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,

Weiler, G.J. Epstein and Huscroft JJ.A.

January 21, 2016

129 O.R. (3d) 37 | 2016 ONCA 60

Case Summary

Courts — Judges — Bias — Reasonable apprehension of bias — Defendants bringing motion to dismiss action for lack of jurisdiction or to stay it on basis of forum non conveniens — Motion judge adjourning motion on his own initiative to give plaintiffs opportunity to correct flaw that he identified as being fatal to their position — Motion judge [page38 ]dismissing motion half-way through hearing without giving counsel opportunity to make oral submissions on issues of joinder and forum non conveniens — Motion judge providing no factual or legal foundation for his comment that motion was abuse of process — Motion judge repeatedly criticizing defendants' counsel and expressing critical view of jurisdiction motions in general — Motion judge releasing further reasons after appeal was commenced which constituted after-the-fact attempt to bolster his position — Motion judge's conduct giving rise to reasonable apprehension of bias.

Three Ontario plaintiffs and five out-of-province plaintiffs sued four foreign defendants for breach of various franchise agreements and certain provisions of two franchise statutes. The defendants brought a motion to dismiss the action for lack of jurisdiction, and alternatively sought a stay on the basis of forum non conveniens. At the first hearing, the motion judge adjourned the motion on his own initiative to give the plaintiffs the opportunity to correct a flaw that he identified as being fatal to their position. He observed that Ontario clearly had jurisdiction simpliciter over the claims brought by the Ontario plaintiffs, and that, but for having their claims joined with those of the Ontario plaintiffs, there seemed no reason for the non-Ontario plaintiffs to pursue claims in Ontario. He asked counsel to file further factums to make submissions on joinder, jurisdiction and forum non conveniens. Half-way through the one day set aside for the second hearing, the motion judge dismissed the motion without hearing oral argument on joinder and forum non conveniens. He referred to the motion as an "abuse of process". The defendants appealed. The motion judge subsequently issued an "amended endorsement" more than nine months after dismissing the motion.

Held, the appeal should be allowed.

The conduct of the motion judge gave rise to a reasonable apprehension of bias. At various points in the proceedings, he conducted himself in a manner that gave the appearance that he favoured the plaintiffs' position. After adjourning the motion on his own initiative to give the plaintiffs a chance to correct what he regarded as a fatal flaw in their position, he asked the parties to prepare arguments on what he identified as principal issues -- joinder and forum non conveniens. He then decided the motion without allowing counsel to engage the court in oral argument on those important points. He relied heavily on joinder in deciding to dismiss the motion, concluding that Ontario had jurisdiction simpliciter in respect of all claims because the claims of the Ontario plaintiffs were properly joined with those of the non-Ontario plaintiffs. The motion judge mischaracterized several submissions the defendants made as concessions. The overall tenor of his remarks suggested a view critical of jurisdiction motions in general and this motion in particular. He provided no factual or legal foundation for his finding that the motion was an abuse of process. That finding was unwarranted. He repeatedly criticized the defendants' counsel on matters including their advocacy skills, knowledge of the law and handling of the matter. An informed and reasonable observer would think that the amended endorsement was an after-the-fact justification for the decision rather than an articulation of the reasoning that led to the decision. The cumulative effect of the motion judge's conduct was that an informed and reasonable observer, viewing the proceedings as a whole, would conclude that the defendants did not receive a fair hearing.

