Court File and Parties

COURT FILE NO.: CV-15-538042 DATE: 20170712 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

YESCO FRANCHISING LLC Plaintiff

• and - 2261116 ONTARIO INC., 2470322 ONTARIO LTD., WILF GOLDLUST and GERALD PATT Defendants

Counsel: Nafisah Chowdhury, for the Plaintiff Derek Ronde and Christopher Horkins, for the Defendants, Wilf Goldlust and 2261116 Ontario Inc.

AND BETWEEN:

2261116 ONTARIO INC. and WILF GOLDLUST Plaintiffs by Counterclaim

• and - YESCO FRANCHISING LLC, JOSHUA M. YOUNG and MICHAEL R. WARDLE Defendants by Counterclaim

Counsel: Derek Ronde and Christopher Horkins, for the Plaintiffs by Counterclaim, Wilf Goldlust and 2261116 Ontario Inc. Jean-Marc Leclerc, for the Defendants by Counterclaim, Joshua M. Young and Michael R. Wardle

HEARD: June 21, 2017

MONAHAN J.

Reasons for Judgment

[1] This is a motion for summary judgment brought by YESCO Franchising LLC (“YESCO”), along with Mr. Joshua A. Young (“Young”) and Mr. Michael R. Wardle (“Wardle”), senior executives of YESCO (the “Applicants”). They seek dismissal of a counterclaim (the “Counterclaim”) filed by 2261116 Ontario Inc. (“226”), a former Ontario franchisee of YESCO, and Mr. Wilf Goldlust (“Goldlust”), the principal owner of 226 (the “Respondents”). The Counterclaim was filed in response to a claim filed by YESCO against the Respondents and others (the “YESCO Claim”), following cancellation of 226’s franchise in 2015.

[2] YESCO is a franchisor with its head office in Salt Lake City, Utah. The YESCO franchise involves a system for establishing, operating and marketing a sign and lighting service and maintenance business. YESCO began offering and selling franchises in the United States in March 2011 and in Canada in March 2012.

[3] In November 2012, YESCO entered into a franchise agreement with 226 for the province of Ontario (the “Franchise Agreement”). The franchise operation proved unsuccessful and was cancelled by YESCO in 2015. On October 8, 2015, YESCO commenced the YESCO Claim alleging breach of contract and various other causes of action, and seeking injunctive relief and damages.

[4] The Respondents filed a statement of defence to the YESCO Claim and commenced the Counterclaim, alleging breach of contract against YESCO, and alleging breach of the Arthur Wishart Act (Franchise Disclosure), [1] as well as negligent misrepresentation at common law, against the Applicants.

[5] The Applicants move for summary judgment dismissing the 226 Counterclaim on grounds that it is barred by the Limitations Act, 2002, [2] or, in the alternative, that the claims are without merit.

[6] For the reasons that follow, I would grant the motion for dismissal of the claims in the 226 Counterclaim against YESCO, Young and Wardle for negligent misrepresentation at common law, but otherwise would dismiss the motion for summary judgment and allow the 226 Counterclaim to proceed against YESCO, Young and Wardle.

The Franchise Agreement

[7] In 2012, Goldlust became aware of the YESCO franchise as a potential business opportunity. After discussions with YESCO representatives, on September 11, 2012, Goldlust received a Franchise Disclosure Document, [3] as required by s. 5 of the Wishart Act. One of the prime purposes of the Wishart Act in general and the FDD in particular is to “obligate a franchisor to make full and accurate disclosure to a potential franchisee so that the latter can make a properly informed decision about whether or not to invest in a franchise.” [4] A franchisee who suffers a loss because of a misrepresentation contained in an FDD has a claim for damages against the franchisor as well as any person who signed the FDD. The FDD provided to Goldlust was signed by Young and Wardle on behalf of YESCO. [5] Subsequently, on November 7, 2012, YESCO and 226 entered into a franchise agreement for the province of Ontario. [6]

