COURT OF APPEAL FOR ONTARIO

CITATION: Stuart Budd & Sons Limited v. IFS Vehicle
    Distributors ULC, 2016 ONCA 60

DATE: 20160121

DOCKET: C58835

Weiler, Epstein and Huscroft 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 Latella and Sarah Petersen, for the appellants

Andy Seretis, for the respondents

Heard: July 9, 2015

On appeal from the order of Justice David L. Corbett of
    the Superior Court of Justice, dated April 23, 2014 and the amended
    endorsement, dated February 3, 2015, with reasons reported at 2015 ONSC 519.

Epstein J.A.:

OVERVIEW

[1]

Three Ontario plaintiffs and five out-of-province plaintiffs (the
    respondents) sued four foreign defendants (the appellants) for breach of
    various franchise agreements and of certain provisions in two franchise
    statutes in a statement of claim issued in March 2013.

[2]

The appellants brought a motion to dismiss the proceeding for lack of
    jurisdiction. In the alternative, they asked the court to stay the matter on
    the basis of
forum non conveniens
. The appellants took the position
    that the claims should be brought in five provinces. Alternatively, if the
    claims were to proceed together in one action, the action should be heard in
    California.

[3]

The motion judge dismissed the motion. He found that there was
    jurisdiction
simpliciter
in Ontario for all claims and that a single
    proceeding would be a suitable and efficient way for the respondents to advance
    their claims.  He viewed Ontario as the most convenient forum for that single
    proceeding.

[4]

On appeal, the appellants challenge the motion judges findings and
    conclusions relating to jurisdiction
simpliciter
and
forum non
    conveniens.
They also submit that the motion judges comments and conduct
    during the course of the jurisdiction motion raise a reasonable apprehension of
    bias.

[5]

After considering the cumulative effect of the impugned actions of the
    motion judge in the context of the entire proceedings, I have regrettably come
    to the conclusion that an informed person, viewing the matter realistically and
    practically, would conclude that there was a reasonable apprehension of bias on
    the part of the motion judge.  The appeal must therefore be allowed and a
    new hearing ordered.

BACKGROUND FACTS

[6]

The corporate appellants, IFS Vehicle Distributors UFC (IFS) and International
    Fleet Sales Inc. (Fleet Sales) are affiliated companies. IFS is a franchisor
    and supplier of the Saab dealership network in Canada.  Fleet Sales supplies
    Saab parts and accessories to IFS. The appellant, Michael Libasci, is the President
    of IFS and the President and Chief Executive Officer of Fleet Sales. The
    appellant, Peggy King, was the Secretary and Treasurer of IFS and the Chief
    Financial Officer of Fleet Sales.  She is now retired.  Both individual appellants
    lived in California at the material time.

[7]

The respondents are all new and used Saab car dealers.  Five are not
    resident in Ontario  290756 Alberta Ltd., 9216-0415 Quebec Inc., 6847781
    Canada Ltd., Forbes Saab and Used Car Shop Inc., and Springman & Springman
    Limited.  The other three  Stuart Budd & Sons Limited, Saab on the Queensway
    Ltd. and 798983 Ontario Inc.  are Ontario corporations.

[8]

Before 2009, General Motors and its affiliates sold Saab automobiles in
    Canada.  In 2009, GM restructured its North American operations.  As part of
    that restructuring, GM stopped selling Saab automobiles and terminated its
    business with all of its Canadian Saab dealers.

[9]

A Swedish company, Saab Automobile AB (Saab AB), acquired the Saab
    brand from GM and sought to enter the Canadian market in 2010.  Saab AB approached
    Fleet Sales to help import and distribute Saab motor-vehicles from Sweden and
    Saab parts from the United States into Canada.  To this end, in June 2010, IFS was
    incorporated as an affiliate of Fleet Sales in British Columbia.

[10]

IFS
    conducted independent contract negotiations with each of the respondents about their
    again becoming Saab dealers. Ultimately, IFS executed eight separate dealer
    agreements during an eight-day period.

[11]

These
    agreements established, among other things, the terms under which the dealers
    would order cars and parts from IFS. Each contract had a choice of law clause that
    referred to the law of Ontario and the law of the jurisdiction where the dealer
    was resident. None of the agreements contained a choice of forum clause.

[12]

In
    his reasons, the motion judge summarized the relevant facts pertaining to IFSs
    operation. This unchallenged summary is as follows:

[27] IFS is a Canadian company, incorporated in and thus
    resident in British Columbia.  It was also registered to do business in
    Ontario.  There is no evidence that it was registered to do business in
    Michigan or California.

[28] IFSs Registered Address is in British Columbia.  Its
    Ontario Address was identified by it as its principal place of business, and
    was its mailing address.

[29] IFS contracted with Saab AB to distribute Saab new cars
    and parts in Canada.  It established a dealer network in Canada by contracting
    with eight former Saab dealers in five provinces of Canada.  The dealership
    agreements were signed at each of the Canadian dealerships.

[30] IFS imported cars and parts into Canada and sold them to
    its dealers.  It sent invoices showing its Ontario Address.  It established
    bank accounts in Canada and received payments here by electronic transfer or by
    cheque to a lockbox in Toronto.

[31] I find that IFSs business was in Canada and not in
    Michigan or California.

THE PROCEEDINGS

The First Hearing

[13]

On
    May 22, 2013, the parties attended motion scheduling court to secure a date for
    the appellants motion challenging Ontarios jurisdiction over the action. The
    first mutually available date was March 27, 2014. That date was approved for a
    motion estimated to take one day. A timetable for the preparation of the motion
    was established.

[14]

The
    parties exchanged affidavits.  The respondents filed only one affidavit.  It
    was sworn by Mr. Budd, the principal of the respondent Stuart Budd & Sons
    Limited, on behalf of his dealership and the other seven dealers. The
    appellants contested the respondents evidence on the grounds that it was
    extensively based on information provided to Mr. Budd by others, without his
    having identified the source of his information and setting out why he believed
    the information to be true.

[15]

On
    March 27, 2014, the motion came before Corbett J., who agreed that the respondents
    evidence was improper. In his view, the respondents framing of the evidence would
    be fatal to their position on the motion. He therefore adjourned the motion on
    his own initiative and ordered the respondents to serve a further affidavit
    from Mr. Budd.

[16]

The
    motion judge established a timetable for the return of the motion and set the
    matter for a full-day hearing before him on April 23, 2014.  He also expressed
    his view that the case cries out for case management and consequently
    directed appellants counsel to contact the team leader for case management.

[17]

In
    his endorsement adjourning the motion (the First Endorsement), the motion
    judge made a number of comments that he referred to as his preliminary, yet
    strongly held views, including:

[I]t seems plain that there is jurisdiction
simpliciter
in Ontario over the claims brought by the Ontario plaintiffs. But for having
    their claims joined with those of the Ontario plaintiffs, there seems no reason
    for the non-Ontario plaintiffs to pursue claims in Ontario.

Thus it appears that the principal arguments on the motion will
    concern the effect of joinder on jurisdiction, and issues of
forum non
    conveniens.

I also indicated to counsel that I do not anticipate that cross[-]examination
    of representatives of each of the plaintiffs will add materially to the factual
    background in which these issues arise. However, it may be that something will
    be added, and I will not second guess counsel's choice to cross[-]examine,
    given the significance of the issues.

[18]

The
    respondents delivered a further affidavit from Mr. Budd plus an affidavit sworn
    by an individual on behalf of each of the seven other respondents.
    Cross-examinations on the affidavits were held.  At the request of Corbett J.,
    further factums were filed to address the new evidence and to make submissions
    on the specific issues of joinder, jurisdiction, and
forum non conveniens
.

The Second Hearing

[19]

On
    April 23, 2014, the parties returned before Corbett J. to argue the motion.
    Prior to the lunch break and before hearing argument on joinder and
forum
    non conveniens
, the motion judge rendered his decision dismissing the
    appellants motion and referring to it as an abuse of process (the Second
    Endorsement).

