



COURT
    OF APPEAL FOR ONTARIO

CITATION:
Quickie
    Convenience Stores Corp. v. Parkland Fuel Corporation, 2020 ONCA 453

DATE: 20200710

DOCKET: C67832

Feldman, Fairburn and Nordheimer
    JJ.A.

BETWEEN

Quickie
    Convenience Stores Corp.

Applicant (Appellant)

and

Parkland
    Fuel Corporation

Respondent (Respondent)

William C. McDowell and Brian Kolenda,
    for the appellant

Linda  M. Plumpton and Jonathan Silver,
    for the respondent

Heard: June 24, 2020 by video
    conference

On appeal from the judgment of Justice Paul
    B. Kane of the Superior Court of Justice dated November 14, 2019, with reasons
    reported at 2019 ONSC 6520.

Nordheimer J.A.:


A.

Overview

[1]

Quickie Convenience Store Corp. appeals from the
    dismissal of its application for declaratory relief arising out of a proposed commercial
    transaction
. The proposed
    commercial transaction involved several contracts, including leases and credit/debit
    card agreements, all relating to fuel stations in Ontario and Quebec. The
    appellant had put those fuel stations up for sale. Completion of the sale
    required that the appellant be able to assign these contracts. Parkland Fuel
    Corporation, the respondent, refused to consent to the assignments. The
    appellant sought a declaration that the respondent had refused its consent
    unreasonably. The application judge dismissed the application.

[2]

For the following
    reasons, I would allow the appeal, set aside the order below, and substitute an
    order granting the declaratory relief.

B.

Background

[3]

It is not necessary to go into every detail
    concerning the dealings and relationships between the appellant and the
    respondent. The basic facts are that the appellant is an Ontario corporation
    that owns and operates a chain of 52 convenience stores located in Ontario and
    Quebec. Gasoline service stations are located at 22 of these stores. At issue
    in this proceeding are 15 of those gasoline service stations which receive
    their fuel from the respondent. The respondent is a large fuel supply company.

[4]

Of these 15 stations, eight are located in
    Ontario and seven are located in Quebec. For 12 of the 15 stations, the
    appellant owns the fee simple interest in the land. For the other three stations,
    the appellant has a leasehold interest on the land.

[5]

The stations and their fuel supply are governed
    by various lease and sublease agreements. Typically, the appellants interest
    in the land is leased to the respondent, and then sub-leased back to the
    appellant. In addition to these leases, the appellant and the respondent are
    also parties to 14 credit/debit card agreements.

[6]

As already mentioned, the appellant is seeking
    to sell these 15 stations. To do so, it needs to assign the leases and, in some
    cases, the credit/debit card agreements.

[7]

The leases contain certain terms that are
    relevant to the relief sought. Specifically, the leases contain an assignment
    clause, and, in most instances, both a forum selection clause and a choice of
    law clause. Many of these terms are identical, or substantially similar, in
    wording. In all but one case, the leases require the respondents prior written
    consent in order to be assigned. In the case of 12 of the 15 sites, the leases
    provide that the appellant shall not assign [the] lease without the prior
    written consent of the respondent and cannot assign [the] sublease nor
    sub-sublet the Leased Premises without the respondents prior written
    consent. In one instance, the lease expressly provides that consent to the
    assignment may not be unreasonably withheld.

[8]

Schedule A to these reasons outlines the forum
    selection and choice of law clauses for the 15 stations. In summary, 11 leases
    stipulate that the governing law shall be Ontario, two stipulate that the
    governing law shall be Quebec, and two contain no stipulation. Similarly, 11
    leases have a forum selection clause naming Toronto, two name Montreal, and two
    contain no stipulation. It should be noted that the two leases that do not
    contain a choice of law clause are the same two leases that do not contain a
    forum clause. Both of the stations that are the subject of those two leases are
    located in Quebec.

