Queen Mamma Ltd. et al v. 2755060 Ontario Inc. et al, 2026 ONSC 1686
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
QUEEN MAMMA LTD.; AJMAL ANWARI
Plaintiff(s)/Defendant(s) by Counterclaim
– and –
2755060 ONTARIO INC., DBA MAMMA'S PIZZA; JOGINDER SINGH KHAKH; MAMMA'S MARKETING INC.; 2755067 ONTARIO INC.
Defendant(s)/Plaintiff(s) by Counterclaim
Jonathon Mesiano-Crookston, Niki Kanavas, Counsel, for the Plaintiff(s)/Defendant(s) by Counterclaim
David Altshuller, Claire Doi,
Counsel, for the Defendant(s)/Plaintiff(s) by Counterclaim
HEARD: January 5-9 and January 12, 2026
Judge: MATHEN, J.
REASONS FOR JUDGMENT
OVERVIEW
1For 17 years, Ajmal Anwari (“Ozzy”),1 operated a Mamma’s Pizza franchise at 2118 Queen Street East in Toronto. Ozzy purchased the franchise in 2004 through his corporation, Queen Mamma Ltd. At the time, the Mamma’s Pizza franchise was owned by Monte Carlo Restaurant Limited.
2On October 27, 2020, Monte Carlo sold the franchise system to 2755060 Ontario Inc. (“275 Ontario” or “Mamma’s Pizza”), then owned by Joginder Singh Khakh. Joginder transferred ownership of 275 Ontario to his nephews, Dilawar Singh Khakh (“Marko”) and Ranjit Mahil (“Randy”).
3On June 21, 2021, the new franchisor terminated Ozzy’s franchise and locked him out of the store.
4Between July and November 2021, Ozzy protested outside the store. For a few weeks, Ozzy was accompanied by family and friends after which he protested alone. Ozzy and others held signs and engaged with passersby and store employees. Ozzy gave media interviews.
5In September 2021, Ozzy sued for wrongful termination of his franchise. Ozzy named four defendants: 2755060 Ontario Inc. o/a Mamma’s Pizza, Joginder Singh Khakh, Mamma’s Marketing Inc., and 2755067 Ontario Inc., which is the holding company for Mamma’s Marketing.
6In February 2022, the defendants counterclaimed for nuisance, libel, slander, and intentional interference with economic relations. On April 21, 2023, the defendants amended their pleadings to add the word ‘defamation’ to the heading ‘nuisance, libel, and slander’. At trial, the defendants argued trespass. The plaintiffs did not object to the arguments about trespass. I will consider whether the defendants’ pleadings contain facts sufficient to support it.
7Briefly, both claims are dismissed in large part. Ozzy was entitled to thirty days’ notice before his franchise was terminated. He received only two days. For that breach, Ozzy is owed $10,000. Ozzy has not proved that the franchise was wrongfully terminated in other ways, or that a remedy lies in equity. With regard to their counterclaim, the defendants have not proved the great majority of their claims including that they are owed $1.4 million damages. The defendants are entitled to recoup some of their claimed expenses, and to nominal damages for trespass. Neither party breached the Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3 (“Wishart Act”). If the parties cannot agree on costs, I will entertain written submissions.
8Since Ozzy is the sole principal of Queen Mamma Ltd., I refer to the plaintiffs/defendants by counterclaim as “plaintiffs”, “Ozzy” and/or “Queen Mamma”. I will refer to the defendants as “defendants”, “franchisor”, “Mamma’s Pizza” and/or “Marko”. I frequently refer to the former franchisor, Monte Carlo Fine Foods, through its principal, and key witness in this trial, Mauro Galli (“Mauro”).
CHRONOLOGY
9The events and periods leading up to this trial include Ozzy’s early experience with Mamma’s Pizza, including his first franchise agreement in 2004; the 2014 Franchise Agreement for 2118 Queen Street East (the “Franchise Agreement”); the franchise system sale in 2020; the termination of Ozzy’s franchise in 2021; and the aftermath of that termination.
January 1, 2004 – March 31, 2014
10Ozzy, who left high school after grade 10, started working for Mamma’s Pizza in 1998, when he was seventeen. By 2004, he had become a manager.
11At that time, the owner of Mamma’s Pizza franchise was Monte Carlo (Legacy) Fine Foods Limited. On or about January 9, 2004, Monte Carlo entered into a commercial lease with Maxner Real Estate Ltd. (the Landlord) for a restaurant located at 2118 Queen Street East in Toronto.
12In 2004, in partnership with an individual named Robert (Bob) Krieger, Ozzy entered into his first franchise agreement for a Mamma’s Pizza located at 2118 Queen Street East. The 2004 agreement is not in evidence.
13In 2010, Bob Krieger sold Ozzy his share of the 2118 Queen St. East franchise. Ozzy operated the franchise through his corporation, Queen Mamma Ltd.
14During this period, Ozzy and some family members had other Mamma’s Pizza franchises in Toronto, including at the intersections of Logan and Danforth, Jane and Bloor, and Islington and Dundas. By 2021, Ozzy no longer had any involvement or interests in those franchises.
April 1, 2014
15On or about April 1, 2014, Queen Mamma Ltd. entered into a new franchise agreement and a sublease with the former franchisor, Monte Carlo. Ozzy did not pay a renewal fee. The monthly royalty fee to use the Mamma’s Pizza brand and trademark was $1,500.
16The 2014 Franchise Agreement contained numerous clauses important to this case.
17Section 4 deals with renewals:
4.01 First Renewal Term (Term)
The term of this Agreement shall commence on the date hereof, and shall expire on the earlier of (i) the day preceding the tenth (10th) anniversary hereof or (ii) on the expiration, termination or non-renewal of the Franchisee's lease or sublease of the Premises, unless terminated sooner in accordance with the provisions of this Agreement.
4.02 Renewal
Upon the expiry of the first 5 year Renewal Term (Term), the Franchisee shall only have the right to renew this Agreement if (a) the Franchisee is in compliance with all of the material terms and conditions of this Agreement, the lease and the sub-lease for the Premises; (b) the lease or sub-lease for the Premises, or any renewal thereof, provides that the Franchisee may lease or sublease the Premises for a period of time beyond the first renewal Term; and (c) if the landlord for the Premises and Monte Carlo can mutually agree upon the terms and conditions of the second renewal term of the lease…
18Section 4.02 of the Franchise Agreement applies to renewals:
a. The Franchisee shall be entitled to one renewal term, the term for which shall be determined by the renewal rights set out in the lease or sub-lease for the Premises;
b. The Franchisee shall notify Monte Carlo in writing that it wishes to renew;
c. In the event of non-compliance, should Monte Carlo decide not to renew the agreement, it shall notify the Franchisee in writing setting for the reasons for the non-renewal and shall give “as much notice…as is reasonably practicable in the circumstances”;
d. The Franchisee shall execute and deliver to Monte Carlo a new Franchise Agreement for the renewal term in Monte Carlo’s then-current standard form…[and] the Franchisee shall pay “no Initial Franchise Fee”, but “instead shall pay…a non-refundable renewal fee” of $5,000;
e. The Franchisee shall carry out Monte Carlo’s required upgrading, replacements, repairs and improvements;
f. The Franchisee shall reimburse Monte Carlo for all of its reasonable costs and expenses in connection with the renewal.
19Section 16.01 provides that Monte Carlo may, on two days’ written notice, terminate the Franchise upon one of several enumerated events occurring including:
a. “the Franchisee fails to pay any sums payable to Monte Carlo pursuant to this Agreement or the Lease or Sublease”;
s. “the Franchisee…conducts its business…or itself in a manner materially detrimental to the goodwill or reputation of Monte Carlo”; and
u. “the Franchisee fails to perform any other covenants or agreements contained herein or in the lease or sublease…if within then (10) days following written notice…of such failure the Franchisee has not remedied such default”.
20Section 19.09 is an “Entire Agreement” clause which states:
This Agreement, the Manual and the documents incorporated herein by reference constitutes the entire agreement of the parties and no representations, inducements, promises or agreements, oral or otherwise…not embodied herein shall be of any force and effect. No amendment to this agreement shall be binding upon Monte Carlo unless the same is in writing an executed by Monte Carlo under seal.
April 2, 2014 – December 31, 2019
21For the next five years, Ozzy operated the restaurant at 2118 Queen St. E. He became a fixture in the community, known for things like donating pizza slices to local students.
22The defendants argue that in October 2016, Ozzy had an altercation with a Mamma’s Pizza supervisor named Ryan. Ryan filed and later dropped a criminal complaint about this incident.
23The defendants state that on November 9, 2016, Ozzy was noted in default of the franchise agreement for failing to operate the store in compliance with required hours and protocol, and for using “racist and abusive language and behaviour.” The former franchisor, Monte Carlo, requested alternative management. That request was not implemented, and the former franchisor did not follow up on it.
24I do not find the above incidents in 2016 relevant to whether the new franchisor lawfully terminated the franchise five years later. However, the incident with Ryan is relevant to Ozzy’s credibility, which I discuss below.
25On October 12, 2018, Mauro Galli and the Landlord for 2118 Queen St. E. agreed to terms for a lease renewal, beginning April 1, 2019. Ozzy thought the rent was too high.
26On November 19, 2018, Mauro wrote to Ozzy offering to renew the franchise agreement on terms that included: a $2,500 renewal fee (less than Monte Carlo’s standard fee of $5,000); and royalties of $2,000/month or 4% of gross sales. At some point, Mauro improved the terms, offering a reduced monthly royalty of $1,575; and a further 5-year renewal term after May 31, 2024. The renewal fee remained $2,500.
27Ozzy did not sign the renewal.
28On March 20, 2019, Mauro’s corporate lawyers advised Ozzy in writing that the sublease would expire on March 31, 2019. Ozzy had until March 31, 2019 to provide a written response after which “the Franchise Agreement will be deemed to have been terminated.” Ozzy was to courier or deliver the following four items:
a. A signed renewal letter;
b. A certified cheque in the amount of $5,000 plus HST in respect of the renewal fee (note that the fee increased again);
c. Twelve post-dated rent cheques made out to the Landlord for the months of April 2019 to March 2020; and
d. Copy of a signed contract with respect to certain repairs and renovations.
29Ozzy did not sign the renewal. His lawyers wrote to Mauro on April 16, 2019, requesting a 10-year sublease with two five-year options to renew and monthly royalties further reduced to $1,000.
30On or about May 21, 2019, Ozzy persuaded the Landlord to agree to lower rental rates than what Mauro had negotiated in October 2018. Ozzy, Mauro and the Landlord initialed a document containing rental rates for a renewed lease from April 1, 2019 until March 31, 2024 (the “three-way agreement”).
31In those lease negotiations, Ozzy secured a total rent reduction of $8,700, comprised of $50 a month in 2021, $175 a month in 2022, and $250 a month in 2023.
32The record does not contain further communications, in 2019, between Mauro and Ozzy about a renewed franchise agreement. However, it appears that they agreed on terms which included: a monthly royalty fee of $1,575; a renewal fee of $2,500; and a further 5-year renewal after May 31, 2024.
January 1, 2020 – June 21, 2021
33On February 11, 2020, Mauro sent Ozzy a franchise renewal document to review and sign. Mauro sent follow up emails on February 20, February 27, March 4 and March 11. Each time, Ozzy replied that he had not yet had time to review the agreement.
34On March 17, 2020, the government of Ontario declared a state of emergency due to the COVID-19 pandemic. The government lifted the state of emergency on July 24, 2020.
35In July 2020, Mauro Galli met with Ozzy in person and again asked him to sign the renewal agreement. Mauro advised Ozzy that the franchise likely would be sold.
36Ozzy did not sign the renewal agreement.