[20]

In
    his brief reasons, the motion judge noted IFSs activities in various parts of
    Canada and found that IFSs presence in Ontario went well beyond the virtual
    presence discussed in the seminal case on jurisdiction,
Club Resorts Ltd.
    v.
Van Breda
, 2012 SCC 17, [2012] 1 S.C.R. 572, at para. 87. He concluded
    that there had to be a place in Canada where the respondents could call the
    appellants to account and that that place was Ontario.

[21]

After
    expressing this conclusion, the motion judge advised that he would be
    delivering further reasons for the purposes of any appeal of this decision. He
    established a tight time schedule for the progress of the action, concerned
    that the motion had been pursued on an unreasonable basis and at excessive
    cost in terms of time and delay.  The motion judge concluded the Second
    Endorsement by indicating that complying with the terms of his order would not
    constitute attornment to the Ontario court for the purposes of any appeal.

Appeal and Motion for a Stay

[22]

On
    May 22, 2014, the appellants served a notice of appeal from the motion judges
    decision and moved for a stay pending appeal. On July 14, 2014, this court
    granted the requested stay, holding that the proposed appeal raised several
    serious issues, namely, the intersection of jurisdictional issues and joinder,
    the motion judges failure to address the defendants other than IFS in his
    jurisdiction analysis, and the motion judges comments that may suggest
    pre-determination of the issues:
Stuart Budd & Sons Limited v. IFS
    Vehicle Distributors
, 2014 ONCA 546, 122 O.R. (3d) 472, at paras. 24-25.

THE REASONS

[23]

The
    motion judge released his reasons for appeal purposes, entitled Amended
    Endorsement on February 3, 2015, over nine months later.

[24]

At
    the outset of his analysis, the motion judge found there to be no argument
    that Ontario lacks jurisdiction
simpliciter
over the claims asserted
    by the three Ontario respondents against IFS.  He then turned to the claims of
    the non-Ontario respondents.

[25]

In
    response to the motion judges inquiries, the appellants identified two
    alternatives that, in their view, would avoid the jurisdictional problems
    created by a single action in Ontario:

a. proceedings commenced by each of the plaintiffs in their
    respective provinces;

b. a proceeding commenced by all of the currently named
    plaintiffs against all of the defendants before the courts of California.

[26]

From
    this response, the motion judge drew the following conclusions.  First, there
    is jurisdiction
simpliciter
in each of the provinces where IFS
    established a Saab dealership within the province. Second, the respondents did
    not object to joinder of their claims.  Third, the respondents position was
    that there is nowhere in Canada that IFS may be sued by its Canadian dealers,
    in one proceeding.

[27]

The
    motion judge saw no connection between the claims against IFS and California,
    other than that the two individual appellants lived in California and its
    affiliate, Fleet Sales, was incorporated there.

Jurisdiction
Simpliciter

[28]

Based
    on the reasoning set out in the following paragraphs, the motion judge found
    that IFS carried on business in each of the provinces where it had a dealership
    network and that it had its strongest presence in Ontario:

[43] When IFS entered into a dealership agreement within a
    province, it carried on business within that province, as a franchisor
    creating a network of Canadian dealers to sell Saab products in Canada.  The
    goal was to create a national network of dealers.  On this basis I conclude
    that factor b. of the
Van Breda
analysis is made out for all of the
    plaintiffs in each of the provinces where IFS had a dealer: that is, I find
    that IFS carried on business and had a substantial connection to each of the
    provinces in which it had a dealer.

[48] If I am wrong in that conclusion [that the plaintiffs
    claims are closely enough related to give rise to a substantial connection to
    any jurisdiction in which any one of the claims could be brought], I find that
    IFS had its strongest presence in Ontario.  Three of its eight dealers were
    located in Ontario.  Its mailing address is in Ontario.  It is registered to do
    business in Ontario.  Its bank accounts are in Ontario.  Its address on all its
    invoices and other communications to dealers shows an Ontario address.  The one
    meeting it had with its dealers was held in Ontario.  Its National Service
    Manager, Serge, held training sessions in Ontario and had his only office in
    Ontario.  Thus presumptive factor b. is made out for the claims of all of the
    plaintiffs.

Joinder

[29]

The
    motion judge found that the test for joinder was satisfied given the appellants
    concession that they could be sued together in California.  He nevertheless went
    on to consider the issue of joinder, beginning with the claims of the
    non-Ontario respondents.

[30]

The
    motion judge agreed with the appellants central contention that the principles
    of joinder do not do away with the requirement for jurisdiction
simpliciter
.
    However, he found that this objection disappear[ed] given his finding that
    IFS carried on business in Ontario.

[31]

The
    motion judge concluded that the claims of the non-Ontario respondents were
    properly joined with the claims of the three Ontario respondents. First, he
    held that the Ontario choice of law clause demonstrated that the non-Ontario
    respondents intended their rights and obligations to be the same as if they
    operated in Ontario, relying on
405341 Ontario Limited v. Midas Canada Inc.
,
    2010 ONCA 478, 322 D.L.R. (4th) 177. The motion judge reinforced this
    conclusion by considering the fact that the claims arose out of the same series
    of transactions or occurrences and that there might be common questions of fact
    and law, within the meaning of rr. 5.02(1)(a) and (b) of the
Rules of Civil
    Procedure
, R.R.O. 1990, Reg. 194.  Put simply, the claims involved common
    disclosure, identically worded agreements, and the same course of dealings. It
    would also promote the convenient administration of justice for all eight
    claims to be heard together within the meaning of r. 5.02(1)(c) of the
Rules
.

[32]

The
    motion judge then considered joinder of the non-Ontario appellants.  He started
    by noting that the appellants did not argue that separate proceedings ought to
    be commenced against each respondent in different jurisdictions.  After
    highlighting the connection among the various appellants, he concluded that IFS
    carried on business in Canada (and specifically, Ontario), remotely.  The
    crux of the motion judges assessment of IFSs business activities appears at
    para. 59:

IFS is a Canadian company.  It carried on business as an
    automobile distributor in Canada.  It contracted with dealers in Canada to sell
    Saab automobiles within Canada.  It maintained formal offices, mailing
    addresses, bank accounts and tax accounts  all things necessary for it to take
    title to cars and parts in Canada and then transfer them to dealers for resale
    to consumers in Canada.  The defendants Libasci and King signed Disclosure
    Statements provided to four Saab dealers as required by franchise disclosure
    legislation in Ontario and Alberta.  In so doing, they acted as franchisor
    associates within the meaning of that legislation.  They made their
    representations in Ontario and Alberta respectively when they caused those
    Disclosure Statements to be delivered to and relied upon by dealers in those
    jurisdictions.  [Fleet Sales] is alleged to be and is named a defendant as a
    franchisors associate as well, and thus is included in the case because of its
    role relating to IFSs Canadian franchise business.

[33]

Based
    on this summary, the motion judge concluded that the four appellants were
    properly joined as parties.

Forum Non Conveniens

[34]

The
    motion judge then turned to a brief analysis of the doctrine of
forum non
    conveniens
, starting with the following statement, at para. 61:

Once it is concluded that there is jurisdiction in Ontario, and
    in any province in which IFS had dealers, and that it is permissible for the
    claims of all plaintiffs to be pursued in one proceeding against all four
    defendants, the issue of
forum non conveniens
virtually disappears.

[35]

The
    motion judge repeated the view he expressed in the Second Endorsement that all
    claims should be pursued in one action and that Ontario is the most convenient
    place for that action.

Disposition

[36]

In
    summary, the motion judge found that Ontario has jurisdiction
simpliciter
over
    the claims of all respondents against IFS. A single proceeding is a suitable
    and efficient way to advance these claims and Ontario is the most convenient
    forum for that single proceeding.

[37]

The
    motion judge therefore dismissed the motion.

Process of the Motion

[38]

The
    motion judge concluded the Amended Endorsement with a relatively lengthy
    section entitled Process of this Motion, which he identified as necessary because
    the motion was bad and called for a sterner response.

