ONTARIO

SUPERIOR COURT OF JUSTICE

(COMMERCIAL LIST)

COURT FILE NO.: CV-11-9254-00CL
DATE: 20120103

APPLICATION UNDER Rules 14.05(2), 14.05(3)(g) and 41 of the Rules of Civil Procedure , Section 101 of the Courts of Justice Act , and section 243(1) of the Bankruptcy and Insolvency Act

BETWEEN:

Mark Healy and Mark V. Healy Sales & Distribution Inc. Applicants – and – Canadian Tire Corporation, Limited Respondent

W. C. McDowell and T. Morris, for the Applicants

W. J. Burden and Linda Knol for the Respondent

MORAWETZ J.

REASONS FOR JUDGMENT

[ 1 ] Mark Healy and Mark V. Healy Sales & Distribution Inc. (the “Appellants” or “Healy”) appeal from the arbitration award (“Award”) of arbitrator Graeme Mew (the “Arbitrator”) dated March 23, 2011, awarding the Appellants $250,000 in damages plus pre-judgment interest.

[ 2 ] The Appellants ask that the Award be set aside and that the following judgment be substituted therefor:

(a) judgment in favour of the Appellants;

(b) costs;

(c) in the alternative, a new arbitration hearing before a different arbitrator;

(d) in the further alternative, that the matter be submitted to the Arbitrator in accordance with the direction of this court.

[ 3 ] The Arbitrator sat alone in an arbitration (the “Arbitration”) pursuant to the provisions of the Arbitration Act, 1991 , S.O. 1991, c. 17 and pursuant to Article 23 of a dealer contract between the parties (the “Dealer Contract”).

[ 4 ] The Arbitrator awarded the Appellants $250,000 in damages plus interest pursuant to s. 3 of the Arthur Wishart Act (Franchise Disclosure), 2000 , S.O. 2000, c. 3 (the “AWA”). The Appellants contend that the Arbitrator made this portion of the award to compensate for Canadian Tire Corporation, Limited’s (the “Respondent”) breach of its duties of good faith and fair dealing in relation to forecasts given to the Appellants in 2005 regarding a Canadian Tire store expansion referred to as the “20/20 Project” at Canadian Tire Store 429 in Oakville, Ontario (“Store No. 429”). The Arbitrator dismissed the Appellants’ other claims.

[ 5 ] From the standpoint of the Appellants, this case involves the Respondent’s actions and omissions as a franchisor in relation to the Appellants, its franchisee. The claims relate to Store No. 429. Following receipt of forecasts from the Respondent in March 2000, the Appellants gave up a Canadian Tire Store in Alliston, Ontario to replace and relocate Store No. 429 (the “Replacement Build”). The Respondent’s forecasts for the Replacement Build projected no annual losses, and indeed, predicted annual profits and equity of over $1 million by 2003. In the ensuing five years, the Appellants contend that these forecasts were missed by millions of dollars.

[ 6 ] On a later occasion, in 2005, the Appellants contend that the Respondent provided further forecasts of sales and profits for the 20/20 Project. The Arbitrator found that:

CTC breached its duty of good faith and fair dealing by effectively making Healy go through the Oakville 20/20 Project and by providing Healy with projections relating to that Project which they knew were questionable. (Award at para. 246)

[ 7 ] The Appellants contend that in awarding damages for this breach, the Arbitrator substantially reduced the damages he would have otherwise awarded, as a result of his conclusion that the dealer had itself breached the parties’ franchise agreement (the “Dealer Contract”), and it had run afoul of s. 3 of the AWA which requires fair dealing from each of the franchisor and franchisee.

[ 8 ] The Appellants submit that the Arbitrator declined to award the Appellants damages for the Replacement Build based on three factors: absence of negligent misrepresentations; absence of reliance; and a release in the Dealer Contract. In addition, the Arbitrator made findings about the Appellants’ own due diligence. Had he found the Respondent liable for negligent misrepresentation, the Arbitrator concluded that he would have awarded $1,600,548. The Appellants submit that the Arbitrator selected the wrong figure from the Respondent’s expert report on damages and that the correct figure arrived by following the Arbitrator’s own reasoning was $3,179,149.

