CITATION: 1291079 Ontario Limited v. Sears Canada Inc., 2016 ONSC 7451
COURT FILE NO.: 3769/13
DATE: 2016-11-29
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 1291079 ONTARIO LIMITED, Plaintiff
AND:
SEARS CANADA INC., Defendant
BEFORE: Gray J.
COUNSEL: Andy Seretis, Counsel for the Plaintiff
Peter F.C. Howard, Counsel for the Defendant
HEARD: November 29, 2016
ENDORSEMENT
[1] This action has been certified as a class proceeding. The plaintiff now proposes to bring a motion for partial summary judgment. This is opposed by the defendant, who submits that the entire matter should be allowed to proceed to trial.
Background
[2] On June 11, 2014, I heard a motion to certify this action as a class proceeding. On September 8, 2014, I granted the motion.
[3] The common issues that were certified are as follows:
a) Has Sears Canada, at any time since July 5, 2011 breached its obligations under the Dealer Agreements with each of the class members, including the asserted obligation to exercise contractual discretion in good faith, by:
i. Failing to increase commission paid to class members;
ii. Changing commissions paid to class members in August 2012;
iii. Selling directly to customers located within the class members’ Market Areas (as defined in their respective Dealer Agreements), or, alternatively, by failing to pay commission to the class members for good sold directly to customers located within the class members’ Market Areas through direct channels;
iv. Changing local store advertising subsidies;
v. Failing to provide a monthly accounting of how compensation was calculated; or
vi. Imposing handling fees payable by customers on catalogue sales made by dealers?
b) Has Sears Canada been unjustly enriched by any of the acts or omissions in (a) (i) to (vi) above?
c) If liability is established, what is the appropriate measure of damages or compensation, if any, for the class?
d) Is Sears Canada a “franchisor” within the meaning of the Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c.3 (Arthur Wishart Act)? If so:
i. Did Sears Canada breach the duty of fair dealing under s.3 of the Arthur Wishart Act by any of the acts of omissions set out in (a) (i) to (vi) above, and, if so, what are the damages for the class?
ii. Was Sears Canada required to deliver to each class member a disclosure document within the meaning of s.5 of the Arthur Wishart Act at least fourteen days before the class member signed a Dealer Agreement or any material amendment thereof, and if so, were the provisions of s.5(3) of the Act otherwise complied with? If s.5 was not complied with, what are the damages for the class under s.7?
[4] By way of a consent order, the following additional common issue was certified:
Is an express or implied term of the Dealer Agreements, or a requirement of the duty of fair dealing under the Arthur Wishart Act, that Sears would take reasonable measures to support and protect the Sears Hometown Store Network? If so, did Sears breach that term by reason of any of the conduct alleged in the Fresh as Amended Statement of Claim?
[5] After I certified this action as a class proceeding, the parties agreed on a timetable for the action. That timetable was furnished to me in writing by counsel for the plaintiff on February 23, 2015. By an endorsement dated February 27, 2015, I approved the timetable.
[6] While there had been some mention, during the certification motion, of the prospect that it might be beneficial to obtain an early determination of whether the parties were in the relationship of franchisor and franchisee as contemplated under the Arthur Wishart Act (Franchise Disclosure), 2000, (the “AWA”), there is no mention of such a prospect in the timetable that was furnished to me on February 23, 2015. What that timetable specified was the agreement to a discovery plan; the exchange of affidavits of documents; oral examinations for discovery; the answering of undertakings; the service of expert reports; refusals motions; mediation; and a common issues trial.
[7] According to the affidavit material filed by the defendant, the parties agreed to a protocol for the exchange of evidence in electronic form as of July 23, 2015. The parties have exchanged documents in accordance with the protocol. As of June 23, 2016, the defendant had collected 1,496,162 documents; reviewed 131,577 documents; and produced 15,688 documents.
[8] The parties attended a mediation before the Honourable Warren K. Winkler on October 14, 2015, but a resolution was not reached.
[9] On or about March 3, 2016, the parties exchanged proposed revised timetables. Neither timetable contemplated a partial summary judgment motion. The defendants’ proposed timetable was accepted by the plaintiff. It contemplates a common issues trial in September 2017.