[39]

He
    began with the issue of delay.  The motion judge expressed the view that by requesting
    a full day for the hearing, the appellants had delayed the motion by almost
    nine months. He criticized the appellants for the amount of time they took to
    prepare their materials for the initial hearing and described their objection
    to the respondents evidence as technical. He asked rhetorically, What was
    the point?, repeating his concern over the delay the objection caused.   Although
    the motion judge acknowledged that not every line of questioning was useless,
    he concluded that overall, the appellants cross-examinations of the respondent
    affiants were a waste of time.

[40]

The
    motion judge next dealt with the merits of the motion. He expressed   frustration
    with appellants counsel for failing to realize that once the finding had been
    made that IFS carried on business in Ontario, there was not much left to talk
    about.

Post-Motion Events

[41]

Finally,
    the motion judge addressed what he referred to as post-motion events, including
    his motivation for releasing further reasons. He expressed a concern that
    jurisdiction motions present an opportunity to subvert the principles embodied
    in r. 1.02, saying that the fault lay in the
Rules
, the jurisprudence
    on attornment, and the courts, for making this possible.

[42]

The
    motion judge found that substantial indemnity costs were justified as a
    sanction for bringing a motion that, in his view, was so devoid of merit and
    bringing it in a time-consuming, expensive and impractical manner.  He fixed
    these elevated costs in the amount of $50,000 inclusive.

ISSUES

[43]

The
    appellants raise three main grounds of appeal:

1.

Whether the motion judge erred in law and principle regarding the
    application of the law germane to jurisdiction
simpliciter
and its
    intersection with joinder to the relevant facts;

2.

Whether the motion judge erred in law and principle regarding the
    application of the law germane to the issue of
forum non conveniens
to
    the relevant facts; and

3.

Whether the motion judges statements, conduct and delay give rise to a
    reasonable apprehension of bias.

[44]

As
    previously indicated, I have come to the conclusion that the appellants were
    effectively deprived of a fair hearing.  On that basis alone, the appeal must
    be allowed.  It is therefore neither necessary nor appropriate for me to
    consider the other two grounds of appeal.

APPLICABLE LEGAL PRINCIPLES

Presumption of
    Integrity

[45]

Judges
    benefit from a presumption of integrity, which acknowledges that they are bound
    by their judicial oaths and will carry out their duties in accordance with
    their legal responsibilities:
R. v. Teskey
, 2007 SCC 25, [2007] 2
    S.C.R. 267, at para. 29. In
R. v. Arnaout
, 2015 ONCA 655 (CanLII), at
    para. 18, this court described these responsibilities: A judge must both weigh
    the case impartially in his or her own mind and ensure that the circumstances
    objectively demonstrate his or her impartiality to an informed and reasonable
    observer.

[46]

Although
    judges enjoy the benefit of the presumption of integrity, the presumption can
    be rebutted by a judges comments or conduct:
Yukon Francophone School
    Board, Education Area #23 v. Yukon (Attorney General)
, 2015 SCC 25, [2015]
    2 S.C.R. 282, at para. 27.

Reasonable Apprehension of Bias

[47]

As
    noted by Abella J. in
Yukon Francophone
, at para. 21, the Supreme
    Court has consistently endorsed the test for a reasonable apprehension of bias as
    set out in de Grandpré J.s dissenting opinion in
Committee for Justice and
    Liberty v. National Energy Board
, [1978] 1 S.C.R. 369, at p. 394:

[W]hat would an informed person, viewing the matter
    realistically and practically  and having thought the matter through
    conclude. Would he think that it is more likely than not that [the
    decision-maker], whether consciously or unconsciously, would not decide fairly.

[48]

The
    strong presumption of judicial impartiality is not easily displaced:
Cojocaru
    v. British Columbia Womens Hospital and Health Centre
, 2013 SCC 30,
    [2013] 2 S.C.R. 357, at para. 22.  A reasonable apprehension of bias requires a
    real likelihood or probability of bias:
Arsenault-Cameron v. Prince Edward
    Island
, [1999] 3 S.C.R. 851, at para. 2;
R. v. S. (R.D.)
, [1997]
    3 S.C.R. 484,
per
Cory J., at paras. 112-14. The test is an objective
    one, viewed from the perspective of an informed and reasonable observer:
Chippewas
    of Mnjinkaning First Nation v. Chiefs of Ontario
, 2010 ONCA 47, 265 O.A.C.
    247, at para. 230, leave to appeal refused, 33613 (July 18, 2010).  It is a
    high burden.

[49]

Significantly,
    in assessing whether a judges presumption of impartiality has been displaced,
    his or her individual comments or conduct during the hearing of a matter should
    not be considered in isolation but within the context of the entire proceedings:
S. (R.D.)
,
per
Cory J., at para. 134
;
Wewaykum Indian Band v. Canada
,
    2003 SCC 45, [2003] 2 S.C.R. 259, at para. 77
.

[50]

The
    objective of the test is to ensure both the reality and the
appearance
of a fair adjudicative process. Both are essential to maintaining public
    confidence in our system of justice:
Yukon Francophone
, at paras.
    22-23. It is not normally possible to prove actual bias. If the impugned
    conduct or comments have the cumulative effect of raising a reasonable
    apprehension of bias, there is no need to consider the impact of the bias.

THE
    PARTIES SUBMISSIONS

[51]

The
    appellants argue the cumulative effect of the following gives rise to a
    reasonable apprehension of bias:

1.

The motion judge displayed a pre-disposition against the
    appellants position and against motions of this nature, in general;

2.

The
    motion judge was gratuitously critical of the position taken by appellants and
    their counsel in bringing the motion and in the manner in which they proceeded
    with it; and

3.

The
    reasons for appeal purposes referred to by the motion judge as his Amended
    Endorsement, released over nine months after the Second Endorsement, display
    after-the-fact reasoning designed to address issues the motion judge then knew
    were being raised on appeal.

[52]

The
    respondents submit that the motion judge did his best to manage a complex
    motion. His comments, at times favoured one side, and at times, the other. The
    motion judge adequately explained his reasons for dismissing the motion in his
    Second Endorsement.  His delayed reasons merely amplified those findings and
    conclusions.

ANALYSIS

The Appearance of Pre-disposition

[53]

In
    my view, at various points in the proceedings the motion judge conducted
    himself in a manner that gave the appearance that he favoured the respondents
    position.

[54]

First,
    he adjourned the motion on his own initiative to give the respondents an
    opportunity to correct a flaw that he identified as being fatal to their
    position. In his First Endorsement, he explained that the goal here, as must
    be the case on a jurisdiction issue, should be to establish the underlying
    facts so that definitive determinations may be made and the case then proceed
    in the proper form.

[55]

Although
    the motion judges desire to determine the matter on the merits is commendable,
    a reasonable observer could perceive the adjournment as the motion judges
    going out of his way to assist the respondents. That perception is strengthened
    by the motion judges rather dismissive comment that he did not anticipate that
    the respondents cross-examinations of the appellants on their new material
    would add much to the background. Although understandable in isolation, the
    adjournment was the first step along a course of conduct that, considered as a
    whole, created the appearance that the motion judge was predisposed against the
    appellants position.

[56]

In
    the second scheduled hearing, the motion judge dismissed the motion halfway
    through the full-day that had been scheduled without giving counsel the
    opportunity to make oral submissions on two issues that he properly identified as
    principal arguments  joinder and
forum non conveniens.
The parties had
    prepared their arguments with respect to these issues
at the motion judges
    request.
It is true that comprehensive factums, dealing with these
    issues, had been filed. However, the motion judge decided the motion without
    allowing counsel to engage the court in oral argument on these important
    points.

[57]

Deciding
    the jurisdictional challenge without allowing for oral argument, especially
    with respect to the issue of joinder, is cause for particular concern in a case
    involving multiple parties on both sides.

