Court of Appeal for Ontario
Date: August 13, 2019 Docket: C65643
Judges: MacPherson, Tulloch and Harvison Young JJ.A.
Between
Angelo Cassandro Plaintiff (Appellant/Respondent by way of cross-appeal)
and
Peter Glass and Peter Glass c.o.b. Micugh Construction Services Defendants (Respondents/Appellants by way of cross-appeal)
Counsel
Paul J. Pape and Cristina Senese, for the appellant
Trent Falldien, for the respondents
Heard
June 13, 2019
On Appeal
On appeal from the order of Justice John S. Poupore of the Superior Court of Justice, dated June 19, 2018, with reasons reported at 2018 ONSC 3503.
Tulloch J.A.:
Overview
[1] The appellant, Mr. Cassandro, leased his property to the respondent, Mr. Glass. Mr. Glass ran a commercial contracting business as a sole proprietorship. The relationship between Mr. Cassandro and Mr. Glass broke down. Mr. Cassandro terminated the lease, took possession of the premises, and distrained Mr. Glass' commercial operating equipment on the property. Mr. Cassandro sued Mr. Glass claiming damages for unpaid rent and damage to the property. Mr. Glass counterclaimed and claimed damages for the value of the chattels seized and lost income. The trial judge awarded damages to both parties and set them off against each other. Both parties appeal on liability and damages.
[2] For the following reasons, I would allow Mr. Cassandro's appeal in part on the issue of damages for loss of income and would order a new trial on this issue, but would otherwise dismiss his appeal. I would allow Mr. Glass' cross-appeal in part on the issue of crediting rent arrears from the value of the seized chattels, but would otherwise dismiss his cross-appeal.
Facts
[3] Mr. Cassandro owned a property in the City of Greater Sudbury (the "City"). Mr. Glass ran a commercial contracting business. In 2009, Mr. Cassandro leased his property to Mr. Glass. The lease was an oral agreement on a month-to-month basis with rent of $3,090 per month.
[4] Mr. Glass intended to use the property to store construction vehicles and equipment. However, the property was zoned as rural which precluded this use. As a result, Mr. Glass undertook to rezone the property for commercial use with Mr. Cassandro's assistance. Mr. Glass agreed to pay the fees and costs of the rezoning process and complete the paperwork. I will refer to this agreement as the Oral Agreement. Mr. Cassandro thus applied for approval to the City and to the Nickel District Conservation Authority ("NDCA") to rezone the property to industrial.
[5] As the parties proceeded with the rezoning application, Mr. Glass began to modify the property to make it suitable for his business. In 2009, Mr. Glass began dumping landfill into a designated flood plain regulated by the NDCA. A regulation enacted under the Conservation Authorities Act, R.S.O. 1990, c. C.27, prohibited such dumping without a permit. The NDCA issued a violation notice and a stop work order. The NDCA later issued a permit to Mr. Cassandro that authorized Mr. Glass to dump landfill within certain limits. On October 30, 2009, the NDCA inspected the property. It found that Mr. Glass had violated the terms of the permit by dumping excessive landfill too close to the water's edge. Because Mr. Cassandro was the owner, the NDCA ordered him to remove the excess fill and to remediate the environmental damage the fill was causing.
[6] Mr. Cassandro was ultimately successful in rezoning the property to industrial. However, the Ontario Municipal Board required him to enter into a Site Plan Control Agreement (the "Site Plan Agreement") with the City as a condition of the rezoning. On August 30, 2011, Mr. Cassandro and the City signed the Site Plan Agreement, which was registered on title. The Site Plan Agreement incorporated the terms of the remediation that the NDCA had required and Mr. Cassandro agreed to complete this remediation to the NDCA's satisfaction. The Site Plan Agreement also contained additional terms that required further modifications to the property.
[7] The Site Plan Agreement required Mr. Cassandro to pay $25,339.30 to the City for various fees and deposits related to the rezoning. Pursuant to the Oral Agreement, Mr. Glass was responsible for paying this sum and he did so. Likewise, as the Oral Agreement provided, Mr. Glass assumed the cost of completing the Site Plan Agreement.
[8] After the Site Plan Agreement was signed, Mr. Glass was injured while working on the property. This resulted in an extended hospital stay. Mr. Glass' evidence was that he spent one and a half years in a wheelchair after his release from hospital. Mr. Glass admitted at trial that this accident affected his income. However, he insisted in his trial evidence that the accident did not prevent him from managing his business and that he was able to direct his employees and staff.
[9] In 2013, a survey was conducted that set out the extent of Mr. Glass' overfilling of landfill. The NDCA directed Mr. Cassandro to remove the excessive landfill and conduct remediation. Mr. Cassandro approached Mr. Glass. They agreed that Mr. Glass would conduct the remediation. However, Mr. Glass did not complete the required remediation and refused responsibility to rectify the excessive landfill.