[8] The record filed on this motion for summary judgment indicates that, almost from the beginning of its operations, the 226 YESCO franchise encountered financial difficulties. One of the major stumbling blocks that emerged related to the efforts by the parties to develop so-called “National Accounts”. A “National Account” is a significant, pre-existing customer that has an ongoing relationship with YESCO from which a new or existing franchisee can obtain business. [7]

[9] Based on his discussions with YESCO representatives prior to entering into the Franchise Agreement, Goldlust claims the fact that YESCO had a “National Accounts” program was one of the key reasons he decided to pursue this business opportunity. Both the FDD and the Franchise Agreement state that YESCO and its affiliates “have established and continue to develop a national accounts program for the United States and Canada…designed to address the needs of National Accounts Program customers.” [8]

[10] Goldlust alleges that, contrary to the representations in the FDD and the Franchise Agreement, YESCO did not develop a “National Accounts” Program as promised and that this was a key reason why the 226 franchise proved unsuccessful. YESCO, Young and Wardle, for their part, claim that YESCO had established a “National Accounts” program, and that it continued to develop the program, as required under the Franchise Agreement. Moreover, YESCO, Young and Wardle argue that 226 was never provided with any guarantees as to the number of “National Account” customers it would secure, or the revenues that would be derived from such customers.

Litigation Between the Parties

[11] By early 2015, the relationship between the Parties had deteriorated significantly. YESCO had served a notice of default on 226 in respect of non-payment of installments of the franchise fee on December 12, 2013, and it filed a second such notice on March 20, 2015. YESCO further claims that during 2015, 226 and Goldlust began operating a competing business using the YESCO brand and relying on confidential information obtained from YESCO. YESCO terminated the Franchise Agreement and, on October 8, 2015, filed the YESCO Action, claiming damages for breach of contract and various other causes of action, and seeking interlocutory and permanent injunctive relief restraining 226 and Goldlust from using confidential information, soliciting YESCO’s customers, or carrying on business in competition with YESCO. I note that the claims in the YESCO Action are not before me on this motion and I make no comment on the substance of these claims.

[12] On December 16, 2015, 226 and Goldlust served notice of their intention to defend the YESCO Claim and to bring the 226 Counterclaim against YESCO, Young and Wardle. Following the filing of the 226 Counterclaim on April 5, 2016, on August 5, 2016, YESCO, Young and Wardle brought the present motion for summary judgment in which they seek dismissal of the 226 Counterclaim.

Test for Summary Judgment

[13] In Hryniak v. Mauldin, 2014 SCC 7, [9] the Supreme Court of Canada interpreted amendments to Rule 20 of the Rules of Civil Procedure, [10] (the “Rules”), which provide that a court may grant summary judgment if it is satisfied that “there is no genuine issue requiring a trial with respect to a claim or defence.” [11] Karakatsanis J. held that the Rule 20 amendments were intended to effect a culture shift, one in which the justice system moves away from the assumption that a conventional trial is the expected or ideal method to resolve civil claims. Given the fact that most Canadians cannot afford to sue when they are wronged or defend themselves when they are sued, simpler and less expensive models of adjudication that are nevertheless fair and just must be made available. Summary judgment motions are one such response to the urgent need to make the civil justice system more accessible and responsive to the needs of Canadians.

[14] In Hryniak, the Supreme Court made it clear that the summary judgment procedure should be interpreted broadly, favouring proportionality and meaningful access to the affordable, timely and just adjudication of claims. In practice, “when the use of the new [summary judgment] powers would enable a judge to fairly and justly adjudicate a claim, it will generally not be against the interest of justice to do so”. [12] At the same time, the Court emphasized that the process must be such that the motions judge is able to have confidence that she can find the necessary facts and resolve the dispute fairly. The standard for fairness is “whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.” [13]

[15] In this case, extensive documentary evidence has been filed, including numerous affidavits and transcripts of cross-examinations. As will be explained below, there are marked differences in the various accounts of the affiants as to the relevant facts, including what representations were made (or not made) and how the parties conducted themselves. Given such differences, to what extent is it appropriate to resolve such factual differences on a motion for summary judgment?

