ONTARIO SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-09-378916
DATE: 20131004

BETWEEN:

VELA BOODOO

Plaintiff

– and –

SUNIL BOODOO, KELLY ROMEIRO and 6280828 N.B. INC. O/A JANI KING OF SOUTHERN ONTARIO

Defendants

Yigal Rifkind, for the Plaintiff

Marc Whiteley, for the Defendant, Sunil Boodoo

HEARD: September 30, October 1, 2 and 3, 2013

Stinson J. (Orally)

Reasons for Judgment

[1] This case involves a dispute about the ownership of a franchise to provide cleaning and janitorial services. The plaintiff is the former owner of the franchise. In essence, she asserts that she transferred the franchise to the defendant on a temporary basis for a limited period of time; she now complains that the defendant has wrongfully failed to honor their agreement to return the franchise to her. For his part, the defendant asserts that the transfer was absolute and there was no agreement or arrangement for him to return the franchise to the plaintiff. The action was discontinued or dismissed against the other defendants prior to trial.

[2] The case turns on findings of fact and credibility and a determination of whether the plaintiff has discharged the burden of proof to establish the facts that would support her claim.

[3] Unhappily, this is a dispute among family members who once shared a close relationship. The plaintiff, Vela Boodoo is the aunt of the defendant Sunil Boodoo. (For ease of reference I shall refer to all family member witnesses by their first names.) Sunil is the son of Vela’s older sister, Camilla. According to Vela’s testimony, prior to the dispute that is the subject of this lawsuit, they enjoyed a very close relationship of mutual confidence and trust. For his part, Sunil confirms that the members of their family had a close relationship.

[4] In September 2005, Vela and her fiancé Patrick Bunbury became the owners of Jani King of Toronto Inc. Franchise Number 156. Jani King of Toronto is part of Jani King International, a large international franchisor of businesses that provide cleaning and janitorial services. In simple terms, the franchisor Jani King contracts with customers or clients who require cleaning and janitorial services for their premises. Jani King clients range from offices, to health clubs, to retailers to country clubs. The client contracts are held by and administered by Jani King as franchisor. The size of any one cleaning contract may vary significantly, depending upon the effort needed to perform the work, such that an individual contract may generate revenue of between a few hundred dollars per month to several thousand dollars per month.

[5] In turn, the franchisor provides the opportunity to its franchisees to perform the cleaning and janitorial work. In this fashion, a franchisee may be responsible for a single cleaning contract for one client or for a large number of contracts for multiple clients at multiple locations. The more contracts assumed by the franchisee, the greater the franchise revenue. Franchisees can be a single person operation or a much larger enterprise employing a large number of workers.

[6] At the heart of the Jani King franchise relationship is the franchise agreement between Jani King and the franchisee. In simple terms, the franchisee pays an upfront franchise fee to Jani King to purchase the franchise. In return, Jani King commits itself to providing the franchisee with a specified dollar value of cleaning contract opportunities. The amount of the franchise fee varies according to the size of the guaranteed contract opportunities. Jani King’s basic obligation, therefore, is to provide business opportunities to the franchisee. The franchisee then decides whether or not to take up the opportunities. If it does, the franchisee then becomes responsible for performing the work for the customer, and revenue is generated accordingly. Jani King handles the billing and contract administration and remits the franchisee’s portion of the revenue to it.

[7] In addition to the basic franchise fee, the franchisee pays a royalty to Jani King based upon the amount of revenue generated. Franchisees may also “purchase” additional contract opportunities from Jani King, upon payment of additional fees. Franchisees can thus leverage their business opportunities by taking on the responsibility for more cleaning contracts and overseeing the work of employees hired to do the actual cleaning work. This, of course, requires administrative and managerial skills, in addition to access to the client contract business opportunities.

[8] Vela and Patrick obtained Franchise 156 by way of a transfer from the original franchisees. The original franchisees had paid a franchise fee of $25,650 to Jani King in January 2005. When Vela and Patrick purchased Franchise 156 by way of transfer in September 2005, they paid one half of that amount to the transferors and promised to pay the balance to them subsequently. Vela testified that they never paid the balance. The actual transfer process required the completion of formal documents under the direction of Jani King at its head office.

[9] After they became owners of Franchise 156, Vela and Patrick began to service the cleaning contracts associated with the franchise, which numbered three or four. By far the largest one was cleaning work for the Credit Valley Golf and Country Club, a customer that generated more than $4,000 in monthly revenue. The other customers of Franchise 156 combined generated only slightly more than $1,000 per month.