[58]

The
    import of this concern is heightened by the extent to which the motion judge
    relied on joinder in deciding to dismiss the motion.  The motion judge
    concluded, at para. 47, that there is jurisdiction
simpliciter
of all
    claims in Ontario because the claims of the Ontario plaintiffs are properly
    joined with those of the non-Ontario plaintiffs:

I find that there is jurisdiction in each of the provinces in
    which IFS established dealers, including Ontario. I find that the
    [respondents] claims arise out of the same series of transactions and events
    and involve common questions of fact and law,
and are
    thus closely related to give rise to a substantial connection to any Canadian
    jurisdiction in which any one of the claims could be brought
. [Emphasis
    added.]

[59]

The
    motion judge thus effectively found that a non-Ontario plaintiff can be
    substantially connected to Ontario, without having established a presumptive
    connecting factor between the subject matter of the litigation and the forum,
    if the non-Ontario plaintiffs claim is properly joined with that of at least
    one plaintiff that has established jurisdiction
simpliciter
.

[60]

At
    para. 48, the motion judge found that if he was wrong in coming to this
    conclusion, IFS nonetheless had its strongest presence in Ontario. Therefore, presumptive
    factor b.  carrying on business in Ontario  had been made out for the
    claims of all eight plaintiffs. However, the motion judge failed to consider whether
    the appellants evidence had rebutted the presumption by showing, for example,
    that the subject matter of the litigation is unrelated to the defendants
    business activities in Ontario in the case of the four non-Ontario plaintiffs:
    see
Van Breda
, at para. 96.

[61]

The
    motion judge reached these conclusions without considering how this approach
    fits into the
Van Breda
framework, which departs from the historical
    emphasis on [a]bstract concerns for order, efficiency or fairness at the
    jurisdiction
simpliciter
stage by requiring a plaintiff to establish a
    clear presumptive connecting factor between the claim and the forum.

[62]

Jurisdiction
    motions are complex. This one is no exception, given that courts have yet to
    consider how and at what stage joinder should be factored into the
Van
    Breda
analysis.  In my view, determining the jurisdiction challenge
    without permitting counsel to debate the complicated, and as yet unresolved,
    issue of the intersection between joinder and jurisdiction within the
Van
    Breda
framework deprived the appellants of the opportunity to present
    their arguments fully. It also deprived the motion judge of the benefit of
    those arguments on this important issue.

[63]

I
    am also troubled by the motion judges having characterized several submissions
    the appellants made, as concessions.  I refer to his interpretation of the
    following answers the appellants provided in response to questions concerning
    their position how and where the respondents may properly advance their claims
    against the appellants.

a. Were the non-Ontario plaintiffs to commence proceedings in
    their home provinces in precisely the same form as framed in this proceeding,
    the defendants would not object to the jurisdiction of the courts of those
    provinces;

b. Were this proceeding to only involve the three Ontario
    plaintiffs, the defendants would not challenge the jurisdiction of the Ontario
    court; and

c. Were the 8 plaintiffs to commence proceedings before the
    courts of California in precisely the same form as framed in this proceeding,
    the defendants would not object to the jurisdiction of the courts of
    California.

[64]

At
    para. 96, the motion judge found that the appellants conceded that Ontario had
    jurisdiction
simpliciter
over the three Ontario respondents. However,
    earlier in his reasons, at para. 49, the motion judge concluded that
    [q]uestions of joinder [were] obviated by the [appellants] concession that
    all eight [respondents] may sue all four [appellants] together

[65]

This
    was a leap of logic from the answers given to the questions. Even assuming the
    appellants counsel can be taken to have conceded that Ontario had jurisdiction
simpliciter
over the three Ontario respondents, the motion judge was
    not entitled to automatically conclude that questions of joinder were obviated.
    The motion judge ought to have put this conclusion to the appellants to ensure
    that they understood the import he drew from the answers they gave to his
    questions. Although we do not have a transcript of the hearing before us, it
    does not appear that he gave them this opportunity.

[66]

It
    is important that concessions be clearly made and clearly identified as such:
    see e.g.
National Trust Co. v. Bouckhut
(1987), 61 O.R. (2d) 640
    (C.A.), at paras. 16-18. This is because concessions attract serious
    consequences. What has been conceded is taken as proven without further
    evidence or argument.

[67]

Despite
    his conclusion that the appellants had conceded that Ontario had jurisdiction
simpliciter
over the three Ontario respondents, the motion judge conducted his own
    analysis of the issues of jurisdiction and joinder. However, his failure to give
    the appellants the opportunity to orally address the separate issue of joinder
    and his assumption that the contentious issue of joinder was obviated by the
    answers to his questions respecting jurisdiction, means that his holding was infected
    by a flawed process.

[68]

Although
    the motion judge acknowledged the legitimacy of the appellants position on a
    few occasions, the overall tenor of his remarks was derisive and suggests a
    view critical of jurisdiction motions and of this motion in particular. I refer
    to the motion judges finding that the motion was an abuse of process, a
    colossal waste of time, and paras. 89 and 92 of his Amended Endorsement in
    particular:

And all of this is what led me on April 23rd to characterize
    this motion as not simply unmeritorious or doomed to failure, but as an abuse
    of process.  It has been brought in accordance with the Rules.  It has been
    presented effectively by competent and experienced counsel.  And yet it is
    patently without merit.  It had no prospect of advancing the litigation and
    could serve only to delay adjudication on the merits and drive up costs.

The net result is two years and tens of thousands of dollars in
    costs have been wasted.  I call that an abuse of process.

[69]

A
    finding that a proceeding or a step taken in a proceeding is an abuse of
    process is serious. The doctrine of abuse of process focuses on the integrity
    of the adjudicative functions of courts and has been used to describe proceedings
    that are unfair to the point that they are contrary to the interest of
    justice:
Toronto (City) v. C.U.P.E., Local 79
, 2003 SCC 63, [2003] 3
    S.C.R. 77, at para. 35, citing
R. v. Power
, [1994] 1 S.C.R. 601, at p.
    616.

[70]

The
    motion judge provided no factual or legal foundation for his comments and I see
    no indication that the motion was brought for the purpose of delaying the
    proceedings and adding legal costs.   His finding that the motion was an abuse
    of process, made on his own initiative, without the benefit of submissions or
    reference to any legal authorities, was, in my opinion, unwarranted.

[71]

The
    finding of abuse of process in these circumstances is another consideration relevant
    to the ultimate determination of whether the appellants have established a
    reasonable apprehension of bias.

Comments about the Appellants
    and their Counsel

[72]

It
    is important to acknowledge from the outset that it takes much more than a
    demonstration of impatience with counsel or even unwarranted discourtesy to rebut
    the strong presumption of impartiality:
Kelly v. Palazzo
, 2008 ONCA
    82, 89 O.R. (3d) 111, at para. 21.

[73]

However,
    courts will be rightly troubled when a motion judge is consistently discourteous
    towards counsel for no apparent reason. Derisive remarks will therefore be
    relevant to the issue of bias: see
Yukon
, at para. 52.

[74]

In
    all three endorsements, the motion judge repeatedly criticized appellants counsel
    on matters including their advocacy skills, knowledge of the law, and handling
    of the matter. When viewed in the context of the rest of the motion, I conclude
    that the appellants have demonstrated that the motion judges treatment of
    appellants counsel contributed to raising a reasonable apprehension of bias:
    see
S. (R.D.)
,
per
Cory J., at para. 141.

[75]

I
    refer to comments in the first two endorsements that the appellants cross-examinations
    were a waste of time and their argument was frustrating and interminably,
    circling around and about, in and around.

[76]

The
    motion judge went much further in his Amended Endorsement, at paras. 89 and 91,
    where he described the appellants decision to challenge the jurisdiction of
    the Ontario court:

It is what is known in the trade as litigating with
    prejudice.  As I said to counsel at the end of the motion, we do not litigate
    this way anymore.  The only qualification I would add to this statement is that
    I do not want to be taken as suggesting that this sort of approach to civil
    proceedings was ever appropriate, ever the way we litigated.

