In 1201059 Ontario Inc. v. Pizza Pizza
Limited,1 the Ontario Divisional Court dismissed a
franchisee's appeal that essentially sought to re-litigate
findings of fact on the issue of statutory materiality that had
already been determined by the Ontario Superior Court of
The issue at the root of the appellant's action was what, if
any, disclosure obligations the franchisor was obliged to make
pursuant to the Arthur Wishart Act (Franchise Disclosure),
2000, SO 2000, c 3 in the context of the renewal of a
franchise agreement. The appellant alleged that the franchisor
failed to adequately disclose in writing its plans for proposed
renovations when he renewed his franchise agreement for a further
5-year term. The appellant did not want to incur the costs for
renovations and alleged that it suffered damages when the
franchisor attempted to proceed with renovations and allegedly
terminated the agreement before its date of completion.
In concluding that there were no material changes in the renewal
agreement that could be considered fundamental to the
appellant's business operations, the Superior Court dismissed
the appellant's action. Our Franchise Group's review of
this decision back in
October 2013 can be found here.
While four main issues were raised on appeal, the first was
probably the most significant – whether the Superior Court
erred in finding as a fact that there had been no material change
in the operation of the respondent's business which would have
triggered any disclosure obligation under the Wishart Act. The
other three issues involved the assessment of damages.
In upholding the lower court finding that the franchisor did not
breach its disclosure obligation, the Divisional Court noted
distinction between a trial and appellate court. The trial judge is
in the unique position of having heard the evidence and assessed
the witnesses, and for this reason, is granted deference by
appellate courts when it comes to findings of fact. Unless the
appellate court finds that the trial judge made a palpable and
overriding error, this deference remains. In this appeal, however,
the appellant was seeking to re-litigate the trial judge's
findings of fact that were grounded in the evidence.
In finding that "the appellant had his day in court,"
the Court concluded that the findings of fact on those issues
determined by the trial judge did not come remotely close to
passing the threshold of palpable and overriding error. The
Divisional Court held that the trial judge had closely reviewed all
of the evidence before him and that based on such review, the
appellant's witness was not credible. Having made the
determination concerning whom he believed, in the Court's view,
he correctly concluded that the respondent did not breach its
disclosure obligations under the Wishart Act and that there was no
material change in the operation of the respondent's business
between when the appellant entered into the original franchise
agreement and when it entered into the renewal agreement.
Key Take-Away Principles
So what does all this mean? In upholding the Superior
Court's decision, it is clear that courts will continue to
assess materiality on a case-by-case basis. For this reason, it is
important to closely consider all of the circumstances of the
franchise relationship when deciding what information to disclose
in advance of the renewal of a franchise agreement.
On a broader scale, this decision lends itself in support of
defining the role of the appellate court in Ontario – it is
not meant to be a second kick at the can for parties to re-litigate
their claims. This is not to say that errors warranting appellate
intervention will not occur, but it is safe to say that the
appellate court will show great deference to a trial judge's
decision unless the error is plain and obvious.
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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