[ 9 ] The Appellants set out the primary issues as follows:

Issue 1: What principles guide the appropriate standard of review?

Issue 2: Did the Arbitrator err in denying liability based on negligent misrepresentation?

Issue 3: Did the Arbitrator err in denying liability on other grounds?

Issue 4: Did the Arbitrator err in his assessment of damages?

Issue 5: Did the Arbitrator err in substantially reducing Healy’s damages in respect of CTC’s breach of its duty of good faith and fair dealing?

Issue 6: Did the Arbitrator err in failing to award Healy sufficient damages for breach by CTC of its duties of good faith and fair dealing in the litigation?

[ 10 ] The Appellants submitted that this appeal was not limited to errors of law and, by reason of the wording of the provisions of the Dealer Contract and Schedule O, this appeal should extend to questions of mixed fact and law.

[ 11 ] Initial argument was heard on the threshold issue of the appropriate standard of review.

[ 12 ] In my endorsement released October 10, 2011, I ruled against the position put forth by the Appellants. I determined that the appeal was restricted to questions of law. The standard of review is one of correctness: Housen v. Nikolaisen , 2002 SCC 33 , 2 S.C.R. 235, at para. 27 . Questions of mixed fact and law can be considered only if the issue gives rise to an error in law.

[ 13 ] It follows that the scope of review on this appeal is limited to a consideration of errors of law. As stated in Canada (Director of Investigation and Research, Competition Act) v. Southam Inc . 1997 , [1997] 1 S.C.R. 748, at para. 35 : “Briefly stated, questions of law are questions about what the correct legal test is…”.

[ 14 ] The Appellants submit that the Arbitrator erred in denying liability based on negligent misrepresentation. The Appellants submit that the Arbitrator invented a test for negligent misrepresentation that was inconsistent with the governing authorities.

[ 15 ] The Appellants submit that the Arbitrator erred in law in his findings respecting negligent misrepresentation. He found that Mr. Healy did not rely upon the projections provided to him – ostensibly because his personality was such that he would have charged ahead with the Replacement Build regardless of whether certain information was given to him. As well, the Appellants submit that the Arbitrator found that the projections were not negligently prepared.

[ 16 ] The Appellants submit that the Arbitrator also misapplied Alberta appellate authority to conclude that, in order to incur liability for a negligent misrepresentation, the plaintiff must have relied solely on the misrepresentation. The Appellants contend that this was in error and that appellate authority in Ontario has held that the defendant’s negligent misrepresentation need not be the sole cause of the plaintiff’s loss, as there can be more than one substantial cause and it is sufficient if the plaintiff relies upon the misrepresentation to his detriment.

[ 17 ] The Appellants’ key submission is that the Arbitrator applied a novel and incorrect standard for negligent misrepresentation. They submit that the Arbitrator ignored the test for negligent misrepresentation in Queen v. Cognos Inc., 1993 , [1993] 1 S.C.R. 87, at p. 110, and substituted his own four-part test. In order to succeed in the arbitration against CTC based on negligent misrepresentation, counsel to the Appellants submits that the Appellants had to satisfy the factors of the Cognos test, namely, that:

1. CTC owed Healy a duty of care based on a “special relationship”;

2. CTC made representations to Healy that were untrue, inaccurate or misleading;

3. CTC acted negligently in making the representations;

4. Healy reasonably relied on the misrepresentation; and

5. Healy sustained damages as a result.

[ 18 ] The Appellants submit that instead of applying the law in Cognos, at para. 124 of the Award, the Arbitrator created his own four-part test for determining liability that considered the following factors:

(a) the quality of the projections provided to Healy by CTC;

(b) the accuracy or completeness of the projections;

(c) Healy’s reliance on the projections;

(d) Healy’s own responsibilities ( i.e. due diligence).

