



COURT OF APPEAL FOR ONTARIO

CITATION: Stuart Budd & Sons Limited v. IFS Vehicle
    Distributors ULC, 2016 ONCA 977

DATE: 20161223

DOCKET: C62235

Doherty, MacPherson and Lauwers JJ.A.

BETWEEN

Stuart Budd & Sons Limited, 290756 Alberta
    Ltd., Saab On The
Queensway Ltd., 798983 Ontario Inc., 9216-0415 Quebec Inc., 6847781
Canada Ltd., Forbes Saab And Used Car Shop Inc., and
Springman & Springman Limited

Plaintiffs (Respondents)

and

IFS Vehicle Distributors ULC, International Fleet
    Sales Inc.,
Michael Libasci and Peggy King

Defendants (Appellants)

Matthew J. Latella and Sarah Patricia Peterson, for the
    appellants

Andy Seretis, for the respondent

Heard: December 7, 2016

On appeal from the order of Associate Chief Justice Frank
    N. Marrocco of the Superior Court of Justice, dated May 3, 2016, with reasons
    reported at 2016 ONSC 2980 and from the costs order June 8, 2016, with reasons reported
    at 2016 ONSC 3798.

Lauwers J.A.:

[1]

The respondents are eight Saab car dealerships in five provinces. Three
    of the dealerships carry on business in Ontario. The respondents brought an
    action in Ontario seeking a declaration that they validly rescinded their Saab
    Sales and Service Agreements pursuant to Ontarios
Arthur Wishart Act
    (Franchise Disclosure) 2000, S.O. 2000
, c. 3. They also sought damages
    pursuant to s. 7(1) of the Act or for breach of contract.

[2]

The defendants are companies and individuals associated with the revival
    of the Saab automobile brand and dealer network in North America. IFS Vehicle
    Distributors ULC was incorporated in British Columbia and carried on business
    as the franchisor and supplier of the Saab dealership network. International
    Fleet Sales Inc. was incorporated in California, and carried on the business of
    supplying parts and accessories to IFS Vehicle Distributors ULC. IFS Vehicle
    Distributors ULC and International Fleet Sales Inc. are affiliated companies.
    Michael Libasci was the President and sole director of IFS Vehicle Distributors
    ULC and the President and CEO of International Fleet Sales Inc., and resided in
    California. Peggy King, now retired, was the Secretary and Treasurer of IFS
    Vehicle Distributors ULC and the Chief Financial Officer of International Fleet
    Sales Inc., and resided in California.

[3]

The appellants brought a motion challenging the Ontario courts
    jurisdiction to hear the action in respect of the five out of the eight
    respondent dealerships that are located and do business outside Ontario. They
    also submit that Ontario should decline to hear the case on the basis of
forum
    non conveniens.
The appellants submit that either of California or
    Michigan would be a more appropriate forum.

[4]

The motion judge dismissed the motion.

[5]

The appellants contend that the motion judge made four errors: first, in
    his application of the law germane to jurisdiction
simpliciter
; second,
    in his
forum non conveniens
analysis; third, by relying on a case that
    neither party cited. Fourth, the appellants dispute the motion judges decision
    relating to costs of the motion before Corbett J.

[6]

We address each issue in turn.

A.

jurisdiction
simpliciter

[7]

The law on jurisdiction
simpliciter
of the Ontario Superior
    Court was set out by the Supreme Court of Canada in
Van Breda v. Villages
    Resort Ltd.
, 2012 SCC 17. At para. 90 of
Van Breda
, LeBel J.
    established four presumptive connecting factors ("PCFs"), any one of
    which would, if present, entitle a provincial superior court to take
    jurisdiction over a legal dispute in tort law: (1) the defendant is domiciled
    or resident in the province; (2) the defendant carries on business in the
    province; (3) the tort was committed in the province; or (4) a contract
    connected with the dispute was made in the province.

[8]

There is no doubt that the action was properly brought by the three
    Ontario plaintiffs in Ontario. The contracts between the Ontario plaintiffs and
    IFS Vehicle Distributors ULC were negotiated and signed in Ontario.

[9]

The appellants argue that the out-of-province plaintiffs cannot be part
    of this action, and cannot sue an out-of-province defendant in Ontario. They
    are therefore not properly joined in this action. The appellants advise that if
    the individual out-of-province plaintiffs were to bring similar actions in
    their home provinces, the appellants will not contest the jurisdiction of the respective
    provincial superior courts. This would require four actions in addition to this
    action in Ontario.

