ONTARIO SUPERIOR COURT OF JUSTICE

Transcription

1 Court File No.: ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: PHOENIX HOSPITALITY (BANANAS) INC., PHOENIX HOSPITALITY (COPA) INC., PHOENIX HOSPITALITY (DARD) INC. and BANANAS BEACH BAR INC. - and - Plaintiffs THE CORPORATION OF THE TOWN OF WASAGA BEACH and BRIAN SMITH Defendants TO THE DEFENDANTS STATEMENT OF CLAIM 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 plaintiff s lawyer or, where the plaintiff does not have a lawyer, serve it on the plaintiff, and file it, with proof of service, in this court office, 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 filing 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 filing a statement of defence, you may serve and file 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 file 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 PLAINTIFF S CLAIM, and $2, for costs, within the time for serving and filing 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 $ for costs and have the costs assessed by the court.

2 2 TAKE NOTICE: THIS ACTION WILL AUTOMATICALLY BE DISMISSED if it has not been set down for trial or terminated by any means within five years after the action was commenced unless otherwise ordered by the court. Date: August, 2016 Issued by Address of court office Local registrar 75 Mulcaster Street Barrie, ON L4M 3P2 TO: The Corporation of the Town of Wasaga Beach - Clerk's Office 30 Lewis Street Wasaga Beach, ON L9Z 1A1 AND TO: The Corporation of the Town of Wasaga Beach 30 Lewis Street Wasaga Beach, ON L9Z 1A1 AND TO: Brian Smith 30 Lewis Street Wasaga Beach, ON L9Z 1A1

3 3 CLAIM 1. THE PLAINTIFFS CLAIM: (a) as against the Defendant, The Corporation of the Town of Wasaga Beach: (i) (ii) (iii) (iv) (v) (vi) a declaration that The Corporation of the Town of Wasaga Beach is in breach of its contract with and/or statutory and regulatory obligations to the Plaintiffs arising out of the tendering process conducted by The Corporation of the Town of Wasaga Beach pertaining to the Three Bars (as that term is defined below); a declaration that The Corporation of the Town of Wasaga Beach breached its duty to the Plaintiffs to act fairly in the tendering process conducted by The Corporation of the Town of Wasaga Beach pertaining to the Three Bars (as that term is defined below); a declaration that The Corporation of the Town of Wasaga Beach having invited the Plaintiff to bid tender for the lease of the Three Bars (as that term is defined below) had a duty to the Plaintiff to conduct the tender fairly and in accordance with, inter alia, disclosed selection criteria and evaluation methodologies specified, applicable purchasing policies and practices, applicable by-laws, and applicable trade agreements; a declaration that the Requests for Proposals further described herein issued by The Corporation of the Town of Wasaga Beach for the lease of the Three Bars (as that term is defined below) constitute a bid or tender process; the Plaintiffs state that as result of the breach of contract and breach of duty by The Corporation of the Town of Wasaga Beach as set out herein that the Plaintiffs have suffered damages as pleaded herein; damages in the amount of $2,432, inclusive of HST for breach of contract, breach of the duty of fairness in the tender process, breach of duty of good faith in the tendering process, unfair bidding practices, collusion, deceit and/or misfeasance of public office and/or abuse of authority;

4 4 (vii) punitive and exemplary damages in the amount of $1,000, inclusive of HST; (viii) (ix) (x) prejudgment and post-judgment interest pursuant to the Courts of Justice Act, R.S.O c. C-43, as amended; costs of this action on a substantial indemnity basis together with the applicable taxes thereon; and such further and other relief as this Honourable Court may deem just. (b) as against the Defendant, Brian Smith: (i) damages in the amount of $1,000, inclusive of HST for misfeasance of public office and/or abuse of authority, inducing breach of contract, wrongful interference with economic interests, collusion, and/or breach of fiduciary duty; (ii) (iii) (iv) (v) (vi) (vii) damages in the amount of $500, inclusive of HST for defamation and libel; punitive and exemplary damages in the amount of $500, inclusive of HST; an interim, permanent, or interlocutory order enjoining the Defendant from making, publishing, disseminating or broadcasting defamatory statements about the Plaintiffs to the public; prejudgment and post-judgment interest pursuant to the Courts of Justice Act, R.S.O c. C-43, as amended; costs of this action on a substantial indemnity basis together with the applicable taxes thereon; and such further and other relief as this Honourable Court may deem just.