[9]

When the appellant decided to sell these
    stations, it notified the respondent of the sales process, as it was
    contractually bound to do. The respondent expressed a willingness to waive its rights
    of first offer to purchase, and consent to the appellants assignment of the
    agreements. However, the respondent made its waiver and consent contingent on the
    appellant agreeing to a five-year extension to the existing leases and credit/debit
    card agreements. The appellant declined to provide that extension.

[10]

As the sale process progressed, in January 2018,
    the appellant received an offer to purchase the 15 stations (among the
    appellants other assets) from a prospective purchaser. The appellant advised
    the respondent of this offer. The respondent maintained its refusal to consent
    to the assignment of the leases and the credit/debit card agreements.

[11]

The appellant then brought an application in the
    Superior Court of Justice in which it sought:

(a) a declaration that the Respondent has
    unreasonably withheld its consent to the Applicant's assignment of its rights,
    interests, title, benefits, burdens and liabilities under the:

(i) Lease and Sublease Agreements
    for the 15 convenience stores listed in Schedule A hereto; and

(ii) Credit/Debit Card Agreements
    for the 14 convenience stores listed in Schedule B hereto;

(b) an order compelling the Respondent to
    consent to the Applicant's assignment of its rights, interests, title,
    benefits, burdens and liabilities under the:

(i) Lease and Sublease Agreements
    for the 15 convenience stores listed in Schedule A hereto; and

(ii) Credit/Debit Card Agreements
    for the 14 convenience stores listed in Schedule B hereto.

[12]

In bringing its application, the appellant
    relied on s. 23(2) of the
Commercial Tenancies Act
,
R.S.O.
    1990, c. L.7, and r. 14.05(3)(d) of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194.

C.

THE DECISION BELOW

[13]

The application judge gave lengthy reasons for
    dismissing the appellants application. In those reasons, the application judge
    made various findings including that:

(i)

the respondents notice of refusal to consent to
    the proposed assignment of leases and subleases was a prohibited attempt to
    obtain benefits exceeding its rights in those contracts, such as a five-year
    extension of all category of contracts or the right to purchase the assets of
    five sites; and

(ii)

the respondent unreasonably refused to consent
    to the proposed assignment to the purchaser of the 14 leases and subleases and
    the one letter of intent which included a lease provision, pursuant to s. 23(1)
    of the
Commercial Tenancies Act
and did not thereby act reasonably as
    a contractual party pursuant to the common law duty to act in good faith as to
    those leasing contracts.

[14]

However, the application judge then went on to
    consider the impact of the choice of law and forum selection clauses. He found
    that:

(i)

the respondent had shown that there is no reason
    such as fraud or public policy for the reasons stated below, to not enforce the
    Quebec law and forum selection clauses as to the lease and sub-lease agreements
    located in that jurisdiction; and

(ii)

the respondent at the first step of the above
    test has demonstrated the validity of the election of Quebec as the governing
    law contractual term, as they are valid, clear, enforceable and apply to the
    cause of action involving the Quebec sites before the court.

[15]

The application judge concluded that the
    appellant had the onus to show strong reason or cause why this court should
    not enforce these commercial parties selection of Quebec as the governing law
    as to the contracts which involve the leasing of Quebec property to carry on
    business in that Province.

[16]

The application judge found that the appellant
    had failed to discharge its onus. Specifically, the application judge said that
    the appellant had not presented any evidence as to why the parties had selected
    Quebec as the governing law for some sites and Ontario for other Quebec sites.
    He also said that the appellant had not presented any evidence as to Quebec law
    including whether it was the same as or different on the issues before the
    court.

[17]

Consequently, the application judge held that he
    could not grant the relief sought with respect to the two leases that contained
    the Quebec choice of law terms and he was hesitant to grant the relief with
    respect to the two leases where there were no choice of law or forum selection
    terms.

[18]

The application judge then dismissed the
    application.