Cases referred to

405341 Ontario Ltd. v. Midas Canada Inc., [2010] O.J. No. 2845, 2010 ONCA 478, 264 O.A.C. 111, 70 B.L.R. (4th) 1, 322 D.L.R. (4th) 177, 191 A.C.W.S. (3d) 113; Arsenault-Cameron v. Prince Edward Island, 1999 641 (SCC), [1999] 3 S.C.R. 851, [1999] S.C.J. No. 75, 267 N.R. 386, 201 Nfld. & P.E.I.R. 1; [page39 ]Chippewas of Mnjikaning First Nation v. Ontario (Minister of Native Affairs), [2010] O.J. No. 212, 2010 ONCA 47, 265 O.A.C. 247, [2010] 2 C.N.L.R. 18, 184 A.C.W.S. (3d) 986 [Leave to appeal to S.C.C. refused [2010] S.C.C.A. No. 91]; Club Resorts Ltd. v. Van Breda, [2012] 1 S.C.R. 572, [2012] S.C.J. No. 17, 2012 SCC 17, 291 O.A.C. 201, 2012EXP-1452, J.E. 2012-788, EYB 2012-205198, 429 N.R. 217, 343 D.L.R. (4th) 577, 91 C.C.L.T. (3d) 1, 10 R.F.L. (7th) 1, 17 C.P.C. (7th) 223, 212 A.C.W.S. (3d) 712; Cojocaru v. British Columbia Women's Hospital and Health Centre, [2013] 2 S.C.R. 357, [2013] S.C.J. No. 30, 2013 SCC 30, 336 B.C.A.C. 1, 445 N.R. 138, 2013EXP-1773, J.E. 2013-958, EYB 2013-222291, 357 D.L.R. (4th) 585, 51 Admin. L.R. (5th) 1, 1 C.C.L.T. (4th) 1, [2013] 7 W.W.R. 211, 44 B.C.L.R. (5th) 1, 226 A.C.W.S. (3d) 838; Committee for Justice and Liberty v. Canada (National Energy Board), 1976 2 (SCC), [1978] 1 S.C.R. 369, [1976] S.C.J. No. 118, 68 D.L.R. (3d) 716, 9 N.R. 115; Kelly v. Palazzo (2008), 89 O.R. (3d) 111, [2008] O.J. No. 412, 2008 ONCA 82, 233 O.A.C. 160, 290 D.L.R. (4th) 315, 168 C.R.R. (2d) 256, 164 A.C.W.S. (3d) 780; National Trust Co. v. Bouckhuyt (1987), 1987 4098 (ON CA), 61 O.R. (2d) 640, [1987] O.J. No. 930, 43 D.L.R. (4th) 543, 23 O.A.C. 40, 38 B.L.R. 77, 21 C.P.C. (2d) 226, 7 P.P.S.A.C. 273, 46 R.P.R. 221, 6 A.C.W.S. (3d) 406 (C.A.); R. v. Arnaout (2015), 127 O.R. (3d) 241, [2015] O.J. No. 5050, 2015 ONCA 655, 339 O.A.C. 379, 328 C.C.C. (3d) 15, 126 W.C.B. (2d) 3; R. v. Cunningham (2011), 106 O.R. (3d) 641, [2011] O.J. No. 3546, 2011 ONCA 543, 241 C.R.R. (2d) 135, 281 O.A.C. 7, 274 C.C.C. (3d) 338, 89 C.R. (6th) 142, 96 W.C.B. (2d) 357; R. v. Power, 1994 126 (SCC), [1994] 1 S.C.R. 601, [1994] S.C.J. No. 29, 165 N.R. 241, J.E. 94-649, 117 Nfld. & P.E.I.R. 269, 89 C.C.C. (3d) 1, 29 C.R. (4th) 1, 2 M.V.R. (3d) 161, 23 W.C.B. (2d) 194; R. v. S. (R.D.), 1997 324 (SCC), [1997] 3 S.C.R. 484, [1997] S.C.J. No. 84, 118 C.C.C. (3d) 353, 10 C.R. (5th) 1, 151 D.L.R. (4th) 193; R. v. Teskey, [2007] 2 S.C.R. 267, [2007] S.C.J. No. 25, 2007 SCC 25, 280 D.L.R. (4th) 486, 364 N.R. 164, [2007] 8 W.W.R. 385, J.E. 2007-1147, 74 Alta. L.R. (4th) 1, 412 A.R. 361, 220 C.C.C. (3d) 1, 47 C.R. (6th) 78, EYB 2007-120453, 73 W.C.B. (2d) 457; Stuart Budd & Sons Ltd. v. IFS Vehicle Distributors ULC (2014), 122 O.R. (3d) 472, [2014] O.J. No. 3349, 2014 ONCA 546; Toronto (City) v. C.U.P.E., Local 79, [2003] 3 S.C.R. 77, [2003] S.C.J. No. 64, 2003 SCC 63, 232 D.L.R. (4th) 385, 311 N.R. 201, J.E. 2003-2108, 179 O.A.C. 291, [2003] CLLC Â220-071, 17 C.R. (6th) 276, REJB 2003-49439, 120 L.A.C. (4th) 225, 59 W.C.B. (2d) 334; Wewaykum Indian Band v. Canada, [2003] 2 S.C.R. 259, [2003] S.C.J. No. 50, 2003 SCC 45, 231 D.L.R. (4th) 1, 309 N.R. 201, [2004] 2 W.W.R. 1, J.E. 2003-1819, 19 B.C.L.R. (4th) 195, 7 Admin. L.R. (4th) 1, [2004] 1 C.N.L.R. 342, 40 C.P.C. (5th) 1; Yukon Francophone School Board, Education Area #23 v. Yukon (Attorney General), [2015] 2 S.C.R. 282, [2015] S.C.J. No. 25, 2015 SCC 25, 370 B.C.A.C. 1, 471 N.R. 206, 336 C.R.R. (2d) 137, [2015] 11 W.W.R. 217, 75 B.C.L.R. (5th) 1, 84 Admin. L.R. (5th) 185, 383 D.L.R. (4th) 579, 2015EXP-1501, J.E. 2015-825, EYB 2015-252077, 252 A.C.W.S. (3d) 247

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 1.02, 5.02(1)(a), (b), (c)

APPEAL from the order of Corbett J. dated April 23, 2014 and the amended endorsement, [2015] O.J. No. 979, 2015 ONSC 519 (S.C.J.).

Matthew Latella and Sarah Petersen, for appellants.

Andy Seretis, for respondents. [page40 ]

The judgment of the court was delivered by

G.J. EPSTEIN J.A.: —

Overview

[1] Three Ontario plaintiffs and five out-of-province plaintiffs (the "respondents") sued four foreign defendants (the "appellants") for breach of various franchise agreements and of certain provisions in two franchise statutes in a statement of claim issued in March 2013.

[2] The appellants brought a motion to dismiss the proceeding for lack of jurisdiction. In the alternative, they asked the court to stay the matter on the basis of forum non conveniens. The appellants took the position that the claims should be brought in five provinces. Alternatively, if the claims were to proceed together in one action, the action should be heard in California.

[3] The motion judge dismissed the motion. He found that there was jurisdiction simpliciter in Ontario for all claims and that a single proceeding would be a suitable and efficient way for the respondents to advance their claims. He viewed Ontario as the most convenient forum for that single proceeding.

[4] On appeal, the appellants challenge the motion judge's findings and conclusions relating to jurisdiction simpliciter and forum non conveniens. They also submit that the motion judge's comments and conduct during the course of the jurisdiction motion raise a reasonable apprehension of bias.

[5] After considering the cumulative effect of the impugned actions of the motion judge in the context of the entire proceedings, I have regrettably come to the conclusion that an informed person, viewing the matter realistically and practically, would conclude that there was a reasonable apprehension of bias on the part of the motion judge. The appeal must therefore be allowed and a new hearing ordered.

