Court File and Parties

COURT FILE NO.: 18-76033 DATE: 2020/06/01 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

QUICKIE CONVENIENCE STORES CORP. Applicant – and – PARKLAND FUEL CORPORATION Respondent

Counsel: William McDowell, Brian Kolenda and Vinayak Mishra, for the Applicant Linda Plumpton and Johnathon Silver, for the Respondent

Costs decision Kane J.

[1] Parkland Fuel Corporation (“Parkland”) seeks an award of $88,282 costs of this application on a partial indemnity scale, consisting of:

a. $75,307 for legal fees, with its actual cost thereof being $125,513; b. $2,818 for disbursements; and c. $10,156 of HST.

[2] Parkland seeks this cost award based on its success in defending this application and Quickie’s lack of success in obtaining any of the relief it claimed.

[3] In the alternative, Parkland submits that if the court should decide that less than full partial indemnity costs should be awarded due to Quickie’s success on some legal issues in the application, a 20% reduction of the costs claimed would be fair and appropriate.

[4] Quickie Convenience Stores Corp. (“Quickie”) submits that there should be no award of costs to Parkland given the divided success of the parties and Parkland’s late presentation of its jurisdictional arguments just prior to the application hearing.

[5] Quickie in the alternative submits that Parkland’s cost claim should be reduced by 50 % and therefore should not exceed $45,000, all in.

Analysis

[6] Cost awards pursuant to s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C. 43, are to be determined taking into consideration the principles in R. 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 94.

Level of Success

[7] The court in its Reasons for Decision dated November 14, 2019 (the “Decision”) denied the relief claimed by Quickie and dismissed its application: Decision para. 145. That conclusion indicates that Parkland was fully successful in the result.

[8] Quickie however submits that although it was not successful in obtaining the declarations and order sought, it was successful on two core issues, namely:

a. its compliance with its first notice and offer (the “FN&O”) obligations, namely to provide Parkland with an opportunity to make an offer to purchase Quickie’s sites; and b. as to whether Parkland had unreasonably refused consent pursuant to s. 23 of the Commercial Tenancy Act, R.S.O. 1990 c. L.7 (the “CTA”) to Quickie’s request and proposed assignment of certain leases and subleases to Harnois Groupe Immobilier Inc. and Le Groupe Harnois Inc. (collectively “Harnois”) pursuant to the latter’s letter of intent (the “Harnois LOI”).

[9] Quickie brought this application for two declarations and for an order to compel Parkland to consent to its assignment of certain contracts. The first declaration requested was brought pursuant to R. 14.05(2) and (3)(d) and ss. 23(1) and (2) of the CTA as to whether Parkland unreasonably withheld its consent to the proposed assignment of certain contracts to Harnois.

[10] Quickie in its application specifically sought:

a. a declaration pursuant to s. 23(1) of the CTA that Parkland unreasonably withheld its consent to Quickie’s assignment of its rights, interests, title, benefits, burdens and liabilities under certain leases, subleases and credit/debit card contracts; b. an order compelling Parkland to provide its consent to Quickie’s assignment of its rights, title, interests, burdens and liabilities under such leases, subleases and credit/debit card agreements; and c. a declaration regarding the January 25, 2018 Harnois LOI that: i. Quickie had fully complied with Parkland’s right of first notice of proposed sale of assets and Parkland’s opportunity to offer to purchase; ii. Parkland had no further rights under that opportunity to offer to purchase; and iii. Quickie be released and forever discharged from any and all obligations, liabilities, actions and claims relating to the opportunity to offer to purchase: Decision, para. 14.

First Declaration Sought

[11] The court for the reasons indicated dismissed the request for the first declaration pursuant to s. 23(1) of the CTA that Parkland unreasonably withheld its consent to Quickie’s assignment of its rights, interests, title, benefits, burdens and liabilities under certain leases, subleases and the credit/debit card contracts: Decision, paras. 41(e), 44 to 48, 113 and 114 to 141.

Order Sought

[12] The court for the reasons given dismissed the request for an order compelling Parkland to provide its consent to Quickie’s assignment of its rights, title, interests, burdens and liabilities under the subject leases, subleases and credit/debit card contracts: Decision, paras. 41(e), 44 to 48, 67, 113 and 114 to 141.

