COURT FILE NO.: CV-14-497012/OT DATE: 2014 04 25 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: BATH FITTER FRANCHISING, INC. (Applicant) – and – 975989 ONTARIO INC. – and – 1861105 ONTARIO INC., doing business as Bath Liners and Remodeling – and - DESMOND COWAN – and – MICHAEL LITSTER – and – B.L.R. MISSISSAUGA LTD. (Respondents)

BEFORE: EMERY J

COUNSEL: Michael N. Bergman, for the Applicant Adam Jarvis, for the Respondents, 975989 Ontario Inc., Desmond Cowan and B.L.R. Mississauga Ltd. Golan Yaron, for the Respondents, 1861105 Ontario Inc. and Michael Litster

HEARD: March 18, 2014

ENDORSEMENT

[1] The applicant, Bath Fitter Franchising, Inc. (“BFFI”) is a Delaware company that markets franchising systems for bathroom remodeling products and services to franchisees in Canada and the United States.

[2] BFFI sold one such franchise to the respondent, 975989 Ontario Inc. (“975”) for the territory defined by the City of Mississauga. The most recent franchise agreement covered a five year term from June 30, 2008 to June 30, 2013.

[3] The franchise agreement expired on June 30, 2013 when it was not renewed by the parties. On November 12, 2013, BFFI also sent a letter to 975 terminating the Mississauga franchise.

[4] The franchise agreement contained a standard clause prohibiting the franchisee and all members of the franchisee’s immediate family from consulting with or holding an interest directly or indirectly with a company or enterprise that operated a business similar to the business of the franchise within the defined territory, or within a 25 mile radius of it for a period of two years after any termination of the franchise agreement.

[5] The respondent, Desmond Cowan, is the principal of the respondent of 975. BFFI alleges that Mr. Cowan transferred his business interests in 975 to the respondent, Michael Litster and the respondent, 1861105 Ontario Inc. (“186”) and is assisting them to operate a business similar to the systems, products and services marketed by BFFI through its franchise system.

[6] The applicant further alleges that Mr. Litster and 186 are contractually prevented from operating a business that competes with BFFI in the City of Mississauga as they are parties to another franchise agreement with BFFI for a territory in South Carolina. BFFI alleges that the franchise agreement for 186 contains the same standard clause restricting competitive activity after the termination of a franchise agreement, and that it somehow binds them from engaging in any business similar to the business opportunities offered by BFFI in Mississauga.

[7] B.L.R. Mississauga Ltd. has been named as a respondent because it is a company that is allegedly controlled by Sara Cowan, the wife of Mr. Cowan. BFFI alleges in the application that B.L.R. Mississauga Ltd. is operating in the City of Mississauga and is bound by the same restrictive covenant.

[8] In January, 2014, BFFI commenced an application in Toronto seeking injunctive relief against all respondents. BFFI is requesting orders from this court to enjoin them from operating a business in the City of Mississauga if they are breaching the franchise agreement.

[9] The respondents bring this motion under Rule 13.1.02 to transfer the application to Brampton. The respondents say that there is no connection between the parties and the subject matter of the application to Toronto. They say the application should have been commenced at Brampton in the first place as the respondents all live or carry on business in the Regional Municipality of Peel and because that is where all material facts occurred.

[10] Rule 13.1.02 (2) gives this court discretion to make an order to transfer an application from one court location to another on the motion of any party if the court is satisfied that a transfer is desirable in the interest of justice having regard to:

(1) where a substantial part of the events or omissions that gave rise to the claim occurred;

(2) where a substantial part of the damages were sustained;

(3) where the subject matter of the proceedings is or was located;

(4) any local community’s interest in the subject matter of the proceeding;

(5) the convenience of the parties, the witnesses and the court;

(6) where there are counterclaims, cross-claims or third or subsequent party claims;

(7) any advantages or disadvantages of a particular place with respect to securing the just, most expeditious and least expensive determination of the proceeding on its merits;

(8) whether judges and court facilities are available at the other location; and

(9) any other relevant matter.