[10] Mr. Glass' failure to remediate the property led to the breakdown of the landlord-tenant relationship. Mr. Cassandro served a notice of eviction on Mr. Glass on November 4, 2013. Beginning in mid-January, Mr. Cassandro denied Mr. Glass access to the leased premises and his chattels. On January 13, 2014, Mr. Cassandro served a further notice on Mr. Glass that gave Mr. Glass nine days to remove all remaining property from the premises. The notice stated that Mr. Glass could not enter the leased premises unless he first paid Mr. Cassandro $3,100. Mr. Glass never removed the property from the premises. By January 31, 2014, Mr. Cassandro terminated the lease, took possession of the leased premises and distrained Mr. Glass' chattels.
[11] At some time after February 1, 2014, Mr. Cassandro took the position that he was entitled to distrain Mr. Glass' chattels as security for damages that would be assessed at a future date. These damages included damage for ongoing rent and the excessive number of the chattels on the property, which Mr. Cassandro alleged were too expensive to relocate and store. However, Mr. Cassandro did not begin to attempt to ascertain the quantum of these damages until October 2015.
[12] The chattels remain on the property by the lakeside. Mr. Cassandro failed to properly secure and maintain them. Some have disappeared and others have depreciated in value. The property is full of the chattels. At trial, Mr. Cassandro gave evidence that the chattels blocked access to the property. This both prevented him from renting the property and prevented the equipment required to remediate the environmental damage from gaining access to the property. The quote for an on-site move of the chattels to permit remediation was $17,797.50 and the quote for removal to another site was $49,835.
Superior Court Decisions
(1) Endorsement of Gordon R.S.J., dated October 19, 2015
[13] Gordon R.S.J. granted in part Mr. Cassandro's motion for summary judgment. He found that Mr. Glass was in arrears of rent in January 2014 and that it was thus appropriate for Mr. Cassandro to take possession of the property owing to the default in payment. He ordered that Mr. Glass was liable to Mr. Cassandro for loss of rental income and other losses resulting from Mr. Glass' use of the property, including the claim for work required to comply with the NDCA remediation order. Gordon R.S.J. ordered a trial to establish the amount of Mr. Cassandro's damages. He made no determination as to the validity of Mr. Cassandro's decision to retain possession of Mr. Glass' chattels.
(2) Endorsement of Gordon R.S.J., dated February 2, 2017
[14] Gordon R.S.J. dismissed Mr. Glass' motion to set aside his summary judgment order. He accepted Mr. Glass' argument that the permit was issued to Mr. Cassandro and that the NDCA would hold Mr. Cassandro responsible for compliance with the permit. However, Gordon R.S.J. held that Mr. Cassandro still had a valid claim against Mr. Glass for the costs of remediating the work that Mr. Glass had improperly performed. This remedial work was required to comply with the permit.
(3) Reasons of the Trial Judge
(a) Mr. Cassandro's Claim
[15] The trial judge found that Mr. Cassandro was entitled to only $3,090 in rent for the month of January 2014. The trial judge based this finding on the fact that Mr. Cassandro terminated the lease agreement on January 31, 2014 and, as such, he could no longer charge Mr. Glass rent after this date.
[16] The trial judge also awarded Mr. Cassandro damages for the remediation required by the NDCA and the cost of completing the Site Plan Agreement. He assessed these damages at $54,240 and $92,660 respectively, based on the cost estimates provided at trial. He also awarded Mr. Cassandro $1,299.56 for obtaining the survey to detail the remediation work required and the NDCA fees of $750.
[17] The trial judge rejected the remainder of Mr. Cassandro's claim for damages, including the cost that Mr. Cassandro claimed to move Mr. Glass' chattels. He found that either Mr. Cassandro failed to prove these damages or they resulted from the excessive distress that he found that Mr. Cassandro had taken.
[18] The trial judge awarded Mr. Cassandro total damages in the amount of $152,039, broken down as follows:
| Category of Damage | Damage Award |
|---|---|
| Rent | $3,090 |
| Cost to relocate fill | $54,240 |
| Survey | $1,299 |
| NDCA fees | $750 |
| Cost to complete Site Plan Agreement | $92,660 |
(b) Mr. Glass' Counterclaim
[19] The trial judge found that Mr. Cassandro's distress of Mr. Glass' chattels was excessive and in effect was a wrongful conversion. Because Mr. Cassandro had terminated the lease, he could only dispose of sufficient chattels to satisfy the outstanding rent. Mr. Cassandro had no right to withhold the remainder of Mr. Glass' chattels in anticipation of future damages. The trial judge accepted the value of these chattels at $161,900 as appraised by the valuator Mr. Cassandro retained and awarded Mr. Glass this sum less the $3,090 in rent arrears for a total of $158,810. I note, however, that the actual number of the valuation was $167,390. The trial judge proceeded to rule that the chattels would be Mr. Cassandro's to dispose of.