[19]

After the application judge released his
    reasons, counsel for the appellant wrote to the application judge and inquired
    whether he had, in fact, intended to dismiss the application in its entirety.
    Counsel for the respondent wrote and advised the application judge that there
    was no need to clarify the reasons. The application judge responded by advising
    counsel that [g]iven the decision is now under appeal on undisclosed grounds
    and the fact that Parkland objects to the court providing clarification to the
    questions posed, it would be inappropriate to issue supplementary reasons at this
    point.

D.

Analysis

[20]

In my view, the application judge erred both in
    his analysis of the issues that were before him and in his conclusion. Even if
    his reasoning was correct, and I conclude that it was not, his conclusions
    regarding the choice of law and forum selection clauses did not address any of
    the 11 leases that related to the gas stations that were either located in
    Ontario, or were located in Quebec but had Ontario choice of law, and Toronto
    forum selection, clauses (collectively the Ontario gas stations). Indeed,
    given his conclusion that the respondent had unreasonably withheld its consent
    to the assignment of the leases, it ought to have followed that the appellant
    would have been entitled to the declarations that it sought, at least with
    respect to the leases applicable to the Ontario gas stations.

(i)

The partial relief issue

[21]

The respondent attempts to sustain the
    application judges decision to dismiss the application as a whole by
    submitting that the appellant had pitched its case, and the relief that it
    sought, on an all or nothing basis. In my view, that submission is inconsistent
    with the reality of the situation and is also contrary to the prevailing rules
    regarding the scope of a judges authority to grant relief in this type of
    situation.

[22]

The appellant wanted relief with respect to all of
    the leases. It had agreed to sell the 15 gas stations to its prospective
    purchaser and needed relief respecting all of the gas stations to do so. Understandably,
    therefore, the appellant cast the relief that it sought at its highest, that
    is, declarations for all 15 gas stations. However, there is nothing in the
    record, nor is there any sensible commercial approach, that would hold that the
    appellant either had to score a complete victory or leave without any remedy at
    all, especially in the circumstances here where the transaction spanned two
    provinces. Given that fact, and given the presence of the choice of law and
    forum selection clauses, it should have been clear to all parties that there was
    the potential for a court to conclude that it could address the Ontario gas
    stations but not the Quebec gas stations, for example. Further, it makes no
    sense for the Ontario court not to deal with the Ontario gas stations since, on
    the application judges own analysis, the Quebec court would not deal with the
    Ontario gas stations.

[23]

This approach is also consistent with the
Rules
    of Civil Procedure
, specifically r. 38.10(1) which provides, in part:

On the hearing of an application the presiding
    judge may,

(a) grant the relief sought or dismiss or
    adjourn the application,
in whole or in part
and with or without terms[.]
    [Emphasis added.]

[24]

At a minimum, the application judge should have
    dealt with the application as it related to the Ontario gas stations. He erred
    in failing to do so. The respondents reliance on
Sobeski v. Mamo
,
    2012 ONCA 560, 112 O.R. (3d) 630, to advance its submission, on this point, is
    misplaced. Given the application judges findings about the respondents
    conduct, the appellant should have been granted the declaratory relief that it
    sought with respect to at least the 11 Ontario gas stations, even if the
    appellant then had to go to Quebec to deal with the other four gas stations.

[25]

In fact, two of the Quebec gas stations did not
    have forum selection or choice of laws clauses. Even on the application judges
    reasoning, only the two gas stations with Montreal forum selections clauses and
    Quebec choice of law clauses would have been properly excluded.

(ii)

The Quebec gas station leases

[26]

That leads to the issue respecting the four
    Quebec gas stations. Two of those gas stations had leases where there was no
    choice of law or forum selection clause. Consequently, there was no impediment,
    of the type found by the application judge, to him dealing with those two gas
    stations as part of dealing with the Ontario gas stations. Given what I will
    have to say in a moment about the impact of the choice of law clause, the
    appellant ought to have obtained the declaratory relief that it sought with
    respect to those two gas stations as well.

[27]

I turn to the last two gas stations, the ones
    that had a Quebec choice of law clause and a Montreal forum selection clause.
    Should those clauses have prohibited the application judge from granting relief
    with respect to those gas stations? I find that they should not.