[ 19 ] In addition, the Appellants contend that the correct standard of care in projections cases is not the standard used in the Award. At para. 144 of the Award, citing J.R.K. Car Wash Ltd. v. Gulf Canada Ltd. (1992), 46 C.P.R. (3d) 525 (Ont. Ct. (Gen. Div.)), at p. 544, the Arbitrator indicates that “the standard of care, in respect of a projection or forecast, is whether the representation falls within an acceptable range of opinion”. Counsel to the Appellants submits that this standard is the more stringent standard for breach of warranty, which is not one of Healy’s causes of action.

[ 20 ] The Respondent takes the position that the appeal is entirely without merit. Specifically, the Respondent contends that Healy cannot overcome the clear and unequivocal findings of fact and credibility that were made by the Arbitrator. In particular, the Arbitrator found at paras. 164 and 167 as follows:

My very firm impression from both the manner and substance of Mr. Healy’s evidence, which I observed over the many days that he spent testifying, is that he would have taken on Store #429 even if the projections had been less favourable.

Healy’s strong preference for a store located in the Oakville/Mississauga area and his own conclusions as to the financial opportunities which the offer presented to him, would have resulted in Healy accepting the offer for Store #429 even if the projections had been prepared in the manner in which Mr. Hutton [Healy’s expert] opined they should have been and even if all of the information contained in the CEA and revised CEA had been known to Healy.

[ 21 ] The Respondent submits that in order to be successful in overturning the Arbitrator’s decision that CTC was not liable for negligent misrepresentation in relation to the sales forecast, Healy would need to demonstrate that the Arbitrator made errors in law in concluding that:

(i) the sales forecast was not negligently prepared;

(ii) Healy did not rely on the sales forecasts; and

(iii) Healy waived his claim for negligent misrepresentation via the release in the contract that governed the parties’ relationship.

[ 22 ] The Respondent submits that Healy has failed to demonstrate that the Arbitrator made any such errors.

[ 23 ] On the specific issue as to whether the Arbitrator erred in dismissing Healy’s claim for negligent misrepresentation, the Respondent submits that the Arbitrator applied the correct legal test for misrepresentation. Specifically, the Respondent submits that Healy’s assertion that the Arbitrator made up his own four-part test is incorrect.

[ 24 ] The Respondent submits that the Arbitrator did not say that the factors were the test. He stated at para. 124 of the Award that the “potential liability of CTC…seems to me to ultimately be determined by reference to the tort of negligent misrepresentation and in particular, to the following factors”.

[ 25 ] The Respondent contends that the Arbitrator did not need to discuss the first branch of the test, as it was not disputed that CTC owed a duty of care to Healy and the Arbitrator had already concluded that the parties were in a franchise relationship. Factors (a) and (b) identified by the Arbitrator relate to the second and third branches of the Cognos test and Factors (c) and (d) relate to the fourth branch of the test.

[ 26 ] Further, the Respondent submits that it is apparent from the substance of the Arbitrator’s analysis that he properly applied the Cognos test. Under the second and third branches of the test, the Arbitrator considered whether the sales forecast was inaccurate and had been negligently prepared. Under the fourth branch of the test, the Arbitrator considered whether Healy reasonably relied on the sales forecasts. The Arbitrator also provisionally assessed damages under the fifth part of the test.

[ 27 ] Further, it is submitted that the Arbitrator did not err in considering Healy’s own responsibilities as asserted by Healy. Healy’s responsibilities and due diligence are relevant to the fourth branch of the test, which requires any reliance to be reasonable. See Avco Financial Services Realty Limited v. Norman , 2003 , [2003] O.J. No. 1255 (C.A.), at paras. 20 , 42-44.

[ 28 ] I do not accept the arguments put forth by the Appellants. It seems clear that the Arbitrator was live to the issue of negligent misrepresentation and, although he did not formally set out the Cognos test, he considered all five factors that go into the Cognos test. The following paragraphs of the Award are relevant:

Paragraph 123: the Arbitrator concludes that the relationship between CTC and Healy is that of franchisor and franchisee, which satisfies the requirement of a “special relationship” in which a duty of care is owed – Cognos factor 1.

