COURT OF APPEAL FOR ONTARIO
RE: 1039198 ONTARIO INC. (Plaintiff/Respondent)
v. ASH PHARMACIES INC. and AZIM MITHA (Defendants/ Appellants)
BEFORE: McMURTRY C.J.O., MORDEN and ROSENBERG JJ.A.
COUNSEL: E. Hyer, for the appellant
R. Shastri and L. H. Zucker, for the respondent
HEARD: June 26, 2000
On appeal from the judgment of Madame Justice A. M. Molloy dated October 22, 1998
E N D O R S E M E N T
[1] The only issues in this appeal from a judgment of Molloy J. concern the assessment of damages. The appellants argue that the trial judge erred in finding that the respondent took reasonable steps to mitigate its damages.
[2] The appellants point to a number of factors that they argue show that the lease of Unit 9 at a reduced rent to 1104727 Ontario Inc. was not reasonable in the circumstances. They argue that the transaction was not an arm's length transaction and that the lease contained terms designed to favour the company’s principal. The trial judge was aware of the circumstances surrounding the entering into the lease. She reviewed the relevant circumstances and accepted the explanation of the respondent’s witness for the decision to lease to 1104727 Ontario Inc. and to do so on the impugned terms. We see no basis for interfering with what was essentially a factual determination.
[3] We do not agree with the appellants that the trial judge proceeded on an incorrect principle by, in effect, holding that as a matter of law they were required to adduce appraisal evidence to show that the mitigation efforts were not reasonable. Rather, the trial judge’s reasons indicate that she was satisfied with the efforts made by the respondent to mitigate its damages and there was no appraisal evidence to cast doubt upon the reasonableness of those efforts.
[4] The tenant of Unit 10 vacated in 1996. The respondent took no steps to pursue the tenant or the person who provided an indemnity agreement. The appellants argue that the trial judge erred in failing to find that the losses flowing from the abandonment of Unit 10 by the replacement tenant were remote. In our view, the issue was not one of remoteness. The question was whether the respondent took reasonable steps to mitigate. After the tenant vacated, the respondent took steps to find a new tenant. Eventually it was able to do so but at a reduced rate. The new tenant was also 1104727 Ontario Inc.
[5] The respondent having taken steps to mitigate its losses in relation to Unit 10, the onus of establishing that those efforts were not reasonable fell upon the appellants. They adduced no evidence that, in the circumstances, failing to pursue the tenant (apparently a shell company) was unreasonable. The only evidence before the trial judge was that the respondent’s principals believed that the indemnifier had returned to Hong Kong. There was no contrary evidence from the appellants. The trial judge was satisfied that the respondent had made reasonable efforts and we have not been persuaded that she erred in doing so.
[6] In calculating the amounts of future rents on Units 9 and 10, the trial judge made an estimate based on current amounts reduced by a factor for uncertainty of recovery. We agree that the trial judge’s approach was the correct one and see no basis for interfering with her decision to use a factor of 50%. The weight to be given to the factor does not seem to have been addressed in argument at trial and was raised for the first time in this court in oral argument. The trial judge referred to circumstances that made the collection of future rents uncertain and that were capable of supporting her conclusion.
[7] Counsel for the appellants did not pursue the question of the irregular distress proceedings in oral argument. There is no merit to this ground of appeal. The trial judge’s findings of fact are supported by the evidence.
8Accordingly, the appeal is dismissed with costs.
(signed) "R. McMurtry C.J.O."
(signed) "J. W. Morden J.A."
(signed) "M. Rosenberg J.A."