Second Declaration Sought

[13] The court for the reasons indicated dismissed the request for this second declaration regarding the January 25, 2018 Harnois LOI, that:

a. Quickie had fully complied with the FN&O, namely Parkland’s right of first notice of Quickie’s proposed sale of its assts and Parkland’s opportunity to offer to purchase the same: Decision, paras. 50 to 58, 76, 82 and 103(c); b. Parkland had no further rights under that opportunity to offer to purchase: Decision, paras. 11(a), 40(e), 59, 83; and c. Quickie is released and forever discharged from any and all obligations, liabilities, actions and claims relating to the opportunity to offer to purchase: Decision, paras. 11(a), 40(e), 44 to 48, 67, 83, 113, and 114 to 141.

Quickie’s Alleged Success

[14] As to the first declaration sought, the court determined that Parkland had pursuant to s. 23 of the CTA unreasonably refused consent to Quickie’s proposed assignment of several of its leases and subleases to Harnois pursuant to the Harnois LOI. That determination however was restricted to the lease and subleases which provided that they were governed by the law of Ontario. That determination favorable to Quickie did not apply to the other leases and subleases in issue which stated that they were governed by the law of Quebec: Decision paras. 113 to 141.

[15] The first declaration sought pursuant to s. 23 of the CTA, included the credit/debit card contracts. The court for the reasons given refused that relief sought in the first declaration as to such credit/debit card contracts: Decision, paras. 40(e), 135 to 137 and 139 to 141.

[16] As to the first element of the second declaration requested, Quickie is correct that the court determined it had complied with its FN&O obligations, namely to give first notice to Parkland of its intention to sell its assets, to give notice to Parkland of the Harnois LOI and to afford Parkland the opportunity to submit a purchase offer: Decision, paras. 50 to 58, 76, 82 and 103(c). That conclusion however was only one of three determinations in the second declaration requested as to the FN&O. The court denied the other two determinations sought in that second declaration and therefore refused to grant this second declaration.

[17] Quickie was unsuccessful in obtaining the two declarations and the order sought for the reasons stated. Success as to the relief claimed, as opposed to issues therein, accordingly was not divided between the parties: Wesbell Networks Inc. (Receiver of) v. Bell Canada, 2015 ONCA 33, [2015] O.J. No. 279, at paras. 19, 21 and 22, or as occurred in Burtch v. Barnes (Estate), 2007 ONCA 95, at para. 1.

[18] In relation to the above, the court notes that Quickie would have been successful in obtaining a declaration as to the first of the three determinations sought in the second declaration, namely as to compliance with its obligations pursuant to the FN&O, had it sought separate declarations for each of those three elements, rather than combining them in one requested declaration.

Experience Levels, Rates Charged and Hours Expended

[19] It appears that counsel for Parkland divided work between senior and more junior counsel, which resulted in appropriate cost savings.

[20] The court requested any party seeking costs to provide several levels of information including “an itemized list of the legal services rendered, including the dates, the amount of time and who provided such services”.

[21] Counsel for Parkland provided some but not all of such requested information. Quickie however in reply did not object and took no issue as to experience levels of counsel, the rates charged or the hours expended. Based on that lack of objection, such elements are not in issue. The court does not consider such elements determinative as to the costs to be awarded.

Importance and Complexity of Issues

[22] The evidence of the large amounts of money involved in the possible purchase of all and some of Quickie’s assets indicated the apparent importance of this proceeding to the parties.

[23] The variety of the contracts, the terms thereof in issue and their impact on such issues created some complexity.

Reasonable Cost Expectation of Unsuccessful Party

[24] The parties did not address this element.

[25] Given the number, variety of contracts and difference in the terms therein in issue, as well as length of the application hearing, the quantum of partial indemnity costs claimed do not exceed what Quickie should have expected.

Conduct Shortening or Unnecessarily Extending Proceeding

[26] Quickie submits the conduct of Parkland disentitles it to any or all of its costs because it failed to raise the jurisdictional arguments as to the choice of law and the forum selection issues in a timely manner, thus preventing an earlier and less costly determination of such jurisdictional issues. Quickie argues that the parties instead proceeded with exchanging affidavits on all issues, conducting cross-examinations thereon and the three-day argument of this application.

