Court File No. {f ONTARIO SUPERIOR COURT OF JUSTICE OTTAWA CONVENTION CENTRE CORPORATION Plaintiff f. - and - TREEFORT HIP PRODUCTIONS INC. Defendant STATEMENT OF CLAIM TO THE DEFENDANT A LEGAL PROCEEDING HAS BEEN COMMENCED AGAINST YOU by the plaintiff. The claim made against you is set out in the following pages. IF YOU WISH TO DEFEND THIS PROCEEDING, you or an Ontario lawyer acting for you must prepare a statement of defence in Form 18A prescribed by the Rules of Civil Procedure, serve it on the plaintiffs lawyer or, where the plaintiff does not have a lawyer, serve it on the plaintiff, and ?le it, with proof of service, in this court of?ce, WITHIN TWENTY DAYS after this statement of claim is served on you, if you are served in Ontario. If you are served in another province or territory of Canada or in the United States of America, the period for serving and ?ling your statement of defence is forty days. If you are served outside Canada and the United States of America, the period is sixty days. Instead of serving and ?ling a statement of defence, you may serve and ?le a notice of intent to defend in Form 18B prescribed by the Rules of Civil Procedure. This will entitle you to ten more days within which to serve and ?le your statement of defence. IF YOU FAIL TO DEFEND THIS PROCEEDING, JUDGMENT MAY BE GIVEN AGAINST YOU IN YOUR ABSENCE AND WITHOUT FURTHER NOTICE TO YOU. IF YOU WISH TO DEFEND THIS PROCEEDING BUT ARE UNABLE TO PAY LEGAL FEES, LEGAL AID MAY BE AVAILABLE TO YOU BY CONTACTING A LOCAL LEGAL AID OFFICE. IF YOU PAY THE CLAIM, and $2,000.00 for costs, within the time for serving and ?ling your statement of defence, you may move to have this proceeding dismissed by the court. If you believe the amount claimed for costs is excessive, you may pay the plaintiff?s claim and $400.00 for costs and have the costs assessed by the court. TAKE NOTICE: THIS ACTION WILL AUTOMATICALLY BE DISMISSED if it has not been set down for trial or terminated by any means within ?ve years after the action was commenced unless otherwise ordered by the court. If a Date December D, 2015 Issued by If) WA Local registrar Address of 161 Elgin Street court of?ce Ottawa, ON K2P 2K1 TO: DENTONS LLP 1420-99 Bank Street Ottawa, ON 1H4 Attention: K. Scott McLean CLAIM 1. The plaintiff, Ottawa Convention Centre Corporation claims from the defendant, treefort hip productions inc. (?treefort?) Damages for breach of contract or, in the alternative, compensation for unjust enrichment in the amount of $156,476.21; Pre-judgment interest on any amounts payable by treefort to at the rate of 1.5 percent per month (18 percent per annum), or, in the alternative, in accordance with the Courts of Justice Act, from the date of December 10, 2015 to the date of judgment; (0) Post-judgment interest at the rate of 1.5 percent per month (18 percent per annum) or, in the alternative, in accordance with the Courts of Justice Act; Costs of this action on a substantial indemnity basis; and Such further and other relief as to this Honourable Court may seem just. 2. The plaintiff is a corporation incorporated pursuant to the laws of Ontario which acts as the licensor of space, services and amenities associated with the Shaw Centre located on Colonel By Drive in the City of Ottawa in the Province of Ontario. 3. treefort is a corporation incorporated pursuant to the laws of the Province of Ontario with its head of?ce in the City of Ottawa in the Province of Ontario. 4. Pursuant to a license agreement dated February 3, 2015, agreed to license to treefort and treefort agreed to license from certain space, services and amenities associated with the Shaw Centre for the purposes of an event known as the ?Ottawa Wine and Food Festival 2015? (?the License?). 5. Pursuant to the license agreement in place between the parties and pursuant to subsequently signed event orders for additional services (?the Event Orders?), treefort agreed to pay to a sum equal to all fees associated with the License, the Event Orders as well as any additional charges. 6. treefort has failed to pay those amounts as they became due and is breach of its contractual obligations. claims damages for such breach in the amount of $156,476.25. 7. In the alternative, treefort has been unjustly enriched by claims compensation for such unjust enrichment from treefort in the amount of $156,476.25. 8. In accordance with the license agreement between the parties, interest accrues on all amounts due and owing 30 days from the delivery of the invoice at the rate of 1.5 percent per month or 18 percent per annum. The invoice was delivered on or around November 10, 2015. claims interest on all amounts found by the Court to be due and owing at such rate. 9. proposes that this matter be tried in the City of Ottawa in the Province of Ontario. December 10, 2015 Perley-Robertson, Hill McDougall LLP/s.r.l. 1400 340 Albert Street Ottawa, ON 0A5 Andrew .F. Lenz 33969H Tel: (613) 566-2842 Fax: (613) 238-8775 Lawyers for the Plaintiff Court File No. 15-66839 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: OTTAWA CONVENTION CENTRE CORPORATION Plaintiff and TREEFORT HIP PRODUCTIONS INC. Defendant STATEMENT OF DEFENCE AND COUNTERCLAIM 1. The Defendant treefort hip productions inc. (?treefort?) admits the allegations contained in paragraphs 2 and 3 of the Statement of Claim. 2. The Defendant denies the allegations contained in paragraphs the Statement of Claim unless otherwise expressly admitted herein. The Licence Agreement and Event Orders 3. treefort is the owner of the Ottawa Wine and Food Festival. The predecessor to the Ottawa Wine and Food Festival was the Ottawa Wine and Food Show (the Ottawa Wine and Food Festival and the Ottawa Wine and Food Show are alternately referred to as the ?Festival? or the ?Show? as usage warrants). The purpose of the Show was the promotion and showcase of domestic and international wine and food within the City of Ottawa. The Show was designed to ?t within the mandate of the plaintiff Ottawa Convention Centre Corporation (?the Convention Centre? or ?the Centre?) which was to operate, maintain and manage an international class convention centre facility in the City of Ottawa in a manner that will -2- promote and develop tourism and industry in Ontario. The Show was the ?rst of its kind in Canada (references to the Convention Centre or to the Centre herein include references to locations and facilities as usage warrants). The Show became a marquee event for the Convention Centre and was one of the Centre's top 25 sources of revenue generating events. The Convention Centre?s internal costs of hosting the Show were low, which produced substantial pro?t margins. The Show developed into a signature event that de?ned the Convention Centre as one of the leading international class venues in Ontario. The Convention Centre piggybacked on the Show?s success by inviting prospective clients to attend in an effort to attract new clientele. This strategy was extremely success?Jl. For these reasons, the Convention Centre recognized that building and sustaining a particular course of dealing with the Show was necessary to ensure a lasting and pro?table business relationship. Accordingly, ensuring that the Show remained at the Convention Centre and was ?nancially viable were two of the Centre?s top priorities. For its part, management of the Show recognised that the Convention Centre was the only appropriate venue in the City of Ottawa for its needs. The City of Ottawa did not have any other international class downtown venues that were suf?ciently large and sophisticated to hold this type of event. The Show could only succeed and remain viable if it was held in the Convention Centre. Accordingly, and over the course of several years the Convention Centre and management of the Show developed and adhered to a contractual course of dealing that re?ected their mutual and objective intentions and business needs. The terms of this contract re?ected the nature of the parties? business relationship. They mutually 10. 11. -3- recognized that they were economically dependent on each other and on the market in which they were operating, being the organization of large consumer festivals, marketing and tourism (?the Contract?). They agreed to be aware of and sensitive to the mutuality of these rights and obligations. The Licence Agreement and Event Orders referred to in the statement of claim were part of this Contract, entered into annually facilitating the mechanics of scheduling individual events each festival season. Contrary to what is alleged in the statement of claim, the licence agreements and event orders in any particular year did not de?ne the Contract between the parties but were subsumed in and subject to other terms and conditions of the Contract. This was known to the Convention Centre throughout. The Contract The Contract was de?ned in particular by three key covenants between the parties. First, the Convention Centre and management of the Show agreed that the Centre was the only venue in the City of Ottawa that could appropriately host the Show. The course of dealings between the parties gave rise to a continuing obligation on the part of the Convention Centre to host the Show, subject to each party?s right to provide reasonable and adequate notice to the other of its intention to terminate this relationship (the ?Continuing Relationship?). Second, the Convention Centre agreed that the Show required booking protection from other like food and beverage events. Accordingly the customary course of dealings between the parties gave rise to a covenant that prohibited the Convention Centre from 12. 13. 14. 15. 