DATE: 20050718
DOCKET: C42097
COURT OF APPEAL FOR ONTARIO
CRONK, GILLESE and MACFARLAND JJ.A.
B E T W E E N :
1490664 ONTARIO LIMITED and JUDITH BELLINGER
Daniel J. MacKeigan and Shawn L. Graham for the appellants
Applicants (Respondents)
- and -
DIG THIS GARDEN RETAILERS LTD., ROGER HARPER AND ROBYN BURTON
Scott A. Rosen and Robert P. Hine for the respondents
Respondents (Appellants)
A N D B E T W E E N:
DIG THIS GARDEN RETAILERS
LTD., ROGER HARPER and ROBYN BURTON
Applicant by Counter-Application
- and -
1490664 ONTARIO LIMITED and JUDITH BELLINGER
Respondents by Counter-Application
Heard: May 6, 2005
On appeal from the judgment of Justice Carolyn J. Horkins of the Superior Court of Justice dated June 11, 2004.
MACFARLAND J.A.:
[1] This case requires the court to interpret and apply the Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3 (the “Act”) to a dispute over a retail gardening franchise. The respondent franchisees sought judgment rescinding a written franchise agreement dated September 17, 2001 and damages from the appellant franchisors in the amount of $272,279.53. The franchisor and its principals (collectively, the “franchisors”) in response claimed that the franchisees breached the agreement and violated duties of good faith and fair dealing imposed by the Act.
[2] The essence of the franchisees’ claim was that the franchisors failed to provide a proper disclosure document as required by s. 5 of the Act, thereby entitling the franchisees to automatic rescission and repayment under s. 6 of the Act. The franchisors disclosed much, but not all, of the information required under the Act, but they did so in a piecemeal fashion, over the course of several meetings and in several different documents. They argued that this method of disclosure substantively met the requirements of the Act, and that rescission was therefore inappropriate.
[3] After a three-day trial, the trial judge held in favour of the franchisees, concluding that the appellants did not provide the respondents with the required disclosure document and that the respondents were therefore entitled to rescission of the franchise agreement in accordance with s. 6(2) of the Act. She also held that the corporate appellant Dig This Garden Retailers Ltd. (“Dig This Garden”), along with its two officers and directors, Roger Harper and Robyn Burton, were jointly and severally liable to reimburse the respondents for the payments referred to in s. 6(6) of the Act. The damage quantification was adjourned to a later date. For the reasons that follow, I would dismiss the franchisors’ appeal.
FACTS
[4] Mr. Harper and Ms. Burton are each officers, directors, and 50 per cent shareholders in Dig This Garden, a British Columbia corporation. Dig This Garden franchises stores that operate as retailers of garden supplies and gifts.
[5] Around March 15, 2001, the respondent Judith Bellinger met Mr. Harper at the Canada Blooms garden show in Toronto. When she expressed an interest in purchasing a Dig This Garden franchise, Mr. Harper suggested she contact the Dig This Garden store in Victoria, British Columbia to obtain an information package. In April, 2001 Ms. Bellinger requested the information package in accordance with Mr. Harper’s suggestion.
[6] By early April 2001, Ms. Bellinger had also spoken to Gayle Somers, who operated the Castlefield Road franchise in Toronto. Later in May, she returned to the Castlefield Road franchise with Mr. Harper and learned about the inventory carried by the franchisors and about both Mr. Harper and Ms. Burton’s experience in other franchise systems.
[7] On June 1, 2001, Mr. Harper provided Ms. Bellinger with two pro forma statements of the projected income and estimated expenses for stores with different square footages. On June 5, 2001, Ms. Bellinger received a draft franchise agreement, which she and her lawyer reviewed. That document disclosed the address of the franchisors, minimum levels of inventory required, and the required 3.5 per cent royalty fee to be paid to the franchisors.
[8] She received pictures of the Dig This Garden franchise on Bayview Avenue in Toronto, as well as the projected financial statements for the Bayview and Castlefield franchises. In September 2001, at Ms. Bellinger’s request, Ms. Burton attended with her at her lawyer’s office and answered questions put to her by Ms. Bellinger’s lawyer.
[9] Ms. Bellinger attended at Victoria, British Columbia from September 24, 2001 to October 1, 2001 for training in the Dig This Garden franchise system. She received a buying plan and was introduced to two suppliers. The appellants submit that by the time the training session was completed, the respondents had received “approximately 70 per cent of the information required to be disclosed by the Act and its Regulations”.
