Stuart Budd & Sons Limited et al. v. IFS Vehicle Distributors ULC et al.

[Indexed as: Stuart Budd & Sons Ltd. v. IFS Vehicle Distributors ULC]

Ontario Reports

Court of Appeal for Ontario,

Epstein J.A. (in Chambers)

July 14, 2014

122 O.R. (3d) 472 | 2014 ONCA 546

Case Summary

Civil procedure — Appeal — Stay pending appeal — Appellants bringing motion challenging jurisdiction of Ontario court to hear action for damages under Arthur Wishart Act (Franchise Disclosure) and other remedies — Motion judge dismissing motion as abuse of process — Order stayed pending appeal — Appeal raising serious issues to be tried — Possibility of being found to have attorned to jurisdiction of Ontario court by taking further steps creating some risk of irreparable harm to appellants — Balance of convenience favouring appellants.

The plaintiffs brought an action for various forms of relief, including damages under the Arthur Wishart Act (Franchise Disclosure), 2000. The defendants brought a motion challenging the jurisdiction of the Ontario court to hear the action. The motion judge dismissed the motion as an abuse of process. The defendants brought a motion to stay the order pending the final disposition of their appeal from that order.

Held, the motion should be granted.

The proposed appeal raised several serious issues: the proper test to determine jurisdiction in claims involving franchise legislation with regard to the intersection of jurisdictional issues and joinder; the consequences of the fact that in his determination of the jurisdictional issue, the motion judge referred to only one of the defendants; and the consequences of certain comments by the motion judge that might suggest predetermination of the issues. The possibility of being found to have attorned to the Ontario jurisdiction by taking any further steps in the action created some risk of irreparable harm to the defendants. The balance of convenience favoured the defendants.

Cases referred to

BTR Global Opportunity Trading Ltd. v. RBC Dexia Investor Services Trust, [2011] O.J. No. 4279, 283 O.A.C. 321, 2011 ONCA 620; Circuit World Corp. v. Lesperance (1997), 1997 1385 (ON CA), 33 O.R. (3d) 674, [1997] O.J. No. 2081, 100 O.A.C. 221, 71 A.C.W.S. (3d) 900 (C.A.); [page473] Gourmet Resources International Inc. (Trustee of) v. Paramount Capital Corp., [1991] O.J. No. 2293, 5 C.P.C. (3d) 140, 31 A.C.W.S. (3d) 937 (Gen. Div.); Horsefield v. Ontario (Registrar of Motor Vehicles) (1997), 1997 2546 (ON CA), 35 O.R. (3d) 304, [1997] O.J. No. 3388, 102 O.A.C. 285, 118 C.C.C. (3d) 184, 30 M.V.R. (3d) 81, 73 A.C.W.S. (3d) 385, 35 W.C.B. (2d) 437 (C.A. — Chambers); International Corona Resources Ltd. v. Lac Minerals Ltd., [1986] O.J. No. 2128, 21 C.P.C. (2d) 252 (C.A. — Chambers); Longley v. Canada (Attorney General), [2007] O.J. No. 929, 2007 ONCA 149, 223 O.A.C. 102, 153 C.R.R. (2d) 224, 156 A.C.W.S. (3d) 280; M.J. Jones Inc. v. Kingsway General Insurance Co. (2004), 2004 6211 (ON CA), 72 O.R. (3d) 68, [2004] O.J. No. 3286, 242 D.L.R. (4th) 139, 189 O.A.C. 272, 6 C.P.C. (6th) 121, 132 A.C.W.S. (3d) 835 (C.A. — Chambers); Ogden Entertainment Services v. United Steelworkers of America, Local 440 (1998), 1998 1441 (ON CA), 38 O.R. (3d) 448, [1998] O.J. No. 1824, 43 C.L.R.B.R. (2d) 48, 110 O.A.C. 297, 98 CLLC Â220-046, 79 A.C.W.S. (3d) 301 (C.A.); RJR-MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC), [1994] 1 S.C.R. 311, [1994] S.C.J. No. 17, 111 D.L.R. (4th) 385, 164 N.R. 1, J.E. 94-423, 60 Q.A.C. 241, 54 C.P.R. (3d) 114, 46 A.C.W.S. (3d) 40; Van Damme v. Gelber (2013), 115 O.R. (3d) 470, [2013] O.J. No. 2750, 2013 ONCA 388, 363 D.L.R. (4th) 250, 42 C.P.C. (7th) 100, 307 O.A.C. 81, 228 A.C.W.S. (3d) 91; Wolfe v. Pickar, [2011] O.J. No. 2035, 2011 ONCA 347, 282 O.A.C. 64, 92 C.P.R. (4th) 208, 84 C.C.L.T. (3d) 167, 332 D.L.R. (4th) 157; Yaiguaje v. Chevron Corp., [2014] O.J. No. 194, 2014 ONCA 40, 315 O.A.C. 109 (C.A. — Chambers)