[10] On July 21, 2016, counsel for the plaintiff forwarded to counsel for the defendant a draft notice of motion for partial summary judgment. The draft summary judgment motion contemplated summary judgment on common issue (d) certified under the order dated September 8, 2014. For ease of reference, it reads as follows:
d) Is Sears Canada a “franchisor” within the meaning of the Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c.3 (Arthur Wishart Act)? If so:
i. Did Sears Canada breach the duty of fair dealing under s.3 of the Arthur Wishart Act by any of the acts of omissions set out in (a) (i) to (vi) above, and, if so, what are the damages for the class?
ii. Was Sears Canada required to deliver to each class member a disclosure document within the meaning of s.5 of the Arthur Wishart Act at least fourteen days before the class member signed a Dealer Agreement or any material amendment thereof, and if so, were the provisions of s.5(3) of the Act otherwise complied with? If s.5 was not complied with, what are the damages for the class under s.7?
[11] As part of the proposed summary judgment motion, the plaintiff contemplated an order directing individual hearings, inquiries and determinations under s. 25(1) of the Class Proceedings Act in respect of class members’ claims under s.7 of the AWA, and directions relating to procedures to be followed to resolve them.
[12] Counsel for the plaintiff, in his factum and in his submissions before me, made it clear that whatever the result of the partial summary judgment motion, the rest of the claims reflected in the Statement of Claim would, if not resolved, proceed to a common issues trial.
[13] The defendant says it has incurred fees and disbursements of approximately $646,000 with respect to document collection, document review, and production.
[14] On August 10, 2016, the plaintiff served its notice of motion and motion record for partial summary judgment. The notice of motion is substantially the same as the earlier draft. A date has been fixed for the hearing of the motion, on May 27, 2017.
[15] In accordance with the timetable, the defendant delivered its written interrogatories on June 29, 2016. The plaintiff has not delivered its written interrogatories.
Submissions
[16] Mr. Howard, counsel for the defendant, submits that the court should make an order staying the motion for summary judgment. He submits that it is not appropriate, in the circumstances, to allow a single issue to be severed and decided in advance of the common issues trial. This is particularly so, he submits, in view of what has occurred to date. The defendant has expended considerable resources in producing documents and advancing the litigation in accordance with the agreed-upon timetable.
[17] Mr. Howard submits that to permit a single issue to be determined before the balance of the issues are determined by the common issues trial judge will do little or nothing to advance the objective of conducting the litigation in a proportionate, timely or cost-effective manner. Rather, it will have the potential to produce at least two final orders or judgments, with concomitant rights of appeal to be pursued separately.
[18] Accordingly, Mr. Howard submits that the plaintiff should not be permitted to proceed with a motion for partial summary judgment. Rather, all issues should be determined at a common issues trial.
[19] In the alternative, Mr. Howard submits that the plaintiff should pay a significant amount to compensate the defendant for costs thrown away based on the agreed-upon timetable. Had the plaintiff brought a motion for partial summary judgment early in the litigation, the defendant would not have undertaken the voluminous search for and production of documents, at considerable expense, that it did. At the very least, all of that work would have been postponed until after the motion for partial summary judgment had been concluded, and any appeals had been disposed of.
[20] Mr. Seretis, counsel for the plaintiff, submits that the motion for summary judgment should be allowed to proceed as scheduled.
[21] Mr. Seretis submits that the legal issue raised under common issues (d) (i) and (ii) can be disposed of quite simply, on a very straightforward record. It is primarily a legal issue: is the relationship between the parties one of franchisor and franchisee that is governed by the AWA? It is likely that there will be few facts in dispute on the issue, and the resolution of the issue is primarily one for legal argument.
[22] Mr. Seretis submits that the motion judge has ample tools at his disposal to deal with any individual issues arising out of a partial summary judgment, assuming the plaintiff is successful, and it need not be assumed that the resolution of any individual issues will cause additional difficulty or cost. For example, it would be open to the motion judge to order that any individual issues be determined at the same time as, or after, the common issues trial. There may be other avenues available to minimize cost and disruption.
