Parkland Corporation v 2700455 Ontario Inc., 2025 ONSC 1898

COURT FILE NO.: CV-24-170
DATE: 2025-03-26
ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:
Parkland Corporation, Applicant
– and –
2700455 Ontario Inc., Lakhwinderpal Dhindsa, Paramathas Joseph, and Muraleetharan Sivaguru, Respondents

Appearances:
Brendan Jones, for the applicant
Bois Wilson, for the respondents 2700455 Ontario Inc. and Lakhwinderpal Dhindsa
No one appearing for the respondents Paramathas Joseph and Muraleetharan Sivaguru

Heard: March 6, 2025

Reasons for Judgment
Ranjan K. Agarwal

I. INTRODUCTION

[1] The respondent 2700455 Ontario Inc. owns and operates a gas station in Hanover, Ontario. In 2020, the applicant Parkland Corporation contracted with 270 and its owners, the respondents Paramathas Joseph and Muraleetharan Sivaguru, to become their exclusive supplier of Esso-branded signs, equipment, and fuel for at least the next 10 years. Joseph and Sivaguru sold the gas station, through a share purchase sale, to the respondent Lakhwinderpal Dhindsa in 2023.

[2] Under the supply agreement, Parkland pays a commission to 270 for each litre of fuel sold. 270 also has financial obligations, like paying a Program Fee for Esso’s loyalty program.

[3] Almost immediately after Dhindsa took over the business, 270 had financial challenges. It had trouble paying its mortgage and the monthly Program Fees. Dhindsa tried to renegotiate the commission rates, or sell the gas station to Parkland. In response, Parkland offered to sell 270 the fuel, rather than provide it on consignment. Dhindsa refused this option—he insisted on a lower commission rate, which Parkland declined. In retaliation, Dhindsa refused to provide a security deposit to Parkland.

[4] Sensing that 270 was in dire financial straits, Parkland suspended fuel delivery to 270. It didn’t terminate the agreement. 270 responded by removing the Esso signs and equipment, and it began selling fuel from an unknown, third-party distributor.

[5] In reply, Parkland started this proceeding, and moved for an interlocutory injunction. On the eve of the motion hearing, 270 contracted with one of Parkland’s competitors, which also has the right to supply Esso products. In December 2024, the court ordered 270 to stop selling non-Parkland fuel until the disposition of this application.

[6] At this hearing, Parkland applies for declarations that the supply agreement is valid and binding on the parties, and that 270 breached the agreement by selling non-Parkland fuel. It asks for a permanent injunction and an order disgorging 270’s profits. 270 responds by applying for a declaration that the supply agreement is void and unenforceable.

[7] For the reasons discussed below, I order or declare that:

• the supply agreement remains in effect;
• 270 breached the agreement; and
• 270 is prohibited from selling non-Parkland fuel at the gas station during the term of the agreement and any renewals or extensions.

[8] On damages, I endorse an order that Parkland’s claim for damages proceed to trial. I also endorse an order that 270 shall pay Parkland’s costs on a partial indemnity basis, fixed in the amount of $50,000.

II. BACKGROUND

A. Facts

1. The Parties

[9] Parkland is a fuel distributor. It purchases Esso-branded products, including fuel, from Imperial Oil and performs all fuel sales and service functions for gas stations in its dealer network.

[10] 270 operates a gas station in Hanover, Ontario (defined in the supply agreement as the Marketing Premises). Dhindsa is the principal of 270.

2. The Supply Agreement

[11] In March 2020, Parkland, as the “Distributor”, and 270, as the “Dealer”, entered into a “Motor Fuel Supply Agreement — Esso Branded Motor Fuels”. Sivaguru and Joseph, as 270’s owners at the time, provided guarantees to Parkland under the agreement.

[12] In October 2022, Dhindsa bought all of the shares of 270 from Sivaguru and Joseph. Dhindsa, as 270’s new owner, provided a guarantee to Parkland as required by the agreement.

[13] The agreement is a long-term exclusive contract for the supply of Esso-branded products to 270:

• Parkland has granted 270 the right to use Esso signs for the sale of Esso-branded fuel from the gas station
• Parkland gave 270 equipment for its gas station business and an interest-free, forgivable loan for $200,000—if the agreement is terminated early, 270 has to reimburse Parkland for the equipment and the loan
• 270 agrees to “sell only those grades or qualities of Motor Fuels as supplied” by Parkland
• Parkland agrees to supply fuel to 270 on a consignment basis, and pay 270 a fixed commission agreed to by the parties
• 270 agrees to use Imperial Oil’s retail credit and debit system and point-of-sale service
• the term of the agreement is from July 1, 2020, to June 30, 2030, and may be renewed or extended

[14] If 270 is in default of the agreement, Parkland may “suspend the supply of Motor Fuels to the Marketing Premises until such time as the Dealer has cured the default.”

