Kristina A. Davies

Former franchisees appealed an order granting the franchisor leave to amend its statement of defence to add equitable setoff in litigation under the Arthur Wishart Act (Franchise Disclosure), 2000.

The franchisees had already obtained partial summary judgment rescinding the franchise under s. 6(2) and damages under s. 6(6), with a reference determining compensation.

The court held that equitable setoff could be a tenable defence under s. 9 of the Act because statutory rights do not exclude other common law or equitable remedies unless expressly limited.

However, the defence could apply only to the remaining misrepresentation claim under s. 7 and could not reopen the finalized s. 6 rescission and compensation determinations.

The appeal was dismissed but clarified to limit the scope of the amendment.

The defendant moved to stay an Ontario action on the basis that Vermont was the more appropriate forum for a dispute arising from an allegedly unpaid US$3.5 million promissory note connected to hotel investments in Vermont and New Hampshire.

The court held that Ontario had jurisdiction simpliciter because the defendant resided in Ontario, triggering a presumptive connecting factor under the framework established in Club Resorts Ltd. v. Van Breda.

The defendant failed to rebut the presumption or demonstrate that Vermont was clearly the more appropriate forum under the doctrine of forum non conveniens.

The court emphasized that both parties resided in Ontario, the alleged default occurred in Ontario, the defendant’s assets were located in Ontario, and requiring the plaintiff to litigate in Vermont would create unfairness because he was barred from entering the United States.

The motion to stay the Ontario proceeding was dismissed.