Stuart Budd & Sons Limited v. IFS Vehicle Distributors ULC, 2015 ONSC 519

CITATION: Stuart Budd & Sons Limited v. IFS Vehicle Distributors ULC, 2015 ONSC 0519

COURT FILE NO.: CV-13-476346

DATE: 20150203

SUPERIOR COURT OF JUSTICE – ONTARIO

BETWEEN: STUART BUDD & SONS LIMITED, 290756 ALBERTA LTD., SAAB ON THE QUEENSWAY LTD., 798983 ONTARIO INC., 9216-0415 QUEBEC INC., 6847781 CANADA LTD., FORBES SAAB AND USED CAR SHOP INC., and SPRINGMAN AND SPRINGMAN LIMITED, Plaintiffs

• and -

IFS VEHICLE DISTRIBUTORS ULC, INTERNATIONAL FLEET SALES INC., MICHAEL LIBASCI and PEGGY KING, Defendants

BEFORE: D.L. CORBETT J.

COUNSEL: David Sterns and Andy Seretis, for the Plaintiffs

Matthew Latella and Frank Spizzirri, for the Defendants

AMENDED ENDORSEMENT*

1Where in Canada may Canadian Saab dealers sue the Canadian distributor of Saab automobiles? Nowhere, says the Canadian distributor. They must go to California to sue their Canadian distributor. Or they can sue in separate actions in five provinces.

2Now how could that be?

Background

3Up to 2009, Saab automobiles were sold in Canada by General Motors and its affiliates. In 2009, GM restructured its North American operations. As part of that restructuring, GM ceased selling Saab automobiles and terminated all of its Canadian Saab dealers.

4Saab Automobile AB, a Swedish company, acquired the Saab brand from General Motors, and sought to enter the Canadian market in 2010.

­­­­_____

Typographical errors have been corrected in paras. 72 and 100.

5Saab approached the defendant International Fleet Sales Inc. “to assist [Saab] with the importation and distribution of Saab motor vehicles from Sweden and parts from the United States into Canada”.[1]

6International Fleet Sales Inc. is a California company. It was founded by Michael Libasci in 1999 as “an export distributor of… GM vehicles originating in North America, providing vehicles, logistics, parts, service and training.” Mr Libasci says that it “has extensive business relationships with organizations such as: the United Nations, the United States military, US State Department, General Motors and GM dealers worldwide, as well as various other non-governmental organizations.”[2]

IFS Created to be Canadian Saab Distributor

7IFS Vehicle Distributors ULC was incorporated as an affiliate of International Fleet Sales Inc. in British Columbia in June 2010 “to work with Saab AB to import and distribute Saab motor vehicles from Sweden and parts from the United States into Canada.”[3] Its registered offices are at its solicitors, Fasken Martineau Dumoulin LLP, in Vancouver (the “Registered Principal Address”). IFS also registered to do business in Ontario on June 22, 2010, listing its principal place of business in Ontario as 2400 South Service Road, Oakville (the “Ontario Address”). [4]

8IFS approached the plaintiffs, each of which had been a Saab dealer under contract with GM, and found that they were all interested in being Saab dealers again. These discussions took place in June to August, 2010.

IFS Franchise Disclosure Documents

9IFS provided a formal disclosure document to the three plaintiffs located in Ontario and the one plaintiff located in Alberta in purported[5] compliance with provincial legislation governing franchisor’s disclosure obligations (the “Disclosure Documents”).[6] IFS did not provide the Disclosure Documents to the other plaintiffs, whose home provinces did not have comparable franchise disclosure legislation.

10In the Disclosure Documents, IFS disclosed its Principal Registered Address and the Ontario Address as its business addresses.[7] It also disclosed its Alberta address as at the offices of Fasken Martineau Dumoulin LLP in Calgary Alberta.[8] It did not identify any other addresses at which it carried on business.

11The Disclosure Documents include a certificate from the defendants Libasci and King in which they certified:

… that this disclosure document (a) contains no untrue information or statements, whether of a material fact or otherwise and (b) includes every material fact, statement, financial statement and other information required to be included [by the applicable provincial franchise disclosure legislation].

The certificate is set out on IFS letterhead showing its address as the Ontario Address.[9]

12In the Disclosure Documents, IFS provided a balance sheet to July 14, 2010. It showed no assets or activities – all columns were “0”, reflecting that the company had just been formed and had not yet done anything. A note at the end of the statement says:

[IFS]… is in the process of establishing accounts in Canada. Once these are established these numbers will change.[10]

IFS did establish a bank account, at Scotiabank, in Toronto.[11] It told its dealers to make payments directly to this bank account, or, alternatively, to pay by cheque to a lockbox IFS maintained in Toronto.[12] There is no evidence that IFS had any other bank accounts.