[15] Separately, Parkland has the right to terminate the agreement without notice in some cases. 270 has no right to terminate the agreement early. The agreement is also terminated when it expires, or if Parkland’s underlying agreement with Imperial Oil terminates.

[16] As I discuss below, 270’s gas station was deemed to be “debranded” in September 2024. That term is defined in the agreement:

By written notice to the Dealer, the Distributor may withdraw its approval to: (i) brand the Marketing Premises (“de-brand”) or (ii) use or operate any motor fuels business or Related Businesses at the Marketing Premises, if, in the Distributor’s sole judgment: (i) the Marketing Premises (or the motor fuels business and/or Related Businesses) fails to portray the image and standards expected from Esso Branded Retail Outlets; or (ii) The Dealer is in default of any obligation, condition, representation, or warranty under this Agreement or any related or supplemental agreement.

[17] If a gas station is debranded, it must stop using Esso-branded products, including fuel.

3. 270 and Dhindsa Didn’t Provide a Security Deposit

[18] Under the supply agreement, Dhindsa, as guarantor, agreed to provide a security deposit of $50,000 “in a form acceptable to Parkland.”

[19] The supply agreement states that the security shall be provided in the form of a “stand-by irrevocable letter of credit”. From 2020 to 2023, 270 provided a surety bond instead, which was acceptable to Parkland. For 2023-2024, Parkland approved renewal of the bond, but 270 and Dhindsa never signed the paperwork. 270 also didn’t provide a letter of credit.

4. The Parties Tried to Negotiate a Different Agreement

[20] Dhindsa struggled to manage the gas station. He had challenges paying 270’s mortgage payments. For some reason, he thought the commissions were higher (5¢/L) than agreed on (3.2¢/L).

[21] In Spring 2024, Dhindsa and Parkland discussed moving from a consignment model to Parkland’s Buy/Sell program. Dhindsa responded by proposing that Parkland buy the gas station from him, which Parkland rejected.

[22] In April 2024, the dispute escalated. Parkland reminded Dhindsa of his and 270’s obligation to provide a bond—it threatened to suspend fuel deliveries if 270 didn’t do so. Dhindsa seemed surprised that Parkland was asking for a bond, or any security at all. He requested clarification about Parkland’s threat to stop fuel delivery. And he said that there was an agreement to “keep our prices by 2 cents above the market rate if we get them in return”. On this last point, Parkland’s position was that the agreement specified the commission, which is based on “rack prices every day”.

5. 270 Defaulted on Loyalty Payments

[23] Under the agreement, 270 promised to pay Parkland a “Program Fee” based on the number of loyalty points issued to customers.

[24] To assist 270 manage its financial challenges, Parkland didn’t collect this fee in late 2023 and early 2024. By March 2024, 270 owed over $12,000 to Parkland. Eventually, Parkland debited this amount from 270’s account.

[25] Even though 270 acknowledged that it owed money to Parkland, and repeatedly asked Parkland to defer payment, it then claimed that the payments were “unauthorized”.

6. Parkland Suspended Fuel Deliveries

[26] In April 2024, Parkland suspended delivery of fuel to 270’s gas station. Its position was that 270 posed a credit risk: 270 couldn’t pay the Program Fee, it told Parkland that it couldn’t pay its mortgage, and it refused to provide security to Parkland.

[27] Dhindsa responded by purporting to terminate the supply agreement. He cited an oral agreement between him and Maurice Chessman, Parkland’s Territory Manager, that Parkland would increase the commission to 4¢/L. Chessman denies making any promises to Dhindsa. Dhindsa also denied the existence of any loyalty program. He said he was refusing to sign a bond agreement until Parkland kept its promises.

7. 270 Started Selling Non-Parkland Fuel

[28] In late May 2024, 270 removed or covered the Esso signs at the gas station. Dhindsa’s son, who helped operate the gas station, explained their decision to do so on Facebook:

I am the owner at that station I am going to clearify [sic] again, firstly we do not own any other location, secondly we removed the signs by ourselves due to parkland (the gas supplier and one of the esso brand owners) giving us extremely low commissons [sic] and increasing our gas prices higher for our customers.

[29] Parkland then learned that 270 was selling non-Parkland fuel to drivers.

8. Parkland Moved for an Injunction

[30] In August 2024, Parkland started this proceeding for declarations that the supply agreement remains in effect and that 270 breached the agreement, and an interlocutory and permanent injunction barring 270 from selling non-Parkland fuel.

