Over four years after the certification of the case as a class
proceeding, and over six years after the action was commenced, the
Ontario Superior Court of Justice approved a settlement of the
class action brought on behalf of Midas franchisees against their
franchisor regarding 2003 changes to the Midas franchise
In 405341 Ontario Limited v. Midas Canada Inc.,
Madam Justice Lax approved a settlement that provides for the
franchisor paying franchisee class members $8,500,000, inclusive of
interest, legal fees, disbursements, administration expenses and
taxes. In approving the settlement, which was for significantly
less than the amount originally claimed by the plaintiff
($75,000,000), the Court noted the changing landscape in Canadian
franchise litigation, particularly in respect of the recent Tim
Hortons decisions where the Ontario Court of Appeal outlined the
difficulty of proving bad faith and the lack of fair dealing in
respect of franchise system changes:
Midas relies heavily on the TDL case, where the court
dismissed an action brought by franchisees in the Tim Hortons
franchise system who alleged bad faith conduct. The TDL
case certainly highlights the risk of loss at trial. In his
reasons, Justice Cullity acknowledged that proving bad faith and
lack of fair dealing would involve the "difficult exercise of
weighing the detriment suffered by the Franchisees, as a result of
the change in the products supply system, in light of the undoubted
right of Midas to give consideration and weight to its own
interests".... Even if the plaintiff is successful at trial,
the anticipated range of damages for breaches of the duties of good
faith and fair dealing is uncertain. Moreover, appeals are
It is heartening to Canadian franchisors to have the Court
acknowledge that "the jurisprudence in franchisee class
actions has developed" in respect of good faith and fair
dealing claims in respect of system changes. Given the
jurisprudential progression, franchisors can hopefully expect
courts to thoroughly analyze proposed franchisee class actions to
ensure the legitimacy and appropriateness of statutory and common
law bad faith claims.
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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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