Update: Ontario Court Grants Franchisees’ Claim For Ongoing Disclosure As The Pet Valu Saga Continues

Last year, we discussed the Ontario Superior Court's decision to substantially dismiss a class action commenced by former Pet Valu franchisees on summary judgment (here). On the basis that new evidence had arisen on the motion that could support a new common issue, Justice Belobaba deferred answering two related issues until argument could be heard on the potential new issue. The Court recently released the latest decision in the action (1250264 Ontario Inc. v. Pet Valu Canada, 2015 ONSC 29), and the final outcome of this dispute still remains to be seen.

Justice Belobaba ultimately declined to allow the plaintiff franchisees to add the new common issue in question, as the evidence arising from the summary judgment was not new, and to allow an amendment at the present stage of the litigation would prejudice the defendant.

More importantly, however, he proceeded to decide the question of whether the franchisor had a duty to provide ongoing disclosure, based in the duty of good faith and fair dealing imposed by s. 3 of the Arthur Wishart Act. Although the decision is quite fact-specific (i.e. relying on the specific language used in the disclosure document and franchise agreement), Justice Belobaba held that Pet Valu did have an ongoing duty to disclose the amount of volume rebates it received, pursuant to the s. 3 duty of good faith and fair dealing, and that it breached this duty.

One common issue remains to be determined by the Court: what damages, if any, the franchisor is required to pay for its breach of this duty of ongoing disclosure. Justice Belobaba held he would require further submissions to answer that question, including regarding the limitation period and the quantification of damages.

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