A lick of common sense should have made it clear that this
    motion, as framed, was doomed from the outset.  So why bring it?  If the
    honestly held belief was that this case ought to be pursued in California, all
    I can say to the defendants is give your heads a shake.

[77]

I
    see no justification for any of these comments.  As noted above, the courts
    have yet to interpret the Supreme Courts decision in
Van Breda
as it
    relates to the relationship between joinder and jurisdiction. In my view, it is
    therefore not obvious that there is a place in Canada (at least one) where the
    Canadian distributor of Saab vehicles carries on business and may be answerable
    to the claims of its dealers, as the motion judge suggested in his Second
    Endorsement.

[78]

I
    see no basis for characterizing the motion as bad, accusing appellants counsel
    of deliberately delaying the matter, or criticizing him for his knowledge of
    the law or for the manner in which he ran his case.

Delayed Reasons

[79]

In
    his Second Endorsement, the motion judge advised counsel that he would be
    preparing reasons for appeal purposes.  He cautioned that these reasons may
    take a while.  In fact, they took quite a while  the parties waited over nine
    months for the Amended Endorsement. During those nine months an appeal was
    commenced and a stay of the motion judges decision was granted.

[80]

Delay
    in delivering further reasons, in and of itself, does not displace the presumption
    of integrity:
Teskey
, at para. 23.  Moreover, a judges knowledge of a
    pending appeal is just a factor to be taken into consideration:
R. v.
    Cunningham
, 2011 ONCA 543, 106 O.R. (3d) 641, at para. 47.

[81]

However,
    in all of these circumstances, and in particular having regard to the conduct
    of the proceedings,  I am of the view that an informed and reasonable observer
    would think that the Amended Endorsement was something other than an expression
    of the reasoning that led him to dismiss the motion.

[82]

This
    case bears some similarity to
Arnaout
, which made clear that conduct
    will have the effect of displacing the presumption of integrity if, in all the
    circumstances, an informed and reasonable observer would think that the
    amendment was an after‑the-fact justification for the decision rather
    than an articulation of the reasoning that led to the decision:
Arnaout
,
    at para. 23;

see also
Teskey
,
at
    para. 21.

[83]

In
Arnaout
,

the trial judges stated purpose in delivering
    amended reasons was to correct an error. This court held that, in so doing, the
    presumption of integrity had been rebutted. Although in this case the motion
    judge stated his intention to prepare further reasons for appeal purposes,
    the question is the same: Would an informed and reasonable observer see the Amended
    Endorsement as motivated, at least in part, by a desire of the motion judge to
    defend his decision to dismiss the motion against the specific attacks made in
    the appeal that, to the motion judges knowledge, were identified in this
    courts reasons for granting the stay? Such motivation may, even
    subconsciously, lead to reasons designed to justify the challenged decision
    rather than to reveal the reasoning that led to the decision:
Cunningham
,
    at para. 47.

[84]

In
    my view, the Amended Endorsement suggests that the motion judge was motivated
    to respond to the challenges to his decision. I refer to the motion judges
    expressly identifying and then responding to grounds of appeal addressed in the
    reasons on the stay motion. Specifically, the motion judge dealt with two of
    the three serious issues raised in the proposed appeal  the fact that his Second
    Endorsement only addressed jurisdiction in regards to the appellant IFS and the
    consequences of certain comments he made and actions he took.

[85]

I
    find the portion of the Amended Endorsement where the motion judge attempts to  justify
    his  handling of the matter, particularly troubling:

[93] I was concerned by excessive delay on April 23, 201[4]. I
    directed the parties to follow the schedule to complete pleadings, exchange
    documents and schedule discoveries, without regard to whether the defendants
    brought an appeal

[94] There were two other reasons for directing this schedule.
    Supplementary reasons were required for this decision because I used unusually
    strong language in disposing of this motion

[95] Second, I knew when I decided the motion that these
    reasons would be a long time coming.  I was concerned about the delay inherent
    in an appeal, but more, I was concerned that the parties would be delayed
    awaiting these reasons before they could proceed with any appeal.  I already
    had a significant backlog of reserve decisions in April 2014, and that
    situation got worse over the course of the year because of resource issues in
    this court that are well known to the profession.  By adjourning the motion
    back to myself I had hoped to save the parties nine months of delay, and my
    scheduling order was intended to ameliorate the risk that my delay in getting
    reasons out would leave the case in abeyance.

[96] Finally, I could see no basis for an appeal of the finding
    that Ontario has jurisdiction over the claims of the three Ontario plaintiffs
    since this point was conceded by the defendants.  Therefore, the risk that time
    and resources could be wasted on this case while an appeal was pending was
    ameliorated considerably.

[86]

In
    these passages, the motion judge appears to insinuate himself into the appeal
    process by attempting to defend his actions and his comments.  It was an after‑the-fact
    attempt not only to justify but also to bolster his decision.

Conclusion
    Regarding a Fair Hearing

[87]

The
    assessment of a reasonable apprehension of bias is a difficult one. It requires
    a careful and thorough review of the proceedings since the cumulative effect of
    the alleged improprieties is more relevant than any single transgression.

[88]

I
    have no doubt that the motion judge was well-intentioned.  I have no doubt that
    he put a great deal of effort into resolving the jurisdiction issue.  However,
    my review of the three endorsements leads me to conclude that the motion judges
    actions gave rise to a reasonable apprehension of bias. He made unwarranted
    negative comments about the appellants  their counsel, their position, and
    their arguments  prior to the conclusion of argument and arbitrarily curtailed
    argument. He then wrote reasons that went beyond reflecting the reasoning
    process and entered the fray as an advocate for his actions and decisions   in
    the Second Endorsement.

[89]

In
    my opinion, the cumulative effect of the motion judges conduct is that an
    informed, reasonable observer, viewing the proceedings as a whole, would
    conclude that the appellants did not receive the fair hearing to which they
    were entitled.

[90]

I
    am therefore of the view that the decision must be set aside.

DISPOSITION

[91]

For
    these reasons, I would allow the appeal, set aside the order below, and order
    that the motion be heard anew before a different justice of the Superior
    Court.

[92]

I
    would order the respondents to pay the appellants costs fixed in the amount of
    $20,000, including disbursements and applicable taxes. I would order the costs
    of the first jurisdiction motion to be at the discretion of the judge hearing
    the second jurisdiction motion.

Released: January 21, 2016 (KMW)

Gloria
    Epstein J.A.

I
    agree K.M. Weiler J.A.

I
    agree Grant Huscroft J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Tyoga Investments Ltd. v. Service
    Alimentaire Desco Inc.,
2016 ONCA 15

DATE: 20160108

DOCKET: C60748

Juriansz, Hourigan and Brown JJ.A.

BETWEEN

Tyoga Investments Ltd.

Plaintiff (Respondent)

and

Service Alimentaire Desco Inc.

Defendant (Appellant)

John M. Picone and Pamela Sidey, for the appellant

Colleen Butler and Peter McKenna, for the
    respondent

Heard and released orally: January 4, 2016

On appeal from the order of Justice Guy P. DiTomaso of
    the Superior Court of Justice, dated June 11, 2015.

ENDORSEMENT

[1]

The appellant seeks to set aside the order of the motion judge that dismissed
    its motion for a stay of proceedings on the basis that the Ontario courts lack
    jurisdiction over the dispute between the parties, or alternatively, that
    Ontario is
forum non conveniens
, and that validated the service of the
    statement of claim in Québec.

[2]

The appellant is a Québec corporation and the respondent is an Ontario
    corporation. They had a contractual relationship by which the respondent
    imported chicken from the United States into Ontario under its federally
    granted quota, and then sold that chicken to the appellant in Québec. The
    appellant processed that product, together with product from other sources
    including its own quota, and sold the processed product throughout Canada, both
    directly and through distributors.

[3]

The motion judge found that the parties entered into a contract made in
    Ontario in 2009 and renewed annually on the same terms subject to a change in
    the respondents fees which fluctuated based on market conditions.  He found
    that that contract, as renewed in 2013, was the contract connected with the
    dispute. The motion judge also found that the appellant carried on business in
    Ontario and that the appellant had not satisfied its onus of rebutting the
    presumption of a real and substantial connection between the claim and Ontario.
    The motion judge then went on to conclude that the appellant had not
    established that Québec was a clearly more appropriate jurisdiction to try the
    action.

