Court of Appeal for Ontario

Date: 2017-04-06 Docket: C62520

Judges: Feldman, Sharpe and Roberts JJ.A.

Parties

Between

The Cora Franchise Group Inc. Plaintiff (Defendant by Counterclaim) (Respondent)

and

William Watters Defendant (Plaintiff by Counterclaim) (Appellant)

And Between

2176693 Ontario Ltd. and William Watters Plaintiffs by Counterclaim (Appellants)

and

The Cora Franchise Group Inc. Defendant by Counterclaim (Respondent)

Counsel

D. Andrew Thomson, for the appellant

Derek Ronde, for the respondent

Hearing and Appeal

Heard and released orally: March 31, 2017

On appeal from: the order of Justice A.J. O'Marra of the Superior Court of Justice, dated July 5, 2016.

Endorsement

[1] The appellant, principal owner of 2176693 Ontario Ltd., a franchisee of the respondent, appeals a summary judgment against him as guarantor of the franchisee's indebtedness.

[2] The appellant does not dispute the franchisee's indebtedness or his obligation as guarantor. However, he asserted by way of set-off and sought to assert by way of counterclaim a claim for damages arising from the loss of the potential sale of the franchise which failed to close when the franchisee refused to provide the franchisor with a release as required by the franchise agreement.

[3] The motion judge found that there was no basis for the appellant to assert a set-off and that the franchisee's claim for damages flowing from the loss of the sale was statute barred.

[4] We see no error on the part of the motion judge.

[5] The franchise agreement explicitly precludes set-off and, in any event, the right to damages asserted is that of the franchisee not the appellant. Moreover, the motion judge did not err in including that any claim for damages was barred by the limitation period.

[6] The franchisee commenced the successful application in October 2013 against the franchisor for a declaration that the provision in the franchise agreement requiring the release was invalid.

[7] The motion judge correctly rejected the submission that the appellant only acquired the information necessary to commence a claim after the application and appeal judgments in that proceeding. The damages claim could have been brought at the same time as the declaratory proceeding and there is no merit to the submission that the limitation period did not start to run until after the Court of Appeal's judgment.

[8] The respondent cross-appeals the amount awarded by the motion judge.

[9] We agree that the motion judge erred by awarding the amount reflected by the May 25, 2016 balance rather than the full extent of the debt as of the date of the judgment as claimed by the respondent.

[10] Accordingly, the appeal is dismissed. The cross-appeal is allowed and a reference is directed to determine the amount owing as of the date of the judgment. Costs to the respondent fixed at $12,677.53, inclusive of disbursements and taxes.

K. Feldman J.A.

Robert J. Sharpe J.A.

L.B. Roberts J.A.