13In IFS’s Disclosure Documents it indicated that its transactions with dealers would be subject to Canadian federal and provincial taxation:

In all cases, the dealer must pay the federal, provincial, and local sales, goods and services or similar taxes assessed against or payable to IFS… with respect to any payments to IFS….[13]

IFS Dealership Agreements

14IFS entered into dealership agreements with each of the eight plaintiffs during an eight day period in August 2010. The dealership agreements were signed at each of the dealerships:

(a) Stuart Budd & Sons Limited, in Oakville, Ontario, on August 3, 2010;

(b) Saab on the Queensway Ltd., in Etobicoke, Ontario, on August 3, 2010;

(c) 798983 Ontario Inc., in Kitchener, Ontario on August 7, 2010;

(d) 290756 Alberta Ltd., in Calgary, Alberta, on August 11, 2010;

(e) 9216-0415 Quebec Inc., in Quebec City, Quebec, on August 4, 2010;

(f) 6847781 Canada Ltd., in Laval, Quebec, on August 4, 2010;

(g) Forbes Saab and Used Car Shop Inc., in Dartmouth, Nova Scotia, on August 10, 2010;

(h) Springman & Springman Limited, in Surrey, British Columbia, on August 12, 2010.[14]

15The dealership agreements each provide:

a. The distributor is IFS, a Canadian company incorporated in British Columbia;

b. Each dealer is authorized to conduct business as a Saab dealer at a specific premises within a geographic “Area of Primary Responsibility” within Canada;

c. Each of the dealership agreements incorporates by reference the “Standard Provisions to Dealer Sales and Service Agreement” (the “Standard Terms”) and other standard documents.[15]

16The Standard Terms incorporated into the dealership agreements provide:

ARTICLE 4 AUTHORIZED LOCATIONS

4.1 Dealer Network Planning

IFS will monitor marketing conditions and endeavor, to the extent practicable, to have dealers appropriate in number, size and location to maximize the effectiveness of its dealer network….

4.2 Area of Primary Responsibility

Dealer is responsible for effectively selling, servicing and otherwise representing Saab Products in the Area of Primary Responsibility designated [for Dealer].

4.4 Facilities

4.4.1 Location

Dealer agrees to conduct Dealership Operations only from the approved location(s)….[16]

5.1 Responsibility to Promote and Sell

5.1.1 Dealer agrees to effectively, ethically and lawfully sell and promote the purchase, lease and use of Saab products by consumers located in its Area of Primary Responsibility….

5.1.2 Dealer located in Canada is authorized to sell new Motor Vehicles only to customers located in Canada. Dealer agrees that it will not sell new Motor Vehicles for resale or principal use outside Canada. Dealer also agrees not to sell any new Motor Vehicles which were not originally manufactured for sale and distribution in Canada.

5.1.3 It is IFS and Saab Automobile AB policy not to sell or allocate new Motor Vehicles to dealers for resale to persons or parties (or their agents) engaged in the business of reselling, brokering (included but not limited to buying services) or wholesaling Motor Vehicles. The dealer distribution organizations (sic) that IFS has established in Canada are best suited for the distribution of Motor Vehicles in Canada…. Nothing in this Article 5.1.3 is intended to restrict Dealer from selling Motor Vehicles to other IFS Saab dealers in Canada.

17.12 Applicable Law

This agreement is governed by the laws of the province of Ontario….

17The dealership agreements do not specify where litigation must be brought: there is no “choice of forum” clause. In respect to the Ontario dealers, a choice of forum outside Ontario could have run afoul of the Arthur Wishart Act, which provides:

Any provision in a franchise agreement purporting to restrict the application of the law of Ontario or to restrict jurisdiction or venue to a forum outside Ontario is void with respect to a claim otherwise enforceable under this Act in Ontario.[17]

18When the dealership agreements were signed, IFS provided each dealer with a “Manufacturer’s Certification of Dealer”. Each was signed by Mr Steinhagen, IFS’s Chief Executive Officer, and on each Mr Steinhagen recorded IFS’s address as the Ontario Address in his own handwriting.[18]

19There is no evidence that IFS had any dealers outside Canada.

Performance of the Dealership Agreements

20On August 31, 2010, shortly after the eight dealership agreements were signed, IFS convened a meeting with its dealers for October 6, 2010. The meeting was held in Toronto, Ontario. Most of the plaintiffs sent representatives to this meeting.[19]

21Dealers ordered cars and parts from IFS. IFS imported this merchandise into Canada and sold it to dealers. IFS issued invoices and other documents related to these transactions. It obtained an HST number and charged and collected HST from its dealers on these transactions. All invoices, statements and credit memos from IFS to its dealers listed the Ontario Address as IFS’s address.[20]

22There is no evidence that IFS sold cars or parts outside Canada, or that it collected or paid taxes outside Canada.

23IFS’s correspondence to dealers was on letterhead showing the Ontario Address.[21] In October 2011, IFS changed communications related to billing for parts, which were purchased through the defendant International Fleet Sales Inc., which has premises in Michigan. An email in relation to this change states:

The IFS address on the proforma will be changing, it currently and incorrectly shows our address here in Michigan and that will be changing to the IFS Vehicle Distributors ULC address in Oakville – which is the correct address.[22]

24The “correct address” was located at the dealership of the plaintiff Stuart Budd & Sons Ltd. This, it seems, was the plan from the outset. In an email from IFS to Budd on July 2, 2010 – before the dealership agreements were signed – IFS raised two points:

Item 1 – We would like to rent a “desk” in your facility and make it our address in Canada. We would use the following address –

IFS Vehicle Distributors ULC

Care of Budd’s Saab

2400 South Service Road West

Oakville, Ontario, Canada L7L 5M9

Probably will want a phone – either with connection to our office here in Michigan or with a voice mail recording that we can access from Michigan to check messages.