[10] On September 17, 2001, the franchisors executed the franchise agreement and provided a copy to Ms. Bellinger. On September 21, 2001, Ms. Bellinger executed and initialled the franchise agreement in her lawyer’s office, subject to certain amendments recommended by her lawyer. Ms. Bellinger brought the franchise agreement with her to the training session in Victoria where she provided it to Ms. Burton. On September 28, 2001, a copy of the agreement was returned to her and it included Ms. Burton’s initials on the proposed amendments. That same day Ms. Bellinger paid the required $30,000 franchise fee to Dig This Garden.
[11] On November 9, 2001, Ms. Bellinger opened the franchise store in Markham, Ontario. It was not profitable. On December 5, 2002, citing her “terrible financial losses,” her solicitor served a notice of rescission claiming that the franchisors had failed to provide a disclosure document and demanding payment pursuant to s. 6(6) of the Act. The franchisees continued to operate the store for three-and-one-half months after the service of the notice of rescission. The trial judge found that this lag was due to Ms. Bellinger’s efforts to sell off her stock and to get out of her lease with her landlord, which she did as of April 1, 2003. The store closed its doors on March 23, 2003.
LEGISLATION
[12] Three provisions of the Act, in particular, are relevant to this appeal. Section 5 imposes a duty of disclosure on the franchisor: disclosure must be provided in a single disclosure document delivered to the prospective franchisee at least fourteen days prior to the execution of the franchise agreement or the payment of any consideration to the franchisor. Section 6 then provides certain rights of rescission in the event of inadequate disclosure. Finally, s. 7 provides the right to an action for damages in the event, inter alia, of the failure to meet the requirements of the s. 5 disclosure provision. It is evident then that the thrust of the Act is to set standards for adequate disclosure and to create significant penalties for failing to meet those standards.
[13] The relevant parts of the statute are as follows:
- (1) A franchisor shall provide a prospective franchisee with a disclosure document and the prospective franchisee shall receive the disclosure document not less than 14 days before the earlier of,
(a) the signing by the prospective franchisee of the franchise agreement or any other agreement relating to the franchise; and
(b) the payment of any consideration by or on behalf of the prospective franchisee to the franchisor or franchisor’s associate relating to the franchise.
(2) A disclosure document may be delivered personally, by registered mail or by any other prescribed method.
(3) A disclosure document must be one document, delivered as required under subsections (1) and (2) as one document at one time.
(4) The disclosure document shall contain,
(a) all material facts, including material facts as prescribed;
(b) financial statements as prescribed;
(c) copies of all proposed franchise agreements and other agreements relating to the franchise to be signed by the prospective franchisee;
(d) statements as prescribed for the purposes of assisting the prospective franchisee in making informed investment decisions; and
(e) other information and copies of documents as prescribed.
(6) All information in a disclosure document and a statement of a material change shall be accurately, clearly and concisely set out.
- (1) A franchisee may rescind the franchise agreement, without penalty or obligation, no later than 60 days after receiving the disclosure document, if the franchisor failed to provide the disclosure document or a statement of material change within the time required by section 5 or if the contents of the disclosure document did not meet the requirements of section 5.
(2) A franchisee may rescind the franchise agreement, without penalty or obligation, no later than two years after entering into the franchise agreement if the franchisor never provided the disclosure document.
(6) The franchisor, or franchisor’s associate, as the case may be, shall, within 60 days of the effective date of the rescission,
(a) refund to the franchisee any money received from or on behalf of the franchisee, other than money for inventory, supplies or equipment;
(b) purchase from the franchisee any inventory that the franchisee had purchased pursuant to the franchise agreement and remaining at the effective date of rescission, at a price equal to the purchase price paid by the franchisee;
(c) purchase from the franchisee any supplies and equipment that the franchisee had purchased pursuant to the franchise agreement, at a price equal to the purchase price paid by the franchisee; and
(d) compensate the franchisee for any losses that the franchisee incurred in acquiring, setting up and operating the franchise, less the amounts set out in clauses (a) to (c).
- (1) If a franchisee suffers a loss because of a misrepresentation contained in the disclosure document or in a statement of a material change or as a result of the franchisor’s failure to comply in any way with section 5, the franchisee has a right of action for damages against,
(a) the franchisor;
(b) the franchisor’s agent;
(c) the franchisor’s broker, being a person other than the franchisor, franchisor’s associate, franchisor’s agent or franchisee, who grants, markets or otherwise offers to grant a franchise, or who arranges for the grant of a franchise;
(d) the franchisor’s associate; and
(e) every person who signed the disclosure document or statement of material change.
