Hudson’s Bay goes to court to challenge ‘irrational’ retail lockdown rules in Ontario

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Allowing big-box retailers such as Walmart and Costco to remain open to sell non-essential goods – such as toys and Christmas decorations – while shutting down other stores that sell the same items is “irrational and unfair,” a lawyer for Hudson’s Bay Co. ULC argued before the Ontario Superior Court on Thursday.

The hearing was called in response to the retailer’s application last week for a judicial review of government restrictions on non-essential retail in parts of Ontario. Such procedures are designed for courts to review whether government decisions are reasonable.

HBC is attempting to salvage what is left of the crucial holiday shopping season, in a year when retailers have already suffered significant sales losses. Public-health authorities have asked Canadians to limit non-essential outings – including shopping trips – in an attempt to curb the spread of the COVID-19 pandemic. Provincial governments across the country are enacting new restrictions in response to surging case numbers.

Ontario broke another record on Thursday, reporting its highest number of new COVID-19 cases in one day since the pandemic began. The province logged 2,432 new infections, the third day in a row when it recorded more than 2,000 new cases.

The province shut down all non-essential retailers in Toronto and Peel Region on Nov. 23. Stores selling essential items – including some big-box chains – have been allowed to remain open at 50-per-cent capacity. Other retail stores and small businesses are permitted to sell items for delivery or curbside pickup only. Since then, Ontario has extended the restrictions to include York Region and Windsor-Essex.

HBC argued on Thursday that the fact it does not sell some groceries, is not a rational basis to make a distinction between the department-store chain and others such as Walmart.

“Hundreds of chain big-box retailers and discount stores are selling on a completely unrestricted basis, the merchandise that Hudson’s Bay sells,” HBC’s lawyer, Jonathan Lisus, said during the online hearing.

HBC is not alone in making this argument: The company is part of a coalition of nearly 50 retailers – including Canadian Tire Corp., Indigo Books & Music Inc., Sephora Canada and Staples Canada – that called on the province earlier this month to lift store-closing rules and instead to allow all stores to open with stricter limits on the number of shoppers allowed inside at one time.

Provinces have taken different approaches to limiting people’s opportunities for exposure: Alberta and Nova Scotia, for example, have both imposed capacity restrictions on all stores. Manitoba, like Ontario, has shut down “non-essential” retailers but big-box stores permitted to remain open have been prevented from selling non-essential items. This week, Quebec announced further shutdowns beginning on Dec. 25 and also said big box stores cannot sell non-essential goods.

On Thursday, HBC argued that the court had different options to address what it said was an unbalanced approach to regulation. It could provide an exemption specifically allowing Hudson’s Bay stores to open, it could include language in the rules allowing department stores to open, or it could remove language limiting essential retailers to those selling groceries.

But a lawyer representing the provincial government said that the distinction is clear between retailers who sell essential goods such as groceries, and those who do not. HBC and other “non-essential” retailers can open their stores for curbside pickup of online orders, lawyer Richard Ogden said.

“The purpose [of the regulations] is to allow activity to occur where it can and where it is required because it is essential, and to do it in a way that is sufficiently safe,” Mr. Ogden said, adding that there is a risk to allowing people to shop in stores if it is not necessary. While HBC has argued that there is scant evidence that retail stores are a significant source of COVID-19 transmission, Mr. Ogden said that it can be difficult to track the exact source of many infections.

“It is not for this court to strike down completely, or to rewrite, the government’s response to a once-in-a-century pandemic,” Mr. Ogden said.

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