Paragraphs 126-137: the Arbitrator provides details regarding how the sales forecast was prepared, which is relevant to the accuracy of the forecast and whether the representor acted negligently in making the representation – Cognos factors 2 and 3.

Paragraphs 141, 156: the Arbitrator finds that Healy was well aware of the underperformance of the store when he decided to take it on, which is relevant to his reasonable reliance on the sales forecast – Cognos factor 4.

Paragraph 144: the Arbitrator sets out the standard of care: “the standard of care, in respect of a projection or forecast, is whether the representation falls within an acceptable range of opinion”. In setting out the standard of care, the Arbitrator implicitly acknowledges that a duty is owed – Cognos factor 1.

Paragraph 148: the Arbitrator makes the finding that the projections, though with the benefit of hindsight, were too optimistic (which does not rise to the level of untrue, inaccurate or misleading – Cognos factor 2), but were not negligently prepared – Cognos factor 3.

Paragraph 163: the Arbitrator finds that Healy did not do all that he could have and should have by way of due diligence before making his decision, which is relevant to his reasonable reliance on the forecast – Cognos factor 4.

Paragraphs 164-166: the Arbitrator finds that Healy would have accepted the offer regardless of whether the projections had been less favourable, which suggests he did not rely on the forecasts to his detriment – Cognos factors 4 and 5.

Paragraph 168: on the basis of his findings, the Arbitrator concludes that CTC did not breach any duty it owed to Healy.

[ 29 ] I agree with the Respondent’s submission that it is apparent from the substance of the Arbitrator’s analysis that he properly applied the Cognos test. Under the first branch of the test, he implicitly acknowledged that a duty was owed. Under the second and third branches of the test, the Arbitrator considered whether the sales forecast was inaccurate and had been negligently prepared, and under the fourth branch of the test, the Arbitrator considered whether Healy reasonably relied on the sales forecast. The Arbitrator also provisionally assessed damages under the fifth branch of the test. Further, the Arbitrator did not err in considering Healy’s own responsibilities, as asserted by the Appellants. Healy’s responsibilities and due diligence are relevant to the fourth branch of the test, which requires any reliance to be reasonable ( Avco Financial Services at paras. 20, 42-44).

[ 30 ] In arriving at my conclusion on this issue, I did consider further authorities provided to me by the Appellants: Suwary v. Women’s College Hospital , 2011 ONCA 676 , [2011] O.J. No. 4780 , and Oz Optics Limited v. Timbercon, Inc. , 2011 ONCA 714 , [2011] O.J. No. 5029 . These cases reinforce the requirement to apply the Cognos test, which the Arbitrator did in this case.

[ 31 ] The Appellants raised additional arguments relating to the Arbitrator’s findings on the issue of negligent misrepresentation.

[ 32 ] The Appellants argue at para. 126 of their factum that the standard of care used by the Arbitrator was the more stringent standard for breach of warranty, and was not appropriate in a projections case (see para. 19, above).

[ 33 ] In my view, the Respondent provides a complete answer to this submission at paras.174-181 of its factum.

[ 34 ] I agree with the Respondent that the flaw in the Appellants’ argument becomes apparent when one recognizes the “representation” at issue when a plaintiff alleges negligent misrepresentation arising from a financial forecast provided by the defendant.

[ 35 ] As Watt J. (as he then was) stated in J.R.K. Car Wash at p. 544, “[a] forecast, by its very nature, is but an estimate or projection made about a matter in futuro ”. I also agree with the Respondent’s statement that a negligent misrepresentation claim cannot be based on a forecast about the future; it must be based on a statement of existing fact: Deep v. MD Management , 2007 , [2007] O.J. No. 2392 (S.C.), at para. 13 , aff’d 2008 ONCA 189 , [2008] O.J. No. 961 (C.A.).