[16] Following Hryniak, Ontario courts have emphasized that the resolution of such factual issues in the context of summary judgment depends on the circumstances of the case and must, therefore, proceed on a case by case basis. Nevertheless, certain key factors or considerations that motions judges should take into account in resolving disputed questions of fact have been identified in a growing body of Ontario case law:

(a) The importance of credibility. Notwithstanding that Rule 20.04(2.1) expressly permits motion judges to evaluate the credibility of a deponent, the more a case turns on credibility, the less likely it is that resort to Rule 20.04’s enhanced fact-finding powers is in the interests of justice. [14] Conversely, where it is the inferences drawn from the facts which are disputed, rather than the facts themselves, it will more likely be in the interests of justice to resolve the case using the enhanced fact-finding powers; [15]

(b) The size and quality of the record. Where a case turns on credibility, the less information available to the motion judge, the less likely it is that it is in the interests of justice to resolve the case using Rule 20.04(2.1)’s enhanced fact-finding powers. [16] On the other hand, where there is a large record before the motions judge, it is more likely that a case can be resolved using Rule 20.04(2.1). This is because a large record permits the motions judge to evaluate the extent to which an affidavit is supported or contradicted by the record. [17] In particular, where an affiant has been cross-examined, an appropriate finding of credibility may be apparent from the record; [18]

(c) Partial summary judgment should be approached with caution. Caution is warranted when applying Rule 20.04 to motions for partial summary judgment. First, if the matter proceeds to trial, then the fact-finding analysis may be duplicated at trial. Second, it risks inconsistent findings of fact. Where a witness’s evidence is relevant to issues that will be raised at trial and it is likely that the witness will be called again, the risk of duplicative proceedings and inconsistent findings of fact is heightened. [19] These risks will not be present in every case, however: it may be possible to “silo” certain findings of fact to certain issues. A witness’s evidence may only be relevant to the issue on summary judgment.

[17] Applying these factors and considerations, and as described in more detail below, I draw a distinction between the grounds advanced by the Applicants based on the Limitations Act, as opposed to those based on an analysis of the substantive merits of the Counterclaim.

[18] The factual issues necessary to resolve the Limitations Act are limited and discrete. Moreover, in large measure they can be fairly and appropriately addressed on the basis of uncontradicted evidence in the record. Further, the limitations issues depend in significant measure on the interpretation and application of provisions of the Limitations Act in relation to the FDD and the Franchise Agreement. These latter documents can be interpreted in accordance with normal principles of contractual interpretation. I also note that the parties have joined issue on the limitations argument and it has been fully canvassed on this motion.

[19] The grounds advanced by the Applicants in relation to the substantive merits of the Counterclaim engage different considerations. These issues are predominantly factual in nature, involving significantly disputed accounts of the conduct of the parties, as reflected in the numerous affidavits filed on this motion. The appropriate and fair resolution of these factual disputes necessarily engages considerations of credibility, as opposed to the inferences to be drawn from agreed facts. Moreover, the same factual disputes will necessarily arise in the context of the YESCO Claim, which is not before me on this motion. This raises squarely the risk of duplicative and inconsistent findings of fact, which was identified as an important concern in Hryniak and has been subsequently highlighted by the Court of Appeal. Moreover, the Respondents do not agree that the claims in the Counterclaim can be appropriately resolved on a motion for summary judgment.

[20] I therefore proceed on the basis the Limitations Act issues are appropriate for resolution on this motion, while those that depend upon an assessment of the substantive merits of the Counterclaim are not.

Analysis: Limitations Act

[21] Section 4 of the Limitations Act provides that a claim shall not be commenced in respect of a claim “after the second anniversary of the day on which the claim was discovered.” The day on which a claim is ‘discovered’ is determined in accordance with s.5, which provides as follows:

“5. (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).”

