



COURT OF APPEAL FOR ONTARIO

CITATION: Reynolds v. Alcohol and Gaming
    (Registrar), 2019 ONCA 788

DATE: 20191002

DOCKET: M50865 (M50864)

Nordheimer J.A. (In Chambers)

BETWEEN

John Reynolds, Carl Ignatius,
    Ekrem Uzunova, Elbahlul Bara, Ilim Uzunova, Olga German, Pietro Greco, Ravino
    Junaev, Ronen Ackernan, Sofia Kuliev and Varant Kichian

Moving Parties

and

Registrar (Alcohol and Gaming
    Commission of Ontario)

Responding Party

Michael Lacy and Scott Dallen, for the moving
    parties

Judie Im, Heather Burnett and Andi Jin, for the
    responding party

Gavin Finlayson, for 2707461 Ontario Inc.

Gregory Azeff, for Najila Guthrie

Robin Linley and Christoper DiMatteo, for Steven
    Cochrane, Gerrit Murray, 11522302 Canada Inc., Ralph Llacar and Michael Hassey

Whitney Abrams for 22008292 Alberta Ltd.

Heard: October 1, 2019

REASONS FOR DECISION

A.

Background

[1]

The moving parties bring this motion on an
    urgent basis seeking a stay of the order of the Divisional Court dated
    September 27, 2019 that lifted an earlier stay that had been granted by that
    court.
[1]

[2]

This matter involves the lottery process
    developed by the Government of Ontario to select a limited number of interested
    persons who may apply for a licence to operate retail cannabis stores. The moving
    parties are part of a group of 42 persons who were selected in the latest
    lottery, held on August 20, 2019, to be able to apply for licences to open such
    stores. After they were selected, the Registrar disqualified the moving parties
    on the basis that they did not provide an irrevocable letter of credit within
    five days of being notified of their selection. The Registrar then selected 11
    new persons from the wait list to assume those available spots.

[3]

The moving parties brought an application for
    judicial review of the Registrars decision to disqualify them. On September 12,
    2019, they sought and obtained an order for a stay of the Registrars decision from
    a single judge of the Divisional Court pending the hearing of the application
    for judicial review. That order effectively froze the licencing process for all
    42 persons. The hearing of the application for judicial review was expedited by
    the Divisional Court such that the judicial review was argued before that court
    on September 25, 2019. On September 27, 2019, the Divisional Court released an
    endorsement dismissing the application for judicial review and lifting the
    stay. The Divisional Court said that the reasons for their decision would be
    provided within ten days. Those reasons, of course, have not yet been received.

B.

Submissions of the Parties

[4]

The moving parties now seek a stay of the
    Divisional Courts decision, which would effectively reinstitute the earlier
    stay, pending their motion for leave to appeal being heard and determined by
    this court. The moving parties say that they can perfect their motion for leave
    to appeal within 24 hours of the receipt of the Divisional Courts reasons and that
    they would also seek to have the determination of their motion for leave to
    appeal expedited. The moving parties contend that any delay resulting from a
    stay in those circumstances will be limited.

[5]

The responding party opposes any further stay
    and argues that the test for a stay is not met. The responding party argues
    that there should not be any further interference with the Governments
    mandated process for selecting persons who will be eligible to apply for
    licences. In that regard, the responding party points to the fact that a stay
    would not only interfere with the processing of the 11 new persons requests
    for licences but also the processing of 29 additional persons requests who
    were part of the lottery process and whose applications are also being held up
    pending the resolution of this matter.
[2]

C.

Analysis

[6]

The test for a stay is well-established. It
    involves the same factors as are involved in the granting of an interlocutory
    injunction:
RJR-MacDonald Inc. v. Canada (Attorney General),
[1994] 1
    S.C.R. 311. Those factors are:

·

There is a serious issue to be determined;

·

The party seeking the stay will suffer
    irreparable harm if a stay is not granted;

·

The balance of convenience favours the moving
    party.

(1)

Serious Issue to be Determined

[7]

In the somewhat unusual circumstances of this
    case, where I do not have the reasons for the decision of the court below, I am
    somewhat limited in determining the apparent merits of the proposed appeal.
    However, in light of those circumstances, I believe my approach to the first factor
    must be to take it that there is a serious issue to be determined. I draw that
    conclusion not only from the submissions that the parties have made regarding
    the underlying dispute and the issues that were raised on the judicial review
    application but also from the fact that the Divisional Court reserved its
    decision on this matter. While not a significant consideration, I believe that
    I am entitled to draw from that fact that the Divisional Court thought, at the
    very least, that the application raised issues that needed to be addressed.
    That said, I also recognize that, in the view of the Divisional Court, the
    position of the moving parties on those issues was found to be wanting.

[8]

I am satisfied, on that basis, that there is a
    serious issue to be determined, particularly because this is a low threshold
    to meet:
Tisi v. St. Amand
, 2017 ONCA 539, at para. 5.

(2)

Irreparable Harm

[9]

In terms of irreparable harm, I start from the
    proposition that the moving parties are seeking the opportunity to pursue a
    commercial venture. In the usual course, a lost opportunity to pursue a
    commercial venture can be compensated for by way of damages. Further, if the moving
    parties are ultimately successful, and are able to obtain licences, the fact
    that they were precluded from being first to market can also be valued and
    made compensable in damages.