[11] As the moving parties, the respondents rely upon the decision of Justice Stinson in Eveready Industrial Services Corp. v. Jacques Daoust Coatings Management Inc. 2005 19797 (ON SC), [2005] O.J. No. 2285, 76 O.R. (3d) 390 on how to apply those factors. The applicant relies on the decision of Master Muir in Michael Wilcox v. Flintstone Glass and Mirror Ltd., 2009 73279 on how those factors should be weighed to determine whether or not to transfer a proceeding under Rule 13.1.02 (1).

[12] The controlling principle on a motion to transfer a proceeding under Rule 13.1.02 (2)(b) is whether the transfer is desirable in the interest of justice. The court must consider the enumerated factors under that serve as guides in the course of deciding if the transfer requested meets or falls short of that controlling principle.

[13] The Eveready case offers the policy context for the application of Rule 13.1.02(b). In Eveready, Justice Stinson provides the basis for preserving the logic behind the Rules of Practice that governed civil proceedings in Ontario before the Rules of Civil Procedure replaced them in 1985. The previous requirement that there be a rational connection between the venue where the proceeding commenced and the place giving rise to the litigation was consistent with the principle that the judicial system in Ontario be open and transparent to the public. This pronouncement of the open court principle is as fundamental today as it was before 1985. At para. 14 of Eveready, Justice Stinson frames the modern statement of the principle as follows:

• 14 Based on common sense, and apart from the authorities, it seems logical that a case should be heard at a place where the cause of action arose or where all or at least some of the parties are located. The public most affected by a case has a right to observe the hearing. The question of the relative expense of holding a hearing in one place compared to another is another important factor and may affect the public's perception of the integrity of the system.

[14] With that context in mind, I now turn to the evidence filed on the motion to determine whether a transfer of the application from Toronto to Brampton is desirable in the interest of justice by weighing the factors set out under Rule 13.1.02 (2)(b).

(1) where a substantial part of the events or omissions that gave rise to the claim occurred

[15] Unlike in an action, the applicant has already filed an affidavit in support of the application it has brought for injunctive relief. The affidavit of Johanne Patry deposes to the following facts:

• the respondent, 975989 Ontario Inc. (“975989”) is located at 3600A Laird Road, Suite #14, Mississauga;

• 975989 entered into a franchise agreement with the applicant for a period of five years for the Mississauga location;

• that Desmond Cowan approached the applicant for the purposes of transferring ownership of the franchise of the Mississauga location to Michael Litster;

• that a part of a standard review for the Mississauga location, a Location Review form was provided. The Territory name provided on the Location review was for the territory of the City of Mississauga.

• the applicant has further submitted as evidence of the breach of the franchise agreement that one or more of the respondents have violated the franchise agreement by competing with the applicant in the City of Mississauga. Specifically, it is alleged that one or more of the respondents contracted with Sherry Donelly who lives and carries on business in the City of Mississauga. The alleged agreements and/or contracts with Sherry Donelly took place in the City of Mississauga.

• in the applicant’s letter dated December 4, 2013, the Applicant asserts that the franchise agreement between 975989 and the applicant is for the “territory centred upon the address, 3600A Laird Road, unit 14 Mississauga, Ontario”. The letter continues to allege that one or more of the respondents are improperly competing with the applicant out of the Mississauga location.

[16] I consider that the applicant’s own evidence establishes a substantial part of the events giving rise to its claim for injunctive relief occurred in the City of Mississauga. As the City of Mississauga and the City of Brampton are both in the Regional Municipality of Peel, I find that this factor favours Brampton.