Statutes referred to

Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3 [as am.]

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 63.02

MOTION to stay the order of Corbett J. of the Superior Court of Justice dated April 23, 2014 pending an appeal.

Matthew J. Latella and Sarah Petersen, for moving parties.

Andy Seretis, for responding parties.

[1] EPSTEIN J.A. (in Chambers): — The moving parties, the appellants in the appeal, move under rule 63.02 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for an order staying the order of Corbett J. dated April 23, 2014, pending the final disposition of their appeal from that order. The moving parties also seek an extension of time to perfect their appeal.

[2] The order under appeal dismissed the moving parties' motion in which they, particularly the claims advanced by the non-Ontario plaintiffs, challenged the jurisdiction of the Ontario Superior Court to hear their action seeking various forms of relief, including substantial damages, under the Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3.

[3] Through preliminary reasons released April 23, 2014, the motion judge dismissed the motion, referring to it as an "abuse of process". The motion judge also imposed a timetable for the advance of the action. Specifically, he ordered the moving parties to deliver a statement of defence by June 30, 2014. [page474]

[4] I refer to the April 23, 2014 reasons as "preliminary" as in his decision the motion judge stated that "[f]urther supporting reasons will be delivered in due course for the purposes of any appeal of this decision". No further reasons have yet been released.

[5] For the reasons that follow, I grant both the stay and the extension of time to perfect the appeal.

The Procedural Background

[6] The responding parties to this motion and the respondents on appeal are eight new and used car dealers operating in five different provinces. Five of the responding parties are not based in Ontario, three are Ontario-based.

[7] The moving party IFS Vehicle Distributors ULC ("ULC") is an unlimited liability company incorporated pursuant to the laws of British Columbia. Its head office is in British Columbia. The moving party International Fleet Sales Inc. ("Fleet") is a corporation incorporated pursuant to the laws of California. Its head office is in California. Michael Libasci is the president of IFC and the president and chief executive officer of Fleet Sales. Peggy King is the secretary and treasurer of IFS and chief financial officer of Fleet Sales. At the material time, the moving parties Mr. Libasci and Ms. King resided in California.

[8] On March 15, 2013, the responding parties issued the statement of claim in this action. On April 29, 2013, the moving parties challenged the jurisdiction of the Superior Court of Ontario.

[9] Counsel for the moving parties made every effort to obtain the first available date for the motion to be heard. That date was March 27, 2014. The moving parties cross-examined the affiants who provided evidence on behalf of the responding parties. The responding parties cross-examined Mr. Libasci's affidavit on behalf of the moving parties, in writing. They asked only one question.

[10] The moving parties delivered a reply factum in which they raised various problems about the sufficiency of the responding parties' evidence.

[11] The motion proceeded before Corbett J. on March 27, 2014. He agreed with the moving parties that the responding parties' evidence was improper. On his own initiative, the motion judge adjourned the motion on the basis that the responding parties' improper framing of the evidence "would be fatal" to the motion. The motion judge ordered the parties to serve further affidavit material. [page475]

[12] Specifically, the endorsement of March 27, 2014 contained the following:

(i) Mr. Latella is correct that the information from [the responding parties] who have not provided direct evidence has not been framed properly. This would be fatal on a motion such as this. However, the goal here, as must be the case on a jurisdiction issue, should be to establish the underlying facts so that definitive determinations may be made and the case then proceed in the proper form.