ISSUES
[14] The appellants raise six issues on this appeal:
(1) Whether the trial judge erred in interpreting and/or applying s. 5 of the Act by finding that the respondents provided no disclosure.
(2) Whether the trial judge erred in interpreting and/or applying ss. 6(1) and 6(2) of the Act by finding that the respondents were entitled to rescission in accordance with s. 6(2) of the Act and that s. 6(1) was not applicable.
(3) Whether the trial judge erred in finding that the respondents are entitled to rescission by failing to find that the respondents affirmed the franchise agreement after serving a notice of rescission.
(4) Whether the trial judge erred in holding that the respondents were entitled to rescission under s. 6 and to damages pursuant to s. 7 of the Act.
(5) Whether the trial judge erred in finding that the appellants Mr. Harper and Ms. Burton are “franchisor’s associates” as defined by the Act.
(6) Whether the trial judge erred in finding that the appellants are jointly and severally liable to the respondents.
Issue 1: Whether the trial judge erred in finding that the appellants provided no disclosure as required by s. 5 of the Act.
[15] It is perfectly clear from the language used in s. 5 of the Act that disclosure is to be made in one “disclosure document”. All of the required and prescribed information is to be included in that one document and it is to be accurate, clear, and concise – and all delivered at one time. Here the appellants concede that at best they provided only 70 per cent of the information required to be disclosed. Even that, it is obvious, was provided in bits and pieces over time and not in one document delivered at one time.
[16] One of the prime purposes of the Act 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. The contents of the disclosure document are generally described in the s. 5(4) of the Act and detailed in Ontario Regulation 581/00, passed pursuant to the legislation.
[17] The appellants argue that the respondent Ms. Bellinger received information that “substantively” complied with the Act and its associated regulations although there was not “procedural” compliance. As set out in their factum, they assert:
The information that the Franchisees received, through the information package, pro formas, draft franchise agreement and various other sources, totalled more than 70 per cent of the information which is required to be disclosed under the Act and its Regulations. The fact that all information was not given to the Franchisees in one document at one time does not detract from the fact that the Franchisees did, in fact, receive the information and had the opportunity to review the information and franchise agreement with their lawyer.
The disclosure period was spread out over a period of six months and commenced when Bellinger attended at the Canada Blooms gardening trade show in Toronto, Ontario and included various documents and the hosting by Harper and Burton of the Franchisee in their residence in Victoria, British Columbia for a week where they put Bellinger throughout an intense training and information program prior to the formal execution of the Franchise Agreement and to payment of any moneys.
[18] In my view, the facts as described by the appellants do not fulfill the requirements of the Act. There is no issue of “substantive” versus “procedural” compliance. The requirement that disclosure occur in the form of a single document is not an empty formal requirement. The legislature clearly envisioned that the purpose of the legislation – i.e., ensuring that a decision to enter into a franchise agreement is an informed one – would best be fulfilled by giving prospective franchisees the opportunity to review a single document or documents, so that all the information is before them at the same time. It is simple commonsense that people have more difficulty processing and assessing information given at different times, some of it orally, than they do information provided in a single, written document.
[19] The language of the Act is unambiguous, and it is mandatory. It prescribes in clear and precise terms what is required. To give effect to the clear language used in this case does not produce an absurd result, and it fulfils the purpose of the legislation. Therefore, I agree with the trial judge’s conclusion that the appellants did not provide disclosure as required by s. 5 of the Act. Accordingly, I would reject the first ground of appeal.
Issue 2: Whether the trial judge erred by finding that the respondents were entitled to rescission in accordance with s. 6(2) of the Act and that s. 6(1) was inapplicable.
[20] The second ground of appeal is tied to the first. Section 6(1) of the Act permits a franchisee to rescind a franchise agreement within sixty days of receipt of that document if the franchisor failed to meet the requirements of s. 5, either because disclosure was late or incomplete. Where no disclosure document has been provided at all, s. 6(2) applies and a franchisee may rescind a franchise agreement within two years of executing it. The trial judge in this case found that no disclosure document was provided within the meaning of the Act and, therefore, the franchisees could avail themselves of the two-year limit in s. 6(2).