[31] In October 2024, 270 started a counter-application for a declaration that Parkland terminated the agreement, so the agreement is null and void. It also asked for reimbursement of $11,214.21 (the Program Fee debited from its account).

[32] On October 30, 2024, Imperial Oil advised Global Fuels Inc., a competitor to Parkland, that it had provided Global Fuels a “trademark letter for Hanover NOG.” As I understand, this meant that Imperial Oil had authorized Global Fuels to supply Esso-branded products to 270. Relying on this communication, 270 asserted that Parkland no longer had authorization from Imperial Oil to market Esso-branded products at 270’s gas station, effectively ending the supply agreement.

[33] Parkland’s position was that Imperial Oil only issued a trademark letter for 270’s gas station to Global Fuels because the gas station was debranded, meaning that it was “open” for trademark approval. Imperial Oil advised Parkland that it would reinstate Parkland’s approval for 270’s gas station on two conditions:

(a) if the supply agreement between Parkland and 270 is deemed in force (with “substantiated backup documentation”); and
(b) if 270 “fully adheres to the requirements inherent in a trademark approval (including but not limited to approved branding and point-of-sale system)”.

[34] At some point, 270 contracted with Global Fuels, which then supplied it with Esso-branded products.

[35] Parkland’s motion for an interlocutory injunction was scheduled for November 21, 2024. Justice Bloom granted the injunction: “prohibiting [270] from selling fuels purchased from sellers other than Parkland pending the adjudication of the application, and subject to variation of this relief by the judge hearing the application.” See Parkland Corporation v 2700455 Ontario Inc., 2024 ONSC 6784, at para 32.

B. Litigation History

[36] For the injunction hearing, the parties, at first, relied on three affidavits from Chessman, two affidavits from Dhindsa, and the transcripts of the cross-examinations of Chessman and Dhindsa.

[37] The hearing of the two applications was scheduled for January 2, 2025.

[38] Dhindsa didn’t honour his undertakings. Parkland and 270 also contended that they each improperly refused to answer several questions. On December 23, 2023, Parkland served an affidavit from Elliott Collyer, Vice President, Retail Fuel and Store Merchandising.

[39] Justice Miller adjourned the applications hearing to March 6, 2025, so 270 could cross-examine Collyer. She also scheduled any refusals motions for February 12, 2025 (including from Collyer’s cross-examination). Both parties brought refusals motions. Justice Stewart refused to hear the motions because they were booked for 40 minutes, but the parties’ material was over 1300 pages long.

[40] Parkland then brought its refusals motion returnable at the same time as the applications.

[41] Parkland has abandoned its application as against Joseph and Sivaguru.

III. ANALYSIS AND DISPOSITION

[42] Parkland argues that it has a valid agreement with 270. It’s prepared to resume fuel delivery once 270 complies with its contractual obligations. That said, it seeks an injunction barring 270 from receiving fuel from anybody else, and it wants a disgorgement of 270’s profits since the supply agreement was suspended.

[43] 270 submits that the performance of the agreement was frustrated, or Parkland committed a fundamental breach. Alternatively, it argues that an injunction and disgorgement are inappropriate remedies.

A. Issue #1: Did Parkland Frustrate the Contract?

[44] Frustration occurs when a situation has arisen for which the parties made no provision in the contract and performance of the contract becomes “a thing radically different from that which was undertaken by the contract.” A party alleging frustration must establish that there was a “supervening event” that: (a) radically altered the contractual obligations; (b) was not foreseeable and for which the contract does not contemplate; and (c) has not been caused by the parties. See Croke v VuPoint System Ltd., 2024 ONCA 354, at paras 21-23.

[45] 270 argues that the contract was frustrated and, as a result, Parkland’s application should be dismissed. It says that its agreement with Global Fuels is a “supervening event” that has ended performance of the supply agreement.

[46] Parkland responds that 270 can’t rely on this event to argue frustration because 270 caused the event—it sought out Global Fuels, contracted with Global Fuels, and is now selling products supplied by Global Fuels.

[47] 270 replies that it didn’t cause this event for two reasons: (a) Parkland, not 270, caused the loss of Parkland’s trademark authorization from Imperial Oil for 270’s gas station; and (b) there’s some doubt whether Imperial Oil will reinstate Parkland’s authorization.

[48] For the reasons discussed below, I agree with Parkland. The supervening event here wasn’t the agreement with Global Fuels. It was 270’s decision to take down the Esso signs and stop selling Esso-branded fuel.

1. Relevant Facts

[49] On November 4, 2024, Chessman deposed that “the Global trademark letter referred to in the Dhindsa November Affidavit was only issued by Imperial Oil because the Marketing Premises is currently considered ‘debranded’ as a result of the Dealer’s breaches of the Agreement.” The specified source of Chessman’s information was Collyer. Collyer’s information was from Charles Cameron, Imperial Oil’s Manager, Market Development. In support of this paragraph, Chessman pointed to emails between Cameron and Collyer in November 2024.