5 5 The Parties 2. The Plaintiffs, Phoenix Hospitality (Bananas) Inc., Phoenix Hospitality (Copa) Inc., and Phoenix Hospitality (Dard) Inc. are companies incorporated pursuant to the laws of the Province of Ontario and were at all relevant times proponents in respect of the Requests for Proposals further described below. 3. The Plaintiff, Bananas Beach Bar Inc., is a company incorporated pursuant to the laws of the Province of Ontario and carries on business as the operator of a bar, namely, Bananas Beach Club in the Beach Area One vicinity located along Beach Drive in Wasaga Beach, Ontario. 4. The Plaintiffs (collectively referred at as Phoenix ) state that Phoenix successfully operated the Three Bars (as that term is defined below) during the 2015 summer season, without incidents. Further, the Plaintiffs state that Phoenix was never in (nor is in) default of any payment to Wasaga Beach, its suppliers, applicable utility entities and/or its employees. 5. The corporate Defendant, The Corporation of the Town of Wasaga Beach ( Wasaga Beach ), is a town in the Province of Ontario having its municipal offices located in Wasaga Beach, Ontario. At all relevant times, Wasaga Beach was the registered owner of the Three Bars (as that term is defined below). 6. The individual Defendant Brian Smith ( Mayor Smith ) is an individual residing in the Province of Ontario. At all relevant times, Mayor Smith was the mayor of Wasaga Beach. Overview 7. The Plaintiffs state that on or about May 14, 2015, Wasaga Beach purchased seven waterfront properties in the Beach Area One vicinity, located along Beach Drive in Wasaga Beach. Included with the said purchase were twenty-eight commercial units, including three bars, namely, The Copa Cabana, Bananas Beach Club and The Dardanella (collectively, the Three Bars ).

6 6 Requests for Proposals to Lease the Three Bars 8. The Plaintiffs state that between in or around November 2, 2015 and May 18, 2016, Wasaga Beach issued Notices of Requests for Proposals ( RFP s ) to lease the Three Bars and accepted submissions for the 2016 Season as follows: Property/Unit 1 RFP to Lease The Copa Cabana licensed establishment at the main beachfront area in Wasaga Beach, with opening prescribed for May 24, RFP to Lease the Bananas Beach Club licensed establishment at the main beachfront area in Wasaga Beach 3 RFP to Lease the Dardanella licensed establishment at the main beachfront area in Wasaga Beach (RFP Round One in respect of the 4 #EDO RFP to Lease the Dardanella licensed establishment at the main beachfront area in Wasaga Beach (RFP Round Two in respect of the 5 #CAO RFP to Lease the Dardanella licensed establishment at the main beachfront area in Wasaga Beach (RFP Round Three in respect of the Submission Closing Date November 25, 2015 December 2, 2015 December 2, 2015 February 25, 2016 at 2:00 p.m. Wednesday, June 1, 2016 at 2:00 p.m. Phoenix s Submissions/Bids respecting Wasaga Beach s RFPs to Lease the Three Bars 9. The Plaintiffs state that Phoenix submitted its RFP Submissions/Bids for the 2016 Season for the Three Bars in a timely and compliant manner as follows: Property/Unit Amount/Proposed Rent Leasehold Improvements Proposed Term Rental 1 The Copa Cabana $25, $45, Years + 5 Years 2 Bananas Beach Club $75, $85, Years + 5 Years 3 The Dardanella (RFP Round One in respect of the 1 - $34, $34, $35, $36, $156, $65, $65, $65, Years + 5 Years