[10] To begin with the franchise ran relatively well for Vela and Patrick. Unfortunately, they ran into personal problems that ultimately led to the events that have brought them to court. The principal difficulties were caused by a series of family illnesses, most significantly to Patrick, but also to two of Vela’s daughters. When Patrick became ill and unable to work, Franchise 156 was transferred into the name of Vela alone. Although she was doing her best to manage, by the spring of 2007 Vela was finding it difficult to cope with her business and personal responsibilities. In addition she was pregnant, due to deliver her baby in July. She therefore found she could no longer perform the cleaning work at Credit Valley. Sunil introduced Vela to his girlfriend, Kelly Romeiro. The three of them visited the site and Vela subcontracted with Kelly to carry out the Credit Valley work, starting in May 2007.

[11] Vela ultimately concluded that she was no longer able to continue to operate her Jani King franchise. She therefore approached Jani King, the franchisor, and asked that her franchise be put on suspension. Jani King agreed and made arrangements to transfer her client contracts to other franchisees. Vela also made the difficult decision to apply to Durham Social Services ("DSS") for social assistance.

[12] For his part, independently of Vela, Sunil had purchased an interest in a Jani King franchise, Franchise 216. He did so in the summer of 2006, together with a partner, a business associate from Primerica, Tony Brar. According to Sunil’s evidence, while he knew that Vela worked in the cleaning business, he was unaware that she, too, had a Jani King franchise. He only became aware of this, according to him, in around April 2007 when he saw Vela at a Jani King franchisee gathering. It was subsequent to this that Kelly began to perform the work at Credit Valley for Vela.

[13] To begin with, Sunil and his partner found that operating a Jani King franchise was challenging. Initially they had only one contract, but following the suspension of Vela's franchise, they were assigned the Credit Valley contract as well. As their business expanded it became fairly stressful for them. By the summer of 2007 Sunil’s partner Tony decided to walk away from the business, leaving Sunil to manage it on his own. This made matters even more stressful for Sunil, but ultimately he got things under control. Following this, however, his partner Tony returned and announced that he expected to resume where he left off, as a co-owner and operator of Franchise 216. This led to increasing tension between the two, to the point where they rarely spoke.

[14] This brings me to the events of November 2007 and following. The parties have differing accounts about certain important events and details. On others, they and the documents agree.

[15] In basic terms, in late November or early December 2007 Sunil met with Vela at her house. At the time, Vela’s Franchise 156 was inactive. Sunil was unhappy with his business partner Tony and wanted to sever relations. Although their explanations for the details differ, both Vela and Sunil testified that at the meeting at Vela’s house Vela agreed to transfer Franchise 156 to Sunil.

[16] Subsequently, on December 14, 2007 Vela and Sunil attended at the Jani King head office. They met with the office manager, Su Pang. Ms. Pang testified that she explained all the documentation and Vela and Sunil proceeded to sign the necessary transfer documents. This was the third set of transfer documents signed by Vela, starting with the first as transferee from the original owners of Franchise 156, then the second when Franchise 156 was transferred to her alone and now the third, the transfer to Sunil. The transfer fee of $2,000, normally payable by the transferor [Vela] was paid by Sunil. Subsequently, Sunil transferred the Credit Valley business from Franchise 216 to Franchise 156. His business partner, Tony, unilaterally removed Sunil as a director of the corporation that owned Franchise 216. In light of the fact that he now had his own franchise, Franchise 156, however, and he was operating it with his own contracts, Sunil took no action against Tony.

[17] Both Vela and Sunil testified that they had an oral agreement relating to the transfer of Franchise 156 from Vela to Sunil. The terms of that oral agreement are at the heart of this dispute. According to Vela, the transfer of Franchise 156 to Sunil was a temporary arrangement only. She did it to accommodate Sunil, in order to help him out due to his problems with his business partner Tony. According to her, after six months Sunil was to return "her business" to her.

[18] The version given by Sunil of the parties' agreement is significantly different. According to him, the transfer of Franchise 156 to him was permanent and not temporary. At the time they agreed to make the transfer, Franchise 156 was inactive and had no contracts or revenue. In exchange for the transfer of Franchise 156 to him, he agreed to provide business to Vela – that is, the opportunity to perform cleaning work – when she was again able to do it. Specifically, he intended to provide her with the cleaning work at Credit Valley (which she had previously performed) and up to a total of $6,000 worth of monthly cleaning opportunities within the next year following the transfer. He also agreed to provide work to and train her sons Vic and Victon in the operation of the cleaning business.

[19] It may thus be seen that the plaintiff and the defendant tell distinctly different stories about their arrangements for the transfer of Franchise 156. As events turned out, it did not take long for those differences and this resulting dispute to emerge. This came about as a result of two other unfortunate events for Vela and her family.