[20] The trial judge noted that Mr. Glass' counterclaim was "very thin on evidence and difficult to accept as presented." He accepted that the seizure of the chattels prevented Mr. Glass from earning income. However, he found that Mr. Glass failed to mitigate his losses because he failed to pursue expeditious legal means to regain the seized chattels and instead "chose to do nothing." The trial judge ultimately assessed damages for the loss of income counterclaim at $100,000. He provided no other analysis explaining how he arrived at this figure.
[21] The trial judge awarded Mr. Glass total damages of $258,810. Finally, the trial judge set-off Mr. Cassandro's damages against Mr. Glass' damages and awarded Mr. Glass judgment in the amount of $106,771.
Issues
[22] Mr. Cassandro raises the following issues on his appeal:
Did the trial judge err by failing to find that Mr. Cassandro lawfully distrained Mr. Glass' chattels pursuant to the common law remedy of distress damage feasant?
Did the trial judge make a palpable and overriding error in determining that Mr. Glass had lost income as a result of the distraint?
Did the trial judge err by awarding damages for the value of Mr. Glass' chattels and for loss of income in light of the trial judge's finding that Mr. Glass failed to mitigate his damages?
[23] In his cross-appeal, Mr. Glass raises the following issues:
Did the trial judge err by ordering Mr. Glass to pay damages of $92,660 to finish the zoning upgrade for Mr. Cassandro's property?
Did the trial judge err in failing to give Mr. Glass credit for the $25,339.30 he paid to the City pursuant to the Site Plan Agreement?
Did the trial judge overcompensate Mr. Cassandro for the $3,090 in rent arrears by double-counting this figure?
Mr. Cassandro's Appeal
(1) Distress Damage Feasant
[24] Mr. Cassandro's first argument is that he was entitled to distrain Mr. Glass' chattels by virtue of the common law defence of distress damage feasant.
[25] The defence of distress damage feasant is an ancient common law right that permits an occupant of land to distrain a chattel found on that land in certain circumstances. Mr. Cassandro referred us to several Canadian cases that establish the requirements of the doctrine of distress damage feasant. Those cases appear to establish two main requirements. First, the chattel the occupant of the land has seized must have trespassed or have been unlawfully present on the occupant's land: Stewart v. Gustafson, [1999] 4 W.W.R. 695 (Sask. Q.B.), at para. 32; Forhan & Read Estates Ltd. v. Hallett and Vancouver Auto Towing Service (1959), 19 D.L.R. (2d) 756 (B.C. Co. Ct.), at p. 759. Second, the chattel must have caused actual damage to the occupant's land and must be continuing to cause such damage at the time of its seizure: R. v. Howson, [1966] 2 O.R. 63 (C.A.), at pp. 77-78, per Laskin J.A. (as he then was); Forhan, at pp. 758-759; Barbour v. University of British Columbia, 2009 BCSC 425, 310 D.L.R. (4th) 130, at para. 50, rev'd on other grounds, 2010 BCCA 63, 316 D.L.R. (4th) 354, leave to appeal refused, [2010] S.C.C.A. No. 135. If these requirements are met, the occupant can distrain the offending chattel in order to secure compensation for the damage it has caused from its owner: Stewart, at para. 32; Forhan, at p. 758.
[26] Mr. Cassandro asserts that the chattels were unlawfully on the property because Mr. Glass had no right to keep them there following the termination of the lease. Mr. Cassandro also identifies three forms of damage that he says allow him to rely on the defence of distress damage feasant. First, Mr. Cassandro says that the chattels caused environmental damage that led to the NDCA remediation order because Mr. Glass used the chattels to dump the landfill. This damage continues to the present day as the fill continues to sit on the flood plain and destabilize the slope. Second, Mr. Cassandro states that Mr. Glass' chattels continue to prevent the machinery needed to remediate the property from accessing it. Third, the chattels form an obstruction that prevents Mr. Cassandro from renting out the property.
[27] I do not accept this argument. Mr. Cassandro did not plead distress damage feasant and did not argue it at trial. The evidentiary record is not adequate to permit him to advance this claim on appeal and it would be unfair to Mr. Glass to allow him to do so. Moreover, properly understood, the doctrine does not assist Mr. Cassandro.
