Lister (Ronald Elwyn) Ltd., Lister and Lister v. Dunlop Canada Ltd., (1982) 42 N.R. 181 (SCC)

• Judge: Laskin, C.J.C., Martland, Ritchie, Dickson, Beetz, Estey, McIntyre, Chouinard and Lamer, JJ.
• Court: Supreme Court (Canada)
• Case Date: May 31, 1982
• Jurisdiction: Canada (Federal)
• Citations: (1982), 42 N.R. 181 (SCC);65 CPR (2d) 1;14 ACWS (2d) 315;[1982] SCJ No 38 (QL);[1982] ACS no 38;1982 CanLII 19 (SCC);18 BLR 1;42 NR 181;41 CBR (ns) 272;[1982] 1 SCR 726;135 DLR (3d) 1

Lister Ltd. v. Dunlop Can. (1982), 42 N.R. 181 (SCC)

MLB headnote and full text

Ronald Elwyn Lister Limited, Lister and Lister v. Dunlop Canada Limited

Indexed As: Lister (Ronald Elwyn) Ltd., Lister and Lister v. Dunlop Canada Ltd.

Supreme Court of Canada

Laskin, C.J.C., Martland, Ritchie, Dickson, Beetz, Estey, McIntyre, Chouinard and Lamer, JJ.

May 31, 1982.

Summary:

The plaintiff franchisee and its owner-guarantors brought an action for damages against the franchisor resulting from the failure of the franchise and its consequences. The franchisee's action was for damages for the wrongful seizure of the company's assets. The owner's action was for damages for the unlawful seizure of the assets of another business of his on the same premises as the franchise. The guarantors' action was for the setting aside of their guarantees on the ground of the franchisor's misrepresentations in obtaining the franchise agreement, for which all of the plaintiffs also claimed damages. In the aftermath of the franchise failure and the seizures the owner-guarantors and the franchisor made a settlement agreement in which the franchisor forbore its right of action on the guarantees in return for the owner-guarantors giving security for their indebtedness. The Ontario High Court allowed only the claim for damages for wrongful seizure on the ground that the franchisee was entitled to notice of the requirement to pay under the security agreements, which notice was not given. The Ontario Court of Appeal allowed the franchisor's appeal on the ground that, although normally the franchisee would be entitled to notice, no notice was required in the circumstances, because the owners had indicated that no payment would be made. The franchisee and the guarantors appealed.

The Supreme Court of Canada allowed the appeal and restored the trial judgment on the ground that notice of requirement to pay under the security agreements was required and the lack of notice rendered the seizures unlawful. The Supreme Court of Canada affirmed the dismissal of the plaintiffs' other claims, because the entering of the settlement agreement by the plaintiffs with full knowledge of all that has transpired prevented them from relying on any previous misrepresentation by the franchisor.

Contracts - Topic 2876

Consideration - What constitutes - Forbearance to sue - The Supreme Court of Canada held that forbearance to sue constituted consideration for a contract - See paragraphs 31 to 34.

Contracts - Topic 4190

Remedies for breach - Rescission - Waiver of right to rescind - What constitutes waiver - The owners of a franchisee guaranteed its obligations to the franchisor - After the franchise failed and franchisor claimed under the guarantees the parties made a settlement agreement - Subsequently, the owners brought an action to set aside the guarantees on the ground of misrepresentation by the franchisor in obtaining the franchise agreement - The Supreme Court of Canada held that the entering by the owner-guarantors of the settlement agreement with full knowledge of all that had transpired prevented their relying on any previous misrepresentation by the franchisor - See paragraphs 20 to 23, 31 to 34.

Contracts - Topic 9278

Unconscionable transactions relief - Persons entitled to relief - Persons not entitled - Persons who receive independent legal advice - A franchise failed - As a result of tremendous financial pressure on the owner-guarantors of the franchisee, they made a settlement agreement with the franchisor with full knowledge of all that had transpired and with independent legal advice - The Supreme Court of Canada held that the owner-guarantors could not subsequently challenge the validity of the settlement agreement on the ground of the parties' unequal bargaining positions, because the owner-guarantors made an independent and informed judgment to enter the agreement - See paragraphs 20 to 23.