Item 2 – we plan to have a service manager in Canada and I am reaching an agreement with Serge – who you folks are familiar with. However IFS would rather not go through the effort of setting up payroll, etc. What I was thinking is that you could handle this for us – for a fee. We would pay you the salary and the handling fee and you would arrange to pay the person and handle the taxes/benefit costs and have the person paid. Not sure that this can be arranged, we may need to think about it some more, but that is our thought.[23]

25Two of IFS’s senior officers were in California: Mr Libasci and Ms King. Its Chief Executive Officer, Mr Steinhagen, was in Michigan. Most other persons involved on behalf of IFS were in Michigan. It is not clear that IFS had any employees at all. Messrs Libasci and Steinhagen and Ms King held positions in affiliated companies, and it seems likely that other personnel in Michigan were similarly employed by affiliates of IFS.

26IFS had a National Service Manager in Canada, “Serge”, who was apparently based in Ontario.[24] There is no direct evidence of the nature of “Serge’s” legal relationship with IFS. On the basis of Mr Libasci’s uncontradicted evidence that IFS had no employees in Canada, I infer that “Serge” held his position with IFS as an independent contractor rather than as an employee.

Summary

27IFS 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.

28IFS’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.

29IFS 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.

30IFS 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.

31I find that IFS’s business was in Canada and not in Michigan or California.

This Motion

32This motion was brought to dismiss the entire action on the basis that Ontario is without jurisdiction, or alternatively, that Ontario is not the convenient forum for this case.[25] The defendants did not seek alternative relief dismissing the claims of the non-Ontario plaintiffs, or dismissing the claims against some but not all of the defendants. The defendants’ position was that this action should not be permitted to proceed in Ontario at all.

33This motion first came before me on March 27, 2014. It was adjourned to April 23, 2014, when it was argued on the merits.[26] However the merits were addressed to some extent on March 27th, when I asked counsel a series of questions designed to help me understand the defendants’ position on how and where this proceeding could be brought. Counsel did not provide clear answers on March 27th and I indicated that I would expect him to do so on April 23rd, once he had a chance to obtain instructions. Portions of my handwritten endorsement from March 27th relating to these points read as follows:

… As I advised during the brief argument this morning, on a review of the materials it 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.

Also as I indicated to the parties, since the defendants 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.

34At the return of the motion on April 23rd, the defendants conceded that Ontario has jurisdiction simpliciter over the claims of the three Ontario plaintiffs.[27] However, lest there be any misunderstanding, I start my legal analysis with that bedrock point before moving on to consider the position of the non-Ontario plaintiffs and the other defendants.

Jurisdiction Simpliciter and the Ontario Dealers

35The Supreme Court of Canada has held that four non-exhaustive “connecting factors” establish presumptive jurisdiction simpliciter. If the plaintiffs establish any one of these factors, then they presumptively establish a “real and substantial connection” between the dispute and Ontario:

a. the defendant is resident in Ontario;

b. the defendant carries on business in Ontario;

c. the tort or breach of contract was committed in Ontario; or

d. the contract was made in Ontario.[28]

I address factors a. and b. below when I consider the position of the non-Ontario plaintiffs. Factors c. and d. are clearly established in respect to the claims of the three Ontario dealers. The legal wrongs complained of by the three Ontario plaintiffs occurred in Ontario. The contracts with those three dealers were made in Ontario. The subject-matter of those contracts was within Ontario: the distribution of Saab cars for sale to consumers in Ontario. The contracts designate Ontario as the law of the contracts. The contracts do not contain any provisions contracting into, or out of, any particular jurisdiction. There is simply no argument that Ontario lacks jurisdiction simpliciter over the claims asserted by the Ontario dealers against IFS.

36Accordingly, the preliminary view I expressed on March 27th, and the subsequent concession by the defendants, are correct. Ontario has jurisdiction simpliciter over the claims of the Ontario dealers.

Jurisdiction Simpliciter and the Non-Ontario Plaintiffs

37The defendants filed a supplementary factum prior to return of this motion on April 23, 2014. In it they responded to my request to identify the alternative(s) that they say would be preferable to a single action in Ontario brought by eight dealers:

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 8 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.

… there are two alternatives, both of which would be preferable to this proceeding, as presently constituted. Both alternatives would have avoided the jurisdictional problems created by this matter in its current form. The alternatives are:

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.[29]

38Several points arise from these positions. First, there is jurisdiction simpliciter in each of the provinces where IFS established a Saab dealer for claims of any dealership within the province. Again, I agree with this concession, which seems inevitable: jurisdiction would be presumed in each case on the basis of factors c. and d. of Club Resorts Ltd. v. Van Breda.

39Second, there is no objection to joinder of the defendants to claims brought against IFS. The claims against Mr Libasci and Ms King arise from their alleged status as “franchisor’s associates” of IFS, potentially liable as such under the franchise disclosure legislation in Alberta and Ontario. The claims against the other corporate defendant arise from its dealings as a parts supplier to and an affiliate of IFS in IFS’s dealings with its dealers in Canada. The concession that these defendants are subject to the jurisdiction of the Ontario courts in respect to the claims of the Ontario dealers is thus correct, and properly carries over into a concession that these defendants would likewise be subject to the jurisdiction of the courts of the provinces in which any dealer is located to the same extent as is IFS.