16. -4- hosting events that competed with the Show 60 days before and 60 days following the dates accepted by the Show (?the Protective Covenan Third, the Convention Centre agreed to hold dates for the Show on a rolling ?ve year basis. Speci?cally, the two weekends in early November of every festival season were to be held by the Centre for the Show. In the ?rst 22 years of the Show?s experience at the Convention Centre, this covenant was deviated from rarely (?the Scheduling Covenant?). During the periods referred to below, the Convention Centre variously purported to deviate from the terms and conditions of the Contract but failed to give adequate or reasonable or any notice of its intention to do so. As they affected treefort, such deviations were either endured or worked around by treefort in good faith efforts to mitigate their effect but were neither accepted nor waived. Further, such deviations resulted in costs and associated losses to treefort which costs and losses are the responsibility of the Convention Centre. treefort Purchases the Show Prior to the 2008 festival season, the Convention Centre announced that it would be involved in a major expansion between 2008 and 201 1. For this reason, the Show moved to Lansdowne Park. treefort purchased the Show in 2008 pursuant to an asset purchase agreement (the Schedule to the APA con?rmed that the Convention Centre was holding November dates for the Show between 2011 and 2015, all in accordance with the Contract. As evidenced by the conduct of the parties, treefort? acquisition of the Show did not affect any of the Centre?s existing contractual obligations or the rights that governed its dealings 17. 18. 19. -5- with the Show. The conduct of the parties was equivalent to an act of novation. In particular, on July 27, 2009, the Convention Centre con?rmed it was holding dates in November for the Show into 2014. On the return of the Show to the Convention Centre for the 2011 season it was re-branded by treefort as a ?Festival?. The re-branding was the best way to link the Festival to the newly built Convention Centre, its downtown location and proximity to hotels, restaurants and bars. treefort created hotel packages to entice guests from outside of Ottawa to attend the Festival. It also added two days of additional programming and increased the number of Festival events from 20 to 40 to capitalize on the increased event space. The Convention Centre also partnered with the Festival and sponsored the new marketing initiatives such as ?Salute to Veterans?, ?Vintners Brunch? and the ?Ottawa Wine Challenge?. To the mutual bene?t of the Convention Centre and treefort, the Festival?s return to the Convention Centre was hugely successful. Overall event attendance increased by 10%, which was driven in large part by growth in out of town attendance from 4% to 15% relative to 2008 ?gures. The increase in out of town patrons had a positive effect on the greater tourism economy in the form of an increase in hotel and restaurant receipts in Ottawa and would not have been possible without the Festival?s retum to the Convention Centre. The Festival was a major stimulant to the Ottawa tourism economy. An economic impact study conducted in January 2012 con?rmed that the 2011 Festival generated 600 hotel room nights for its exhibitors alone, over $1 million in additional revenues for the Rideau 20. 21. 22. 23. 24. -5- Centre, the restaurants and retailers in the By Ward Market and total economic bene?ts for the City of $3.61 million. The success of the Festival in 2011 and subsequent years was not lost on the Convention Centre. Intentional Breach by the Convention Centre of the Contract For reasons not clear to treefort, and unknown to treefort at the time, the Convention Centre subsequently adopted an approach to its relationship with treefort marked by confusion and inconsistency totally out of keeping with the success of the Festival in 2011. treefort says that this conduct marked a business decision by the Convention Centre to force treefort and the Festival out of the Convention Centre over time without providing adequate or any notice to treefort. This conduct and the intention behind it was in breach of the Contract and was in bad faith. Particulars of this intentional conduct include the following. On December 15, 2011treefort was abruptly advised by management of the Convention Centre that the Convention Centre had unilaterally decided to cancel the Festival after 2012. While reasons were purportedly given, they failed to align in any particular with reality, and were exaggerated. This advice was con?rmed by letter dated December 21, 2011. To the extent that this purported to be adequate notice to treefort it was not. At the same time, the Convention Centre increased the costs of the Festival ?vefold. As a consequence, the Festival could no longer be ?nancially viable, a fact known to the Centre. The Convention Centre also imposed additional non-negotiable terms and conditions, 25. 26. 27. -7- which ran counter to the Contract, and which were expressed as conditions that treefort was required to accept if it was to have a Festival in 2012 at the Centre. These terms and conditions were punitive and arbitrary and were inserted for the sole purpose of forcing the Festival out of the Convention Centre before the 2012 season. Confusingly, they were coupled with advice from the Convention Centre that if treefort agreed to these and related demands, dates beyond 2012 were possible. As pleaded below, this behaviour was repeated in 2015. These contradictory positions were introduced by the Centre in bad faith, for reasons then unknown to treefort. As the Convention Centre was aware, the treefort had no other options but to accept the terms dictated by the Convention Centre with such modi?cations as it could reasonably achieve. It had no other means of mitigating its loss and saving the Festival. The Convention Centre?s arbitrary and unilateral interference with the business of the Festival continued in 2012. The Centre arbitrarily reduced the occupancy of the event by approximately 2,000 guests. During the Saturday evening of the 2012 Festival and without any notice, the Convention Centre refused entrance to attendees who had already purchased tickets from entering the facility because ?they didn't feel comfortable.? This occurred even though the agreed upon occupancy limit had not yet been met. This caused additional and unnecessary wait times for patrons seeking to enter the facility and required the Festival to issue over $25,000.00 in refunds. Despite the excitement and anticipation for the new ?Festival? model that was rolled out in 2011, the media coverage of the event was critical and focused on the wait times. The negative impression caused by the Convention Centre?s decision to refuse 28. 29. 30. -3- customers damaged the reputation of the Festival and treefort?s brand. Ticket sales declined 25%. The Memorandum of Understanding The confusing and inconsistent conduct of the Convention Centre continued into 2013. Contrary to previous declarations, on January 11, 2013 the Convention Centre con?rmed that it was holding dates for the Festival from November 2014 through November 2017. As a consequence of this inconsistent conduct, treefort and the Convention Centre began to negotiate the terms and provisions of a written instrument that would assist the parties in managing the mechanics of their Contract, particularly as it concerned the scheduling of ?lture festivals (the On March 27, 2013 the parties entered into to the terms of the MOU. The MOU highlighted the manner in which the Scheduling Covenant would continue: ?The MOU is intended to establish guidelines around the negotiation of rental rates for future OWF events, in recognition of the longstanding tradition of holding the OWFF at the Ottawa Convention Centre during the ?rst two weeks of November.? The Festival would be provided with ?move in on a Thursday at 12:01 am. and move out on a Sunday evening by 11:59 with appropriate consideration given to extensions if needed.? (0) ?It is understood that while ?xed dates cannot be guaranteed under this MOU, the dates will be contracted in accordance with the Ottawa Convention Centre?s 31. 32. 33. 34. -9- published booking policy and based upon the continued success and safety of the OWF and respecting the longstanding tenancy held by the ?The OCC has provided dates for the Festival for the next 3 years and will hold space in accordance with the booking policy for subsequent years. . .The OCC will provide a licence agreement for the following year within 2 weeks of the conclusion of the show and will continue to hold dates for subsequent years. The OWFF will be contacted should any future dates on hold no longer be available.? Notwithstanding the MOU, in 2013 the Convention Centre purported to impose yet another set of additional conditions and terms upon the Festival that made the event less pro?table and more dif?cult to operate. First and foremost, the Convention Centre required the Festival to occupy the entire ?oor space of the Centre during the entirety of the event. This was inconsistent with the Convention Centre?s custom of allowing the Festival to ?cohabitate? the facility with other events. These new requirements resulted in an increase in rental fees beyond market for 2013, 2014, 2015. While treefort attempted to improvise, overall paid attendance in 2013 declined by 25 percent compared to the 2012 Festival. Further, in 2013 and thereafter, the Convention Centre began to compete with the Festival, by aligning itself with Priv? Foods among other event organizers. In 2014 the Convention Centre, without notice to treefort, booked a number of events during three of the four weekends prior to the Festival. In doing so, the Centre knew that these were competing events in breach of the Contract. The Convention Centre partnered 35. 36. 37. 38. -10- with these events by operating the sale of alcohol. Furthermore, the Convention Centre partnered with Priv? Foods in booking a competing Priv? Foods event. treefort protested these events but to no avail. Again, treefort attempted to mitigate its losses, all the while protesting the conduct of the Convention Centre. The 2014 Festival I proceeded as scheduled but predictably resulted in lower attendance due in part to the Convention Centre hosting three competing events in October 2014. In September and October 2014, the Convention Centre advised that the dates of November 3-6, 2015 and November 10-13, 2015 that had previously been held for the Festival, had been given to a ?City Wide Convention Business?, in breach of the MOU and the Scheduling Covenant. The Convention Centre advised that the only available dates for the Festival in 2015 were October 29-November 1 or November 20-22, 2015. In taking this step, the Convention Centre was aware that the Festival could not operate between November 20 and 22, 2015 because of the con?ict with the Toronto Gourmet Food Wine Expo. The earlier dates would result in the Festival?s Saturday, its busiest and most successful day, landing on Halloween. The Festival could not succeed on Halloween as it would be competing with countless Halloween themed events and traditional Halloween activities. The Festival is not and will never be recognized by consumers as a way to celebrate Halloween. The Festival took a number of steps to mitigate the impact of having to compete with Halloween in 2015. These additional initiatives reduced the Festival?s marketing budget by approximately $35,000. Ultimately, attendance for the 2015 Festival was dramatically lower than previous years. Paid attendance for the Saturday events was over 50% lower 39. 