Creditors and Debtors - Topic 1065

Debtors rights - Before payment - Notice of requirement to pay - The Supreme Court of Canada held that a debtor is entitled to reasonable notice of a requirement for payment under an instrument creating a debt, notwithstanding that the instrument does not expressly require notice - See paragraphs 12, 35 to 38.

Damages - Topic 1301

Exemplary or punitive damages - Wrongful seizure, detention or conversion of goods - A franchisor wrongfully seized a failed franchisee's goods and goods of its owner under security agreements, thereby putting the franchise and another enterprise of the owner out of business - The Supreme Court of Canada affirmed the trial judge's award of exemplary damages for the wrongful seizure and conversion of the goods - See paragraphs 3, 41.

Damages - Topic 4044

Interference with business relations - Measure of damages - The Supreme Court of Canada affirmed a trial judge's method for determining the amount of damages for the wrongful seizure of company goods - See paragraphs 1 to 3, 39 to 40.

Torts - Topic 3095

Trespass - Trespass to goods - Conversion - What constitutes wrongful seizure and conversion - A franchisor wrongfully seized a franchisee's goods and other goods belonging to the owner of the franchisee without giving notice of the franchisee's requirement to pay under security agreements - The Supreme Court of Canada held that the seizure of the goods without reasonable notice constituted trespass and conversion for which the franchisor was liable in damages - See paragraphs 35 to 38.

Cases Noticed:

Lloyds Bank v. Bundy, [1974] 3 All E.R. 757, consd. [para. 23].

Callisher v. Bischoffsheim (1870), L.R. 5 Q.B. 449, appld. [para. 31].

Miles v. New Zealand Alford Estate Co. (1885), 32 Ch. D. 266, appld. [para. 31].

Magee v. Pennie Insurance Co., [1969] 2 Q.B. 507 (C.A.), consd. [para. 31].

Massey v. Sladen (1868), L.R. 4 Ex. 13, appld. [para. 36].

Toms v. Wilson (1863), 4 B. & S. 442; 122 E.R. 524, appld. [para. 37].

Moore v. Shelly (1883), 8 A.C. 285 (P.C.), consd. [para. 37].

Minister Broadloom Corporation (1968) Ltd. v. Bank of Montreal (1979), 25 O.R.(2d) 198 (H. Ct.), consd. [para. 37].

Royal Bank of Canada v. Cal Class Ltd. and Coopers and Lybrand Ltd. (1979), 18 B.C.L.R. 55 (S.C.), consd. [para. 37].

J. & E. Ltd. v. Barclay, [1937] 3 All E.R. 620 (C.A.), refd to. [para. 39].

Kullberg's Furniture Ltd. v. Flin Flon Hotel Co. Ltd. (1958), 26 W.W.R.(N.S.) 721 (Man. C.A.), refd to. [para. 39].

Yukon Southern Air Transport Ltd. v. The King, [1942] Ex. C.R. 81, refd to. [para. 39].

Brodt v. Wearmouth and Pyle, [1937] 1 W.W.R. 777 (B.C.C.A.), refd to. [para. 39].

Authors and Works Noticed:

Cheshire and Fifoot, The Law of Contract (10th Ed.), p. 70 [para. 31].

Chitty on Contracts (24th Ed.), p. 82 [para. 31].

Counsel:

D.K. Laidlaw, Q.C., and P.H. Griffin, for the appellants;

R.M. Loudon, Q.C., and H.W. Sterling, for the respondent.

This case was heard on November 3 and 4, 1981, at Ottawa, Ontario, before Laskin, C.J.C., Martland, Ritchie, Dickson, Beetz, Estey, McIntyre, Chouinard and Lamer, JJ., of the Supreme Court of Canada.

On May 31, 1982, Estey, J., delivered the following judgment for the Supreme Court of Canada: