and control of the sale of beer in Ontario. [50] The first step in a division of powers analysis is to determine the “pith and substance” or the “true character of the law”: Canada Post Corporation v. Hamilton (City), 2016 ONCA 767, 134 O.R. (3d) 502, at para. 32. Here, the essence of both the overall regulatory regime embodied in the Liquor Control Act and s. 10(3) itself is the regulation and control of the sale of liquor in the province. I agree with the motion judge that this matter is unquestionably within a province’s jurisdiction under the Constitution Act, 1867, s. 92(13), property and civil rights, and s. 92(16), matters of a local or private nature. As observed in General Motors of Canada Ltd. v. City National Leasing, [1989] 1 S.C.R. 641, at p. 682: [C]ompetition is not a single matter, any more than inflation or pollution. The provinces too, may deal with competition in the exercise of their legislative powers in such fields as consumer protection, labour relations, marketing and the like. The point is, however, that Parliament also has the constitutional power to regulate intraprovincial aspects of competition. [51] Here, there is no conflict between valid provincial legislation and the federal Competition Act, as the federal legislation accords leeway to provinces to implement legislation to advance their public interest, without running afoul of s. 45 of the Competition Act. That in essence, is the regulated conduct defence. Whether the provincial legislation is retroactive or not is beside the point in a non-criminal context. [52] I agree with the motion judge’s conclusion that s. 10(3) is constitutionally valid legislation, enacted within the matters allocated to a province by s. 92 of the Constitution Act, 1867. (5) Leave to appeal costs [53] The motion judge awarded costs to the then defendants as follows: LCBO: $753,321.90 Brewers Retail Inc.: $724,250.00 Molson: $502,145.00 Labatt: $394,780.23 Total: $2,374,497.13 [54] These amounts represented a substantial discount from the actual costs incurred and from the partial indemnity costs ordinarily expected. [55] The Law Foundation of Ontario and the appellants seek leave to appeal and allege that the motion judge made many errors in his assessment of costs. They submit that he failed to consider the impact upon access to justice of a cost order of this magnitude. Further, they submit that under an analysis of s. 31(1) of the Class Proceedings Act, 1992, S.O. 1992, c. 6, the motion judge erred in his assessment of the complexity of the case, the extent to which the case raised a matter of public interest, the degree of novelty of the issues raised and erred in his assessment of what amount constituted a fair and reasonable costs award. [56] This court has held that leave to appeal costs awards should be granted sparingly and only in “obvious cases where the party seeking leave convinces the court there are ‘strong grounds upon which the appellate court could find that the judge erred in exercising his discretion’”: Brad-Jay Investments Ltd. v. Szijiarto (2006), 218 O.A.C. 315 (C.A.), leave to appeal refused, [2007] S.C.C.A. No. 92, at para. 21. Here, the motion judge largely considered all the arguments made by the appellants; he did not fail to consider a relevant factor. The appellants in effect ask this court to re-weigh the arguments made before the motion judge. [57] The appellants sued for close to two billion dollars, and alleged that the respondents had engaged in a criminal conspiracy. A reasonable litigant would expect that the respondents would each devote significant resources to responding to this claim. [58] This is not a case in which this court should grant leave to appeal costs. C. DISPOSITION [59] I would dismiss the appeal, and dismiss the request for leave to appeal costs. [60] The respondents may make brief written submissions as to the costs of the appeal, to be served and filed within 30 days after the date of the release of these reasons. The appellants may file their submissions as to the costs of the appeal within 20 days thereafter. Released: April 17, 2019 “AH” “G. Pardu J.A.” “I agree Alexandra Hoy A.C.J.O.” “I agree Janet Simmons J.A.” [1] The defendant Sleeman Breweries Ltd. owned the remaining 10% of Brewers Retail Inc. The appellants do not appeal the dismissal of their action against Sleeman Breweries Ltd. [2]In Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, the court discussed the need for “leeway” language in a federal criminal statute to create room for a “valid provincial regulatory scheme” to operate, giving rise to a regulated conduct defence: at para. 77 (emphasis added). There is some suggestion by scholars, practitioners and the Competition Bureau that the exercise in statutory interpretation giving rise to the defence may be different when it is raised by a conflicting federal regulatory scheme: Robert Mysicka, “The Regulated Conduct Doctrine” (2011) 24:1 Can. Competition L. Rev. 18 at p. 25; Michael Trebilcock, “Regulated Conduct and the Competition Act” (2004) 41 Can. Bus. LJ 492 at pp. 497-498; Brian A. Facey & Dany H. Assaf, Competition and Antitrust Law: Canada and the United States, 4th ed. (Toronto: LexisNexis, 2014) at paras. 11.30, 11.39-11.40. Whether “leeway” language would be required in such a case is an issue for another day.