Court Considers Deemed Place of Contracting in Jurisdiction Analysis

Andrew Ottaway, B.A. (Hons.), LL.B.Business Law, Business Litigation, Civil Litigation, Contract Disputes, Contract Termination, Cross-Border Litigation, Forum Challenges, Franchise | Licensing, Franchise Law, Injunction & Specific Performance, Jurisdictional Challenges0 Comments

In We Serve Health Care LP v. Onasanya, 2018 ONSC 1758, the Applicant was a franchisor of home health care service providers.. The Applicant had its head office in Ontario and regional offices in various jurisdictions, including one in Saskatchewan.  The individual Respondent entered into a Franchise Agreement with the Applicant’s predecessor company granting her a license to operate a franchise in Saskatchewan.. She later assigned her rights under the Franchise Agreement to the corporation Respondent.

The Applicant refused to renew the Franchise Agreement, resulting in a dispute.  The Applicant commenced an Application in Ontario for a declaration that the Franchise Agreement had expired and for a mandatory order that the Respondents comply with their post-expiry obligations under the Franchise Agreement. The Respondents brought a motion to stay the Application on the basis that the Ontario Court did not have jurisdiction.  

The Applicant argued that the dispute was presumptively connected to Ontario because the Franchise Agreement was made in Ontario, thereby giving Ontario jurisdiction simpliciter. The Court considered how the Franchise Agreement was formed to determine where it was made.  The Applicant’s lawyer in Toronto had sent to the Respondents in Regina a letter by courier enclosing the Applicant’s unsigned standard form of Franchise Agreement, stating that the lawyer would have the Applicant sign the Franchise Agreement after the Respondents returned the signed version.  The Respondents returned the signed Franchise Agreement to the Respondent’s lawyer. The Respondent’s lawyer eventually sent the Franchise Agreement signed by the Applicant to the Respondents’ lawyer in Saskatchewan.

The Court applied the postal acceptance rule, being:  where a contract or agreement is concluded by post, the contract is made at the place of mailing.  The Applicant argued that the return of the Franchise Agreement executed by the Respondents was an offer to purchase the Franchise, which the Applicant accepted by executing the Franchise Agreement and sending it back by courier from Ontario.

The Court disagreed.  The Court found that sending a final unsigned version of the standard form Franchise Agreement by courier and advising that the Applicant would sign if the Respondents executed it demonstrated the Applicant’s intention to be bound, and therefore constituted an offer to the Applicant.  By returning the signed Franchise Agreement, the Respondents accepted that offer. As the Respondents’ acceptance was sent from Saskatchewan, the Franchise Agreement was deemed to have been made in Saskatchewan.

The Court found that the Application did not have a real and substantial connection to Ontario and stayed the Application.

The lawyers at Gilbertson Davis LLP have experience in business disputes, franchise disputes, cross-border litigation and jurisdiction challenges.  Please contact us for an initial consultation.

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About the Author
Andrew Ottaway, B.A. (Hons.), LL.B.

Andrew Ottaway, B.A. (Hons.), LL.B.

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