Background Facts

[6] The corporate appellants, IFS Vehicle Distributors UFC ("IFS") and International Fleet Sales Inc. ("Fleet Sales"), are affiliated companies. IFS is a franchisor and supplier of the Saab dealership network in Canada. Fleet Sales supplies Saab parts and accessories to IFS. The appellant Michael Libasci is the president of IFS and the president and chief executive officer of Fleet Sales. The appellant Peggy King was the secretary and treasurer of IFS and the chief financial officer of Fleet Sales. She is now retired. Both individual appellants lived in California at the material time. [page41 ]

[7] The respondents are all new and used Saab car dealers. Five are not resident in Ontario -- 290756 Alberta Ltd., 9216-0415 Quebec Inc., 6847781 Canada Ltd., Forbes Saab and Used Car Shop Inc., and Springman & Springman Limited. The other three -- Stuart Budd & Sons Limited, Saab on the Queensway Ltd. and 798983 Ontario Inc. -- are Ontario corporations.

[8] Before 2009, General Motors and its affiliates sold Saab automobiles in Canada. In 2009, GM restructured its North American operations. As part of that restructuring, GM stopped selling Saab automobiles and terminated its business with all of its Canadian Saab dealers.

[9] A Swedish company, Saab Automobile AB ("Saab AB"), acquired the Saab brand from GM and sought to enter the Canadian market in 2010. Saab AB approached Fleet Sales to help import and distribute Saab motor vehicles from Sweden and Saab parts from the United States into Canada. To this end, in June 2010, IFS was incorporated as an affiliate of Fleet Sales in British Columbia.

[10] IFS conducted independent contract negotiations with each of the respondents about their again becoming Saab dealers. Ultimately, IFS executed eight separate dealer agreements during an eight-day period.

[11] These agreements established, among other things, the terms under which the dealers would order cars and parts from IFS. Each contract had a choice of law clause that referred to the law of Ontario and the law of the jurisdiction where the dealer was resident. None of the agreements contained a choice of forum clause.

[12] In his reasons, the motion judge summarized the relevant facts pertaining to IFS's operation. This unchallenged summary is as follows [at paras. 27-31]:

IFS is a Canadian company, incorporated in and thus resident in British Columbia. It was also registered to do business in Ontario. There is no evidence that it was registered to do business in Michigan or California.

IFS's Registered Address is in British Columbia. Its Ontario Address was identified by it as its principal place of business, and was its mailing address.

IFS contracted with Saab AB to distribute Saab new cars and parts in Canada. It established a dealer network in Canada by contracting with eight former Saab dealers in five provinces of Canada. The dealership agreements were signed at each of the Canadian dealerships.

IFS imported cars and parts into Canada and sold them to its dealers. It sent invoices showing its Ontario Address. It established bank accounts in Canada and received payments here by electronic transfer or by cheque to a lockbox in Toronto.

I find that IFS's business was in Canada and not in Michigan or California. [page42 ]

The Proceedings

The first hearing

[13] On May 22, 2013, the parties attended motion scheduling court to secure a date for the appellants' motion challenging Ontario's jurisdiction over the action. The first mutually available date was March 27, 2014. That date was approved for a motion estimated to take one day. A timetable for the preparation of the motion was established.

[14] The parties exchanged affidavits. The respondents filed only one affidavit. It was sworn by Mr. Budd, the principal of the respondent Stuart Budd & Sons Limited, on behalf of his dealership and the other seven dealers. The appellants contested the respondents' evidence on the grounds that it was extensively based on information provided to Mr. Budd by others, without his having identified the source of his information and setting out why he believed the information to be true.

[15] On March 27, 2014, the motion came before Corbett J., who agreed that the respondents' evidence was improper. In his view, the respondents' framing of the evidence "would be fatal" to their position on the motion. He therefore adjourned the motion on his own initiative and ordered the respondents to serve a further affidavit from Mr. Budd.

[16] The motion judge established a timetable for the return of the motion and set the matter for a full-day hearing before him on April 23, 2014. He also expressed his view that the case "cries out for case management" and consequently directed appellants' counsel to contact the team leader for case management.

[17] In his endorsement adjourning the motion (the "first endorsement"), the motion judge made a number of comments that he referred to as his "preliminary, yet strongly held views", including:

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

Thus it appears that the principal arguments on the motion will concern the effect of joinder on jurisdiction, and issues of forum non conveniens.

I also indicated to counsel that I do not anticipate that cross[-]examination of representatives of each of the plaintiffs 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.

[18] The respondents delivered a further affidavit from Mr. Budd plus an affidavit sworn by an individual on behalf of [page43 ]each of the seven other respondents. Cross-examinations on the affidavits were held. At the request of Corbett J., further factums were filed to address the new evidence and to make submissions on the specific issues of joinder, jurisdiction and forum non conveniens.

The second hearing

[19] On April 23, 2014, the parties returned before Corbett J. to argue the motion. Prior to the lunch break and before hearing argument on joinder and forum non conveniens, the motion judge rendered his decision dismissing the appellants' motion and referring to it as an "abuse of process" (the "second endorsement").

[20] In his brief reasons, the motion judge noted IFS's activities in various parts of Canada and found that IFS's presence in Ontario went well beyond the "virtual presence" discussed in the seminal case on jurisdiction: Club Resorts Ltd. v. Van Breda, [2012] 1 S.C.R. 572, [2012] S.C.J. No. 17, 2012 SCC 17, at para. 87. He concluded that there had to be a place in Canada where the respondents could call the appellants to account and that that place was Ontario.