[22] It is common ground that the allegations in the Counterclaim were made on December 16, 2015. The Applicants maintain that, if there were any misrepresentations in either the FDD or the Franchise Agreement (which they deny), these should have been known to the Respondents by November 7, 2012, the date of the Franchise Agreement. They rely on the fact that Goldlust was a sophisticated businessman who had entered into numerous commercial transactions and had access to professional and legal advice. In the alternative, they argue that the latest date upon which the Respondents knew, or ought to have known, of their claim was December 12, 2013, the date YESCO delivered a notice of default to 226 for non-payment of an installment of the franchise fee. YESCO relies on cases such as Butera et al. v. Mitsubishi Motors et al., 2012 ONSC 4980, affirmed 2013 ONCA 125, [20] where claims by franchisees were dismissed on limitations grounds. They argue that the Counterclaim was commenced more than two years later and is thus statute-barred.

[23] The Respondents advance two lines of argument in response. First, Respondents argue that clause 5.4 of the Franchise Agreement, as well as the comparable provision in the FDD, expressly established a continuing or ongoing obligation on YESCO to “continue to develop” a National Accounts Program for Canada and the United States. [21] The obligation to “continue to develop” the National Accounts Program was thus not a failure to perform a single obligation at a specific time, or what the Court of Appeal in Pickering Square Inc. v. Trillium College Inc., 2016 ONCA 179 termed a “once and for all” breach; it was, rather, in a different category, involving a “breach of a continuing obligation under a contract.” [22]

[24] Secondly, the Respondents argue that the discoverability rule in s. 5(1) requires a determination of the date on which a claimant knows, or ought to know, when the launching of a civil claim is an “appropriate means” to recover its loss. The Respondents submit that the “appropriate means” language in s.5(1)(a)(iv) permits plaintiffs, in certain circumstances, to commence claims more than two years after they discovered a loss, particularly where they are relying on a defendant with superior knowledge and expertise who is engaged in good faith efforts to remedy the loss. The recent Court of Appeal decision in Presidential MSH Corporation v. Marr Foster & Co., 2017 ONCA 325 [23] interpreted the “appropriate means” language in s. 5(1)(a)(iv) in the following terms:

“Resort to legal action may be “inappropriate” in cases where the plaintiff is relying on the superior knowledge and expertise of the defendant, which often, although not exclusively, occurs in a professional relationship. Conversely, the mere existence of such a relationship may not be enough to render legal proceedings inappropriate, particularly where the defendant, to the knowledge of the plaintiff, is not engaged in good faith efforts to right the wrong it caused. The defendant’s ameliorative efforts and the plaintiff’s reasonable reliance on such efforts to remedy its loss are what may render the proceeding premature.”

[25] In this case, 226’s concerns regarding the National Accounts Program were brought to the attention of YESCO in early December 2013, [24] and throughout 2014 and into early 2015 there were ongoing discussions between the parties in an effort to build a viable National Accounts Program in Canada. The Respondents argue that they were entitled to rely on the expertise and superior knowledge of YESCO, and the fact that YESCO was engaged in ongoing efforts to develop the National Account program, before having to decide to commence litigation.

[26] In order to ascertain the date upon which any claim the Respondents might have against the Applicants was ‘discovered’ for limitations purposes, it is necessary to properly interpret the scope of YESCO’s obligations under the Franchise Agreement. In particular, it is necessary to determine the meaning of YESCO’s commitment to ‘establish and continue to develop’ a National Accounts Program for the United States and Canada.