[4]

On appeal, the appellant submits that the contract that governs the
    dispute was made in 2013 and that contract and the 2009 contract were both made
    in Québec in any event. The appellant recognizes it sells its product in
    Ontario, but submits its business of selling product in Ontario is not related
    to the contract.

[5]

We find it unnecessary to set out these arguments in any detail. Suffice
    it to say, they are all predicated on findings of fact and findings of mixed
    law and fact. We are not persuaded that the motion judge made any palpable and
    overriding errors. In our view, there is sufficient evidence in the record to
    support his findings.

[6]

The appellants argument that Québec is the clearly more appropriate
    forum also fails, as it is largely premised on the same alleged errors the
    appellant advanced on its jurisdictional argument. It follows that the motion
    judge properly validated the service of the claim outside Ontario.

[7]

The appeal is dismissed. Costs are fixed in the amount of $10,000 all-inclusive
    as agreed by counsel.

R.G.
    Juriansz J.A.

C.W.
    Hourigan J.A.

David
    Brown J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: 410784 Ontario Limited v. Little Zinger Inc. (Corktown
    Esso), 2016 ONCA 90

DATE: 20160202

DOCKET: C58937

Gillese, MacFarland and van Rensburg JJ.A.

BETWEEN

410784 Ontario Limited

Plaintiff by Counterclaim (Appellant)

and

Little
    Zinger Inc. carrying on business as Corktown Esso,

Zafar
    Khokhar, James Stonley and

Jet
    Transportation Limited

Defendants to the Counterclaim (Respondents)

P. James Zibarras and Adam N. Weissman, for the
    appellant

Wendy Greenspoon-Soer, for the respondents

Heard:  January 19, 2016

On appeal from the judgment of Justice Victoria R. Chiappetta
    of the Superior Court of Justice, dated May 16, 2014, with reasons reported at
    2014 ONSC 2510.

MacFarland J.A.:

[1]

The appellant appeals from the judgment of Chiappetta J. dismissing its
    counterclaim with costs on the basis that the appellants claims were statute
    barred. For the reasons that follow, I would dismiss the appeal.

BACKGROUND IN BRIEF

[2]

The appellant, referred to throughout these proceedings as City Gas,
    operated a gasoline station from leased premises at 176 Front Street East in
    Toronto for a number of years.

[3]

City Gas leased the premises on which it operated the gas station from
    the respondent Jet Transportation Limited (Jet), the owner of the property.
    Other parts of the property were leased to other tenants, including a hair
    salon and a framing business.

[4]

On November 7, 2004 the lease for City Gas expired. At this point in
    time and for a number of years before, the daily operations of City Gas had
    been run by the respondents Khokhar and Stonley, both long time trusted
    employees of City Gas. The principal of City Gas, Selby Wemyss, was getting
    older and was in poor health.

[5]

Selbys efforts to renew the lease were sporadic and not urgent. He
    first discussed renewal of the lease with Mr. Winch, Jets solicitor, in or
    around November 2004. Winch advised him that the lease had expired on November
    7, 2004. Selby indicated that he wanted a five year renewal on the same terms
    as the expired lease. Winch told him that Jet was looking for a head tenant to
    lease the entire building and for a significant increase in the base rent. The principals
    of Jet, Leonard Nefsky and Sam Wagman, were also getting older and their
    companys offices had moved to a different location. They wanted a head lease
    so that the head tenant would be responsible for the care and maintenance of
    the property and to deal with the other tenants. At the time Leonard Nefskys
    son, Neal, was looking after the property for his father.

[6]

At a subsequent meeting at Jets offices among Neal and Leonard Nefsky,
    Sam Wagman and Selby Wemyss, Neal offered to renew the lease if Selby would
    agree to a significant increase in base rent and a head lease for the premises
     the same terms which had been earlier conveyed. Selby Wemyss turned down the
    offer  he refused to take on a head lease and said he couldnt afford a rent
    increase. The parties agreed to continue the tenancy on a month to month basis.

[7]

Selby again attempted to renew the lease in May 2005. He called Winch
    and offered a five percent increase in base rent, all other terms to remain the
    same. Jet rejected the offer and made no counteroffer.

[8]

Stonley was aware in 2005 that the tenancy of his employer was month to
    month from conversations he had with Selby.

[9]

On November 22, 2005 Dorothy Wemyss (Selbys wife), in the presence of
    her husband, told Stonley and Khokhar that City Gas had a 10-year lease for the
    premises and that they should buy the business for $500,000. Selby agreed.

[10]

Dorothys
    assertion that they had a ten-year lease did not ring true.

[11]

Stonley,
    from his discussions with Selby, thought that the tenancy was month to month. Stonley
    and Khokhar called Neal Nefsky and told him about their conversation with
    Dorothy. Neal told them that City Gas did not have a ten-year lease and that
    the tenancy was month to month. In the words of the trial judge, Neal
    sarcastically said why dont you give me $500,000 and I will sell you the
    business. He also told Stonley and Khokhar that Jet would not renew the lease
    with City Gas because Selbys health was poor, he didnt know Dorothy and did
    not wish to deal with Stephanie Silver (Selbys daughter). Neal further
    explained that Jet was seeking a head tenant and the reasons why. He asked Stonley
    and Khokhar to make Jet an offer to lease the premises as head tenant.

[12]

Stonley
    and Khokhar consulted with their lawyer and in December 2005 sent an offer to
    Winch to lease the premises as head tenant. Stonley and Khokhar had in
    September 2004 incorporated Little Zinger Inc., a company in which they each
    had a fifty percent interest. The offer was from Little Zinger to Jet.

[13]

Also
    in December 2005, Silver became involved in the lease negotiations on her
    fathers behalf and spoke with Winch about renewing the lease. The trial judge
    accepted Winchs evidence that Silver called him and offered to renew the
    expired lease on primarily the same terms but with a twenty-five per cent
    increase in the base rent and that he told her the offer was not acceptable to
    Jet.

[14]

Winch
    responded to Little Zingers offer on February 7, 2006. After some negotiations,
    the lease between Jet and Little Zinger was finalized on February 28, 2006.

[15]

Meanwhile,
    on February 24, 2006, Jet served City Gas with a Notice to Vacate, giving the
    company a little over 60 days notice to vacate the premises.

[16]

On
    February 27, 2006 Silver, on behalf of City Gas, fired all employees of City
    Gas and paid severance to all employees except Khokhar and Stonley. Silver
    testified that they were not paid severance because she fired them with cause
    for stealing. On their records of employment the cause for Khokhars and
    Stonleys dismissal was noted as misconduct. The notation caused them to be
    unable to collect EI benefits.
[1]

[17]

The
    evidence of Silver about how the terminations of Khokhar and Stonley came about
    that day is very different from their version of what happened.

[18]

The
    trial judge rejected Silvers evidence finding it to be incredible. She
    accepted the evidence of Khokhar and Stonley that on February 27, 2006 Silver
    said to them both words to the effect:

You guys went behind my fathers back and got yourselves a
    sweet deal  youre out of here.

[19]

She
    then told them to turn in their keys and credit cards and leave.

[20]

The
    trial judge accepted that evidence and found that Silver/City Gas knew on
    February 27 that it was Khokhar and Stonley who had replaced them as tenants of
    the premises and concluded:

It can be reasonably inferred therefrom that as of February 28,
    2006, the Plaintiff knew that Stonley and Khokhar had acquired the lease with
    Jet for the premises and this was the reason for their termination.

[21]

However,
    City Gas, despite its knowledge that its two trusted senior long-time employees
    had gone behind its back and obtained a lease from Jet, did nothing about it.
    It fired all its employees and vacated the premises within 30 days. In the
    course of closing out the station, it removed the gas tanks and pumps as well
    as a canopy.

