COURT FILE NO.: 266/05
DATE: 2006/06/14
SUPERIOR COURT OF JUSTICE - ONTARIO
DIVISIONAL COURT
RE: Esbin Realty Corporation and Dauson Properties Ltd. & The Noik Group of Companies
BEFORE: Justice Epstein
COUNSEL: Oren Chaimovitch, for the Appellant, Dauson Properties Ltd. & The Noik Group of Companies
Harold Rosenberg, for the Respondent, Esbin Realty Corporation
DATE HEARD: June 6, 2006 at Toronto
E N D O R S E M E N T
[1] The defendant, Dauson Properties Ltd. & The Noik Group of Companies, appeals from the judgment of Justice D. Godfrey dated June 30, 2005 in which the learned small claims court judge ordered Dauson to pay to the plaintiff, Esbin Realty Corporation, $9223.40 plus interest and costs.
[2] The appeal involves the interpretation of a listing agreement between the parties and the application of the facts to that interpretation.
Background
[3] By agreement dated April 14, 2003, Dauson listed with Esbin, a realtor, a unit in its plaza that was available for rent. The listing expired on September 1, 2003.
[4] The terms in the agreement central to the determination of the issues raised in this appeal are:
I [the defendant] agree to pay you a commission equivalent to…$1.00 p.s.f. per year on any Lease of Agreement to Lease affected either during the currency of this Agreement from any source whatsoever, or within six months thereafter with any party to whom you [the plaintiff] your representatives or Cooperating Brokers have introduced my said property during the currency of this Agreement provided you have given me written notice not later than seven (7) calendar days after the expiry of this Agreement of the names of such parties so introduced.
All enquiries from any source whatsoever shall be referred to you and all offers submitted to me shall be brought to your attention before acceptance. I will allow you to show prospective tenants over the property during reasonable hours and you shall have the sole and exclusive right to place your for “rent” or for “lease” sign upon the property.”
[5] The space in issue was a unit of 1,724 square feet (the “unit”). It had been unoccupied since March 31, 2001.
[6] During the currency of the listing agreement Esbin promoted the unit, showed it on a number of occasions and produced several offers.
[7] Since August of 1997, Pizza Pizza had been a tenant in the plaza of a slightly smaller unit. On September 8, 2003 Dauson and Pizza Pizza entered into an agreement that the parties identified as an “amending agreement” whereby Pizza Pizza agreed to relocate into the unit.
[8] Prior to signing the so-called amending agreement, Pizza Pizza’s construction people went through the unit. Pizza Pizza then quickly concluded its lease transaction with Dauson.
Analysis
[9] Dauson submits that the trial judge erred in finding that:
(a) Esbin introduced Pizza Pizza to the unit during the currency of the listing agreement;
(b) Esbin would have been able to conclude a leasing agreement between Dauson and Pizza Pizza by September 1, 2003 had it known of Pizza Pizza’s interest;
(c) Esbin could not comply with the 7 day notice provision in the agreement as it was unaware of Pizza Pizza’s interest; and
(d) That the agreement entered into between Pizza Pizza and Dauson was a new lease rather than an amendment to the existing lease between them.
(a) Did Esbin introduce Pizza Pizza to the unit during the currency of the listing agreement?
[10] The first issue to be addressed is whether the trial judge erred in finding that Esbin “introduced” the unit to Pizza Pizza. Dauson submits that the word must be considered in terms of its plain meaning and since Pizza Pizza was already a tenant in the plaza and knew about the unit, Esbin did not introduce the property.
[11] First, the trial judge made a finding of fact, that is not challenged, that Pizza Pizza and Dauson were working on arrangements relevant to the lease of the unit, during the months of July and August of 2003.
[12] Against that background, I turn to the agreement between the parties. The listing agreement must be read in a way that gives it business efficacy. Surely, it cannot be that the parties intended this provision to mean that Esbin would be disentitled to commission if a prospective tenant that already knew about the unit decided to lease it within the term of the agreement.
[13] Secondly, during this period of time, Dauson was required to refer all inquiries “from any source” to Esbin – “any source” includes existing tenants. Dauson failed to notify Esbin of Pizza Pizza’s interest thereby preventing Esbin from working with Pizza Pizza to secure the deal. Dauson cannot rely on its own breach of the agreement in support of its argument that Esbin did not introduce Pizza Pizza to the property.
[14] In my view the trial judge properly found that Esbin notionally introduced the unit to Dauson.
(b) would Esbin have been able to conclude a leasing agreement between Dauson and Pizza Pizza by September 1, 2003 had it known of Pizza Pizza’s interest?
[15] Based on the evidence of the relationship between Pizza Pizza and Dauson and the circumstances surrounding their negotiations resulting in the quick culmination of their agreement to lease the unit, it was open to the trial judge to find that Esbin would have been able to conclude a leasing agreement between Dauson and Pizza Pizza within the currency of the listing agreement.
( c ) What are the consequences of the application of the facts to the 7-day notice provision in the agreement?
[16] In dealing with this issue the trial judge relied, once again, on Dauson’s breach in failing to advise Esbin of Pizza Pizza’ interest. In his reasons Judge Godfrey said that Esbin could not comply with the requirement since Dauson did not advise Esbin of Pizza Pizza’s interest.
[17] There is no dispute as to the purpose of this provision. It is to put Dauson on notice as to the potential ongoing liability for commission obligations following the expiry of the listing agreement. Dauson submits that Esbin’s clear failure to fulfill its obligations under this 7-day notice provision is fatal to its claim for compensation under the provisions of the agreement.
[18] I agree with counsel for Esbin that in these circumstances, the principle of putting Dauson on notice of potential commission liability, is not applicable. Secondly, once again, Dauson cannot rely on its own breach to avoid its obligations to Esbin.
(d) Was the agreement entered into between Pizza Pizza and Dauson a new lease rather than an amendment to the existing lease between them?
[19] There was evidence at trial that was capable of supporting the trial judge’s conclusion that the agreement between Pizza Pizza and Dauson was a new lease, regardless of what label the parties attached to it. Pizza Pizza agreed to occupy entirely different space within the plaza. Pizza Pizza was relinquishing its previous smaller space to move into the unit. The document itself refers to “new premises” and “surrendering” the original space.
[20] There is no reason to interfere with the trial judge’s finding that a further issue was raised about the amount of the commission. The wording of the listing agreement is clear. Esbin is entitled to commission based on the number of square feet in the unit that was leased to Pizza Pizza.
Conclusion
[21] What the trial judge found, correctly in my view, is that Dauson tried to avoid its obligations to Esbin by breaching the terms of the listing agreement. But for Dauson’s breach, Esbin would have been able to fulfill its obligations. I see no reason to interfere with the trial judge’s determination that in these circumstances Esbin is entitled to its commission.
[22] For these reasons the appeal is dismissed. If the parties are unable to resolve the issue of costs, they may make written submissions to me within 20 days.
Epstein J.
DATE: June 14, 2006