Hy and Zel's Inc. v. Ontario (Attorney General); Paul Magder Furs Ltd. v. Ontario (Attorney General) [1993] 3 S.C.R. 675: Standing -- Act defining holiday and restricting shopping on those defined holidays -- Corporate Charter challenge alleging infringement of freedom of religion following convictions for breach of Act -- Declaration sought that Act unconstitutional -- Application stayed pending decision in similar case but brought on following finding of constitutionality -- Constitutional questions querying whether freedom of religion infringed and, if so, whether infringement justified -- Whether corporations had standing to seek declaration of unconstitutionality

Present: Lamer C.J. and La Forest, L'Heureux-Dubé, Sopinka, Gonthier, Cory, McLachlin, Iacobucci and Major JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO

Practice -- Standing -- Act defining holiday and restricting shopping on those defined holidays -- Corporate Charter challenge alleging infringement of freedom of religion following convictions for breach of Act -- Declaration sought that Act unconstitutional -- Application stayed pending decision in similar case but brought on following finding of constitutionality -- Constitutional questions querying whether freedom of religion infringed and, if so, whether infringement justified -- Whether corporations had standing to seek declaration of unconstitutionality -- Retail Business Holidays Act, R.S.O. 1980, c. 453, ss. 1(1)(a), 2(2), 8(1), (2).

The Retail Business Holidays Act restricts holiday shopping and defines "holiday". The Act has been defied by many retailers, notwithstanding a finding of constitutional validity, and each amendment subsequent to this finding has been seen as dealing a fatal blow to its constitutionality.

The Attorney General for Ontario applied under s. 8 of the Retail Business Holidays Act for an order requiring Paul Magder Furs Ltd. and two other retailers to close on the following Sunday (Christmas Eve), Christmas Day, and Boxing Day. In response, Paul Magder Furs Ltd., together with some 30 employees not named in the s. 8 application, brought a civil application in the High Court against the Attorney General (the "Magder application") requesting declarations that s. 2(2) of the Act was unconstitutional and that the employee applicants had a right to work on the holidays stated in the Act. The Magder application requested a hearing at the same time as the s. 8 application and relied on the material filed in the Attorney General's s. 8 application. An interim s. 8 order requiring Paul Magder Furs Ltd. to close on holidays as defined in the Act was granted given that firm's deliberate and persistent breaches of the Act. The Ontario Court of Appeal quashed an appeal of the interim order on jurisdictional grounds and at adjourned sine die an appeal from a finding of contempt which was made when the firm remained open in violation of the interim order. That court later ruled that the notice of appeal did not stay the imposition of fines under the contempt order and refused Paul Magder Furs Ltd.'s application to bring the s. 8 application back on for hearing because of its continuing contempt of court.

The Regional Municipality of Halton brought a s. 8 application against Hy & Zel's Inc. The Attorney General later intervened and took over the action. In response to the s. 8 application, the principals of Hy & Zel's Inc. brought a civil application requesting, among other things, a declaration that s. 2(2) of the Act was invalid. Hy and Zel's Inc. subsequently brought a new application against the Attorney General, with over 100 of its employees, seeking declarations that s. 2(2) of the Act was unconstitutional, that the Act was unconstitutional and that the employee applicants have a right to work on holidays. This application relied on material filed in Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada, plus some additional affidavit evidence.

The applications of both firms were stayed until a judgment was rendered in Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada. This case involved a similar s. 8 application and applications for declaratory relief. Both the Magder and the Hy & Zel applications were set for hearing following the Court of Appeal's finding the Act to be constitutional in Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada. The constitutional questions here queried whether the Retail Business Holidays Act infringed religious freedom guaranteed by s. 2(a) of the Canadian Charter of Rights and Freedoms or equality rights guaranteed by s. 15, and if so, whether the infringements were justified under s. 1.

Held (L'Heureux-Dubé and McLachlin JJ. dissenting): The appeals should be dismissed.

Per Lamer C.J. and La Forest, Sopinka, Gonthier, Cory, Iacobucci and Major JJ.: In order for the Court to exercise its discretion to grant standing in a civil case, where the party does not claim a breach of its own Charter rights but those of others, a serious issue must be raised as to the Act's validity, the appellants must be directly affected by the Act or have a genuine interest in its validity, and no other reasonable and effective way can exist for bringing the Act's validity before the court.

A serious issue was raised here. It was assumed for purposes of this appeal only that the numerous amendments enacted in the years since the Act was upheld in R. v. Edwards Books and Art Ltd. have sufficiently altered the Act that the Act's validity was no longer a foregone conclusion.

The Act had a direct effect on the appellants. While the Act affects all Ontarians by limiting shopping on defined holidays, only retailers and retail employees were subject to prosecution for its violation.

Other reasonable and effective ways to bring the issue before the court existed. Since both applications presented almost no original evidence in support of their claim, and relied on evidence filed in the Attorney General's s. 8 application (the Magder application) or in Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada (the Hy and Zel application), a more reasonable and effective matter of bringing this matter before the court may exist. The nature of the Act did not assist the appellants. The Act did not discourage challenges and so create a situation where no party directly affected could reasonably be expected to challenge the legislation. The party seeking to challenge the Act must show that there is no other reasonable and effective means of bringing the matter before the court.

Appellants did not have standing on the basis that their own religious rights have been violated. Even if it is assumed that corporations can have religious rights, there was no evidence or allegation that appellants' rights were violated. Charter decisions cannot be made in a factual vacuum. In the absence of facts specific to the appellants, both the Court's ability to ensure that it hears from those most directly affected and that Charter issues are decided in a proper factual context are compromised.

