Emkay Canada Fleet Services Corp. v. Imperial Oil, 2016 ONSC 2710

CITATION: Emkay Canada Fleet Services Corp. v. Imperial Oil, 2016 ONSC 2710 COURT FILE NO.: CV-15-523003 DATE: 20160502

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

EMKAY CANADA FLEET SERVICES CORP. Plaintiff

– and –

IMPERIAL OIL, IMPERIAL OIL LIMITED, MCCOLL-FRONTENAC PETROLEUM INC., VALERO ENERGY INC., CST CANADA CO., SHELL CANADA LIMITED, PIONEER ENERGY LP, PARKLAND INDUSTRIES LTD., CTC KDL FUELCO L.P. and CANADIAN TIRE CORPORATION LIMITED Defendants

COUNSEL: Cynthia L. Spry, for the Plaintiff Amy Pressman, for Imperial Oil, Imperial Oil Limited and McColl-Frontenac Petroleum Inc., Defendants Gordon Douglas, for Valero Energy Inc. and CST Canada Co., Defendants Heather R. Weir, for Shell Canada Limited, Defendant Larry Reimer, for Pioneer Energy LP and Parkland Industries Ltd., Defendants Colin Pendrith, for CTC KDL, Fulco L.P. and Canadian Tire Corporation Limited, Defendants

HEARD: April 13, 2016

JUDGMENT

LEDERER J.:

[1] Joinder is "[t]he uniting of parties or claims in a single lawsuit".[^1] This motion concerns joinder, in this case, not the consolidation but, rather, the separation of proceedings. In civil matters, it has long been an underlying goal of our administration of justice to avoid an unnecessary multiplicity of actions dealing with the same events or concerns. We seek to save costs of the parties, conserve court time and avoid the risk of decisions which conflict with each other:

The avoidance of multiple proceedings was one of the major goals of the great Judicature Acts that began in England in 1873 and came to Ontario in 1881.[^2] Section 138 of the Courts of Justice Act,[^3] states that, as far as possible, multiplicity of legal proceedings shall be avoided, and for decades the trend of the jurisprudence on the joinder of causes of action and the joinder of parties to proceedings is to allow Joinder and to avoid a multiplicity of proceedings if at all possible.[^4]

[2] The plaintiff, Emkay Canada Fleet Services Corp. (hereinafter, Emkay), provides vehicle leasing and the ancillary services to corporate customers in Ontario and elsewhere in Canada. One ancillary service is the provision of a "universal fuel card" (a credit card) used by customers to purchase fuel from fuel providers. According to Emkay, its card is accepted by over 90 different fuel providers. Among the providers are the ten defendants in this action, all of which operate service stations in Ontario. It is alleged that a single fraud ring used counterfeit Emkay fuel cards to make purchases. The defendants charged Emkay for the purchases that had been made but Emkay was unable to complete the program by, in turn, properly charging any cardholder. Emkay calculated that, as a result of the fraud, it had been improperly invoiced $1.096 million. It launched a single action naming all ten of the defendants and claiming damages of $1,600,000. Not all of the defendants are independent of each other. There are three groups and three individual defendants. The plaintiff has divided the value of the fraudulent transactions between them as follows:

1. Imperial Oil, Imperial Oil Limited and McColl-Frontenac Petroleum Inc. (hereinafter, the "Imperial Defendants"): $721,238.91
2. Shell Canada Limited (hereinafter, "Shell"): $110,290.59
3. Parkland Industries Ltd. (hereinafter, "Parkland"): $58,903.59
4. Valero Energy Inc. and CST Canada Co. (hereinafter, the "CST Defendants"): $39,608.10
5. CTC KDL Fuelco L.P. and Canadian Tire Corporation, Limited (hereinafter, the "Canadian Tire Defendants"): $36,705.51
6. Pioneer Energy L.P.: $15,285.28

TOTAL: $982,031.98

[3] It is unclear to me why this total differs from the allegation that Emkay was invoiced for $1.906 million in fraudulent charges. Be that as it may, the action is a single proceeding seeking a global amount ($1,600,000). On the motion, counsel for the plaintiff suggested the action included a claim for the loss of good will. I point out this is not referred to in what I understand to be the current form of the Statement of Claim (the Amended Statement of Claim, dated March 30, 2015).

