Feb 11, 2014
Jennifer Brown, Canadian Lawyer InHouse
Tim Hortons has been awarded $1.8 million in costs in a franchise class action certification and summary judgment motion dismissed in 2012.
In Fairview Donut Inc. v The TDL Group Corp., Tim Hortons had claimed partial indemnity costs of $2,415,500, inclusive of taxes and disbursements. The total fees and disbursement billed by Tim Hortons’ solicitors were almost $3 million.
The plaintiff had acknowledged “the certification and summary judgment motions for which costs are sought were factually and legally complex, important to the parties and . . . in the circumstances, they could reasonably expect to be required to pay a meaningful costs award to the defendants.”
In the case, Tim Hortons’ franchisees claimed the company breached their franchise agreement and its duty of good faith and fair dealing by switching from fresh-baked goods to “Always Fresh” partially pre-baked goods. It also required them to introduce a lunch menu, which they claim increased their costs and forced them to sell the products at a loss.
Although the plaintiffs appealed Strathy’s decision, the Court of Appeal upheld it in December 2012, dismissing the appeal entirely. The Supreme Court of Canada refused leave to appeal.
The matter amounted to an 11-day hearing and 15 bankers boxes of documents.
“When you look at that it’s not surprising you’re talking about significant costs,” says franchise lawyer Jennifer Dolman of Osler Hoskin & Harcourt LLP. “Also keep in mind this is all partial indemnity costs so it doesn’t represent the full cost, it’s scaled down.”
Dolman points out the unique nature of the hearing that was before Strathy also suggests the costs would be high.
“He heard the motion for summary judgment together with the certification motion and that’s very unusual,” she says.
“Obviously this is very significant for franchisors in the class action context of deterring franchisees or any similar group from bringing lawsuits. They need to take into account cost consequences,” says Dolman.