



COURT OF APPEAL FOR ONTARIO

CITATION: 2122994 Ontario Inc. v. Lettieri, 2017 ONCA 830

DATE: 20171030

DOCKET: C62827

MacFarland, Hourigan and Pardu JJ.A.

BETWEEN

2122994 Ontario Inc. and Raisa Baila

Plaintiffs (Respondents)

and

John Lettieri
, Jim Papadopoulos and
Lettieri
    Bars Ltd.

Defendants (
Appellants
)

AND BETWEEN

Lettieri Bars Ltd.

Plaintiffs by counterclaim

and

Raisa Baila

Defendant to the counterclaim

Morris Cooper, for the appellants

Adrienne Boudreau and Krishana Persaud, for the
    respondents

Heard and released orally: October 25, 2017

On appeal from the judgment of Justice Michael A. Penny
    of the Superior Court of Justice, dated October 7, 2016, with reasons reported
    at 2016 ONSC 6209.

REASONS FOR DECISION

[1]

The appellant argues that the trial judge erred in failing to permit him
    to cross-examine the respondent about the arrangement she had with Toronto
    Dominion Bank (TD), the entity said to have loaned her the money to fund the
    cost of leasehold improvements made to the property.

[2]

In the same vein, it is argued that the trial judge erred in permitting
    respondents counsel to inform the court that TD had a judgment in excess of
    $300,000 against the respondent, and that an arrangement had been made between
    the bank and the respondents.

[3]

We do not accept this submission. In our view, whatever the arrangements
    were between TD and its customer, they are irrelevant to the issue between the
    franchisor and the franchisee. The only relevant fact for the purpose of
    compensation under the
Arthur Wishart Act (Franchise Disclosure)
,
    2000, S.O. 2000, c. 3 (the Act) is the amount the franchisee paid to the
    franchisor under this category and here the number $287,289 is not in dispute.

[4]

The language of the statute is clear. On rescission the franchisor is,
    under ss. 6(6)(a), to 
refund to the franchisee any money
    received from or on behalf of the franchisee, other than money for inventory,
    supplies or equipment
. Whether the franchisee paid these monies from
    her funds, borrowed funds or inherited funds is irrelevant to her claim against
    the franchisor. Her entitlement is statutory and the language of the
    legislation is clear. Whatever she paid to him, he must pay back.

[5]

Unlike legislation in other jurisdictions, as the respondent points out
    in her factum, Ontario has a specific legislated payback scheme. It is not a
    net loss regime. And whether the leasehold improvements are properly categorized
    under s. 6(6)(a) or s. 6(6)(c) is immaterial from the appellants perspective.
    No matter the category, the result is the same: pay back what the franchisee
    paid.

[6]

We agree with the trial judge. Any argument on the categorization of
    this claim is really about form over substance and is quite immaterial. In our
    view, the trial judge was correct in categorizing this claim as he did.

[7]

Secondly, there is no breach of the s. 3 duty of fair dealing. This
    courts decision in
Personal Service Coffee Corp. v. Beer

(2005)
,
256 D.L.R. (4th) 466 (C.A.)

is dispositive of this argument.

[8]

And lastly, the respondent Baila was required to provide the franchisor
    with her personal guarantee of both the franchise agreement and the sublease.
    In light of the way the arguments were presented at trial, it was appropriate
    for judgment to be granted in her favour as well.

[9]

The appeal is dismissed. Costs are awarded to the respondent fixed in
    the amount of $25,000, inclusive of disbursements and HST.

J. MacFarland J.A.

C.W. Hourigan J.A.

G. Pardu J.A.