37On October 27, 2020, the defendant 2755060 Ontario Inc. o/a Mamma’s Pizza purchased the franchise system. The new franchisor hired Mauro Galli on a full-time basis to manage the transition. Mauro did this for over a year.
38On November 25, 2020, the new franchisor’s lawyer wrote to Ozzy about the franchise sale. The letter had a memo line that said, among other things, “Franchise Agreement between Monte Carlo Restaurant Limited (the “Former Franchisor”) and Queen Mamma Ltd. (the “Franchisee”)”. The letter also said that “your rights and obligations under the Franchise Agreement and Sublease shall not be impacted by the [sale].” The new franchisor asked Ozzy to execute and return Preauthorized Debit Forms.
39On or about January 28, 2021, the new franchisor and Ozzy had an introductory meeting. Ranjit Mahal (Randy), Dilawar Singh Khakh (Marko), Ozzy and Mauro attended. Nothing was signed.
40On March 2, 2021, the new franchisor wrote to Ozzy that “the term of your Franchise Agreement expired and that the Former Franchisor permitted you to continue to over hold both the Franchise Agreement and Sublease on a month-to-month basis.” The letter repeated the request to execute Preauthorized Debit Forms.
41On March 16, 2021, citing s. 5 of the Wishart Act, the new franchisor sent Ozzy a disclosure package.
42On May 26, 2021, the parties met at the franchisor’s office. The meeting was acrimonious. Ozzy did not sign anything.
43On June 21, 2021, the franchisor delivered a notice of termination of the franchise agreement and sublease, effective June 25, 2021.
June 28, 2021 – present day
44On June 28, 2021, the franchisor enforced the termination, took possession of the store, and assumed operation of the franchise.
45Shortly afterwards, Ozzy and other persons, including family members, began protesting outside the store. After a few weeks, Ozzy protested alone until the weather changed in November 2021.
46In July 2021, various social media posts were made about the franchisor.
47In December 2022, the franchisor converted the 2118 Queen St. E. location to a Pizza Depot and sold it to a new franchisee.
PARTY POSITIONS
Plaintiff
48Ozzy says that his franchise agreement had two parts: the agreement itself and the commercial lease for 2118 Queen E. The formal franchise agreement executed in 2014 had a ten-year term with a negotiation of the royalty fee after 5 years. In 2019, Ozzy, the former franchisor and the Landlord renewed the lease in writing.
49Ozzy argues that, in February 2020, he and the former franchisor verbally agreed to renew the Queen Mamma franchise agreement. The renewal included increased royalty payments and a reduced franchise renewal fee. Ozzy says that the 2014 franchise agreement is ambiguous about whether the agreement had to be signed. Applying contra proferentum, the ambiguity favours Ozzy, so the agreement was valid despite being unsigned. Ozzy adds that the COVID-19 pandemic stymied efforts to obtain the signatures in February and March 2020, and both parties simply “forgot about it”.
50Ozzy testified that the October 2020 sale of the Mamma’s Pizza franchise was not “transparent” to him, although he did hear about it. Ozzy acknowledges meeting Mauro Galli in a park around July 2020. Mauro told Ozzy about the pending sale and asked Ozzy to sign the franchise renewal agreement. Ozzy testified that he found the meeting “odd”. Mauro looked “disheveled” and was “wearing a dirty mask”. Ozzy did not recall seeing a physical copy of the renewal agreement, and he did not accept receipt of, or sign, any papers. He admits that he told Mauro he would “sign the document with the new guys” – meaning the new franchisors.
51In November 2020, Ozzy received a letter from the new franchisor’s lawyers, Loopstra Nixon. Among other things, the letter confirmed that Ozzy’s franchise agreement was in good standing. Ozzy met with the new franchisors in early 2021. He described the meeting as very positive.
52Ozzy says that the next thing that happened was in March 2021, when he got notice that he should pick up a disclosure package from the new franchisor. Ozzy was confused – he did not understand why he would be getting a disclosure package pursuant to the Wishart Act. The package included a renewal agreement with much harsher terms than what Ozzy and Mauro negotiated in 2020. Ozzy believed that he already had a valid agreement and did not need to sign anything.
53Ozzy acknowledges that on March 22, 2021, Mauro wrote to him to confirm a time to pick up the package, which Mauro said Ozzy would have 14 days to review. Ozzy acknowledges that on April 2, 2021, he confirmed in an email that he had picked up the package; that he had “a minimum 15 days to review”; and that he would prefer “another 30 days in order to thoroughly go through the document.”
54Ozzy did not give an answer on the renewed agreement. Instead, he sought a meeting with the new franchisors. Ozzy believed he could better negotiate with them face to face. The parties met on May 26, 2021. Ozzy found the franchisors, especially Randy, extremely hostile. They said that they owned the business and could do whatever they want. Randy even compared himself to Adolf Hitler and Benito Mussolini. The meeting ended abruptly, without any agreement.
55Over the next few weeks, nothing happened.
56On June 21, 2021, Mamma’s Pizza terminated Ozzy’s franchise with no notice. The termination letter states that Ozzy had not remedied certain defaults, refused to respond to the Franchisor’s March 2, 2021 letter and refused to “sign any documents related to the long overdue renewal of your Franchise Agreement”. The letter demanded Ozzy surrender possession and, amongst other things, pay $7,161.25 plus interest which had been owing since July 13, 2019.
57Ozzy was upset. His longtime franchise, and source of income, was gone. He stood outside his former store – sometimes with other people – in protest. Police attended more than once but did not press charges. Ozzy denies impeding, harassing, or defaming anyone.
58Ozzy says that the defendants rely on “technicalities”. They cite contractual provisions that no one ever adhered to or complained about. Under the Wishart Act, the defendants were supposed to deal with Ozzy in good faith. They did not. The termination of Ozzy’s franchise is out of all proportion to Ozzy’s alleged breaches.
59During the trial, Ozzy amended his pleadings to include relief from forfeiture.
60In his pleadings, Ozzy seeks, among other things:
a. Damages of $500,000 for breach of contract, breach of s. 3 of the Wishart Act, and unjust enrichment;
b. Aggravated damages of $500,000;
c. Additionally, or alternatively, punitive and exemplary damages of $500,000 for “the Respondents’ malicious, oppressive, high-handed and callous acts”; and
d. Dismissal of the defendant’s counterclaim, with costs.
61While Ozzy initially sought a declaration that the franchise agreement’s non-compete provisions were unconscionable, at trial he withdrew that request since the provisions expired in June 2023.
Defendants
62The Defendants argue that the lease and, by extension, Ozzy’s sublease, expired on March 31, 2019. Under the terms of the franchise agreement, the agreement also expired on that date.
63The former franchisor permitted Ozzy to over hold both the franchise agreement and sublease on a month-to-month basis while the parties negotiated a renewed agreement.
64Therefore, when the defendants purchased the franchise system in October 2020, Ozzy did not have a valid franchise agreement. In the alternative, he had a month-to-month agreement.
65Counsel to Mamma’s Pizza sent Ozzy a letter on March 2, 2021, advising him that “the term of your Franchise Agreement expired and … the Former Franchisor permitted you to continue to over hold both the Franchise Agreement and Sublease on a month-to-month basis.” The letter mentioned that Ozzy and the new franchisors would be meeting “to discuss the renewal of your Franchise Agreement and Sublease.”
66On March 16, 2021, Mamma’s Pizza prepared a disclosure package which, as a new franchisor, it had to do under the Wishart Act. The disclosure package included terms for a renewed franchise agreement. Through its now-employee Mauro Galli, the franchisor informed Ozzy that he had 14 days to review the package. Ozzy asked, first, to extend the deadline and then, after that extended deadline passed, to meet in person.
67The defendants met with Ozzy on May 27, 2021. The meeting fell apart due to Ozzy and his brother Mohammed’s boorish behaviour and outlandish demands, such as paying an even lower monthly royalty fee than the reduced fee Ozzy had paid in the past, as well as procuring their own supplies. The meeting ended abruptly, without any agreement. After the meeting, Ozzy did nothing to negotiate further. In the circumstances, given its liability for a store and lease that was not bound by a formal agreement, the new franchisor terminated the franchise.
68The defendants argue that they are not responsible for what Ozzy knew prior to the franchise sale in October 2020. However, Ozzy knew that the sale was likely months before it actually occurred. No one kept anything a secret.
69The defendants deny that their actions were “unlawful, oppressive, high-handed or malicious”.
70The defendants deny that they violated the Wishart Act. They counterclaim that Ozzy did when he failed to (a) remedy his contract defaults and (b) sign a franchise agreement.
71Mamma’s Pizza counterclaims that it suffered from Ozzy’s actions after the termination. Ozzy’s protest outside the store created a nuisance and interfered with the franchise’s business. Ozzy defamed Mamma’s Pizza with signs, social media posts and comments. As a result, Mamma’s Pizza lost significant business in 2021 and was forced to convert the franchise to another brand. It is entitled to damages.
72The defendants seek:
a. An injunction permanently restraining the plaintiff from making defamatory statements against the defendants; or attending at or near the premises of the former franchise and causing a nuisance.
b. A declaration that the plaintiffs breached the Franchise Agreement and sublease.
c. A declaration that the Franchisor validly terminated the Franchise Agreement and Sublease on June 25, 2021.
d. Damages of $1,000,000 for breach of the Franchise Agreement and Sublease, lost profits, harm caused to the Franchisor’s system, brand and reputation.
e. Damages of $200,000 for defamation, nuisance, libel and slander.
f. Damages of $200,000 for breach of the Franchisee’s duty of good faith and fair dealing pursuant to s. 3 of the Wishart Act.
g. Dismissal of the plaintiffs’ counterclaim, with costs.
73As the personal plaintiff has not attended the franchise location for several years, an injunction is not necessary, and I do not consider it further.
ISSUES
74The trial raises the following issues:
a. In June 2021, did the plaintiffs have an existing/valid Franchise Agreement with the defendants and if they did, was it month-to-month?
b. If there was a franchise agreement in June 2021, did the current Franchisor have the right to terminate it as it did?
c. If the current Franchisor did have the right to terminate, are the plaintiffs nevertheless entitled to relief from forfeiture?
d. Did either party breach the Wishart Act?
e. What, if any, damages are owing to the plaintiffs?
f. Did the plaintiffs engage in nuisance, defamation, trespass, or interference with economic relations against Mamma’s Pizza and, if they did, what damages are owing to the defendants?
g. Is the defendants’ evidence about economic loss served and filed on or about January 5, 2026 (i.e. just before the trial) admissible?
h. Is Ozzy a proper plaintiff to these proceedings?
i. Do the named defendants, Mr. Joginder Singh Khakh, Mama’s Marketing Inc. or 2755067 Ontario Inc., have any liability to the plaintiffs?
75In paragraph [7], above, I have set out my brief answers to issues (a) through (f). Since the plaintiffs do not owe damages for economic loss, it is not necessary to consider issue (g). Given my findings, Ozzy is a proper plaintiff to these proceedings. Given the modest damages awarded against the defendants, and the lack of argument and a specific claimed remedy such as a stay of proceedings, it is not necessary to answer issue (i).
ANALYSIS
76The facts as I find them are set out in the following analysis. I begin with some general observations, followed by a discussion of each issue.
Interpreting contracts
77In Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, the Supreme Court of Canada affirmed that the governing “practical, common-sense approach” to the interpretation of contracts, where the overriding concern is to determine “the intent of the parties and the scope of their understanding”: at para. 47. To do so, a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract: Sattva, at para. 47. Ascertaining the surrounding circumstances in which a contract was made requires knowing “the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating”: Sattva, at para. 47, citing Reardon Smith Line v. Hansen-Tangen, [1976] 3 All E.R. 570 (H.L.), at p. 574, per Lord Wilberforce.
