T A & K Enterprises Inc. v. Suncor Energy Products Inc. et al., (2011) 283 O.A.C. 293 (CA)

• Judge: Goudge, MacFarland and Watt, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: June 13, 2011
• Jurisdiction: Ontario
• Citations: (2011), 283 O.A.C. 293 (CA);2011 ONCA 613

TA&K Ent. Inc. v. Suncor Energy (2011), 283 O.A.C. 293 (CA)

MLB headnote and full text

Temp. Cite: [2011] O.A.C. TBEd. SE.025

T A & K Enterprises Inc. (plaintiff/appellant) v. Suncor Energy Products Inc. and Suncor Energy Inc. (defendants/respondents)

(C53117; 2011 ONCA 613)

Indexed As: T A & K Enterprises Inc. v. Suncor Energy Products Inc. et al.

Ontario Court of Appeal

Goudge, MacFarland and Watt, JJ.A.

September 27, 2011.

Summary:

A franchisee purported to exercise the right of rescission given by the Arthur Wishart Act (Franchise Disclosure) to a franchisee whose franchisor had not provided it with the disclosure statement required under the Act. The franchisee also commenced a proposed class action, alleging the right to rescind and claiming the refund provided by the Act. The franchisor asserted that the exemption from the disclosure requirement in s. 5(7)(g)(ii) of the Act (for franchise agreements that were not valid for longer than one year and did not involve the payment of a non-refundable franchise fee) applied. The franchisor moved for summary judgment to dismiss the action.

The Ontario Superior Court, in a decision reported at [2010] O.T.C. Uned. 7022, granted the motion. The franchisee appealed.

The Ontario Court of Appeal dismissed the appeal.

Franchises - Topic 5

General - Legislation - Interpretation - Section 5(7)(g)(ii) of the Arthur Wishart Act (Franchise Disclosure) exempted franchise agreements that were not valid for longer than one year and did not involve the payment of a non-refundable franchise fee from the disclosure requirement in the Act - A franchisee asserted that payments for intangibles, such as royalties, had to be considered franchise fees - To support its argument, the franchisee referred to the French version of the Act which used the phrase "redevances de franchisage non remboursables" - The franchisee translated "redevances" as any requirement to be paid at fixed intervals, which would include royalties - The Ontario Court of Appeal rejected this argument - The franchisee's interpretation would mean that franchise fees included any payment required to be paid at fixed times, including rent - This would effectively prevent any franchise agreement from falling within the exemption, which could not have been the legislative intent - The regulation to the Act set out what a disclosure document had to include, such as the franchisee's costs "associated with the establishment of the franchise, including the amount of any deposits or franchise fees" - Further, the seminal document underlying the Act expressly distinguished between franchise fees and royalties - These were better guides than the French version of the Act - Taking these considerations together, a franchise fee did not include royalties or payments for goods and services - See paragraphs 25 to 27.

Franchises - Topic 2063

Franchise agreement - Duties of franchisor - To provide statement of material facts (disclosure) - A franchisee purported to exercise the right of rescission given by the Arthur Wishart Act (Franchise Disclosure) to a franchisee whose franchisor had not provided it with the disclosure statement required under the Act - The franchisee also commenced a proposed class action, alleging the right to rescind and claiming the refund provided by the Act - The franchisor asserted that the exemption from the disclosure requirement in s. 5(7)(g)(ii) of the Act (for franchise agreements that were not valid for longer than one year and did not involve the payment of a non-refundable franchise fee) applied - A motion judge granted the franchisor's motion for summary judgment to dismiss the action - The Ontario Court of Appeal dismissed the franchisee's appeal - The requirements of s. 5(7)(g)(ii) were met - The agreement, which was signed on November 11, 2008 and was valid from November 15, 2008 to November 14, 2009, could not be treated as being valid for more than one year - Nor could the payments for intangibles such as royalties be considered a franchise fee that would take the agreement out of the exemption - A franchise fee was in the nature of a fee paid for the right to become a franchisee - It did not include royalties or payments for goods and services - See paragraphs 15 to 30.

Franchises - Topic 2207

Franchise agreement - Termination - Rescission - [See Franchises - Topic 2063 ].

Statutes - Topic 502

Interpretation - General principles - Intention of Parliament or legislature - [See Franchises - Topic 5 ].

Statutes - Topic 1611

Interpretation - Extrinsic aids - General - Regulations and other delegated legislation - [See Franchises - Topic 5 ].

Statutes - Topic 1806

Interpretation - Intrinsic aids - Bilingual statutes - Interpretation of one version by reference to the other - [See Franchises - Topic 5 ].

Cases Noticed:

Country Style Food Services Inc. v. 1304271 Ontario Ltd. et al. (2005), 200 O.A.C. 172 (C.A.), refd to. [para. 27].

Authors and Works Noticed:

McCamus, John D., Essentials of Canadian Law: The Law of Contracts (2005), pp. 651, 652 [para. 20].

Counsel:

David Sterns and Allan D.J. Dick, for the appellant;

Larry P. Lowenstein, Jean-Marc Leclerc and Adam Hirsh, for the respondents.

This appeal was heard on June 13, 2011, by Goudge, MacFarland and Watt, JJ.A., of the Ontario Court of Appeal. On September 27, 2011, Goudge, J.A., delivered the following judgment for the court.