(ii) The [responding party] shall provide a supplementary affidavit identifying the sources of the information, and information about the precise relationship of the sources to the [responding parties]. This shall be done by April 1, 2014. The [moving parties] shall identify which of these individuals they wish to cross-examine, and these cross-examinations shall be completed by April 11, 2014. The motion shall return before D.L. Corbett J. for a full day on Wednesday, April 23, 2014.

(iii) [I]t seems plain that there is jurisdiction simpliciter in Ontario over the claims brought by the Ontario [responding parties]. But for having their claims joined with those of the Ontario [responding parties], there seems no reason for the non-Ontario [responding parties] to pursue claims in Ontario.

(iv) Thus it appears that the principal arguments on the motion [will concern][^1] the effect of joinder on jurisdiction, and issues of forum non conveniens.

(v) I also indicted to counsel that I do not anticipate that cross-examination of representatives of each of the [responding parties] will add materially to the factual background in which these issues arise. However, it may be that something will be added, and I will not second guess counsel's choice to cross-examine, given the significance of the issues.

(vi) Also as I indicated to the parties, since the [moving parties] object to the way in which this matter is being pursued against them, they should be prepared to identify the alternative(s) they say would be preferable to the single action brought against them in Ontario.

(vii) This case cries out for case management. [The responding parties'] counsel shall write to Himel J. bringing this endorsement to Her Honour's attention. Both sides are at liberty to advise Her Honour of their respective positions on whether there should be case management.

[13] The responding parties served further affidavit material upon which they were cross-examined.

[14] The parties filed additional factums in which they addressed the new evidence and made submissions on the issues of joinder and forum non conveniens, as requested by the motion judge. [page476]

[15] Further argument took place in the morning of April 23, 2014. Prior to the lunch break and before hearing argument on joinder and forum non conveniens, the motion judge rendered his decision.

The Motion Judge's Decision -- Preliminary Reasons

[16] The motion judge referred to the motion as an abuse of process.

[17] The motion judge noted that ULC is in the business of distributing Saab automobiles in Canada. It has a mailing address and bank accounts in Ontario. Each dealership agreement provides that Ontario law will apply. The agreements contain no choice of forum clause.

[18] The motion judge found ULC's activities in Ontario to be of considerable scope. He found that in adopting Ontario law, the provisions of the Arthur Wishart Act apply, permitting the dealers to make common cause.

[19] In dismissing the motion, the motion judge expressed concern that the motion had been pursued on an unreasonable basis and had caused excessive delay. He therefore established a tight timeline for the progress of the action and ordered that a request be made for a "fresh" supervising judge.

[20] Finally, the motion judge ordered that "complying with the terms of this order will not constitute attornment to Ontario for the purposes of any appeal".

Analysis

Request for a stay

[21] In RJR-MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC), [1994] 1 S.C.R. 311, [1994] S.C.J. No. 17, at p. 334 S.C.R., the Supreme Court of Canada set out a three-part test for obtaining a stay of a judgment pending appeal: (1) is there a serious question to be tried (i.e., to be determined on the appeal); (2) will the moving party suffer irreparable harm if the stay is not granted; and (3) does the balance of convenience favour granting the stay?

(1) Serious question

[22] The first component, whether there is a serious question to be determined on the appeal, requires a preliminary assessment of the merits of the appeal: RJR-MacDonald Inc., at p. 334 S.C.R.