[27] YESCO argues that it did have in place a National Accounts Program, in the sense that there was a dedicated team devoted to National Accounts and an electronic platform to allow for the facilitation and sharing of potential National Account customers. YESCO further notes that the Franchise Agreement did not include any promises as to the types or numbers of National Account customers that a franchisee would receive. Section 5.5 of the Franchise Agreement, under the heading “Referral of Leads and Fees”, states that “there is no guaranty that you will receive any Leads” and, further, that “we do not guaranty the number or frequency of any such Leads.” In fact, the Franchise Agreement provided that YESCO could terminate or modify the National Account Program “at any time”. [25]

[28] The interpretation of a contract should be consistent with the reasonable expectations of the parties and should not give rise to results that are commercially unreasonable or that the parties would not have contemplated in the commercial context in which the contract was negotiated. [26] Parties’ reasonable expectations with respect to the meaning of a contractual provision can often be gleaned from the circumstances surrounding the contract’s formation.

[29] In this case, the Franchise Agreement guaranteed neither the number of National Accounts nor the revenue they might generate. In fact, the contract states that a franchisee may not receive any National Accounts customers and allowed YESCO to cancel the National Accounts Program. Nevertheless, the wording of the contract, as well as the conduct of the parties both prior to and following its execution, clearly indicates that the YESCO National Account Program was an important component of the Franchise Agreement.

[30] There are two sections of the contract, extending to nearly three single-spaced pages, devoted to the National Accounts Program, with detailed rights and obligations regarding the manner in which such National Accounts are to be dealt with, fees to be paid for such Accounts, and the rights of franchisees such as 226 to participate in the Program. Young acknowledged in cross-examination that National Accounts were “a core component of the business.” [27] Moreover, there were numerous meetings, conference calls, and email exchanges continuing throughout the period during which the 226 franchise was in operation devoted to the subject of National Accounts. YESCO’s position throughout these discussions was that it was making its best efforts to identify and develop National Accounts customers in Canada. In my view, there is extensive and uncontradicted evidence in the record confirming that YESCO’s obligation to establish and develop a National Accounts Program in Canada was an important component of the contract.

[31] While the contract did not guarantee any specific numbers of National Accounts or the revenues they might generate, it did require YESCO to establish a viable National Accounts Program, in the sense that it would be a realistic possibility for a franchisee who diligently pursued such opportunities to secure business from such accounts. For example, clause 5.5 of the Franchise Agreement provided that YESCO’s marketing efforts “may result in sales leads that have the possibility of generating opportunities to provide…[services] to customers within your Territory.” (emphasis added) This possibility must be realistic as opposed to merely theoretical, since National Accounts were expected to be a “core component of the business”. [28] I believe that this interpretation of the “National Accounts” commitment in the FDD and the Franchise Agreement accords with the reasonable expectations of the parties, gives the contractual provision practical effect, and accords with commercial reality.

[32] The Respondents maintain that YESCO failed to develop a viable National Accounts Program in Canada, in the sense described above. They claim that the National Account customers that YESCO referred to 226 had very little or no possibility of generating business for 226. Those few accounts that YESCO did provide were either insignificant or unprofitable for 226. In the Respondents’ view, the “Canadian National Account program was a mirage.” [29]

[33] By early December 2013, 226 and Goldlust had certainly become aware of significant challenges with the National Account Program. For example, on December 3, 2013 a representative of another Canadian YESCO franchisee wrote to YESCO regarding the fact that none of the Canadian franchisees (including 226) had received any national account business from YESCO, and proposing the appointment of a national salesperson for Canada. [30]

[34] Young responded by indicating that he and a YESCO colleague were “working on a plan related to Canada and the national opportunity.” He further notes that “I agree that a strategy and plan is important” and proposes to discuss the issues with a YESCO colleague and then follow up with a conference call. [31]

[35] The proposed follow-up call took place on December 19, 2013, between YESCO, 226 and other Canadian franchisees, to discuss national customers in Canada. [32] On December 20, 2013, YESCO circulated a summary of the previous days call, setting out next steps and including “existing YNS [YESCO] customer opportunities in Canada markets.” [33] The December 20 summary also notes that YESCO is to call on all leads for these identified national accounts.