40. 41. 42. -11- compared to 2014. Revenues from booth sales, ticket sales and sampling ticket sales were also lower. The lower attendance also reduced treefort?s revenues under several of its sponsorship agreements because these agreements tied the ?nancial payout to treefort to the Festival?s attendance levels. On August 24, 2015, the Convention Centre advised that it had set aside November 3-6 for the 2016 Festival and November 9-13 for the 2017 Festival, identifying space allocation and associated costs for 2016. At the same time, it unilaterally advised that it would no longer permit events like the Festival to be booked more than 12 months in advance and as a result of this change would not commit to the 2016 dates. On October 22, 2015, notwithstanding meetings at which treefort attempted to understand and regularize matters, the Convention Centre advised that it was only holding the dates of November 4 through 6 for the 2016 Festival and was ?not in a position to con?rm dates yet for your event? for 2017. This was a breach of the Contract. The Plaintiff?s Claim for $156,476.21 As pleaded above, treefort and the Convention Centre entered into a Licencing Agreement and an Event Order in connection with the rent and operational expenses charged by the Centre for the 2015 season. treefort entered into these documents under protest of the breach by the Convention Centre of the covenants referred to herein. treefort had consistently complained to the Convention Centre that it had incurred losses due to the conduct of the Convention Centre which had to be addressed. 43. 44. 45. 46. 47. -12- The liability alleged by the Convention Centre to be owing by treefort under the Licence and Event Order is $156,476.21. treefort does not recognize that or any liability to the Convention Centre. The Event Order provided for payment in 4 instalments. Following a meeting between treefort and the Convention Centre on October 19, 2015 the Convention Centre offered to adjust the Festival?s payment schedule, by dividing the 4th instalment into 2 pieces. treefort did not agree to making these payments due to the on-going breach by the Centre including in the most recent particular the losses resulting from being wrongfully compressed into Halloween. treefort requested a meeting to review all matters on October 28, 2015 but on October 29, 2015 it was met with a demand by the Convention Centre that the ?rst portion of the 4th instalment be paid. On the same date the Convention Centre advised that it was holding the Festival in breach of contract as of 2:00 pm that day on the basis of the purported outstanding account balance. treefort could not reasonably agree to this position or demand unless the Festival?s legacy issues were resolved in good faith as part of any negotiation, and it so advised. The Convention Centre was not entitled to take this position or to make this demand. On October 30 to November 1, 2015 the 2015 Festival took place. On November 6, 2015 the Convention Centre advised treefort by email that ?there is a high level of activity for the fall dates in 2016? and the Convention Centre ?needs to move forward in allocating the space and moving to contract?. In this email, it further advised that on the 1st weekend of November, 2015, ?we will be releasing the Thursday November 3rd and Friday November 4th, 2016 to accommodate a convention. A tentative hold will 48. 49. 50. -13- remain on Saturday, November 5th and Sunday, November 6th for the Ottawa Food and Wine Festival (sic) but does limit the program?. It further advised that treefort?s contracted dates were committed to another event and therefore not available. Finally, it advised that alternative dates of November 17 to November 20, were ?on tentative hold?. The email closed: ?The dates are limited for 2016, and would encourage resolving 2015 at your earliest convenience.? The email of November 6, 2015 was written by the Convention Centre to treefort in bad faith, and was contrary to the terms of the Contract and the MOU, under which the Convention Centre had no right or authority to withhold dates for 2016. The Convention Centre knew that the 2016 dates being proposed did not comply with its contractual obligations. The Convention Centre had no right or authority to hold 2016 dates ransom. It knew that the dates it was trumpeting were not available to treefort and in particular that the alternative 2016 dates suggested would con?ict with the Toronto Gourmet Food Wine Expo. The Convention Centre was not bargaining in good faith in linking the two issues. Furthermore, the Convention Centre did not intend to provide any dates to treefort for 2016. In conducting itself in this manner, it was in breach of the Contract, the MOU, and its obligation at law to contract, bargain and act in good faith. treefort responded to this threat immediately, and subsequently more formally on November 12, 2015, once again requesting a meeting to resolve all matters ef?ciently and equitably. Attempts by treefort to establish a meeting date ultimately were resolved by the party?s agreement to meet on November 24, 2015. 51. 52. 53. 54. -14- At the meeting of November 24, 2015 the Convention Centre handed a letter to treefort which was purportedly a without prejudice communication. treefort says that the Convention Centre cannot, by reason of its conduct, take this position. At the trial of this matter treefort will seek to rely on this letter. The letter of November 24, 2015 among other things linked 2016 dates to resolution of 20 1 5 accounting and required a full and ?nal release from treefort for all past claims. Again, the Convention Centre was not bargaining in good faith in linking the two issues. treefort says the Convention Centre was motivated at material times, including in November, 2015 by an undisclosed intention to force treefort out of the Convention Centre after the 2015 festival season, if not before, of which treefort was unaware. By virtue of its conduct herein, the Convention Centre is not entitled to demand the amounts claimed herein from treefort unless and until it accounts for its own conduct and breach resulting in losses to treefort. treefort has incurred losses attributable to the breach and misconduct of the Convention Centre in amounts far greater than the amount claimed by the Convention Centre herein, approximating $3,000,000, and is entitled to set off these losses against any amounts claimed by the Convention Centre. Wherefore the defendant asks that this action be dismissed with costs. -15- COUNTERCLAIM 55. The defendant treefort hip productions inc. (?treefort?) claims: (C) An order restraining the plaintiff Ottawa Convention Centre Corporation (the ?Convention Centre? or ?the Centre?) from irrevocably licensing, booking or otherwise con?rming non Festival dates (as referred to herein) in the ?rst and second weekends of November for the Festival Seasons of 2016 through 2020, without ?rst making them available to treefort for the purposes of presenting the Festival at the Centre; An order requiring the Centre to comply with its obligations under the Contract and the MOU referred to herein, including but not limited to an order restraining the Convention Centre from entering into any contracts or agreements of any type in respect of the use Of its facilities by any competitors of treefort or the Festival during the period that is 30 days prior and 30 days after each subsequent Festival; An ex parte, interim or interlocutory order; An order declaring that the Convention Centre has intentionally interfered with treefort?s economic relations, good will and brand; Damages for interference with economic relations, goodwill and brand in the amount of $500,000; General damages in the amount of $6,000,000 in the circumstances pleaded herein; Special damages in the amount of $3,000,000; 56. 57. 58. -1 6- Punitive damages in the amount of $100,000; Pre and post-judgment interest in accordance with section 129 of the Courts of Justice Act; The costs of this proceeding on a substantial indemnity basis, plus all applicable taxes; and, Such further and other Relief as to this Honourable Court may seem just. The Defendant repeats and relies upon the allegations in the Statement of Defence in support of the Counterclaim. Irreparable Harm As is known by the Convention Centre, it is the only venue in Ottawa capable of hosting the Festival and its business model is the Convention Centre. The redevelopment of Lansdowne Park has reduced the footprint of the Civic Centre arena below what would be necessary to accommodate the Festival. The only other venue that has a suf?cient amount of square footage - the EY Centre, is not located near the downtown core. A downtown location is essential to the Festival?s success, both ?nancially and otherwise. The EY Centre is not a viable option for the Festival because it is not located on a rapid transit link, near a suf?cient number of major hotels or adjacent to other retail and hospitality services that complement the event. Of critical importance to the Festival is securing the attendance of exhibitors and sponsors. Repeat exhibitor participation has historically been very high, averaging approximately 75%. However, in light of the exhibitor concerns regarding the Halloween dates, the 59. 60. 