[28] First, Mr. Cassandro neither pled distress damage feasant nor did he argue it at trial. It is uncontested that Mr. Cassandro did not argue distress damage feasant at trial. Nor is the statement of claim capable of being construed as including a pleading of distress damage feasant. The statement of claim does plead that Mr. Glass caused damage to the property by placing fill on the land and that Mr. Cassandro seized the chattels to secure compensation for the damage to the land and the cost of complying with the NDCA remediation order. However, it does not plead that the chattels themselves caused any damage to the land, even though this is a necessary element of distress damage feasant.
[29] As a result, I conclude that it would be unfair to Mr. Glass to permit Mr. Cassandro to raise this doctrine on appeal. This court is rightly reluctant to consider new issues on appeal, particularly when those issues involve a factual component that was not fully explored at trial: Kaiman v. Graham, 2009 ONCA 77, 245 O.A.C. 130, at paras. 18, 21. I do not accept Mr. Cassandro's argument that it is appropriate to consider distress damage feasant on appeal because it is a pure question of law. The application of the distress damage feasant doctrine to this case involves factual questions that were never raised or fully explored at trial because Mr. Cassandro never argued distress damage feasant. In particular, as Mr. Glass submits, there is no evidence that any individual chattels that Mr. Cassandro seized were used in the excavation work that led to the NDCA remediation order. Nor did Mr. Glass have notice or an opportunity to respond to this argument as it was not pled or advanced at trial. The evidentiary record is not adequate to adjudicate the distress damage feasant issue and it would be unfair to Mr. Glass for this court to do so.
[30] Second, even if it was appropriate for this court to consider the doctrine of distress damage feasant on this appeal, that doctrine does not assist Mr. Cassandro. As I have explained, distress damage feasant has two main requirements: that a chattel is trespassing or is unlawfully present on the occupant's property, and that it is causing continuing actual damage to the occupant's property. Here, Mr. Cassandro's argument fails on the first requirement, namely that of trespass or unlawful presence. At the time of the initial damage in 2009, the chattels were lawfully on the leased premises because, as Mr. Cassandro's tenant, Mr. Glass was entitled to bring the commercial operating equipment there.
[31] I do not accept Mr. Cassandro's argument that the chattels became unlawfully present on the property at the time that Mr. Cassandro terminated the lease. This argument is inconsistent with Mr. Cassandro's own actions. The January 13, 2014 notice he delivered to Mr. Glass barred Mr. Glass from removing the chattels until Mr. Glass satisfied all outstanding rent and cost. It does not lie in Mr. Cassandro's mouth to assert that the chattels were trespassing when Mr. Cassandro himself prevented Mr. Glass from removing them prior to the date on which Mr. Cassandro seized the chattels.
[32] Accordingly, it is not necessary to consider whether the second requirement of continuing actual damage is met on these facts.
(2) Damages for Lost Income
[33] Mr. Cassandro's second argument is that the trial judge made a palpable and overriding error of fact in determining that Mr. Glass lost income as a result of the seizure of his chattels. Mr. Cassandro submits that the evidence does not support the finding that Mr. Glass' business was in operation prior to the distraint of his chattels. He points to the evidence that Mr. Glass' 2013 income tax summary records $0 of income for the entirety of 2013, even though the chattels were only seized in January 2014. Accordingly, there is no evidence that Mr. Glass was operating his business or making a profit at the time of the seizure.
[34] I agree with Mr. Cassandro that the trial judge failed to explain how he resolved the central issues on the counterclaim for damages for lost income. He neither explained how he concluded that Mr. Glass had lost income nor how he arrived at the $100,000 figure for lost income. This court owes deference to a trial judge's assessment of damages. However, the trial judge's reasons which leads to his or her assessment of damages must allow for meaningful appellate review: R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869, at para. 28; Saramia Crescent General Partner Inc. v. Delco Wire and Cable Limited, 2018 ONCA 519, at para. 93. The trial judge simply did not explain how he found that Mr. Glass had proven a loss and how he calculated the damages for loss of income. Accordingly, it falls to this court to undertake a fresh assessment: Pita Royale Inc. (Aroma Taste of the Middle East) v. Buckingham Properties Inc., 2019 ONCA 439, 1 R.P.R. (6th) 1, at para. 11.
[35] I rely on the principles of proof of loss and quantum of damages that this court set out in TMS Lighting Ltd. v. KJS Transport Inc., 2014 ONCA 1, 314 O.A.C. 133, at para. 61, citing Martin v. Goldfarb (1998), 41 O.R. (3d) 161 (C.A.), at p. 187, leave to appeal refused, [1998] S.C.C.A. No. 516. As the plaintiff in the counterclaim, Mr. Glass bore the onus of proving his claimed loss and the quantum of damages on a balance of probabilities. Trial judges are of course obligated to do their best to assess damages even where difficulties in quantification render a precise mathematical calculation impossible. In cases where the nature of the damage makes assessment difficult, the trial judge may even resort to guess work in assessing damages. However, plaintiffs still have the duty to prove the facts that trial judges base their damage estimates upon. Where a plaintiff fails to adduce the necessary evidence and the resulting absence of evidence makes it impossible for the trial judge to assess damages, that plaintiff may only be entitled to nominal damages. However, nominal damages are not appropriate where the plaintiff has demonstrated a substantial loss, even if there is a lack of evidence on quantum: TMS Lighting, at para. 85; Rosenhek v. Windsor Regional Hospital, 2010 ONCA 13, 257 O.A.C. 283, at para. 38, leave to appeal refused, [2010] S.C.C.A. No. 89.