[21] After expressing this conclusion, the motion judge advised [at para. 93] that he would be delivering further reasons "for the purposes of any appeal of this decision". He established a tight time schedule for the progress of the action, concerned that the motion had been "pursued on an unreasonable basis and at excessive cost in terms of time and delay". The motion judge concluded the second endorsement by indicating that complying with the terms of his order would not constitute attornment to the Ontario court for the purposes of any appeal.

Appeal and motion for a stay

[22] On May 22, 2014, the appellants served a notice of appeal from the motion judge's decision and moved for a stay pending appeal. On July 14, 2014, this court granted the requested stay, holding that the proposed appeal raised several serious issues, namely, the intersection of jurisdictional issues and joinder, the motion judge's failure to address the defendants other than IFS in his jurisdiction analysis, and the motion judge's comments that may suggest predetermination of the issues: Stuart Budd & Sons Ltd. v. IFS Vehicle Distributors ULC (2014), 122 O.R. (3d) 472, [2014] O.J. No. 3349, 2014 ONCA 546, at paras. 24-25. [page44 ]

The Reasons

[23] The motion judge released his reasons for appeal purposes, entitled "amended endorsement", on February 3, 2015, over nine months later.

[24] At the outset of his analysis, the motion judge found there to be "no argument" that Ontario lacks jurisdiction simpliciter over the claims asserted by the three Ontario respondents against IFS. He then turned to the claims of the non-Ontario respondents.

[25] In response to the motion judge's inquiries, the appellants identified two alternatives that, in their view, would avoid the jurisdictional problems created by a single action in Ontario:

(a) proceedings commenced by each of the plaintiffs in their respective provinces;

(b) a proceeding commenced by all of the currently named plaintiffs against all of the defendants before the courts of California.

[26] From this response, the motion judge drew the following conclusions. First, there is jurisdiction simpliciter in each of the provinces where IFS established a Saab dealership within the province. Second, the respondents did not object to joinder of their claims. Third, the respondents' position was that there is nowhere in Canada that IFS may be sued by its Canadian dealers, in one proceeding.

[27] The motion judge saw no connection between the claims against IFS and California, other than that the two individual appellants lived in California and its affiliate, Fleet Sales, was incorporated there.

Jurisdiction simpliciter

[28] Based on the reasoning set out in the following paragraphs, the motion judge found that IFS carried on business in each of the provinces where it had a dealership network and that it had its strongest presence in Ontario [at paras. 43 and 48]:

When IFS entered into a dealership agreement within a province, it carried on business within that province, as a "franchisor" creating a "network" of Canadian dealers to sell Saab products in Canada. The goal was to create a national network of dealers. On this basis I conclude that factor b. of the Van Breda analysis is made out for all of the plaintiffs in each of the provinces where IFS had a dealer: that is, I find that IFS carried on business and had a substantial connection to each of the provinces in which it had a dealer. [page45 ]

If I am wrong in that conclusion [that the plaintiffs' claims are closely enough related to give rise to a substantial connection to any jurisdiction in which any one of the claims could be brought], I find that IFS had its strongest presence in Ontario. Three of its eight dealers were located in Ontario. Its mailing address is in Ontario. It is registered to do business in Ontario. Its bank accounts are in Ontario. Its address on all its invoices and other communications to dealers shows an Ontario address. The one meeting it had with its dealers was held in Ontario. Its National Service Manager, Serge, held training sessions in Ontario and had his only office in Ontario. Thus presumptive factor b. is made out for the claims of all of the plaintiffs.

Joinder

[29] The motion judge found that the test for joinder was satisfied given the appellants' concession that they could be sued together in California. He nevertheless went on to consider the issue of joinder, beginning with the claims of the non-Ontario respondents.

[30] The motion judge agreed with the appellants' central contention that the principles of joinder do not do away with the requirement for jurisdiction simpliciter. However, he found that this objection "disappear[ed]" given his finding that IFS carried on business in Ontario.

[31] The motion judge concluded that the claims of the non-Ontario respondents were properly joined with the claims of the three Ontario respondents. First, he held that the Ontario choice of law clause demonstrated that the non-Ontario respondents intended their rights and obligations to be the same as if they operated in Ontario, relying on 405341 Ontario Ltd. v. Midas Canada Inc., [2010] O.J. No. 2845, 2010 ONCA 478, 322 D.L.R. (4th) 177. The motion judge reinforced this conclusion by considering the fact that the claims arose out of the same series of transactions or occurrences and that there might be common questions of fact and law, within the meaning of rule 5.02(1)(a) and (b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Put simply, the claims involved common disclosure, identically worded agreements and the same course of dealings. It would also promote the convenient administration of justice for all eight claims to be heard together within the meaning of rule 5.02(1) (c) of the Rules.

[32] The motion judge then considered joinder of the non-Ontario appellants. He started by noting that the appellants did not argue that separate proceedings ought to be commenced against each respondent in different jurisdictions. After highlighting the connection among the various appellants, he concluded that IFS carried on business in Canada (and specifically, [page46 ]Ontario) "remotely". The crux of the motion judge's assessment of IFS's business activities appears at para. 59:

IFS is a Canadian company. It carried on business as an automobile distributor in Canada. It contracted with dealers in Canada to sell Saab automobiles within Canada. It maintained formal offices, mailing addresses, bank accounts and tax accounts -- all things necessary for it to take title to cars and parts in Canada and then transfer them to dealers for resale to consumers in Canada. The defendants Libasci and King signed Disclosure Statements provided to four Saab dealers as required by franchise disclosure legislation in Ontario and Alberta. In so doing, they acted as franchisor "associates" within the meaning of that legislation. They made their representations in Ontario and Alberta respectively when they caused those Disclosure Statements to be delivered to and relied upon by dealers in those jurisdictions. [Fleet Sales] is alleged to be and is named a defendant as a franchisor's associate as well, and thus is included in the case because of its role relating to IFS's Canadian franchise business.