61. -17- decreased Saturday attendance for the 2015 Festival and the increased presence of Priv? Foods and other competitors that were introduced and/or partnered with by the Convention Centre, the outlook for future years is much lower. In any case, the repeat business depends upon being able to sell to exhibitors in a timely manner, with con?rmed space and dates. To date, treefort has not been able to secure any exhibitors or sponsors because of The Convention Centre has the Convention Centre?s position as described herein. interfered knowingly with treefort?s economic relations. In accordance with the terms of the MOU, the licence agreement to use the Convention Centre's premises for the following year is to be provided for execution within two weeks following the conclusion of the Festival. The Convention Centre breached that requirement in 2015 by failing to provide, and by persisting in that failure, reasonable or any dates for 2016. This requirement exists so that the next year?s dates can be communicated to exhibitors attending the current year?s event so that they can plan to attend the following year and integrate the event into their respective marketing plans which are normally set every January. treefort is already running at least 50 days behind schedule. The core selling season for securing exhibitors and sponsors runs from the end of October until May, while many exhibitors will commit their full marketing budgets by the end of December. treefort has been deprived of capturing that market share and is exposed to losing exhibitors to competitors. treefort is also losing irretrievable ground daily to historical competitors who produce similar events across the country, and who are already in the marketplace selling exhibit 62. 63. -13- space. Already one third of the core selling time for exhibitor space has elapsed without the Festival being able to market and provide marketing materials directly to exhibitors with con?rmed dates for the 2016 Festival. Some of treefort?s competitors, including the Toronto Gourmet Food Wine Expo, have already received con?rmed dates from their host facility through 2018. With no con?rmed dates for 2016, let alone years beyond, treefort does not have a product to sell. Without the 2016 season, it has no stepping stone into the 2017 season, which is part of the fabric of ?Ottawa 2017? - the celebration of Canada?s 150th year as a nation. The City of Ottawa is working closely with national and local business partners to develop a year-long celebration. treefort?s business will be destroyed. treefort is losing local market share and exhibitors to competitors that the Convention Centre allowed, and in the case of Priv? Foods, partnered with, to develop. This represents a new and unforeseeable risk to its business and brand, the magnitude of which is not yet known. Here again the Convention Centre has interfered knowingly with treefort?s economic relations. Competitors within and outside Ottawa are signing exhibitors and sponsors to similar events who would normally attend the Festival in Ottawa. There are major events every year in Toronto in November with major shows typically planned for Vancouver, Edmonton, Calgary and Quebec. These events compete for the same exhibitors, brands, suppliers and sponsors. treefort and others are after the same marketing dollars, and these dollars are ?nite and normally allocated early in the year for these kinds of events. treefort is losing ground to these other events (its competitors) on a daily basis, all because the 64. 65. 66. 67. 68. -19- Convention Centre has reneged on its obligation to provide it with November 2016 dates and future November dates. Without intervention, treefort faces a complete loss of market share to its traditional competitors and to other local events like Priv? Foods, with whom the Convention Centre is partnering. In addition to the competition for exhibitors and sponsors, the period from December to March is when the Festival and similar events secure talent in the form of celebrity chefs and notable wine experts. Without ?rm dates treefort is unable to organize and market the Festival and attract an enviable consumer base of up to 28,000 strong. treefort risks the complete loss of its business, including any ability to sell the business as a going concern. The Festival and the Convention Centre have always enjoyed a strong business arrangement, codi?ed by the Contract itself, which has resulted in millions of dollars in . pro?ts for the Centre over its 30 year relationship. The events referred to herein would indicate that the Centre wants to run its own food and wine event. Either way, it is clear that the intention of the Convention Centre is to terminate this good faith long-term relationship without honest dealings or proper notice, by purporting to rely on, and hide behind, its claim for monies owing. The Convention Centre knows that it is the only Space which can accommodate the Festival in Ottawa. The Convention Centre is aware that an event of this magnitude and style is not compatible outside of the downtown core. As a consequence the Festival will 69. 70. 71. 72. 73. -20- be unable to meaningfully mitigate any loss suffered by the actions of the Convention Centre. The Convention Centre?s conduct and failure to give proper notice or conduct itself in good faith has put at risk the existence of a 30 year legacy event, representing the entire business, reputation and livelihood of treefort. treefort has suffered irreparable harm and is entitled to the orders referred to herein. Intentional Interference with Economic Relatiw For the reasons set out above, treefort says that the Convention Centre has interfered with its economic relations and that it is entitled to an order to that effect, and damages. Special Damages In the years 2011 to 2015, treefort has suffered losses and incurred costs, as pleaded above, in an amount approximating $3,000,000. treefort was not aware that these losses and costs were the direct result of a decision by the Convention Centre, as pleaded above, to displace treefort for its own gain. General Damages If it were appropriate to measure the loss to treefort of its business in Ottawa, that number would be at least $6,000,000, the equivalent of 5 years? notice under the Contract coupled with a lost opportunity to market the business. While treefort asserts that the loss it will suffer is irreparable, it claims that amount in the event this Honourable Court should determine otherwise. As pleaded, the Convention Centre failed to give any or adequate notice of its intention to deviate from the terms and conditions of the Contract. -21- Punitive Damages 74. The intentional conduct of the Convention Centre as pleaded herein demonstrates a marked departure from what treefort was entitled to expect in its relations with the Convention Centre, was oppressive and high handed and offends the court?s sense of decency. treefort claims damages in the amount of $100,000. 75. Wherefore treefort claims the relief set out in paragraph 55 herein. Date: December 24, 2015 DENTONS CANADA LLP Barristers Solicitors 1420 - 99 Bank Street Ottawa ON 1H4 K. Scott McLean LSUC 16455G scott.mclean@dentons.com Tel: (613) 783-9665 Fraser Mackinnon Blair Tel: (613) 783-9647 Fax: (613) 783?9690 scott.mclean@dentons.com Lawyers for the Plaintiff TO: PERLEY-ROBERTSON, HILL MCDOUGALL LLP/s.r.l. 1400 -340 Albert Street Ottawa ON 0A5 Andrew J.F. Lenz Tel: (613) 566-2842 Fax: (613) 238-8775 Lawyers for the Plaintiff RCP-E 27A (July 1, 2007) I cam File No, 1565.839; . . .. SUPERIOR 'on JESTJCEM .- . :HEmd ll . A . . 1.. FACTUM OF THE RESPONDING PARTY, OTTAWA CONVENTION CENTRE CORPORATION On this. motion the defendant by counterclaim, treefort hip productions inc, (?treefort?), seeks against the Ottawa Convention Centre Corporation a. An interim or interimrinterim order restraining from ?irrevocably licensing; hocking or. Otherwise con?rming non-festival dates (asreferred to herein) the, ?rstan'd November for thefestival seasons of through to 2020, Without ?ret'niaki-ng them'aVailable to treefort for the purposes of presenting the Shaw Centre; pending the return and hearing of a rniot'ion for interlocUtory order herein?; b' Orders? ?timing to- 9335 management the timetable for the hearing of the motion; and"- - . . 9. Costs, The position of is that there is no basis? for making the injunctive order as sought by treefort. .It is apparent that the complaints .of- treefnrt relating to the manner in which the events of 20111?15 unfolded are unfounded.- However, even if they were grounded in the evidence they would not give rise to any injunctive relief moving forward. The real question for the purposes of the within motion is whether there is ample evidence Of a contractual entitlement to fixed dates at the Shaw Centre for the next several years There is not. Whether. the. motion is decided on interim basis or an interimvin'terim basis, treefort does not meet the test for injunctive relief and, mo?rel?lndamentally, the space has already been licensed to third parties not'before the Court. PART I STATEMENT oF. FACTS A .- Introduction 3. r! The dispute before the Court relates to the relationship between and treefort, which was a client of History and Booking Policies 4. Prior to 2008 the was the manager and licensor of space which was known as the Ottawa Congress Centre. Since 2011, the has been the manager and licensor of the space which currently operates as the Shaw Centre on Colonel By Drive in the City of Ottawa. Motion Record of the Responding Party, Tab 1 Af?davit of Dan Young, para. 3 and has historically and continues to liCense space based on certain criteria and categories. Conventions are and historically have: been the primary target for the Shaw Centre. Conventions draw outside. visitors and money to Ottawa and Ontario. They are given priority in booking and are referred to in the record as ?first priority eventsii. Motion Record of the Responding Party, Tab 1 Affidavit of Dan Young, para. 12 Other events such as meetings, consumer shows, and local events ,(galas, dinners, fundraisers, trade shows etc,) do have the same Status as Conventions- T-hey are a second ti_er:of events and are referred to in the record as ?second pridrity events?. Motion Record of the Responding Party, Tab-1 - Af?davit of Dan Young, para, 13 Even among second priority events, the internal policy and. direction of is very business oriented, The management team strives to select events of excellent quality that generate high revenue and do not have a negative impact on the Shaw Centre or the first priority events. In other words, not all second priority events are created equal. Motion Record of-the Responding Party, Tab 1 Af?davit of Dan Young, para. 22 The mechanics of bookingof ?rst priority events and, second priority events is' quite different; First priority eVents will be booked several years in adVan'ee, However, although tentative bookings (?holds?) Will be given to. second priority events, will not'agree to enter into licensing agreements any more than: a year in advance. This was always the policy and remains the policy. I Motion Record of the Responding Party, Tab 1 - Af?davit of Dan Young, para. 23 10. 