[21] The appellants argue that this case falls to be considered under s. 6(1) and not under s. 6(2). They argue that the information package provided in April 2001 to Ms. Bellinger and the draft franchise agreement provided on June 5, 2001 constituted inadequate disclosure documents, but the fact is that they were “disclosure documents”. Therefore this case involves disclosure documents that did not meet the s. 5 requirements. Since the franchisees’ notice was delivered some fourteen months after the execution of the franchise agreement, they missed their statutory sixty-day deadline under s. 6(1).
[22] I disagree. Section 6(1) presupposes the existence of a single “disclosure document”. None was provided on the facts of this case. Accordingly, s. 6(1) is inapplicable. In this respect, I agree with the trial judge that disclosure cannot be satisfied by several documents or orally. As she stated in her reasons: “If the drafters of this legislation intended to provide a franchisor with an alternative method of satisfying the disclosure obligation then the Act would have stated so. It does not.”
[23] Section 6(2) is the provision applicable to this case. In serving a notice of rescission in November 2002, Ms. Bellinger acted within the two year period prescribed by that provision. This disposes of the second ground of appeal.
Issue 3: Whether the trial judge erred by failing to find that the respondents affirmed the franchise agreement after serving a notice of rescission.
[24] The appellants’ position is that the respondents, by carrying on business for three-and-one-half months after service of their notice of rescission, affirmed the franchise agreement and thereby became disentitled to rescission. The appellants submit that affirmation of contract is a defence to the claim of rescission. They argue that Ms. Bellinger, in full knowledge of all requisite facts and with the guidance of counsel, expressly elected to operate the franchise business for a significant time subsequent to issuing the notice of rescission, thereby affirming the franchise agreement.
[25] The appellants rely on this court’s decision in Samson v. Lockwood (1998), 1998 1920 (ON CA), 40 O.R. (3d) 161 at 176, in which Rosenberg J.A. noted:
However a party who affirms a contract after becoming aware of the nature of the misrepresentation loses the right to rescind. Affirmation can be express or can be inferred from conduct and it is argued that Lockwood did both.
He continued to attempt to market the property and even increased the price after he learned of the misrepresentation. He attempted albeit unsuccessfully, to obtain the benefit of the contract. Thus, he appears to have affirmed the contract expressly and by conduct. Does it matter then that as found by the trial judge, Lockwood although aware of the facts that gave rise to the right to rescind was unaware of his legal right to rescind? In my view, in the circumstances of this case it does not.
And at p. 179:
It follows that I would hold that Mr. Lockwood affirmed the contract. The law as laid down by this court in Panzer v. Zeifman (1978), 1978 1658 (ON CA), 20 O.R. (2d) 502, 88 D.L.R. (3d) 131 therefore applies. Brooke J.A. speaking for the court at p. 509 described the legal effect of affirmation:
[T]he purchaser lost whatever right he had to rescission when he elected to affirm the contract. Such an election, once made, is determined forever. By accepting the contract and asserting its terms as to performance he has adopted it, and so he cannot now claim rescission on the ground of the original misrepresentation. Rescission was the only relief claimed by the purchaser. In the circumstances the learned trial judge was right in dismissing his action, and the appeal in that regard is dismissed. (Emphasis added by Rosenberg J.A.)
[26] I would reject the appellants’ argument for several reasons. First, a key distinction between Samson and the case at bar is that in Samson the court was concerned with the common law right of rescission whereas here we are dealing with a statutory right of rescission: see Stephan v. Insurance Corporation of British Columbia (2000), 2000 3798 (ON CA), 48 O.R. (3d) 41 at para. 16 (C.A.).
[27] In Stephan, the insured sought to rescind a settlement agreement that he had signed in order to pursue statutory accident benefits from his insurer. The right of rescission was conferred by statute and arose automatically because the insurer had not provided the insured with a notice explaining the range of options available to him prior to entering into the settlement. The insurer argued that “rescind” as used in the applicable Ontario regulation should be interpreted in accordance with the approach to the equitable remedy of rescission, such that, unless both parties could be restored to their original situations, rescission would not be granted. The insurer argued that the required mutuality involved the return of settlement funds as well as the setting aside of the release sought by the insured. The court noted that even under equitable rescission, the court would not order full restitution if it was not just to do so and then stated at para. 16:
In any event, we are not dealing here with the application of the equitable remedy of rescission. We are, instead, applying a statutory right to rescind based on the failure by the insurer to comply with a duty to provide the insured with written notice of his rights.
