A catering franchisee — Gilles Lupien, a retired NHL player — was ultimately successful in a multimillion-dollar lawsuit against a real estate developer.
The developer had proposed that the franchisee build and operate a restaurant as part of a new commercial development in west suburban Montreal, which was to include a commercial mall and a hotel. The contract between the franchisee and the developer, signed in December 2007, provided that the franchisee build the restaurant and then operate it under a lease with the developer. The franchisee built the restaurant as agreed, but neither the commercial mall nor the hotel were ever developed.
In its December 2016 judgement, the Québec Superior Court held that such conduct by the developer was an of abuse of rights and breach of the rules of good faith in contractual matters.
This lawsuit also dealt with the application (or non-application) of “entire agreement” clauses generally contained in commercial leases. In this case, the context for the signing of the lease was important, as representations had been made before and after signing that a commercial mall and a hotel would be built. Ultimately, the Court considered the wording of the lease ambiguous given that certain of its provisions could be read as if the mall and hotel had been built. The “entire agreement” clause was thus tossed aside by the Court, which then applied the rules of interpretation and considered the context, including precontractual representations. The Court held that the developer’s conduct amounted to misrepresentation and breach of its duty to act in good faith. The lease was annulled and the franchisee was ultimately awarded $4.1 million in damages and interest.
The developer’s appeal of the decision was rejected by the Court of Appeal of Québec.
The plaintiff/respondent, Restaurant Loupy’s Inc., was represented by Frédéric Paré, Maude Brouillette and Marjorie Bouchard of Stikeman Elliott LLP.
Jacques S. Darche and Marie-Claude Lassiseraye Mathieu of Borden Ladner Gervais LLP acted for the defendants/appellants, Broccolini Limited Partnership 1 and 6750923 Canada Inc.