COURT OF APPEAL FOR ONTARIO DATE: 20220928 DOCKET: C69791

Gillese, Huscroft and Sossin JJ.A.

BETWEEN

Professional Court Reporters Inc. Plaintiff (Appellant)

and

Pistachio Financier Corp. and Real Crowd Capital Inc. o/a R2 Defendants (Respondents)

Counsel: Jeremy Sacks, for the appellant Patrick Bakos, for the respondents

Heard: September 14, 2022

On appeal from the judgment of Justice Andra Pollak of the Superior Court of Justice, dated July 28, 2021 and December 8, 2021.

REASONS FOR DECISION

[1] The appellant, Professional Court Reporters Inc. (“PCR”), entered into a sub-tenancy agreement with the respondent Pistachio Financier Corp. (“Pistachio”) (the “Sublease”). The respondent Real Crowd Capital Inc. o/a R2 (“RCCI”), indemnified Pistachio’s obligations pursuant to the Sublease. 2291818 Ontario Inc. (“BeWell”) was a sub-subtenant of Pistachio and RCCI.

[2] Pistachio defaulted after failing to pay rent for seven days, which gave the appellant the option to terminate the Sublease. The appellant gave notice of termination and re-entered the premises. The appellant commenced an action against Pistachio and RCCI seeking payment of all amounts owed under the Sublease, damages arising from the default and termination of the Sublease in the amount of $750,000, and pre- and post-judgment interest at the lesser of prime plus 5% per annum and the maximum rate permitted by applicable law, in accordance with the terms of the head lease. Under the terms of the Sublease, those matters are expressly governed by the head lease.

[3] Pistachio, RCCI, and BeWell commenced their own action claiming that PCR had unlawfully terminated the Sublease and owed damages related to their lockout from the premises and relocation, in addition to claiming set-off in the PCR action.

[4] The appellant successfully moved for summary judgment and to have the respondents’ action dismissed. It was awarded damages of $91,952.58, plus $10,706.56 in pre-judgment interest at the contractual rate of prime plus 5% per annum, and post-judgment interest in accordance with s. 127 of the Courts of Justice Act, R.S.O. 1990, c. C.43. The damages award did not include the appellant’s claim for loss of profit. The appellant was awarded costs on a partial indemnity basis.

[5] On this appeal, the appellant submits that the motion judge erred in finding there was no evidence to support its claim for loss of profit for the unexpired balance of the head lease term. The appellant submits, further, that the motion judge erred by not enforcing the interest rate set out in the head lease, and by awarding costs on a partial indemnity scale despite the higher costs scale set out in the head lease.

[6] The appeal is allowed in part, for the reasons that follow.

Damages for lost profit

[7] The appellant argues that it should have been awarded damages for profits lost for the unexpired balance of the head lease term. The respondent Pistachio was bound by the rental rates in the Sublease for an eight-year period, and Pistachio was paying more to the appellant than the appellant was paying in rent under the head lease. The motion judge declined to award damages for these lost “profits” because she found that the appellant had not met its burden of proof.

[8] The appellant says that the motion judge either made a palpable and overriding error in finding there was no evidence or erred in law by requiring proof beyond the information set out in the head lease and Sublease.

[9] We do not agree.

[10] The motion judge carefully considered the matter and invited the appellant to address the calculation of damages for lost profits. In essence, the appellant relied on the difference between the rent it was required to pay under the head lease and the amount it was charging Pistachio under the Sublease as proof of damages for lost profit. In response, the respondents argued that the appellant had led no evidence proving that it had occasioned any loss and pointed to the evidence of the appellant’s representative, Mr. Parham Fini, who testified that, on balance, there was no profit component to the Sublease rent payments.

[11] Although Mr. Fini’s evidence could be clearer, it was open to the motion judge to conclude that despite the difference in rent between that which the appellant received from Pistachio and that which it paid under the head lease, the appellant failed to establish that the disparity amounted to a loss of profits. The motion judge was entitled to accept Mr. Fini’s evidence on this point which was that there was no loss of profits. This ground of appeal must be rejected.

Post-judgment interest

[12] The appellant argues that the motion judge erred in declining to award post-judgment interest at the rate of interest set out in the head lease, namely, prime plus 5%.

[13] We accept this submission.

[14] In the absence of exceptional circumstances, which were not alleged, the appellant was entitled to recover pre- and post-judgment interest at the rate set out in the head lease: see e.g., National Leasing Group Inc. v. Verbanac Law Firm Professional Corporation, 2015 ONSC 145, at paras. 20-22. The motion judge provided no reasons for her decision not to give effect to the parties’ agreement in respect of post-judgment interest, even though she awarded interest at the higher rate set out in the head lease for the appellant’s pre-judgment interest claim.

[15] Accordingly, the appellant is entitled to post-judgment interest at the head lease rate of prime plus 5% per annum. The appellant argued at the hearing of this appeal that interest should run from an earlier date. However, this argument was not made in the appellant’s factum and the appellant acknowledged that in these circumstances this submission was not properly pursued. As a result, no change is made to the date from which post-judgment interest is to be calculated.

Costs on the motion

[16] The motion judge found that the appellant’s costs were reasonable having regard to the factors set out in Boucher et al. v. Public Accountants Council for the Province of Ontario et al. (2004), 71 O.R. (3d) 291 (C.A.) and the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, but awarded them only on a partial indemnity basis. The costs award is for the appellant’s summary judgment motion as well as its success in having the respondents’ action dismissed.

[17] The appellant argues that it was entitled to costs on a higher scale pursuant to the terms of the head lease, which applied to the subtenant under the Sublease. The motion judge gave no reason for not enforcing the terms of the head lease, which clearly entitles the appellant to costs on a higher scale. Accordingly, the appellant is entitled to costs of the appellant’s summary judgment motion and dismissal of the respondents’ action, which we fix at $75,279, all inclusive.

Disposition

[18] The appeal is allowed in part.

[19] The appellant is entitled to post-judgment interest at the rate set out in the head lease.

[20] The appellant is entitled to costs below fixed at $75,279, all inclusive.

[21] In light of its partial success, we order costs of the appeal to the appellant, fixed in the amount of $3,000, all inclusive.

“E.E. Gillese J.A.”

“Grant Huscroft J.A.”

“L. Sossin J.A.”