“In essence”, the court explained, “the Plaintiffs raise two sets of claims against the Defendants. KWR’s claims concern the Defendants’ alleged breach of the restrictive covenants contained in their license agreements with KWR. . . . KWR argues that the operation of the Defendants’ new brokerages under the aegis of a competing real estate franchisor breaches various contractual terms between the parties. KWR claims that the breached contractual terms include the restrictive covenants contained in their license agreements”.

The plaintiffs were seeking a pre-trial injunction against the defendants, and the court accepted the defendants’ argument that “because the relief requested amounts to a mandatory injunction, the first arm of the RJR-MacDonald test should require a higher standard of proof than a serious issue to be tried. It should require proof of a strong prima facie case”.

After an extensive review of the merits of the plaintiffs’ case and the leading authorities, the court found that “there is a strong prima facie case that the restrictive covenants in the License Agreements are both reasonable and enforceable against the Defendants. Further, the Defendants have breached those terms by joining a competing real estate franchise during the term of the License Agreements. Accordingly, there is a strong likelihood that the Plaintiffs will succeed in this proceeding following trial”.

The court also found that the plaintiffs had met the second element of the test:

From the law and the evidence before me, I find that KWR will suffer irreparable harm if an injunction were not granted. I say this because:

1.   The loss of two major franchises in two major markets, with the loss of about six hundred agents, all to a larger direct competitor, causes great harm to KWR.

2.   That harm would be compounded by the anticipated reaction of other KWR franchisees if this motion were denied. Those franchisees would learn that the restrictive covenants in their license agreements, which both bind them to KWR and protect them from KWR competitors, are of little value. That would most likely shrink the goodwill and ultimately, the value of the KWR system in Canada.

3.   Moreover, the Defendants’ breaches of the License Agreements would likely significantly set back any KWR replacement franchises in the applicable Ottawa and Mississauga territories. In addition to lost goodwill and market share, those replacement franchises would be faced with having to compete with former KWR franchises in those same territories

After a brief review of the third element, the court concluded that “the balance of convenience tilts towards the Plaintiffs”.

Finally, the defendants argued that the plaintiffs weren’t entitled to the injunction because they came to the court with unclean hands. The court dismissed this argument in short order:

Undoubtedly, inasmuch as the Plaintiffs seek to obtain equitable relief in the form of an injunction, the clean hands doctrine applies. But I have not found that KWR engaged in any improprieties regarding the Defendants which would cause me to invoke the clean hands doctrine to deny to the Plaintiffs the relief they seek.

The post Ontario court orders mandatory injunction in franchise dispute first appeared on British Columbia Law Institute.

Summary of the case

The court’s overview at the start of its decision provides a good summary of the dispute at the heart of this case.

[2]        The Applicants are a same-sex couple. The Applicants and the Respondents, who are the child’s biological parents, initially agreed the Applicants would act as parents upon the birth of the Respondents’ child. Once the child was approximately four months’ old, the Respondents sought the return of their child to their care. The child, who is now approximately 17 months’ old, continues to be in the Applicants’ full-time care, subject to parenting-time being exercised by the Respondents.

[3]        As such, the Applicants have no biological connection to the child, namely, Isabelle . . . . They seek to become her legal parents, pursuant to s. 13 of the Children’s Law Reform Act, R.S.O. 1990 c. C.12. [This is the Ontario equivalent to section 31 of British Columbia’s Family Law Act, which empowers a court to make a declaration of parentage.]

[4]        If such a designation is not possible, and regardless of same, the Applicants seek to have primary residence of Isabelle and sole decision-making responsibility for her. They are agreeable to the Respondents having ongoing, gradual increased parenting-time with Isabelle, including overnights, as of July 15, 2022 (once Isabelle is 18 months’ old). It was proposed by the Applicants that the parenting schedule be reviewed in January 2024, once Isabelle reaches the age of three years’ old.

[5]        The Respondents oppose the Applicants’ court Application and seek to have their claims dismissed. They wish to have Isabelle immediately returned to their primary care and seek an order that they have sole decision-making responsibility for her. They are agreeable to the Applicants having contact with Isabelle a minimum of once per week, with the date and duration to be determined by the Respondents in accordance with Isabelle’s best interests.