[36] In my view, the trial judge failed to resolve the conflicting evidence on whether Mr. Glass had in fact met his onus to prove that he lost income as a result of the seizure of his chattels. The trial judge simply stated that he was satisfied that the seizure of the chattels prevented Mr. Glass from earning income. Respectfully, the trial judge failed to make the necessary findings on this issue. As Mr. Cassandro argues, Mr. Glass' 2013 income tax summaries show an income of $0 for that entire year. In light of Mr. Glass' trial evidence that the injury he experienced did not prevent him from operating his business, it would have been open to the trial judge to find that Mr. Glass had ceased operating his business prior to the seizure of the assets. Yet the trial judge never made a finding on this critical issue. As this issue involves assessing Mr. Glass' credibility, this court is not in a position to resolve it. In the circumstances, I would be prepared to order a new trial on the trial judge's failure to resolve this issue alone.
[37] Second, Mr. Glass failed to meet his onus in this case to quantify the lost income. As the trial judge himself found at para. 102 of his reasons, his counterclaim was "very thin on evidence and difficult to accept as presented." The only documentary evidence that Mr. Glass provided in support of his claim for loss of income was personal tax return summaries. As the trial judge found, at para. 51, Mr. Glass failed to provide back-up documentation to explain how the net business income was generated. Nor did the tax return summaries provide the source of the income. Likewise, Mr. Glass provided no documentary evidence for the years 2017 or 2018. Instead, Mr. Glass simply gave oral evidence that he ran a successful construction business and that he was unable to earn income following the seizure of his chattels.
[38] Mr. Glass is responsible for the absence of evidence. He could have asked his clients and customers for documents or contracts to prove a revenue stream. He could have also sought documentary materials from his suppliers. As he admitted in cross-examination, he did not do so. All he did was produce his income tax summaries. As I have explained, these income tax summaries are a wholly inadequate basis on which to assess his damages. I am convinced that it would not have been difficult for Mr. Glass to produce evidence that would have allowed the trial judge to properly quantify the loss of income from the seized chattels, if any. Accordingly, this is not a case where the assessment of damages was difficult because of the nature of the damage Mr. Glass was attempting to prove.
[39] As a result, I am satisfied that the trial judge erred in principle when he quantified the damages for loss of income at $100,000. On this record, there was an absence of evidence that made it impossible to assess damages for loss of income. The trial judge could not simply pick a number, as he appears to have done.
[40] However, it would be inappropriate for this court to award nominal damages in this case. Mr. Glass gave oral evidence that prior to the eviction he ran a very successful construction service business. His evidence was that the eviction and seizure of his chattels had a devastating impact on his business. As a result, he had to completely shut his business down because he had no additional income-generating capital assets. Admittedly, I would order a new trial on this issue due to the trial judge's failure to resolve the conflicting evidence on whether Mr. Glass in fact suffered a loss. However, it would be open to a trier of fact to accept Mr. Glass' evidence and find that he did suffer a substantial loss. I therefore disagree with Mr. Cassandro that there was no evidence capable of supporting a finding that Mr. Glass was operating his business at the time of the seizure of the chattels or that he suffered a loss. In these circumstances, it would be unjust to deprive Mr. Glass of the opportunity to establish the quantum of his damages: see Martin, at p. 190; TMS Lighting, at paras. 83-87. Accordingly, I would order a new trial on the issue of damages for lost income.
(3) Mitigation
[41] Mr. Cassandro's third argument is that the trial judge erred in law by awarding Mr. Glass damages for both the value of the chattels and lost income in light of his finding that Mr. Glass failed to mitigate his damages. In response to this argument, Mr. Glass submits that the trial judge erred in finding that he had failed to mitigate his losses.
[42] I agree with Mr. Cassandro that the trial judge failed to explain how his finding on mitigation affected his ultimate damage awards. The trial judge found that Mr. Glass had failed to mitigate his damages but then proceeded to award him $100,000 for lost income. He did not explain how he took Mr. Glass' failure to mitigate into account in arriving at this figure. He likewise did not appear to make any deduction from the value of the chattels as a result of Mr. Glass' failure to mitigate.