[10]

The motion judge focussed his analysis on the second PCF under Van Breda:
    the defendant carries on business in the province. He found that IFS Vehicles
    Distributors ULC carried on business in Ontario, at para. 38. He then set out the
    supporting evidence for this conclusion, at para. 39:

The following uncontested facts are helpful in reaching this
    conclusion:



IFS Vehicle Distributors ULC obtained an extra-provincial license to
    permit it to carry on business in Ontario;



IFS Vehicle Distributors ULC negotiated and sold three SAAB dealerships
    in Ontario;



IFS Vehicle Distributors ULC sold vehicles and, through International
    Fleet Sales Inc., parts to dealers in Ontario;



The bank to which all Dealers were directed to make payment was the
    Scotiabank Main Branch in Toronto, Ontario;



IFS Vehicle Distributors ULC maintained a lockbox for collecting cheques
    in Toronto, Ontario;



IFS Vehicle Distributors ULC maintained a presence in Ontario at Budds
    Saab, located at 2400 South Service Road West, Oakville, Ontario, in the
    following ways:

-This address appeared on invoices
    for vehicles and parts;

-IFS Vehicle Distributors ULC told
    the Ontario government when it obtained its extra-provincial license that this
    address was its principal place of business in Ontario;

-IFS Vehicle Distributors ULC, in a
    Disclosure Document provided to some but not all of the plaintiffs, indicated that
    this address was its premises in Ontario;

-This address was used on the
    manufacturers certification provided to each of the plaintiffs.

[11]

Apart from these facts, the motion judge also referred to some
    admissions made by Jim Steinhagen, the CEO of IFS Vehicles Distributors ULC, as
    evidence of carrying on business in Ontario, at paras. 41-42. It appears that IFS
    Vehicles Distributors ULC had some presence at the Budd dealership address. There
    is some factual dispute about the degree of presence, but there is no dispute
    that an individual by the name of Serge St-Louis did attend from time to time
    on behalf of that appellant.

[12]

In oral argument, counsel for the appellants agreed with these facts, and
    considered them to be fair as far as they go except for the second bullet. He
    took some umbrage at the motion judges expression in the second bullet that
    IFS Vehicles Distributors ULC sold three Saab dealerships in Ontario. These
    were dealers who had sold Saabs in the past. However, counsel agreed that the new
    dealership agreements were negotiated in Ontario. We do not think that
    omitting the words and sold from the second bullet takes away from the force
    of it as support for the finding that IFS Vehicle Distributors ULC carries on
    business in Ontario.

[13]

The appellants dispute the sufficiency of these factors in establishing
    that IFS Vehicles Distributors ULC was carrying on business in Ontario, in
    light of the decisions of the courts in
Arsenault v. Nunavut
, 2015
    ONSC 4302, affirmed 2016 ONCA 207,
Essex Garments Canada Inc v. Cohen
,
    [2005] O.J. No. 5716, and
Chevron Corp. v. Yaiguaje
, 2015 SCC 42. Each
    of these cases, they assert, required a more substantial physical connection
    than the motion judge found for IFS Vehicle Distributors ULC.

[14]

In
Arsenault
the plaintiff sued the Government of
    Nunavut in Ontario for wrongful dismissal. Nunavut challenged the courts
    jurisdiction. Polowin J. found, at para. 64: that maintaining a small office
    in Ottawa for such a limited purpose cannot reasonably be said to be carrying
    on business in Ontario. The Liaison Office is not analogous to a division or
    branch of the corporations business in the province. She found that the
    Ontario Superior Court lacked jurisdiction
simpliciter
, and also found
    Nunavut to be a more appropriate place to try the case, on the basis of f
orum
    non conveniens
.

[15]

In
Essex Garments
, the plaintiff sued Gendis Inc.
    for past due invoices rendered to an affiliated company. Spies J. found, at
    para. 19:

Although Gendis Inc. through a wholly owned subsidy area owns
    real property in Ontario, that does not give Gendis Inc. a physical presence in
    Ontario. Nor do the other factors relied upon by the plaintiffs. Gendis Inc.
    does not have any offices in Ontario and does not itself carry on business
    anywhere in Ontario. The fact that it is registered and therefore able to do so
    is not enough.

[16]

Finally, in
Chevron
, the plaintiffs were seeking to
    have recognized and enforced a foreign judgment against Chevron by the Ontario
    Superior Court of Justice. Gascon J. noted, at para. 86: Chevron Canada has a
    physical office in Mississauga, Ontario based on the motion judges finding,
    which he quoted at para. 86:

Chevron Canada operates a business establishment in
    Mississauga, Ontario. It is not a mere "virtual" business. It runs a
    bricks and mortar office from which it carries out a non-transitory business
    with human means and its Ontario staff provides services to and solicits sales
    from its customers in this province.