[33] Based on this summary, the motion judge concluded that the four appellants were properly joined as parties.

Forum non conveniens

[34] The motion judge then turned to a brief analysis of the doctrine of forum non conveniens, starting with the following statement, at para. 61:

Once it is concluded that there is jurisdiction in Ontario, and in any province in which IFS had dealers, and that it is permissible for the claims of all plaintiffs to be pursued in one proceeding against all four defendants, the issue of forum non conveniens virtually disappears.

[35] The motion judge repeated the view he expressed in the second endorsement that all claims should be pursued in one action and that Ontario is the most convenient place for that action.

Disposition

[36] In summary, the motion judge found that Ontario has jurisdiction simpliciter over the claims of all respondents against IFS. A single proceeding is a suitable and efficient way to advance these claims and Ontario is the most convenient forum for that single proceeding.

[37] The motion judge therefore dismissed the motion.

Process of the motion

[38] The motion judge concluded the amended endorsement with a relatively lengthy section entitled "Process of this Motion", which he identified as necessary because the motion was "bad" and called for a sterner response. [page47 ]

[39] He began with the issue of delay. The motion judge expressed the view that by requesting a full day for the hearing, the appellants had delayed the motion by almost nine months. He criticized the appellants for the amount of time they took to prepare their materials for the initial hearing and described their objection to the respondents' evidence as "technical". He asked rhetorically, "What was the point?", repeating his concern over the delay the objection caused. Although the motion judge acknowledged that not every line of questioning was useless, he concluded that, overall, the appellants' cross-examinations of the respondent affiants were a waste of time.

[40] The motion judge next dealt with the merits of the motion. He expressed frustration with appellants' counsel for failing to realize that once the finding had been made that IFS carried on business in Ontario, there was not much left to talk about.

Post-motion events

[41] Finally, the motion judge addressed what he referred to as post-motion events, including his motivation for releasing further reasons. He expressed a concern that jurisdiction motions present an opportunity to subvert the principles embodied in rule 1.02, saying that the fault lay in the Rules, the jurisprudence on attornment and the courts for making this possible.

[42] The motion judge found that substantial indemnity costs were justified as a sanction for bringing a motion that, in his view, was so devoid of merit and bringing it in a time-consuming, expensive and impractical manner. He fixed these elevated costs in the amount of $50,000, inclusive.

Issues

[43] The appellants raise three main grounds of appeal:

(1) whether the motion judge erred in law and principle regarding the application of the law germane to jurisdiction simpliciter and its intersection with joinder to the relevant facts;

(2) whether the motion judge erred in law and principle regarding the application of the law germane to the issue of forum non conveniens to the relevant facts; and

(3) whether the motion judge's statements, conduct and delay give rise to a reasonable apprehension of bias. [page48 ]

[44] As previously indicated, I have come to the conclusion that the appellants were effectively deprived of a fair hearing. On that basis alone, the appeal must be allowed. It is therefore neither necessary nor appropriate for me to consider the other two grounds of appeal.

Applicable Legal Principles

Presumption of integrity

[45] Judges benefit from a presumption of integrity, which acknowledges that they are bound by their judicial oaths and will carry out their duties in accordance with their legal responsibilities: R. v. Teskey, [2007] 2 S.C.R. 267, [2007] S.C.J. No. 25, 2007 SCC 25, at para. 29. In R. v. Arnaout (2015), 127 O.R. (3d) 241, [2015] O.J. No. 5050, 2015 ONCA 655, at para. 18, this court described these responsibilities: "A judge must both weigh the case impartially in his or her own mind and ensure that the circumstances objectively demonstrate his or her impartiality to an informed and reasonable observer."

[46] Although judges enjoy the benefit of the presumption of integrity, the presumption can be rebutted by a judge's comments or conduct: Yukon Francophone School Board, Education Area #23 v. Yukon (Attorney General), [2015] 2 S.C.R. 282, [2015] S.C.J. No. 25, 2015 SCC 25, at para. 27.

Reasonable apprehension of bias

[47] As noted by Abella J. in Yukon Francophone, at para. 21, the Supreme Court has consistently endorsed the test for a reasonable apprehension of bias as set out in de Grandpré J.'s dissenting opinion in Committee for Justice and Liberty v. Canada (National Energy Board), 1976 2 (SCC), [1978] 1 S.C.R. 369, [1976] S.C.J. No. 118, at p. 394 S.C.R.:

[W]hat would an informed person, viewing the matter realistically and practically -- and having thought the matter through -- conclude. Would he think that it is more likely than not that [the decision-maker], whether consciously or unconsciously, would not decide fairly.

[48] The strong presumption of judicial impartiality is not easily displaced: Cojocaru v. British Columbia Women's Hospital and Health Centre, [2013] 2 S.C.R. 357, [2013] S.C.J. No. 30, 2013 SCC 30, at para. 22. A reasonable apprehension of bias requires a "real likelihood or probability of bias": Arsenault-Cameron v. Prince Edward Island, 1999 641 (SCC), [1999] 3 S.C.R. 851, [1999] S.C.J. No. 75, at para. 2; R. v. S. (R.D.), 1997 324 (SCC), [1997] 3 S.C.R. 484, [1997] S.C.J. No. 84, per Cory J., at paras. 112-14. The test is an objective one, viewed from the perspective of an informed and [page49 ]reasonable observer: Chippewas of Mnjinkaning First Nation v. Ontario (Minister of Native Affairs), [2010] O.J. No. 212, 2010 ONCA 47, 265 O.A.C. 247, at para. 230, leave to appeal to S.C.C. refused [2010] S.C.C.A. No. 91. It is a high burden.