[4] Each of the six defendants (or group of defendants) have brought motions in which they each seek to separate themselves from the rest: five by relief from joinder, and one (Shell) staying the action against it on the basis that, in its case, jurisdiction has been reserved to Alberta. The action is founded both in contract and negligence. The contract action depends on the allegation that there are agreements between each of the defendants (or groups of defendants) and Emkay providing for acceptance of the cards by the providers, the subsequent invoicing of Emkay and payment by it for the purchases that were made. The difficulty is that none of the alleged agreements can be found or have been produced by either side. Nonetheless, it would seem there must be some kind of agreement or understanding in place. The fact is that fuel has been purchased using the Emkay cards, invoices have been delivered and payments have been made.

[5] Both Shell and the Canadian Tire Defendants say that they stand apart. They submit that there are agreements which touch on their relationship with Emkay and which are determinative of the issues raised in the action. Shell relies on a "Fleet Card Acceptance Agreement" it entered into with Emkay on April 19, 2013. Emkay noted that the majority of the transactions which occurred at Shell-supplied and operated service stations took place before this contract was signed. Emkay says the agreement would not affect those transactions and no written agreement that would has been produced.

[6] The Canadian Tire Defendants refer to an agreement they entered into with Leasemaster National Inc. concerning the use of fuel cards at Canadian Tire-branded service stations. Emkay acquired assets from Leasemaster National Inc., but indicates that the agreement in question was not signed. Emkay submits that there is no evidence that this agreement was binding or had been assigned to it.

[7] In this case, the assertion that joinder is appropriate is made by Emkay on the basis that the purchases that are the demonstration of the fraud represent a "series of transactions," raise "common questions of law or fact" and their presence in a single proceeding will "...promote the convenient administration of justice".[^5] The defendants disagree in respect to each of these three propositions.

[8] The defendants submit that any causes of action against them are individual and distinct. The relationship between each of them and Emkay depends on the presence of separate contracts and independent torts. This being so, there can be no common questions of law or fact. The 4,371 transactions which are said to be demonstrative of the fraud are each dependent on their own facts. They are all different. Every service station would have its own management and practices. Thus, they do not represent a series of transactions. In the circumstances, it would not serve to promote the administration of justice to compel all of these defendants to sit the through a trial where their particular interests would take up only a small portion of the time. From this foundation, the defendants took the position that the administration of justice would only be served by severing the six sets of defendants.

[9] For its part, Emkay believes there is a common question of law. The question is who bears the liability when a fraud such as occurred takes place? Is it the plaintiff who operates the fuel card program or the defendants who are the immediate sellers of the fuel? Counsel identifies this question even though she was not ready to acknowledge that the answer is necessarily the same for all six defendants. The same is not the case with respect to negligence. Counsel does agree that, in these circumstances, if there is no duty of care owed by a fuel provider to the operator of the card program, that finding would be common to all defendants. Counsel observed that the transactions, which are at the root of the action, were "perpetrated by a single fraud ring". On that basis, they represent a series of transactions. Counsel for Emkay proposed that it would not promote the convenient administration of justice to conduct separate trials. This would inconvenience witnesses, including experts who would be called on to appear several times essentially for the same purpose, there would be increased costs, duplicative procedural steps, including discovery, and the risk of inconsistent verdicts.

[10] As suggested at the outset of these reasons, joinder is not an issue which is limited to the interests of the parties. It has a long history and originates with concerns the court has for its processes and the administration of justice. This was raised with all counsel at the outset of the hearing of the motion. They took some time to review the question and to their considerable and collective credit, proposed a resolution which is simple and should be effective:

1. Insofar as the action is brought against the Imperial Defendants, it is to be severed and will proceed.
2. Insofar as the other defendants are concerned (with the possible exception of Shell), all the remaining actions are to be stayed until the Imperial matter has been resolved either by settlement, decision at trial or, if necessary, by the Court of Appeal.
3. It may be that the decision in the Imperial matter will assist in resolving the remaining matters. If there is reason to continue (if there is some basis for one, some or all of the remaining matters to be distinguished from the findings made with respect to Imperial), those matters that proceed will do so pursuant to the "Simplified Procedure" governed by Rule 76 of the Rules of Civil Procedure. With the exception of Pioneer, the following will apply to any matter that proceeds following the decision in Imperial: (a) Despite rule 76.04(2), motions for examinations-for-discovery beyond 2 hours may be brought; (b) Despite rule 76.04(1), para. 1, "limited" cross-examinations on affidavits provided in respect of any motions that are brought are permitted; and, (c) To the extent that Emkay may recover for damages to its goodwill and reputation, such damages are to be attributable to each defendant individually (they will not be jointly and severally liable).
4. The claim against Pioneer falls within the jurisdiction of the Small Claims Court. To accommodate its inclusion with the other matters to which the "Simplified Procedure" is to apply, the following applies to Pioneer: (a) There will be document exchange pursuant to the "Simplified Procedure"; (b) There will be no examinations-for-discovery; and, (c) There will be no mandatory mediation.

