CITATION: Trade Secrets International Ltd. v. Jalaly, 2009 ONCA 748
DATE: 20091028
DOCKET: C50271
COURT OF APPEAL FOR ONTARIO
Doherty, Goudge and Gillese JJ.A.
BETWEEN
Trade Secrets International Ltd. and Trade Secrets Beauty First Ltd.
Plaintiffs (Appellants)
and
Fatemeh Jalaly aka Fatemeh Bibi Jalaly Moghaddam and 1651187 Ontario Limited
Defendants (Respondents)
AND BETWEEN
Fatemeh Jalaly and 1651187 Ontario Limited
Plaintiffs by Counterclaim (Respondents)
and
Trade Secrets International Ltd. and Trade Secrets Beauty First Ltd., Highfield Holdings Inc. and Joseph Bellotti
Defendants by Counterclaim (Appellants)
Alan B. Dryer, for the appellants
Scott Rosen and Bryan Fromstein, for the respondents
Heard and orally released: October 20, 2009
On appeal from the judgment of Justice B. Wright of the Superior Court of Justice dated March 5, 2009.
ENDORSEMENT
[1] This appeal was limited to the damage award made by the trial judge pursuant to s. 6(6)(d) of the Arthur Wishart Act, S.O. 2000, c. 3 (the “Act”). In oral argument, the appeal focused on a single aspect of that damage award – was the respondent entitled under s. 6(6)(d) to recover the $82,127.49 paid by her to the CIBC to pay off the prior franchisee’s indebtedness?
[2] There was evidence in the form of documentation relating to the sale of the franchise indicating that in return for the payment of that amount, the respondent received the assets and goodwill of the business. The appellant franchisor was aware of the terms of the transaction between the respondent and the former franchisee. In his correspondence concerning the transaction, the franchisor’s solicitor described the payment as consideration for the transfer of the assets of the business.
[3] The trial judge provided no reasons for his damage assessment. We are satisfied that in the absence of any explanation for the award, we should consider the merits of the damage claim as it relates to the $82,127.49 without regard to the trial judge’s decision.
[4] Section 6(6)(d) provides:
6(6) The franchisor, or franchisor’s associate, as the case may be, shall, within 60 days of the effective date of the rescission …
(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). [Emphasis added.]
[5] Both sides took a minimalist approach to the damage claim at trial. The respondent offered nothing to support the claim apart from her viva voce testimony and a single tax return. The appellant chose not to challenge that testimony or to offer any evidence relevant to the damage assessment required under s. 6(6).
[6] Having regard to the slim record, we are satisfied that the evidence does establish that the respondent operated the business at a loss throughout its tenure. The respondent did not attempt at trial to quantify that loss or to make a separate claim for that loss. We are also satisfied that on the evidence, the $82,127.49 constitutes a loss incurred in the “acquiring, setting up and operating” of the franchise. That amount is, therefore, compensable under the Act and was properly included in the damage award.
[7] The appeal is dismissed. Costs to the respondent in the amount of $8,000, inclusive of GST and disbursements.
“Doherty J.A.”
“S.T. Goudge J.A.”
“E.E. Gillese J.A.”