Credibility
78Credibility is a primary vehicle for determining the truth of alleged facts. Assessing credibility is not an exact science: Konstan v. Berkovits, 2023 ONSC 497, at para. 11, citing R. v. Gagnon, 2006 SCC 17, [2006] 1 S.C.R. 621, at para. 20.
79Traditional criteria used to assess witness evidence include witness demeanour, inherent probability in the circumstances, and internal and external consistency: Prodigy Graphics Group Inc. v. Fitz-Andrews, 2000 CarswellOnt 1178, at para. 46, per Cameron J.
80Witness credibility is critical to the burden of proof. Where a party has the burden to discharge a legal onus, I must satisfy myself, on a balance of probabilities, of “the credibility and reliability of the evidence in order to be in a position to make the relevant findings of fact”: Konstan, at para. 9.
81Credibility differs from reliability. Credibility has to do with whether someone is honest, while reliability concerns whether their testimony is accurate: R. v. Sanichar, 2013 SCC 4, [2013] 1 S.C.R. 54, at para. 19. One may find a witness generally credible yet doubt their reliability. Conversely, a witness who is not credible may still offer reliable testimony.
82This trial had five witnesses:
a. Ozzy;
b. Ozzy’s financial expert, Ephraim Stulberg;
c. Dilawar Singh Khakh (Marko), a director of the corporate defendants;
d. Mauro Galli, principal of the former franchisor Monte Carlo Ltd.; and
e. Michel Harbe, a former employee who worked at the Queen St. E. store in 2021 and who testified via Zoom.
83Two other persons whose actions figure in the events did not testify: Ozzy’s brother Mohammed, and the franchise co-owner Ranjit Mahal (“Randy”). Both of these persons were in the courtroom at various points in the trial.
84The chief trial witnesses – Ozzy and Marko – each lacked credibility and reliability in significant ways.
85Ozzy spoke movingly about his background, his contributions to the Mamma’s Pizza brand, his commitment to the Beaches community where the store is located, and his love for his family. However, Ozzy was not always credible or reliable. He spoke tangentially, veering from one topic to another, making it difficult for his counsel to conduct a coherent examination in chief. Ozzy frequently digressed into lengthy narratives about people and events not relevant to the trial. Perhaps Ozzy was not deliberately trying to obstruct or complicate the proceedings, but his style of testimony made it challenging to figure out what he was trying to say.
86At trial, both parties highlighted a 2016 altercation between Ozzy and a Mamma’s Pizza employee. One night, Ozzy called the head office for assistance and had words with a supervisor named Ryan. A few days later, Ryan showed up at the store, and Ozzy threw him out. While the incident itself is not pertinent to the substantive issues in this trial, Ozzy was not truthful about it. In particular, and contrary to Ozzy’s testimony, I am persuaded that Ozzy screamed at Ryan and shoved him, hard, to get him out of the store. The incident was witnessed by passersby on the street, who emailed Mamma’s Pizza afterward. Ozzy denied “touching” Ryan, while simultaneously admitting that he hit Ryan with his chest. Some weeks later, Ozzy apologized for this incident in an email or text message to Mauro. At trial, Ozzy could have simply admitted that he lost control. Instead, he dissembled and gave an account that is implausible. This part of Ozzy’s testimony shows that he is reluctant to acknowledge facts that might make him look bad.
87Among other things, I do not find Ozzy credible on: why he did not sign the renewed franchise agreement in 2020; who played what role in the May 27, 2021, meeting with the new franchisor; and whether he could recognize certain persons (such as his own children) or events (such as whether he was recording store employees or whether anyone glued things to the store windows) in the various videos of the protests outside the store in July 2021.
88The defendant, Marko, also suffered from credibility and reliability problems. Marko took the perplexing position that he had seen none of the crucial documents in this case until they were put to him on the stand. He would have this court believe that he was not involved with the franchise purchase and simply let his lawyers take care of everything. His testimony on these points is unbelievable. I also find Marko not credible about his relationship with Mauro Galli, whom Marko suggested was entirely responsible for dealing with Ozzy leading up to and after the termination. Marko described Mauro in a manner that suggested that Mauro was still acting as the franchisor in 2021, even as Marko insisted that he (Marko), remained in charge. Finally, I do not find Marko reliable on the business losses the franchise system sustained because of Ozzy’s actions; or on why Marko decided to convert the Queen Mamma location into a Pizza Depot.
89Ozzy’s expert, Ephraim Stulberg, was credible and reliable. He presented his income report thoroughly, explained his methodology carefully and responded in a measured and thoughtful way to cross-examination. Because I conclude that the plaintiffs were entitled to more notice than was given, but the franchise was not otherwise wrongfully terminated, I have not focused on Mr. Stulberg’s evidence, although I have noted the documents appended to his report which show Queen Mamma’s income statements. Had it been necessary to reach the issue, I would have relied on Mr. Stulberg’s analysis of Ozzy’s economic losses, albeit not necessarily every one of his calculations.
90I find Mauro Galli both credible and reliable. Mauro’s testimony was both internally and externally consistent. While occasionally testy under cross-examination, Mauro was not combative. The Plaintiffs invite me to disregard Mauro’s testimony because Mauro frequently said that he would not lie after swearing on the Bible to tell the truth. I do not find those statements to be manipulative, but sincere explanations of why Mauro felt bound to tell the truth. I believe that Mauro regrets how things turned out and that he wanted Ozzy to sign a franchise renewal agreement in 2020 and 2021. I prefer Mauro’ testimony that the May 2021 meeting between the parties went off the rails because of Ozzy and his brother Mohammed.
91I am satisfied that Michel Harb sought to be truthful. However, due in part to the passage of time and in part to the fact that he was inside the store and not on the street, some of Michel’s testimony about the effect of Ozzy’s protest on staff, security and customers is not reliable.
Issue One: In June 2021, did the plaintiffs have an existing/valid Franchise Agreement with the defendants and if they did, was it month-to-month?
92The first issue raises the following questions:
a. What was the length of term of the 2014 Franchise Agreement?
b. On what, if anything, did Ozzy and the former Franchisor come to an agreement?
c. Does it matter that an agreement was not put in writing?
93I find that, in order for it to be renewed, the 2014 Franchise Agreement required both a completed lease/sublease and a complete franchise agreement. While the parties reached agreement on rent for the lease/sublease, they did not conclude the franchise agreement because, while they came to terms, they never formalized those terms in writing. Having something in writing was essential, both because the Mamma’s Pizza franchise system is predicated upon formal agreements, and because the parties frequently changed the terms of the agreement during their negotiations. Ozzy had several chances to sign the franchise agreement and never did. Therefore, at some point in 2020, the franchise agreement became a month-to-month agreement.
94The issues in this trial do not require many specific findings about what happened prior to April 2, 2014. However, based on the evidence led at trial, I am satisfied that:
a. Ozzy has a limited formal education.
b. Ozzy had several franchise agreements with Mamma’s Pizza between 2004 and 2014.
c. Together with Bob Krieger, Ozzy entered into a franchise agreement for the franchise located at 2118 Queen Street East.
d. Bob sold his franchise share to Ozzy in 2010.
e. Ozzy was familiar with the Mamma’s Pizza franchise system.
What was the length of term of the 2014 Franchise Agreement?
95The parties disagree on the term of the Franchise Agreement. Ozzy argues that it was for ten years. He says that the five-year renewal mentioned in s. 4.02 is “confusing” but does not change that the term was ten years. Many of Ozzy’s arguments rely on the claim that he had a ten-year agreement. Indeed, Ozzy claims that, when the parties reached a verbal agreement in 2019 to renew the agreement, they intended it to last until 2029.
96Ozzy further argues that, to the extent there is an inconsistency between ss. 4.01 and 4.02, the rule of contra proferentum means that he should receive the benefit of the more generous interpretation. That rule states that where there is an ambiguity in a contract, the benefit is to go to the party who did not draft it.
97The defendants argue that the franchise operated in 5-year increments, because it was dependent upon an underlying commercial lease. That is why, for example, s. 4.02 states that a renewal shall only occur “…(c) if the landlord for the Premises and Monte Carlo can mutually agree upon the terms and conditions of the second renewal term of the lease.”
98At trial, the parties agreed that contra proferentum only applies if there is an actual inconsistency in the agreement: Salah v. Timothy’s Coffees of the World Inc. (2009), 65 B.L.R. (4th) 235 (Ont. S.C.), at para. 75, aff’d 2010 ONCA 673, 74 B.L.R. (4th) 161 (“Salah (ONCA)”).
99For the following reasons, I do not find that contra proferentum applies:
a. There is no inconsistency between a framework agreement for ten years (s. 4.01) and a requirement to renew after five years (s. 4.02). Such an arrangement makes sense in the context of a franchise where the lease for the premises is with a third-party landlord. It also makes sense given the other factors that go into a franchise agreement for a retail enterprise – such as marketing arrangements and technical support – might change over time and require further negotiation. The idea that the parties would ‘lock in’ for ten years with no room to manoeuvre is both implausible, and inconsistent with the record in this case.
b. The franchise agreement depended upon having a commercial lease for the premises.
c. The agreement would require negotiations, which depended on the lease renewal.
d. The evidence before the court is that the lease between the franchisor and the landlord proceeded in five-year terms.
100Therefore, I find, the parties understood that the franchise agreement operated in five-year phases, against the broader backdrop of a ten-year contract. That means that the parties had to come to terms on a renewal of the Franchise Agreement in 2019.
On what, if anything, did Ozzy and the former Franchisor come to an agreement about in 2019?
101The next issue is whether Ozzy and the former Franchisor came to an agreement in 2019 and, if so, about what.
102Ozzy insists that the “three-way agreement” reached between him, Mauro and the Landlord in May 2019, wrapped up all the negotiations necessary to renew the Franchise Agreement. In his testimony, Ozzy was adamant that the 2019 negotiations were a package deal. He says that the parties to the lease renewal – him, the Landlord and the head tenant/former franchisor – were involved in discussions about everything. However, he also says that he and Mauro Galli came to an agreement about other components of the franchise agreement.
103The defendants reject that the three-way agreement concluded all negotiations. Based on the evidence, I agree. It is unlikely that a commercial landlord would be involved in the details of a franchise agreement. Aside from Ozzy’s testimony, there is no corroborating statement for his argument. On this point, I prefer the evidence of Mauro Galli, who testified that the lease negotiations were separate from the rest of the renewal.
104I am satisfied that, by February 2020, Ozzy and Mauro Galli had agreed to the following terms in relation to a renewed franchise agreement:
a. The rental rates agreed to with the Landlord set out in the document initialled by Ozzy, Mauro and the Landlord on or about May 21, 2019;
b. A $2,500 franchise renewal fee; and
c. A $1,500 royalty rate.
105I find that there was no agreement about Ozzy paying Monte Carlo’s legal fees, as required under s. 4.02(f). On July 12, 2019, Mauro sent Ozzy an email asking Ozzy to pay legal fees of $7,161.25 incurred in relation to the renewal. Ozzy emailed Mauro back on July 13, 2019, stating “I DO NOT APROVE THIS [sic].” I am satisfied that, with this message, Ozzy intended to prevent the former franchisor from withdrawing this amount through the Ozzy’s Pre-Authorized Debit agreement.
Does it matter that an agreement was not put in writing?
106Ozzy acknowledges that he never signed a renewal agreement but argues that that does not affect the agreement’s validity. Ozzy says the parties “forgot” about signing the agreement in the upheaval of the COVID-19 pandemic.