[49] Significantly, in assessing whether a judge's presumption of impartiality has been displaced, his or her individual comments or conduct during the hearing of a matter should not be considered in isolation but within the context of the entire proceedings: S. (R.D.), per Cory J., at para. 134; Wewaykum Indian Band v. Canada, [2003] 2 S.C.R. 259, [2003] S.C.J. No. 50, 2003 SCC 45, at para. 77.

[50] The objective of the test is to ensure both the reality and the appearance of a fair adjudicative process. Both are essential to maintaining public confidence in our system of justice: Yukon Francophone, at paras. 22-23. It is not normally possible to prove actual bias. If the impugned conduct or comments have the cumulative effect of raising a reasonable apprehension of bias, there is no need to consider the impact of the bias.

The Parties' Submissions

[51] The appellants argue the cumulative effect of the following gives rise to a reasonable apprehension of bias:

(1) the motion judge displayed a predisposition against the appellants' position and against motions of this nature, in general;

(2) the motion judge was gratuitously critical of the position taken by appellants and their counsel in bringing the motion and in the manner in which they proceeded with it; and

(3) the reasons for appeal purposes referred to by the motion judge as his "amended endorsement", released over nine months after the second endorsement, display after-the-fact reasoning designed to address issues the motion judge then knew were being raised on appeal.

[52] The respondents submit that the motion judge did his best to manage a complex motion. His comments, at times favoured one side, and at times, the other. The motion judge adequately explained his reasons for dismissing the motion in his second endorsement. His delayed reasons merely amplified those findings and conclusions. [page50 ]

Analysis

The appearance of predisposition

[53] In my view, at various points in the proceedings the motion judge conducted himself in a manner that gave the appearance that he favoured the respondents' position.

[54] First, he adjourned the motion on his own initiative to give the respondents an opportunity to correct a flaw that he identified as being fatal to their position. In his first endorsement, he explained that "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".

[55] Although the motion judge's desire to determine the matter on the merits is commendable, a reasonable observer could perceive the adjournment as the motion judge's going out of his way to assist the respondents. That perception is strengthened by the motion judge's rather dismissive comment that he did not anticipate that the respondents' cross-examinations of the appellants on their new material would add much to the background. Although understandable in isolation, the adjournment was the first step along a course of conduct that, considered as a whole, created the appearance that the motion judge was predisposed against the appellants' position.

[56] In the second scheduled hearing, the motion judge dismissed the motion halfway through the full-day that had been scheduled without giving counsel the opportunity to make oral submissions on two issues that he properly identified as "principal arguments" -- joinder and forum non conveniens. The parties had prepared their arguments with respect to these issues at the motion judge's request. It is true that comprehensive factums, dealing with these issues, had been filed. However, the motion judge decided the motion without allowing counsel to engage the court in oral argument on these important points.

[57] Deciding the jurisdictional challenge without allowing for oral argument, especially with respect to the issue of joinder, is cause for particular concern in a case involving multiple parties on both sides.

[58] The import of this concern is heightened by the extent to which the motion judge relied on joinder in deciding to dismiss the motion. The motion judge concluded, at para. 47, that there is jurisdiction simpliciter of all claims in Ontario because the claims of the Ontario plaintiffs are properly joined with those of the non-Ontario plaintiffs: [page51 ]

. . . I find that there is jurisdiction in each of the provinces in which IFS established dealers, including Ontario. I find that the [respondents'] claims arise out of the same series of transactions and events and involve common questions of fact and law, and are thus closely related to give rise to a substantial connection to any Canadian jurisdiction in which any one of the claims could be brought.

(Emphasis added)

[59] The motion judge thus effectively found that a non-Ontario plaintiff can be substantially connected to Ontario, without having established a presumptive connecting factor between the subject matter of the litigation and the forum, if the non-Ontario plaintiff's claim is properly joined with that of at least one plaintiff that has established jurisdiction simpliciter.

[60] At para. 48, the motion judge found that if he was wrong in coming to this conclusion, IFS nonetheless had its strongest presence in Ontario. Therefore, presumptive factor b. -- carrying on business in Ontario -- had been made out for the claims of all eight plaintiffs. However, the motion judge failed to consider whether the appellants' evidence had rebutted the presumption by showing, for example, that the subject matter of the litigation is unrelated to the defendants' business activities in Ontario in the case of the four non-Ontario plaintiffs: see Van Breda, at para. 96.

[61] The motion judge reached these conclusions without considering how this approach fits into the Van Breda framework, which departs from the historical emphasis on [Van Breda, at para. 82] "[a]bstract concerns for order, efficiency or fairness" at the jurisdiction simpliciter stage by requiring a plaintiff to establish a clear presumptive connecting factor between the claim and the forum.

[62] Jurisdiction motions are complex. This one is no exception, given that courts have yet to consider how and at what stage joinder should be factored into the Van Breda analysis. In my view, determining the jurisdiction challenge without permitting counsel to debate the complicated, and as yet unresolved, issue of the intersection between joinder and jurisdiction within the Van Breda framework deprived the appellants of the opportunity to present their arguments fully. It also deprived the motion judge of the benefit of those arguments on this important issue.