[ 36 ] Further, a financial forecast carries with it an implied representation (or statement of existing fact) that the forecast was prepared by a person of skill and experience who exercised reasonable care and skill in its preparation. ( J.R.K. Car Wash at pp. 541-545, particularly at p. 541 where Watt J. cites Esso Petroleum Co. v. Mardon , [1976] 1 Q.B. 801, at p. 818) ; Deep at para. 14, citing Kerr v. Danier Leather Inc. (2005), 77 O.R. (3d) 321 (C.A.), at para. 136 ). Thus, if the forecast was such that no person of reasonable skill or experience should have made, the implied representation will be untrue, inaccurate or misleading, and may have been negligently made.

[ 37 ] The Respondent submits that the courts properly recognize that there is an element of judgment involved when preparing a forecast and, in order to determine whether the forecast was such that no person of reasonable skill should have made it, the court will assess whether the forecast comes within a “range of acceptable opinion”, or “range of reasonableness”. The plaintiff has the onus of proving that the forecast falls outside the range of acceptable opinion ( J.R.K. Car Wash at p. 544).

[ 38 ] The Respondent makes the following submission at paras. 179 and 180 of its factum:

Healy’s assertion that the passage that Arbitrator Mew quoted from J.R.K. Car Wash applies only to breach of warranty and not to negligent misrepresentation is erroneous. The implied representation or warranty at issue in these causes of action is identical, namely, that the forecast was prepared by a person of skill and experience who exercised reasonable care in its preparation. For both causes of action, the plaintiff must prove that the implied representation or warranty was false.

J.R.K. Car Wash Ltd. , which dealt with both negligent misrepresentation and breach of warranty, makes it clear that the test is the same. For example, after examining the leading case of Esso Petroleum Co. v. Mardon , Justice Watt stated the following [at p. 541]:

The warranty [in Esso Petroleum v. Mardon ] was that the forecast of throughput was sound, that is to say, that Esso had made it with reasonable care and skill. Liability will be established [for breach of warranty] where it is made to appear that the forecast was such that no reasonable person of skill or experience should have made it. At bottom, there lies negligence in the preparation of the forecast.

[ 39 ] After finding the defendant liable for breach of warranty, Watt J. turned to the tort of negligent misrepresentation, and stated at p. 545: “The authority of Esso Petroleum v. Mardon, supra , extends equally to the statement of the principles applicable to the tort of negligent misrepresentation”.

[ 40 ] In finding the defendant liable for negligent misrepresentation, Watt J. relied on his earlier analysis for breach of warranty, stating at p. 546: “The opinion was negligently given, as earlier found”.

[ 41 ] I agree with the statements of the Respondent at para. 181 of its factum where it concludes that Arbitrator Mew made no error in law. He:

(a) Properly stated that the standard of care, in respect of a forecast, is “whether the representation falls within an acceptable range of opinion”;

(b) Appropriately emphasized that the experts who testified in this case (Clayton and Hutton) agreed that “forecasting is an art rather than a science and that the element of judgment is an appropriate part of the process”; and

(c) Correctly held that, in such circumstances, “caution must be applied before concluding that a particular projection is one that no person of skill or experience should have made”.

[ 42 ] The Appellants also challenge the Arbitrator’s conclusions with respect to questions of reliance and causation and submitted that the Arbitrator erred in taking an unnecessarily narrow view and, in doing so, applied the dictum of the Alberta Court of Appeal in L.K. Oil and Gas Ltd. v. Canalands Energy Corp . [1987] A.J. No. 427 (C.A.) ; leave to appeal to S.C.C. refused, [1989] S.C.C.A. No. 383.

[ 43 ] The Appellants submit that the Arbitrator’s application of the Alberta authority is inconsistent with several recent statements of the Court of Appeal for Ontario, specifically Ault v. Canada (Attorney General) , 2011 ONCA 147 , [2011] O.J. No. 845.

