Law Times

June 19, 2017

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Ruling strict about document disclosure BY ALEX ROBINSON Law Times L awyers say a recent Court of Appeal decision clari- fies that courts are going to use a strict approach when considering whether a franchise disclosure document complies with provincial legislation. In Mendoza v. Active Tires & Auto Inc., a franchisee sought to rescind the agreement it had with a franchisor on the basis that the dis- closure document it had provided did not comply with the Arthur Wishart Act. The act regulates franchise dis- closure in Ontario and holds that franchisees can rescind a franchise agreement without penalty within two years if the franchisor never provided the disclosure document. The Court of Appeal over- turned a lower court decision, which ruled in favour of the fran- chisor and said the franchisee could not rescind the agreement, as the disclosure was sufficient. Lawyers say the lower court's decision in the case was an outlier that would have benefited fran- chisors, as it would have meant courts would take a less stringent approach to disclosure obligations. Jennifer Dolman, a partner with Osler Hoskin & Harcourt LLP, who was not involved in the case, says the lower court's deci- sion was welcome from the per- spective of a lawyer who represents franchisors, but it was inconsistent with past court decisions. "The Court of Appeal has now corrected the record as it were, as to the fact that no, it's not going to be a subjective consideration," she says. The case turned on whether two deficiencies in the disclosure document that was provided to the franchisee were material. The disclosure certificate lacked the required signatures of two direc- tors and the franchisors also failed to provide financial statements in compliance with the act. The motion judge, Ontario Su- PRESS FREEDOM Canadian lawyers must uphold Charter P7 FOCUS ON Family Law P8 See Record, page 2 PM #40762529 $5.00 • Vol. 28, No.21 June 19, 2017 L AW TIMES C O V E R I N G O N T A R I O ' S L E G A L S C E N E • W W W . L A W T I M E S N E W S . C O M LSUC NAME CHANGE Steering committee considering shift P4 BY ALEX ROBINSON Law Times T he Ontario Court of Ap- peal has overturned a lower court decision that found a one-year limita- tions period was appropriate for claims tenants bring against their landlords. The decision means the limita- tions period for such matters is two years. Lawyers say the decision to overturn the earlier October 2016 ruling in Letestu v. Ritlyn In- vestments Limited is important because it could have led to the dismissal of hundreds of claims and an increase in negligent rep- resentation claims against lawyers who would have been more likely to miss the shorter limitations per- iod. Sonia Leith says the Court of Appeal's ruling means there will be less confusion for tenants and the lawyers that represent them. "Whenever there's a change in limitation periods, there is always a sense of panic because that's one area where lawyers can become exposed," says Leith, a personal injury lawyer with Neinstein LLP, who was not involved in the case. The case concerned a claim that had been brought by the estate of a deceased man against his landlord for an alleged fall he suffered on a damaged carpet. The tenant's estate started the claim 23 months after the alleged slip and fall, seeking $500,000 in damages. Shortly before the trial started, the landlord moved to have the claim struck on the basis that the Ontario Superior Court did not have jurisdiction to hear the case as it fell within the jurisdiction of the Landlord and Tenant Board. The motion judge, Ontario Su- perior Court Justice James Sloan, dismissed the claim, finding the Landlord and Tenant Board had exclusive jurisdiction and that a limitation period of a year under the Residential Tenancies Act ap- plied. He found that as the action had not been started within that one-year period, the court could not assume jurisdiction. Kieran Dickson, one of the lawyers who represented the de- fendant, argued that the one-year limitations period within the act should apply if it is accepted that the court's power to hear such a dispute is derivative of the board's See LawPRO, page 2 Sonia Leith says a recent ruling by the Ontario Court of Appeal will mean less confusion for clients involved in claims against their landlords. Photo: Robin Kuniski Court overturns decision on limitations period Milton Davis says lawyers representing fran- chisors need to be very careful to ensure disclosure systems are compliant with the Arthur Wishart Act. 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