[20] As I have mentioned, in June 2007 Vela arranged with Jani King to put her franchise in suspension. She also applied for social assistance. In connection with her social assistance application, she was required to disclose the status of her income and assets, including the status of her Jani King franchise. She explained to DSS she was unable to work because she was eight months pregnant and had to give up her business. She provided DSS with a copy of the employment agreement she had made with the independent contractor, Kelly. She obtained confirmation for DSS from Jani King that she had no ongoing clients. She obtained confirmation for DSS from Credit Valley that she had not been working there since early May. She obtained further written confirmation for DSS from Jani King that she would be inactive for a minimum of 12 months, due to medical reasons. She stated in a declaration sworn on June 30, 2007 that she did not subcontract with anyone because she did not have the money to pay a transfer fee. On the basis of this disclosure she was able to secure social assistance payments. On an ongoing monthly basis she was required to provide DSS with written confirmation from Jani King that she was not receiving any income in relation to Franchise 156.

[21] According to Ms. Pang, the office manager at Jani King, after Vela signed the transfer agreement transferring Franchise 156 to Sunil in December 2007, Vela asked Ms. Pang to write a letter to her caseworker at DSS. Ms. Pang wrote such a letter on December 27, 2007 advising that "as of December 14, 2007 Mrs. Vela Boodoo is no longer a Jani King franchise owner. She had [sic] relinquished her position and surrendered all rights as a franchisee hereto." It would appear that Vela’s purpose in obtaining this letter was to relieve her of the ongoing obligation to provide monthly statements from Jani King to DSS confirming her income – or rather, her lack of income – from that source. Simply stated, confirmation that she was no longer a Jani King franchisee would make monthly reporting unnecessary.

[22] Unfortunately, the letter sent by Jani King to DSS at the request of Vela had unexpected consequences. Specifically, when it learned that Vela had transferred Franchise 156 to Sunil for no monetary consideration, DSS concluded that this was an inappropriate disposition of an asset. As a result, it made the decision to terminate Vela's social assistance benefits. Although informed by both Sunil and her caseworker of her right to appeal that decision, Vela did not pursue an appeal.

[23] The other unhappy event that took place in Vela’s immediate family in early 2008 was that her son, Vic, was charged with several criminal offenses. He therefore required a lawyer. With his mother’s help, he applied for legal aid. Initially Vic was turned down. Vela then wrote a letter explaining her financial difficulties and mentioned her plan to return to work with Jani King in June, once her youngest was one year old.

[24] In turn, this mention of her Jani King business gave rise to further inquiries from Legal Aid. Vela requested a letter from Sunil confirming the terms of their arrangement. On February 24, 2008 Sunil prepared a letter in which he confirmed the transfer of Franchise 156 from Vela to him and further confirmed that he was the sole owner. He mentioned that Vela had the right to become a "preferred contractor" of Franchise 156 whenever her personal obligations ended. Vela disagreed with Sunil's characterization of their arrangement and drafted a further letter suggesting that in June 2008 Franchise 156 was to be transferred back to her and she would regain full and sole ownership. When he became aware of that draft letter, Sunil disagreed. Their dispute became apparent.

[25] Subsequently, Vela confronted both Sunil’s mother Camilla and Sunil himself regarding what she considered to be Sunil’s refusal to stand by their agreement. She made secret recordings of these discussions. Those recordings were entered into evidence. The confrontation with Sunil took place in the basement of his mother’s house, after he had been awakened by Vela. It is fair to characterize that exchange as a confrontation leading to a heated argument, and not a reasoned conversation. It is apparent to me that Sunil was having difficulty understanding the complaint that Vela was making and that the two were often talking at cross purposes.

[26] As I have indicated, Vela’s position was that Franchise 156 was to be returned to her by Sunil in June 2008. Sunil’s position was that the transfer was permanent, but that he was willing to provide work opportunities to Vela and her sons and to train her sons in the business. Neither Vela nor Sunil recognized the validity of the opposite party’s position. As a result, Sunil did not return ownership of Franchise 156 to Vela. As well, neither Vela nor her sons performed any work for Sunil. Instead, Vela commenced this lawsuit claiming damages of almost $86,000, an order for an accounting for all monies received by Franchise 156 from June 2008 forward and an order vesting title to Franchise 156 in Vela’s name.