40Third, the defendants take the position that there is nowhere in Canada that IFS may be sued in one proceeding by its Canadian dealers. Rather, the only jurisdiction in which IFS has a “substantial connection” giving rise to jurisdiction over claims against it is the State of California.

41I see no connection between these claims against IFS and the State of California, other than that Mr Libasci and Ms King live in California and IFS’s affiliate, International Fleet Sales Inc., is incorporated there.

42IFS is a Canadian company, carrying on business in Canada, and not carrying on business anywhere else. It is a subsidiary of an American company, and is largely operated by Americans living in the United States. IFS is somewhat ephemeral, to be sure, but its business was real and was conducted in Canada.

43When 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.

44It is clear from the statement of claim that this case is about the failure of the national network of Saab dealers. The claims are connected. They arise from the same series of transactions that led to the creation of IFS’s dealer network over a period of eight days in August 2010. The claims are based upon common questions of law and of fact. It is appropriate that these claims be pursued in a single proceeding: costs will be reduced by having one set of counsel, common core documentary production, common discoveries and one trial. Indeed, I cannot imagine that Mr Libasci and Ms King would find it more “convenient” to attend between five and eight examinations for discovery in multiple actions, and attend court for between five and eight trials across Canada.

45This, in turn, leads to the fourth point that arises from the defendants’ position. They do not object to the claims of the plaintiffs being joined in one proceeding. They agree that this would be permissible, but only if it was done in California.

46I pressed counsel on this position. California? Was there nowhere in Canada that Canadian Saab dealers could make common cause against their Canadian distributor? In response counsel suggested that Nova Scotia might be the jurisdiction to the best claim for a common proceeding, because it was in Nova Scotia that the cars came off the boats and title transferred to the Canadian dealers. But certainly not Ontario. And this was no concession that Nova Scotia would have jurisdiction. California.

47I find that there is jurisdiction in Ontario on two bases. First, as stated above, I find that there is jurisdiction in each of the provinces in which IFS established dealers, including Ontario. I find that the plaintiffs’ claims arise out of the same series of transactions and events and involve common questions of fact and law, and are thus closely enough related to give rise to a substantial connection to any Canadian jurisdiction in which any one of the claims could be brought.

48If I am wrong in that conclusion, 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 of Parties and Claims

49Questions of joinder of claims are obviated by the defendants’ concession that all eight plaintiffs may sue all four defendants together, but only in California. From this it is clear that the defendants’ objection is purely jurisdictional, and that, apart from jurisdiction, the test for joinder is satisfied. And in any event, I conclude that the test for joinder is satisfied.

50Rule 5.02 provides:

(1) Two or more persons represented by the same lawyer of record may join as plaintiffs or applicants in the same proceeding where,

(a) They assert, whether jointly or severally or in the alternative, any claims to relief arising out of the same transaction or occurrence, or series of transactions or occurrences;

(b) A common question of fact or law may arise in the proceeding; or

(c) It appears that their joining in the same proceeding may promote the convenient administration of justice.

(2) Two or more persons may be joined as defendants or respondents where,

(a) There are asserted against them, whether jointly or severally or in the alternative, any claims to relief arising out of the same transaction or occurrence, or series of transactions or occurrences;

(b) A common question of law or fact may arise in the proceeding;

(e) It appears that their being joined in the same proceeding may promote the convenient administration of justice.[30]

51Analysis of joinder issues requires a review of the statement of claim. It is clear that this was never an issue the defendants intended to raise as the basis for their motion: they did not even include the statement of claim in their motion record. In their factum, dated February 11, 2014, the word “joinder” is not mentioned, Rule 5 is not cited, and the factors set out in Rule 5.02 are not analysed. The issue is addressed for the first time in the defendants’ supplementary factum, after I raised the issue on March 27th.

(a) Joinder of the Claims of the non-Ontario Plaintiffs

52The defendants’ central contention on this point is that the principles of joinder do not obviate the requirement for jurisdiction simpliciter. This contention is correct.[31] However, since there is jurisdiction simpliciter, because IFS carries on business in Ontario, this objection disappears. This dispenses with most of the defendants’ argument on this point, which is predicated on their incorrect contention that “all four defendants” are “from outside Ontario”.[32]

53The defendants did not address arguments to the alternative position that, although IFS carries on business in Ontario, the joinder of the non-Ontario plaintiffs’ claims should not be permitted.[33] I find that the non-Ontario plaintiffs assert claims arising out of the “same series of transactions or occurrences” as those asserted by the Ontario plaintiffs, within the meaning of Rule 5.02(1)(a). I find that there may be common questions of fact and law that may occur in all eight claims, within the meaning of Rule 5.02(1)(b). And I find that it would promote the convenient administration of justice for all eight claims to be heard in the same proceeding, within the meaning of Rule 5.02(1)(c).

54IFS understood that its dealership network was a franchise operation. It made disclosure to its three Ontario dealers and one Alberta dealer in accordance with applicable provincial franchise disclosure legislation. The dealership contracts stipulated that the law of Ontario applied to all of them. That law includes the Arthur Wishart (Franchise Disclosure) Act. In similar circumstances the Court of Appeal has found:

… by agreeing that the laws of Ontario are to govern… a franchise agreement applicable to franchises operating in another province, the intention of the parties was that their rights and obligations – including the reciprocal and inviolable rights and duties of fair dealing – are to be the same as if the business of the franchise was operated in Ontario.[34]

55If it was thought that this provision does not have extra-territorial application to the non-Ontario plaintiffs, despite the clear wording of the Act, and despite the choice of law in all eight of the contracts, I would still conclude that joinder of these claims ought to be permitted. These claims involve common disclosure, contracts with identical wording, and the same course of dealings that ultimately led to the failure of the IFS dealership network in Canada. The plaintiffs allege that IFS failed to perform its obligations under the dealership agreements, and eventually stopped doing business altogether, leaving the plaintiffs with unsold inventories of cars and parts, and no continuing presence of the Saab brand in Canada. These are not individuated complaints about specific conduct directed at specific dealerships, but claims arising from the alleged failure of the overall enterprise for which, the plaintiffs allege, IFS is liable in law to them.

56I conclude that the claims of the non-Ontario plaintiffs are properly joined in this proceeding with the claims of the three Ontario plaintiffs.

Joinder of the non-Ontario Defendants

57The defendants do not argue that separate proceedings ought to be commenced against separate defendants in different jurisdictions. And this is a sensible position. IFS is a subsidiary of a Michigan company, that is itself affiliated with a California company. Its President, Mr Libasci, and its Chief Financial Officer, Ms King, are residents of California and have never been in Ontario. Its Chief Executive Officer, Mr Steinhagen, is a resident of Michigan where he works for IFS’s American affiliates.[35] It had a “desk’ at Budd’s Saab, but usually no one sitting at the desk. IFS largely carried on business in Canada remotely – by email, fax, telephone – from Michigan and California.[36]

58But there is a world of difference between carrying on business outside of Ontario and having only a virtual presence within Ontario (on the one hand), and carrying on business inside Ontario remotely. The former may give rise to issues of whether there is jurisdiction in Ontario. The latter does not.

59IFS 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. ULC International Fleet Sales Inc. 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.

60I find that all four defendants are properly joined as parties in this proceeding.

Forum Conveniens

61Once 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.

62It would not be convenient for either the plaintiffs or the defendants for these claims to be pursued in multiple actions in five provinces, for the reasons I have given respecting joinder of the claims. Of course, it would be more convenient for the British Columbia plaintiff, for example, to have this proceeding in British Columbia. Likewise it would be more convenient for the Alberta plaintiff if this proceeding was in Alberta. Once it is concluded that a common proceeding is more convenient than multiple proceedings, the question is: where would be convenient for the common proceeding.

63In argument counsel has mentioned Nova Scotia, Michigan and California, though the defendants only concede that California would have jurisdiction.

64It is obvious that Ontario is the most convenient Canadian forum for this proceeding.[37] Three of the eight dealers are in Ontario. IFS’s presence was strongest in Ontario. The law of the contract is Ontario. Michigan, where IFS has most of its witnesses, is closer to Ontario than the other Canadian jurisdictions.

65I see nothing convenient about California as a choice of jurisdiction. It is closer to British Columbia than is Ontario. Aside from B.C., California is more remote from the plaintiffs and the defendants’ Michigan witnesses than is Ontario. It may be inconvenient for Mr Libasci and Ms King to come to Ontario. However they chose to do business in Ontario as franchisor’s associates when they signed IFS’s Disclosure Documents and caused them to be delivered to dealers in Ontario.

Conclusion

66I find there is jurisdiction simpliciter in Ontario for all claims of all plaintiffs against all defendants. I find that a single proceeding brought by all eight plaintiffs against the defendants would be a suitable and efficient way in which to advance these claims. And I find that Ontario is forum conveniens for that single proceeding. The motion is dismissed.

Process of this Motion

(a) Motion Scheduling

67I do not like excoriating parties or counsel. I do not view every excursion into court as a “teaching moment” for those unfortunate enough to appear before me. If a motion is bad, best to dismiss it and get on with something else. But this motion provokes a sterner response. Why?

68This action was commenced in February 2013. The defendants brought this motion, and so did not deliver a statement of defence, so as not to attorn to Ontario’s jurisdiction, the correct procedure on a motion challenging jurisdiction.

69This motion was presented to Low J. in motions scheduling court as something complex and important, requiring a full day’s argument. As a result it did not proceed as a “regular” motion, and was scheduled for March 2014. By these two steps – bringing the motion and saying that it required a full day of court time – this case was delayed, almost automatically, by about nine months.

70This was a simple motion that could have been presented in two hours or less, scheduled on a regular motions day. It should have been pursued that way.

(b) Assembling the Evidence

71The parties exchanged motion records by the end of August 2013. I have read those records closely and have been unable to divine any material disputes of fact. Mr Budd made a mistake in one particular of his evidence, which Mr Libasci corrected in reply materials. Mr Budd provided a further affidavit acknowledging that he had been wrong and that Mr Libasci was right on this point.[38]

72The defendants’ motion materials are not elaborate and could easily have been put together within a month. The plaintiffs responded within a month. Follow-up materials should not have required more than a couple of weeks for each side. The times I suggest here are reasonable “ordinary course” estimates of the time required to assemble the factual record: between two to three months. It could have been done faster than that.