[43] However, I do not accept Mr. Cassandro's argument that Mr. Glass' failure to mitigate disentitles him to damages. I agree with Mr. Glass' argument that the trial judge made a palpable and overriding error of fact when he found, at para. 102 of his reasons, that Mr. Glass simply "chose to do nothing in the years from seizure until now."
[44] First, the trial judge's finding that Mr. Glass "chose to do nothing" is a misapprehension of the evidence. When Mr. Cassandro commenced his action against Mr. Glass on May 2, 2014, Mr. Glass promptly made a counterclaim for conversion in respect of the seized chattels. The trial judge's finding, at para. 55 of his reasons, that Mr. Cassandro "took no legal step to recover his property" is thus a palpable and overriding error. Section 73 of the Commercial Tenancies Act, R.S.O. 1990, c. L.7, in fact expressly preserves the tenant's right to bring an action to seek a remedy for unlawful distress. Mr. Glass thus did pursue a legal step to recover his property by commencing the counterclaim, and he did so promptly. In this regard, I also note that, on August 15, 2017, Mr. Glass' counsel wrote to Mr. Cassandro's counsel requesting dates for Mr. Glass to obtain the seized chattels from the property. Mr. Cassandro's counsel rebuffed this request.
[45] I also reject Mr. Cassandro's argument that the trial judge's finding of failure to mitigate finds support in the evidence of the bailiff. The bailiff gave evidence that Mr. Glass neither approached him with rent monies nor with instructions on how to recover the chattels in January 2014. However, as a matter of law, this evidence was incapable of grounding a finding of failure to mitigate. As the trial judge found, the loss only crystallized on January 31, 2014 when Mr. Cassandro terminated the lease and seized the chattels. The bailiff's evidence thus concerned Mr. Glass' conduct prior to the date the loss definitively occurred. As this court held in Davy Estate v. CIBC World Markets Inc., 2009 ONCA 763, 97 O.R. (3d) 401, at para. 18, the defence of mitigation only arises after the plaintiff has suffered the loss and it concerns conduct unrelated to the initial loss. Accordingly, the defendant cannot invoke mitigation in relation to the plaintiff's pre-loss conduct or failure to avoid the loss prior to its occurrence: see Angela Swan & Jakub Adamski, Canadian Contract Law, 3rd ed. (Markham, Ont.: LexisNexis Canada Inc., 2012), at para. 6.274.1. Mr. Glass' alleged failure to approach the bailiff with rent monies or to recover the chattels in January 2014 predated the loss and thus is incapable of grounding a finding of failure to mitigate.
[46] Second, the trial judge made a palpable and overriding error of fact in finding that Mr. Glass failed to mitigate because he failed to pursue "fairly expeditious legal means…to regain" the chattels. Presumably, the trial judge was referring to the procedure in s. 66(1) of the Commercial Tenancies Act that permits a tenant to apply to a Superior Court judge to challenge the validity of distress. Sections 66(1) and 67 of the Commercial Tenancies Act provide that the Superior Court judge will hear and determine the matters the application raises in a summary way and may provide interim relief pending the determination of the dispute.
[47] The trial judge's apparent finding that Mr. Glass unreasonably failed to use the application procedure in s. 66(1) of the Commercial Tenancies Act was in error because the trial judge did not give any effect to the fact that Mr. Cassandro had started an action against Mr. Glass. That action put squarely in issue the validity of the seizure of the chattels as Mr. Cassandro pled that he was entitled to retain them. Instead of commencing a separate proceeding, Mr. Glass chose to respond to the action by making a counterclaim for conversion in respect of the seized chattels. I am not convinced that it would have served the interests of justice for Mr. Glass to instead commence a parallel proceeding to seek the return of the seized chattels. Commencing a separate application instead of responding to the action with a counterclaim would have resulted in a duplication of proceedings that would raise the prospect of inconsistent findings between the judge hearing Mr. Glass' application and the judge presiding over Mr. Cassandro's action.
Cross-Appeal
(1) Damages for Cost of Completing the Site Plan Agreement
[48] Mr. Glass' first argument on his cross-appeal is that the trial judge erred in awarding Mr. Cassandro $92,660 in damages for the cost of completing the Site Plan Agreement. Mr. Glass first challenges his liability for those damages. He submits that it is unclear that he made any agreement with Mr. Cassandro regarding their commitments to contribute towards the zoning upgrade. Even if they did make any agreements, Mr. Cassandro terminated those agreements when he terminated the lease in January 2014. Second, Mr. Glass argues that Mr. Cassandro failed to mitigate his damages. Mr. Glass submits that the property was not rezoned from rural to industrial. Accordingly, Mr. Cassandro can mitigate his damages by not completing the Site Plan Agreement and keeping the property zoned as rural. Even if the property was rezoned to industrial, Mr. Cassandro could mitigate his damages by submitting an application to change the zoning back to rural. If he did so, he would not be required to comply with the Site Plan Agreement.
