TORONTO — AutoCanada Inc., in a filing to the Ontario Superior Court of Justice, denied former CEO Patrick Priestner’s assertion that the company’s $250-million lawsuit against him was issued in “bad faith.”
“AutoCanada has at all times acted in good faith toward Priestner both before and after his departure from AutoCanada,” the company’s Sept. 5 response reads. “AutoCanada had no choice but to commence this litigation after Priestner refused, without any lawful justification, to right the wrongs he has committed against the Company described in the Claim and herein.”
In its Sept. 5 filing, AutoCanada replied to Priestner’s April statement of defence, in which Priestner alleged the lawsuit was an attempt by the company to acquire dealerships he owns at “below market value.” AutoCanada in February sued Priestner, the company’s founder, saying that when he acquired dealerships through private companies while he was with AutoCanada, he was acting against the company’s interests.
A spokesman for Priestner did not immediately respond to Automotive News Canada’s request for comment. AutoCanada Executive Chairman Paul Antony declined to comment.
Priestner, the CEO of Canada One Auto Group Ltd., and his attorneys said in April that he acted within AutoCanada’s interests and denied that he misled the company. His defence statement pointed to a 2011 policy change that allowed senior management to privately purchase dealerships AutoCanada was barred from buying or those it chose to not acquire.
AutoCanada said in February the policy was implemented in part because Priestner allegedly said private acquisitions would benefit the company, as it would receive an option to purchase those stores if an automaker allowed public ownership of their stores. Priestner denied such an agreement existed, though AutoCanada again alleged that the policy change was due in large part to what Priestner told its board.
“AutoCanada denies the Defendants’ suggestion that Priestner was a passive participant in these changes,” the September filing reads. “To the contrary, these changes were accepted by the Board and implemented by the Company based on Priestner’s representations as alleged in the Claim, including his representations that major OEMs did not and would not permit public company ownership and that AutoCanada would benefit from permitting Priestner to acquire dealerships privately as alleged in the Claim.”
AutoCanada said in its response that Priestner’s defence statement did not mention that his ownership stake in the company through Canada One “fell dramatically” in 2013 and 2014, when the company said Canada One sold more than six million common shares in AutoCanada for gross proceeds of about $288 million. Canada One went from owning 45.9 per cent of AutoCanada shares following the company’s initial public offering in 2006 to less than 10 per cent in July 2014, AutoCanada said.
“Priestner amassed a private network of dealerships with the assistance of direct financing from AutoCanada and indirect financing through the sale of his AutoCanada shares at favourable prices,” the company alleged.