- About Us
- Franchise Law
- Business Disputes
- Our Important Court Cases
- What’s New
Author: Robert Jones, Law Works P.C.
Editor: Ben Hanuka, Law Works P.C.
In 2462192 Ontario Ltd. v. Paramount Franchise Group Inc., a January 23, 2019, motion decision of the Ontario Superior Court, the court denied the franchisor, Paramount Franchise, leave (permission) to file additional affidavits in response to a summary judgment motion for rescission, after cross-examinations had been completed. Doing so would have amounted to the franchisor ‘splitting its case’, which would have been unfair to the other side.
The franchisor had been aware of the allegations that it wanted to address in its additional affidavits and did not have a reasonable explanation for why it had not delivered them before conducting cross-examinations.
The plaintiff, 2462192 Ontario Ltd. (“246”), was the franchisee of a Paramount franchised restaurant in Burlington, Ontario.
The defendant, Paramount Franchise Group Inc. (“Paramount”), is a franchisor of restaurants specializing in Middle Eastern cuisine. The defendant, Mohamad Fakih (“Fakih”), is the founder, president and director of Paramount.
In October 2017, 246 sued Paramount and Fakih for rescission of its franchise agreement. 246 brought a motion for summary judgment.
By mid-October 2018, Paramount and Fakih had all the evidence that 246 planned to rely on in the motion for summary judgment, including 246’s allegation that the franchise disclosure document that Paramount and Fakih submitted as evidence was a forgery.
The cross-examinations started on November 26, 2018. After they ended, Paramount and Fakih brought the present motion for leave (permission) to file two affidavits: one sworn by Nina Harnarine, a handwriting expert, and one sworn by Fakih, about 246’s forgery allegations.
The Legal Test
Rule 39.02(2) of the Ontario Rules of Civil Procedure prevents a party from filing an affidavit after it has cross-examined an adverse party on its affidavit, unless there is consent or leave of the court. A party cannot wait to decide if it wants to file a responding affidavit to contradict allegations in an adverse party’s affidavit until after testing the strength of the allegations on cross-examination. This rule is designed to promote finality of the evidentiary record and discourage case-splitting.
The four-part test for leave (permission) under Rule 39.02(2) was set out in First Capital Reality Inc. v. Centrecorp Management Services Ltd., as follows:
The Affidavits did not Respond to Something Raised during Cross-Examination
The court assumed, without deciding, that the affidavits were relevant, and that admitting them would not cause non-compensable prejudice to 246.
But the court found that the affidavits did not respond to an issue raised during cross-examination. Although an issue does not need be raised for the first time, or be raised during the cross-examination of the same party’s witness who seeks leave to file an affidavit, the legal test requires more than simply asking 246 about its forgery allegations.
The court rejected Paramount and Fakih’s argument that cross-examining 246 about its forgery allegations meant that they were raised during cross-examinations. If this were enough, it would permit parties to engage in case-splitting, a practice which should be discouraged.
Paramount and Fakih Ought to have Filed the Affidavits before Cross-Examining the Plaintiff
The court concluded that Paramount and Fakih did not have a reasonable explanation for not filing the affidavits before they cross-examined 246’s affiant.
Paramount and Fakih argued that they did not file the affidavits earlier because of the evidentiary rule in Browne v Dunn. The rule in Browne v Dunn prevents a party from presenting evidence that contradicts a witness before first questioning the witness about the evidence on cross-examination. It stops the witness from being ambushed. In other words, Paramount and Fakih argued that they did not file the affidavits earlier because they assumed that 246 would first cross-examine Fakih about its forgery allegations.
The court held that the rule in Browne v Dunn had no application. There was no duty on 246 to cross-examine Fakih about 246’s forgery allegations. 246 did not attempt to ambush Fakih. Paramount and Fakih knew about 246’s forgery allegations before the cross-examinations started. They had the opportunity to file the affidavits at that time and made a tactical decision not to.
The court agreed with 246 that Paramount and Fakih were attempting to engage in case-splitting. It also observed that, in any event, the affidavits had very little probative value.Tags : Rescission
*Law Works is a Canadian law firm. It publishes a newsletter to inform subscribers about franchise and arbitration disputes. You may unsubscribe at any time by clicking the ‘unsubscribe’ link in our emails.
Fill out this form to request information