(2) where a substantial part of the damages were sustained

[17] The applicant is clear that it is not seeking damages against any of the respondents on the application. It has limited its remedy to injunctive relief. However, if BFFI claims that it has or will suffer commercial injury or irreparable harm as grounds for an injunction, BFFI would have to prove that injury or harm was or would be suffered within the territory it seeks to protect. I therefore conclude by the nature of the relief BFFI seeks on the application that a substantial part of its claim for injury or harm is concentrated on the territory defined by the City of Mississauga. Therefore, this factor favours Brampton.

(3) where the subject matter of the proceedings is or was located

[18] The applicant claims a breach of its franchise agreement by the sale or participation by the respondents 975 and Mr. Cowan in a similar business within the City of Mississauga during the two year period following the termination of the franchise agreement. The alleged breach of the over holding clause in the franchise agreement is the gravamen of the application. The claim for injunctive relief is extended to the other respondents by that breach. It is inescapable to conclude that all or mostly all of the subject matter of the proceeding is located in the City of Mississauga. I find this factor favours Brampton.

(4) any local community interest in the subject matter of the proceeding

[19] The local community could find a franchise fight of some interest. However, apart from any particular interest of a community member in the litigation between two businesses offering similar products and services, I find this factor to be neutral. There was no evidence before me to conclude otherwise.

(5) the convenience of the parties, the witnesses and the court

[20] BFFI is a company incorporated in the State of Delaware, in the United States. It is one of a group of companies that operates under a general banner as Bath Fitters. The group operates a head office in Canada located at St-Eustache, Quebec from which it provides executive and management services. There is no evidence before the court that the applicant has a presence in Ontario other than contractual relationships with franchisees.

[21] I note that Justice Stinson agreed in Eveready with the previous observation by Master Sandler in Continental Breweries v. 707517 Ontario Inc. [1990] O.J. No. 2985 that the location or convenience of counsel is not a factor to consider except for legal costs. However, this factor may be a consideration when viewed from the perspective of the convenience of any party to meet with and instruct counsel. The convenience factor should not matter to BFFI as Mr. Bergman’s office is also located in Quebec and there is no evidence before me how Toronto is more convenient to BFFI as a party than Brampton.

[22] By contrast, all five of the respondents reside or carry on business in the City of Mississauga, as do their lawyers.

[23] Mr. Cowan states in his affidavit filed in support of the motion that he is not aware of any parties or potential witnesses that reside or carry on business in the City of Toronto. Sherry Donelly has been identified in Ms. Patry’s affidavit as a potential witness as she was a customer who had placed an order with Michael Litster under the belief that she was dealing with an authorized Bath Fitter representative. Ms. Donelly lives in Mississauga. There was evidence before me in the form of an affidavit sworn by Courtney Allan that Ms. Allan had contacted Ms. Donelly who had told her that Brampton would be her preferred venue if she was to give evidence.

[24] I further note that Mr. Cowan has deposed in his affidavit that once the venue issue is decided, the respondents intend to bring a motion for the purposes of having the application converted to an action. In the event that the application is converted to an action, or if the court hearing the application considers it just to order the trial of an issue under Rule 38, the witnesses who would give viva voce evidence for the respondents or customers like Sherry Donelly reside in the Regional Municipality of Peel.

[25] The factor relating to the convenience of the parties and potential witnesses favours Brampton over Toronto.

(6) where there are counterclaims, cross-claims or third or subsequent party claims

[26] There are no counterclaims, crossclaims or third party claims as this proceeding was commenced as an application. There is also no evidence that there would be counterclaims, cross-claims or third or subsequent party claims if this application were converted to an action. This factor is therefore neutral.

(7) any advantages or disadvantages of a particular place with respect to securing the just, most expeditious and least expensive determination of the proceeding on its merits

[27] There is evidence before the court that the parties attended at motions scheduling court in Toronto on March 4, 2014 when the applicant requested a hearing date on an urgent basis to bring a motion for an interlocutory injunction. The motions scheduling court denied the applicant’s request for an urgent motion date. While the endorsement does not say so, Courtney Allan deposes in her affidavit that the presiding judge reportedly stated at the time “that Brampton Superior Court of Justice is the proper forum for the applicant’s proposed motion”.

