Despite the retroactive nature of the Arthur Wishart
Act (AWA) (Act), its anti-waiver provision only applies to
rights purportedly waived after the date on which the AWA came into
force, according to a recent decision of the Ontario Superior Court
In Healy v. Canadian Tire Corporation (Healy), the
Court held that the franchisee had waived his right to claim for
negligent misrepresentation in respect of a change to the franchise
relationship, by failing to give notice of the claim pursuant to
his dealer agreement. Though the dealer agreement was signed after
the AWA's effective date, the representations were made
before the AWA came into force.
Healy, was an appeal of an arbitral award that accorded
the franchisee damages of $250,000 for a breach of the duty of fair
dealing in respect of a 2005 store renovation project, but denied
recovery on the more substantial issue of alleged negligent
misrepresentation in respect of a replacement store project from
2000 (Replacement Build).
The franchisee had participated in the Replacement Build,
replacing and relocating its Canadian Tire franchise. The
franchisee claimed that the franchisor had made negligent
misrepresentations in respect of certain sales forecasts, which
were provided to the franchisee regarding the Replacement
Among the reasons given by the arbitrator for refusing the
negligent misrepresentation claim, was that the franchisee had
waived the claim by failing to give notice of it pursuant to the
terms of his Dealer Contract with the franchisor. However, the
franchisee argued that the waiver provided in the Dealer Contract
was negated by section 11 of the AWA, which voids "any
purported waiver or release by a franchisee of a right given under
this Act or of an obligation or requirement imposed on a franchisor
or franchisor's associate."
The relevant dates would be central to the Court's
decision. The sales forecast for the Replacement Build was provided
by the franchisor in March 2000. The AWA, and its section 3 duty of
good faith and fair dealing, came into force several months later,
on July 1, 2000. The effective date of the Dealer Contract was July
13, 2000, 12 days after the AWA came into force but the Dealer
Contract was actually signed on January 15, 2001, six months after
the AWA's effective date.
The franchisee also claimed that damages for the Replacement
Build should have been in excess of $3 million, a figure which was
substantially higher than the amount the arbitrator would have
awarded if the franchisor had been found liable for negligent
misrepresentation. The arbitrator significantly reduced the damage
award in light of the franchisee's own breaches of the duty
of good faith and fair dealing.
The Court Narrowly Interprets Section 11 and Affirms Franchisee
The Court found that section 11 only acts to void a release of a
right given under the AWA. Because the alleged misrepresentations
occurred in March 2000, before the AWA came into force, the Court
held that no right under the AWA had been waived by the Dealer
The Court made this finding even while acknowledging that
section 2 of AWA makes the Act applicable to a renewal or extension
of a franchise agreement entered into before the coming into force
of the AWA. Though the AWA applied to the Dealer Contract, the
Dealer Contract's waiver/release provision was accepted in
respect of representations given before the AWA came into force,
and therefore did not constitute a waiver of a right under the
The Court also affirmed the arbitrator's finding in
respect of the damages reduction. It affirmed that the section 3
duty of good faith and fair dealing is a "two-way street"
and that the arbitrator was justified in reducing the assessed
damages, as a result of the franchisee's own (unspecified)
breaches of the Dealer Contract.
Impact of the Decision
The decision in Healy makes clear that waivers
pre-dating the AWA can survive and can be enforced by the
franchisor. It also affirms that the duty of good faith and fair
dealing is owed as much by franchisees as by franchisors.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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