[63] I am also troubled by the motion judge's having characterized several submissions the appellants made as concessions. I refer to his interpretation of the following answers the appellants provided in response to questions concerning their position how and where the respondents may properly advance their claims against the appellants: [page52 ]

(a) were the non-Ontario plaintiffs to commence proceedings in their home provinces in precisely the same form as framed in this proceeding, the defendants would not object to the jurisdiction of the courts of those provinces;

(b) were this proceeding to only involve the three Ontario plaintiffs, the defendants would not challenge the jurisdiction of the Ontario court; and

(c) were the eight plaintiffs to commence proceedings before the courts of California in precisely the same form as framed in this proceeding, the defendants would not object to the jurisdiction of the courts of California.

[64] At para. 96, the motion judge found that the appellants conceded that Ontario had jurisdiction simpliciter over the three Ontario respondents. However, earlier in his reasons, at para. 49, the motion judge concluded that "[q]uestions of joinder [were] obviated by the [appellants'] concession that all eight [respondents] may sue all four [appellants'] together . . .".

[65] This was a leap of logic from the answers given to the questions. Even assuming the appellants' counsel can be taken to have conceded that Ontario had jurisdiction simpliciter over the three Ontario respondents, the motion judge was not entitled to automatically conclude that questions of joinder were obviated. The motion judge ought to have put this conclusion to the appellants to ensure that they understood the import he drew from the answers they gave to his questions. Although we do not have a transcript of the hearing before us, it does not appear that he gave them this opportunity.

[66] It is important that concessions be clearly made and clearly identified as such: see, e.g., National Trust Co. v. Bouckhuyt (1987), 1987 4098 (ON CA), 61 O.R. (2d) 640, [1987] O.J. No. 930 (C.A.), at paras. 16-18. This is because concessions attract serious consequences. What has been conceded is taken as proven without further evidence or argument.

[67] Despite his conclusion that the appellants had conceded that Ontario had jurisdiction simpliciter over the three Ontario respondents, the motion judge conducted his own analysis of the issues of jurisdiction and joinder. However, his failure to give the appellants the opportunity to orally address the separate issue of joinder, and his assumption that the contentious issue of joinder was obviated by the answers to his questions respecting jurisdiction, means that his holding was infected by a flawed process.

[68] Although the motion judge acknowledged the legitimacy of the appellants' position on a few occasions, the overall tenor of [page53 ]his remarks was derisive and suggests a view critical of jurisdiction motions and of this motion in particular. I refer to the motion judge's finding that the motion was an abuse of process, "a colossal waste of time", and paras. 89 and 92 of his amended endorsement in particular:

And all of this is what led me on April 23rd to characterize this motion as not simply unmeritorious or doomed to failure, but as an abuse of process. It has been brought in accordance with the Rules. It has been presented effectively by competent and experienced counsel. And yet it is patently without merit. It had no prospect of advancing the litigation and could serve only to delay adjudication on the merits and drive up costs.

The net result is two years and tens of thousands of dollars in costs have been wasted. I call that an abuse of process.

[69] A finding that a proceeding or a step taken in a proceeding is an abuse of process is serious. The doctrine of abuse of process focuses on the integrity of the adjudicative functions of courts and has been used to describe proceedings that are "unfair to the point that they are contrary to the interest of justice": Toronto (City) v. C.U.P.E., Local 79, [2003] 3 S.C.R. 77, [2003] S.C.J. No. 64, 2003 SCC 63, at para. 35, citing R. v. Power, 1994 126 (SCC), [1994] 1 S.C.R. 601, [1994] S.C.J. No. 29, at p. 616 S.C.R.

[70] The motion judge provided no factual or legal foundation for his comments and I see no indication that the motion was brought for the purpose of delaying the proceedings and adding legal costs. His finding that the motion was an abuse of process, made on his own initiative, without the benefit of submissions or reference to any legal authorities, was, in my opinion, unwarranted.

[71] The finding of abuse of process in these circumstances is another consideration relevant to the ultimate determination of whether the appellants have established a reasonable apprehension of bias.

Comments about the appellants and their counsel

[72] It is important to acknowledge from the outset that it takes much more than a demonstration of impatience with counsel or even unwarranted discourtesy to rebut the strong presumption of impartiality: Kelly v. Palazzo (2008), 89 O.R. (3d) 111, [2008] O.J. No. 412, 2008 ONCA 82, at para. 21.

[73] However, courts will be rightly troubled when a motion judge is consistently discourteous towards counsel for no apparent reason. Derisive remarks will therefore be relevant to the issue of bias: see Yukon, at para. 52. [page54 ]

[74] In all three endorsements, the motion judge repeatedly criticized appellants' counsel on matters including their advocacy skills, knowledge of the law and handling of the matter. When viewed in the context of the rest of the motion, I conclude that the appellants have demonstrated that the motion judge's treatment of appellants' counsel contributed to raising a reasonable apprehension of bias: see S. (R.D.), per Cory J., at para. 141.

[75] I refer to comments in the first two endorsements that the appellants' cross-examinations were a "waste of time" and their argument was "frustrating" and "interminably, circling around and about, in and around".

[76] The motion judge went much further in his amended endorsement, at paras. 89 and 91, where he described the appellants' decision to challenge the jurisdiction of the Ontario court:

It is what is known in the trade as "litigating with prejudice". As I said to counsel at the end of the motion, we do not litigate this way anymore. The only qualification I would add to this statement is that I do not want to be taken as suggesting that this sort of approach to civil proceedings was ever appropriate, ever "the way we litigated".

A lick of common sense should have made it clear that this motion, as framed, was doomed from the outset. So why bring it? If the honestly held belief was that this case ought to be pursued in California, all I can say to the defendants is "give your heads a shake".