[22]

After
    City Gas had vacated and in the course of preparations to re-open, Little Zinger
    learned that there were contamination issues with the site and remediation
    would be necessary. The re-opening of the station was delayed for over a year
    and on February 26, 2009 Little Zinger sued City Gas, Silver and Dorothy
    Wemyss. Selby Wemyss had died by this time. On March 27, 2009, City Gas
    counterclaimed against Little Zinger, Jet, Khokhar and Stonley advancing the
    claims that are the subject of this appeal.

[23]

Little
    Zinger subsequently agreed to dismiss/discontinue its action. The counterclaim
    proceeded to trial.

[24]

The
    trial judge dismissed the claims of City Gas as against all the defendants on
    the basis that they were statute barred. She went on to analyze the various
    claims, in the event that her conclusion regarding the limitation period was
    wrong. She would have found that City Gas had proven its claim against Stonley
    and Khokhar for breach of fiduciary duties and would have awarded $150,000 in
    damages. She would have dismissed the other claims.

ANALYSIS

The limitations period and the claim that Jet induced Stonley
    and Khokhar to breach their employment contract with and fiduciary duty to City
    Gas

[25]

The
    appellant submits that in concluding that its claims were statute barred the
    trial judge erred in law and made palpable and overriding errors in her
    underlying factual determination.

[26]

After
    reviewing the evidence and making her findings of fact the trial judge
    concluded that the appellant knew that Stonley and Khokhar had entered into a
    lease with Jet prior to March 2007.

[27]

She
    then considered s. 5 of the
Limitations Act
, S.O. 2002, c. 24, Sch. B,
in the face of the appellants
    argument that it did not discover its cause of action until February 26, 2009
    when Little Zingers statement of claim was served on it.

[28]

The
    appellants statement of defence and counterclaim was issued March 27, 2009.
    The argument the appellant advanced at trial and in this court was that because
    the negotiations between Stonley and Khokhar and Jet were conducted in secret,
    the appellant could not have known it had a claim until the process was served.

[29]

The
    trial judge rejected this argument. She found that City Gas knew before March
    2007 that it was Stonley and Khokhar who had entered into a lease with Jet and
    accordingly its claims against those individuals were statute barred.

[30]

The
    appellant says that in doing so the trial judge made an inference based on
    pure speculation that was not supported by any evidence.

[31]

In
    my view, the trial judges finding is amply supported in the record. Both
    Khokar and Stonley testified that they had a conversation with Silver on
    February 27, 2006, in which she said words to the effect of you went behind my
    fathers back, looks like you guys got a lease and you got yourselves a
    sweet deal. The trial judge accepted this evidence and rejected Silvers
    evidence as incredible. Her finding is entitled to deference in this court and I
    would not interfere with it. Accordingly, I reject this ground of appeal.

[32]

This
    was a difficult trial in the sense that there were directly contradictory
    versions of the events that had occurred among the witnesses. Selby Wemyss had
    died and his wife Dorothy was unable to attend the trial.

[33]

Mr.
    Zibarras, counsel to the appellant, had also been its solicitor during the
    negotiations about the lease. He was unavailable as a witness and
    cross-examination in the circumstances was made more difficult. In addition,
    all of the respondents were represented by the same lawyer.

[34]

The
    appellant further submits that the trial judge erred in law by dismissing the
    appellants claims for inducing breach of contract against Jet as statute
    barred without engaging in any independent analysis of that claim.

[35]

At
    the conclusion of the evidence, the trial judge asked counsel to settle a list
    of the legal and factual issues she had to decide and they did so. At para. 37
    of her reasons she set out in full the agreed legal and factual issues. She
    stated the first issue as follows:

1.       Is the
    claim brought by City Gas barred by the Act?

(a)
When did City Gas know that Stonley and
    Khokhar had entered into a lease with Jet, that City Gas had suffered damages,
    and that a proceeding was the appropriate means to remedy it?

(b)
When ought City Gas to have known that
    Stonley and Khokhar had entered into a lease with Jet, that City Gas had
    suffered damages, and that a proceeding was the appropriate means to remedy it
?

[36]

Although
    the agreed list of issues is some two and one-half pages in length, there is no
    question or issue specifically set out that asks whether the claim for inducing
    breach of contract or any of the other claims against Jet were statute barred.

[37]

It
    is apparent from the record, the reasons of the trial judge and from how the
    appeal was argued in this court that the focus of the appellants claim was on
    Stonley and Khokhar and their secret negotiations to obtain the lease for the
    premises.

[38]

In
    the circumstances, the trial judge can be forgiven for not specifically dealing
    with whether the claim against Jet for inducing breach of contract was statute barred.

[39]

In
    this court almost the entirety of the appellants argument focused on the
    actions of Stonley and Khokhar and why the trial judges credibility findings
    should be set aside. Comparatively little time was spent on the inducing breach
    of contract claim either on the merits of the claim or the related limitation
    issue.

[40]

That
    said, counsel agree that the point was argued and the trial judge did not deal
    with it. To properly determine the limitation issue would involve an
    evidentiary review of conflicting evidence and related fact finding. An exercise
    this court is not equipped to make. However, in this case, in my view, it is
    unnecessary.

[41]

Assuming
    for present purposes that the claim was not statute barred, the trial judge
    concluded that Jet did not induce Stonley and Khokhar to breach their fiduciary
    duties to City Gas. The trial judge reviewed the evidence related to the timing
    of the negotiations between Stonley, Khokhar and Jet and concluded that Jets
    interference was neither intentional nor deliberate. At paras. 180-181 of her
    reasons she noted:

[180]
On November
    22, 2005, [Neal] Nefsky invited Stonley and Khokhar to make Jet an offer to
    lease the premises. The Defendants submit that [Neals] invitation should be
    excused as he was only contacted by Stonley and Khokhar after Dorothy offered
    to sell them the business. It was [Neals] invitation, however, on November 22,
    2005 that was the first step of a dance that ultimately ended in the
    Plaintiffs eviction
.

[181]
Having said
    that, I am unable to conclude that Jets interference was deliberate and
    intentional. In inviting the trusted employees to make an offer for a head
    lease, [Neal] was pursuing the interests of Jet. Jet wanted a head lease on the
    premises and [Neal] exploited an opportunity presented to him to secure it. He
    could not have known, at the time he invited the offer, however, that Stonley
    and Khokhar would choose to pursue the opportunity without disclosing it to
    their employer or without receiving their employers consent. The evidence does
    not demonstrate that at the time of the invitation, [Neal] was or could be
    certain that a head lease of the sort he proposed would inevitably result in
    the Plaintiffs eviction. It cannot be said therefore that Jet intended the
    breach
.

[42]

In
    addition it will be remembered that City Gas had been a month to month tenant
    since November 2004. It had made a couple of sporadic efforts to renew the
    lease since that time but no sustained effort to do so. Its last offer to the
    landlord Jet had been rejected in December 2005. Jet was insisting on a head
    lease and City Gas was refusing that term. Dorothy and Selby Wemyss had offered
    to sell the business to Stonley and Khokhar for $500,000 on the representation
    (untrue though it was) that City Gas had a ten-year lease. It was due to their
    interest in determining whether a lease in fact existed that Stonley and
    Khokhar came into contact with Jet who was looking for a head tenant. From
    Jets perspective, City Gas was trying to sell the business and was not
    interested in a head lease. In all the circumstances, the trial judges finding
    of a lack of the necessary intention element of the tort is supported by the
    evidence.

[43]

Thus,
    it is unnecessary to deal with whether this claim was statute barred because it
    fails on the merits in any event. This ground of appeal is rejected.

Damages

[44]

The
    appellant argues that the trial judge got the damages wrong when she rejected
    the evidence of the appellants expert.