11. 12. 13. treefort treefort?s principle, Joan Culliton, worked with when it ran the Ottawa Congress Centre prior to her' employment being terminated in 2007, In the course of her employment, she would have had intimate knowledge of the mandate, policies and procedures of- and she would have known the distinction betWeen ?rst priority and second priority events. Motion Record of the Responding Party, Tab 1 - Affidavit of Dan Young, para. 24 There was at the Ottawa Congress Centre a preexisting event called the ?Ottawa Wine and Food Show? which was owned by company called Players Exposition International Inc. (?Players-9. The principals of this company were Robert and Halfina Player. The Ottawa Wine and Food Show rented space at the Ottawa COngress Centre prior to the advent of?the Shaw Centre; Motion Record of the Responding Party, Tab 1 .- Affidavit of Dan Young, para. 25 After her termination from the it would appear that Ms. Culliton purchased the Ottawa Wine and Food Show part of asset purchase agreement-(as opposed to a Share: purchase) and, according to her evidence, She changed. the name from the Ottawa Wine and Food Show to the Ottawa Wine and Food Festival. I Motion Record of theMoving Party, Tab 2 - Affidavit of Joan Culliton, para. 7 Motion Record of-the Responding Party, Tab 1 7Af?davit quan Young, para. 216? Like the Ottawa Wine and. Food- Sho.w, the OWFF has paid attendance by ,memers of the public, paid"- Wine taStings and dozens cf exhibitOrs the wine, beverage, alcohol and food industry. the core, it is an event where the'public pays to enter, pays for tickets to sar?nple food and beverage products from ,a host of exhibitors and attends special eVents such as. guided tastings, celebrity chef dinners, etc; I I Motion Record of the Responding Party, Tab 1 - Affidavit of Dan Young, para. 27 Much space is dedicated in Ms. Culliton?s af?davit (see para. 7) to the relationship between the Ottawa COngress Centre and the Ottawa Wine and Food Show. According to Dan Young, however, the Ottawa Wine and Food Show was simply a client. It was important to the Ottawa Congress Centre in the same Way every Client is but there Was no special relationship which the Ottawa Congress Centre had with the Ottawa Wine and Food Show. Motion Record of the Moving Party, Tab 2 - Af?davit of Joan Culliton, para. 7 - Zr . Alleged ?Contract? between OWFF'Predccessor and 14. 15". 16. According to Ms, Culliton? there was a ?contractual course of dealings? between the OttawaWine and Food Show and the which, presumably gives rights to treefort now; According to Ms. Culliton, there were three ?key terms and provisiOns?? to this ?cOntractual matrix?: I a. c. A continuing aobligation to host the Ottawa Wine and Food Show since it was and, accepted that the Centre was the only venue that could appropriately host the s'howl?; I i A covenant? which entailed insulating the Ottawa Wine and Food Show from other food and beverage. events; and jA ?scheduling covenant? under which the ?Convention Centre held dates for the Ottawa Wine Food Show?? on a ?rolling ?ve year basis; More Speci?cally; the tWo Weeks in early November were held fer the Ottawa Wine and Food Show? Motion Record of the Moving Party, Tab 2 - Af?davit of Joan Culliton, para. 14-22 According to Dan Young, the Ottawa Wine and Food Show would never have had this i kind of Scheduling available to it. The show Was always consideredia second priority event. deposes; ?It brought in little in the way of outside visitors and did not meet the criteriawhich we u'se'and used to'mea'Sure ?rst priority events. This was alWays'made clear to the Players who owned it and I belieVe.. that it was the understandingrof Ms. Cullit'on. Every year the Players w0uld advise us of their desire for certain dates at the OttaWa CongT?Ss Centre and: We would attempt to accommodate their wishes (as we would do for any client) but it was always made clear to; them thatwe could not guarantee those dates and; of Course, we Would'not agreeito' enter into any licensing agreements more than a year adVanceL Motion Record of the Responding Party, Tab 1 - Af?davit of Dan Young, para. 30 Dan Young continues: Also signi?cant was that there was no?contract?.? with the Ottawa Wine and Food Show, the kind of which. Ms. Culliton deposes to in paragraphs 14 and fellowing of her af?davit. If? there had been I would have been aware of it and it would have been the only centrapt to which was a party. It w0uld have been quite exceptional and did not exist. On the contrary, in conformity with our. practice there were a series of contracts which were entered into annually for space and other services at the Otta'Wa r. 1 Congress Centre. That was the model and remains the model. Furtherrnore, the contracts which have existed and continue to be entered into do not include the terms which She alleges. they could not because they are contrary to our mandate and our poliCies. There was no ?continuing obligation? or any ?scheduling covenant? with Player?s and neither ofthose notions were made part of the relatiOnship with Ms. Culliton or treefort. Ms. Culliton also alludes in her af?davit as well to a ?Protective, Covenant? which characterized the relationship with Players and, presumably, was made part of our relationship with Ms. Culliton and treefort. This is n'onsense. As I depose above, such-?protection? from competition was at the discretion Of the President. It was not and is not part of our ongoing licensing agreements. I'wOuld add-that, to my knowledge, the President n?ever exercised his or her discretion to offer such ?protectiO'n?ito'M's; Cullit?dn. Motion Record of the Responding Party, Tab 1 - Af?davit of Dan Young, para. 31 and 33 The documentary evidence adduced. in the record con?rms the evidencle Young. The ?rst exhibit to-the Af?davit of loan Culliton, for example, would appear to be a portion of 3 heragreement of purchase and sale under which she is buying. the Qttavva Wine and vFood'Show from Players._ In her af?davit she? makes no reference to the following which appears at the bottom of her own exhibit: ?fHolding means: dates are tentatively being held for the show and best efforts bytboth and will be made to actually prov-ide these dates. ContraCts by both Lansdowne Park and the can only be signed one year before the scheduled event as has. been the case in the past. With both Lansdowne Park and the we have been holding shoWs for [4 and. 22 years respectfully and we have always repented our preferred dates.? I Exhibit her af?davit?is a letter from the to Ms. Culliton during the course Of the renovatiOn's (2008-2011) at which time the Ottawa Wine and Food Show-took place atLansdoWnePark. Cthpic?uously omitted from her af?davit is this paragraph: ?fSecondly, although the Ottawa, Convention Centre booking policies have not changed and we cannot con?rm consumer or trade shows for more than one year out, the followmg'isa list'o?f perspective: dates we are currently holding in the new facility on your behalf forthe'OttaWa Wine and Food Show??.l' Motion Record of the Moving Party, Tab 2 - Af?davit of Joan Culliton, Exhibit and Exhibit 1? OWFF Events at Shaw Centre 8. From 2008-2010 the Congress Centre was closed for renovations and the OWFF, which by this time had been purchased by Ms?. Culliton or treefort was held at Lansdowne Park. Beginning of 2011, h0wever, Ms. Culliton licensed Space and amenities from at the Shaw Centre for the OWFF. There were problems immediately. Ms. Culliton was dif?cult to deal with and those aspects of the narrative are dealt with in some length in Mr. Young?s af?davit. They do not need' to be repeated here. Equally important, however, was that there Was rowdiness, underage drinking, security issues, ?ghting, drunkenness and other problems that staff do not want to have at the Shaw centre. . The came to the decision that it did not want any further relations with the OWFF givenzthe riSky? aspects of the Show. combined with the dif?culties in dealing with Ms. Culliton. According, a letter was :?sent to her. Motion Record of the Responding Party, Tab 1 - Af?davit of Dan Young, para. .37 and 39 decided to attempt to work with Ms. Culliton to try and deal with the concerns - that. the; Centre and to. attempt to accommodate herl requests. Certain "requirements Were made'of Ms. Culliton and- she agreed to them. She describes in 'her af?davit theseconcernsas arbitrary and punatiye. Young Simply disagrees. Motion Record ,ofthe Responding Party, Tab 1 - Af?davit of Dan Young, para. 41 Due to the problems that had been encountered some ?success indicators? were agreed upon between Ms, Culliton, and The document appears at Exhibit to Ms. Culliton?s af?davit. A licensing agreement was eventually entered into for 2012 (which included the same entire.agreement-clause which appears in all the other contracts). The event was again problematic and a. Memorandum of Understanding was entered into to setthe parameters for a'rel'ationship for the years, 2013 and following. The MOU speci?cally refers to the ?succeSsindicators? - Motion Record of the Responding Party, Tab 1- Af?davit of Dan Young, para. 42 Motion Record of the Moving Party, Tab 2 - Af?davit of Joan Culliton, Exhibit In the MOU it is made clear. to Ms. Culliton and she agreed that ??xed dates cannot be guaranteed? and that: 23:. 24-. 