[17]

Each case invoking the fourth PCF of carrying on business in
    Ontario must be considered on its unique facts. While a more substantial
    presence, along the lines discussed in the cases, would have added weight to
    the motion judges determination, we do not accept the appellants submission
    that the factors taken into account by the trial judge in finding jurisdiction
simpliciter
were insufficient.

[18]

At para. 61, the motion judge made the following observation: The
    Supreme Court of Canada made it clear in the
Van Breda
decision that
    once the court determines that a presumptive connecting factor has been
    established and not rebutted it should assume jurisdiction over all aspects of
    the case citing paras. 99-100.

[19]

In our view, once the action is properly constituted from
    the perspective of jurisdiction
simpliciter
, then the issue of
    efficiency in the litigation becomes relevant with respect to the joinder of
    other parties, as this court noted in
Trillium Motor World Ltd. v. General
    Motors of Canada Ltd.
, 2014 ONCA 497, at paras. 46-49. The Supreme Court affirmed
    this decision in
Lapointe Rosenstein Marchand Melançon LLP v. Cassels Brock
    & Blackwell LLP
, [2016] SCC 30, and noted, at paras. 32 and 44:

The fourth factor also promotes flexibility and commercial
    efficiency. As seen in
Van Breda
, all that is required is a connection
    between the claim and a contract that was made in the province where
    jurisdiction is sought to be assumed. A connection does not necessarily
    require that an alleged tortfeasor be a party to the contract. To so narrow the
    fourth presumptive factor would unduly narrow the scope of
Van Breda
,
    and undermines the flexibility required in private international law.



It is worth noting that nothing in
Van Breda
suggests
    that the fourth factor is unavailable when more than one contract is involved,
    or that a different inquiry applies in these circumstances. Nor does
Van
    Breda
limit this factor to situations where the defendants liability
    flows immediately from his or her contractual obligations, or require that the
    defendant be a
party
to the contract:
Pixiu
    Solutions Inc. v. Canadian General-Tower Ltd.
,

2016 ONSC
    906, at para. 28 (CanLII). It is sufficient that the dispute be connected to
    a contract made in the province or territory where jurisdiction is proposed to
    be assumed:
Van Breda
, at para. 117. This merely requires that a
    defendants conduct brings him or her within the scope of the contractual
    relationship and that the events that give rise to the claim flow from the
    relationship created by the contract: paras. 116-17.

[20]

We observe that taking litigation efficiency into account does not
    convert it into another PCF, contrary to the appellants submission.

B.

forum non conveniens

[21]

The motion judge provided detailed reasons for concluding that the
    appellants failed to discharge the onus of establishing that there is a better
    and more appropriate forum than Ontario, at para. 57:

I am satisfied based on all the evidence that the defendants
    have failed to discharge their onus of establishing that there exists a better
    and more appropriate forum than Ontario to fairly and efficiently dispose of
    this litigation. Specifically, the following factors are helpful in reaching
    this conclusion:



Three of the plaintiffs reside in Ontario;



The remaining five plaintiffs reside in Canada and would be able to
    attend court in Toronto or elsewhere in Ontario;



Two representatives of IFS Vehicle Distributors ULC, its CEO Mr. James
    Steinhagen and Mr. Jim Moreen, are in Southfield, Michigan, and their evidence
    can easily be taken in Windsor, Ontario, which borders Detroit;



Although not necessary for my decision, I note that attending outside of
    California is not unduly onerous for the defendants because the defendants have
    offered to consent to jurisdiction if each of the plaintiffs sues in their home
    province. Had the plaintiffs been so inclined, the defendants would then have
    appeared and defended in British Columbia, Alberta, Ontario, Québec and Nova
    Scotia;



All of the Dealership Agreements specify that they are governed by the
    law of Ontario, although it will be necessary to apply the Franchise Act of
    Alberta to the 290756 Alberta Ltd. agreement. It was not suggested during the
    course of argument that there is any provision in Albertas Franchises Act
    dealing with rescission, disclosure, franchisor associates or damages, which is
    materially different than the Arthur Wishart Act. In any event, any differences
    between the Arthur Wishart Act and the Franchises Act of Alberta would have to
    be proven by expert evidence if this matter were tried in California;



The claim against Michael Libasci, Peggy King and International Fleet
    Sales Inc. is based on the theory of liability that each of them is a
    franchisors associate or an associate of a franchisor and therefore
    jointly and severally liable with IFS Vehicle Distributors ULC pursuant to
    sections 6(6) and 7(1) of the Arthur Wishart Act and, with respect to 290756
    Alberta Ltd., section 1(2) of the Franchises Act of Alberta;



Trying this claim in Ontario will avoid the expense of proving Ontario
    law in a foreign jurisdiction by expert evidence.