[27] Quickie acknowledges that Parkland’s June 7, 2018 responding affidavit to the application contained an oblique reference to the choice of law and choice of forum clauses in some of the leases and subleases contracts. It is submitted however that Parkland first raised a challenge to the Ontario Court’s jurisdiction to hear the dispute in its September 21, 2018 factum delivered before the October 5, 2018 first day of argument of the application, but that was five months after having consented to have the application heard on an expedited basis in Ottawa.

[28] Quickie submits that had Parkland raised its jurisdictional arguments at the outset, such narrow jurisdictional issue could have been determined promptly, including by motion, and thereby avoided the costs incurred in the exchange of evidence, conducting full cross-examinations and the three days argument of the application’s substantive issues.

[29] Quickie’s Notice of Application was commenced on April 3, 2018 in Ottawa. with no return date. That Notice of Application and its April 11, 2018 supporting affidavit do not address:

a. the contractual provisions in some of the leases and sublease contracts in issue that they were governed by Quebec law, their designation of a Quebec forum selection and require consent to an assignment; and b. the non-assignability without consent of the credit/debit card contracts.

[30] The leases and subleases contracts of some of the Quebec sites however state they are governed by Quebec law. Quickie thereby knew upon issuance of its application seeking relief pursuant to the Ontario CTA, that the law governing such contracts was an issue which needed to be addressed. Quickie should have known those contractual provisions created that issue, that it needed to be considered and that the court in any event might well request counsel to address the same.

[31] Quickie did not introduce evidence that Parkland’s consent to have this contested application determined by the court in Ottawa, rather than the Toronto or Montreal forum selection clauses in some of the contracts, included Parkland’s express withdrawal or waiver of Quebec being the governing law in some of the leasehold contracts.

[32] Quickie upon issuance of its application, as to the first declaration as well as the order sought, also knew that the credit/debit card contracts state that they are not assignable without Parkland’s consent and that the subject matter of such contracts did not involve a lease of land governed by the CTA.

[33] Despite the above knowledge and apparently without an express waiver from Parkland as to such issues, Quickie elected to proceed with full cross-examinations and to argue the full application, rather than it seeking a preliminary and narrower determination of the above jurisdictional issues as contained in some of the contracts.

[34] Quickie’s application material upon filing would not have been less due to the then unidentified issues by Parkland.

[35] The first day of argument of the Application as stated was on October 5, 2018. By that date, presumably, cross-examinations would have been completed.

[36] It is unknown whether the parties would have proceeded with a preliminary motion without cross-examination.

[37] The next two days of argument occurred on November 22, 2018 and April 1, 2019. Quickie thereby in any event had abundant time to address the jurisdictional issues.

[38] For these reasons, the costs sought on this application should not be reduced because Parkland, nor Quickie, did not elect to bring a preliminary motion to determine such jurisdictional issues.

Other R. 57.01 Factors

[39] Quickie in opposing a cost award does not rely upon any the other factors in r. 57.01.

[40] The court does not consider the other R. 57.01 factors relevant to an award of costs in this case. This conclusion is reinforced by Quickies’ lack of reliance thereon.

Conclusion

[41] The determination of costs should include consideration of success as to the substance of the issues which includes Quickies’ success regarding the first issue of the second declaration sought and not solely be governed by the form of the relief claimed.

[42] Quickie as stated was successful on the FN&O issue, being the first of three issues sought in the second declaration. A declaration would have granted had a separate declaration been sought on that ground.

[43] The court accordingly concludes there should be a 20% reduction of the costs claimed, given Parkland’s success on the “other four issues”: Copeland v. Ontario (Minister of Natural Resources), 2014 ONSC 1098, [2014] O.J. No. 832, at para. 6, Wilson v. Legacy Private Trust, 2014 ONSC 6699, at para. 37, Relax Muskoka Cottages Inc. v. 2052219 Ontario Inc., 2017 ONSC 5964, at paras. 24 and 32, and Laven Associates Ltd. v. Price (1993), 20 C.P.C. (3d) 86 (Ont. Gen. Div.), at paras. 3 and 13.

[44] Parkland is awarded $52,900 costs on a partial indemnity scale against Quickie, inclusive of disbursements and HST.

Justice P. Kane Released: June 1, 2020