[50] Chessman’s affidavit is incorrect. He never spoke to Collyer. Further, in cross-examination, Collyer agreed that “nobody at Imperial referenced breaches…by [270]”.

[51] 270 argues that Parkland has fabricated evidence. 270 also argues that the email attached to Chessman’s affidavit is intentionally incomplete. It points to several others emails between Collyer and Cameron.

[52] Parkland was sloppy. First, this evidence is double hearsay, which is inadmissible. Second, Chessman should’ve been clearer about the source of his information. But I don’t accept 270’s argument that Chessman is lying—he’s carelessly combined two facts, each of which is true. Imperial Oil considered the gas station to be debranded. And 270 breached the supply agreement by removing the Esso signs and selling non-Parkland fuel.

[53] On September 19, 2024, Imperial Oil noticed that all the Esso trademarks had been removed from 270’s gas station. It asked Parkland about the gas station’s status: “Has it been debranded and we just never received (or misplaced) the debrand notice?” Parkland told Imperial Oil that the issue was with “legal to resolve”.

[54] Imperial Oil wasn’t satisfied by that answer: “Understand that your legal team is reviewing, but unfortunately if the signs are ripped down and it’s still operating (i.e. selling fuel), then it has to be considered debranded.” Imperial Oil also advised Parkland of the consequence of the site being debranded: “Full disclosure - this has come about as other BWs are inquiring as to the status of the site. If there is no branding, then unfortunately I don’t have much choice but to treat it as a ‘competitive conversion’ and approve a TPA request should one be submitted.”

[55] So, even though Parkland hadn’t debranded 270’s gas station (i.e., withdrawn its approval to “brand the Marketing Premises”), Imperial Oil deemed the gas station to be debranded because the Esso signs were gone but the gas station was still selling fuel.

[56] At this point, matters became contentious between Imperial Oil and Parkland. Parkland told Imperial Oil that it still had a contract for the site, and there was a pending lawsuit: “If a BW approaches the site, we will consider it a breach of contract by the dealer and an inducement of breach by the BW - with [Imperial Oil] support????”

[57] Parkland and Imperial Oil took their discussion off email. On October 4th, Cameron summarized those discussions in writing. I infer from the email that Parkland told Imperial Oil that it intended to cover up or remove the Esso branding on 270’s gas station. Imperial Oil identified the issue it had with the signs still being displayed: “the BW business model simply does not account for a situation where a site is open with partial but not full Esso branding, while not purchasing branded fuel nor using an approved point-of-sale system.”

[58] Cameron then made a statement that 270 highlights: “From Imperial’s perspective, even an affirmative judgement for [Parkland] would still result in an uncertain path for the site to remain as a Licensed Dealer with Esso under [Parkland].”

[59] Three days later, Cameron revisited its position: “we will need to revert to our original position that the site is considered debranded as it is not purchasing fuel from Parkland as BW nor is it using an approved point-of-sale system for an Esso branded site.”

[60] On November 4th, Collyer emailed Cameron: “Can you confirm that if Parkland’s agreement with the dealer is determined to remain in force, then [Imperial Oil] will reinstate Parkland’s approval to use the Esso trademark at the Hanover location?”

[61] Cameron responded affirmatively:

Hi Elliott - yes, we confirm that if the dealer sales agreement between Parkland and the licensed dealer is deemed in force (with substantiated backup documentation) and if the licensed dealer fully adheres to the requirements inherent in a trademark approval (including but not limited to approved branding and point-of-sale system), then Imperial would reinstate Parkland’s approval to use the Esso trademark at the subject location.

2. Analysis and Disposition

[62] Taking these communications together, 270 argues that:

• Parkland is to blame for losing its authorization to brand 270 as an Esso gas station
• there’s no guarantee that if the court declares the agreement to be binding, Imperial Oil will reauthorize the gas station

[63] I don’t accept these arguments.

[64] 270 was in default of its obligations under the supply agreement. It failed to provide a security deposit, either in the form of an irrevocable letter of credit or a surety bond. Under the agreement, Parkland, in its sole judgment, was entitled to withdraw its approval of 270 to brand the gas station.

[65] But before Parkland could take that step, 270 removed the Esso signs and started supplying non-Parkland fuel—a breach of the supply agreement. Dhindsa’s son publicized 270’s decision to do so as retaliation for Parkland’s alleged bad-faith bargaining. At that point, Imperial Oil deemed the gas station to be debranded.