[22]

The appellants did not devote any time in oral argument to this issue
    and addressed it only briefly in their factum. They complain that the
    respondents impeded cross-examination in this issue but brought no motion for
    relief before the motion was argued. This is a discretionary decision that took
    into account the relevant factors and we see no basis on which to interfere
    with it.

C.

relying on new authorities

[23]

The appellants contend that it was an error in principle for the motion
    judge to rely on a case that neither party cited. They criticize the motion
    judge for referring to
Cannon v. Funds for Canada Foundation
, 2010
    ONSC 4517, affd 2011 ONCA 185 as the basis for distinguishing
Lailey v.
    International Student Volunteers Inc.
, 2008 BCSC 1344, a decision on which
    the appellants relied.

[24]

In
Lailey
, two of the plaintiffs were British Columbia
    residents and one was an Ontario resident. They contracted with the defendant,
    a non-profit corporation with its principal office in Orange County,
    California, which offered travel programs to students consisting of adventure
    travel with volunteer work and optional language lessons. An incident occurred
    in Ecuador and the plaintiff sued for damages for breach of contract in failing
    to provide them with safe and secure accommodation among other things. The
    motion judge found that the British Columbia Supreme Court had jurisdiction
simpliciter
over the action between the British Columbia plaintiffs and the California
    defendant, but that did not permit it to adjudicate the claim of the Ontario
    plaintiff against the California defendant. The court said, at para. 34: this
    court has no territorial competence or relation to her claim. It cannot simply be
    bootstrapped onto the claims the two other plaintiffs about which the Court
    does have jurisdiction.

[25]

The motion judge in
Lailey
relied in part on the decision of
    Goodman J. (as he then was) in
Tridon Ltd. v. Otto Bahlier KG
(1978),
    1 O.R. (2d) 569 (H.C.)

[26]

The motion judge distinguished
Lailey
based on comments by
    Strathy J. (as he then was) in
Cannon Funds
, at paras. 80-91. Strathy
    J. noted, at para. 90, that
Tridon
had been effectively overruled on
    the basis that order and fairness are not accomplished by turning away
    jurisdiction where a fraction of the relief claimed may fall outside rule 17.02
    and where in other respects there is a real and substantial connection
    between the parties in the subject matter of the action in Ontario; Strathy J.
    quoted Hockin J. in
Overland Custom Couch Inc. v. Thor Industries Inc.
(1999), 46 O.R. (3d) 788, at para. 19.

[27]

We see nothing improper in the motion judges use of
Cannon Funds
to consider the application of
Lailey
. It was not a new case that
    arose after the argument on which the motion judge might have required further
    submissions. On the issue in question
Cannon Funds
is usefully
    analogous.

D.

leave to appeal costs

[28]

The motion judge ordered the defendants to pay the plaintiffs about
    $50,000 in costs, inclusive of fees, disbursements and HST. The appellants did
    not formally seek leave to appeal this costs award but challenge it nonetheless.

[29]

The motion judges reasoning is set out at paras. 4 through 7 of the
    costs endorsement :

The Court of Appeal left the matter of the costs of the first
    jurisdictional motion to me at paragraph 92 of its decision. Clearly, the Court
    of Appeal thought that the costs of the first motion could follow the costs of
    the second.(Para.5)

I do not accept the defendants submission that the conduct of
    the judge who heard the first motion was such that the plaintiffs should be
    denied costs for the April 2014 proceeding. While the Court of Appeal set aside
    the decision on the first motion, it did not indicate that there were no costs
    on account of the first motion. Rather the Court of Appeal left the costs of
    the first motion to be decided by the judge who heard the second motion.(Para.6)

I do not accept the defendants argument that they should be
    awarded costs because they successfully raised the fact that the plaintiffs
    affidavit evidence was deficient. (Para. 7)

[30]

The appellants have not identified any error in principle in what is clearly a discretionary decision. Accordingly, if leave to appeal costs were sought, it would have been refused.

E.

disposition

[31]

For these reasons, the appeal is dismissed with costs payable by the
    appellants to the respondents in the amount of $13,000, all-inclusive.

P. Lauwers J.A.

I agree Doherty
    J.A.

I agree J.C.
    MacPherson J.A.

Released: December 23, 2016