[11] Shell sets itself apart. It relies on a "forum selection clause" found in the agreement it made with Emkay on April 19, 2013. The clause states that it is to be "...governed by and construed exclusively in accordance with the laws of the province of Alberta and the law of Canada applicable therein." The clause goes on to say: "Each of Shell and the Card Issuer irrevocably submits to the exclusive jurisdiction of the courts of Alberta over any claim or matter arising under or in connection with the Agreement." It is the submission of Shell that the date the agreement was entered into is of no moment. It is Shell's evidence that the terms by which it accepts fuel cards of the type being considered (Fleet Cards) are standard and that they universally require Alberta to be the governing jurisdiction. In Shell's view, it would be reasonable to conclude that the terms of the agreement which Emkay says existed prior to the agreement of April 19, 2013 would be the same, at least in respect to the governing jurisdiction. This being so, pursuant to that provision, the action, insofar as it proposes to proceed against Shell, should be stayed. Any action against Shell should be or should have been started in Alberta.[^6]

[12] This is not necessarily so.

[13] Generally, such clauses are dealt with on the basis that parties are obliged to adhere to the agreements they make. This is not a question of deciding whether the jurisdiction that is the subject of the agreement is the right or the best place for the matter to proceed. The issue is not resolved by deciding that the selected jurisdiction is a forum non conveniens[^7] (a discretionary power that allows the court to dismiss a case in circumstances where another court is much better suited to hear the case[^8]).

[14] This is not to say that a "forum selection clause" will never be set aside. "[T]he exercise of the court's discretion not to enforce a forum selection clause is governed by the 'strong cause' test....".[^9] The implication of the test is that there are only a few factors that may justify the departure from the general principle that those that agree to such clause should be bound by them. Among that small number of considerations is where "...enforcing the clause in the particular case would frustrate some clear public policy".[^10] Among the "public policy" considerations that may be at play is the administration of justice and the need for the processes of the court to respond appropriately. In Mobile Mini Inc. v. Centreline Equipment Rentals Ltd.,[^11] the Arizona supplier of goods sued its Ontario dealer for non-payment. The dealer counter- claimed alleging that the goods were defective. The contract between them provided that claims could "only be litigated in Arizona". The dealer successfully moved to stay the action in Ontario. The Court of Appeal recognized the "strong cause" test as applicable:

When a defendant moves to stay a proceeding brought in Ontario relying on a forum selection clause which designates another jurisdiction as the appropriate forum, the Ontario court will stay the Ontario proceedings unless the plaintiff can show 'strong cause' for not giving effect to the clause. The plaintiff must show that on a consideration of the totality of the circumstances, it would be unreasonable or unjust to stay the Ontario proceedings.[^12]

[Emphasis added]

[15] The court recognized (as counsel for the supplier had acknowledged) that had the motion to stay been brought at the outset of the proceedings in Ontario, those proceedings would have been stayed. As it was, the motion had not been brought at the outset, but immediately before the case was to be scheduled for trial. The court concluded:

In these exceptional circumstances, we think it would be unjust to require the appellant to stop the proceedings in Ontario on the eve of trial and move them to Arizona to begin the proceedings afresh some three and a half years after the statement of claim was issued.

....While the close connection between Ontario and the subject matter of the litigation would not by itself trump the forum selection clause, it does make it easier to come to the conclusion that given the delay and the defendant's conduct in the proceedings, justice requires that the Ontario proceedings continue.[^13]

[Emphasis added]

[16] This returns me to what was said at the outset of these reasons. It is a fundamental and long-standing principle that a multiplicity of proceedings is to be avoided. Joinder of multiple defendants has been said to be directed at two basic policy considerations, economy and justice:

Economy: A plaintiff is permitted to join multiple defendants to achieve a saving of time and costs, both to himself and to the court, through the avoidance of a multiplicity of actions where there are questions of law or fact in common to the claims asserted....To require the plaintiff to suit each defendant separately would involve the plaintiff in additional costs and would require the court to go over much of the same area twice.