[66] The supervening event here wasn’t the agreement between Global Fuels and 270. It was 270 deciding to take down its Esso signs and stop selling Esso-branded products. At that point, the supply agreement couldn’t be fulfilled. There was no evidence that even if Parkland started supplying fuel again, that 270 would put back the Esso signs or sell Esso-branded fuel, or that Dhindsa would provide security.

[67] Imperial Oil likely doesn’t have any particular loyalty to Parkland. Its interest is in ensuring that Esso has a market presence in Hanover. Global Fuels likely has an interest in displacing Parkland and expanding its dealer network. As a result, when 270 effectively debranded itself by taking down its Esso signs, it created the void that Global Fuels sought to fill, and Imperial Oil countenanced.

[68] To the extent that this event “radically altered” the parties’ obligations under the agreement, 270 caused the event. It took down the signs and stopped selling Esso-branded fuel in retaliation for Parkland’s perceived bad-faith bargaining.

[69] Further, despite Imperial Oil’s changing position, its most recent communication shows that if this court finds the agreement is valid, Parkland will be authorized to distribute Esso-branded products to 270.

[70] As a result, performance of the agreement hasn’t been frustrated. If 270 provides security, Parkland will start supplying fuel again. There’s no reason to believe that 270 won’t be able to “fully adhere” to the approval requirements, since it’s presumably doing that to Imperial Oil’s satisfaction under the agreement with Global Fuels.

B. Did Parkland Fundamentally Breach the Agreement?

[71] 270 argues that Parkland fundamentally breached the agreement, which repudiated the contract. A breach is “fundamental” if it deprives the other party of “substantially the whole benefit of the contract”. See Stayside Corporation Inc. v Cyndric Group Inc., 2024 ONCA 708, at para 9.

[72] 270 submits that Parkland’s decision to suspend fuel deliveries breached its duty of good faith, which is a fundamental breach of the agreement. I disagree. Parkland didn’t exercise its discretion to suspend fuel delivery to 270 for an improper purpose. As a result, it didn’t breach the agreement.

1. Parties’ Positions

[73] Parkland says that 270 was in default. I agree—it refused to provide security as required by the agreement and repeatedly deferred payment of the Program Fee. As a result, Parkland had a right to suspend fuel delivery until 270 cured its default.

[74] 270 responds that Parkland breached its duty to exercise its contractual discretionary power in good faith in two ways. See Bhasin v Hrynew, 2014 SCC 71, at paras 63-70. First, 270 argues that its alleged credit risk was a pretext. Because Parkland provided fuel on consignment, 270 says there could be no credit risk—270 never took possession of the fuel, it used Parkland’s Credit and Debit System to process transactions, and Parkland paid 270 a commission. Second, Parkland knew that 270 was in financial distress. Parkland refused to negotiate better commission rates, which is why 270 became a credit risk.

[75] 270 says I should draw an adverse inference from Parkland’s failure to provide any internal correspondence about the decision to suspend 270’s fuel deliveries.

[76] In sum, 270 asks me to find that Parkland suspended the fuel deliveries for some ulterior motive (e.g., to force 270 to stop asking for a better commission).

2. Analysis and Disposition

[77] To begin, the purpose of the suspension clause is to provide for consequences where the dealer defaults under the supply agreement without Parkland having to resort to termination of the agreement. Parkland emphasizes that it intentionally negotiates long-term, exclusive fuel supply agreements to “protect market share and create an efficient business environment.” This purpose would be undermined if, on default, Parkland’s only recourse was to terminate the agreement. As shown here, Parkland’s competitors are prepared to quickly take over supply agreements, and Imperial Oil wants to ensure the gas stations remain branded as Essos.

[78] Parkland didn’t exercise its discretion to suspend fuel deliveries to 270 for an improper purpose. The chain of emails show that Parkland repeatedly tried to nudge Dhindsa into signing the bond. At first, Dhindsa didn’t seem to understand the purpose of the bond, even though he was contractually obligated to provide security. Then, he said that he was “reluctant” to sign the bond until Parkland kept its promises. Finally, he feigned outrage that Parkland was asking him to sign the bond “10 months after” but said he would do so if it amended the agreement.

[79] Though Parkland operates on a consignment basis, it loses physical control of the fuel once it’s pumped into the gas station’s underground tanks. Given that Parkland was supplying around $500,000 of fuel every month, a $50,000 security in the form of an LOC or bond is reasonable even though it doesn’t give up legal control of the fuel.

