COURT OF APPEAL FOR ONTARIO

CITATION: 2147191 Ontario Inc. v. Springdale Pizza Depot Ltd., 2015 ONCA 116

DATE: 20150219

DOCKET: C59022

Doherty, Gillese and Lauwers JJ.A.

BETWEEN

2147191 Ontario Inc. and Jaswinder Grewal

Plaintiffs (Respondents)

and

Springdale Pizza Depot Ltd., Ranjit Singh Mahil and Dilawar Singh Khakh

Defendants (Appellants)

David Altshuller, for the appellants

Shane P. Murphy, for the respondents

Heard and released orally: February 6, 2015

On appeal from the order of Justice Frederick L. Myers of the Superior Court of Justice, dated June 6, 2014.

ENDORSEMENT

[1] Counsel for the appellants advances one argument in his oral submissions. He submits that the motion judge erred in holding that the appellants could not avail themselves of the “resale” exemption from disclosure provided in s. 5(7)(a)(iv) and s. 5(8) of the Arthur Wishart Act.

[2] On counsel’s submission, the evidence shows that the appellants met with the respondents for the purpose of determining whether the respondents would be suitable franchisees. He submits that the motion judge erred in holding that the mere fact of the meetings was enough to make the appellants more than a “passive” participant in the process and to therefore trigger the disclosure requirements.

[3] This argument was made on the motion. The motion judge addressed it in some detail at paras. 5 through 19. He referred to the controlling case law. He limited himself to the unchallenged facts. Those facts revealed the following:

• The appellants were involved in three meetings with the respondents in respect of the respondents’ acquisition of the franchise;

• The discussions included the possibility that the respondents would acquire the franchise through a new franchise agreement. It was eventually determined that the transaction would proceed by way of assignment from the previous franchisee;

• The appellants required the respondents to execute an acknowledgement. Among other things that document provided certain additional protection to the appellants.

[4] Based on these unchallenged facts the motion judge concluded at para. 17:

…when a franchisor leads the parties to believe that it is starting down the path of requiring a new franchise agreement, meets the prospective franchisees multiple times, and requires extra consideration that limits the exercise of the prospective franchisees’ rights, I do not think it can be said to have been merely passive.

[5] The motion judge’s finding was justified on the unchallenged facts before him. The finding is also consistent with the spirit of the case law from this court concerning the interpretation of the Arthur Wishart Act and recognizes both the overall purpose of the Act and the need to “narrowly construe” the disclosure exceptions in the Act.

[6] The appeal is dismissed. On agreement, costs to the respondents in the amount of $5000, inclusive of disbursements and relevant taxes.

“Doherty J.A.”

“E.E. Gillese J.A.”

“P. Lauwers J.A.”