The appellant franchisor appealed a Small Claims Court judgment awarding the respondent franchisee a return of their initial franchise fee.
The Deputy Judge had found that the franchise agreement was frustrated because the franchisor failed to secure a lease for the specific location contemplated in the agreement.
On appeal, the Divisional Court upheld the decision, finding no palpable and overriding error in the application of the doctrine of frustration.
The court also rejected the argument that frustration could not be found because it was not explicitly pleaded, noting that strict pleading standards do not apply in Small Claims Court.