107For the following reasons, I reject Ozzy’s argument:
a. Other than the period beginning in March 2019, there is no evidence that, in his many years as a franchisee, Ozzy ever operated a Mamma’s Pizza franchise without a written agreement.
b. One of the terms for a renewal under s. 4.02 of the Franchise Agreement is that the franchisee executes and returns a written agreement. There is no evidence that Mauro waived this condition. Nor is there evidence, in 2020, that Ozzy ever advised Mauro that that a formal written agreement was unnecessary because the parties already had a verbal one.
c. For months, Mauro Galli tried to have Ozzy sign a written agreement. Mauro made a last-ditch effort in July 2020, after which the franchise was sold.
d. I am not persuaded that the COVID-19 pandemic impeded Ozzy’s ability to sign the agreement. None of Ozzy’s email replies to Mauro in February and March 2020, when Mauro was trying to get him to sign, mention COVID-19. It is true that on March 23, 2020, Ozzy asked Mauro for a meeting about how to deal with COVID-19, but that email does not mention the franchise agreement. I accept that from late February, everyone was occupied with COVID-19. But COVID-19 does not explain Ozzy’s refusal to sign the agreement over the preceding weeks.
108Therefore, I find that Ozzy’s failure to execute a written agreement matters. Mauro testified that, had Ozzy signed the renewal agreement as he was urged to, his situation in June of 2021 would have been quite different and, in all likelihood, his franchise would not have been terminated. I agree.
Conclusion
109Ozzy’s franchise was at risk because he repeatedly failed to sign the renewal agreement. However, I do not agree with the defendants that Ozzy’s franchise terminated on March 31, 2019. I find that, first, Mauro, and then, the new franchisor, allowed Ozzy to continue to operate the franchise while the parties tried to come to terms.
110There is nothing in the franchise agreement that contemplates it running month to month. The sublease does contain such a provision. Nevertheless, I am satisfied that that is what Ozzy was operating under. That is the term the franchisor used in its communication to Ozzy on March 2, 2021. If the franchisor wished to terminate the franchise, it could have done so at that time. Instead, the franchisor sent Ozzy a disclosure package and terms for a renewal. This shifts the analysis to whether the franchisor was within its rights to terminate the franchise when and how it did.
Issue Two: If there was an existing franchise agreement in June 2021, did the current Franchisor have the right to terminate it as it did?
111Deciding this issue involves the following questions:
a. Did the former or current franchisor waive any requirements in the franchise agreement?
b. What did the existing franchise agreement mean for termination?
c. On what basis was the franchise terminated?
d. Did the termination comply with the franchisor’s obligations to Ozzy?
Did the former or current franchisor waive any requirements of the franchise agreement?
112Under the principle of waiver:
[I]f one party, by his conduct, leads another to believe that the strict rights arising under the contract will not be insisted upon, intending that the other should act on that belief, and he does act on it, then the first part will not afterwards be allowed to insist on the strict legal rights when it would be inequitable for him to do so.
Petridis v. Shabinsky (1982), 1982 1829 (ON HCJ), 35 O.R. (2d) 215 (Ont. H.C.), at p. 222.
113Ozzy argues that Mauro Galli waived many of the strict terms of the franchise agreement. For example:
a. Mauro accepted a verbal acceptance of the sublease renewal and franchise renewal, when under the franchise agreement, both needed to be in writing.
b. Mauro did not demand the renewal fee by way of invoice or other notice.
c. Mauro did not demand an updated Pre-Authorized Debit agreement for the new royalty amount.
114Accordingly, Ozzy says, he could not be penalized later for failing to abide by the above items. Furthermore, he argues, the franchise system sale covered the terms of existing franchise agreements, including any past waivers by former franchisors – in this case, Mauro. Ozzy adds that, during his negotiations with the current franchisors, they waived certain of the requirements on which they now rely.
115It is true that Mauro did not hold Ozzy strictly to every term of the franchise agreement. For example, having considered both the discussions between Mauro and Ozzy after July 2019, and Mauro’s testimony, Mauro decided not to press the issues of the legal fees during those negotiations. Based on Mauro’s testimony, which I believe, while Mauro was not happy with this, he was prepared to deal with the additional cost. Therefore, I find, the legal fees were waived during the negotiations with the former Franchisor.
116Nevertheless, for the following reasons, I am not persuaded that waiver applies in any other respect.
117First, the fact that negotiations proceeded for several months in 2020 undermines Ozzy’s argument. Throughout that time, Mauro made it clear that he expected Ozzy to sign the agreement, which contained the terms outlined above. Nothing in Mauro’s conduct indicates that he waived that expectation. Nor do I find that Mauro waived payment of the franchise renewal fee. I am satisfied that Mauro was waiting for Ozzy to sign the deal, by which point Mauro would have tried to recoup the renewal fee.
118Second, while it is true that Mauro stopped pressing the renewal issue after July 2020, by that time, the franchise system sale was in progress. I find that Mauro sincerely and reasonably decided that he had done his best and that the new franchisors could deal with Ozzy. I do not accept that Mauro waived any part of the franchise agreement except, as noted above, collecting on the legal fees.
119Third, once the system was sold, the new franchisors quickly communicated to Ozzy their expectation that a renewal agreement be signed. I do not interpret the initial letter sent by Loopstra Nixon as either a waiver of any of the terms of the franchise agreement, or an admission that Ozzy had a valid agreement as described in the Franchise Agreement, as opposed to a month-to-month one. A fairer reading of the letter is that, if Ozzy had a valid agreement, it would be honoured. I find it most plausible that the new franchisor sent Ozzy a standard form letter that ‘set the table’ for further discussions, as those discussions became appropriate and necessary. Here, once the new franchisors became aware of Ozzy’s situation (that he did not have a signed renewal), they sent him a second letter on March 2, 2021, which explicitly outlined their expectations and requests. Unlike the initial letter, the March 2nd letter is specific to Ozzy’s situation.
What did the existing franchise agreement mean for termination?
120I have found that Ozzy was in a month-to-month franchise agreement, and that the new franchisor did not waive any of the franchise requirements. The next question is what was required to terminate that franchise.
121Because the Franchise Agreement does not provide for a month-to-month arrangement. the Agreement does not specify how such an arrangement should be terminated.
122As set out in paragraph 20, above, s. 16.01 of the Agreement provides various bases for termination on two days’ notice.
123Ozzy argues that the franchisor never provided any notice that the franchise was being terminated. He simply received notice that the franchise was being terminated, by way of letter dated June 21, 2021, from the Defendant’s counsel. That letter states that:
a. Ozzy never responded to counsel’s letter dated March 2, 2021;
b. Ozzy has refused to remedy “certain defaults related to the Franchise Agreement and sublease”;
c. Ozzy has “refused to sign any documents related to the long overdue renewal” of the Franchise Agreement;
d. Pursuant to Article 16.00(a), (s) and (u),2 the agreement is terminated effective 5 p.m. June 25, 2021; and
e. By or before that date, Ozzy must among other things pay all amounts owing including outstanding royalties and $7,171.25 plus interest owing since July 13, 2019.
124Therefore, Ozzy argues, the Franchisor never spelled out to Ozzy, in advance, that he was in jeopardy of losing his franchise so that he could try and remedy the situation. Accordingly, the termination was unlawful.
125The Defendants’ principal argument is that the Franchise Agreement had already terminated as of March 31, 2019. Their alternative argument, which I have accepted, is that the agreement became a month-to-month franchise. In that case, they argue:
a. the agreement became one of indefinite duration, to which the material terms of the former agreement continue to apply;
b. the agreement is subject to termination on reasonable notice; and
c. in the current circumstances, the termination was reasonable given Ozzy’s “refusal to sign the renewal document”.
126Having considered the facts, both parties’ submissions and the relevant case law, I find that once the Franchise Agreement became a month-to-month arrangement, it was a contract of “indefinite duration” that could be terminated by either party with reasonable notice: 2287913 Ontario Inc. v. ERSP International Enterprises Ltd., 2021 ONSC 6756, 157 O.R. (3d) 641 (“ERSP”), at para. 148, citing 1397868 Ontario Ltd. v. Nordic Gaming Corporation (Fort Erie Race Track), 2010 ONCA 101, 259 O.A.C. 173
127For clarity, I do not find that any of the provisions in s. 16.01, which would require only two day’s notice, apply. In particular, I do not find that the Franchisee had conducted its business or itself “in a manner materially detrimental to the goodwill or reputation of” the Franchisor”. Nor did the Franchisee fail to perform any covenants or agreements within 10 days. It is true that the royalty payments were in deficit by $75 each month. However, I do not accept that such a modest deficit entitled the Franchisor to terminate the agreement under 16.01(a). I am not satisfied that the Franchisor gave Ozzy explicit notice that he was in default with respect to the royalties prior to sending the notice. I find the argument that termination is justified based on this single defect incompatible with a “common sense” approach to contractual interpretation: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633 at para. 47.
On what basis was the franchise terminated?
128The next question is on what basis the franchise was terminated. Having considered all the evidence, I find that after the disastrous second meeting in May 2021, the franchisor concluded that the business relationship with Ozzy could not be salvaged. I accept Mauro’s testimony that the meeting was “the worst business meeting he had ever attended,” and that Ozzy and his brother, Mohammed, were the aggressors. I am persuaded that Ozzy and/or Mohammed made unrealistic demands such as an even lower royalty rate than Ozzy was paying to the former franchisor, and much more freedom to run the restaurant outside the Franchise Agreement, such as procuring their own supplies.
129I believe that the new franchisor likely found Ozzy to be ungovernable.
130I am satisfied that, in light of (a) the May meeting; (b) the fact that Ozzy had not yet signed a renewal agreement; and (c) the fact that after the meeting Ozzy made no further overtures, the Franchisor concluded that further discussion would be useless, and it simply wanted to end the relationship.
Did the termination comply with the Franchisor’s obligations to Ozzy?
131The final question is whether the termination complied with the Franchisor’s legal obligations to Ozzy. This involves determining whether the termination offered to Ozzy was reasonable.
132I accept the plaintiffs’ argument that the Franchisor’s termination letter provided, at most, two days’ notice. The Franchisor argues that, because the franchise was not seized until June 28, 2021, the notice was actually 5 days. This argument cannot be accepted. The Franchisor must be held to the letter that it sent, which cites an effective date of termination of a couple of days.
133The plaintiffs stress that the June 28th letter was not a ‘notice’, but rather an actual termination. In another case, that point would be material. Here, it is not, because the actual notice to which the plaintiffs were entitled is relatively short.
134I find that Mamma’s Pizza did not provide reasonable notice. As explained above, in June 2021, the franchisor did not have grounds to immediately terminate the agreement. There is no evidence showing that Ozzy’s continued operation of the Queen Street East store posed an immediate risk to the franchisor. Rather, the franchisor determined that it no longer wished to be in a relationship with Ozzy.
135In ERSP, supra at para. 270, the court analyzed applicable factors for determining the reasonable notice period, at para. 270, such as the expectations of the parties, the intended duration of the relationship, the dependency of the business, the commercial climate of the product (or business?), the level of investment, established practice, and the manner in which the termination was disclosed. The factors should be analyzed at the time of termination: ibid at para. 269.
136The following facts affect the period of notice:
a. The new franchisor first asked Ozzy to review and respond to the franchise renewal on March 2, 2021. He was given 14 days to do so.
b. Ozzy asked for an extended deadline, which he received.
c. When the extended deadline passed, Ozzy asked for a face-to-face meeting, which he received on May 27, 2021.
d. Altogether, approximately ten weeks passed between the initial deadline and the meeting.
e. Throughout this time, Ozzy knew that the franchisor wanted him to sign the renewal.
f. In his testimony, Ozzy said that the terms offered by the new franchisor would have made it impossible for him to carry on with his business.
g. After the second meeting, which went very badly, Ozzy took no steps to renew negotiations.
h. Ozzy’s termination letter was sent out four weeks later.
