David Simon Altshuller

Former franchisees rescinded their franchise agreements under the Arthur Wishart Act after failing to receive a disclosure document.

Following a reference determining the franchisor’s payment obligations under s. 6(6) of the Act, the franchisor defendants moved to oppose confirmation of the Master’s report, challenging awards for inventory, supplies and equipment, the refusal to offset profits earned during operation, and the costs award.

The court applied the deferential standard governing review of a master’s report and held that no error in principle or misapprehension of evidence had been demonstrated.

The court confirmed that payments under s. 6(6)(a)-(c) are independent statutory entitlements and cannot be offset by profits under s. 6(6)(d).

The Master’s findings and costs award were upheld.

Following a reference determining compensation owed under s. 6(6) of the Arthur Wishart Act (Franchise Disclosure), 2000 after rescission of a franchise agreement, the court considered the appropriate costs award.

The successful franchisee plaintiffs sought substantial indemnity costs after obtaining an order requiring the defendants to pay $290,830.72 plus interest.

The defendants argued no costs should be awarded because the amount had effectively been conceded.

The court held that the plaintiffs were the successful party and entitled to costs, but rejected substantial indemnity costs absent reprehensible conduct or success under Rule 49.

Partial indemnity costs were fixed at $25,000 inclusive of disbursements and taxes.

Following a declaration that the plaintiffs validly rescinded their franchise agreement, a reference hearing was held to determine compensation under s. 6(6) of the Arthur Wishart Act.

The court awarded compensation for refunded money, inventory, and equipment, but denied compensation for operating losses because the plaintiffs failed to properly record cash transactions and could not substantiate their claimed expenses.

Total compensation of $290,830.72 was ordered.

The appellants appealed a motion judge's decision that a restrictive covenant in a franchise agreement was not ambiguous to the point of being unenforceable as a pure question of law.

The Court of Appeal dismissed the appeal, finding that the provision was not facially ambiguous when read in the context of the entire agreement, and that any factual ambiguities would need to be determined at trial.

The appellants appealed a decision declaring the respondents were entitled to rescind a second franchise agreement due to the appellants' failure to provide a disclosure document.

The Court of Appeal upheld the application judge's findings that the matter was appropriate for an application, that the second agreement was a 'franchise agreement' under the Arthur Wishart Act triggering disclosure obligations, and that the rescission claim was not statute-barred because the limitation period only began when the franchisor disputed the notice of rescission.

Following the dismissal of the plaintiff's action, the successful defendants sought costs on a substantial indemnity basis.

The court found that the plaintiff's conduct was not reprehensible and awarded costs on a partial indemnity basis.

The court reviewed the defendants' bills of costs, making reductions for excessive trial preparation time and for the defendants' failure to properly produce relevant documents before trial, which had necessitated a two-day adjournment.

Total costs of $784,276.99 were awarded to the defendants.

The respondents brought a motion before the Court of Appeal regarding the appellants' proposed fresh amended notice of appeal.

The court held that the motion judge's finding on the interpretation of the franchise agreement was a final order and properly appealable.

However, the remaining issues decided under Rule 20 were interlocutory, as the motion judge merely found genuine issues requiring a trial without finally determining them.

The motion was granted, with costs awarded to the moving parties.

The appellant franchisor appealed a summary judgment declaring that the respondents validly rescinded their franchise agreement due to a lack of disclosure.

The franchisor argued it was exempt from disclosure obligations under the resale exemption of the Arthur Wishart Act, claiming it merely consented to the transfer between the former franchisee and the respondents.

The Court of Appeal dismissed the appeal, finding the franchisor was actively involved in the transaction by directing the respondents to the vendor, participating in negotiations, and requiring the execution of additional documents not specified in the original franchise agreement.

Consequently, the grant was 'effected by or through the franchisor', nullifying the exemption.

The appellant franchisee received a disclosure document from the respondent franchisor more than 14 days after paying a franchise fee, but six months before executing the franchise agreement.

Nearly two years later, the franchisee sought to rescind the agreement under the Arthur Wishart Act.

The Court of Appeal upheld the motion judge's finding that the franchisee had no right of rescission.

Section 6(2) applies only when no disclosure document is ever provided, and section 6(1) requires rescission within 60 days of receiving a late or deficient document, which the franchisee failed to do.

The appellant appealed a partial summary judgment granted in favour of the respondent bank, which was based on the appellant's criminal conviction for fraud relating to the same transactions.

The appellant sought to introduce fresh evidence alleging ineffective assistance by her civil and criminal counsel.

The Court of Appeal dismissed the appeal, finding no error by the motion judge and concluding that the fresh evidence lacked a credible basis.

The court held that allowing the appeal would permit an abuse of process by relitigating the summary judgment, the criminal conviction, and the criminal trial.