Author: Anthony Pugh, Student-at-Law, Law Works P.C.
Editor: Ben Hanuka
In 8518076 Canada Inc. v. Quiznos Canada Restaurant Corporation, a March 6, 2018 decision of the Ontario Superior Court of Justice, the motion judge refused to stay or transfer to the Superior Court in Toronto two Small Claims Court Ottawa actions that the franchisee, 851, commenced against Quiznos Canada.
851, the plaintiff and franchisee, brought a total of three actions against Quiznos Canada and four related individual defendants (collectively “Quiznos”).
In August 2016, the franchisee commenced an action in the Superior Court in Toronto, alleging misrepresentation contrary to section 7 of the Arthur Wishart Act (Franchise Disclosure), 2000. The franchisee alleges that the certain projected revenue information provided by Quiznos misrepresented the actual costs and sales of Quiznos franchisees.
In addition, the franchisee started two different Small Claims Court actions in Ottawa against Quiznos in October and November 2017, respectively. The first is in relation to an advertising fund term in the franchise agreement. The franchisee alleges that Quiznos did not respond to three requests it made asking how the advertising fees were spent, in breach of this term.
The second relates to fee reduction term in the franchise agreement. Because of the misrepresentation action, the defendants denied the franchisee the benefit of the fee reduction. The franchisee alleges that Quiznos arbitrarily discriminated against it and that this discrimination is a breach of the fair dealing requirement in section 3 of the Wishart Act.
Quiznos brought a motion to stay or transfer the Small Claims Court Ottawa actions to the Superior Court in Toronto.
Motion judge refuses to stay or transfer Small Claims Court actions
The motion judge agreed with the franchisee that the Small Claims Court actions in Ottawa were factually and legally distinct from the misrepresentation action in Toronto, even though all three actions arose from the same franchise agreement and there were common parties.
First, the Small Claims Court actions do not raise the same issues of disclosure and misrepresentation that is at the heart of the Superior Court action.
Second, the timing of the Small Claims Court actions differs from the misrepresentation claim. The former concern breaches of contract which occurred during the term of the franchise agreement. The misrepresentation, on the other hand, allegedly occurred before the parties entered into the franchise agreement.
A multiplicity of proceedings with conflicting decisions would not result from the actions being conducted in different courts because the misrepresentation action relies on a different set of facts and a different body of law than the Small Claims Court actions
Finally, proceeding with the Small Claims Court actions in the Superior Court in Toronto would place a burden on the franchisee because of increased cost in having to retain counsel and increased time in having the matters heard. Also, having to litigate the Small Claims Court matters in Toronto would inconvenience the franchisee. This burden is unnecessary because the actions can be managed more efficiently and effectively separately.
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