[49] I reject these arguments.
[50] The trial judge's findings of fact provide a complete answer to Mr. Glass' argument that he was not liable. The trial judge found that Mr. Cassandro and Mr. Glass made an Oral Agreement in which Mr. Glass agreed to pay the fees and assume the costs of the rezoning application. Pursuant to this Oral Agreement, Mr. Glass assumed the costs of completing the work required by the Site Plan Agreement. I do not accept that Mr. Cassandro's termination of the lease terminated the Oral Agreement. The Oral Agreement was separate from the lease agreement. Indeed, the parties made the Oral Agreement after the lease began. Accordingly, the termination of the lease did not relieve Mr. Glass from his obligations under the Oral Agreement.
[51] The trial judge's findings of fact also provide an answer to Mr. Glass' argument on mitigation. The trial judge found that the rezoning application was successful. Implicit in this finding is that the property's zoning changed from rural to industrial as a result of the rezoning application. The trial judge's finding was grounded in the evidence of a site plan and subdivisions control engineer for the City who testified that the property was successfully rezoned from rural to industrial.
[52] Furthermore, I also reject Mr. Glass' alternative argument that Mr. Cassandro could have simply rezoned the property back to rural and thus avoided the obligations under the Site Plan Agreement.
[53] In support of his argument, Mr. Glass points to evidence showing that the cost of filing a rezoning application is approximately $3,000 along with the evidence of the City engineer that a rural property typically does not require a site plan. However, in cross-examination, Mr. Glass' counsel asked the City engineer whether the City would still require the Site Plan Agreement to be completed upon rezoning. The City engineer stated as follows:
There would be modifications required to the property, to go back to that zoning, because of the nature of the buildings, all the buildings on a property. There would have to be things – I'm not an expert in that. That would be more of a planning exercise that would have to be discussed, how we would get back to [the rural] designation, given the history. It's a bit complicated.
The City engineer went on to state that he was not sure whether the buildings on the property would have to be demolished if the property was rezoned.
[54] In my view, Mr. Glass has failed to meet his onus to show that Mr. Cassandro could have reasonably avoided his losses by submitting a rezoning application: Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51, [2012] 2 S.C.R. 675, at para. 24. The evidence of the City engineer indicates that rezoning the property back to rural would involve a complex planning exercise that would require modifications to the property and possibly the demolition of structures. I cannot infer from this evidence how extensive these modifications would be. Nor can I conclude that the cost of these modifications would be less than the cost of simply completing the Site Plan Agreement. Without such evidence, this court cannot infer that Mr. Cassandro failed to mitigate his damages by acting unreasonably. Mr. Cassandro's duty to mitigate does not require him to embark on such a risky or speculative venture for the benefit of Mr. Glass: see Davy Estate, at para. 26; Stephen M. Waddams, The Law of Damages, 5th ed. (Toronto: Canada Law Book, 2012), at para. 15.150.
(2) Credit for Deposit Paid to the City
[55] Mr. Glass' second argument is that the trial judge erred in failing to award him credit for the $25,339.30 that he paid to the City under the Site Plan Agreement. Mr. Glass submits that it would result in a windfall to Mr. Cassandro if he did not receive credit for this sum.
[56] As a preliminary matter, I note that only $13,500 of the $25,339.30 that Mr. Glass paid to the City is properly characterized as a deposit. A letter from the City to Mr. Glass that was entered as an exhibit at trial makes clear that $11,839.30 of the $25,339.30 total payment consists of payment for a non-refundable cash contribution and legal fees. There is no basis to give Mr. Glass credit for this sum.
[57] I do not accept Mr. Glass' argument that he is entitled to credit for the remaining $13,500. His argument is inconsistent with the law of deposit. As this court recently held in Benedetto v. 2453912 Ontario Inc., 2019 ONCA 149, 86 B.L.R. (5th) 1, at para. 7 (citations omitted), a deposit is not part of the contract to which it is attached but instead "stands on its own as an ancient invention of the law designed to motivate contracting parties to carry through with their bargains." If the contract is not performed, the payee is not obligated to return the deposit to the payor: Benedetto, at para. 5. In this case, Mr. Glass would have understood when he paid the deposit that he would not get it back until the Site Plan Agreement was completed. Pursuant to the Oral Agreement with Mr. Cassandro, Mr. Glass was responsible for completing the Site Plan Agreement. He did not do so. He would only get the deposit back if he did. Mr. Glass cannot get his deposit back through the backdoor by crediting it from the damages he owes Mr. Cassandro.