[28] A right to statutory rescission is different from equitable rescission and the principles of the latter do not apply to the former. The respondents’ solicitor sent the notice of rescission to the appellants by letter dated December 5, 2002 and, assuming the letter was mailed, the franchise agreement was rescinded December 10, 2002.[^1] As of that date, in my view, there was no longer any contract in existence capable of affirmation. To hold otherwise would negate the remedy provided by s. 6(2).
[29] The second reason for rejecting the appellants’ argument has to do with the phrase “without penalty or obligation” contained in s. 6(2). That phrase must refer to the franchise agreement; it is not unusual for such agreements to impose financial penalties and obligations on franchisees in the event of early termination.
[30] However, while the phrase may mean there is no obligation on the franchisee to mitigate vis-à-vis the franchisor, it must be borne in mind that a franchisee might also face losses due to agreements with third parties. The franchisee will often be obligated to a landlord by virtue of a lease for the premises where the franchise operation is carried out. A franchisee might also be under obligations to suppliers.
[31] There is nothing in the Act that frees a franchisee of its obligations to such third parties. Therefore, it may be necessary for a franchisee to carry on his or her business for a time in order to achieve an orderly winding down. Indeed, in this case, the trial judge found as fact that Ms. Bellinger kept her store open in order to sell off stock and while making efforts to get out of her lease. To suggest that a franchisee who is attempting to mitigate its losses in this manner has thereby affirmed the franchise agreement it has sought to rescind in my view ignores the entire purpose of the legislation, and s. 6 in particular. The Act is designed to put the franchisee back in its pre-franchise position where there has been non-disclosure, provided notice is served within the prescribed time. While turning out the lights and walking out the door on the same day the notice of rescission is delivered may be feasible as against the franchisor, it is not necessarily so with respect to third parties.
[32] It is, I think, no answer to suggest that the franchisor would be obligated to pay such costs or expenses to the franchisee under s. 6(6)(d) or in an action for damages under s. 7 of the Act. In my view, it is preferable for a franchisee to make reasonable efforts for an orderly winding down of the business and to minimize its losses where possible. In so doing, it cannot be said to have affirmed the agreement that is rescinded by operation of law.
[33] Were there any remaining doubt about the issue, it is resolved by s. 11 of the Act, which states:
- Any purported waiver or release by a franchisee of a right given under this Act or of an obligation or requirement imposed on a franchisor or franchisor’s associate by or under this Act is void.
[34] The language of this section is sufficiently broad to cover the situation where it is alleged that a franchisee has, in effect, by her conduct affirmed the franchise agreement and waived her statutory right to rescission. The section makes it clear there can be no waiver of the rights given under the Act.
[35] For all these reasons I conclude that there was no affirmation of the franchise agreement after service of the notice of rescission. Accordingly, this ground of appeal also fails.
Issue 4: Whether the trial judge erred in holding that the respondents were entitled to rescission under s. 6 and to damages under s. 7 of the Act.
[36] Section 6(2) of the Act provides a statutory right of rescission. Once it is triggered, s. 6(6) requires the franchisor to make certain payments to the franchisee as set out in paragraphs (a) through (d) within sixty days of the effective date of rescission. The right to these payments is additional to the right to rescind the agreement. Moreover, s. 7 of the Act provides a franchisee with a right of action for damages against the franchisor in the event, inter alia, of “failure to comply in any way with section 5”.
[37] The appellants argue that, at common law, a plaintiff who may sue for rescission and damages must elect at trial which remedy to pursue. They say that the trial judge erred in permitting the respondents to rescind the agreement and sue for damages without being put to this election.
[38] As I indicated earlier, the principles of equitable rescission do not apply in a case of statutory rescission. Further, the Act specifically provides for certain payments to be made to the franchisee within sixty days of the effective date of rescission as set out in s. 6(6). In addition, s. 7 clearly provides that if a franchisee suffers a loss as a result of a franchisor’s failure to comply in any way with s. 5, the franchisee has a right of action for damages. Failure to comply in any way with s. 5 includes a failure to provide the disclosure document that the section requires. In circumstances where a franchisor fails to make the payments required of it under s. 6(6), those damages could include such amounts. As well, if a franchisee suffered any other loss as a result of the franchisor’s failure to comply with s. 5, the franchisee may sue for such damages under s. 7.