[36] As noted above, the Respondents commenced their claim on December 16, 2015. The issue for limitations purposes, therefore, is whether Respondents had ‘discovered’ their claim, as defined in s. 5 of the Limitations Act, as of December 16, 2013. In my view, the answer to this question is “no”, as the Applicants were at that time undertaking ameliorative efforts designed to develop a National Accounts Program for Canada, and the Respondents were entitled to rely on the superior knowledge and skill of Applicants as the latter attempted to remedy the difficulties with the program. In this sense, the commencement of a proceeding by the Respondents for breach of the Franchise Agreement, or for losses resulting from misrepresentation in the FDD, were at that time premature, in the sense described by the Court of Appeal in Presidential MSH Corporation.

[37] In my view it was reasonable, as of December 2013, for 226 and Goldlust to have proceeded on the basis that YESCO’s efforts to develop a National Account Program for Canada might well prove successful. While it was evident that the Program was encountering significant difficulties, YESCO was responding positively and constructively to the complaints raised by its Canadian franchisees, including 226. Moreover, those efforts continued throughout 2014 and into early 2015, including a meeting between representatives of YESCO and 226 in Salt Lake City at the end of October 2014, followed by a meeting in January 2015 involving YESCO and its Canadian franchisees. YESCO continued to regularly supply 226 with potential leads for National Account customers throughout this period. These efforts were consistent with YESCO’s ongoing obligation to “continue to develop” the National Accounts Program in Canada. As such, the present circumstances are distinguishable from those in Federation Insurance Company of Canada v. Markel Insurance Company of Canada, 2012 ONCA 218, where a party was not permitted to delay the commencement of proceedings for “some tactical or other reason beyond two years from the date the claim is fully ripened…” [34]

[38] YESCO’s obligation in this regard was an ongoing one, as opposed to an obligation that crystallized at a particular moment in time. The relevant wording in s. 5.4 of the Franchise Agreement, wording selected by YESCO as part of its standard terms, is sufficient to distinguish this case from cases such as Butera, where the franchisor’s performance was due and ascertainable as of a specific date. In December of 2013, YESCO representatives had provided lists of potential National Accounts and other suggestions and proposals as to how to develop the National Account Program in Canada. Given YESCO’s experience in developing a similar program in the United States, it was reasonable for the Respondents to proceed on the basis that YESCO was attempting, in good faith, to satisfy its obligations under s.5.4 of the Franchise Agreement. Had the plans and proposals put forward by YESCO in December 2013 and early 2014 proven successful, YESCO might well have fulfilled its obligation to establish and develop a National Account Program and 226’s franchise might well have proven financially viable.

[39] As the Court of Appeal noted in 407 ETR Concession Company Limited v. Day, 2016 ONCA 709, one reason why the legislature added “appropriate means” as an element of discoverability in s. 5(1)(a)(iv) “was to enable courts to function more effectively by deterring needless litigation…courts take a dim view of unnecessary litigation.” [35] It was reasonable and appropriate for the Respondents to choose to work cooperatively with YESCO to remedy the concerns identified, rather than commencing litigation. In particular, the Respondents were relying on YESCO’s experience and superior knowledge in relation to this industry, and particularly YESCO’s superior knowledge with respect to the establishment and development of a National Accounts program; while the Respondents had prior business experience, this did not extend to the business operated by YESCO. Thus I do not believe that, as of December 16, 2013, the Respondents knew, or ought to have known, that, “having regard to the injury loss or damage, a proceeding would be an appropriate means to seek a remedy.”

[40] In my view the limitations analysis set out above applies to the allegations in the Counterclaim regarding misrepresentation and breach of the Wishart Act.

[41] This finding is sufficient to dispose of the Applicants’ motion for summary judgment on limitations grounds, and it is therefore unnecessary for me to determine the precise point at which the Applicants knew, or ought to have known, that a proceeding was “an appropriate means to seek [a] remedy”. This would require a detailed analysis of the correspondence between the parties that occurred over 2014 and into early 2015, and involve more difficult findings on disputed issues of fact.