[28] There is evidence before the court that as of March 10, 2014, there are long motion dates in Brampton available for this application on June 2 and 16, July 2 and 9, and August 13 and 27, 2014.

[29] There is also evidence before the court to suggest an early hearing date for the application in Brampton could avoid a motion in Toronto for interlocutory relief.

[30] I consider the proximity of dates available to the court and the parties for the argument of the application to favour Brampton. It makes no sense for the parties to prepare for and argue an interlocutory injunction and then to prepare and argue the application itself at a later date if it remains in Toronto. This would be contrary to the principle under Rule 1.04 that the Rules be liberally construed to secure the just, most expeditious and least expensive manner determination of the proceeding on the merits.

(8) whether judges and court facilities are available at the other location

[31] There was no evidence before me on this factor. Therefore, I consider it to be neutral to each party.

(9) any other relevant matter

[32] The Rules of Practice before 1985 may have required a rational connection between the parties or the subject matter at issue and the place the proceeding should be commenced to dictate that location over another as much as possible. It was then up to another party to challenge that place as the de facto venue for the hearing or trial under limited grounds. Under the current regime, the choice of place to have a legal proceeding heard is made by the party commencing the proceeding and the motion for a transfer to a different location is made after the fact under Rule 13.1.02 (2). That freedom of choice should not be confused with tacit approval to ignore the implied policy behind selecting a logical place for a hearing or trial, or the factors that would suggest the proper place of commencement. Although the Rules no longer require a rational connection between case and place does not mean that a party may commence a proceeding at a court location in the province without regard to any connection to the parties or the issues between them. The very factors spelled out in Rule 13.1.02(2) make this point clear.

Conclusion

[33] Aside from those factors that are neutral to all parties, I conclude upon considering the factors under Rule 13.1.02(2) (b) that all roads lead to Brampton. I disagree with Mr. Bergman’s argument that the facts of this case resemble the situation considered by Master Muir in Wilcox v. Flintstone Glass and Mirror Ltd. If anything, the facts and how the factors apply resemble the decision of McCartney J. in Green v. 1695929 Ontario Inc., 2010 ONSC 6660 where he ordered the transfer of an application from Thunder Bay to Kenora.

[34] All things considered, I am following the approach taken by this court in the Eveready case for a motion of this nature. I am satisfied that a transfer of this application from Toronto to Brampton is desirable in the interest of justice. However, there is a protocol in place that requires the approval of each Regional Senior Justice for the relevant judicial regions to approve the request for transfer before an order is made under Rule 13.1.02(2)(b). Therefore, the order to transfer the application commenced by BFFI in Toronto to Brampton is granted, subject to the approval of the Regional Senior Justices for those two regions.

[35] The respondents 975, Mr. Cowan and B.L.R. Mississauga Ltd. Filed a Costs Outline with the court when the motion was heard. I invite counsel for the respondents Michael Litster and 186 to file a Costs Outline by May 2, 2014 and for counsel representing BFFI to file any responding materials by May 9, 2014 if the parties cannot come to terms on costs.

Emery J

DATE: April 25, 2014

COURT FILE NO.: CV-14-497012/OT DATE: 2014 04 25 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: BATH FITTER FRANCHISING, INC. (Applicant) – and – 975989 ONTARIO INC. – and – 1861105 ONTARIO INC., doing business as Bath Liners and Remodeling – and - DESMOND COWAN – and – MICHAEL LITSTER – and – B.L.R. MISSISSAUGA LTD. (Respondents)

BEFORE: EMERY J.

COUNSEL: Michael N. Bergman, for the Applicant Adam Jarvis, for the Respondents, 975989 Ontario Inc., Desmond Cowan and B.L.R. Mississauga Ltd. Golan Yaron, for the Respondents, 1861105 Ontario Inc. and Michael Litster

ENDORSEMENT

EMERY J

DATE: April 25, 2014