[39] It is clear from the language of the Act that the legislature intended that in cases of non-disclosure the franchisee would no longer be bound by the agreement; would be entitled to the return of any money paid to the franchisor; would be entitled to have the franchisor purchase any inventory, equipment, and supplies that the franchisee purchased pursuant to the franchise agreement at the price it had paid for such inventory, equipment, and supplies; and would be entitled to compensation for losses incurred in acquiring, setting up, and operating the franchise.
[40] I therefore reject the fourth ground of appeal.
Issues 5 and 6: Whether the appellants Mr. Harper and Ms. Burton, as “franchisor’s associates”, are jointly and severally liable to the respondents, together with the appellant Dig This Garden.
[41] The fifth and sixth issues raised on this appeal are related and can be dealt with together. The appellants argue that the trial judge erred in finding that Mr. Harper and Ms. Burton are “franchisor’s associates” who are jointly and severally liable, together with Dig This Garden, to the respondents.
[42] “Francisor’s associate” is defined in the legislation as follows:
“franchisor’s associate” means a person,
(a) who, directly or indirectly,
(i) controls or is controlled by the franchisor, or
(ii) is controlled by another person who also controls, directly or indirectly, the franchisor, and
(b) who,
(i) is directly involved in the grant of the franchise,
(A) by being involved in reviewing or approving the grant of the franchise, or
(B) by making representations to the prospective franchisee on behalf of the franchisor for the purpose of granting the franchise, marketing the franchise or otherwise offering to grant the franchise, or
(ii) exercises significant operational control over the franchisee and to whom the franchisee has a continuing financial obligation in respect of the franchise;
[43] In my view, both Mr. Harper and Ms. Burton meet the statutory definition of “franchisor’s associate”. First, they each admit to holding 50 per cent of the shares of Dig This Garden, they are both officers and directors of Dig This Garden, and both were directly involved in granting the franchise to the respondents by making representations to the respondents on behalf of Dig This Garden. On these facts, it was open to the trial judge to find that Mr. Harper and Ms. Burton directly controlled Dig This Garden. Together they held 100 per cent of its shares and ran all aspects of the company. In such circumstances it would be difficult to come to any other reasonable conclusion.
[44] The appellants seem to fasten on the fact that individually they each only hold 50 per cent of the shares of Dig This Garden and neither have the extra 1 per cent necessary for control.
[45] Section 1(3) of the Act makes it clear that control of a corporation may rest in the hands of more than one person. It provides:
- (3) A franchisee, franchisor or franchisor’s associate which is a corporation shall be deemed to be controlled by another person or persons if,
(a) voting securities of the franchisee or franchisor or franchisor’s associate carrying more than 50 per cent of the votes for the election of directors are held, otherwise than by way of security only, by or for the benefit of the other person or persons; and
(b) the votes carried by such securities are entitled, if exercised, to elect a majority of the board of directors of the franchisee or franchisor or franchisor’s associate [Emphasis added].
[46] Further, s. 28(j) of the Interpretation Act, R.S.O. 1990, c. I.11 provides:
- In every Act unless the contrary intention appears,
(j) words importing the singular number or the masculine gender only include more persons, parties or things of the same kind than one, and females as well as males and the converse.
[47] There is nothing in the language of the Act to suggest any contrary intention. When the definition contained in s. 1(3) is read in its plural form there can be no doubt but that Mr. Harper and Ms. Burton meet the definition on the facts of this case and are franchisor’s associates.
[48] Finally, s. 8(3) of the Act provides:
- (3) All or any one or more of the persons specified in subsection 7(1) who are found to be liable in an action under that subsection or who accept liability with respect to an action brought under that subsection are jointly and severally liable.
[49] Where a franchisor fails to make the payments prescribed in ss. 6(6), it is open to a franchisee to bring an action in damages against the franchisor and franchisor’s associates under s. 7. If liability is imposed in such an action, s. 8(3) triggers joint and several liability. Accordingly, I would also reject the fifth and sixth grounds of appeal.
CONCLUSION
[50] In the result, I would dismiss the appeal with costs of the appeal to the respondents on a partial indemnity scale, fixed in the sum of $15,000.00 inclusive of disbursements and G.S.T.
RELEASED:
“JUL 18 2005” “J. MacFarland J.A.”
“EES” “I agree E.A. Cronk J.A.”
“I agree E.E. Gillese J.A.”
[^1]: This calculation is based on s. 6(4)(b) of the Act, which provides rescission is effective on the fifth day after a notice of rescission is mailed.