[28]

The application judge erred in his analysis of
    these clauses in a number of respects. First, the application judge conflated
    the analysis of these two different clauses. The application judge took the
    test that relates to when a court will depart from a forum selection clause and
    used it in determining the impact of the choice of law clause.

[29]

Second, the application judge erred in finding
    that the appellant bore the onus of establishing whether Quebec law was the
    same as, or different from, Ontario law. That onus rested with the respondent,
    if it was going to allege that the foreign law was different from the local
    law. Indeed, the respondent acknowledged before us that it bore that onus. However,
    the respondent did not lead any evidence that Quebec law differed from Ontario
    law with respect to the issues that were before the application judge. In the
    absence of such evidence, the application judge ought to have proceeded on the
    basis that the Quebec law was the same as Ontario law: Lord Collins of
    Mapesbury et al., ed.,
Dicey, Morris & Collins on the Conflict of Laws
,
    15th ed. (London: Sweet & Maxwell, 2012), at p. 332; see also
Uber Technologies
    Inc. v. Heller
, 2020 SCC 16, at para. 50.

[30]

Third, the application judge failed to properly
    apply the strong cause test to determine whether he ought to give effect to the
    forum selection clause. The law on this is set down in
Z.I. Pompey Industrie
    v. ECU-Line N.V.
, 2003 SCC 27, [2003] 1 S.C.R. 450. In that decision, the
    Supreme Court of Canada confirmed that foreign selection clauses are generally to
    be enforced unless the party seeking to avoid the forum selection clause shows
    strong cause why the clause should not be enforced.

[31]

In my view, the appellant has satisfied the
    strong cause test. In saying that, I am cognizant of the factors relevant to
    the strong cause test set out in
Z.I. Pompey Industrie
, at para. 19, as
    quoted by the Supreme Court of Canada from
The 
Eleftheria

,
    [1969] 1 Lloyd's Rep. 237 (Adm. Div.). I reach my conclusion for the following
    reasons.

[32]

First, this is not a case of a single contract
    with a single forum selection clause. Here we have 15 contracts  11 of them select
    Toronto as the forum, two select Montreal, and two have no selection. Second,
    the contemplated transaction was for the sale of the 15 gas stations as a
    whole. Commercial reality strongly favours having any issues raised with
    respect to the transaction dealt with in a single forum. Requiring the parties
    to litigate the same issue twice, in two different courts, does not advance
    that commercial reality. Third, there is a general principle that courts will strive
    to avoid a multiplicity of proceedings. Indeed, that principle is reflected in
    s. 138 of the
Courts of Justice Act
, R.S.O. 1990, c. C.43. Fourth, as
    I have already noted, there was no evidence that the law as between Quebec and
    Ontario was any different, nor was there any other evidence that would have
    established that the respondent would lose any juridical advantage by having to
    litigate the issue in Toronto, instead of Montreal. On that latter point, I
    would note that the parties in fact litigated the issues in Ottawa and no one
    raised any objection to that. I would also note that the parties were as
    connected to Ontario, if not more so, than they were to Quebec. Fifth, there is
    no evidence that the respondent genuinely desired to have the issues
    surrounding these two gas stations determined in Quebec, as opposed to simply engaging
    in an effort to gain a procedural advantage.

[33]

In summary, the factual situation here presented
    the type of exceptional circumstances that justified a departure from the
    general principle that forum selection clauses will be enforced:
Expedition
    Helicopters Inc. v. Honeywell Inc.
,
2010 ONCA 351, 100 O.R. (3d)
    241, at para. 23, leave to appeal refused, [2010] S.C.C.A. No. 258.

[34]

In the end result, neither the choice of law
    clause nor the forum selection clause posed any true impediment to the
    application judge deciding the issues that were before him with respect to the
    Quebec gas stations.