Ontario legislation (like legislation in British Columbia) gives people the legal tools they need to effectively achieve the result the parties desired (when they “initially agreed the Applicants would act as parents upon the birth of the Respondents’ child”). The tragedy of this case was that the parties were unaware of these tools and embarked on their plan without proper legal advice, only consulting with a lawyer shortly before the child’s birth. By then, it was too late to meet the legislation’s requirements for an effective surrogacy arrangement.

The court’s ruling on parentage

At various points in the judgment, the court emphasized the importance of complying with the legislation:

[233]        I agree with counsel for the Respondents that we have a legislative framework in place for the placement of children through adoption and surrogacy for a reason. These legislative schemes offer a roadmap to all parties involved (biological parents, adopted parents, intended parents, surrogates) to ensure safeguards are met vis-à-vis all parties in the matter and ultimately for the safety, well-being and protection of children. Some of these safeguards include independent legal advice, specified counselling, home studies, pride training and the like.

[234]        The court and public policy should not condone a party having a child and simply handing them off like a football to a third party. This is not the intent of our legislation. There has to be some oversight as to whether the third party is an appropriate caregiver for the child and whether all parties involved understand their rights and obligations and the long-term repercussions of their actions. The issue of permanency for the child is also important, as the birth parent can hand over their child to a third party only to turn around at a later date demanding the return of the child. These situations could have devastating ramifications on the parties and dangerous consequences for the physical and emotional well-being and development of the child.

These considerations came to the fore in the court’s analysis of the applicants’ request for an order declaring parentage.

The court began by noting “[t]here is not a lot of existing case law on having more than two declared parents under s. 13 of the Children’s Law Reform Act.” The court decided it could distinguish this case from an earlier Ontario case because “this case does not involve an insemination or the specific pre-conception intent of gifting reproductive material.” As the court explained:

[294]        Although it was always the intention of the parties that the Applicants would be the intended parents to Isabelle, the evidence actually suggests it was the parties’ intention for the Respondents to not be legally recognized as Isabelle’s parents. There was never any intention to have all four parties be the legal parents for the child. Regardless, these discussions only took place after conception.

[295]        As I previously stated, I am not convinced that when [the respondents] set out to have sexual intercourse with one another they set out to conceive a child by donating or gifting their egg and sperm for the sole purpose of providing the Applicants with a child. In all of the communications I have read (and there are many), the mother never stated the conception was planned for this purpose. She actually refers to her pregnancy as an “oops” or accident. There were no communications I could find suggesting [the male respondent] set out to intentionally donate his sperm.

Finally, the court noted that “it was open to the legislature to require that the best interests of the child be considered with respect to any declaration of parentage, but it did not and chose to omit same.”

The court’s ruling on guardianship

In contrast to the court’s reasoning on parentage, the court noted that the best interests of the child governed its decision on guardianship: “I concur there is no presumption in favour of the biological parents or genetics when determining a parenting order for a child. The governing principle as per subsection 24(1) is best interests, having regard to the considerations outlined in 24(2) and the factors outlined in 24(3) of the [Children’s Law Reform Act]. The best interests standard is a child-centered approach.” And in this case, the court’s determination of the child’s best interests led it to rule in favor of the applicants:

[266]        Isabelle appears to have a secure attachment with the Applicants. There is a possibility that if she were to be placed with the Respondents, she could still form further secure attachments, which would not negatively affect her development. However, why would I do this? Why would I risk this child’s development when she is feeling loved, safe, nurtured and has a parental connection with the Applicants? Why would I now change the status quo when the Applicants have a history and a proven track record with the development of this child and have met all of her needs, and presumably will continue to do so? The fact that the Respondents are her biological parents and want her return is simply not enough. I must look at the totality of the evidence and the circumstances and be guided by the legislative factors to determine what is in this child’s best interests.

[267]        The fact that particular safeguards were not followed or adhered to is not enough to return this child to her biological parents. It is the here and the now and where we are today.

In the result, the court ordered that the applicants had “sole decision-making responsibility” for the child, whose primary residence was to be with the applicants, and granted specified parenting time and other specified rights to consultation and information to the respondents.

The post In “a case about everything the parties did wrong to achieve a particular goal,” Ontario court illustrates the differences between guardianship and parentage first appeared on British Columbia Law Institute.