Addison Chevrolet Buick GMC Ltd. et al. v. General Motors of Canada Ltd. et al., (2016) 348 O.A.C. 281 (CA)

• Judge: Doherty, Pardu and Benotto, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: January 22, 2016
• Jurisdiction: Ontario
• Citations: (2016), 348 O.A.C. 281 (CA);2016 ONCA 324

Addison Chevrolet v. General Motors (2016), 348 O.A.C. 281 (CA)

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Temp. Cite: [2016] O.A.C. TBEd. MY.003

Addison Chevrolet Buick GMC Limited, Addison on Erin Mills Chevrolet Buick GMC Limited, Applewood Holdings Inc., Budds Chevrolet Cadillac Buick GMC Limited, City Buick Chevrolet Cadillac GMC Ltd., Courtesy Chevrolet Limited, Frost Chevrolet Buick GMC Cadillac Ltd., Gateway Chevrolet Inc., Hogan Chevrolet Buick GMC Limited, Humberview Inc., Leggat Chevrolet Buick GMC Ltd., Leggat Chevrolet Cadillac Buick GMC Limited, Markville Chevrolet Inc., Roy Foss Motors Ltd., Roy Foss Chevrolet Ltd., Wallace Chevrolet Cadillac Buick GMC Ltd. and Wilson Nibblet Motors Limited (plaintiffs/appellants) v. General Motors of Canada Limited, General Motors Company and General Motors LLC (defendants/ respondents )

(C60644; 2016 ONCA 324)

Indexed As: Addison Chevrolet Buick GMC Ltd. et al. v. General Motors of Canada Ltd. et al.

Ontario Court of Appeal

Doherty, Pardu and Benotto, JJ.A.

May 3, 2016.

Summary:

The appellants were dealers of General Motors vehicles in the Greater Toronto Area. Their dealer agreements were with General Motors Canada Limited (GMCL). The appellants' action alleged that GMCL and its parent company (GM US) owed and breached their duty to act fairly and in good faith under the Arthur Wishart Act (Franchise Disclosure) (AWA) and at common law. GM US brought a motion under rule 21 alleging that it did not owe a duty of good faith to the appellants under the AWA or at common law. To impose any duties, it was argued, would be to improperly pierce the corporate veil. The motion judge agreed and struck the claim against GM US. The appellants appealed.

The Ontario Court of Appeal allowed the appeal. It was not plain and obvious that the action had no reasonable prospect of success.

Contracts - Topic 3502

Performance or breach - Obligation to perform - Good faith - Exercise of - [See Practice - Topic 2230 ].

Franchises - Topic 2067

Franchise agreement - Duties of franchisor - Duty of good faith - [See Practice - Topic 2230 ].

Practice - Topic 2230

Pleadings - Striking out pleadings - Grounds - Failure to disclose a cause of action or defence - The appellants were dealers of General Motors vehicles in the Greater Toronto Area - Their dealer agreements were with General Motors Canada Limited (GMCL) - The appellants' action alleged that GMCL and its parent company (GM US) owed and breached their duty to act fairly and in good faith under the Arthur Wishart Act (Franchise Disclosure) (AWA) and at common law - GM US brought a motion under rule 21 alleging that it did not owe a duty of good faith to the appellants under the AWA or at common law - To impose any duties, it was argued, would be to improperly pierce the corporate veil - The motion judge agreed and struck the claim against GM US - The appellants appealed - The Ontario Court of Appeal allowed the appeal - The court stated that "Although the motion judge correctly directed himself as to the 'plain and obvious test', his reasons, read as a whole, reveal an approach that required the appellants to demonstrate that they would succeed rather than to require the respondent to demonstrate that they could not possibly succeed. It was through this lens that he considered both the statutory and the common law claims and dismissed the action against GM US. The AWA is remedial legislation. The duties owed involve important questions of legal interpretation, are the subject of limited jurisprudence, and, in this case, require a factual record. The interaction between the franchise context and the duties of good faith and fair dealing at common law raises a novel and not implausible argument that should not have been struck on a rule 21 motion. I do not agree that the appellants' claims have no reasonable prospect of success. It is not plain and obvious that a parent company in the position of GM US could never owe a duty of good faith or fair dealing to the appellants under the AWA or at common law" - See paragraphs 23 to 66.

Counsel:

Jonathan C. Lisus and James Renihan, for the appellants;

Larry P. Lowenstein, Gillian S.G. Scott, and Geoffrey J. Hunnisett, for the respondents.

This appeal was heard on January 22, 2016, before Doherty, Pardu and Benotto, JJ.A., of the Ontario Court of Appeal. The following judgment of the Court of Appeal was delivered by Benotto, J.A., and was released on May 3, 2016.