Franchise Law - SCJ

Following a motion where the defendants were largely unsuccessful in seeking further particulars and striking paragraphs of the plaintiff's statement of claim, the plaintiff sought costs of $11,923.04.

The court found the plaintiff was substantially successful and the defendants' motion was largely unnecessary.

The court awarded the plaintiff costs fixed at $8,500 on a partial indemnity scale.

The defendants appealed a Master's order that granted the plaintiffs leave to amend their statement of claim to add new defendants and new claims regarding supplier contributions to an advertising fund, and ordered related documentary production.

The Superior Court of Justice allowed the appeal in part.

The court found that adding a new corporate defendant on the eve of trial constituted an abuse of process given the extensive delays in the nine-year-old franchise dispute.

The court also held that the Master erred in allowing the amendments regarding supplier contributions, as they constituted a new cause of action that was statute-barred and not legally tenable under the clear terms of the franchise agreements.

The Master's orders adding the new party and allowing the supplier contribution amendments were set aside.

The plaintiff franchisee brought a motion for an interlocutory injunction to prevent the defendant franchisor from acting on a Notice of Expiration of a restaurant franchise agreement.

The franchise agreement explicitly stated there was no right to renew after the initial 10-year term.

The plaintiff argued it was entitled to an extension based on alleged oral representations and breaches of the duty of fair dealing under the Arthur Wishart Act.

The court found the requested relief was a mandatory injunction requiring a strong prima facie case.

The court dismissed the motion, finding the plaintiff's case was weak, any potential remedy would likely be in damages rather than an order compelling renewal, and the plaintiff failed to establish irreparable harm.

The applicants, former franchisees, brought an application to enforce a settlement agreement requiring the respondent franchisor to pay $100,000.

The respondents withheld payment, arguing the applicants breached the agreement by continuing to use the franchise's store design and branding.

The court found that the applicants' use of generic open-concept shelving and flooring did not infringe on the franchisor's protected branding.

The court held that the respondents breached the settlement agreement and the duty of fair dealing under the Arthur Wishart Act by withholding the funds.

The application was granted and the respondents' counter-application was dismissed.

Following the dismissal of the plaintiffs' franchise claims under the simplified procedure, the successful defendant sought partial indemnity costs of $145,670.

The plaintiffs argued this amount was disproportionate to the $100,000 at issue and suggested $35,000.

The court applied the factors under Rule 57.01(1), emphasizing proportionality and the reasonable expectations of the unsuccessful party.

The court fixed the defendant's partial indemnity costs at $65,000, finding the amount claimed by the defendant to be disproportionate to what was at stake in the simplified procedure action.

The defendants brought a motion for security for costs against three corporate plaintiffs (former franchisees) in three related actions.

The plaintiffs argued they were impecunious and that an order would be unjust due to the defendants' delay, the existence of counterclaims, and the nature of franchise litigation.

The court found that the plaintiffs were not impecunious because their shareholders had the ability to fund the litigation.

Applying a holistic approach, the court determined it was just to order security for costs, but reduced the quantum to reflect the defendants' delay and the overlapping counterclaims.

Following their successful motion for an interlocutory injunction restraining the defendant from terminating their franchise business, the plaintiffs sought partial indemnity costs of $115,500.

The defendant argued costs should be reserved to the trial judge or reduced by half.

The court rejected reserving costs, noting the action was at an early stage.

Noting the importance of the issues and the defendant's failure to provide its own costs outline for comparison, the court fixed costs payable to the plaintiffs at $95,000 inclusive of disbursements and HST.

The moving defendants brought a motion to strike various claims from the plaintiffs' Statement of Claim, including claims for statutory rescission, misrepresentation, common law rescission, and all claims against the individual defendant director personally.

The court struck the claim for statutory rescission without leave to amend as it was brought beyond the two-year limitation period under the Arthur Wishart Act.

The court struck the claims against the individual director, finding no separate identity of interest from the corporate franchisor, but granted leave to amend.

The claims for misrepresentation and common law/equitable rescission were also struck with leave to amend due to a lack of necessary particulars.

The defendants brought a refusals motion arising from the examination for discovery of the plaintiff in a franchise dispute.

The defendants sought answers regarding the plaintiff's prior business experience to test his credibility about whether earnings projections were provided at a crucial meeting.

The court ordered the plaintiff to answer these questions, finding them relevant to what occurred at the meeting.

However, the court upheld the plaintiff's refusals to answer questions regarding discussions with his independent legal advice lawyer, as those questions improperly breached solicitor-client privilege.

The defendants in a franchise dispute brought a motion to compel the plaintiff to provide further particulars and to strike numerous paragraphs of the plaintiff's amended statement of claim.

The plaintiff, a former franchisee of a dog daycare business, alleged that the defendants conspired to manufacture grounds to terminate the franchise agreement and take over the location.

The Master dismissed the majority of the defendants' demands for particulars, finding they improperly sought evidence rather than material facts required for pleading.