[58] Nor does failing to credit Mr. Glass for the deposit result in a windfall to Mr. Cassandro. Mr. Cassandro's claim against Mr. Glass is grounded in contract, namely the Oral Agreement between the two men. The aim of contract damages in this case is to place Mr. Cassandro in the same position he would have been in if Mr. Glass had performed the Oral Agreement: Fidler v. Sun Life Assurance Co. of Canada, 2006 SCC 30, [2006] 2 S.C.R. 3, at para. 44. If the Oral Agreement had been performed, Mr. Cassandro would no longer have to pay the costs of completing the Site Plan Agreement. That is why the trial judge properly awarded Mr. Cassandro the costs of completing the Site Plan Agreement in damages. There is thus no windfall to Mr. Cassandro. The return of the deposit is a matter between Mr. Glass and the City.
(3) Double-Counting of Rent Arrears
[59] Mr. Glass' third argument is that the trial judge double-counted the $3,090 in rent arrears. He submits that the trial judge both awarded Mr. Cassandro $3,090 in damages for rent arrears and applied this same sum as a discount against Mr. Glass' damages for the value of the seized assets.
[60] I accept this argument. The trial judge's reasons show that he misunderstood the law of distraint and the principle that a party can either take distress or terminate the lease, but not both. The trial judge found that Mr. Cassandro had terminated the lease as of January 31, 2014. Yet the trial judge still found that Mr. Cassandro was entitled to take distraint for the $3,090 of rent and merely characterized the distraint as "excessive". In fact, the distraint was not merely excessive, but wholly unlawful. It is settled law that distraint is unlawful when the landlord terminates the lease at the same time the landlord attempts to take distress. If the landlord terminates the lease, the landlord loses the entitlement to take distress, including the ability to take distress for rent arrears: see Pita Royale, at para. 5; Country Kitchen Ltd. v. Wabush Enterprises Ltd. (1981), 35 Nfld. & P.E.I.R. 391 (Nfld. C.A.), at para. 10. As Mr. Cassandro had no right to take distress to begin with, he is not entitled to credit the $3,090 of rent arrears against the chattels seized.
Correction of Numerical Discrepancy
[61] In addition, I would revise the damages the trial judge awarded to Mr. Glass for the seized assets from $161,900 to $167,390 to correct a numerical discrepancy. The trial judge initially referred to the value of the seized assets as $166,190 but later used the $161,900 figure when awarding damages. Neither of these figures is correct. In fact, the valuator, whose evidence the trial judge accepted, appraised the value of the assets at $167,390.
Disposition
[62] Accordingly, I would allow in part both the appeal and the cross-appeal. On the appeal, I would set aside the trial judge's award to Mr. Glass of $100,000 in damages for lost income and order a new trial on this issue. I would otherwise dismiss the appeal. On the cross-appeal, I would strike out the trial judge's finding that Mr. Cassandro was entitled to credit the rent arrears against the damages he owes Mr. Glass for the seized assets. I would thus strike out the trial judge's deduction of the $3,090 in rent arrears from the $161,900 in damages that he awarded for illegal distress. I would otherwise dismiss the cross-appeal. Finally, I would correct the numerical discrepancy and revise the damages the trial judge awarded to Mr. Glass for the seized assets from $161,900 to $167,390. The effect of my ruling is to reduce Mr. Glass' damages to $167,390, pending any additional damages that may be awarded at the new trial on damages for lost income. The result is that Mr. Glass shall have judgment against Mr. Cassandro after set-off in the amount of $15,351.
[63] I would thus modify the trial judge's order as follows:
Para. 2: Strike out $258,810 in the damages Mr. Cassandro owes to Mr. Glass and substitute $167,390;
Para. 3: Strike out $106,771 in the judgment Mr. Glass has against Mr. Cassandro following set-off and substitute $15,351.
[64] I would also insert two additional paragraphs in the order following para. 3. The first additional paragraph will order that title to the seized chattels be vested in Mr. Cassandro. This gives effect to the trial judge's ruling, at para. 101 of his reasons, that the seized chattels "are [Mr. Cassandro's] to dispose of." The second additional paragraph will order a new trial before a different judge to determine the damages, if any, due to Mr. Glass by Mr. Cassandro for loss of income resulting from Mr. Cassandro's seizure of Mr. Glass' chattels. This paragraph will also state that the costs of this new trial are reserved to the judge hearing it.
[65] As success is split, I would order no costs.
Released: August 13, 2019
"M. Tulloch J.A."
"I agree. J.C. MacPherson J.A."
"I agree. Harvison Young J.A."
Footnote
[i] The regulation is Nickel District Conservation Authority: Regulation of Development, Interference with Wetlands and Alterations to Shorelines and Watercourses, O. Reg. 156/06.