137In my view, the above facts illustrate that the relationship was, if not dead, on life support. Ozzy had operated without a renewed franchise agreement for over a year. I am not persuaded that Ozzy would ever have signed the renewal on the terms presented. The parties were too far apart. As just one example, I am not persuaded that Ozzy would have agreed to pay the standard franchise renewal fee of $5,000. I do not think Ozzy would have paid even half that. I find that Ozzy expected to have with the new franchisor the same casual and forgiving relationship he had with Mauro Galli – which was highly unlikely.
138Considering all the circumstances, I find that, while Ozzy was entitled to more than two days’ notice, he was not entitled to a great deal more. I find that Ozzy was entitled to 30 days’ notice. In lieu of that notice, as explained later in these reasons, Ozzy is owed $10,000.
Issue Three: If the current Franchisor did have the right to terminate the franchise, are the plaintiffs nevertheless entitled to relief from forfeiture?
139At trial, Ozzy amended his pleadings to include a claim for relief from forfeiture. It is not necessary to answer this question, because I find that the Franchisor should not have terminated the franchise on two days’ notice. For completeness, I will address the issue.
The Law
140Courts of equity have always had the power to relieve against the forfeiture of property that otherwise would flow from a breach of contract: see McBride v. Comfort Living Housing Co-operative Inc. (1992), 1992 7474 (ON CA), 7 O.R. (3d) 394 (C.A.), at p. 402. In Ontario, that general power has been codified: Courts of Justice Act, R.S.O. 1990, c. C. 43. Section 98 states that a court “may grant relief against penalties and forfeitures, on such terms as to compensation or otherwise as are considered just”.
141The Court of Appeal for Ontario has described relief against forfeiture as a “discretionary and fact-specific” remedy: Ontario (Attorney General) v. 8477 Darlington Crescent, 2011 ONCA 363, 333 D.L.R. (4th) 326 (“8477”), at para. 87. The party seeking relief must persuade the court that, although forfeiture is consistent with the terms of the contract, it would be “an inequitable consequence”: 8477, at para. 87. Such relief is “particularly appropriate where the interests of the party seeking enforcement by forfeiture can be fully vindicated without resort to forfeiture”: 8477, at para. 87.
Application
142Ozzy is not asking the court to restore his franchise, but to grant equitable relief for the negative economic consequences he suffered because of the termination.
143I appreciate that the termination of Ozzy’s long-term franchise with Mamma’s Pizza had a serious impact on him, in a financial and an emotional sense. However, based on the following findings, I decline to exercise my discretion to award relief from forfeiture:
a. In 2020, Ozzy had several opportunities to sign a renewal agreement, which he refused.
b. I am not persuaded that Ozzy genuinely thought he already had a completed franchise renewal form. That argument is belied by Ozzy’s words and actions in the spring and summer of 2020, when he insisted that he just needed time to review the franchise package.
c. Ozzy did not provide a reasonable explanation for his refusal to sign the franchise renewal before July 2020. By that time, he had been a franchisee for 16 years. I am not persuaded that he was unable to review a renewal agreement, even if he was preoccupied with COVID-19.
d. After July 2020, Ozzy refused to sign the agreement because he thought he could get a better deal with the new franchisors than what he had with Mauro Galli.
e. Aside from requesting a meeting, Ozzy did not take any steps once he received the franchise disclosure package in 2021.
f. Ozzy did not engage in meaningful negotiations with the new franchisor. After asking for an extension of time to provide a response, he never provided one.
g. Ozzy was combative during the second meeting with Randy and Marko in May 2021. He either ignored or failed to appreciate the fact that his franchise was at risk if the parties could not reach an agreement.
h. In all the circumstances, Ozzy has not established that the franchise termination was disproportionate to Ozzy’s refusal to sign a renewal within a clear timeframe. While Ozzy was entitled to more notice, I am not persuaded that failure was disproportionate to the risk in which the new franchisor found itself, due to the fact that it did not have a formal agreement with Ozzy.
144Therefore, this claim is dismissed.
Issue Four: Has either party breached the Wishart Act?
145As each party argues that the other breached the Wishart Act and is liable for damages, I will deal with the arguments together. For the reasons that follow, I dismiss both claims.
The Law
146Section 3 of the Wishart Act provides:
Fair dealing
3.(1) Every franchise agreement imposes on each party a duty of fair dealing in its performance and enforcement.
Right of action
(2) A party to a franchise agreement has a right of action for damages against another party to the franchise agreement who breaches the duty of fair dealing in the performance or enforcement of the franchise agreement.
Interpretation
(3) For the purpose of this section, the duty of fair dealing includes the duty to act in good faith and in accordance with reasonable commercial standards.
147By imposing specific obligations on parties in a franchise relationship, the Wishart Act augments the “limited recognition” of the duty of good faith between contracting parties: Salah (ONCA), at para. 28. The statute also permits “an award of damages for the breach of the duty of good faith, separate and in addition to any award in compensation of pecuniary losses”: Salah (ONCA), at para. 29.
148Ozzy’s primary argument under the Wishart Act is that Mamma’s Pizza failed to advise him that he was in breach of anything in order that he might have the chance to fix it. Consequently, he lost his decades-old business, which the franchisor later sold for $245,000. That loss is grossly disproportionate to anything Ozzy did. Ozzy also stresses that the relationship was marked by a power imbalance, and that Ozzy was unsophisticated and essentially taken advantage of.
149The franchisor’s countervailing argument is that, by failing to sign the franchise agreement, Ozzy acted in bad faith. Defendants’ counsel confirmed this to me during closing submissions.
Application
150For the following reasons, I am not persuaded that Ozzy suffered bad faith treatment:
a. I do not accept Ozzy’s account that he was a ‘babe in the woods’ regarding the franchise system. While Ozzy lacks formal education, he has extensive experience with the Mamma’s Pizza franchise, including owning other franchise stores. Ozzy described himself as a “silent partner” in those other ventures. I find it implausible that Ozzy was completely passive in those ventures. If anything, Ozzy’s pride in his experience with Mamma’s Pizza makes it likely that he assisted and advised his partners. Ozzy had counsel at various points during his negotiations with Mamma’s Pizza leading up to and through this litigation. At trial, Ozzy described his research into market conditions during lease negotiations in 2019. He focused on the impact on his restaurant of a neighboring Mamma’s Pizza franchise, as well as a competitor opening across the street. Ozzy was proud of his research, which he says contributed to him getting a rent reduction. I will add that I find the defendant, Marko, to be quite unsophisticated. Therefore, while the court must be attentive to the fact that a franchisee often is disadvantaged compared to a franchisor, I do not believe that the relationship in this case featured a significant power imbalance.
b. I am persuaded that Ozzy, for reasons of his own, decided not to sign the franchise renewal form. I am not persuaded that any of the individuals involved – Ozzy, Mauro Galli, or the new franchisor – regarded Ozzy’s signature as unimportant. When he was asked to sign in 2020 and 2021, Ozzy did not state that his signature was unimportant, redundant or had been waived. He said he needed time to review.
c. The lack of a signed agreement means that Ozzy did not have anything more than a month-to-month franchise agreement in 2021.
d. Ozzy had a disastrous meeting with the franchisors in May 2021. I am persuaded that Ozzy, and his brother Mohammed, were the aggressors in that meeting.
e. I do not believe that the franchisors acted in bad faith when, several weeks after the disastrous second meeting, and after Ozzy had neither signed the package nor communicated with them in any way, they regarded further negotiations with Ozzy as fruitless and decided to part ways. The fact that they should have given him more notice does not, in my view, constitute bad faith or breach of the statute.
151I also do not accept the defendants’ reliance on the Wishart Act to claim damages of their own from Ozzy. I make that finding because:
a. It is not “bad faith” to refuse to sign a renewal agreement.
b. The defendants permitted Ozzy to operate the franchise on a month-to-month basis while negotiations continued.
c. While the defendants did not explicitly argue this, they seem to suggest that Ozzy was toying with them by refusing to sign. I do not see it that way. Ozzy had an inflated sense of his own bargaining position. That attitude featured in the May meeting when he and/or his brother claimed that he could pay a much lower royalty rate and negotiate his own supply arrangements. Ozzy made a bad bet – but that is not bad faith.
152To conclude, neither party behaved particularly well during their negotiations in 2021. At the same time, neither behaved so egregiously as to breach their obligations under the Wishart Act.
153Accordingly, all claims under the Wishart Act are dismissed.
Issue Five: What, if any, damages are owing to the plaintiffs?
154I have found that Ozzy was owed 30 days’ notice before his franchise was terminated. I have not found that the franchise was unlawfully terminated in any other way; that Ozzy is entitled to an amount in lieu of an equitable relief from forfeiture; or that Ozzy is owed damages under the Wishart Act.
155In ERSP, at para. 305, Justice Sanfilippo cited JMT Phillips (1986) Inc. v. Medieval Glass Industries Ltd., 2002 20782(Ont. S.C.), at para. 29 for the proposition: “[W]hen reasonable notice is not given, the measure of damages ‘should be an amount equal to prospective profits the distributor would have earned during the time period that would have been considered as reasonable notice’”.
156In this case, the evidence from the expert report is that Queen Mamma had posted losses in the preceding months of 2021. However, I am mindful that the store was operating just after the worst of Covid 19. In addition, I find that, in a franchisee situation, a lack of reasonable notice justifies some compensation apart from a franchise’s profitability at the time.
157Given all the circumstances, including the long-standing nature of the franchise in this case, the plaintiffs are entitled to $10,000 in lieu of reasonable notice. This is a modest amount that recognizes the harm done while taking account of the parties’ dysfunctional relationship for which each bears some blame.
Issue Six: Did the plaintiffs engage in nuisance, defamation, libel, slander, trespass, or interference with the defendants’ business and, if they did, what damages are owing?
Introduction
158The defendants counterclaim for nuisance, defamation, slander, libel, and interference with economic relations. At trial, they also argued trespass.
159The defendants argue that the plaintiffs and others “attended at the Premises, banged on the windows, vandalized the Premises and blocked access to the entrance holding signs that were damaging to the Mamma’s Pizza brand.”
160In support of these arguments, the defendants adduced the following evidence:
a. A number of videos taken inside and outside of the store in July 2021;
b. Testimony by Mauro Galli, who attended some of the demonstrations;
c. Testimony of Michel Harb, their former employee at the store;
d. Social media posts by the Queen Mamma’s Instagram handle; and
e. An article in the Beach Metro Newspaper.