This was not a proper case for deciding the extent to which the test for standing in Smith v. Attorney General of Ontario survived the more liberal views relating to public interest standing. No evidence was presented as to how appellants suffered exceptional prejudice under the earlier test.

Per L'Heureux-Dubé and McLachlin JJ. (dissenting): Given the procedural history of this appeal, the understanding of the appellants that this litigation was to proceed as a test case and, in particular, its effect on the large number of outstanding charges presently facing the appellants in the lower courts which raise the same constitutional issue, this is an appropriate case for this Court to exercise its discretion to grant the appellants standing. This conclusion is buttressed by a consideration of both the special and continuing effect of the Act on the appellants in this litigation, the goals of efficiency in the administration of justice and the costs to society and the parties involved of further litigation on the same issue as well as the general rationale underlying the rules of standing. Recognition of the practical and financial impediments to challenging this legislation that would face the appellant employees without the assistance of the corporate appellants militates in favour of granting standing to those appellants.

Standing and the entitlement to the relief sought must be differentiated. Standing is a threshold question involving the recognition of entitlement to come before the court and it must remain, both conceptually and factually, distinct from the court's rulings after hearing the appeal.

R. v. Big M Drug Mart Ltd. did not decide the question of standing here. Its ratio of this case is the positive right of a corporation to rely on the Charter rights of others in defence to a criminal charge. The Court did not consider whether corporations have rights under s. 2(a) because it would be irrelevant since no one could be convicted under an unconstitutional law. Neither R. v. Big M Drug Mart Ltd. nor Irwin Toy v. Quebec (Attorney General) suggests that the Court's rulings on the Charter rights of corporations affects their standing to challenge a perceived infringement of their constitutional right.

The "exceptional prejudice" rule articulated in Smith v. Attorney General of Ontario, required a plaintiff challenging a law of general application to establish that the legislation had a greater impact on the plaintiff than on the public at large and that the plaintiff had an interest affecting his or her personal, proprietary or pecuniary rights. The Attorney General, as a corollary, was assumed to act as the guardian of the public interest. The trilogy of Thorson v. Attorney General of Canada, Nova Scotia Board of Censors v. McNeil, and Minister of Justice of Canada v. Borowski greatly broadened access to the courts and removed the categorical barriers to standing. The courts increasingly look beneath the rules governing standing and consider whether the legislation would be immunized from attack and whether it could be attacked by private litigants removing the need for public interest standing.

The rules regarding public interest standing, which were advanced in the trilogy to liberalize access to the courts, do not govern litigants falling squarely within the rule in Smith. Litigants are still entitled to standing as long as they are able to establish that they are "exceptionally prejudiced" by the legislation's effect on their private rights. The general rule in Smith also applies to litigants seeking declarations under the Charter. Standing must also be available to parties facing criminal or quasi-criminal procedures to challenge the constitutionality of the legislation. The appellants here fall squarely into the category of "public interest litigants" but they are better described as persons who experience "exceptional prejudice" under the Act.
A flexible approach allowing courts to respond to a spectrum of concerns affecting both the parties and the administration of justice should prevail over a strict, no-exception approach. Citizens have an interest in the constitutionally sound behaviour on the part of the legislatures and where the constitutionality of legislation is at issue, the primary focus is on the law itself, and not on the position of the parties. In resolving standing, the Court should take a purposive and functional rather than categorical approach and resort the concerns, which underlie the restrictions on standing such as the multiplicity of suits and judicial economy, should be considered.

A challenge to the constitutionality of a law (assuming that it involves no remedy other than a finding of invalidity) must be governed by the same rules of standing and procedure, regardless of whether the challenge is based on federal or Charter grounds. Corporations, because they may not invoke Charter rights, face obstacles in bringing a Charter challenge that do not exist in division of power challenges. There is no reason in principle, however, to adhere rigidly to a rule which automatically bars challenges to legislation directly affecting a corporate plaintiff simply on the ground that the impugned aspect of the legislation does not directly affect it. As the constitutionality of the law may be raised in defence, the question should be whether the plaintiff has sufficient interest in the outcome of a constitutional challenge. The overriding concern is whether governments have respected the limits of their constitutional authority. Technical barriers to standing based on such grounds as the mode of proceeding chosen cannot be sustained on the level of principle.

The ability of other litigants to bring the issue before the courts should not operate as an automatic and inflexible bar to the court's discretion to grant standing. Consideration should be given in assessing the benefits of proceeding with the constitutional challenge and the prejudice to the appellants in refusing standing late in the proceedings, particularly where the party seeking standing is already before the courts.

The question of the application of s. 15 rights to corporations or to the legislation challenged in this case has not yet been addressed by the Court. As the appellants are the appropriate parties to raise a s. 15 argument in this context and leave was granted by this Court on the issue, no basis for denying standing existed.

The appellants can rely on the record of other parties raising identical legal issues in what are essentially identical circumstances. The nature of the evidence is not generally an issue that bears on the question of standing. Particularly in constitutional cases, background evidence of a general nature may be relevant to set the context of the issue quite apart from the position of the specific parties. More importantly, it would unquestionably be prejudicial to the appellants to have been permitted to rely on this record all along, only to be told at this stage that they will be denied standing for this reason.

The appellant retail employees should not be denied standing for want of evidence to establish standing. Deciding the appeal in a factual vacuum is not an issue at this stage. A court's concern at this stage of the proceedings is whether there is enough material to assess the "nature of the interest" which the plaintiff is asserting. This does not necessarily entail an examination of the evidence. The only effective way for the retail employees to bring an issue before the court, given the expense, may be to join the application with an application brought by others. The employees are affected by the Act's provisions even if they are unlikely to be charged under the Act and their rights under the Act as guaranteed by ss. 2(a) and 15 of the Charter remain an open question.

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