[23] This assessment begins with a presumption of correctness of the decision under appeal: [page477] Ogden Entertainment Services v. United Steelworkers of America, Local 440 (1998), 1998 1441 (ON CA), 38 O.R. (3d) 448, [1998] O.J. No. 1824 (C.A.), at p. 450 O.R. The onus is on the moving parties to establish a case for a stay: International Corona Resources Ltd. v. Lac Minerals Ltd., [1986] O.J. No. 2128, 21 C.P.C. (2d) 252 (C.A. -- Chambers), at p. 255 C.P.C. The threshold to be met in connection with this first component of the test is a modest one: Horsefield v. Ontario (Registrar of Motor Vehicles) (1997), 1997 2546 (ON CA), 35 O.R. (3d) 304, [1997] O.J. No. 3388 (C.A. -- Chambers), at p. 311 O.R.; RJR-MacDonald Inc., at p. 337 S.C.R. The moving parties must demonstrate that the appeal is not frivolous or vexatious: Longley v. Canada (Attorney General), [2007] O.J. No. 929, 2007 ONCA 149, 223 O.A.C. 102, at para. 16; International Corona, at p. 255 C.P.C.

[24] The proposed appeal raises several serious issues:

(1) the proper test to determine jurisdiction in claims involving franchise legislation, here, the Arthur Wishart Act, with regard to the intersection of jurisdictional issues and joinder;

(2) the consequences of the fact that in his determination of the jurisdictional issue, the motion judge only referred to the defendant ULC; and

(3) the consequences of the motion judge's comments that may suggest predetermination of the issues such as the statement made in his first endorsement that "this case cries out for case management" and his conclusion expressed at the outset of his second endorsement, given prior to hearing full argument, that the motion was an abuse of process -- a position not taken by the responding parties.

[25] There is also the possibility of an appeal based not on the merits of the decision but on the delay in the release of reasons after an appeal has been brought.

(2) Irreparable harm

[26] The irreparable harm component has to do with the nature, not the magnitude of the harm: RJR-MacDonald Inc., at p. 341 S.C.R. It refers to harm that cannot be quantified in monetary terms or that cannot be cured: RJR-MacDonald Inc., at p. 341 S.C.R.

[27] The moving parties assert that they will suffer irreparable harm in several respects if a stay is not granted.

[28] The moving parties submit that, without a stay, they will be forced to choose between risking attornment to the jurisdiction of [page478] the Ontario court by filing a defence, or being noted in default and subjected to default proceedings, either of which would irreparably harm their proposed appeal by rendering it moot.

[29] I have some difficulty assessing this argument. I say this based on differing views expressed in recent decisions of this court concerning whether a party risks attornment by taking court-ordered steps in a proceeding in the face of an ongoing jurisdictional challenge. I refer to the decision in M.J. Jones Inc. v. Kingsway General Insurance Co. (2004), 2004 6211 (ON CA), 72 O.R. (3d) 68, [2004] O.J. No. 3286 (C.A. -- Chambers), where at paras. 27-31, Lang J.A. dealt with whether a court order requiring a defendant to deliver a statement of defence would amount to attornment. She held that the defendant's compliance with such an order might amount to attornment. She therefore held that despite the plaintiff's undertaking not to treat the defendant's participation as attornment, refusing a stay could cause irreparable harm.

[30] In BTR Global Opportunity Trading Ltd. v. RBC Dexia Investor Services Trust, [2011] O.J. No. 4279, 2011 ONCA 620, 283 O.A.C. 321, at paras. 28-31, Laskin J.A. distinguished M.J. Jones on the basis that the defendant's responding to the plaintiff's request for documents outside of the "formal bounds" of the court proceedings would constitute attornment.

[31] More recently, in Van Damme v. Gelber (2013), 115 O.R. (3d) 470, [2013] O.J. No. 2750, 2013 ONCA 388, at paras. 21-23, Doherty J.A. noted that attornment by participation in court proceedings had been addressed in Wolfe v. Pickar, [2011] O.J. No. 2035, 2011 ONCA 347, 332 D.L.R. (4th) 157, where, at para. 44, Goudge J.A. said:

[W]hen a party to an action appears in court and goes beyond challenging the jurisdiction of the court based on jurisdiction simpliciter and forum non conveniens, the party will be regarded as appearing voluntarily, thus giving the court consent-based jurisdiction. That is what happened here.