[80] Parkland acknowledges that 270’s arrears for the Program Fee wouldn’t alone cause it to suspend fuel deliveries. But 270’s failure to sign the bond combined with this debt caused Parkland to fear 270’s financial situation. 270 argues that it was operating a multi-million dollar business, so this fear was unreasonable. But, in February 2024, when Parkland asked to debit $4273.12 for the Program Fee, Dhindsa responded: “Please wait to process the payments I’m trying with bank to defer mortgage payments letting you know soon.” In March 2024, when Parkland asked to debit $3817.73, Dhindsa said: “Not right now please letting you know soon.” If 270 couldn’t pay $4000 without defaulting on its mortgage, it was reasonable for Parkland to conclude that 270 was in financial distress.

[81] Parkland also tried working with 270. It offered to move 270 to its Buy/Sell Program, going so far as to provide 270 with model pricing. 270 rejected that offer. 270’s good faith argument rests on Parkland’s refusal to negotiate new pricing. But there’s no good faith obligation on Parkland to renegotiate prices that 270 agreed to in the contract.

[82] Finally, I don’t draw an adverse failure from Parkland’s failure to produce internal communications about the suspension. Parkland advises that it has produced everything in its possession. It’s reasonable that Parkland made the decision to suspend 270’s fuel deliveries after a brief, internal oral discussion. At the time, all that 270 needed to do was e-sign the bond agreement. Parkland had collected the overdue Program Fee. I infer that Parkland thought that suspending fuel deliveries for a short time would cause 270 to meet its obligation to provide security.

[83] In sum, I’m not satisfied that Parkland’s exercise of its discretionary power to suspend fuel deliveries to 270 was made in bad faith. As a result, there was no breach of the agreement, never mind a fundamental breach.

C. Issue #3: Is the Agreement Valid and Enforceable?

[84] As requested by Parkland, I order and declare that the Agreement remains in effect. I further order and declare that 270 breached the agreement by failing to provide Parkland a security deposit in the amount of $50,000.

D. Issue #4: Is an Appropriate Remedy a Permanent Injunction?

[85] Permanent injunctions are granted after a final adjudication of rights. See 1711811 Ontario Ltd. (AdLine) v Buckley Insurance Brokers Ltd., 2014 ONCA 125, at para 56.

[86] To get a permanent injunction, a party must prove they have a legal right. Then, the court decides whether an injunction is the right solution. While “irreparable harm” and “balance of convenience” are key for temporary injunctions, they aren’t directly required for permanent ones. That said, some of the evidence used for temporary orders might help the court decide whether a permanent injunction is appropriate. See AdLine, at paras 79-80.

[87] Permanent injunctions must be specific to circumstances of the case. The injunction should only be as broad as needed to remedy the specific wrong committed and prevent further harm to the plaintiff. See Labourers’ International Union of North America, Loc 183 v Castellano, 2020 ONCA 71, at para 26.

[88] Parkland requests an order enjoining 270 from selling non-Parkland fuel during the term of the agreement and any renewal or extension.

[89] 270 argues that a permanent injunction is improper for two reasons: (a) Parkland is relying on an unenforceable negative covenant; and (b) it would work an injustice. I disagree.

1. Parkland Has a Legal Right

[90] Parkland’s request for an injunction is based on Clause 2(a)(xi) of Schedule F of the Agreement:

Dealer covenants and agrees with Distributor that so long as the Dealer Provisions are in effect, it will… sell only those grades or qualities of Motor Fuels as supplied under the terms of this Agreement by Distributor….

[91] Parkland argues that this clause is an unenforceable negative covenant.

[92] Covenants in restraint of trade are contrary to public policy because they interfere with individual liberty and the exercise of trade. They’re prima facie unenforceable. A covenant will be upheld only if it’s reasonable in reference to the interests of the parties concerned and the interests of the public in discouraging restraints on trade. The party trying to enforce the trade restriction must show it’s reasonable for both sides. The person trying to avoid the trade restriction must show it’s unreasonable for the public. See Mars Canada Inc. v Bemco Cash & Carry Inc., 2018 ONCA 239, at para 22.

[93] The common law rules for restrictive covenants relating to employment don’t apply with the “same rigour or intensity” where the obligations are assumed in the context of a commercial contract. See Dr. C. Sims Dentistry Professional Corporation v Cooke, 2024 ONCA 388, at para 11; Tank Lining Corp. v Dunlop Industrial Ltd., (1982), 40 OR (2d) 219 (CA), at 225.

[94] First, is the covenant a restraint of trade? Parkland concedes that the clause is a negative covenant.

[95] Second, does it fall within one of the limited exceptions to the rule that such restraints are void? In Tank Lining, at 223, Justice Blair identified one such exception: a restraint coupled with mortgages or leases of real property. This clause doesn’t come within this exception. Parkland didn’t argue any other exceptions.

[96] Third, whether the restraint can be justified as reasonable in the interests of the parties? To be reasonable between the parties, the agreement must be no wider than necessary to protect the legitimate or proprietary interests of the party in whose favour it was granted. See Mars Canada, at para 24.