[ 44 ] The Respondent addresses this argument commencing at para. 184 of its factum and, in my view, provides a complete answer to the challenge put forth by the Appellants. Specifically, the Respondent submits that nowhere in the award does the Arbitrator state that Healy had to prove he relied solely on the sales forecast and no other factors. Rather, at para. 165 of the Award, citing L.K. Oil & Gas , at para. 268, the Arbitrator correctly recognized that, “where other factors could be operative, the evidence must be considered to determine which factors (plural) were relied upon”. The Arbitrator examined the evidence and found as a fact that Healy did not rely on the sales forecast but instead relied on other factors when making his decision to accept Store No. 429, namely, his strong preference for a store located in the Oakville-Mississauga area and his own conclusions as to the financial opportunities at Store No. 429: Award at para. 167.

[ 45 ] Further, at para.191 of its factum, the Respondent points out that the Arbitrator’s finding was based on his “very firm impression” from both the manner and substance of Healy’s evidence that he observed over the many (ten) days that Healy spent testifying. The Respondent submits that this was a credibility finding in which the Arbitrator firmly rejected Healy’s assertion that he relied on the sales forecast. I agree with the position put forth by the Respondent that Healy has no appeal from this credibility finding.

[ 46 ] The Appellants also submit that the Arbitrator made inconsistent findings of fact in relation to the sales forecast and that this leads to an error in law.

[ 47 ] In my view, a complete answer to this argument is provided by the Respondent in its factum at paras. 194-198.

[ 48 ] Specifically, Healy’s claim for negligent misrepresentation relates to the sales forecast that CTC gave to Mr. Healy in March 2000 regarding CTC’s plans to construct Store No. 429 and its offer to Mr. Healy to become the dealer for Store No. 429. The Arbitrator found that the sales forecast was not negligently prepared and that Healy did not rely on the sales forecast.

[ 49 ] Five years later, in August 2005, CTC provided Healy with various forecasts in relation to the 20/20 Project, which was an expansion/renovation of the already constructed Store No. 429 of which Healy was already the dealer. The Arbitrator concluded that in providing those forecasts, CTC breached s. 3 of the AWA .

[ 50 ] In terms of the forecasts, it is fundamental to note that they were completely different from one another and were provided to Healy by CTC in two completely different sets of circumstances, five years apart. I reject any submission by the Appellants that the Arbitrator erred in law because he made different factual findings concerning two completely different forecasts, made five years apart.

[ 51 ] The Appellants also argue that the Arbitrator erred in his analysis of the notice and release issues. This argument is set forth in the Healy factum at paras. 159-164.

[ 52 ] The Arbitrator concluded that Mr. Healy was required to give notice of his “claim” as defined in the Dealer Contract as a result of the release provisions under Article 24.21(c) of the Dealer Contract.

[ 53 ] The Appellants submit that the Arbitrator erred in law as s. 11 of the AWA operates to void any release of any right given under the AWA or of any obligation of a franchisor under the AWA. The Appellants argue that to the extent that any of Healy’s claims result as of right under the AWA, the release relied upon by the Arbitrator is void.

[ 54 ] The Appellants submit that the Arbitrator applied the wrong date for the coming into force of the AWA and relied on a non-determinative fact ( i.e. that Mr. Healy received and reviewed the yellow book and made his decision take on Store No. 429 before the AWA came into force). The Appellants submit that the determinative question is whether any right under the AWA is purported to be released by the Dealer Contract signed on April 17, 2005.

[ 55 ] The Appellants also point out that s. 3 of the AWA came into force on July 1, 2000, 12 days before the effective date of Mr. Healy’s Dealer Contract in respect of Store No. 429. In any event, the Appellants point out that the contract was not signed until after January 15, 2001 and further, by operation of s. 2 of the AWA, s. 11 applies to all franchise agreements whether entered into before or after the coming into force of the AWA.

[ 56 ] In analyzing this issue, it is important to note that s. 11 , in my view, only acts to void a release of any right given under the AWA .

