The Trial Decision
Following a three-day summary trial, the Supreme Court of British Columbia granted judgment in favour of Dairy Queen Canada, Inc. for breach of contract and passing-off against a franchisee in Richmond, British Columbia. The Court also dismissed the franchisee’s counterclaim against Dairy Queen for over $1million in damages for breach of contract and various breaches of the Arthur Wishart Act (Franchise Disclosure), 2000, including breach of the duty of good faith and fair dealing.
In dismissing the franchisee’s claim in its entirety, the Court upheld a Mutual Cancellation and Release Agreement, finding that it acted as a complete bar to the claims asserted in the counterclaim. The Court rejected the franchisee’s arguments that the Mutual Cancellation and Release Agreement had been signed under duress or should be disregarded on grounds of unconscionability.
The franchisee appealed the trial decision.
At the outset of the appeal, the franchisee brought a motion to adduce fresh evidence from a hand-writing expert in support of a novel argument that the Release Agreement had not be signed at all. This argument was contrary to the theory advanced by the franchisee in the Court below, namely, that the Release Agreement had been signed, but under duress.
The Court of Appeal for British Columbia dismissed the motion to adduce fresh evidence, finding that the proposed fresh evidence was “more than simply new evidence. This is a reversal of the entire case that [the franchisee] took to trial.” The Court rejected the evidence as “not reasonably capable of belief” and held that “it is not in the interests of justice to admit this evidence and send this matter back for a new trial based on this new theory of the case.”
The Court proceeded to dismiss the franchisee’s arguments on appeal, with particular focus on the (now) alternative submission that the Release Agreement was entered into under duress.
The Court found no error in the trial judge’s determination that the Release Agreement had been entered into without duress, and agreed that Dairy Queen’s offer to forbear enforcement in exchange for entering in the Release Agreement was nothing more than “legitimate commercial pressure”.
In dismissing the appeal in favour of Dairy Queen, the Court concluded that there was “no error in the trial judge’s thorough analysis and certainly no palpable and overriding error.”
Dairy Queen was represented by Colin Pendrith at the summary trial and on appeal.