ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-15-528342
DATE: 20150810
BETWEEN:
SASEENDRAN THADATHIL also known as SASHI THADATHIL,
THADATHIL HOLDINGS INC., AZHAR ABBAS CHAUDHRY,
1048731 ONTARIO INC., VISHUVANATHAN PILLAI also known as VISHUVA PILLAI, MAVADIINVESTMENTS CO. LTD., SRITHARAN SANMUGALINGAM and 2424910 ONTARIO LTD.
Applicants
– and –
GOLDEN GRIDDLE INC., THE GOLDEN GRIDDLE CORPORATION,
LEXTAN CORP., SAND GECKO INC., BEHZAD PILEHVER also known as BEHZAD PILEHVAR, INVAR (EAST YORK) LIMITED, 2355849 ONTARIO LIMITED and THE KARLETON COMPANY LTD.
Respondents
Leora Wise, for the Applicants
No one appearing for the Respondents
HEARD: July 10, 2015
M. D. FAIETA, j
reasons FOR JUDGMENT
[1] An application has been brought by four franchisees who operate a restaurant under the “Golden Griddle” brand for an order declaring that: (1) their respective franchise agreements have been terminated as a result of various fundamental breaches of their respective franchise agreements; (2) the non-competition clauses in their respective franchise agreements are null and void; (3) the leases of the lands on which two of the Applicants operate their “Golden Griddle” restaurants, other than the lease related to land owned by The Karleton Company Limited, are assigned from the Respondents to the Applicants.
[2] The Respondent, The Golden Griddle Corporation (“TGGC”), was placed into receivership by its parent corporation, Lextan Corp. in late 2011. TGGC’s assets were transferred to the shareholders of the Respondent Lextan Corp. TGCC is now bankrupt. Its trustee in bankruptcy takes no position on this Application.
[3] TGGC’s assets are now owned by Golden Griddle Inc. In turn, Golden Griddle Inc. was sold in March 2014 to the Respondent Sand Gecko Inc. The Respondent Behzad Pilehver is the principal of Sand Gecko Inc.
[4] I refer to Golden Griddle Inc., TGGC, Lextan Corp., Sand Gecko Inc. and Behzad Pilehver as the “Golden Griddle Respondents”. The Golden Griddle Respondents have not responded to this Application.
[5] The Applicants submit that the Golden Griddle Respondents have failed to advertise, market and promote the Golden Griddle brand. They also submit that the Golden Griddle Respondents have failed to maintain the integrity of the brand by failing to provide amongst other things, advertising, a website, training and manuals, pre-approved suppliers, logoed products including napkins and mugs, staff uniforms, quarterly and annual meetings.
[6] In my view, these failures amount to a fundamental breach of the franchise agreements between the Applicants and the Golden Griddle Respondents. Further, with the franchise agreements having been terminated by the failures of the Golden Griddle Respondents, the non-competition clauses in those agreements are null and void.
[7] Given that the Respondents Invar (East York Limited) and 2355849 Ontario Limited do not oppose this relief, pursuant to section 23 of the Commercial Tenancies Act, R.S.O. 1990, c. L.7, I order that the requirement for the consent of the Golden Griddle Respondents in respect of the assignment of the following leases is hereby waived in order to permit the assignment of the following leases:
(1) The lease in respect of the Laird location dated May 3, 2001, as amended, between one or more of the Golden Griddle Respondents and the Respondent Invar (East York Limited) in order to permit the assignment of the lease to the Applicants Saseendran Thadathil and/or Thadathil Holdings Inc.;
(2) The lease in respect of the Barrie location dated February 15, 1985, as amended, between one or more of the Golden Griddle Respondents and the Respondent 2355849 Ontario Limited in order to permit the assignment of the lease to Azhar Abbas Chaudry and/or 1048731 Ontario Inc.
[8] I order that costs, on a partial indemnity basis, of $20,000 be paid by the Golden Griddle Respondents in respect of this Application to the Applicants.
Mr. Justice M. D. Faieta
Released: August 10, 2015
COURT FILE NO.: CV-15-528342
DATE: 20150810
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
SASEENDRAN THADATHIL also known as SASHI THADATHIL,
THADATHIL HOLDINGS INC., AZHAR ABBAS CHAUDHRY,
1048731 ONTARIO INC., VISHUVANATHAN PILLAI also known as VISHUVA PILLAI, MAVADIINVESTMENTS CO. LTD., SRITHARAN SANMUGALINGAM and 2424910 ONTARIO LTD.
Applicants
– and –
GOLDEN GRIDDLE INC., THE GOLDEN GRIDDLE CORPORATION,
LEXTAN CORP., SAND GECKO INC., BEHZAD PILEHVER also known as BEHZAD PILEHVAR, INVAR (EAST YORK) LIMITED, 2355849 ONTARIO LIMITED and THE KARLETON COMPANY LTD.
Respondents
REASONS FOR JUDGMENT
Mr. Justice M. D. Faieta
Released: August 10, 2015