7 7 Property/Unit Amount/Proposed Rent Leasehold Improvements Proposed Term Rental 5 - $36, $65, Capital Assets $304, of: 4 The Dardanella (RFP Round Two in respect of the 1 - $34, $34, $35, $36, $36, $156, $65, $65, $65, $65, Years + 5 Years Capital Assets $304, of: 5 The Dardanella (RFP Round Three in respect of the Lease 2016 (partial): $20, Year 1 Year 5 ( ): $35, Per Schedule A: Leasehold improvements of $480, as per below breakdown: 2016 (Partial Year) $20, $125, $125, $70, $70, $70, Partial and 5+5 Per Schedule B: Capital Assets of $273, Furniture - $, Kitchen Furniture - $2, Sound Equipment - $3, Bar/Admin (POS)- $2, Wasaga Beach s Response to Submissions/Bids to Lease the Three Bars 10. In response to bids received from proponents including Phoenix, which bids were to be assessed on technical and financial components, the Plaintiffs state that Wasaga Beach awarded leases to operate the Three Bars as follows:

8 8 Property/Unit Awarded To Proposal Score for Phoenix relative to Award Recipient 1 The Copa Cabana Recreation Leisure Services Ltd. ( RLS ) 66.4 for Phoenix versus 61.3 for RLS (Phoenix ranked #1 by the applicable Evaluation Team). 2 Bananas Beach Club Phoenix N/A 3 The Dardanella (RFP Round One in respect of the n/a no award, staff directed to issue new RFP 4 The Dardanella (RFP Round Two in respect of the 5 The Dardanella (RFP Round Three in respect of the The Plaintiffs state that Phoenix was the only bidder or scored the highest and that Phoenix was and is the recommended proponent per Chief Administrative Officer George Vadeboncoeur ( CAO Vadeboncoeur ). n/a no award The Plaintiffs state that Phoenix scored the highest and that Phoenix was and is the recommended proponent per CAO Vadeboncoeur and Andrew McNeill (Director of Economic Development & Tourism), including on the basis that Phoenix was the n/a no award and to date property remains vacant only bidder with a liquor licence. The Plaintiffs state that Phoenix scored the highest at out of 100, with Elusiv Entertainment placing second at To date, The Copa Cabana and The Dardanella remain closed and vacant, contrary to: (a) (b) Wasaga Beach s objectives of, among other things, having the Three Bars open and avoiding a certain perception of the beachfront; and the RFP requirements regarding the lease for The Copa Cabana mandating opening by May 24, The Bananas Beach Club, which was awarded to Phoenix, was opened on time on May 21, However, Phoenix seeks damages on account of not being able to receive possession of Bananas Beach Bar as prescribed by March or the day after the executed agreement, which would be March 23, 2016, which resulted in Phoenix having roughly fifty percent capacity of the actual rented space. The Plaintiffs state that a letter and invoice have been submitted to Wasaga Beach in this regard on or about June 22, 2016.

9 9 13. While there was a live procurement regarding The Dardanella, the Plaintiffs state that: (a) Mayor Smith negotiated with Phoenix s principals, Enzo Grossi and Larry Pevato, an arrangement whereby: (i) Phoenix s rent for Bananas Beach Club initially set and accepted at $75, was increased to $85, after a first round of negotiations between these parties and in a second round of negotiations increased to $102, under the inseverable and strict condition and representation that Phoenix would be awarded the lease for The Dardanella for the 2016 season. More specifically, the Plaintiffs state that Mayor Smith negotiated the lease of The Dardanella to Phoenix with the total amounts payable for the two leases Bananas Beach Club and The Dardanella to reflect a total of $136, broken down as follows: (A) (B) rent of $102, for Bananas Beach Club; and rent of $34, for The Dardanella. The Plaintiffs state that Mayor Smith suggested the total number of $136, for the two leases to offset and trump a competing proponent s submission of $50, for The Dardanella; (ii) (iii) Mayor Smith and CAO Vadeboncoeur met with Phoenix s principals on March 9, 2016 (the March 9 th Meeting ), at which time, the Deal (as defined herein) was negotiated and draft lease agreements were subsequently prepared and signed by Phoenix alone and/or by Phoenix and Wasaga Beach; Lease agreements were signed and delivered by Phoenix for the amount(s) and terms discussed at the March 9 th Meeting, the total amount of rent payable thereunder constituting an amount equal to or surpassing that paid by Phoenix for the 2015 season and any of the submissions received by Wasaga Beach for the 2016 season; (all of which are hereinafter referred to as the Deal ); and (b) Mayor Smith and his assistant, Ms. Lorainne Santo ( Ms. Santo ), met with Phoenix s principals again on April 22, 2016 (the April 22 nd Meeting ) and