73The defendants elected to cross examine Mr Budd, the affiant who presented all the initial evidence for the plaintiffs. The plaintiffs then conducted a follow up cross examination after Mr Budd answered his undertakings. I read these transcripts carefully. There were a few details added as result of the cross examinations, but nothing material. I consider that these cross examinations were a waste of time.

74Factums were delivered, the defendants’ in February 2014 and the plaintiffs in March 2014. The defendants, in their factum, for the first time, took exception to the form of the evidence provided by the plaintiffs. The plaintiffs had relied on an affidavit from one dealer – Christopher Budd – in which Mr Budd conveyed information about his own dealership and that of the other seven plaintiffs. The evidence respecting the other plaintiffs was not expressed properly – it did not specify properly the source of the information, and did not state that Mr Budd believed it.

75In their factum, the plaintiffs responded to the defendants’ objection by sloughing it off – they took the position that the affidavit was fine as it was.

76And this was the first order of business on March 27, 2014. The defendants argued that the plaintiffs were effectively out of court since they had no admissible evidence on most points.

77I had read the motion materials and had not seen any significant factual conflicts. But the defendants’ objection was correct technically. And the mistake was a rather basic one that should not have been made.

78I could not let the mis-drafting go: although it is a technical point, it is fundamental to evidence on motions. But neither could I do justice by dismissing the action because of drafting errors. This was not a case where the plaintiffs were willfully shielding their witnesses – there did not seem to be anything to shield them from. So I adjourned the motion, directed the plaintiffs to deliver brief supplementary affidavits to fix the problems, and permitted the defendants to cross examine the other seven dealers. I gave the parties a full day back before me on April 23rd so that the motion could be decided on the merits without excessive additional delay.

79The defendants did cross examine every one of the dealers. This was done remotely, which was sensible, and each of the cross examinations was brief – I would estimate from the length of the transcripts between 30 to 45 minutes each. Still, having read each of those transcripts, I cannot see how those cross examinations were useful.

80A particular low point came in the cross examinations of the seven dealers other than Mr Budd. They followed the same pattern. Each confirmed that his dealership had entered into a contract with IFS for a Saab dealership. Each confirmed that he had so advised Mr Budd and confirmed the basic paperwork involved, thus forming the basis for Mr Budd’s initial affidavit. Counsel established that each dealer knew that Saab manufactured the automobiles, and that IFS was Canadian distributor for Saab. Counsel then pointed to the manufacturer’s certificate, which was, in each case, signed by IFS. He then confirmed that IFS was not the manufacturer and suggested that the document “doesn’t accurately reflect the relationship as between the parties”.[39] And then counsel put it to the witness that this “was consistent with the documents that were signed in relation to these transactions with IFS, right?” The question drew an understandable objection in each case.[40] This point was not pursued in oral argument. And what, exactly, was the point? The certificate was provided by IFS. It was signed by IFS. There is nothing in the record to indicate that it was improper or unauthorized for IFS, as the Canadian distributor, to sign this document. If it was improper, is the argument that IFS signed and delivered false and misleading documents, so that none of its documents may be relied upon? If so, it is easy to see why this line of argument was not pursued at the motion.

81As another example, counsel marked as exhibits some definitions taken from the Oxford English Dictionary and cross examined Mr Budd on them, in respect to the desk IFS used at Budd’s offices in Oakville, establishing beyond any doubt that this was not a lease of real property in law. On Oxford’s authority, as put by counsel in his questions, the desk certainly was not “premises”.

82In fairness, not every line of questioning was as useless as these two examples. The dealers acknowledged, for example, that they knew that IFS personnel were located in Michigan, and they conducted most of their IFS dealings with those Michigan people. I do not think these points were controversial, but neither were they entirely pointless.

83I have already said that I considered these cross examinations a waste of time. Sometimes cross examinations turn out that way. But what points did counsel hope to establish by the questions that were asked? And how did those points relate to the overall record? Establishing that the “desk” at Budd was not a “leased premises” was not material – and gave Mr Budd an opportunity to expand on his evidence of the use that was made by Serge of the desk and other facilities at Budd. Cross-examining each dealer about the precise information it had provided to Mr Budd seemed entirely pointless when the substance of that evidence – what had happened between the parties relevant to jurisdiction – was not disputed.

84The cross examinations did not, themselves, delay matters, given the delays arising from scheduling. However, if this motion had been scheduled as a regular motion with materials exchanged as described above, (a) the best course would have been to proceed without cross examinations or, alternatively (b) if counsel really wanted to establish a few minor points, this could have been done in perhaps a one hour cross examination of Mr Budd.

(c) The Evidentiary Objection

85The defence objection to the plaintiffs’ evidence was correct. But it still concerns me. What was the point? The underlying evidence was not controversial – either on its face or as it turned out after cross examinations of the dealers. If the concern was purely technical, it should have been raised between counsel at the earliest opportunity.[41] If it was that the defendants wanted to cross examine the other dealers, then this should have been raised earlier between counsel. If these matters could not be resolved between counsel, then directions could have been obtained before the return of the motion.