[27] The basic question for me to decide in this case is whether the evidence presented by the plaintiff Vela satisfies me on a balance of probabilities that she and Sunil made an agreement that the transfer of Franchise 156 was intended to be a temporary arrangement for six months only and that Sunil agreed to return the franchise to her at the end of that six month period. This requires me to assess and evaluate the evidence that I heard from all witnesses, both those called by the plaintiff and those called by the defendant. Most importantly, I must examine the testimony of Vela and Sunil in particular.

[28] I will begin with an assessment of the evidence of Vela. She comes from a background with limited education and modest training. That said, she was able to purchase and operate her own Jani King franchise with considerable success for a period of time. Although she is not highly educated or sophisticated in business matters, based on her testimony and that of Ms. Pang of Jani King, I am satisfied that she understood the nature of the agreements that she was making and the documents she was signing from time to time.

[29] Overall, I did not find Vela’s evidence to be very persuasive. I say this for several reasons. On several occasions, her trial evidence was contrary to the testimony she gave on discovery. Her trial evidence also conflicted with some of her prior sworn declarations. Some of her trial evidence was contradicted by contemporaneous documents. For example she asserted that she had no contract with Kelly, yet she submitted a contract signed by Kelly as part of her application for assistance to DSS. She claimed she had never seen that document, yet DSS records contain the note "client provided copy of employment agreement with independent contractor for review." The only logical explanation is that Vela herself arranged for Kelly’s employment contract to be provided to DSS to support her application for social assistance.

[30] There was other, independent evidence that conflicted with Vela’s trial testimony. For example, she testified that Ms. Pang knew that the transfer with Sunil was temporary and for six months only. By contrast Ms. Pang testified that Vela never said that it would be a six-month transfer. Indeed, according to Ms. Pang, Jani King does not do temporary transfers of franchises. I found Ms. Pang to be a very careful and forthright witness who is plainly independent of either side.

[31] Finally, I often found the testimony of Vela to be vague. Sometimes she professed to have a lack of recollection on certain points. I was left with the impression that she was being evasive.

[32] Turning to the testimony of Sunil, I did not have any of these concerns regarding his evidence. I acknowledge that he is a high school graduate who has business experience in the field of insurance. As compared to Vela, he is more sophisticated. Those facts, however, are neither a reason to believe or disbelieve his testimony as compared to hers.

[33] Unlike Vela, there were no significant inconsistencies in Sunil’s testimony. His evidence was logical and spontaneous. He was not materially contradicted by any independent evidence.

[34] During the cross-examination of Sunil, various portions of the secretly tape-recorded confrontation between Vela and him were put to him. It was suggested that he acknowledged his obligation to return "the business" to her. His explanation for his statements was that he had indeed agreed to provide "business" to Vela, by returning to her the opportunity to perform the cleaning work she had previously performed at Credit Valley. That explanation makes sense and I accept that Sunil’s use of the term "business" did not equate to or signify an acknowledgment by him that he had agreed to transfer Franchise 156 back to her.

[35] Sunil's mother Camilla testified briefly, to identify her voice and to confirm certain statements made by her to Vela in a conversation secretly recorded by Vela. In it, she purports to report to Vela on discussions between her and Sunil. I am not persuaded that her supposed report of comments made to her by Sunil is sufficiently clear or accurate that I should place any weight on it when assessing Sunil's evidence. In any event, I do not consider these statements to be unequivocal admissions by him, especially when considered in light of his explanation of what he meant when he said directly to Vela that he would be returning her business to her, as discussed above. Besides, none of the alleged statements by Sunil to Camilla was put to Sunil on cross-examination.

[36] Overall, Sunil’s testimony and his explanation for the events in question made sense. It had a "ring of truth".

[37] Apart from the two main witnesses (and Camilla), I also heard testimony from three of Vela's children. All claimed to have been present in the vicinity of the location in Vela’s house where she and Sunil met and made their agreement in relation to the transfer of Franchise 156.

[38] I am not prepared to place any weight on their testimony, for several reasons. First of all, to state the obvious, they are very favorably disposed to their mother and are anxious to support her claim. They are therefore not neutral witnesses. Secondly, it strikes me as highly unusual that all three of them would have been standing or sitting together in close proximity on or near the staircase, as each of them claimed to have been, adjacent to the room in which Vela and Sunil discussed their arrangements, throughout the course of their discussion. It strikes me as highly unlikely that three young people would either have the interest or the patience to remain stationary throughout the time that discussion took place, or that they could actually overhear all of it. Finally, their accounts of what they claim to have heard and understood were all remarkably similar. This strikes me as highly unusual, particularly in light of the fact that the events they were describing took place almost 6 years ago. All these factors point to the conclusion that these three witnesses were not testifying with accuracy about events they personally witnessed. I therefore place no reliance on their evidence.

