Navigating the Non-Essential Business Closure (Part III)

Navigating the Non-Essential Business Closure (Part III)

Matt Benson*
Posted May 4, 2020 Category: Businesses

On Friday, May 1, 2020 the Government of Ontario announced that it will be allowing certain businesses and workplaces to reopen as long as they comply with strict public health measures.  This announcement follows earlier government actions taken on March 24, 2020, when the first “essential business” list was published (see our earlier note here), and April 3, 2020, when the Government narrowed the list of essential businesses (see our earlier note here).

Pursuant to Friday’s announcement, effective today, May 4th at 12:01 a.m., the following businesses are permitted to begin operations:

  • Garden centres and nurseries with curbside pick-up and delivery only;
  • Lawn care and landscaping;
  • Additional essential construction projects that include:
    • shipping and logistics;
    • broadband, telecommunications, and digital infrastructure;
    • any other project that supports the improved delivery of goods and services;
    • municipal projects;
    • colleges and universities;
    • child care centres;
    • schools; and
    • site preparation, excavation, and servicing for institutional, commercial, industrial and residential development;
  • Automatic and self-serve car washes;
  • Auto dealerships, open by appointment only;
  • Golf courses may prepare their courses for the upcoming season, but not open to the public; and
  • Marinas may begin preparations for the recreational boating season by servicing boats and other watercraft and placing boats in the water, but no open to the public. Boats and watercraft must be secured to a dock in the marina until public access is allowed.
The Government of Ontario has made it clear that its essential businesses list will not preclude:
  • the remote operation of businesses (without attendance at the place of business) for the purpose of providing goods by mail or other forms of delivery or making goods available for pick-up, and providing services online, by telephone or other remote means;
  • operation or delivery of services of any government or any person or publicly funded agency or organization that delivers or supports government operations and services, including operations and services in the health care sector; or
  • temporary access to a closed place of business for specific purposes listed in the Ontario Regulation 82/20.

Friday’s updates have been incorporated into the Government of Ontario’s list of essential workplaces, which can be accessed here.  This list is subject to further changes as the COVID-19 situation evolves, and as such, please refer directly to the official Government list when determining whether your business qualifies as an “essential business”. 

What immediate steps should you take?

You should consider whether your business may now open as a result of Friday’s announcement.  All businesses that are not included on the current list of essential services must continue to keep their physical locations closed.  If you are unclear as to whether your business is “essential”, contact the Government of Ontario’s “Stop the Spread Business Information Line” at 1-888-444-3659.  You may also consult the Government of Ontario’s “frequently asked questions about essential businesses” or consult your legal advisor.

What are the consequences for remaining open if your business is not on the list?

As with the prior update, we anticipate that this new updated list will be incorporated into Ontario Regulation 82/20 made under the Emergency Management and Civil Protection Act.  Assuming that is the case, there are serious consequences under the Emergency Management and Civil Protection Act for failing to comply with the Regulation.  Such failure is an ‘offence’ under the Act punishable:

  1. In the case of an individual, by a fine of nor more than $100,000 and imprisonment for up to a year;
  1. In the case of a director or officer of a corporation, by a fine of not more than $500,000 and imprisonment for up to a year; and
  1. In the case of a corporation, by a fine of not more than $10,000,000.

Note that the Chief Justice of Ontario has established the following set fines for individuals captured by item 1 (above):

OffenceSet Fine
Failure to comply with an order made during a
declared emergency.
Obstruct any person exercising a power in
accordance with an order made during a declared emergency.
Obstruct any person performing a duty in
accordance with an order made during a declared emergency.

At present, there are no set fines in the case of directors or officers of a corporation captured by item 2 (above), or in the case of corporations captured by item 3 (above).

Each day that the offence continues (e.g. the business remains open) is a separate offence that could trigger a new set of penalties.  Further, the court may increase any fine imposed on any person in an amount equal to any financial benefit that the offending person received as a result of the offence.

What are your options if you are forced to close?

If your business does not fall within the scope of the “essential businesses”, and the exceptions (e.g. working remotely) do not provide a viable alternative for your business, then your business will need to remain closed. 

Businesses who are forced to close should consider whether they have any insurance coverage, such as business interruption insurance, which may be responsive to the COVID-19 crisis.  In the absence of such coverage, business owners will need to consider a number of options to preserve the viability of their business, including:

  1. Labour and employment considerations – such as the potential need to reduce payroll costs.  Please contact our labour and employment group for more information on this topic;
  1. Financing options – including the availability of loans from federal or provincial governments or banks to assist with immediate cash flow obligations;
  1. Contractual options – including the availability of any applicable force majeure provisions, or possible similar arguments at common law.  See our recent blogs on force majeure clauses, and considerations relating to forbearance agreements; and
  1. Government relief and subsidies – such as those relating to employee subsidies.  Our labour and employment group would be happy to discuss any questions you may have on this topic.

Please contact our business team if you have any questions about this note or wish to discuss your business’s options for mitigating its risks in response to the COVID-19 emergency.  Our lawyers are tracking the developments and stand ready to assist as you navigate the shifting business landscape.  Please see our COVID-19 resource page for daily updates across all disciplines.

We look forward to helping you through this.

Matt Benson*
Posted May 4, 2020 Category: Businesses

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