86The way in which this was pursued was likely to cause further substantial delay in an already protracted motion. When motions are adjourned, they are often adjourned back to motions scheduling court. Had this been done here, the parties would have been given a fresh date for a one day motion, likely some nine months down the road. I was concerned that this case had already been delayed unduly and so put the return date on a non-sit day when I otherwise would have been writing reserve decisions.

(d) Argument of the Motion on the Merits

87On the first appearance, counsel for the defendants was not in a position to advise (a) where his client conceded there was jurisdiction simpliciter; and (b) where in Canada there would be jurisdiction to hear a proceeding by all the plaintiffs against IFS. This was frustrating and impractical. When the court asks – “if not here, then where?” – it expects a better answer than “some other place”.

88Argument on the second appearance was similarly frustrating. The factums were comprehensive; there was not much more to say. As indicated by my analysis above, the defendants’ position on all issues is predicated on its position that IFS did not carry on business in Ontario. When it loses that issue, as it did, there is not much left to talk about. And yet argument went on interminably, circling around and about, in and around.

89And 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. 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”.

90If the motion had been brought as I suggest it should have been, it could have been argued on the merits in an hour or so in June 2013. The manner in which it was pursued put the motion date to April 2014. What a colossal waste of time.

91And I say “if” the motion had been brought. A re-reading of the first two paragraphs of this endorsement summarizes my feelings on the merits. 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”.

92The net result is two years and tens of thousands of dollars in costs have been wasted. I call that an abuse of process.

Post-Motion Events

93I was concerned by excessive delay on April 23, 2013. I directed the parties to follow a schedule to complete pleadings, exchange documents and schedule discoveries, without regard to whether the defendants brought an appeal. I expressly directed that an appeal would not stay my scheduling order, without prejudice, of course, to any stay that might be ordered by the Court of Appeal. Counsel pointed out to me that there have been cases where steps taken in compliance with a court’s scheduling order have been viewed as a form of attorning to the jurisdiction of the court. This was a fair point, and so at counsel’s request I ordered that any steps taken by the defendants in compliance with my scheduling order would not constitute attorning to Ontario for the purposes of any appeal.

94There 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. Motions court is the front line for the court’s efforts to follow the lead established by the Supreme Court of Canada in Hryniak v. Mauldin.[42] The spirit of the Rules, embodied in R.1.02, is to decide proceedings on their merits, fairly, in a cost-efficient manner. Jurisdiction motions present an opportunity to subvert these principles while still complying with the letter of the Rules. And the fault lies, not just in the Rules and the jurisprudence on attornment, or on parties or counsel, but on the courts, for interpreting and applying the Rules and the jurisprudence on attornment in a manner that makes this possible. I concluded that formal reasons, rather than a brief handwritten endorsement, were warranted to make these points.

95Second, 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.

96Finally, 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.

97In July 2014, the Court of Appeal stayed my scheduling order pending the defendants’ appeal of my decision on jurisdiction.[43] The Court of Appeal did not have these reasons when it made its stay order. For obvious reasons it is not appropriate for me to comment on the stay decision.[44]

Costs

98I consider that substantial indemnity costs are justified as a sanction for bringing a motion so devoid of merit, and bringing it in a time-consuming, expensive and impractical manner. I discount those costs slightly to recognize that there was a basic drafting deficiency in the plaintiffs’ initial materials, though the defendants did not deal with that issue in a particularly constructive or practical way.

99In terms of quantum, I accept the hours claimed and hourly rates proposed by the plaintiffs in their bill of costs. The defendants’ position that costs ought to be $10,000 is unreasonable, given the multiple cross examinations and elaborate factums. Although it is not required that the defendants provide their own bill of costs, I do note that none was provided in support of the argument for a much lower quantum than that claimed by the plaintiffs.

100In the result, the motion is dismissed, with costs to the plaintiffs on a substantial indemnity scale fixed at $50,000 inclusive, payable jointly and severally by the defendants within thirty days.

D.L. CORBETT J.

Date: February 3, 2015

1Affidavit of Michael Libasci sworn August 2, 1013, para. 13, Motion Record,, tab 1.

2Affidfavit of Michael Libasci sworn August 2, 2013, para. 6, Motion Record, tab 1.

3Affidavit of Michael Libasci sworn August 2, 2013, para. 13, Motion Record, tab 1.

4Corporation Profile Report, Exhibit “A” to the Afgfidavit of Christopher Budd sworn August 30, 2013, Responding Record, tab 1A.

5In the statement of claim the plaintiffs allege that the Disclosure Documents did not comply with the applicable franchise disclosure legislation.

6Arthur Wishart (Franchise Disclosure) Act, 2000, S.O. 2000, c.3; Franchises Act, R.S.A. 2000, c. F-23.

7Affidavit of Christopher Budd sworn August 30, 2013, para. 25, Responding Record, tab 1.

8Affidavit of Christopher Budd sworn August 30, 2013, Exhibit “C”, p.2, responding Record, tab 1C.

9Disclosure Document, Affidavit of Christopher Budd sworn August 30, 2013, Exhibit “C”, Responding Record, tab 1C, p. 27.

10Disclosure Document, Affidavit of Christopher Budd sworn August 30, 2013, Exhibit “C”, Responding Record, tab 1C, p.78.