[10]

The moving parties attempt to avoid that result
    by raising an issue as to whether the Registrar, or the Government of Ontario
    itself, can be held liable in damages in these circumstances. They point, in
    particular, to s. 11 of the
Crown Liability and Proceedings Act, 2019,
S.O. 2019, c. 7, Sched. 17, specifically s. 11(2) which reads:

No cause of action arises against the Crown or
    an officer, employee or agent of the Crown in respect of a regulatory decision
    made in good faith, where,

(a) a person suffers any form of harm or loss
    as a result of an act or omission of a person who is the subject of the
    regulatory decision; and

(b) the person who suffered the harm or loss
    claims that the harm or loss resulted from any negligence or failure to take
    reasonable care in the making of the regulatory decision.

[11]

I am not satisfied that this provision would
    exclude Crown liability, if the moving parties can establish that the Registrar
    did not act in good faith in reaching the regulatory decision that he did. On
    that point, it appears to be implicit in the moving parties position, that the
    Registrar knew that the email notifications had not been received by the moving
    parties, that the moving parties are contending that the Registrar acted in bad
    faith in disqualifying them in those circumstances.

[12]

I should add that, on this point, I am assuming
    that the disqualification decision constitutes a regulatory decision as defined
    in the Act, although that may be the subject of some debate in the future. I
    would also note the relevant and significant fact that counsel for the Registrar
    accepts that while the Registrar may not be personally liable for damages,
    because of s. 48(1) of the
Cannabis Licence Act, 2018,
S.O. 2018, c.
    12, Sched. 2, the Crown is still liable pursuant to s. 48(2) if the moving
    parties can eventually prove their claim.

[13]

There is another reality in this case and that
    is that as of July 2020 any person will be able to apply for a licence to
    operate a retail cannabis store:
General
, O. Reg. 468/18, s. 8.3(3).
    The lottery process will be eliminated. Consequently, it is not clear that the moving
    parties, even if they wind up being denied a licence through this current
    process, will not be able to obtain a licence in the future. If that should
    transpire, then the moving parties losses will be limited to the delay in
    entering the market which, I have already pointed out, can be compensated by
    way of damages.

[14]

I would also not rule out the possibility that,
    if the moving parties are ultimately successful in obtaining leave to appeal
    and are successful on the appeal, they may have a remedy by which they could
    compel the responding party to grant them the opportunity to apply for licences.
    That possibility also militates against any finding that the damages involved
    here are irreparable.

(3)

Balance of Convenience

[15]

In terms of the balance of convenience, in my
    view, this factor strongly favours the responding party for at least three
    reasons. First, the Registrar has stipulated the process for awarding the
    opportunity to apply for a limited number of licences in this new market. Courts
    should be loath to interfere with that process, both because the process
    reflects policy choices made by the government, and also because there are
    ramifications for others who have legitimate interests under that process. Many
    of these other persons were not before the Divisional Court nor are they before
    this court.

[16]

Second, there is a public interest component to
    this analysis. There has been a decision made to permit persons to legally purchase
    cannabis. Members of the public, who wish to exercise that opportunity, have a
    very limited scope to do so at the present time given the limits on the retail
    stores that are open. The purpose of this most recent lottery was to increase the
    catalogue of stores that can supply the product and therefore the ability of
    the public to make their purchases. A stay would impede the publics ability to
    do so.

[17]

Third, as I mentioned earlier, the moving
    parties position has already been reviewed by a court and it failed. In those
    circumstances, the moving parties do not proceed from a position of strength in
    seeking to hold matters in abeyance while they seek a further review.

D.

Conclusion

[18]

The three factors against which the granting of
    a stay is to be evaluated should not be considered in isolation, nor are they
    to be weighed on a mathematical basis as to whether more factors fall on one
    side of the decision or the other. The three requirements are not to be
    considered as separate hurdles but as interrelated considerations and the strength
    respecting one criterion may compensate for the weakness of another: see
Longley
    v. Canada (Attorney General)
, 2007 ONCA 149, 223 O.A.C. 102, at para. 15.

[19]

Neither the first or second factors weigh
    strongly in favour of a stay. The balance of convenience weighs heavily against
    a stay. Considering the factors as a whole, the balance favours denying the
    stay. The process that the government has decided on should be permitted to
    proceed. If the moving parties are ultimately successful, they may have a
    remedy, at the very least, in damages.

E.

Disposition

[20]

The motion is dismissed. In the circumstances, I
    would not make any order as to costs.


I.V.B. Nordheimer J.A.





[1]

Counsel
    appeared on this motion on behalf of various persons who had been granted
    intervener status before the Divisional Court. That status expired with the
    conclusion of the Divisional Court proceedings. While those parties have yet to
    seek and obtain intervener status in this court (which arguably has to await
    the moving parties obtaining leave to appeal), given the urgency of this motion,
    and without objection from the parties, I allowed counsel for those persons to
    make brief submissions.



[2]

These 29 persons are part of the total of 42 persons
    selected in the lottery.