[42] I therefore find that the Respondents Counterclaim is not barred on limitations grounds because the Respondents’ reliance on the ameliorative efforts of the Applicants rendered an action premature as of December 16, 2013, for purposes of s. 5(1)(a)(iv) of the Limitations Act.

Motion for Summary Judgment on the Merits

[43] The Applicants also seek summary judgment on the basis that the Counterclaim is without merit. The Applicants allege that they complied in all respect with their obligations under the Franchise Agreement; that there were no misrepresentations in the FDD; and that they complied with their obligation of ‘fair dealing’ in the performance of the Agreement, in accordance with s.3 of the Wishart Act.

[44] In contrast, the Respondents claim that the Applicants breached the Franchise Agreement, in that they failed to establish and develop a National Account Program. They also allege that the FDD contained misrepresentations regarding these matters, and that the Applicants breached their duty of good faith contained in s. 3 of the Wishart Act.

[45] I am not confident that I can fairly and justly resolve these matters on the basis of the record using the enhanced fact-finding powers under Rule 20.04(2.1), nor do I believe this is an appropriate case to order oral evidence under Rule 20.04(2.2). The resolution of these matters would require me to make numerous findings of fact on issues that are disputed between the parties. For example, it would be necessary to resolve the factual differences between the parties with respect to whether the National Account Program complied with YESCO’s obligations under the Franchise Agreement. Moreover, many of the same factual issues will arise in relation to the determination of the YESCO Claim against the Respondents. For example, the statement of defence to the YESCO Claim includes extensive discussion of YESCO’s alleged failure to establish and develop a National Account Program. [36] Thus the risk of duplicative and inconsistent findings of fact, which the Court of Appeal has emphasized requires caution in the context of summary judgment motions, arises squarely on this motion.

[46] For these reasons, I conclude that it would not be appropriate to determine the substantive merits of the Counterclaim on this motion for summary judgment.

[47] The only exception to this finding is in relation to the Respondents’ claims for negligent misrepresentation at common law advanced against the Applicants. In my view, the Applicants are entitled to summary judgment dismissing these claims on the basis of clause 20.4.1 of the Franchise Agreement, which provides that the Agreement “contains the entire agreement between the Parties and supersedes any and all prior oral, written, express, or implied agreements, statement or understandings concerning the subject matter hereof.”

[48] It is well established that such ‘entire agreement’ clauses are generally sufficient to operate as a complete bar to negligent misrepresentation claims, particularly when the parties to the contract are commercially sophisticated and/or represented by counsel in the transaction. [37] As that is the case here, and there are no facts alleged that would take this case outside of the established precedents on the point, I would grant the Applicants’ motion for summary judgment dismissing the claims for negligent misrepresentation at common law.

Costs

[49] As success on the motion has been divided, I would decline to make a costs award.

Monahan J.

