A judge has ordered owners of a South Surrey early-learning centre to hang on to the private school’s assets and not change who controls it, pending civil court proceedings to determine the rights to those assets.
Those proceedings are scheduled to get underway this summer.
A judgment posted to the B.C. Supreme Court website Wednesday (Jan. 31) outlines the injunction concerning New Beginnings Early Learning Ltd.’s Morgan Crossing location. It also applies to the business’s Richmond site.
According to the court document, the businesses have franchise agreements with CEFA Systems Inc., and legal proceedings concerning both have been initiated.
CEFA claims it lawfully terminated the agreements after the corporate plaintiffs breached them through “unauthorized de-branding of the schools,” and now wants to enforce its contractual rights to purchase the assets and have proprietary material returned. As well, damages are sought, including “for the corporate plaintiffs’ unauthorized use of proprietary information in operating their new schools.”
The plaintiffs – identified as Mark Leslie and Jackie Jackson – assert that they elected to rescind the agreements and their respective guarantees on the basis they were “induced to enter them as a result of intentionally false and misleading misrepresentations of CEFA and its founder, the co-defendant, Natacha Beim.”
The plaintiffs also seek damages for breach of contract. A 15-day trial is set to get underway on Aug. 12.
CEFA sought the injunction to ensure its contractual rights under the agreements aren’t rendered moot before its claim to those rights can be determined at trial.
CEFA is a system of private junior kindergarten schools that was founded by Beim in approximately 1998. Since franchising in 2002, approximately 20 schools have opened in the Lower Mainland and Toronto using the CEFA program.
Evidence with respect to Beim’s education background, degrees and teaching credentials is “one of the key factual disputes in this case,” the court document notes.
The plaintiffs allege Beim’s representations were “not only false, but were made knowingly by representatives of CEFA as well as Ms. Beim, with the intention of inducing them to enter into those agreements.”
In outlining events leading to CEFA’s August 2018 termination of the agreements, the judgment notes it is “highly significant” that the allegations of misrepresentations were not in the original draft and filed notice of claim – which concerned CEFA’s financial well-being, licensing approvals in Canada and the absence of lawsuits against CEFA – but surfaced during the exchange of affidavits in preparation for the most recent hearing, “and after CEFA demonstrated in affidavit evidence that the financial misrepresentation claim was highly suspect and on a balance of probabilities seemingly without merit.”
The judgment notes that a company owned by Leslie purchased the assets of a CEFA school in Langley just four months prior, has since sold that property to a third party and is presently in litigation with the purchaser for damages based on alleged misrepresentations and breach of contract.
Additional points noted in the judgment include acknowledgement that the plaintiffs “had been planning for months” to convert their CEFA schools into competing businesses, and opened a competing business on the same premises, prior to delivering a notice of rescission – steps the CEFA franchise agreement prohibits.
CEFA issued a termination notice once aware of the de-branding activities, the court document states.
Beim’s education background is the “main thrust” of the plaintiffs’ rescission claim.
The judgment describes points raised as “all serious issues to be tried.” At the same time, “the plaintiffs have not established that Ms. Beim and CEFA have come to court without clean hands.”
“The questions raised by the plaintiffs… are not a basis to deny the relief sought by CEFA on this application.”
The ruling does not prevent the schools from continuing to operate and collect revenue.