Court of Appeal for Ontario

Citation: Salman v. 1152030 Ontario Inc., 2010 ONCA 401

Date: 20100604

Docket: C50663

Before: Cronk, MacFarland and Karakatsanis JJ.A.

Between:

Amir Salman

Respondent/Plaintiff

and

1152030 Ontario Inc., Salvatore Vescio and The Bank of Nova Scotia

Appellants/Defendants

Counsel:

Chris Dockrill, for the appellants 1152030 Ontario Inc. and Salvatore Vescio

Julian Binavince, for the respondent Amir Salman

Heard and released orally: May 14, 2010

On appeal from the judgment of Justice Donald R. Cameron of the Superior Court of Justice, dated May 27, 2009.

ENDORSEMENT

[1] The narrow issue on this appeal is whether the offer to lease commercial premises entered into by the parties constitutes a valid and enforceable lease.

[2] The appellants submit that the trial judge erred in accepting parol evidence when there was no ambiguity in the terms of the signed offer to lease. They submit that having found that the parties had agreed upon the rent, the commencement date, the term of the tenancy and identified the premises, the trial judge erred in failing to find that the offer to lease represented agreement on all material terms necessary to constitute a valid and binding lease.

[3] The trial judge made clear findings of fact that the offer to lease did not constitute a binding lease agreement, but was merely preparatory to a formal commercial lease which was never signed. The trial judge accepted the respondent’s evidence that he had no intention to enter into a binding agreement by signing the offer. He also accepted the evidence of the respondent and his witnesses that: the appellants had assured the respondent that the offer was not a binding contract, but was a preparatory document for negotiation of the formal lease that would be the binding agreement; possession would not be granted until the formal lease was signed; and the respondent never gained possession of the premises. The trial judge also noted that there was no schedule listing the chattels despite the fact that this was to be a turnkey lease.

[4] These findings were open to the trial judge on this record. Indeed, before this court, the appellants accept the trial judge’s key finding that the appellants assured the respondent that the offer to lease was not binding and that a formal lease would be required.

[5] The evidence of the parties’ discussions concerning the import of the offer to lease was admissible with respect to the issue whether the parties intended to enter into a binding agreement upon signing the offer or whether the offer was considered part of the negotiations for the formal binding lease to be signed in the future. Without endorsing the trial judge’s comments regarding the basis for the admission of the parol evidence, we conclude that he was entitled to rely upon this evidence in reaching his findings of fact about the factual matrix underlying the negotiation of the offer to lease: see Dunn v. Chubb Insurance Co. of Canada (2009), 2009 ONCA 538, 97 O.R. (3d) 701 (C.A.), at paras. 33, 34 (footnote 4).

[6] Accordingly, we would not give effect to this ground of appeal.

[7] The appellants next argue that the trial judge erred by making a finding of fraud without stating the basis for that finding and in the absence of a pleading of fraud. In our view, the impugned comments in paragraph [54] of the trial judge’s reasons must be read together with paragraph [52]. In combination, those paragraphs can only reasonably be interpreted as indicating a finding that the appellants had misled the respondent by telling him the offer to lease he signed was not binding and then taking the position that, in fact, it was. The findings of fact that are set out and specifically delineated after paragraph [54] of the trial judge’s reasons make this clear.

[8] The appellants’ real argument is that even if there was a requirement for a formal lease agreement, the trial judge erred in failing to find that this requirement was obviated by the many acts of part performance on the part of the respondent giving rise to the creation of a binding tenancy agreement. The appellants rely upon the findings of the trial judge that the respondent provided cheques for the first and last months rent, provided a letter of credit as security, renovated and decorated the premises, held a party for the opening of the club, restocked the bar and applied for a business licence and to transfer the liquor licence.

[9] We reject this argument. The doctrine of part performance is not dispositive in this case. On the trial judge’s factual findings, the respondent was never provided with the keys to the main front door of the building and to the leased premises. Moreover, again on the trial judge’s findings, on each occasion when the respondent attended at the leased premises after the offer was signed, his entrance and exit from the premises was controlled by representatives of the corporate appellant. Finally, the trial judge accepted that in a memorandum written by the individual appellant after the date of the offer, the respondent was informed he would only be given the keys to the premises after execution of a formal lease by a set date. On these facts, there was ample support for the trial judge’s credibility-based finding that possession of the premises was never provided to the respondent.

[10] We note that we were informed that pursuant to the Order of Epstein J.A., dated March 11, 2010, the letter of credit was surrendered to the bank for cancellation.

[11] For these reasons, the appeal is dismissed. The respondent is entitled to his costs of the appeal in the amount of $4,500, inclusive of disbursements and GST.

“E.A. Cronk J.A.”

“J. MacFarland J.A.”

“A. Karakatsanis J.A.”