25. the dates will be contracted in accordance with the Ottawa Convention Centre?s published booking policy and based upon the continued success and safety of the OWFF and respecting the longstanding tenancy held by the OWFF. Of course, this caveat was in accordance with policies distinguishing between Conventions and events such as tradershows etc. Again, the OWFF is not a ?rst priority event. It has always been a second priority event because it does not bring other business such as hotel bookings etc. into the city. did not and Would not have conclusiVely agreed to dates with Ms. Culli-to'n for dates more than 12 mOnths away. Motion Record of the Responding Party, Tab 1 - Affidavit of Dan Young, para. 44 Another licensing agreement was entered into in. 2013 although it was necessary for her- to take the entire space since negother clients wished to be disturbed by the activities of the M's. Cull?itonjdeposes to the adverse ?nancial effects which these. measures hadorr her business}. Motion Record or the Responding Party, Tab 1_ Ai'fidavit of Dan Young, para. 45 In 2014 a further licensing agreement entered into. According to Dan Young, Ms. Cir-11ith remained dif?cult and the remained problematic although it was felt that the security and other issues werebeing. managed adequately in the circumstances. All things.- censidered at this time, Was prepared; to. continue with her and with Motion Record of the Responding Barty, Tab 1 - Affidavit of_ Dan Young, para. 46 Throughout this period, Culliton was made aware of the dif?cult aspects of the event for the I Motion Record of the Responding Party, Tab 1 - Af?davit of Dan Young, para. 48 2015 OWFF Serious Problems 26. In 2015, things became very problematic. Earlier in the year, agreed to license the OWFF again. It was made clear to Ms. Culliton, however, that the preferred dates in November were not available but she Could have the, prior week (coinciding with Hallowe?en). She signed that licensing agreement in February 2015 and agreed to take that time period; Motion Record of the Responding Party, Tab 1 - Affidavit of Dan Young, para. 50, Exhibit ?12? I 27. 28. 29-. 30. 31. However, as the 2015 OWFF approached the relationship with Ms. Culliton became even more strained. She made it clear that she was not happy abOut the date of her eventand mentioned that the OWFF should receive ?rst priority booking. Motion Record of the Responding Party, Tab 1 Affidavit of Dan Young, para. Again, it had always been made clear to .Culliton that could not guarantee dates and, ?irthermore, like all second priority events, it could not agree to book the OWFF any more than a year in advance, Nonetheless, OC'tober representatives asked her to provide them-with some evidence that the OWFF hasa signi?cant ?nancial impact in a positive manner on the City Of Ottawa and the Province of Ottawa. She was, of to do so. Motion Record of the Responding Party, Tab 1 -.- Af?davit of Dan Young, para. 53 The 2015 was very problematic. treefort failed to pay as required under the licensingagreement, Furthermore, during the event there were many disruptive aspects - .overrpouring __alc_o_hol exhibitors, intoxication, crowd control issues, incidents of theft, intOXi-cated? eXhibitors, intimation on the show ?oor vomiting. Eventually the} Ottawa rPoliceTServiceirsent an email and there were a litany of security issues .?documented by Capital ASecurity?rthiously, the success indicators incorporated into?theMemorandum of Understanding Were not met; Motion Record of the Responding l?art?y, Tab. 1 .- Affidavit? of Dan Young, para. 53 and 54; Exhibit ?614? 15? There was a signi?cant account receivable associated with and treefdrt. Normally this does not happen becauSe clients pay in advance. treefort did'not do so. on this occasion and," unfortunately, -.had to start action against treefort for $156,000.00; - Motion Record ofthe Responding Party, Tab 1 - Affidavit of Dan Young, para, 55 A meeting was held with Ms. Gulliton on November 24, 2015. A letter was given to her at that meeting which contained an offer from to treefort in order to attempt to deal: with the account receivable. Unfortunately, her .s'olicitors'responded with a 5 page letter which sought only to divide the issues? of the aCCount receivable and whatever obligation. Ms. C?ulliton feels is incumbent upon to have her back. In the 5 pages 34. 35. 32. 33. 10 there is no delineation of the theory which treefort now advances related to the contractual analysis it puts forward. Motion?Record ofthe Responding Party, Tab 1 - Affidavit ofDan Young, Exhibit ?17? and ?18? Eventually, a Statement of Defence and Counterclaim along with a Notice of Motion was served on Christmas Eve. On December 30, 2015, late in the day the Notice of Motion with the af?davit material of treefort was served upon the solicitors of Motion Record of the Responding Party, Tab 1 - Af?davit of Dan Young, para. 59 Most signi?cantly, the space which treefort demands is not available at the time it is demanded. The Court cannot grant the relief sought at least without forcing to breach binding contracts-which have already been signed with other parties. Motion Record of the Responding Party, Tab 1 - Af?davit of Dan Young, para. 65 PART II - STATEMENT OF LAW A - Mandatory Iniunction Test mandatory the Court has} to be satis?edthat there is before it ?an unusually strong and clear case?. Inga/tetra Canada Inc. v. Bristol Myers Squib Canada Inc. 1988 CarswellONT 3393 at para. "48:49 . . Injunctions are concerned with preserving the status quo and not altering the status quo. City of London v. Talbot Square Ltd. 197.8 1595. (ONT SC) B- Equitable and other Considerations 36. A seeks injunctive relief must come to the Court with clean hands. This does net mean that a claimant?for equitable?relief is denied a remedy because he or she is a ll ?villain or wrong-doer?. However, Judges will deny relief when the claimant?s wrong- doing taints the appropriateness of the remedy being sought. Pichler v. Meadows 2010 ONSC 1863 at para. 22 37. Where the effect of granting the injunction will be felt by third parties, the balance. of inconvenience sways in favour of not granting injunctive relief. Valastro Corporation v. City of London 2013 ONSC 598 at para. 48 PART SUMMARY OF CRITERIA AN EVIDENCE CONTAINED IN THE RECORD Substantiallssue to be Tried igher) The recent cases relating to good faith in contracting do not assist the plaintiff; There is no real evidence of the plaintiff?s version of the ?3 -pronged? contract what ?evidence? there is is inadmissible in any event; All documents in the record indicate that there were no guarantees of dates and that the ?contractual matrix? being relied upon by the plaintiff was simply not present; If there were a contract With the Ottawa Wine and Food Show Players, there is no evidence that it Was assigned to the current plaintiff. There are myriad legal impediments to the position being advanced; and, There is an entire agreement clause in every licensing agreement which has been entered into since 2011. The Clause speci?cally prevents the kind of contractual analysis the Court is being urged to adopt. Irreparable Harm There is no harm there are other sites where the show can take place; This-is speci?cally the kind of harm which the Supreme Court of Canada has said does not attract injunctive relief; and, There is no evidence of how much the business is worth or what was paid for it. Nor is it clear that any of the harm has anything to do with the acts seeking to be restrained as oppOsed to the various other complaints which are made in the record most of which are irrelevant to the matter of injunctive relief. 1- - 12 Balance of Inconvenience - There is a clear and distinct threat of harm to be suffered by if the injunction is granted. There will be a loss of revenue and certainly reputational harm suffered by - Terms of continuing are not de?ned by treefort in its materials. In light of the evidence from 2015 this is very risky should the Court impose its view for that of the owner and manager of the space? ALL OF WHICH IS RESPECTFULLY SUBMITTED HI AY OF JANUARY, 2016 An re F. Lenz Perley-Robertson, Hill McDougall 1400 340 Albert Street Ottawa, ON KIR 0A5 Andrew J. F, Lenz LSUC 33969H Tel: (613) 233.2022 Fax: (613)238-8775 Lawyers for the Responding Party Court File No. CV-15-66839 ONTARIO SUPERIOR COURT OF JUSTICE N: OTTAWA CONVENTION CENTRE CORPORATION Plaintiff/Defendant to the Counterclaim/ Responding Party - and TREEFORT HIP PRODUCTIONS INC. Defendant/Plaintiff by Counterclaim/ Moving Party FACTUM OF THE PLAINTIFF BY COUNTERCLAIM (MOVING PARTY) (Motion returnable January 7, 2016) Dentons Canada LLP Barristers Solicitors 1420 99 Bank Street Ottawa, Ontario KIP 1H4 K. Scott McLean LSUC Telephone: (613) 783-9665 Facsimile: (613) 783-9690 Fraser Mackinnon Blair 66683L Telephone: (613) 783-9647 Facsimile: (613) 783-9690 Lawyers for the Defendant/ Plaintiff by Counterclaim/Moving Party TO: -ii_ HILL MCDOUGALL LLP/s.r.l. 1400 -340 Albert Street Ottawa ON 0A5 Andrew .F. Lenz/ Tel: (613) 566-2842 Joshua Moon Tel: (613) 566-2801 Fax: (613) 238-8775 Lawyers for the Plaintiff/ Defendant to the Counterclaim Court File No. 15-66839 ONTARIO SUPERIOR COURT OF JUSTICE N: OTTAWA CONVENTION CENTRE CORPORATION Plaintiff/Defendant to the Counterclaim/ Responding Party - and TREEFORT HIP PRODUCTIONS INC. Defendant/Plaintiff by Counterclaim/ Moving Party FACTUM OF THE BY COUNTERCLAIM (MOVING PARTY) PART I NATURE OF THE MOTION 1. The defendant, treefort hip productions inc. (?treefort?) is the owner of the Ottawa Wine and Food Festival (the estival?). treefort seeks an interim order restraining the plaintiff, the Ottawa Convention Centre Corporation (the ?Convention Centre? or the ?Centre?) from irrevocably licensing, booking or otherwise con?rming any ?Festival Dates? (as this term is de?ned herein at paragraph 6) for 2016 through 2020 without ?rst making them available to treefort for the purpose of presenting the Festival at the Centre, pending the return and hearing of a motion for an interlocutory order herein. PART II OVERVIEW AND SUMMARY OF THE FACTS i. The Parties and the Dispute 2. This dispute arises from the Convention Centre?s attempt to terminate an agreement with treefort concerning the operation of the Festival, the terms of which have developed as a result of a -2- contractual course of dealings which spans 30 years. The Festival has been owned by treefort since 2007 and except for a three year period during which the Convention Centre was completely rebuilt, has always been held at the Centre during nearly 30 years of successful business in the City of Ottawa. Joan Culliton is the controlling mind of treefort and the producer of