[97] 270 argues that the clause can’t be reasonable because compliance with the supply agreement means it will go out of business. This argument overstates the point. If 270 is at risk of going out of business, that’s because it made an uneconomic business deal with Parkland. Dhindsa bought the shares of 270 with full visibility into the agreement and, presumably, 270’s finances. He presumably knew the commission rate, the annual sales, and the costs of operating a gas station. There’s no evidence of unequal bargaining power between 270 and Parkland, or that 270 and Dhindsa weren’t “competently advised”. See Tank Lining, at 225.

[98] Also, I say “if” because 270 hasn’t led evidence of its financial circumstances. It simply asserts that it requires a better commission rate to make its mortgage payments. But it hasn’t shown that its deal with Parkland is oppressive, unfair, or prejudicial, or anti-competitive. It also refuses to produce its agreement with Global Fuels, which might be some evidence of an unfair agreement.

[99] Finally, 270 doesn’t argue that the clause is unreasonable because of its geographic coverage, its length of time, or the extent and effect of the prohibited activity.

[100] Even more to the point, the whole purpose of the agreement would be undermined if 270 was entitled to buy products or fuel from Parkland’s competitor, but still have a binding agreement with Parkland. There’d be no purpose to the agreement.

[101] Fourth, whether it’s reasonable with reference to the interests of the public? The question of reasonableness in the public interest must be determined on the facts of each case. See Tank Lining, at 230. 270 argues that if it goes out of business, there will be one fewer gas station in Hanover, which will reduce competition and public choice. Again, it’s speculation that 270 will go out of business. Moreover, there’s no evidence about the extent of competition among gas stations in Hanover.

[102] As a result, I find that the exclusive supply clause is enforceable.

2. An Injunction Wouldn’t Be Unjust

[103] 270 says a permanent injunction is unjust for three reasons. First, it says that an injunction would put it out of business. That’s speculative. Parkland is prepared to renew fuel deliveries if Dhindsa provides it with security. To the extent 270 finds itself in a challenging business environment, that’s not unusual or unjust. Again, Dhindsa agreed to the commission rates when he bought 270. That’s business.

[104] Second, Parkland says that allowing dealers to unilaterally cancel their contracts so they can contract with Parkland’s competitors “would completely undermine Parkland’s business structure and the branded fuel supply industry.” Parkland worries that such a precedent will embolden other dealers to unilaterally “rip up” their agreements. 270 says this risk is all speculative.

[105] This court has found, in other cases involving Parkland’s business model, that it’ll suffer irreparable harm if it loses control of a gas station. See Parkland Corporation v. Caledon Fuels Inc., 2024 ONSC 2361, at para 107; Parkland Corporation v SRAA Inc., 2021 ONSC 2874, at para 92. Justice Bloom also found irreparable harm here.

[106] I agree with Parkland. If 270 can simply walk away from a 10-year agreement just because it doesn’t like the commission rates it freely negotiated, that sets a bad precedent for Parkland’s relationships with other dealers. It would seriously undermine Parkland’s entire business model.

[107] Finally, Parkland argues that Imperial Oil will be “injuriously affected” if the injunction causes 270 to go out of business. I expect that Imperial Oil has factored the occasional gas station going out of business when it made its agreement with Parkland. And it’s not the injunction that will cause 270 to go out of business—if anything, it’s 270’s inability to meet the financial obligations it freely negotiated.

[108] 270 has been willing to ignore its contractual obligations. Global Fuels is willing to tread on Parkland’s agreements. Imperial Oil is willing to authorize Parkland’s competitors even despite a simmering dispute. A court-ordered injunction is the only way to get 270 to abide by its promises to Parkland.

[109] As a result, I endorse an order prohibiting 270 from selling non-Parkland fuel at the gas station during the term of the agreement and any renewal or extension.

E. Issue #5: Is Parkland Entitled to a Disgorgement of 270’s Profits?

[110] From May 2024 to December 2024, 270 was selling fuel to drivers. First, it sold a third-party’s fuel. Then, it sold Esso-branded fuel sourced from Global Fuels. During that 7-month period, Parkland earned no revenues from fuel sales at 270’s gas station.

[111] Disgorgement of profits, here, would be remedial restitution in that Parkland seeks as a remedy for breach of contract. Remedial restitution is an “exceptional remedy that should not be invoked unless other available remedies are inadequate.” See Atlantic Lottery Corp. Inc. v Babstock, 2020 SCC 19, at paras 50-61; Ontario (Finance) v Traders General Insurance (Aviva Traders), 2018 ONCA 565, at para 68.

