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Court of Appeal dismisses Canadian Franchise Association’s motion to intervene in the Dunkin’ Donuts Matter

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Litigation & Dispute Resolution Bulletin

The decision handed down by trial judge Daniel H. Tingley in a case pitting 21 former "Dunkin' Donut" franchisees against their franchisor, Dunkin' Brand Canada Ltd. ("Dunkin' Brands"), was appealed by Dunkin' Brands on July 23, 2012. Only one month before, namely June 21, 2012, the Superior Court ordered Dunkin' Brands to pay $16.4 million in damages for various contractual breaches.

Arguing that the matter will have a great impact on franchise law, the Canadian Franchise Association ("CFA") petitioned the Court of Appeal (the Honourable Clément Gascon) for authorization to intervene, to make representations at the hearing and to file a factum enlightening the Court on the state of franchise law in Canada and on the impact and effects of the Tingley judgment on franchise agreements.

Justice Gascon of the Court of Appeal chose not to exercise his discretionary power in favour of the CFA, explaining at length why their intervention is neither necessary nor useful.

The new regime of article 211 C.C.P. allows a party to intervene in a more limited fashion, but under criteria that are less strict than for voluntary conservatory interventions: the judge need only deem the intervention expedient with regard to the questions at issue. Even though the threshold for obtaining leave to intervene under this provision is generally low, it remains that the Court has assessed it differently in matters involving public law, fundamental rights and constitutional matters.

In private disputes, notes Justice Gascon, the courts are more reticent and tend to require the party applying for intervener status to show that the parties to the proceeding are unable to present all of the aspects or issues at stake. The usefulness of an intervention lies in the fact that it is not merely a repetition of a party's position or an amplification of its view. The judge also believes that the Court must consider the principles of proportionality and proper balance between the relative strength of the parties when exercising its discretion.

In this case, the CFA is a not-for-profit organization whose good faith is not at issue. However, upon reading the CFA's motion, it seems rather clear that it would be supportive of the appellant. While the appellant is a member of the CFA, this is not the case of the respondents. Justice Gascon concludes that allowing the motion to intervene would essentially force the respondents to devote additional time to face another two opponents, and compel them to compensate for the imbalance. In addition, a comparison of the arguments of the CFA and Dunkin' Brands reveals that they are presenting the same views.

For all of these reasons, Justice Gascon ruled that in the context of a private commercial dispute where the parties are represented by competent counsel who have thoroughly argued all of the relevant issues relating to the interpretation and implementation of franchise agreements, the CFA's intervention would be nothing more than a repetition of the appellant's position that would not enlighten the Court on the issues, and he therefore dismissed the motion for leave to intervene.

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