(iii)

The credit/debit card agreements

[35]

This leaves the issue regarding the credit/debit
    card agreements. They are not subject to the
Commercial Tenancies Act
,
and the provision therein prohibiting the unreasonable withholding of consent
    to an assignment.

[36]

The credit/debit card agreements contained a
    clause that simply said that the appellant could not assign the agreement
    without prior written consent. The respondent submits that, absent an express
    provision in the credit/debit card agreements providing that consent cannot be
    unreasonably withheld, the respondent was entitled to withhold its consent in
    this case. The appellant submits that the prohibition against withholding
    consent unreasonably should be implied into the credit/debit card agreements on
    the principles of good faith bargaining, as set out in
Bhasin v. Hrynew
,
    2014 SCC 71, [2014] 3 S.C.R. 494.

[37]

Before addressing the substance of this issue, I
    must address the respondents preliminary objection that the appellant ought
    not to be able to advance this argument because they did not make it before the
    application judge. The appellant acknowledges that counsel below did not rely
    on
Bhasin
to argue that the respondent unreasonably withheld consent
    to the credit/debit card agreements. However, it submits that the general issue
    of whether the respondent unreasonably withheld consent was before the judge,
    as were the principles established in
Bhasin
.

[38]

In my view, the respondent takes an unduly restrictive
    approach to whether this is the type of argument that this court will generally
    decline to hear for the first time on an appeal. To begin, the principle that
    courts should generally decline to hear a new issue on appeal is not an absolute
    rule. It is a discretionary decision to made based on the facts of the
    individual case:
Kaiman v. Graham
, 2009 ONCA 77, 245 O.A.C. 130, at
    para. 18. Further, it is clear that the issue of whether the respondent
    unreasonably withheld consent to an assignment of the credit/debit card
    agreements was squarely before the application judge. The fact that the
    appellant invokes different authority now, than it did before the application
    judge, does not offend the principle:
R. v. Sweeney
(2000), 50 O.R.
    (3d) 321 (C.A.) at para. 32.

[39]

In considering the issue, the application judge
    was obliged to apply any law that was applicable and binding on him. On that
    point, the principles in
Bhasin
were directly before the application
    judge. I would note that it was the respondent who drew the application judges
    attention to that case, albeit for a different purpose. I would not give effect
    to the respondents procedural objection.

[40]

The question then is whether an agreement that
    requires consent to be assigned carries with it an implicit understanding that
    consent to an assignment will not be withheld unreasonably. I agree with the
    appellant on this point. I conclude that a provision in a contract that requires
    one party to consent to the assignment of the contract by the other party, has
    implicit in it the requirement that the party, whose consent is necessary, will
    not withhold that consent for an improper or ulterior purpose. In my view, the
    imposition of a good faith obligation, on the decision whether or not to
    consent, is consistent with the approach to be taken to contracts generally, as
    enunciated in
Bhasin
.

[41]

In
Bhasin
, Cromwell J. outlined the
    organizing principle of good faith that applies to all contracts. It requires
    that parties to a contract act honestly in the performance of their
    obligations. In that decision, Cromwell J. established certain duties that rest
    on parties to a contract. These include:

(i)

parties generally must perform their contractual
    duties honestly and reasonably and not capriciously or arbitrarily; and

(ii)

a contracting party should have appropriate
    regard to the legitimate contractual interests of the contracting partner:
Bhasin
,
    at paras. 63 and 65.

[42]

The application judge found that the
    respondents refusal to consent to the assignment of the leases was a
    prohibited attempt to obtain benefits exceeding its rights in those contracts.
    More specifically, the respondent was attempting to leverage its refusal to
    consent to force the appellant to agree to a five year extension of their
    contractual arrangements.