[32] Justice Doherty also recognized M.J. Jones and Gourmet Resources International Inc. (Trustee of) v. Paramount Capital Corp., [1991] O.J. No. 2293, 5 C.P.C. (3d) 140 (Gen. Div.) as authorities for the proposition that, if a party appears in a court to challenge jurisdiction or seek a stay on the basis of forum non conveniens, any additional steps taken by the party pursuant to an order of the court will not amount to attornment.

[33] While Doherty J.A. expressed the view that taking steps in the proceedings further to a court order would not necessarily constitute attornment, advancing a motion for summary judgment, a motion that went beyond a jurisdictional challenge and was not further to any court order was attornment. [page479]

[34] Finally, in Yaiguaje v. Chevron Corp., [2014] O.J. No. 194, 2014 ONCA 40, 315 O.A.C. 109 (C.A. -- Chambers), at para. 11, MacPherson J.A. (in Chambers), citing Van Damme and BTR, rejected the argument that the party seeking a stay was exposed to irreparable harm based on the risk of attornment.

[35] Here, the responding parties have undertaking not to argue that the moving parties have attorned to the Ontario jurisdiction "by taking any further steps in the action".

[36] I conclude that in the light of this court's unresolved position on this issue, and the wording of the undertaking in question, the possibility of being found to have attorned creates some risk of irreparable harm to the moving parties.

[37] The moving parties also submit that there is a risk of the court's making a finding of statutory applicability of the Arthur Wishart Act, on an incomplete record. I do not see that as a reasonable possibility.

[38] The moving parties further argue that, without a stay, if the costs ordered by this court are paid to the ex juris plaintiffs, there is no assurance they will be returned if the appeal succeeds. I reject this argument. There is no evidence upon which to make a finding that the parties will not respect final costs orders of the relevant Canadian court.

[39] The moving parties' argument that they will suffer irreparable harm has some merit.

(3) Balance of convenience

[40] The balance of convenience part of the test involves a determination of which of the parties will suffer the greater harm from the granting or refusal of the stay pending the disposition of the appeal on the merits. The factors relevant for consideration in determining where the balance of convenience settles varies from one case to the next: RJR-MacDonald Inc., at pp. 342-43 S.C.R.

[41] In my view, the balance of convenience favours the moving parties. The jurisdictional and other issues they raise deserve to be resolved before the moving parties are forced to mount a substantive defence in the Ontario action.

Conclusion

[42] The "serious issue" and "balance of convenience" factors clearly favour the moving parties. The "irreparable harm" factor slightly favours the responding parties. However, given the current uncertainty in this court's position on attornment, it is preferable to deal with this case through the prism of balance of convenience. [page480]

[43] I note the words of Laskin J.A. in Circuit World Corp. v. Lesperance (1997), 1997 1385 (ON CA), 33 O.R. (3d) 674, [1997] O.J. No. 2081 (C.A.), at p. 677 O.R., that "[t]hese three criteria are not watertight compartments. The strength of one may compensate for the weakness of another. Generally, the court must decide whether the interests of justice call for a stay" [citation omitted]. See, also, BTR Global, at para. 16.

[44] The substantive and procedural issues the moving parties have raised are significant. The moving parties have moved expeditiously to challenge the order of Corbett J. There is no basis to be concerned about the time it will take for the appeal to be heard. Waiting for the disposition of the appeal to this court would cause very little prejudice to the responding parties. A stay is justified.

Extension of Time to Perfect the Appeal

[45] The responding parties consent to the granting of an extension of time in which to perfect the appeal. The only divide is the length of the extension. Given the uncertainty over the length and timing of the delivery of the motion judge's further reasons, I grant an extension of 60 days from the date of receipt of the further reasons.

Disposition

[46] The motion is granted. The order of Corbett J. dated April 23, 2014 is stayed pending the determination of the moving parties' appeal from that order.

[47] The moving parties have 60 days from the receipt of the further reasons of Corbett J. to perfect their appeal.

[48] As agreed, the costs of this motion are to be paid by the responding parties in the amount of $2,000, including disbursements and HST.

Motion granted.

Notes

[^1]: The original hand-written endorsement is cut off. It appears to state "will concern".