[39] The remaining two witnesses were, by contrast, completely independent. Ms. Pang of Jani King has considerable experience in dealing with franchisees, including the plaintiff. Her testimony was clear and consistent and supported by the documentary record. The same may be said of the representative of DSS who described her interactions with Vela and the contents of the DSS file. I have no hesitation in accepting the evidence of each of these two independent witnesses.

[40] Based on my assessment of the testimony of the witnesses, and my review of the documentary record, I conclude that wherever there is a material difference between the testimony of the plaintiff Vela and her witnesses and that of the defendant Sunil, I prefer and accept the testimony of Sunil. On balance, his version of events is more credible.

[41] In any case involving disputed facts, the party who asserts the claim has the burden of persuading the judge that the facts they rely on actually occurred. If they are unable to do so, they cannot succeed. In light of my analysis of the evidence, I have reached the conclusion that the plaintiff has failed to persuade me that the transfer by her of Franchise 156 to Sunil was intended to be temporary. Instead, I find as a fact that the transfer was intended to be permanent and that Sunil had no obligation to return the franchise to Vela.

[42] I further find that, in exchange for Vela’s agreement to transfer Franchise 156 to Sunil, he agreed to offer work to Vela and her sons and to train her sons in the business. This was the quid pro quo or benefit flowing from Sunil to Vela in exchange for the transfer of the franchise. Sunil never held Franchise 156 “in trust” for Vela. Due to the subsequent falling out among the family members after Vela's social assistance benefits were terminated, however, Vela and her sons never took up the opportunity that Sunil agreed to provide. In essence, they refused to acknowledge the terms of the agreement with Sunil; for that Sunil cannot be faulted, nor can he be expected to perform an agreement the existence of which the plaintiff denied.

[43] In these circumstances, I am unable to find that Sunil was unjustly enriched at Vela’s expense. They made an agreement that provided for mutual benefits to flow to each other; Vela declined to accept the ones to which she was entitled. This amounts to a juridical reason to not require Sunil to return the benefit that he received as a result of their dealings. It would therefore not be inequitable to permit him to retain the franchise.

[44] Vela also testified that Sunil promised to compensate her if the transfer of Franchise 156 had an adverse impact on her social assistance payments. I do not accept that evidence. I find it unlikely in the extreme that this issue could have been anticipated to the point where such an agreement would have been put in place. Rather, I accept that, at most, Sunil told his aunt that he would easily be able to provide to her cleaning work that would generate income to her equal to what she was receiving by way of social assistance payments. Once again, that offer was not followed up by Vela.

[45] It is unfortunate that the arrangement between Vela and Sunil had the unintended and unexpected consequence of the termination of her social assistance benefits. She could have but did not seek to appeal that decision. Once again, however, Sunil cannot be faulted for what occurred.

[46] The great tragedy of this case is that it has had a negative impact on what was once a harmonious family relationship. It is also unfortunate that Vela and her immediate family have endured the various difficulties that they have encountered. As unfortunate as those circumstances may be, however, based on the evidence presented I reach the conclusion that the evidence fails to support the plaintiff’s case.

[47] For these reasons, the plaintiff’s claim must be dismissed.

[48] Although I have dismissed the claim, our court practice requires me to value the damages I would have awarded to the plaintiff in the event she had been successful. The limited evidence adduced at trial in relation to this issue makes it difficult for me to do so. Noneheless, I will do my best.

[49] Had she been able to persuade me that Sunil wrongly failed to return Franchise 156 to her, Vela’s damages would have been based on the net value of the franchise at the time it ought to have been returned. Since Franchise 156 had no clients of its own and was “on suspension” when it was assigned to Sunil, he would have been entitled to credit for the improvements to it that he made during the time he operated the business. What Vela would have received would have been based on the reality that she would have been receiving a “shell” with no clients; at best she might have received some “goodwill based” business opportunities from Jani King, in the form of potential cleaning contracts worth perhaps $1500 per month. She would have had to purchase additional contract opportunities from the franchisor. This equates to a relatively basic Jani King franchise. Based on the limited evidence adduced at trial regarding the value of such a franchise, I would value the loss of Franchise 156 at $12,000.

___________________________ Stinson J.

Released: October 4, 2013

COURT FILE NO.: CV-09-378916
DATE: 20131004

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

VELA BOODOO

Plaintiff

– and –

SUNIL BOODOO, KELLY ROMEIRO and 6280828 N.B. INC. O/A JANI KING OF SOUTHERN ONTARIO

Defendants

REASONS FOR JUDGMENT

Stinson J.

Released: October 4, 2013