Judge Says Pandemic Shutdown Unfair to Small Businesses

A storefront on Roncesvalles Avenue displays a "for lease" sign as part of a protest against the Ontario government's pandemic lockdown rules in Toronto on Nov. 24, 2020. (Jody White/The Canadian Press)

An Ontario Superior Court judge wrote that there was “apparent unfairness” in the shutdown of small businesses while allowing big store retailers to remain open amid the COVID-19 pandemic.

On Dec. 3, the Ontario Superior Court ordered a quick hearing after Canadian Appliance Source LP, one of Canada’s largest home appliance retailers, sought an injunction against public health orders, warning it will lose millions in Christmas sales, according to Blacklock’s Reporter.

“Small businesses … can ill-afford yet further losses in this horrible year,” wrote Superior Court Justice Frederick Myers.

“I have little understanding of the public interest assessment behind the COVID-19 regulatory regime. Everyone sees the apparent unfairness of small stores closing while big box stores remain open.”

Appliance Source took the issue to court after bylaw officers ordered it to close its stores in Mississauga on Nov. 27, Brampton on Nov. 28, and Etobicoke, Toronto on Dec. 1, in accordance with Ontario’s COVID-19 response regime, which categorises these areas as grey zones that require a lockdown.

The company said it is operating under “hardware stores” which are exempted from mandatory closures, but was still ordered to close its stores, whereas competitors under the same category were allowed to remain open. Its lawyers also argued that the stores had ample supplies of masks and sanitizers, according to Blacklock’s Reporter.

Based on a forecast, Appliance Source was expecting over $27 million in sales in Ontario alone this month. The chain also has stores in Quebec, Alberta, British Columbia, Nova Scotia, and Manitoba.

Appliance Source also said that on a typical pre-Christmas weekend it would clear $500,000 in sales in the Greater Toronto area.

“If it suffers losses as a result of being wrongly shut down by the government, its losses will not be easily recoverable,” the company told the court, adding that “governments have shut it down without having to undertake to pay its damages as it would in a civil proceeding.”

“There is a serious issue to be tried,” Myers wrote. “The definition of a ‘hardware store’ is also an issue.”

In addition, Myers said this case involves “not just the private concerns of the applicant and its customers in its showrooms,” but also the public interest.

“Has the government made a policy choice to favour a small number of very large stores to contain risks while people do necessary shopping?” Myers wrote.

“There appears to be a battle for the hearts and minds of the public between public health advocates and others with different priorities.”

In late November, the province had seen several pushbacks from small businesses against its public health orders.

Adam Skelly (C), owner of Adamson Barbecue, escorts a photographer from his property after defying provincial lockdown orders to shut down indoor and outdoor dining during the COVID-19 pandemic in Toronto on Nov. 25, 2020. (Nathan Denette/The Canadian Press)

Owner of Adamson Barbecue Adam Skelly, for instance, decided to keep his restaurant open for three days despite the order to close for the next month. He was arrested on the third day and later released on a $50,000 bail, but had since gained supporters who donated over $300,000 through a GoFundMe campaign to help him cover his fines and legal fees.

Another case is a toy store Nobletoyz, which the owner Derrick Noble opened his store on Nov. 28 on grounds for fairness.

“It’s completely pathetic that you can walk into Walmart and buy a toy but you can’t walk into Nobletoyz and buy one,” Noble told The Toronto Sun. “We’re doing this to represent all the small businesses in Bolton, Caledon, and right across Canada who are just trying to feed their families and stay alive.”

The Canadian Federation of Independent Business (CFIB) told the Commons finance committee in a Nov. 12 submission that even without Christmas shutdowns, thousands of small businesses would still face insolvency.

“There are hundreds of thousands of zombie businesses, businesses that are essentially dead,” testified CFIB CEO Dan Kelly, reported Blacklock’s Reporter.

“We are going to see those businesses now formally fail, more boarded-up signs. Our research shows one in seven businesses will fail before the end of the pandemic.”

On Dec. 1, the CFIB launched a petition “Small Business First” urging Premier Doug Ford to allow small stores to “reopen with strict capacity limits” as “locking down small retailers right before Christmas does not make sense.”