161With respect to the videos, in response to an undertaking, the defendants produced the following chart:
| Tab | Description | Purpose |
|---|---|---|
| Tab 34 | The video shows the sidewalk outside of the store. There are sounds of applause. A man's voice says, “a round of applause for the corporate guys for taking over our store.” | Nuisance Defamation Slander |
| Tab 39 | Three men hold signs outside of the store. The signs refer to a “70% increase on royalties,” “Boycott Mamma's Pizza”, and “Loyalty Over Royalties.” The man in the red hat uses his phone to video record the people who exit the store. | Defamation Libel Nuisance |
| Tab 40 | A man glues a paper sign on the window of the store. | Defamation Libel Nuisance |
| Tab 43 | Two men and three boys hold signs outside of the store. One man gives his sign to a boy and then leaves. Two of the signs say, “Boycott Mamma's Pizza” and “They called it business, we call it theft.” | Defamation Libel Nuisance |
| Tab 45 | The store is closing for the day. Six people holding signs and several teenagers stand outside of the store. They applaud and cheer when two people exit the store. The man in the red hat and the man behind him use their phones to video record the people exiting the store. The people holding the signs thank the teenagers. The teenagers leave. Two women approach the store and ask if it is closed. The people holding the signs confirm that the store is closed. The man in the red hat says to the two women, “The corporate guys have taken our store. I was the owner of the store. I was here for seven to eight-and-a half years” | Defamation Libel Slander Nuisance |
| Tab 46 | The man in the red hat continues talking to the two women, who later leave. Three men tape signs to the window of the store. | Defamation Libel Nuisance |
| Tab 47 | A man and three boys hold signs outside of the store. The signs say, “We got locked out of work in the midst of a pandemic” and “Boycott Mamma's Pizza.” The boys applaud when people exit the store. | Defamation Libel Nuisance |
| Tab 48 | Two men and two boys hold signs outside of the store. The signs say, “We got locked out of work in the midst of a pandemic” and “Boycott Mamma's Pizza.” | Defamation Libel Nuisance |
| Tab 49 | Four people hold signs outside of the store. | Defamation Libel Nuisance |
| Tab 51 | Four people stand outside of the store. Three of them hold signs. | Defamation Libel Nuisance |
| Tab 52 | A group of people stand outside of the store. Four people hold signs. A man enters the store and points and shakes his finger at the person behind the counter. | Defamation Libel Nuisance Slander |
| Tab 53 | A group of people stand outside of the store. A man and a boy hold signs. | Defamation Libel Nuisance |
| Tab 54 | Three people hold signs outside of the store. | Defamation Libel Nuisance |
| Tab 55 | Three people hold signs outside of the store. A man talks to two bystanders. | Defamation Libel Nuisance |
| Tab 59 | Two people hold signs outside of the store. | Defamation Libel Nuisance |
| Tab 60 | Two people hold signs outside of the store. | Defamation Libel Nuisance |
| Tab 62 | Two people hold signs outside of the store. | Defamation Libel Nuisance |
| Tab 63 | Two people hold signs outside of the store. | Defamation Libel Nuisance |
| Tab 64 | Three people hold signs outside of the store. | Defamation Libel Nuisance |
| Tab 65 | A group of people hold signs outside of the store. One man holds up his phone to the window of the store. | Defamation Libel Nuisance |
| Tab 66 | People holding signs and teenagers stand on the sidewalk outside of the store. They applaud when people exit the store. The man holding the “Boycott Mamma's Pizza” sign uses his phone to video record the people who exit the store. A man who exits the store holds up his phone and films the group. | Defamation Libel Nuisance |
| Tab 74 | Video taken inside the store. Shows a man standing outside the store, kicking his heels against the store wall. | Nuisance |
| Tab 75 | Video taken inside the store. Shows a man standing outside the store, kicking his heels against the store wall. | Nuisance |
| Tab 76 | Video of a person exiting the store, filming the people holding signs and the teenagers outside the store. The people holding signs and the teenagers applaud. The speaker says, “don't harass me.” A person standing on the sidewalk says, “not harassment.” The man in the red hat uses his phone to record the person filming the video. | Defamation Libel Nuisance Harassment |
| Tab 77 | Video taken inside the store. Shows a man standing outside the store, kicking his heels against the store wall. | Nuisance |
162For the reasons that follow, I find the great majority of the counterclaims cannot be sustained.
Nuisance
163Nuisance is an interference with the claimant’s use or enjoyment of land that is both substantial and unreasonable: Antrim Truck Centre Ltd v. Ontario (Transportation), 2013 SCC 13, [2013] 1 S.C.R. 594, at para. 18.
164Accordingly, the defendants must prove that Ozzy’s activities outside the store in the weeks following the termination substantially and unreasonably interfered with the defendants’ use and enjoyment of their property. If that threshold is met, the inquiry proceeds to the reasonableness analysis: Antrim, at para. 19.
165I am not persuaded that Ozzy’s actions rose to the level of being a nuisance.
166The defendants say that nuisance is established by:
a. The fact of the protests themselves, just outside the store.
b. The actions of some of the protestors, including Ozzy, who:
i. “Scream[ed] obscenities at customers”,
ii. Convinced one or more persons to enter the store and cause a scene,
iii. Glued posters to the store windows, and
iv. Knocked or banged against the store’s windows in a repetitive and annoying manner.
c. The fact that the defendants hired a security firm, whose employees later quit because they felt “unsafe”.
167Based the evidence, I am persuaded on a balance of probabilities that:
a. Ozzy, both alone and, sometimes, with others:
i. stood outside the store every or most days until sometime in November 2021;
ii. held signs with various statements about Mamma’s Pizza;
iii. chanted and clapped when employees would enter and leave the store;
iv. engaged with passersby to explain that he had been unfairly locked out of his longtime franchise; and
v. took videos of people entering and exiting the store. For clarity, I do not accept Ozzy’s testimony that he took videos for his own protection.
b. During a few weeks around July 2021, on at least one occasion, one or more of the people protesting with Ozzy:
i. affixed notices on the storefront’s window with an adhesive that the employees had to remove; and
ii. knocked their feet or hips against the storefront’s glass windows, producing a sound that could be heard inside the store.
c. At least some people ordered pizzas and failed to pick them up. There was no evidence of how many.
d. The defendants hired a security firm. The guards assigned to the store sent numerous emails complaining of the situation with the protest. The guards appear to have felt intimidated. Michel Harb testified that at least one guard quit.
168The reasons I decline to find nuisance are:
a. I am not persuaded that Ozzy and other protestors “shouted obscenities at customers and staff”. There are no obscenities captured on the videos that I reviewed, including those shown in court. The defendants’ chart does not list any. The video at Tab 76 noted on the chart above was taken by someone leaving Mamma’s Pizza when someone outside appears to call out “piece of shit”. However, upon reviewing the video I am satisfied that word spoken was “pizza”.
b. I am not persuaded that the security company’s emails to Mamma’s Pizza about the situation, or the fact that one guard assigned to the franchise quit, proves nuisance. There is no evidence about the security company’s experience with handling protests or how it trained its guards. The videos do not show an unsafe situation. At most, the environment is unruly, with fewer than a half dozen protestors in front of the store with signs and, on a very few occasions, larger groups that appear to consist mostly of teenagers. Police attended the premises more than once but never pressed charges. There is no evidence that anyone ever called the police to lay a specific complaint.
c. I am not persuaded that, on or about July 30, 2021, Ozzy encouraged “a black male” and/or “ten other individuals” to enter the store and berate staff. This information is found in one of Michel Harb’s emails to the franchisor. At trial, Michel testified that, through a store window, he glimpsed Ozzy speaking to a black male who then came charging into the store. Michel could not speak in detail about the other ten people who purportedly entered the store as he wrote in his email, and it was not clear whether he was describing a swarming of some sort. Despite the many videos introduced by the defendants, neither of these events is depicted. To be clear, it is possible that former customers or members of the public did enter the store and express their displeasure to the franchisor and/or staff. But there is no evidence of harassment.
d. I do not find the interaction with the female customer mentioned in Michel Harb’s July 30 email probative of nuisance. Michel said that someone entered the store and told staff she was so “afraid she would be attacked and spat on” that she wanted to cancel her order. There is no evidence of what caused this person to form that fear. The woman gave her name and number, but Mamma’s Pizza did not follow up. Given the lack of detail about the customer’s interaction with the protestors, I cannot conclude, on a balance of probabilities, that the alleged incident proves nuisance.
169Applying the test for nuisance to the facts as I find them:
a. I am satisfied that Ozzy’s protest caused some interference with the franchise in the weeks immediately following his termination:
i. The protest was occasionally loud and unruly and was noticed by at least some customers. At times it was annoying, such as when people knocked their heels against the store windows.
ii. The protest appears to have caused stress to security guards assigned to the store.
iii. Some protestors glued posters to the store windows. I find that the protestors did so at Ozzy’s direction.
b. For the following reasons, however, none of the interference was “substantial”:
i. The store remained open.
ii. There is no evidence that the protest dissuaded a considerable number of customers from entering the store to either place or pick up orders.
iii. There is no evidence of interference with delivery drivers.
iv. The protests were most active for the few weeks when others joined Ozzy, and there is no evidence of a decrease in sales during that period.
v. While gluing posters to the windows is unlawful, I am not persuaded that that behavior substantially interfered with the operations of the franchise.
c. Were it necessary to reach the issue, I would not find that any interference was unreasonable because:
i. There was no evidence of protestors entering the store, and I have rejected as unproven the allegation that Ozzy persuaded people to enter the store and harass staff.
ii. While the protests were occasionally unruly and annoying, they remained peaceful.
iii. The court must be cautious about awarding damages against protestors engaged in otherwise lawful expression: Daishowa Inc. v. Friends of the Lubicon (1998), 1998 14828 (ON CTGD), 39 O.R. (3d) 620 (Ont. Gen. Div.) (“Lubicon”).
170Accordingly, the claim in nuisance is dismissed.
Defamation
171The defendants allege that Ozzy engaged in a variety of defamatory acts. Those acts include statements, signs, photographs in news articles and posted online, and social media hashtags. Some statements were published, and others were spoken. Some statements were disseminated online. Therefore, some statements constitute libel and others slander.
172The plaintiffs argue that, to the extent that any of the statements are defamatory, the defence of truth, fair comment and/or qualified privilege applies.
173The plaintiffs object that the defendants did not file notice under the Libel and Slander Act, RSO 1990, c. L.12. I agree that the defendants never asked the plaintiffs to cease their activities, such as by a notice of libel. The defendants have not made explicit claims tied to the interview of Ozzy and accompanying photograph published in a community newspaper. I rely on this news article for the photograph of the signs carried by Ozzy and other protestors, and as evidence that Ozzy said that Mamma’s Pizza increased his royalties by 70%.
174For the reasons that follow, Ozzy is not liable in defamation.
The Law
175An action for defamation lies against the maker of a statement whose publication tends to lower the plaintiff's reputation in the estimation of right-thinking members of society: Lubicon, supra, at p. 655.
176Defamation requires that:
a. The words complained of were published, meaning that they were communicated to at least one person other than the plaintiff (in this case, the franchisor);
b. The words complained of referred specifically to the plaintiff or a reasonable person would conclude that they were about the plaintiff; and
c. The impugned words would tend to lower the plaintiff’s reputation in the eyes of a reasonable person, and are justified as a true statement, fair comment, or made on an occasion of privilege.
Bent v. Platnick, 2020 SCC 23, [2020] 2 S.C.R. 645, at para. 92; UM Financial Inc. v. Butler, 2025 ONCA 844, at para. 4.
177A business’ reputation is one of its most valuable assets: Bent, at para. 146.
178To analyze defamation, the court must, first, consider the statement in the “natural and ordinary meaning” of its words, which is a “matter of impression”: Chopak v. Patrick, 2020 ONSC 5431 at para. 36. In that case, Justice Schabas writes:
As Lord Reid stated long ago in Lewis v. Daily Telegraph Ltd., [1964] A.C. 234, at 258-260, the judge or jury, as the case may be, asks simply “what the words would convey to the ordinary man,” who “does not live in an ivory tower and … is not inhibited by a knowledge of the rules of construction.” The “ordinary man” is “not avid for scandal,” is neither “unusually suspicious” or “unusually naïve,” and “one must try to envisage people between these two extremes and see what is the most damaging meaning they would put on the words in question.” (emphasis added) As Binnie J. put it in WIC Radio v. Simpson, 2008 SCC 40, [2008] 2 S.C.R. 420, at para. 56, “[t]he Court is to avoid putting the worst possible meaning on the words.”
Chopak, ibid.
