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PARTIES - Assignment of contractual rights - Necessity for consent  

Friday, August 21, 2020 @ 6:01 AM  

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Appeal by Quickie Convenience from the dismissal of its application for declaratory relief arising out of a proposed commercial transaction involving several contracts, including leases and credit/debit card agreements relating to fuel stations in Ontario and Quebec. The appellant wanted to sell 15 gas stations supplied with fuel by the respondent. Of these 15 stations, eight were in Ontario and seven are in Quebec.  Eleven leases selected Toronto as the forum, two selected Montreal, and two had no selection clause. The credit/debit card agreements contained a clause that simply provided that the appellant could not assign the agreement without the respondent’s prior written consent. Completion of the sale required that the appellant was able to assign these contracts. The respondent refused to consent to the assignments of the leases and credit card agreements of these gas stations. The appellant sought a declaration that the respondent refused its consent unreasonably. The application judge held that he could not grant the relief sought with respect to the two leases that contained the Quebec choice of law clause and he was hesitant to grant the relief with respect to the two leases where there was no choice of law or forum selection clause.

HELD: Appeal allowed. The declaratory relief sought was granted. The application judge erred both in his analysis of the issues that were before him and in his conclusion. His conclusions regarding the choice of law and forum selection clauses did not address any of the 11 leases that related to the gas stations that were either located in Ontario or were in Quebec but had Ontario choice of law clauses. Given his conclusion that the respondent unreasonably withheld its consent to the assignment of the leases, it ought to have followed that the appellant would have been entitled to the declarations that it sought, at least with respect to the leases applicable to the Ontario gas stations. The Quebec choice of law and Montreal forum selection clauses should not have prohibited the application judge from granting relief with respect to those gas stations. The respondent did not lead any evidence that Quebec law differed from Ontario law with respect to the issues that were before the application judge. In the absence of such evidence, the application judge ought to have proceeded on the basis that the Quebec law was the same as Ontario law. Commercial reality strongly favoured having any issues raised with respect to the transaction dealt with in a single forum. Neither the choice of law clause nor the forum selection clause posed any true impediment to the application judge deciding the issues that were before him with respect to the Quebec gas stations. The respondent was attempting to leverage its refusal to consent to force the appellant to agree to a five-year extension of the parties’ contractual arrangements. The respondent’s refusal to consent to the assignment of the credit/debit card agreements was as unreasonable or improper as was its refusal to consent to the assignment of the leases. It was inconsistent with the duty of good faith that the respondent owed to the appellant.

Quickie Convenience Stores Corp. v. Parkland Fuel Corp., [2020] O.J. No. 3029, Ontario Court of Appeal, K.N. Feldman, J.M. Fairburn and I.V.B. Nordheimer JJ.A., July 10, 2020. Digest No. TLD-August172020009