the Festival. Prior to purchasing the Festival through treefort, Ms. Culliton was employed by the Convention Centre for 13 years and was therefore very familiar with the operation of the Festival (which was then known as the Ottawa Wine and Food Show) and the intricacies of its business relationship with the Centre. ii. The Contractual Course of Dealings between the Festival and the Convention Centre 3. The 30 year relationship between the Festival and the Convention Centre has been beneficial for both parties. The Festival has always been one of the Centre?s top sources of revenue and has annually injected at least $3 million into the local tourism economy. Accordingly, the Festival has also helped the Convention Centre ful?ll its statutory mandate of promoting and developing the tourism industry in Ottawa. Af?davit of Joan Culliton, sworn December 30, 2015 (?Culliton Af?davit?), paragraphs 8-11, Motion Record of treefort Tab 2, pages 23-24 4. Early in their relationship, the Centre and the Festival?s owners recognized that they shared a mutual interest in building and sustaining a long term business partnership. This partnership recognized the Convention Centre?s interest in ensuring the success of one of its marquee clients, the nature of the Festival and the unique market within which it operated, as well as the Convention Centre?s position as the only large-scale event facility in Ottawa?s downtown core. Accordingly, a contractual course of dealings between the Convention Centre and the Festival developed throughout this partnership that re?ected their mutual and objective intentions (the ?Agreement?). s. - 3 - Culliton Affidavit, paragraphs 11-13, MRT, Tab 2, pages 23-24 5. The Agreement contains four covenants on the part of the Convention Centre that are relevant to the relief sought by treefort in this motion. These covenants required the Centre to: host the Festival every year, subject to providing reasonable notice of termination; protect the Festival from competing food and wine events within the 60 day periods prior to and following the Festival (the ?Protection Covenant?); (0) hold the ?rst two weekends in November (Thursday to Sunday) for the Festival on a rolling ?ve year basis (the ?Festival Dates?); and, contract for and publicly announce the Festival Dates for the following year at the conclusion of each Festival. Culliton Affidavit, paragraphs 14-24, MRT, Tab 2, pages 24-27 6. The Convention Centre?s obligation to host the Festival every year, subject to its right to provide reasonable notice of termination, re?ected the understanding that the Festival required a large downtown venue accessible to public transit, hotels and other urban amenities to be successful and that only the Centre and its facilities met these criteria. Similarly, the Protection Covenant re?ected the reasonable and legitimate expectation of long term business partners to not compete with one another. Culliton Affidavit, paragraphs 15-19, MRT, Tab 2, pages 24-25 7. The Convention Centre?s obligation to provide the Festival with priority access to the Festival Dates allowed the Festival?s owners to market an attractive event to potential exhibitors and sponsors in three ways. dates in November allowed the Festival?s owners to attract exhibitors and sponsors who wished to market their products during the lead up to the holiday -4- season. Secondly, the Festival?s owners drew from the same pool of exhibitors as its competitors, including the Toronto Gourmet Food Wine Expo which has always been held during the third weekend in November. Thus, the Festival Dates were essential to ensure that the Festival could attract top tier exhibitors and sponsors, which also bene?ted the Convention Centre. Thirdly, the Festival?s core sales season with exhibitors and sponsors is during the late fall and early winter months. Accordingly, con?rming the Festival Dates for the following year at the conclusion of each Festival permitted the owners of the Festival to enter the market for exhibitors and sponsors during this market?s critical period. Culliton Affidavit, paragraphs 20-24, MRT, Tab 2, pages 26-27 The Convention Centre?s Repeated Breaches of the Agreement with treefort 8. The parties adhered to the terms of the Agreement for decades without disruption. However, in December 2011 the Convention Centre abruptly told treefort that it could operate the Festival for a ?nal year in 2012 only if it was willing to accept a 400% increase in rental and operational charges and agree to a massive increase in oversight. Having been in business with the Festival for 25 years, the Convention Centre knew that the Festival could not operate economically under these conditions and could not be viable at another location. treefort had no choice but to agree to the new onerous terms of business as dictated by the Convention Centre. Culliton Affidavit, paragraphs 33, 39-42 and 47, MRT, Tab 2, pages 30 and 32-35 9. The Convention Centre continued to interfere in the business of treefort during the 2012 Festival. On Saturday evening, the Festival?s premier date, the Centre arbitrarily refused entrance to attendees who had already purchased tickets even though the occupancy limit, which -5- was the product of an expert report prepared by treefort, had not yet been met. This caused substantial ?nancial losses for treefort and damaged the Festival?s reputation. Culliton Affidavit, paragraph 51, MRT, Tab 2, pages 36-37 10. In View of the ongoing dif?culties, the parties negotiated the terms of a written instrument that would assist the managing of the mechanics of their contractual relationship, particularly as it concerned contracting of future Festival Dates (the The MOU was executed on March 27, 2013 and it con?rmed treefort?s existing contractual rights to the Festival Dates and to receive a ?rm contract offer from the Convention Centre for the following year?s Festival Dates within two weeks of the conclusion of each Festival. Culliton Af?davit, paragraphs 55-57, MRT, Tab 2, pages 37-39 11. In spite of the MOU, the Convention Centre continued to impose arbitrary and demanding conditions upon the operation of the Festival in 2013. These measures forced treefort to incur additional expenses and take extraordinary risks, including a 25% increase in its ticket prices, in an unsuccessful attempt to mitigate. The Convention Centre also breached its Protection Covenant by partnering with Priv? Food for a food and wine event in November 2013, an event through which the Centre pro?ted from rental income and through the sale of alcohol. Culliton Affidavit, paragraphs 58-62, MRT, Tab 2, pages 39-40 12. The Convention Centre hosted three more competing events in the month leading up to the 2014 Festival, including another event with Priv?. One of these events, the ?International Food Drink Soiree?, was so closely similar to the Festival that the Festival?s exhibitors -6- believed that it was operated by treefort. The Convention Centre ignored treefort?s concerns for this exceptional level of competition and continued to defy the Protection Covenant. Culliton Affidavit, paragraphs 64-74, MRT, Tab 2, pages 40-43 13. Later in 2014, and contrary to the MOU and the Agreement, the Centre advised treefort that it would not provide treefort with the Festival Dates for 2015 and misled treefort to believe that it would have to operate the Festival during the Halloween weekend in 2015 if there was to be a Festival at all. As treefort later learned, the ?City Wide Convention Business?, the reason advanced by the Convention Centre for the unavailability of the Festival Dates, did not occur and the Convention Centre actually gave Saturday November 7 to Priv?. Culliton Affidavit, paragraphs 75 and 88-89, MRT, Tab 2, pages 40-41 and 47-48 14. The Festival is not and has never been a Halloween event and could not succeed against the array of competing Halloween themed activities. Beginning in December 2014, treefort began to warn members of the Convention Centre?s executive team in writing and in person that the imposition of the Halloween dates would have negative effects on the Festival. Ultimately, the hosting of the Festival over the Halloween weekend caused a drastic decline in ticket sales, the cancellation of several exhibitors and the Festival losing out on full payment under its sponsorship agreements. A number of exhibitors have sought compensation ?'om treefort due to lower attendance and the Festival had to abandon a planned price increase for exhibitor space for 2016. Culliton Affidavit, paragraphs 76,78, 87 and 97-101, MRT, Tab 2, pages 44- 45, 47 and 50-51 .7- 15. On October 22, 2015 Nina Kressler, the Convention Centre?s President and CEO, advised that the 2016 Festival Dates had been contracted out to other event operators without giving any notice to treefort. Despite being in breach of the Agreement and the MOU, the Convention Centre then demanded that treefort pay a purported outstanding account balance in relation to the 2015 Festival on October 29, 2015. treefort objected to making any payment to the Convention Centre due to its ongoing, uncorrected and unacknowledged breaches of the Agreement and the MOU. Culliton Affidavit, paragraph 95-96 and 104-107, MRT, Tab 2, pages 49-50 and 52-53 16. When treefort raised its concerns, including those pertaining to the 2016 Festival Dates, the Convention Centre?s General Manager, Loretta Briard, threatened treefort that no 2016 dates, including any Festival Dates, would be offered to the Festival unless treefort ?resolv[ed] 2015 at [its] earliest convenience.? On November 24, 2015, Ms. Kressler confirmed that any 2016 dates (not including the Festival Dates) would be held as ransom by the Convention Centre in exchange for treefort?s complete satisfaction of its purported account balance and a ?written full and ?nal release? of all of treefort?s potential claims against the Centre. Culliton Affidavit, paragraphs 108-111, MRT, Tab 2, pages 53-54 PART - ISSUES 17. Has the moving party satis?ed the three-part test for granting an injunction? -3- PART IV LAW AND ANALYSIS 18. The following elements form the three-part test for granting an interim injunction: Is there a serious issue to be tried? Will the moving party suffer irreparable harm from granting or refusing the remedy pending a decision on the