The Master also declined to strike most of the challenged paragraphs, though a few specific paragraphs and inflammatory words were struck with leave to amend.

The defendants brought a motion to remove the plaintiffs' counsel of record, arguing he would likely be called as a witness at trial regarding his role in assisting a former franchisee to provide documents to the plaintiffs' previous counsel.

The defendants also sought a further and better affidavit of documents regarding these communications.

The court granted the request for a further affidavit of documents, finding the communications and attachments relevant to the issues at trial.

However, the court dismissed the motion to remove counsel as premature, concluding it was unlikely counsel would be called to testify and his evidence would have tenuous relevance.

Following a successful motion for summary judgment where the plaintiffs were awarded $94,874.27, the plaintiffs sought costs.

The plaintiffs had made an offer to settle that triggered the costs consequences of Rule 49.10.

The court found the requested fees and hourly rates to be reasonable and proportionate.

Costs were fixed at $26,355.17 all inclusive, payable by the defendant.

Following the dismissal of the plaintiff's motion for an injunction to prevent the termination of its franchise, the defendants sought their costs.

The court reviewed the parties' offers to settle and the defendants' cost outline.

Finding the time spent and rates charged to be reasonable, the court awarded the defendants their partial indemnity costs fixed at $41,670.61.

The plaintiff franchisor sought costs following a successful motion for summary judgment against the defendant franchisee.

The franchise agreement contained a provision entitling the franchisor to costs on a solicitor and client basis.

The court rejected the defendant's argument that the indemnity only applied to third-party claims and upheld the commercial bargain.

The court awarded the plaintiff costs on a substantial indemnity basis, fixed at $60,000 inclusive of disbursements and HST.

The plaintiff franchisor brought an action against the defendant, the sole shareholder of a former corporate franchisee, to recover over $1.7 million in costs awarded to the franchisor in a prior class action commenced by the franchisee.

The plaintiff moved for summary judgment relying on an indemnification provision in the franchise agreement and a personal guarantee signed by the defendant.

The court granted the plaintiff's motion, finding the defendant personally liable under both the indemnification provision and the guarantee.

The court also dismissed the defendant's cross-motion, rejecting arguments that the claim was statute-barred or previously released.

The plaintiff franchisee sought an interlocutory injunction to prevent the defendant franchisor from acting on a notice terminating the franchise agreement.

The termination followed a dispute over the scope and cost of renovations required for a final five-year renewal.

Applying the RJR McDonald test, the court found a serious issue to be tried but concluded the franchisee failed to establish irreparable harm, as damages would be an adequate remedy and the franchise term was nearing its absolute end.

The balance of convenience also favoured the franchisor, partly because the franchisee failed to provide an undertaking as to damages.

The motion for an interlocutory injunction was dismissed.

Following a Court of Appeal decision remitting the issue of damages to the Superior Court, the plaintiff sought damages under the Arthur Wishart Act after rescinding a franchise agreement due to the franchisor's failure to provide a disclosure document.

The court assessed the plaintiff's claims for lost income, non-competition covenant compliance, and office expenses.

The court awarded $22,317, covering lease payments, office insurance, and a portion of the claimed lost income, while dismissing claims for equipment costs and lost income related to the non-competition covenant.

The plaintiffs, franchisees of the defendant, brought a motion for partial summary judgment seeking declarations that the defendant franchisor breached the Arthur Wishart Act by failing to provide a disclosure document upon renewal of their franchise agreement, and breached its duty of fair dealing.

The franchisor argued it was exempt from providing a disclosure document under s. 5(7)(f) of the Act because there was no material change.

The court dismissed the motion, finding that whether the terms of the renewal agreement constituted a material change, especially in the context of the franchisor's shift toward a corporate service model, presented a genuine issue requiring a trial.

Following a summary judgment in favour of the plaintiff franchisors for unpaid royalties, the court determined costs, the terms of the draft order, and post-judgment interest.

Despite a contractual clause providing for substantial indemnity costs, the court exercised its discretion to award a reduced lump sum of $15,000, finding the plaintiffs' claimed costs excessive for a straightforward motion.

The court also formally dismissed the defendants' counterclaim, which lacked merit, and enforced the contractual post-judgment interest rate of 24% per annum, finding no exceptional circumstances to override freedom of contract.

The applicant franchisor sought to enforce a restrictive covenant against a former franchisee who continued to operate a similar home medical equipment business at the same location after the franchise agreement expired.

The respondents argued the covenant was unenforceable due to a failure to provide a disclosure document under the Arthur Wishart Act and that the covenant was an unreasonable restraint of trade.

The court found that disclosure was not required because the franchisor was not sufficiently involved in the sale of the franchise.

The court also held that the restrictive covenant was unambiguous, reasonable in its 18-month and 30-mile scope, and protected the franchisor's legitimate business interests.

The application was granted and the respondents were ordered to cease operating the competing business.