Court File and Parties

Court File No.: CV-22-00677096 Date: 20220509 Superior Court of Justice - Ontario

Re: 2525648 Ontario Inc. And: 9007059 Ontario Inc., 9905839 Canada Inc., Hui Wa Lin and Jian Yao a.k.a. Ken Yao

Before: W.D. Black J.

Counsel: Alisha Burby, for the Plaintiff No one appearing, for the Defendants

Heard: May 9, 2022

Endorsement

[1] The motion before me sought injunctive relief relative to both defendants. In the case of 9905839 Canada Inc., (the “Nepean Franchisee”), the injunction sought concerns the Nepean Franchisee’s failure or refusal to purchase ingredients from sources specified under the relevant Franchise Agreement, (the “Nepean Franchise Agreement”), and to pay monthly royalty amounts under that same agreement.

[2] In the case of 9007059 Ontario Inc., (the “Elgin Franchisee”), the injunction sought would prohibit the Elgin Franchisee from operating the restaurant that it has operated at the same site on Elgin Street, in the City of Ottawa, at which it operated the plaintiff’s franchise (the “Elgin Franchise”), pursuant to another franchise agreement, (the “Elgin Franchise Agreement”). The stated basis for this injunctive relief is a provision of the Elgin Franchise Agreement prohibiting the Elgin Franchisee from operating, after termination or expiry of the franchise agreement, for a 36-month timeframe and within a five mile radius a restaurant that is “the same as or substantially similar to” the Elgin Franchise.

[3] The corporate entities are in each case alleged to be owned and operated by the individual defendants, who are said to be spouses of one another.

[4] Only counsel for the plaintiff attended on the motion before me. She confirmed that there is a counsel who has been acting as “agent” for the defendants in connection with certain proceedings, (about which more below), that in addition to serving the materials on the defendants she sent the relevant materials to that counsel/agent, and that she was advised that the counsel/agent had no instructions relative to the motion today, and would not be attending. Likewise, the defendants themselves did not attend.

[5] Ms. Burby of counsel for the plaintiff, advised me that there is a motion pending in Ottawa and a case conference relative to that motion scheduled for May 17, in which the defendants seek a transfer of the proceedings to Ottawa. In addition, Ms. Burby advised me that the defendants have been noted in default.

[6] I appreciate Ms. Burby’s candor in advising me of these related items, and I would have had some reservations about proceeding today in the face of a transfer motion and in circumstances in which there is a likelihood of a motion for default judgment and/or a motion to set aside the noting in default.

[7] In addition though, as I advised Ms. Burby, I had some concerns about certain deficiencies in the record before me, such that it was my inclination, subject to hearing submissions from plaintiff’s counsel, to adjourn the matter briefly to give the plaintiff an opportunity to provide the information that, in my view, was missing from the record before me.

[8] The missing information, again as I advised Ms. Burby, was as follows:

(a) In the matter of the Nepean Franchise, the agreement provides for a term of five years. The date of the Nepean Franchise Agreement appears to be April 4, 2017, such that if the term ran from that date it would have expired on April 4, 2022, just over a month before the date of the motion.

(b) There is a provision in the Nepean Franchise Agreement which states that in fact, the term runs from the date of the “opening of the original store”, but the record is silent as to what that date proved to be. Given that the injunctive relief sought relates to ongoing obligations under the Nepean Franchise Agreement, it makes a significant difference if the agreement is expired, and so I advised counsel that I would need that evidence.

[9] In the case of the Elgin Franchise Agreement, while there is evidence in the record attesting to the similarity of the franchisor’s menu, on one hand, to the menu of the restaurant now operated by the Elgin Franchisee at the same site, there is no definition in the Elgin Franchise Agreement of the operative words “the same or substantially similar”. No factum was filed on the motion and I advised Ms. Burby, that while I suspect that there is or may be case law which will discuss the meaning of “the same or substantially similar” in this type of setting, and may well demonstrate a breach of the relevant provision in this case, I would need to be provided with such authorities, and an argument about their application to the matters before me in order to grant the relief sought.

[10] In all of the circumstances, I advised counsel that I would adjourn the motion to come back before me on an early date following the transfer motion in Ottawa, if such motion is unsuccessful.

[11] The time required for the motion, if and when it comes back before me, will be impacted I expect, by the parties positions relative to the noting in default. To the extent that default is in issue, combined with the injunctive relief sought, I expect that it may require an appointment for a long motion rather than a short one. That will in turn affect the timing for the motion to be heard.

[12] As such, the motion before me is adjourned, to come back before me on an early date to be arranged if the transfer motion in Ottawa is unsuccessful.

[13] In that scenario, the plaintiff would be expected to file supplementary materials to address the two deficiencies identified above, and as discussed, it might also be necessary to deal with a motion or motions relative to the noting in default.

W.D Black J. Date: May 9, 2022