[ 57 ] The Respondent provides its argument in response to the position of the Appellants at paras. 205-213 of its factum, arguing that the Arbitrator was correct in finding that the AWA was not in force at the time that the claim for negligent misrepresentation arose. In this case, Healy’s claim for a negligent misrepresentation arose from the sales forecasts that CTC gave to Healy in March 2000, prior to the AWA coming into force in July 1, 2000.

[ 58 ] In my view, the alleged misrepresentation that would be captured by s. 5 clearly occurred before the AWA came into force and therefore a right under the AWA was not waived as the right to sue for negligent misrepresentation accrued before the AWA came into force. With respect to prospective rights, CTC acknowledges that the release does not purport to deny Healy of any prospective rights granted by the AWA; it only releases claims that have not been specifically reserved and that relate to acts that occurred before the effective date of the Dealer Contract.

[ 59 ] The Appellants also raised the issue that the Arbitrator erred in concluding that Healy released his claim for negligent misrepresentation by omission. A complete answer to this submission is provided at paras. 214-219 of the Respondent’s factum, and in particular, at para. 218:

Having submitted to the Arbitrator that his claim was fully pleaded before CTC produced the CEA and Revised CEA during the document discovery process, Healy is precluded from now submitting that he could not have knowledge of such a claim before CTC produced these documents. For Healy to plead his claim, he must have had sufficient facts to know about it.

[ 60 ] In view of my conclusion that the Arbitrator did not err on the issues that give rise to liability, it is not necessary to comment with respect to the submission that the Arbitrator erred in his provisional assessment of damages for negligent misrepresentation. This issue is moot.

[ 61 ] With respect to the submission that the Arbitrator erred in reducing Mr. Healy’s damages for his breach of duty of good faith and fair dealing, it is appropriate to review the relevant portions of the Arbitrator’s reasons.

[ 62 ] At paras. 234-235 of the Award, the Arbitrator discusses the scope of the duty of fair dealing under ss. 2 and 3 of the AWA , drawing particular attention to the fact that the duty of fair dealing is a mutual one. Paragraphs 237-246 address CTC’s breach of fair dealing. Paragraphs 247-272 address Healy’s breach of fair dealing. The damages for breach of duty of fair dealing pursuant to s. 3 of the AWA are assessed at paras. 301-305, and at para. 306, s. 3 of the AWA is mentioned as the basis on which a damage award is made.

[ 63 ] I agree with the submission of the Respondent at para. 251 of its factum that the Arbitrator made no error in law in his assessment of damages as he correctly recognized that: (i) the duty of good faith and fair dealing under s. 3 of the AWA is “two-way street”; and (ii) damages for a s. 3 breach are not limited to proven pecuniary losses, such that damages may be awarded commensurate with the degree of the breach or offending conduct in the particular circumstances.

[ 64 ] I agree with the submission of the Respondent that it was appropriate for the Arbitrator to consider Healy’s own s. 3 breaches when assessing damages. I see no basis to interfere with the Arbitrator’s conclusion that Healy’s contractual breaches were also breaches of s. 3 of the AWA .

[ 65 ] Finally, the Appellants’ assertion that the Arbitrator erred in not awarding damages for CTC’s alleged breach of duty of good faith and fair dealing in the Arbitration has no merit. The Arbitrator found that CTC did not breach its duty of good faith and fair dealing in the Arbitration, and Healy has no right to appeal this factual finding.

[ 66 ] In all respects, I conclude that the Appellants have failed to demonstrate that the Arbitrator erred in law in the Award.

[ 67 ] The application is dismissed and consequently, an order shall issue dismissing Healy’s appeal with costs to CTC.

[ 68 ] If the parties are unable to agree on costs, written submissions, to a maximum of three pages, may be submitted within 30 days.

MORAWETZ J.

Released: January 3, 2012

COURT FILE NO.: CV-11-9254-00CL
DATE: 20120103

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

MARK HEALY AND MARK V. HEALY SALES & DISTRIBUTION INC. Applicants – and – CANADIAN TIRE CORPORATION, LIMITED Respondent

REASONS FOR JUDGMENT

MORAWETZ J.

Released: January 3, 2012