10 10 Phoenix was told that the Mayor severed the Deal and that business is business. Phoenix asked, prior to the start of the April 22 nd Meeting, if Ms. Santo would be issuing minutes of the meeting, to which she responded: Yes. Phoenix has requested these meeting minutes on several occasions via and has been told that these minutes are the [MAYORS] notes. 14. The Plaintiffs state that only a lease respecting Bananas Beach Club at the rental rate of $102, was signed back by Wasaga Beach, notwithstanding this amount was contingent on the inseverable condition and agreement made between Phoenix and Mayor Smith on behalf of Wasaga Beach that Phoenix was awarded the lease to operate The Dardanella. 15. In light of the foregoing and without juristic reason and/or consideration, the Plaintiffs state that Phoenix s lease rate for Bananas Beach Club is now $102, whereas its submission, which was recommended and accepted, indicated a proposed rent of $75, The Plaintiffs state that the rent amount for Bananas Beach Club would not have increased from $75, to $85, and then to $102, but for: (a) Mayor Smith s direct negotiations with Phoenix as described above, (b) Mayor Smith s representations regarding the operation and lease of The Dardanella by Phoenix, and (c) the Deal. Breaches by the Defendants to the Detriment of Phoenix 16. The Plaintiffs state that Phoenix s submissions of a tender bid in respect of the Three Bars in compliance with the terms and conditions under which the calls for tender were made by Wasaga Beach made and created a contract(s) between the Plaintiffs and Wasaga Beach. 17. The Plaintiffs state that in its implied term of the contract(s) with Wasaga Beach, that Wasaga Beach had an obligation to treat all bids fairly and equally. 18. The Plaintiffs state that Phoenix s bids were filed in conformity with the terms and conditions under which the calls for tender described at paragraph 8 above were made by Wasaga Beach. 19. The Plaintiffs state that Wasaga Beach owed to Phoenix duties, including but not limited to: (a) (b) to provide proper and full disclosure to all bidders; to consider only compliant bids;

11 11 (c) (d) (e) (f) to conduct a fair evaluation process of all submitted bids pursuant to the disclosed selection criteria provided in the evaluation methodologies specified; to award to the bidder scoring the highest on the RFP evaluation; to award the contract(s) as tendered; and to preserve integrity of the bidding system. 20. The Plaintiffs state that at no time was it a requirement that the Three Bars be leased to separate beachfront operators. 21. The Plaintiffs state that Wasaga Beach has breached its contract(s) with the Plaintiffs and that Wasaga Beach failed to fairly consider the bids made by the Plaintiffs with respect to the Three Bars and in fact Wasaga Beach furthermore failed to conduct a fair evaluation of Phoenix s bids pursuant to, inter alia, disclosed selection criteria and evaluation methodologies specified, the RFP process generally, applicable purchasing policies and practices of Wasaga Beach, applicable by-laws of Wasaga Beach, and applicable trade agreements. 22. Wasaga Beach is in breach of its contract(s) with the Plaintiffs arising out of the tendering process conducted by Wasaga Beach. Further, the Plaintiffs state that Wasaga Beach has failed to comply with its duty of fair dealing in contract, has acted in bad faith in a manner contrary to its mandate and authority, and committed acts constituting the tort of abuse of public office. 23. The Plaintiffs further state that Mayor Smith and Wasaga Beach have defaulted on the Deal with Phoenix as the Council Vote for the award to Phoenix for The Dardanella was defeated in June Further, the Plaintiffs state that as a result of the conduct of Wasaga Beach and Mayor Smith, as set out above, Wasaga Beach and Mayor Smith have committed the tort of abuse of authority and/or misfeasance of public office. 24. The Plaintiffs state that as a result of the Defendants conduct and breaches, including but not limited to the aforesaid breaches of contract and breach of duty good faith and fair dealing, Phoenix has incurred damages in the amount of $2,432,000.00, particulars of which will be provided before trial.

