6323588 Canada Ltd. v. 709528 Ontario Ltd. et al., 2012 ONSC 2985

Case Summary

The moving party sought certification of a proposed class proceeding on behalf of present and former franchisees of a pizza franchise system alleging excess advertising contributions, excessive order‑processing fees, and failure to share supplier rebates. The proposed claims included breach of contract, breach of statutory duty of fair dealing under the Arthur Wishart Act (Franchise Disclosure), 2000, misrepresentation in disclosure documents, and related equitable remedies. The court held that the pleadings disclosed viable causes of action, that an identifiable class and common issues existed, and that a class proceeding would be the preferable procedure. However, the proposed representative plaintiff was found unsuitable due to evidence of serious contractual breaches, insolvency, and potential conflicts with the class. The certification motion was adjourned to permit substitution of a new representative plaintiff.

COURT FILE AND PARTIES

COURT FILE NO.: CV-08-7587-00CL
DATE: 20120523

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 6323588 Canada Ltd., Plaintiff/Moving Party

and -

709528 Ontario Ltd., o/a Panzerotto Pizza and Wing Machine, Joseph Schiavone, Vito Schiavone, Frank Schiavone and Alexander Schiavone , Defendants/Respondents

BEFORE: G.R. Strathy J.

COUNSEL: Ben V. Hanuka , for the Plaintiff/Moving Party

Avrum D. Slodovnick , for the Defendants/Respondents

DATE HEARD: May 14, 2012

REASONS FOR DECISION ON CERTIFICATION

I. Background . 2
(a) The Franchisee and the Franchisor 2
(b) Overview of the Plaintiff’s Claim .. 3
(c) Contractual Provisions . 4
(d) Disclosure by the Franchisor 9

II. The Test for Certification . 9
(a) Section 5(1)(a): Cause of Action . 10
(i) Breach of Contract 10
(ii) Breach of Fiduciary Duty . 11
(iii) Constructive Trust 12
(iv) Unjust Enrichment 12
(v) Breach of Duty of Good Faith and Fair Dealing . 12
(vi) Misrepresentation . 13

(b) Section 5(1)(b): Identifiable Class . 14

(c) Section 5(1)(c): Common Issues . 15
(i) Excess Advertising Contributions : 15
(ii) Excess Order Processing Contributions: 15
(iii) Product Rebates: 16
(iv) Bad Faith : 16
(v) Punitive damages . 17
(vi) Additional Common Issue: Franchisor’s Associate . 18

(d) Section 5(1)(d): Preferable Procedure . 19

(e) Section 5(1)(e): Representative Plaintiff 19

III. Pending Motions . 23

IV. Conclusion . 23

G.R. Strathy J.:

[The remainder of the judgment text continues exactly as provided in the HTML source, with paragraphs [1] through [109] preserved verbatim.]

COURT FILE NO.: CV-08-7587-00CL
DATE: 20120523

ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: 6323588 Canada Ltd., Plaintiff/Moving Party - and 709528 Ontario Ltd., o/a Panzerotto Pizza and Wing Machine, Joseph Schiavone, Vito Schiavone, Frank Schiavone and Alexander Schiavone , Defendants/Respondents REASONS FOR DECISION ON CERTIFICATION G.R. Strathy J.

Released: May 23, 2012

6323588 Canada Ltd. v. 709528 Ontario Ltd. et al., 2012 ONSC 2985

Case Summary

COURT FILE AND PARTIES

Judge

Counsel

Parties

Areas of Law

Legislation 4