



COURT OF APPEAL FOR ONTARIO

CITATION: Cora Franchise Group Inc. v. Watters, 2017 ONCA
    535

DATE: 20170626

DOCKET: M47944 (C62520)

Brown J.A. (In Chambers)

BETWEEN

The Cora Franchise Group Inc.

Plaintiff (Defendant
    by Counterclaim)

(Respondent)

(Responding Party)

and

William Watters

Defendant (Plaintiff
    by Counterclaim)

(Appellant)

(Moving Party)

AND BETWEEN

2176693 Ontario Ltd.
    and William Watters

Plaintiffs by
    Counterclaim

(Appellants)

(Moving Parties)

and

The Cora Franchise
    Group Inc.

Defendant by Counterclaim

(Respondent)

(Responding Party)

Michelle
    Kropp, for the moving parties

Derek
    Ronde and Alexandra Murphy, for the responding party

Heard: June 23, 2017

REASONS FOR DECISION

A.

NATURE OF THE MOTION

[1]

The
    moving party, William Watters, is a director and shareholder of 2176693 Ontario
    Ltd., which operated the Niagara Falls Cora restaurant franchise under a
    franchise agreement with the responding party, The Cora Franchise Group Inc.
    Watters gave a personal guarantee of the franchisees indebtedness to Cora.

[2]

In
    December 2015, Cora sued Watters on the guarantee, seeking payment of royalty
    fees, advertising contributions, and products and supplies owed by the
    franchisee. In his statement of defence, Watters acknowledged the indebtedness
    of the franchisee to Cora, but stated the franchisee had decided to pay other
    creditors instead of Cora.

[3]

By
    way of defence, Watters pleaded set-off. With the franchisee, he
    counter-claimed for damages. That defence and counter-claim were based on the
    allegation that Cora had caused the franchisee to lose a potential sale of the
    Niagara Falls franchise in September 2013. Separate litigation took place in
    late 2013 and early 2014 concerning the franchisees efforts to sell that
    business.

[4]

Cora
    moved for summary judgment on the guarantee. The motion judge granted summary
    judgment against Watters on his guarantee in the amount of $117,000 and
    dismissed the counter-claim as statute-barred.

[5]

By
    order dated April 6, 2017, this court dismissed Watters appeal (reasons
    reported at 2017 ONCA 286). The court observed that Watters does not dispute
    the franchisees indebtedness or his obligation as guarantor. The court found
    no error in the motion judges conclusion that the franchise agreement, by its
    terms, precluded set-off. As well, the court saw no error in his conclusion the
    counter-claim was statute-barred. This court, however, allowed Coras
    cross-appeal, holding the motion judge had understated the amount of the
    franchisees indebtedness to Cora and directed a reference to determine the
    amount owing.

[6]

Watters
    has filed a motion seeking leave to appeal the order of this court to the
    Supreme Court of Canada.

[7]

He
    now moves under s. 65.1 of the
Supreme Court Act
, R.S.C. 1985, c. S-26, for
    an order staying the judgment of the motion judge and the order of this court
    pending the determination of his application for leave to appeal.

B.

GOVERNING PRINCIPLES

[8]

T
he test for granting a stay pending an application for
    leave to appeal to the Supreme Court of Canada is well-established. The moving
    party must demonstrate that: (i)

there is a serious issue to
    be adjudicated on its proposed appeal, including that the appeal raises an
    issue of public or national importance; (ii) it will suffer irreparable harm if
    the stay is not granted; and (iii) the balance of convenience favours granting
    the stay. These three components are interrelated in that the overriding
    question is whether the moving party has shown that it is in the interests of
    justice that the court grant a stay:
Iroquois Falls Power Corp. v. Ontario Electricity Financial
    Corp
.
, 2016 ONCA 616,
    at paras. 14 and 15;
Livent
    Inc. (Receiver of) v. Deloitte & Touche
, 2016
    ONCA 395, 131 O.R. (3d) 784, at para. 7.

C.

ANALYSIS

Serious issue

[9]

Dealing
    with the first element of the stay test, I conclude it is unlikely the Supreme
    Court of Canada would grant Watters leave to appeal. He raises three issues on
    his motion for leave to appeal.

[10]

The
    first two relate to the finding that his counter-claim was statute-barred.
    Those issues are primarily fact-driven  i.e. when did Watters discover his
    claim for purposes of ss. 4 and 5 of the
Limitations Act, 2002
,
    S.O. 2002, c. 24, Sch. B?

[11]

The
    third issue concerns his defence of set-off. That involves matters specific to
    these particular parties  the interpretation and interplay of the guarantee
    and franchise agreement, and the effect of Coras conduct in respect of the
    September, 2013 effort to sell the franchise. The motions judge characterized
    Watters set-off defence as spurious and without merit. This court saw no
    error in that conclusion.

[12]

In
    sum, the judgments have little or no wider precedential value given the very
    fact-specific nature of the issues raised by Watters.

Irreparable harm

[13]

Second,
    irreparable harm generally refers to harm not quantifiable in monetary terms.
    Clearly only money is at stake in this proceeding. However, I will refrain from
    taking a narrow view of irreparable harm:
Livent
, at para. 10.

[14]

In
    his affidavit, Watters describes the irreparable harm he would suffer in the
    event a stay were not granted as follows:

In order to immediately come up with enough money to satisfy
    the Order I would have to extract monies from one or all of these retirement
    strategies and lose the compounding interest opportunity and/or pay unnecessary
    costs to collapse the mutual fund, stocks, or bonds and possibly incur huge
    personal income tax costs for excessive income in a single year.

[15]

I
    am not persuaded that constitutes irreparable harm. Watters obviously possesses
    sufficient assets to satisfy the judgments. What Watters describes as
    irreparable harm, I regard simply as the ordinary, foreseeable business risk
    assumed by a guarantor that he might have to draw on personal assets in the
    event demand is made on the guarantee.

Balance of convenience

[16]

Turning
    to the balance of convenience, Watters submits it favours him for several
    reasons: (i) Cora might not satisfy any amounts it might be required to pay at
    the end of the litigation; and, somewhat inconsistently, that (ii) Cora would
    not be prejudiced by the delay caused by a stay because it is a going concern
    with a continuous revenue stream. As well, he points out he has proceeded in a
    timely fashion with his leave to appeal application and the Supreme Court of
    Canada likely will decide it within several months. Watters submits there would
    be no material prejudice to Cora having to wait a few more months until the
    mid-Fall, or so.

[17]

I
    do not accept those submissions. I regard the balance of convenience as
    favouring Cora. The debt owed to Cora was admitted at the start of the
    litigation. Watters acknowledged the franchisee made a deliberate decision not
    to pay the debt but, instead, to prefer other creditors over Cora. As well,
    this is not a case like
Livent
where the party seeking leave to appeal has
    offered security or some other mechanism to ensure the judgment would be paid
    promptly in full if the application for leave failed:
Livent
, at
    paras. 14 and 15.

[18]

Considering all of the circumstances, I am not persuaded Watters
    has shown that it is in the interests of justice that a stay be granted pending
    the determination of his leave to appeal application to the Supreme Court of
    Canada.

D.

DISPOSITION

[19]

I dismiss Watters motion for a stay.

I order him to pay Cora its costs of this motion fixed at
    $5,000, inclusive of disbursements and HST.

David Brown J.A.