merits? (0) Which party will suffer the greater harm from granting or refusing the remedy pending a decision on the merits? a) Serious Issue to be Tried 19. Whether there is a serious issue to be tried is determined on the basis of a common sense and an extremely limited merits-based review of the moving party?s evidence. To discharge its onus under this prong of the test for injunctive relief, it is suf?cient for the moving party to satisfy the court that the case is not frivolous and that there are substantial issues to be tried. RJR-MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC) at pp. 44-45 (?RJR-MacDonald?) Book of Authorities of the Moving Party Tab 1 Bernard v. Valentini (1978), 18 O.R. (2d) 656 (H.C.), BAMP, Tab 2 20. treefort has led suf?cient evidence to satisfy the low threshold that is required to meet this prong of the test. The Culliton Af?davit describes a decades-long contractual course of dealings that gave rise to the Agreement as well as a pattern of dishonest and bad faith conduct on the part of the Centre that is contrary to its terms. The nature and severity of the Convention Centre?s conduct con?rms that its intent was to use its economic power as the City?s only downtown convention facility to impose terms of business that were arbitrary, highhanded and contrary to the Agreement and the MOU, with the sole purpose of squeezing the Festival out of its facilities without fair or reasonable notice. -9- 21. These acts began in 2011 with the attempt to impose a fourfold increase in the rental and operational costs of the Festival and were sustained into 2012 with the arbitrary and costly decision to refuse entry to ticketed guests. 22. The Convention Centre continued to interfere with the contractual rights and interests of treefort in 2013 and 2014 by partnering with competitors during the 60 day periods prior to and following the Festival and refusing to provide treefort with the Festival Dates for 2015. In doing so, the Convention Centre both misled treefort as to the justi?cation for its departure from the Agreement and the MOU and openly refused to comply with its contractual obligations. The Convention Centre?s consistent pattern of dishonesty and bad faith culminated with Ms. Briard and Ms. Kressler?s efforts to intimidate treefort to release its claims against the Centre and agree to its demand for payment in order to obtain dates for 2016 that were not Festival Dates. 23. This pattern of conduct is contrary to the terms of the Agreement and the MOU as well as the obligations of contracting parties to have appropriate regard for the legitimate contractual interests of their contracting partner. In the context of a 30 year business relationship de?ned by mutual cooperation and business respect, treefort was entitled to expect the Convention Centre to do nothing more than comply with its contractual obligations. The Convention Centre has completely refused to discharge this sensible commercial onus and legal obligation. Bhasin v. Hrynew, 2014 SCC 71, paragraph 65 and 69, BAMP Tab 2 b) Irreparable Harm 24. Irreparable harm is harm which either cannot be quanti?ed in monetary terms or which cannot be cured. It is the nature of the harm rather than its magnitude which must be considered. .10- It is well established that irreparable harm is found where the moving party may suffer diminishment of business reputation or permanent market loss. RJR?MacDonald, supra, paragraph 37, BAMP Tab 1 Molsan Canada 2005 v. Miller Brewing Company 2013 ONSC 2758, paragraph 134, BAMP Tab 3 25. Aside from and in addition to the substantial quanti?able monetary losses that have been caused by the Convention Centre?s breach of the Agreement and the MOU, the Centre?s refusal to provide treefort with the Festival Dates for 2016 and to hold the Festival Dates for 2017 and beyond threatens to cause the complete loss of treefort?s business. Culliton Affidavit, paragraph 122, MRT, Tab 2, page 57 26. The viability of the Festival depends on treefort?s ability to attract top tier exhibitors and sponsors. The Festival competes with other similar events, such as the Toronto Gourmet Food Wine Expo for the same pool of exhibitors and sponsors. Due to the refusal of the Convention Centre to contract for 2016 Festival Dates, treefort does not currently have a product to sell. Culliton Affidavit, paragraphs 118, MRT, Tab 2, page 56 27. Furthermore, the core exhibitor selling season is heavily concentrated in the fall and early winter months because the majority of exhibitors? marketing budgets for the following year are ?illy allocated by this time. The timing of the Convention Centre?s refusal to provide the Festival Dates for 2016 has therefore compounded the risk of irreparable harm to treefort. This is causing permanent loss of treefort?s market share to its competitors, including to those competitors with Whom the Convention Centre has recently partnered. The implications of this -11- conduct is therefore likely to result in irretrievable damage to the Festival beyond 2016 and jeopardize the ability of treefort to sell this business as a going concern. Culliton Affidavit, paragraphs 115-119, MRT, Tab 2, pages 55-57 c) The Balance of Convenience 28. The balance of convenience requires the court to determine which party will suffer the greater harm from granting or refusing the remedy pending a decision on the merits. RJR-MacDonald, supra, at 44-45, BAMP Tab 1 29. As has already been described, treefort requires immediate injunctive relief to quell an existential business crisis. In contrast, the injunction will come at no cost to the Convention Centre. The Convention Centre has always reaped ?nancial and other tangible bene?ts from the presence of the Festival and the relief requested by treefort would only prevent the Convention Centre from doing what the Agreement and the MOU already prohibit. Furthermore, since the Convention Centre?s booking policy prevents the Centre from contracting dates more than one year in advance, holding the 2017 Festival Dates will not impair its normal course of business. 30. Interim injunctions are also granted with a view to preserving the status quo and ensuring that the subject-matter of the litigation is not destroyed or irreversibly altered before trial. Here, the status quo involves the parties, including the Convention Centre, adhering to their respective contractual obligations. Therefore, this factor also militates in favour of granting the injunction. London (city) v. Talbot Square Ltd. (1978), 22 OR. (2d) 21 (Div. BAMP Tab 4 . . -12- 31. Furthermore, where the motion concerns a commercial arrangement that has been terminated with immediate effect, the court may issue an injunction refusing termination where: (C) (0 There is not a clear agreement providing for termination of the parties? arrangement; The arrangement has not been terminated in good faith; The arrangement between the parties is long-standing; The business reputation of the moving party would be affected; There is cogent evidence that the moving party?s business would be substantially ended; and There would be no real harm to the defendant in requiring it to continue the arrangement. Great Lakes Harvestore Systems Ltd. v. A. 0. Smith Engineered Storage Products Co. [1998] OJ. No. 873 (Gen. Div.) at para 10 (?Great Lakes Harvestore?), BAMP Tab 5 32. Based on the factors enunciated by the court in Great Lakes Harvestore, the injunction should be granted. The Agreement between the parties and their predecessors spans nearly 30 years and it was formed in a context where the parties understood that the Festival depended on its ongoing relationship with the Convention Centre. Accordingly, neither of the parties to the Agreement may terminate this relationship without ?rst providing a substantial amount of notice. The Convention Centre has failed to provide treefort with any notice of its intention to terminate this relationship. Instead, the Convention Centre has embarked on a course of clandestine, dishonest and bad faith conduct for the sole purpose of forcing treefort out of its facility. -13- 33. treefort?s entire business and its reputation would be negatively affected and potentially destroyed if the interim injunction is not granted. The timing of the Convention Centre?s breach of contract exacerbates the severity of this harm. Disturbingly, the Convention Centre knew that withholding the 2016 Festival Dates at this time would expose treefort to a substantial risk of permanent market loss due to the inability to contract with exhibitors and sponsors for the 2016 Festival. This is especially true where the Convention Centre has also breached the Agreement by trumpeting and partnering with competing entities, like Priv?. 34. Lastly, there is no evidence that the business of the Convention Centre would be negatively affected if it were required to continue the longstanding business relationship with the Festival. To the contrary, the evidence demonstrates that the Festival has had a positive ?nancial impact for the Convention Centre and assists the Centre in ful?lling its statutory mandate. PART ORDER REQUESTED 35. For the foregoing reasons, treefort respectfully requests: an Order granting an interim injunction against the Convention Centre: requiring it to comply with its obligations under the Agreement and the (ii) enjoining it from entering into any contracts or agreements of any type in respect of the use of its facilities in respect of the Festival Dates in the years 2016, 2017, 2018, 2019 and 2020; and An order, if necessary, validating and abridging the time for service and ?ling of the Notice of Motion and Motion Record, and dispensing with any further service thereof; and, -14- the costs of this Motion. ALL OF WHICH IS RESPECTFULLY SUBMITTED this 5th day of January, 2015. K. Scott Mclfeanx Fraser Mackinnon Blair Lawyers for the Defendant/ Plaintiff by Counterclaim/Moving Party Schedule Authorities 1. [UR-MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC) at pp. 44- 45 (?RJR-MacDonald?) Bernard v. Valentini (1978), 18 OR. (2d) 656 (H.C.) Molson Canada 2005 v. Miller Brewing Company 2013 ONSC 2758 London (city) v. Talbot Square Ltd. (1978), 22 OR. (2d) 21 (Div. Ct.) Great Lakes Harvestore Systems Ltd. v. A. O. Smith Engineered Storage Products Co. [1998] OJ. No. 873 (Gen. Div.)