179The court must determine whether the alleged statement would tend to lower a plaintiff’s reputation in the eyes of the ordinary observer. If it would, the court must then decide whether the statement is subject to a defence. The available defences turn in part on whether the statement is one of fact, or an expression of opinion. Statements of fact capable of objective proof require the court to consider the defence of justification: Chopak, supra, note 41. If the statement is one of opinion, then among other things the defence of fair comment can apply.
180The distinction between fact and comment must also be determined from the perspective of a ‘reasonable viewer or reader’: Chopak at para. 42 citing WIC Radio at para. 27.
181In considering whether the defence of fair comment applies, I rely on para. 25 from WIC Radio:
In Ross v. New Brunswick Teachers’ Assn. (2001), 201 D.L.R. (4th) 75, 2001 NBCA 62, at para. 56, the New Brunswick Court of Appeal correctly took the view that "comment" includes a "deduction, inference, conclusion, criticism, judgment, remark or observation which is generally incapable of proof." Brown's The Law of Defamation in Canada (2nd ed. (loose-leaf)) cites ample authority for the proposition that words that may appear to be statements of fact may, in pith and substance, be properly construed as comment. This is particularly so in an editorial context where loose, figurative or hyperbolic language is used (Brown, vol. 4, at p. 27-317) in the context of political debate, commentary, media campaigns and public discourse. See also, R. D. McConchie and D. A. Potts, Canadian Libel and Slander Actions (2004), at p. 340.
182To sustain a defence of fair comment:
a. the comment must be on a matter of public interest;
b. the comment must be based on fact;
c. the comment, though it can include inferences of fact, must be recognisable as comment;
d. the comment must satisfy the following objective test: could any man honestly express that opinion on the proved facts?; and
e. if the comment satisfies the objective test, the defence will still be defeated if the plaintiff proves that the defendant was acting out of express malice which was a “dominant motive” for the statement.
WIC Radio Ltd. v. Simpson, 2008 SCC 40, [2008] 2 S.C.R. 420, at para. 1, citing Cherneskey v. Armadale Publishers Ltd., 1978 20 (SCC), [1979] 1 S.C.R. 1067, at pp. 1099-1100; and para. 53.
183The plaintiff also relies on qualified privilege:
Qualified privilege attaches to “the occasion when the defamatory statement is made, not to the statement of itself” [citation omitted]. Qualified privilege involves reciprocity or mutuality. The statement maker must have some interest in making it and the receiver(s) must have some interest in receiving it. The defence is aimed at serving the public in the sharing of information, rather than serving the private interests of either the defamer or the recipient. Privilege attaches only to the extent that the communication was reasonably appropriate in the context of the circumstances at the time the information was given. The test is whether persons of ordinary intelligence and moral principle, or the great majority of right-minded persons, would have considered it a duty to communicate the information to those to whom it was published.
Brent v Nishikawa, 2016 ONSC 4297, para.16.
184Even in private disputes, the tort of defamation must be interpreted in a way that is sensitive to the fundamental freedom of expression protected by s. 2(b) of the Canadian Charter of Rights and Freedoms: WIC Radio, at para. 1.
185Ozzy argues that Mamma’s Pizza cannot be “defamed”. Rather, the proper claim is “trade libel”. That is because, he says, a corporate person has no compensable injury related to reputation alone. Any injury must be related to a business loss: Manning v. Epp, 2006 24126 (Ont. S.C.). While the question of damages does not arise in this case, for clarity, I find this argument overstated. In many cases, courts have accepted defamation arguments against corporations, including Barrick Gold Corp. v. Lopehandia (2004), 2004 12938 (ON CA), 71 O.R. (3d) 416 (C.A.); Lubicon. The caselaw distinguishing corporate plaintiffs has to do with whether they can recover damages for injury to reputation alone. It is true that, while damages are presumed upon proof of defamation, the Court of Appeal for Ontario has held that there is no presumption as to the quantum or impact of those damages: James Bay Resources Limited v. Mak Mera Nigeria Limited, 2025 ONCA 448 at para. 79. In the same case, the Court held that for corporate plaintiffs, substantial damages are unlikely absent proof of special damages or at least general loss of business or goodwill: ibid. That, however, does not mean that damages are off the table.
Application
186The defendants/plaintiffs by counterclaim cite the following acts as defamatory:
a. The statement made on various occasions, including in an interview published by Beach Metro Community News on August 6, 2021, that Ozzy was locked out of the franchise because he refused to pay 70% increase in royalties;
b. The following signs held outside the store, some of which also appeared in a photograph accompanying the above article:
i. “We got locked out of work in the midst of a pandemic”
ii. “Boycott Mamma's Pizza”
iii. “They called it business we call it theft”
iv. “Mamma’s secret ingredient is greed”
c. The social media hashtag #mammasgreed created by Ozzy, or someone authorized by Ozzy, and used in connection with Queen Mamma’s Instagram account during the summer of 2021;
d. Statements to others that Ozzy had paid all rent and other fees owing on the franchise; and
e. Statements to others that Mamma’s Pizza “illegally took the store away”.
187To begin, on a balance of probabilities I accept that:
a. The statements were published. Ozzy made all of the statements to at least one other person. Where other people held signs, I find that (a) Ozzy created the signs and (b) the persons holding them did so at his request or direction.
b. Where the signs or statements did not explicitly refer to Mamma’s Pizza, with one exception (discussed below) the ordinary person would understand that they were about Mamma’s Pizza. For example, the sign stating “We got locked out of work in the midst of a pandemic” was part of a protest outside the store and was almost always part of a group of signs that did reference the corporation. The ordinary person would understand “the store” to be a Mamma’s Pizza franchise.
188Therefore, with one exception (discussed below) the first two elements of defamation from Bent are satisfied.
189The third component of the Bent test is that the purported statement must be defamatory, in that it “would tend to lower the plaintiff’s reputation in the eyes of a reasonable person”, and is not otherwise justified as truth, or subject to the defence of fair comment, or otherwise protected by some form of privilege. In determining whether this component is met, I will consider relevant defences, for which Ozzy bears the burden of proof.
190I am not persuaded that malice is established for any of the statements. To be sure, Ozzy harboured ill feeling towards Mamma’s Pizza. But that is not sufficient to find malice, which must be the speaker’s “dominant motivation”: Chopak at para. 56. Here, I do not find that it is. Ozzy felt a deep sense of betrayal. He believed Mamma’s Pizza treated him unfairly. I have found that Ozzy’s franchise was terminated without reasonable notice. I am satisfied that Ozzy was acting out of desperation, not malice.
191Given how I dispose of the issues, it is not necessary to deal with the defence of qualified privilege.
1. The royalty rate argument
192Ozzy repeatedly stated that Mamma’s Pizza was trying to “increase his royalties by 70%”.
193For the purpose of analysis, I accept that a statement that a corporation has significantly increased someone’s royalty rate could lower the corporation’s reputation in the eyes of a reasonable observer. In such a case, the statement is defamatory.
194The statement is one of fact. The parties disagree over its truth.
195Ozzy argues that:
a. In 2019, he and the Former Franchisor/Mauro Galli agreed to royalties of $1,575 per month.
b. The royalties in the proposed franchise agreement from the new franchisor were 5% of gross, which at $50,000 a month is $2,500 – an increase of 63%.
c. The store was earning $50,000 per month in gross sales.
d. Applying the basic Consumer Price Index for the following years 2022, 2023, 2024, the royalty increase would exceed 70%.
196Mamma’s Pizza argues that the asserted 70% rate was false in 2021 and unknowable in future years, because:
a. From 2014-2019, Ozzy paid royalties of $1,500 a month.
b. The 2019-2024 agreement contained a monthly royalty rate of $1,575 beginning April 1, 2019, but Ozzy never paid that amount and never signed that agreement.
c. Had Ozzy signed the renewal agreement for 2019-2024, the increase in royalty rate would have been 5%.
d. The current franchisor “had the contractual right to compel QM to sign the then current form of franchise agreement which provided for percentage royalties rather than a flat rate.”
e. Ozzy’s statement must be evaluated against the rate of increase that would have applied in 2021, not the entire 5-year agreement.
f. A 70% increase from a rate of $1,500 a month is $2,550 a month, which would require gross sales of $51,000 a month or $612,000 a year.
g. Gross sales for the year ending March 31, 2021, were $520,929 or $43,400 a month. There is no evidence of gross sales for 2022.
197I find the royalty rate statement justified. I do not accept, as the defendants claim, that the only correct way to calculate Ozzy’s royalty increase is to base it on actual sales as of March 31, 2021. The franchise negotiation was for a term of five years. Therefore, a statement about the royalty rate increase can rest on certain factors in the underlying calculations. In particular, a calculation about a royalty rate can include future sales. Starting from the original flat rate of $1,500, those sales would only have to increase by $6,000 a month for the royalty rate increase to be 70%. Therefore, on a balance of probabilities, I find that Ozzy’s statement that his royalties were increasing by 70% was justified.
198If I am wrong about the 70% increase, I find the statement to be substantially true. Using Queen Mamma’s figures – a royalty rate calculated solely on 2021 gross sales – a five percent monthly royalty rate would be $2,170 (based on monthly sales of $43,400). Based on the original flat rate of $1,500, that $2,170 payment would represent a royalty increase of 44%. That is a high rate on its own. Accordingly, a statement that Mamma’s Pizza raised Ozzy’s royalty by 44%, which on Queen Mamma’s own analysis is true, retains the defamatory sting. The original statement is therefore justified in either event.
2. Other statements on signs and communicated to passersby and others
199Ozzy’s communications included:
a. Signs held outside the store, and statements, which said:
i. “We got locked out of work in the midst of a pandemic”
ii. “They unlawfully took our store away”
iii. “Boycott Mamma's Pizza”
iv. “They called it business we call it theft”
v. “Mamma’s secret ingredient is greed” together with a hashtag “#mammasgreed”, which Ozzy used in social media posts, primarily on Instagram.
vi. A statement Ozzy had paid all rent and fees.
i. Being “locked out during a pandemic”
200Ozzy’s statement that he was “locked out during a pandemic” is a statement of fact.
201In its ordinary meaning, the statement is defamatory. It suggests that the person doing the locking out is callous and cruel, which would tend to lower their reputation. In this case, however, the statement is true. Ozzy’s franchise was terminated without reasonable notice. The franchisor changed the locks on the store. I take judicial notice of the fact that, on June 26, 2021, Ontario was still experiencing the COVID-19 pandemic. Therefore, the statement is justified.
ii. “They unlawfully took our store away”
202The defendants state that Ozzy defamed them by publicly stating that his store had been “unlawfully taken away”. That is a statement of fact.
203A statement by someone that their store was unlawfully taken from them is defamatory. Similar to the statement about being “locked out”, such a statement would tend to lower the reputation of the person alleged to have unlawfully taken the store.
204In this case, the statement is justified. Ozzy’s franchise was terminated without sufficient notice, which is unlawful.
iii. “Boycott Mamma’s Pizza”
205A statement that one should boycott a business is a statement of opinion about how others should treat that business – in this case, Mamma’s Pizza. It is defamatory, because, in its ordinary meaning, it suggests that Mamma’s Pizza has done something so wrong no one should engage in commerce with it.
206This is not a case of secondary picketing: Lubicon at para. 648. Ozzy engaged in peaceful expression about his former franchisor, outside his former store. I find that a reasonable person could honestly hold the opinion that, because of the way that Ozzy was treated, including having his franchise terminated on two days’ notice, Mamma’s Pizza should be boycotted. Accordingly, the defence of fair comment applies.
iv. “Theft”
207The plaintiffs held up signs stating: “They call it business we call it theft”.
208That statement is an opinion. The signs say that the plaintiffs ‘call’ what Mamma’s Pizza does theft, while Mamma’s Pizza ‘calls’ what it does ‘business’. The plaintiffs do not allege that Mamma’s Pizza committed theft, per se, but that its actions are tantamount to it.