[112] Parkland argues that it can’t quantify its losses because: (a) 270 has refused to produce its agreement with Global Fuels or the particulars of its sales since May 2024; and (b) the court would have to make findings of fact based on fuel prices (which often fluctuate) and 270’s sales volume.

[113] 270 responds that Parkland hasn’t shown that other remedies, such as damages, specific performance, or an injunction are inadequate. I agree that specific performance is an inadequate remedy here. An injunction covers 270’s conduct going forward. But for Parkland’s losses between April 2024 and present, I don’t know if damages are an adequate remedy.

[114] Part of the reason Parkland can’t show that damages are inadequate is because 270 refused to produce the volume of fuel it purchased between April 2024 and December 2024, the purchase price, and the sale price or the daily average. These questions are clearly relevant based on Parkland’s pleading and 270’s defence. 270 didn’t even provide a legal basis for the refusal.

[115] As a result, under Rules of Civil Procedure, r 38.10(1)(b), I endorse an order that Parkland’s claim for damages proceed to trial. The trial of this proceeding shall proceed as a summary trial under rule 76.12.

[116] I endorse an order that 270 shall, on or before April 30, 2025, disclose and produce the following information to Parkland:

• the name of the distributors that supplied fuel to 270 between April 2024 and October 2024;
• the volume of fuel that 270 has purchased since April 2024 from distributors other than Parkland;
• the price of the fuel that 270 purchased since April 2024 from distributors other than Parkland;
• the price and daily average price at which the fuel was sold since April 2024;
• the volume of fuel that Parkland sold since April 2024; and
• all invoices, bills of lading, and daily reports for the purchase and sale of fuel since April 2024.

[117] Parkland shall serve any affidavit evidence, including any expert’s reports, for trial on or before June 30, 2025. 270 shall serve any affidavit evidence, including any expert’s reports, for trial on or before August 31, 2025.

[118] On or before September 15, 2025, Parkland shall serve a trial record containing a table of contents, its notice of application, a copy of any relevant endorsements or orders, and any evidence that either party is relying on for trial. Parkland will consult 270 to agree on the contents of the trial record.

[119] The parties shall obtain a pre-trial conference date from the trial coordinator, ideally sometime soon after September 15th. This matter shall be placed on the November 10, 2025, trial sittings list for a 2-day trial unless the court orders otherwise.

IV. COSTS

[120] Subject to the provisions of an act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid. See Courts of Justice Act, RSO 1990, c C.43, s 131.

[121] In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, together with the result in the proceeding and any offer to settle or to contribute made in writing, the factors listed in the Rules of Civil Procedure, r 57.01.

[122] In the usual case, costs are awarded to the prevailing party after judgment has been given. The traditional purpose of an award of costs is to indemnify the successful party in respect of the expenses sustained either defending a claim that in the end proved unfounded (if the successful party was the defendant), or in pursuing a valid legal right (if the plaintiff prevailed). Costs awards are “in the nature of damages awarded to the successful litigant against the unsuccessful, and by way of compensation for the expense to which he has been put by the suit improperly brought”. See British Columbia (Minister of Forests) v Okanagan Indian Band, 2003 SCC 71, at paras 20-21.

[123] The main objective is to fix an amount of costs that is objectively reasonable, fair, and proportionate for the unsuccessful party to pay in the circumstances of the case, rather than to fix an amount based on the actual costs incurred by the successful litigant. See Boucher v Public Accountants Council (Ontario) at para 26.

[124] Parkland was the successful party. As a result, it’s prima facie entitled to costs of the proceeding. Though damages haven’t been determined yet, neither party spent a lot of time or resources on that issue.

[125] Parkland seeks costs on a substantial indemnity scale, fixed in the amount of $71,885.78. The usual rule is that the successful party is entitled to recover some of their costs. An award of costs on an elevated scale is justified in only very narrow circumstances—where an offer to settle is engaged or where the losing party has engaged in behaviour worthy of sanction. See Davies v Clarington (Municipality), 2009 ONCA 722, at para 28. Substantial indemnity costs is the elevated scale of costs normally resorted to when the court wishes to express its disapproval of the conduct of a party to the litigation.

[126] This proceeding was hard-fought. Parkland won on all the issues. But 270 didn’t act in a manner that requires the court’s disapproval. It made legally tenable arguments, even if unsuccessfully. As a result, I endorse an order that 270 shall pay Parkland’s costs on a partial indemnity basis, fixed in the amount of $50,000. This amount is fair—Parkland was successful on the injunction, the application, and 270’s refusals. This amount is reasonable—as the prosecuting party, Parkland had the onus of proving its case, which necessarily increases its costs. And this amount is proportionate—270’s partial indemnity costs are $35,595.

Agarwal J
Released: March 26, 2025