[77] I see no justification for any of these comments. As noted above, the courts have yet to interpret the Supreme Court's decision in Van Breda as it relates to the relationship between joinder and jurisdiction. In my view, it is therefore not "obvious that there is a place in Canada (at least one) where the Canadian distributor of Saab vehicles carries on business and may be answerable to the claims of its dealers", as the motion judge suggested in his second endorsement.

[78] I see no basis for characterizing the motion as "bad", accusing appellants' counsel of deliberately delaying the matter, or criticizing him for his knowledge of the law or for the manner in which he ran his case.

Delayed reasons

[79] In his second endorsement, the motion judge advised counsel that he would be preparing reasons for appeal purposes. He cautioned that these reasons may take a while. In fact, they took quite a while -- the parties waited over nine months for the amended endorsement. During those nine months, an appeal was commenced and a stay of the motion judge's decision was granted. [page55 ]

[80] Delay in delivering further reasons, in and of itself, does not displace the presumption of integrity: Teskey, at para. 23. Moreover, a judge's knowledge of a pending appeal is just a factor to be taken into consideration: R. v. Cunningham (2011), 106 O.R. (3d) 641, [2011] O.J. No. 3546, 2011 ONCA 543, at para. 47.

[81] However, in all of these circumstances, and in particular having regard to the conduct of the proceedings, I am of the view that an informed and reasonable observer would think that the amended endorsement was something other than an expression of the reasoning that led him to dismiss the motion.

[82] This case bears some similarity to Arnaout, which made clear that conduct will have the effect of displacing the presumption of integrity if, in all the circumstances, an informed and reasonable observer would think that the amendment was an after-the-fact justification for the decision rather than an articulation of the reasoning that led to the decision: Arnaout, at para. 23; see, also, Teskey, at para. 21.

[83] In Arnaout, the trial judge's stated purpose in delivering amended reasons was to correct an error. This court held that, in so doing, the presumption of integrity had been rebutted. Although in this case the motion judge stated his intention to prepare further reasons "for appeal purposes", the question is the same: Would an informed and reasonable observer see the amended endorsement as motivated, at least in part, by a desire of the motion judge to defend his decision to dismiss the motion against the specific attacks made in the appeal that, to the motion judge's knowledge, were identified in this court's reasons for granting the stay? Such motivation may, even subconsciously, lead to reasons designed to justify the challenged decision rather than to reveal the reasoning that led to the decision: Cunningham, at para. 47.

[84] In my view, the amended endorsement suggests that the motion judge was motivated to respond to the challenges to his decision. I refer to the motion judge's expressly identifying and then responding to grounds of appeal addressed in the reasons on the stay motion. Specifically, the motion judge dealt with two of the three "serious issues" raised in the proposed appeal -- the fact that his second endorsement only addressed jurisdiction in regards to the appellant IFS and the consequences of certain comments he made and actions he took.

[85] I find the portion of the amended endorsement where the motion judge attempts to justify his handling of the matter particularly troubling [at paras. 93-96]:

I was concerned by excessive delay on April 23, 201[4]. I directed the parties to follow the schedule to complete pleadings, exchange documents [page56 ]and schedule discoveries, without regard to whether the defendants brought an appeal[.]

There were two other reasons for directing this schedule. Supplementary reasons were required for this decision because I used unusually strong language in disposing of this motion[.]

Second, I knew when I decided the motion that these reasons would be a long time coming. I was concerned about the delay inherent in an appeal, but more, I was concerned that the parties would be delayed awaiting these reasons before they could proceed with any appeal. I already had a significant backlog of reserve decisions in April 2014, and that situation got worse over the course of the year because of resource issues in this court that are well known to the profession. By adjourning the motion back to myself I had hoped to save the parties nine months of delay, and my scheduling order was intended to ameliorate the risk that my delay in getting reasons out would leave the case in abeyance.

Finally, I could see no basis for an appeal of the finding that Ontario has jurisdiction over the claims of the three Ontario plaintiffs -- since this point was conceded by the defendants. Therefore, the risk that time and resources could be wasted on this case while an appeal was pending was ameliorated considerably.

[86] In these passages, the motion judge appears to insinuate himself into the appeal process by attempting to defend his actions and his comments. It was an after-the-fact attempt not only to justify but also to bolster his decision.

Conclusion regarding a fair hearing

[87] The assessment of a reasonable apprehension of bias is a difficult one. It requires a careful and thorough review of the proceedings since the cumulative effect of the alleged improprieties is more relevant than any single transgression.

[88] I have no doubt that the motion judge was well intentioned. I have no doubt that he put a great deal of effort into resolving the jurisdiction issue. However, my review of the three endorsements leads me to conclude that the motion judge's actions gave rise to a reasonable apprehension of bias. He made unwarranted negative comments about the appellants -- their counsel, their position and their arguments -- prior to the conclusion of argument and arbitrarily curtailed argument. He then wrote reasons that went beyond reflecting the reasoning process and entered the fray as an advocate for his actions and decisions in the second endorsement.

[89] In my opinion, the cumulative effect of the motion judge's conduct is that an informed, reasonable observer, viewing the proceedings as a whole, would conclude that the appellants did not receive the fair hearing to which they were entitled. [page57 ]

[90] I am therefore of the view that the decision must be set aside.

Disposition

[91] For these reasons, I would allow the appeal, set aside the order below, and order that the motion be heard anew before a different justice of the Superior Court.

[92] I would order the respondents to pay the appellants' costs fixed in the amount of $20,000, including disbursements and applicable taxes. I would order the costs of the first jurisdiction motion to be at the discretion of the judge hearing the second jurisdiction motion.

Appeal allowed.

End of Document