Misconduct by a Civil Authority (Tort)

Hughes v. Liquor Control Board of Ontario, 2019 ONCA 305 (CanLII)

[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.

[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.

[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 CanLII 133 (SCC), [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.