12 12 Defamation 25. On or about August 16, 2016, and on such other dates as the Plaintiffs are currently unaware, the defendant Mayor Smith falsely and maliciously published, personally and in the way of his office, by writing and circulating an open letter on Wasaga Beach letterhead to explain the March 8 th Meeting (the Open Letter ), the following defamatory words (the Defamatory Words ): (a) (b) (c) the tenants of Bananas made accusations against the Mayor and CAO regarding a secret meeting and a deal being struck ; the March 9 th meeting was not secret ; there was no deal made ; 26. The sting of the Defamatory Words is that Mayor Smith falsely and maliciously called the Plaintiffs liars. 27. The Open Letter was defamatory and libellous towards Phoenix. The Open Letter s contents tends to lower Phoenix in the estimation of others and cause others to shun and avoid Phoenix. Mayor Smith s Open Letter was a response to s obtained from a Freedom of Information request, in which the March 8 th Meeting was documented. 28. The Open Letter identifies Phoenix as tenants of Bananas and accuses Phoenix of lying about the March 8 th Meeting. 29. The Open Letter was published in writing and circulated by Mayor Smith, including but not limited to local councillors of Wasaga Beach. 30. Phoenix has a strong prima facie case against Mayor Smith. Mayor Smith s statements are untrue. 31. If Mayor Smith does not stop circulating the Open Letter and making defamatory statements about Phoenix, Phoenix will suffer irreparable harm. Phoenix s reputation is paramount to its success on other public tenders. A threat to Phoenix s reputation shakes the very foundation upon which its business relationships are built.

13 The balance of convenience favours Phoenix. Phoenix cannot control Mayor Smith s behaviour or his statements. Only Mayor Smith can stop publishing defamatory statements about Phoenix. 33. The Plaintiffs state that the Plaintiffs have suffered damages as pleaded herein. Punitive Damages 34. The Plaintiffs state that the Defendants engaged in independent actionable wrongs including but not limited to breach of the duty of good faith and fair dealing and breach of fiduciary duty, for which the Plaintiffs are entitled to punitive damages. 35. The Plaintiffs state that the Defendants conduct was harsh, vindictive, reprehensible and malicious and high-handed. The Plaintiffs plead that this is an appropriate case for this Honourable Court to award punitive and exemplary damages. 36. The Plaintiffs state that Phoenix is therefore entitled to punitive and exemplary damages. Venue / Place of Trial 37. The Plaintiffs propose that this action be tried at BARRIE, Ontario.

14 14 August, 2016 MILLER THOMSON LLP Lawyers / Avocats 600, 60 Columbia Way Markham, ON, Canada L3R 0C9 Enzo Di Iorio LSUC#: 36681V Tel: Fax: ediiorio@millerthomson.com Michael Farace LSUC#: 29852S Tel: Fax: Riccardo Del Vecchio LSUC#: 55199N Tel: Fax: rdelvecchio@millerthomson.com Lawyers for the Plaintiffs

15 PHOENIX HOSPITALITY INC. et al Plaintiffs and THE CORPORATION OF THE TOWN OF WASAGA BEACH et al Defendants Court File No.: ONTARIO SUPERIOR COURT OF JUSTICE Proceeding commenced at Barrie STATEMENT OF CLAIM MILLER THOMSON LLP Lawyers / Avocats 600, 60 Columbia Way Markham, ON, Canada L3R 0C9 Enzo Di Iorio LSUC#: 36681V Michael Farace 29852S Riccardo Del Vecchio LSUC#: 55199N Tel: Fax: Lawyers for the Plaintiffs