[23] For these reasons, Mr. Seretis submits that the motion for partial summary judgment should proceed.
[24] Mr. Seretis submits that it is premature to contemplate whether the plaintiff should be required to compensate the defendant for any costs “thrown away”. He submits that costs were not, in fact, thrown away, because they would have had to have been incurred, in any event, for the common issues trial.
Analysis
[25] Section 12 of the Class Proceedings Act provides as follows:
- The court, on the motion of a party or class member, may make any order it considers appropriate respecting the conduct of a class proceeding to ensure its fair and expeditious determination and, for the purpose, may impose such terms on the parties as it considers appropriate.
[26] There can be little doubt that, pursuant to this provision, I have the authority to make an order prohibiting the bringing of a partial summary judgment motion if I think it is necessary to ensure a fair and expeditious determination of the action. Whether it is necessary to “stay” the summary judgment motion, or whether I can simply order that it not be brought or heard is beside the point.
[27] At this point in the proceedings, the parties have moved some distance towards a common issues trial. They have proceeded under an agreed-upon timetable. I agree with Strathy J., as he then was, in Fairview Donut Inc. v. TDL Group Corp. (2010), 97 C.P.C. (6th) 198 (Ont. S.C.J.), at para. 10, that the court is not bound by a scheduling timetable agreed to by the parties. If I thought the bringing of a partial summary judgment motion would be beneficial in advancing the litigation in a proportionate, timely and cost-effective way, I would have no hesitation in allowing it, no matter what procedural timetable the parties had agreed to.
[28] In this case, I am not persuaded that the bringing of a partial summary judgment motion is appropriate. In my view, it is best that all issues be determined at once at a common issues trial.
[29] The appropriate principles respecting summary judgment motions were extensively canvassed by Karakatsanis J. in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, and it is unnecessary to review her reasons in any depth. At para. 49, she stated that, among other things, the motion judge is to consider whether the summary judgment process is a proportionate, more expeditious and less expensive means to achieve a just result. At para. 60, she noted that if some claims will proceed to trial in any event, it may not be in the interests of justice to use the process, because it may run the risk of duplicative proceedings or inconsistent findings of fact.
[30] In my view, to permit a partial summary judgment motion in this case will simply add to the expense, and may delay the resolution of the entire matter.
[31] It is quite possible, if not probable, that the result of the summary judgment motion will be a final order or judgment. Counsel for the plaintiff has made it clear that it will not resolve the entire action. The balance of the action will proceed to a common issues trial. That will also result in a final order or judgment.
[32] There is every likelihood that there will be two final orders or judgments, and two separate routes of appeal. I do not see how this is in any way proportionate, expeditious or cost-effective.
[33] The difficulty is compounded, in my view, when one considers the stage at which the proposed summary judgment motion is being brought. The parties have had considerable disclosure, they have had mediation, and they have incurred considerable expense.
[34] If a summary judgment motion had been brought immediately after certification, there might be more justification for it. Even then, it would be difficult, if not impossible, to avoid the problem of two final orders or judgments and two separate appeal routes. However, at least the significant document productions and consequent cost would have been avoided, or at least delayed.
[35] Instead of advancing the litigation in a proportionate, expeditious and cost-effective way, the bringing of a partial summary judgment motion will do little more than add complexity and cost, and potentially create more than one final order or judgment with different appeal routes. Among other things, this would be contrary to the policy reflected in s. 138 of the Courts of Justice Act¸ which reads as follows:
- As far as possible, multiplicity of legal proceedings shall be avoided.
[36] In my view, multiplicity of proceedings will be avoided, in this case, if all matters in dispute proceed to a single trial conducted by the common issues trial judge.
Disposition
[37] For the foregoing reasons, the plaintiff will not be allowed to proceed with a motion for partial summary judgment. The date fixed for the hearing of the motion is vacated.
[38] As agreed, the defendant is awarded costs fixed in the amount of $5,000, all-inclusive, payable within 30 days.
Gray J.
Date: November 29, 2016