With Labour Day just around the corner many grocers are considering whether or not they can—or should—open their doors to the public on the upcoming holiday Monday. A new decision from the Ontario Court of Justice discusses the issue but may not be the “final word” on this issue.

The Ontario Court of Justice recently found that two downtown Toronto grocery stores had the right to open for business on a statutory holiday because they met the “prepared meals” exemption under Toronto’s Holiday Shopping Bylaw (the “Toronto Bylaw.”)  The two Longo’s stores at issue sold a variety of prepared foods in addition to the usual array of goods offered at a large grocery store.

The decision is a win for grocers but it may be short-lived.  The City of Toronto has stated that it will appeal the decision.  It is has stated that “businesses cannot rely on the exemption for ‘prepared meals’ to sell goods or services that are not in the form of or in connection with those prepared meals on a holiday.”  It goes on to say that the City “will continue to undertake enforcement action as appropriate.”

Holiday Shopping in Toronto

The Toronto Bylaw prohibits certain retail businesses from opening on nine statutory holidays.  These holidays include New Year’s Day, Good Friday, Labour Day and Thanksgiving Day.

Under the Toronto Bylaw retail businesses may remain open on statutory holidays provided they meet certain exemptions.  Generally speaking, the exemptions apply to:  a) small retail businesses (under 2400 square feet) where no more than three persons are serving the public and only certain goods are for sale; b) pharmacies under 7500 square feet; c) specific types of retail businesses (such as gas stations and liquor stores); d) educational, recreation or amusement businesses that also sell retail items; and e) businesses located in specific tourist zones.

The Longo’s Decisions

On Labour Day 2013 Longo’s opened two of its downtown Toronto grocery stores.  The two stores were issued citations for opening in violation of the Toronto Bylaw.

Longo’s fought the citations and took the position that its stores were exempt from the Toronto Bylaw.  It relied on the “prepared meals” exemption under the Toronto Bylaw, which allows businesses “selling goods or services in the form of or in connection with….prepared meals” to remain open on statutory holidays.  Longo’s argued that because it sold “prepared meals”, in addition to the usual array of goods found at a grocery store, that it was exempt from closing on statutory holidays. Longo’s evidence was that it sold a variety of prepared foods at its stores including prepared sushi, salads and rotisserie chickens.

The City argued that the exemption was only meant to apply to certain retail businesses, such as restaurants, and did not apply to grocers.

The case made its way through the court system.  Both the judge of first instance and the appeal judge agreed with Longo’s, finding Longo’s was exempt from closing on Labour Day because it met the “prepared meals” exemption under the Toronto Bylaw.

The Court, in finding for Longo’s, found that there was no reason that the “prepared meals” exemption wouldn’t apply to a grocery store serving prepared foods.  The Court found no basis to interpret the Toronto Bylaw in the narrow way argued for by the City.

Appealing the Appeal

Unfortunately for Toronto grocers the appeal decision is not the end of the matter.  The City has posted on its website that it will continue to fight the issue in the courts.  It takes the position that “the exemption for ‘prepared meals’ does not permit business to sell goods or services that are not in the form of or in connection with those prepared meals.”

Grocers in Toronto should also be aware that the City has indicated it “will continue to undertake enforcement action as appropriate.”  Presumably, this means that the City will continue to issue citations to grocery stores open on statutory holidays.

Outside Toronto

Holiday opening outside Toronto is governed by the Ontario Retail Business Holidays Act (the “RBHA”).  Generally speaking, the RBHA contains similar prohibitions and exemptions to the Toronto Bylaw.  In particular, the RBHA also contains a “prepared meals” exemption that allows retail business to open on statutory holidays provided that the business sells goods “in the form of or in connection with…prepared meals.”

What to do this upcoming Labour Day

The Longo’s decision suggests that the law on holiday opening is moving towards a more realistic, real-world reflection of modern life.  However, until the law is finally clarified grocers continue to have no clear guidance about whether or not they can rely on the “prepared meals” exemption to open on a holiday.  While waiting for the “judicial last word” on this issue, grocers should keep in mind that the fines for opening on a holiday under either the Toronto Bylaw or the RBHA can be steep:  $50,000 or the total amount of gross sales for the holiday, whichever is greater.  For the time being, it continues to be up to individual grocers to weigh the possible risks of opening on a holiday against the potential benefits.