[45]

There
    were serious problems with the two scenarios underlying the calculations
    advanced by Mr. Kerztman, the expert witness called by the appellant, and the
    trial judge rejected both of them. She properly instructed herself on the law
    in relation to the calculation of damages for breach of fiduciary duty and
    relied on
GasTOPS Ltd. v. Forsyth
,
    2009 CanLII 66153 (Ont. S.C.), at para. 1479, affd 2012 ONCA 134, for the
    proposition that:

A precise calculation, therefore, is not required. Rather an
    estimate of what may have been lost by the plaintiff due to the defendants
    breach, subject to a reduction for contingencies, is the proper approach  .

[46]

The
    trial judge considered the evidence before her and particularly the evidence that
    Dorothy and Selby Wemyss had offered to sell the business to Stonley and
    Khokhar for $500,000, which price was represented to include a ten-year lease.

[47]

She
    concluded that $450,000 would be a reasonable price and from that deducted
    usual costs that would be associated with a sale and fixed damages for breach
    of fiduciary duty at $400,000. I see no error in this conclusion.

Mitigation

[48]

The
    trial judge concluded that City Gas had failed to mitigate its damages. Professor
    Waddams in
The

Law of Contracts
,
6th ed. (Aurora, Ontario: Canada Law Book, 2010), at
    para. 753 notes:

A further restriction on recoverable damages lies in the
    principle that a plaintiff cannot recover for losses that could reasonably have
    been avoided.

[49]

The
    trial judge concluded that the appellant failed to take reasonable steps to
    mitigate and set out in some detail her reasons for doing so.

[50]

In
    coming to her conclusion the trial judge relied on four factors:

1.

The appellant vacated the property within 30 days rather than waiting a
    further 30 days (as it would have been permitted to do). Thus, it forfeited 30
    days of revenue as there was evidence that the monthly revenue exceeded the
    base monthly rent.

2.

The appellant failed to respond to an email from Little Zingers lawyer,
    Korman, offering to sublet the premises to the appellant or buy its equipment.

3.

Kormans file disclosed that Little Zinger would start negotiations to
    buy the equipment at $100,000 or go up to $250,000.

4.

Silvers own evidence that she ignored offers from many others that
    called her and attempted to buy the equipment.

[51]

A
    trial judges finding that a party has or has not taken reasonable steps to
    mitigate is entitled to deference in this court absent a finding of palpable
    and overriding error: see
Hav-A-Kar Leasing Ltd. v. Vekselshtein
, 2012
    ONCA 826, at para. 57.

[52]

Misapprehension
    of evidence amounts to a palpable and overriding error and in my view the trial
    judge did misapprehend the evidence on the four points she relied upon.

[53]

Firstly,
    the fact that the monthly revenue exceeded the base rent proves nothing. There were
    expenses the business would incur in addition to the base rent.

[54]

Secondly,
    the failure of the appellant to respond to Kormans email cannot be considered
    a failure to mitigate in light of the evidence that City Gas was moving the
    equipment to another of its properties for the purpose of selling the
    equipment.

[55]

Thirdly,
    there is no evidence that the appellant had any idea at the time that Little
    Zinger was prepared to pay between $100,000 and $250,000 for the equipment.

[56]

Fourthly,
    Silvers evidence was that the many other offers she refused were ones that
    offered only rock bottom prices.

[57]

I
    would set aside the trial judges finding that the appellant failed to mitigate
    its damages. In the circumstances, however, where the appeal is otherwise
    dismissed, it makes no difference, unless this matter were to go further.

DISPOSITION

[58]

For
    all these reasons the appeal is dismissed.

[59]

Costs
    to the respondents fixed in the sum of $14,000 inclusive of disbursements and
    HST.

[60]

Funds
    are standing in court to the credit of this matter pursuant to an order of this
    court.  I would direct that those monies be paid out to the respondents so far
    as necessary to satisfy this costs award.

Released:  February 2, 2016 EEG

J.
    MacFarland J.A.

I
    agree E.E. Gillese J.A.

I
    agree K. van Rensburg J.A.

[1]
Although all employees were fired on that day, every other employee, including
    Helen, who was alleged along with Khokhar and Stonley to have been robbing City
    Gas blind for years, were paid their separation benefits. Only Stonley and
    Khokhar were not.


COURT OF APPEAL FOR ONTARIO

CITATION: 2249740 Ontario Inc. v. Morguard Elgin Ltd., 2016
    ONCA 100

DATE: 20160203

DOCKET: C59998

Feldman, Simmons and Miller JJ.A.

BETWEEN

2249740 Ontario Inc.

Plaintiff (Respondent)

and

Morguard Elgin Ltd. and Morguard Corporation

Defendants (Appellants)

J. Scott Maidment and Stephen Brown-Okruhlik, for the
    appellants

Ronald F. Caza and Anne M. Tardif, for the respondent

Heard: August 24, 2015

On appeal from the order of Justice Marc R. Labrosse of
    the Superior Court of Justice, dated January 14, 2015, with reasons reported at
    2015 ONSC 299.

ENDORSEMENT

[1]

This endorsement is to be read in conjunction with the  endorsement on
    this appeal dated September 10, 2015, in which the motion judges order for
    summary judgment was set aside: see
2249740 Ontario Inc. v. Morguard Elgin
    Ltd.,
2015 ONCA 605, [2015] O.J. No 4668.

[2]

At that time the court requested written submissions from the parties on
    the effect of the oral agreement of February 2011 to extend the Commencement
    Date of the lease for at least one year and, depending on the effect, whether
    Morguard was entitled to terminate the lease in December 2011 under Article
    3.03. The article provides, in part:

[I]f the Landlord is of the opinion that it will be unable to
    deliver possession of all of the Leased Premises before the expiration of 6
    months after the Commencement Date (in the condition required hereby), the Landlord
    shall have the right to terminate this Lease upon written notice to the Tenant,
    whereupon neither party shall have any liability to the other.

[3]

It is common ground in the parties written submissions that: the lease was
    not repudiated by the oral agreement to extend; it remained in effect; and the
    Commencement Date remained April 1, 2011 (in accordance with para. 8 of the
    Term Sheet that formed part of the lease). We accept those submissions.

[4]

The remaining question is whether Morguard was entitled to terminate the
    lease under Article 3.03 in December 2011. In its written submissions, Morguard
    invited the Court to read Article 3.03 as providing it with a right to
    terminate if Morguard determines that it will not be able to deliver possession
    within 6 months after the Commencement Date. On Morguards reading, once
    Morguard came to the opinion that it could not deliver possession within 6
    months of April 1, 2011, and informed the tenant of this, there was no express
    time limit on the exercise of the termination right. It further submits that
    Article 3.03 should be interpreted as providing that a crystallized right to
    terminate the lease does not expire until the actual delivery of
possession
[of the premises] to the Tenant (emphasis in original).

[5]

On this reading, Morguards right to terminate crystallized when it
    formed the opinion that it would not be able to provide possession of the
    premises prior to the expiration of six months after the Commencement Date,
    i.e. in February 2011 when it made the oral extension agreement. Further,
    Morguard could then choose to exercise its right to terminate  or not  at any
    time prior to the tenant actually coming into possession of the premises.

[6]

We cannot accept this reading of Article 3.03. Article 3.03 contains
    only one communication obligation for the landlord, which is to terminate the
    lease by written notice. It is clear from the text of Article 3.03 that the
    same temporal restriction on forming the opinion that the landlord cannot
    deliver possession of the premises also applies to the delivery of the written
    notice of termination.

[7]

In this case, there was in fact communication with the tenant in
    February 2011 that Morguard would not be able to deliver possession within six
    months of the Commencement Date. But since Morguard did not terminate at that
    time, it did not make use of Article 3.03 in accordance with the terms of that
    provision.

[8]

Accordingly, the written notice of termination that Morguard provided in
    December 2011 was beyond six months after April 1, 2011. It was therefore out
    of time, and in breach of the lease.

[9]

Having previously set aside the decision of the motion judge, judgment shall
    go in favour of the respondent for breach of contract by the appellants. The
    matter is remitted back to the motion judge for quantification of damages, if
    any.

K.
    Feldman J.A.

J. Simmons J.A.

B.W. Miller J.A.