Justice and the risk of inconsistent determination:...There is a second and, it is submitted, a more important one: to assure that justice is done by avoiding the risk of inconsistent determinations. This risk arises because, under the traditional rules of res judicata, only the parties to the litigation (and privies) are bound thereby.... The second policy is arguably the more important of the two because it involves a more significant value. It is concerned not merely with convenience and economy, but with justice in terms of the ultimate outcome. It assures that a fair and proper result is achieved and that if the plaintiff is to lose he does so on the merits rather than as a result of procedural manoeuvring....[^14]

[17] These policy concerns apply here. From the perspective of the plaintiff, the action, insofar as it applies against Shell, is related to and substantially similar to those of the other defendants. From the perspective of the court, there is no reason to separate these claims. To do so would create a multiplicity of proceedings with additional cost and the risk of inconsistent decisions. From the perspective of Shell, no distinction was suggested other than the presence in the April 19, 2013 agreement other than the presence of the Forum selection clause. It is difficult to understand how that contract could apply to transactions that occurred prior to it being agreed to.

[18] The public policy that should govern is the policy against a multiplicity of proceedings. In the particular circumstance of this case, this demonstrates the "strong cause" required to set aside the general understanding that "forum selection clauses" are to be upheld.

[19] I will not order that the proceeding insofar as it applies to Shell be stayed separate from the other defendants. As it is, the action against Shell is stayed in the same manner as the defendants other than the Imperial defendants and will be treated as they are, pursuant to the Simplified Procedure" when that stay is lifted.

[20] There will be no costs.

LEDERER J.

Released: 20160502

[^1]: Black's Law Dictionary, Tenth Edition, Bryan A. Garner, Editor in Chief. [^2]: Paul M. Perell, John W. Morden: The Law of Civil Procedure in Ontario, Second Edition © LexisNexis Canada Inc. 2014, at p. 380, para. 4.436, referring to Foot v. Rawlings, 1963 38 (SCC), [1963] S.C.J. No. 13, [1963] S.C.R. 197 (S.C.C.); and, Treaty Group v. Drake International Inc., [2006] O.J. No. 1529 (Ont. S.C.J.). [^3]: R.S.O. 1990, c. C.43. [^4]: Paul M. Perell, John W. Morden: The Law of Civil Procedure in Ontario, Second Edition, supra, (fn. 2) referring to Thames Steel Construction Ltd. v. Portman, 1980 1670 (ON SC), [1980] O.J. No. 3588, 28 O.R. (2d) 445 (Ont. Div. Ct.); Federation Insurance Co. v. Piscione, 1964 216 (ON SC), [1964] O.J. No. 778, [1964] 2 O.R. 404 (Ont. H.C.J.); Clough v. Greyhound Leasing & Financial of Canada Ltd., 1979 1934 (ON SC), [1997] O.J. No. 4430, 26 O.R. (2d) 590 (Ont. H.C.J.); and, Canadian Steel Corp. v. Standard Lithographic Co., 1933 123 (ON CA), [1933] O.J. No. 367, [1933] O.R. 624 (Ont. C.A.). [^5]: Rule 5.02(2)(a), (b) and (e) of the Rules of Civil Procedure, R.R.O. 1990, O. Reg. 194. [^6]: I say "should have been" because counsel advised the Court that at this point any cause of action in Alberta would be moot. It is too late. It would be beyond the applicable limitation period. [^7]: Expedition Helicopters Inc. v. Honeywell Inc., 2010 ONCA 351, [2010] ONCA 351, 100 O.R. (3d) 241, at paras. 8-11, referred to in Harster Greenhouse Inc. v. Visser International Trade & Engineeering B.V. 2011 ONSC 2608, 16 C.P.C. (7th) 206, at paras. 70-78; and, Manjos v. Fridgant, 2016 ONCA 176, at paras. 5-6. [^8]: Wex Legal Dictionary: www.law.cornell.edu/wex/forum non conveniens. [^9]: Expedition Helicopters Inc. v. Honeywell Inc., supra, (fn. 7), at para. 6, referring to the British case of "Eleftheria" (The)(Cargo Owners) v. "Eleftheria" (The), [1969] 1 Lloyd's Rep. 237 (Eng. P.D.A.); and, quoting from Z.I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27, [2003] 1 S.C.R. 450 (S.C.C.), at para. 19. [^10]: Expedition Helicopters Inc. v. Honeywell Inc., supra, (fn. 7), at para. 24. [^11]: 2004 22309 (ON CA), [2004] O.J. No. 3659, 133 A.C.W.S. (3d) 429, 136 A.C.W.S. (3d) 645, 190 O.A.C. 149. [^12]: Mobile Mini Inc. v. Centreline Equipment Rentals Ltd., supra, (fn.11), at para. 4, referring to Z.I. Pompey Industrie v. ECU-Line N.V. supra, (fn. 9). [^13]: Ibid, (Mobile Mini), at paras. 9 and 10. [^14]: G.D. Watson, "Joinder of Defendants Sued in the Alternative: Solicitors as Co-Defendants" (1981) 2 Advocates' Q. 365, at pp. 371-372.