Released: July 12, 2017

Footnotes

[1] S.O. 2000, c.3 (the “Wishart Act”). [2] S.O. 2002, c.24 (the “Limitations Act”). [3] YESCO Franchise Disclosure Document dated April 16, 2012, Motion Record of Young and Wardle, Tab 2.E (the “FDD”). [4] 1490664 Ontario Ltd. v. Dig This Garden Retailers (2005), 2005 ONCA 25181, 256 D.L.R. (4th) 451 (Ont. C.A.) at paragraph 16. [5] See FDD at p. 130. [6] See Franchise Agreement for Provinces and Territories of Canada, November 7, 2012, Motion Record of Young and Wardle, Tab 2.F (the “Franchise Agreement”). [7] See the Franchise Agreement, s. 5.4, under the heading “National Account Program”. [8] FDD, under heading “National Accounts Program”, at p.32; Franchise Agreement, article 5.4, “National Accounts Program”, p. A-17. [9] Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, (“Hryniak”). [10] R.R.O. 1990, Reg. 194. [11] Rule 20.04(2)(a). [12] Hryniak, at paragraph 59. [13] Ibid, paragraph 50. [14] Trotter v. Trotter, 2014 ONCA 841, 328 O.A.C. 167, at para. 55. [15] Healey v. Lakeridge Health Corp, 2010 ONSC 725, 72 C.C.L.T. (3d) 261, at paras. 31, 37. [16] McCready v. Jaswall, 2016 ONSC 5726, 60 C.C.L.I. (5th) 312, at para. 37. [17] Healey, at para. 36; Nordlund Family Retreat Inc. v. Plominski, 2014 ONCA 444, 373 D.L.R. (4th) 494, at para. 38; Lawless v. Anderson, 2010 ONSC 2723, aff'd 2011 ONCA 102, at para. 21. [18] Cuthbert v. TD Canada Trust, 2010 ONSC 830, 88 C.P.C (6th) 359, at para. 42. [19] Cockshutt v. Computer Facility Services Inc., 2010 ONSC 1789, 80 C.C.E.L. (3d) 225, at paras. 25-26; Yusuf (Litigation guardian of) v. Cooley, 2014 ONSC 6501, 123 O.R. (3d) 474, at paras. 24-25; McCready v. Jaswall, 2016 ONSC 5726, 60 C.C.L.I. (5th) 312, at paras. 28-30; Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438, at paras. 44-45; Canadian Imperial Bank of Commerce v. Deloitte & Touche, 2016 ONCA 922, at paragraphs 36-39. [20] Butera et al. v. Mitsubishi Motors et al., 2012 ONSC 4980, affirmed 2013 ONCA 125 (“Butera”). [21] Clause 5.4 in the Franchise Agreement provides that “[YESCO] and our Affiliates have established and continue to develop a national accounts program for the United States and Canada (“National Accounts Program”) designed to address the needs of National Accounts Program Customers.” [22] Pickering Square Inc. v. Trillium College Inc., 2016 ONCA 179 at paragraphs 23-25. [23] Presidential MSH Corporation v. Marr Foster & Co., 2017 ONCA 325 (“Presidential MSH Corporation”) at paragraph 26. See also 407 ETR Concession Company Limited v. Day, 2016 ONCA 709, 133 O.R. (3d) 762 (“407 ETR”) at paragraphs 44-48; [24] See the email exchange at Tab H to the Affidavit of Josh Young sworn August 1, 2016, Motion Record, Tab 2.H. [25] Franchise Agreement, Motion Record, Tab 2.F. at sections 5.4 & 5.5. [26] Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Cp., 2016 SCC 37, [2016] 2 S.C.R. 23 at paragraphs 50, 63 & 65. [27] See Cross-examination of Joshua Young, May 4, 2017, Brief of Cross-Examination Transcripts and Answers to Undertakings and Refusals, Tab 2 at questions 486-91. [28] Cross-examination of Young, supra. [29] Responding Factum of Wilf Goldlust and 2261116 Ontario Inc., paragraph 16. [30] See Exhibit H to the Affidavit of Josh Young sworn August 1, 2016, Motion Record, Tab 2.H [31] Ibid. [32] Affidavit of Josh Young sworn December 16, 2016, Exhibit X, Reply Motion Record, Tab 1.X. [33] Affidavit of Josh Young sworn December 16, 2016, Exhibit Z, Reply Motion Record, Tab 1.Z. [34] Federation Insurance Company of Canada v. Markel Insurance Company of Canada, 2012 ONCA 218, 109 O.R. (3d) 652 (“Markel”) at paragraph 34. [35] 407 ETR, at paragraph 48. [36] See Statement of Defence and Counterclaim of 2261116 Ontario Inc. and Wilf Goldlust, Motion Record, Tab 2.B, at paragraphs 24-41. [37] See generally Khagen Investments Ltd. v. 710497 (1999), 98 O.T.C. 241 (S.C.), at para. 78. Butera, supra.