[43]

The application judge did not make any separate
    finding regarding the respondents reason for refusing to consent to the
    assignment of the credit/debit card agreements, but it follows that the same
    conclusion regarding the respondents motive, that he found regarding the
    leases, would apply. The parties were not drawing any distinctions between
    these agreements when it came to the issue of assignment. All of the agreements
    between the parties were the subject of the appellants proposed sale. They
    were all to be assigned to the prospective purchaser as part of the sale
    transaction. The respondents objective in withholding its consent was the same
    regardless of whether we are speaking about the leases or about the
    credit/debit card agreements. Its objective was to extract an extension of the
    existing contractual arrangements, something to which it was not otherwise
    entitled. The same conduct that underpins the trial judges findings about the
    respondents dealings in relation to the leases applies to its dealings in
    respect of the credit/debit card agreements. It reflected bad faith dealing. It
    is not unlike the conduct in which the defendants engaged in
Bhasin
.

[44]

The respondents refusal to consent to the
    assignment of the credit/debit card agreements was as unreasonable or improper
    as was its refusal to consent to the assignment of the leases. It was
    inconsistent with the duty of good faith that the respondent owed to the
    appellant. It was also inconsistent with giving appropriate regard to the legitimate
    contractual interests of the appellant, that is, the appellants legitimate
    interest in wishing to sell these gas stations. The appellant was entitled to
    expect that the respondent would act fairly and honourably in deciding whether
    to consent to the assignment of these agreements as part of a sale of the appellants
    businesses to a third party. On that point, there was no evidence that the
    prospective purchasers performance of the leases and the credit/debit card
    agreements would pose any financial or other risk to the respondent.

[45]

There was no principled basis for the
    respondents refusal to consent to the assignment of the credit/debit card
    agreements. I would also observe that there would be a measure of inconsistency
    in a conclusion that the respondent had unreasonably withheld its consent to
    the assignment of the leases but not to the assignment of the credit/debit card
    agreements.

E.

Conclusion

[46]

I would allow the appeal, set aside the order
    below and, in its place, grant an order providing the appellant with the
    declaratory relief that it sought in its Notice of Application.

[47]

The appellant is entitled to its costs of the
    appeal fixed in the agreed amount of $3
5,000
inclusive of disbursements and HST. It would seem that the
    appellant ought to be entitled to its costs of the original application as well
    but if the parties cannot agree on that point, they may make written
    submissions. The appellants submissions shall be delivered within 10 days of
    the date of these reasons and the respondents submissions shall be delivered
    within 10 days thereafter. Each partys submissions shall be limited to three
    pages.

Released: JUL 10, 2020 KF

I.V.B.
    Nordheimer J.A.

I
    agree. K. Feldman J.A.

I
    agree. Fairburn J.A.


Schedule A



Site

Store No.

Store Address

Store Location

Choice of Law Clause

Forum Selection Clause



1

4

24 Boulevard du Mont-Bleu

Gatineau, Quebec

N/A

N/A



2

8

2 Boulevard Louise- Campagna

Gatineau, Quebec

Quebec

Montreal



3

12

9 Du Barry Street

Gatineau, Quebec

Ontario

Toronto



4

16

882 Maloney Boulevard

Gatineau, Quebec

Ontario

Toronto



5

18

3332 McCarthy Road

Ottawa, Ontario

Ontario

Toronto



6

21

108 Greber Boulevard

Gatineau, Quebec

N/A

N/A



7

22

1 Rideau Crest

Nepean, Ontario

Ontario

Toronto



8

23

2335 St-Louis Street

Gatineau, Quebec

Quebec

Montreal



9

24

60 William Street

Brockville, Ontario

Ontario

Toronto



10

28

1034 Pleasant Park Road

Ottawa, Ontario

Ontario

Toronto



11

36

207 Mont Bleu Boulevard

Gatineau, Quebec

Ontario

Toronto



12

43

1661 Hunt Club Road

Ottawa, Ontario

Ontario

Toronto



13

45

800 Stonehaven Drive

Ottawa, Ontario

Ontario

Toronto



14

49

4505 Bank Street

Ottawa, Ontario

Ontario

Toronto



15

61

1780 Heron Street

Ottawa, Ontario

Ontario

Toronto