209Ozzy’s closing submissions do not address the word in particular. He argues that rude comments cannot be defamatory: Gill v. Maciver, 2022 ONSC 1279.
210I do not accept that the term ‘theft’ is simply rude comment. Any hint of theft, particularly against a business, is serious. The term is defamatory – it would tend to harm Mamma’s Pizza’s reputation.
211However, based on Ozzy’s testimony, I find that an ordinary person could honestly form the opinion that some of Mamma’s Pizza’s terms for renewal, such as the increased royalty rate, were unfairly onerous; and its termination of the franchise was unjust. Consequently, a person could form the opinion that Mamma’s Pizza ‘stole’ Ozzy’s franchise from him. The opinion itself need not be reasonable. It need only be something a person could honestly hold and that has some basis in fact. Here, I find that to be the case.
212Therefore, based on the evidence including Ozzy’s testimony of how he felt about his treatment by Mamma’s Pizza, I find the statement “They call it business, we call it theft” to be fair comment.
v. “Mamma’s secret ingredient is greed”; #mammasgreed
213Next is the question of whether using the word “greed” is defamatory.
214Whether a person is ‘greedy’ is not something capable of objective proof. Calling someone greedy involves a moral judgment that amounts to a statement of opinion.
215I am not convinced that calling a corporation “greedy” is likely to lower that corporation’s reputation in the eyes of a reasonable person. The word “greedy” is so commonplace as regards corporations that it may no longer be an epithet but the kind of ‘rude word’ that is not caught under the definition of defamation: Gill v. Maciver, 2022 ONSC 1279, at para. 69, citing Langille v. McGrath (2000), 2000 46809 (NB QB), 233 N.B.R. (2d) 29 (Q.B.).
216If I am wrong, and the term “greedy” would tend to lower Mamma’s Pizza’s reputation, it is fair comment because:
a. Mamma’s Pizza is a corporation selling goods to the public. Comments about its practices are a matter of public interest.
b. The comment that Mamma’s Pizza is “greedy” is based on the fact that Ozzy’s franchise was terminated, he says, unfairly.
c. Calling a corporation “greedy” is clearly recognizable as comment.
d. A person could honestly form the opinion that, in its treatment of Ozzy, Mamma’s Pizza acted in a greedy manner.
e. As explained earlier, I am not persuaded that Ozzy was motivated by malice.
f. I acknowledge that a hashtag used in social media posts likely will be viewed by more people than signs accompanying a physical protest outside a store. Here, however, there is no evidence of how many people saw the posts using the hashtag #mammasgreed. There is therefore no basis on which to conclude that the hashtag worsened the defamatory sting.
vi. Ozzy’s statement that he had paid all rent and fees
217During the protests, Ozzy told other people he had paid all rents and fees. This is a statement of fact. However, it is not defamatory. Because it says nothing about Mamma’s Pizza, the statement cannot have damaged the franchisor’s reputation.
3. Conclusion on defamation
218I do not find Ozzy liable for any of the impugned statements. The statements are either not defamatory, are justified, or are subject to the defence of fair comment.
Trespass
219While not specifically pleaded, in their closing submissions the defendants argue:
[In] Windsor Salt Ltd/Sel Windsor Ltee, 2023 ONSC 1431, in the context of an interim injunction, the court referred to trespass at common law with respect to picketers:
…Moreover, while picketing is presumptively legal and constitutionally protected, such picketing is impermissible where it breaches the criminal law or involves other unlawful conduct such as nuisance, trespass and/or intimidation. The evidence I received in this case included details of specific instances where picketing activity had not only interfered with, obstructed and/or prevented entry to and exit from the plaintiff’s property, but occasions on which picketers had entered onto the plaintiff’s property, attempted to open the doors of vehicles trying to enter the plaintiff’s property, and subjected those trying to enter or leave the plaintiff’s property with verbal abuse that included threats of future harm, while also blaring loud horns and sirens and shining strobe lights and other directed light at the occupants of vehicles being held at the picket lines. In my view, such conduct clearly rises to the level of unlawful and impermissible nuisance, trespass and intimidation.
220Trespass, which is actionable without proof of damage, is “an unjustified intrusion by one person upon land in the possession of another”: 1229965 Ontario Inc. v. York Condominium Corp. No. 263, 2020 ONSC 1639, at para 81.
221The defendants’ amended statement of defence and counterclaim claims that Ozzy “glued signs to the windows of the Premises…causing damage to the windows.” Those facts are sufficient for me to consider trespass notwithstanding that it was not specifically pleaded.
222I have already found that the evidence does not establish that Ozzy committed a nuisance. Given that the protests were peaceful and the videos do not show that protestors shouted obscenities, I also decline to find that the Ozzy’s protests involved intimidation.
223However, Ozzy and/or the protestors acting under him glued flyers to the store windows. I am not satisfied that that caused damage to the windows. There is no evidence that the windows needed to be replaced. Therefore, any trespass that occurred is minor. Nevertheless, no one should have glued anything to the windows. Therefore, I find Ozzy liable in trespass.
Intentional Interference with Economic Relations
224The defendants allege that Ozzy interfered with their economic relations.
225The test for intentional interference with economic relations is:
a. The defendant must have intended to injure the plaintiff’s economic interests;
b. The interference must have been by illegal or unlawful means; and
c. The plaintiff must have suffered economic harm or loss as a result.
ID Inc. v. Toronto Wholesale Produce Association, 2024 ONCA 948, 60 B.L.R. (6th) 23, at para. 21, citing Alleslev-Krofchak v. Valcom Ltd., 2010 ONCA 557, 322 D.L.R. (4th) 193.
226I am not persuaded that the test is met in this case. I accept that Ozzy at least partially intended to injure Mamma’s Pizza’s economic interests, because he urged people to boycott the business. But I am not persuaded that Ozzy did so through illegal or unlawful means.
Damages Flowing From the Alleged Civil Wrongs
227The defendants submit the following amounts for consideration in any damage award:
| Item | Amount |
|---|---|
| Bailiff | $932.25 |
| Security guard | $2,637.99 |
| Junk removal | $1,735 |
| Renovation costs | $108,118.10 |
| Sale of Location | $(-) 245,000 |
| Payments to Purchaser | $40,000 |
| Teplitsky fees | $15,704.7 prior to claim |
| Outstanding from June 21 | $3,295.35 |
| Torkin Manes | $7,100 |
| Royalties 17x$75 | $1,275 |
228Recall that I have found that the former franchisor, Monte Carlo/Mauro Galli, waived the legal fees. Therefore, the new franchisor has no remedy from Ozzy for them.
229Given that the franchisor did not provide Ozzy with sufficient notice, I decline to award any damages for events surrounding the taking of the franchise in June 2021, including legal fees. I do find it appropriate to award the Defendants the amount owing for the royalties ($1,175). Ozzy did not dispute that he should have paid this higher rate. He thought it was automatically being withdrawn through a pre-authorized debit agreement. I am satisfied that it was not.
230The defendants claim damages of $200,000 for defamation, libel and slander. They claim additional damages of $1,000,000 for “breach of the Franchise and Sublease and harm to the Mamma’s Pizza system, brand and reputation.” The damages for the second head relate at least partially to the civil wrongs I have analyzed above.
231Other than trespass, I have dismissed the claims in nuisance, in defamation and in intentional interference. Therefore, no damages are owing for any of them.
232For clarity, I will note that the defendants rely on an income statement for 2118 Queen St. E. from July 2021 to August 2022 that shows the store lost $84,562. The defendants appear to claim the costs for the security guard they hired during the protests in July. The defendants likewise claim for the costs of converting the store into a Pizza Depot, something they say they had to do after Ozzy had tainted the Mamma’s Pizza brand.
233Had it been necessary to reach the issue, for the following reasons, I would have found that Ozzy’s protest outside the store is not linked to any economic loss of the defendants:
a. Ozzy had a right to engage in peaceful protest and to express his views about the termination of his franchise.
b. Any damages must be linked to unlawful actions. Other than a minor trespass, Ozzy’s actions were not unlawful.
c. The protest was active for a couple of weeks outside the store. Ozzy continued to picket for a few months afterwards. It was a small-scale event.
d. The protest was not violent. There is no evidence that the protestors entered the store. I do not find that the increased costs for security are linked to any wrongdoing.
e. Ozzy was a longtime franchise owner and community member. To the extent that the franchise experienced decreased sales, there is no evidence that that decrease was caused by Ozzy’s protest, as opposed to public sympathy for or loyalty to him.
f. There is no evidence about how much if any money was lost in sales during July 2021 when the bulk of the protests occurred.
g. I am not persuaded that any of Ozzy’s activities played a role in the franchisor’s decision to convert the Queen Street E. location from one pizza brand to another. Marko already owned the Pizza Depot brand. He admitted that a number of Mamma’s Pizza franchises were also converted during this period. I reject his testimony that the Queen Mamma franchise was converted primarily because of Ozzy.
234I have found that trespass occurred when Ozzy and protestors under his direction glued things to the store’s windows. This behaviour was wrong, but not gravely so. I award nominal damages of $100.
Is the defendants’ evidence about economic loss served and filed on or about January 5, 2026 (i.e., just before the trial) admissible?
235Given that I have dismissed the defendant’s claims for damages flowing from economic loss, it is not necessary to address the plaintiffs’ objection that any evidence filed the day before the trial is inadmissible.
Is Ozzy a proper plaintiff to these proceedings?
236While the defendants did make this argument in their opening and closing oral submissions, their written submissions do not address the legal basis on which the court should exclude Ozzy as a proper plaintiff to these proceedings.
237The damages owed by the defendants are limited to their failure to provide the plaintiffs reasonable notice. There are no damages owed on account of Ozzy’s personal economic loss, such as that spoken to by the expert income report.
238Therefore, it is unnecessary to address this issue.
Do the named defendants Mr. Joginder Singh Khakh, Mama’s Marketing Inc. or 2755067 Ontario Inc., have any liability to the plaintiffs?
239This is another issue raised at trial but not discussed at length. The defendants’ written argument does not address it. Nor is a specific remedy – such as a stay – requested.
240I acknowledge that the other named defendants did not appear at trial, were not questioned and did not submit affidavits.
241Given the modest damages flowing from this decision, I find it unnecessary to answer this question.
ORDER
242In conclusion, I make the following order:
a. The Plaintiffs’ claim is granted in part:
i. The Plaintiffs are owed damages in the amount of $10,000 for termination of a month-to-month franchise agreement without reasonable notice.
ii. This amount is offset by the awards made in the Defendants’ favour, noted below.
iii. All other claims are dismissed or are moot.
b. The Defendants’ counterclaim is granted in part
i. The Plaintiff Ajmal Anwari did trespass the Defendant 2755060 ONTARIO INC., DBA MAMMA'S PIZZA. For this, I award nominal damages of $100;
ii. The Defendant’s claim for royalties in the amount of $1.275.00 is granted;
iii. All other claims are dismissed or are moot.
c. Pre- and post-judgment interest shall be governed by the Courts of Justice Act.
d. The parties are urged to come to an agreement on costs. Should they be unable to, they may submit argument of no more than seven pages, together with bills of costs and offers to settle, within 45 days of this Order. There shall be no right of reply.
e. The parties may submit an Order consistent with the above provisions for my signature within 14 days.
Mathen J.
Released: March 24, 2026
Footnotes
- In these reasons, I use some parties’ nicknames, respectfully, as that is how they were referred to at trial.
- The letter cites 16.00. Earlier in these reasons, I noted the termination provisions which are found in 16.01. For clarity, the Franchise Agreement subheading for “Termination” is numbered “16.00”.