11Affidavit of Christopher Budd sworn August 30, 2013, para. 46, Responding Record, tab 1.

12Affidavit of Christopher Budd sworn August 30, 2013, para. 47, Exhibit “O”, Responding Record, tabs 1 and 1O.

13Affidavit of Christopher Budd sworn August 30, 2013, Exhibit “C”, Responding Record, tab 1C, p.22.

14Affidavit of Michael Libasci sworn August 2, 2013, paras. 7, 8 and 17, Motion Record, tab 1.

15Affidavit of Christopher Budd sworn August 30, 2013, paras 33-35, Exhibit “G”, Responding Record, tabs 1 and 1G.

16The Disclosure Document makes it clear that dealers will be required to keep their premises in a state satisfactory to IFS, must operate their Saab dealership from the premises, and may not (without permission from IFS) use the premises for purposes other than a Saab dealership: Affidavit of Christopher Budd sworn August 30, 2013, Exhibit “C”, Responding Record, tab 1C, pp.19, 23.

17Arthur Wishart (Franchise Disclosure) Act, 200, S.O. 200, c.3, s.10.

18Affidavit of Christopher Budd sworn August 30, 2013, Exhibits “F” and “G”, Responding Record, tabs 1F and 1G. In cross examination of the dealers, counsel for the defendants suggested that the certificate is incorrect on its faced because it is signed by IFS and the manufacturer is Saab AB. There is no evidence that IFS was not authorized to sign the certificates, and this issue was not pursued in argument.

19Affidavit of Christopher Budd sworn August 30, 2013, Responding Record, paras. 36-38 and Exhibits “H” and “I”, tab 1, 1H and 1I.

20Affidavit of Christopher Budd sworn August 30, 2013, paras. 39-45, Exhibits “J”, “K”, “L”, “M” and “N”, Responding Record, tabs 1, 1J, 1K, 1L, 1M and 1N.

21Affidavit of Christopher Budd, paras. 48-49, Responding Record, tab 1.

22Affidavit of Christopher Budd sworn AQugust 30, 203, para. 50, Exhibit “R”, Responding Record, tab 1 and 1R.

23Affidavit of Christopher Budd sworn August 30, 2013, Exhibit “D”, Responding Record, tab 1D.

24In cross examination, Christopher Budd described “Serge” using IFS’s office at Budd’s dealership. It was an office dedicated to IFS’s use, with a desk and a phone, where mail would be placed, and in which “Serge” worked regularly though by no means daily. Mr Budd had believed that Budd had been paid by IFS to use this office, but in fact payments were never made or demanded: it seems this was an oversight, at least from Budd’s end.

25Notice of Motion dated August 6, 2013, paras. 2 and 3, Motion Record, p.1.

26The motion was adjourned for other reasons: I discuss the process of the motion below, after I have concluded my reasons on the merits.

27See para. XX, below.

28Club Resorts Ltd. v. Van Breda, 2012 SCC 17, at para. 90.

29Defendants’ Supplementary Factum, paras. 3 and 4.

30Rules of Civil Procedure, R.R.O. 1990, Reg. 194, R.5.02.

31Van Breda v. Village Resorts Ltd., 2010 ONCA 84, [2010] O.J. No. 402, para. 79 (C.A.). This finding was neither approved nor disapproved in the subsequent decision in this case by the Supreme Court of Canada.

32Supplementary Factum of the Plaintiffs, paras. 12-20.

33Aside from a brief reference to the relationship between issues of joinder and choice of the most convenient forum, which is addressed below.

34405341 Ontario Ltd. V. Midas Canada Inc., 2010 ONCA 478, paras. 43-45.

35Affidavit of Christopher Budd sworn August 30, 2013, Exhibit “Q”, Responding Record, tab 1Q.

36See, for example, a memo dated January 28, 2011to Canadian Saab dealers. It bears the Ontario Address for IFS. It is sent from the defendants’ Michigan office. It directs dealers to call defendants’ personnel in California: Affidavit of Christopher Budd sworn August 30, 2013, Exhibit “P”, Responding Record, tab 1P.

37See Young v. Tyco International of Canada (2008), 2008 ONCA 709, 92 O.R. (3d) 161 at para. 26 (C.A.).

38The corrected point was Mr Budd’s assertion that IFS had paid rent for the use of its office at the Budd dealership. Mr Budd thought this had been agreed and had been done. He was wrong. I cannot understand how counsel felt the case was advanced by challenging Mr Budd’s credibility – which he did for several pages with some rancour – to the point of putting the Oxford definition of “premises to Mr Budd and then marking it as an exhibit. This was hardly an important point – whether rent was paid. It is clear from the earlier quoted email that it was contemplated that it would be, and this minor detail was overlooked.

39For example, cross examination of Ranko Kraishnik, March 31, 2014, Q.82.

40Cross examination of Ranko Kraishnik, Q.83.

41See for example Mastronardi Produce Ltd. v. Butera, 2011 ONSC 5481 (S.C.J.); Metropolitan Toronto Condo. Corp. No. 781 v. Reyhanian, [2000] O.J. No. 2640 (S.C.J.).

422014 SCC 7.

432014 ONCA 546.

44R. v. Musselman (2004), 2004 34073 (ON SC), 25 C.R. (6th) 295.