COURT FILE NO.: 106/06 and 107/06
DATE: 20071116
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
PROACTIVE RECYCLING INK
Appellant
- and -
1598240 ONTARIO INC o/a NORTHRIDGE PROPERTY MANAGEMENT
Respondent
P. Wade, for the Appellant
R. Brown, for the Respondent
HEARD: September 28, 2007
REASONS FOR JUDGMENT
On appeal from the judgment of The Honourable Deputy Judge G. Barycky, Ontario Court of Justice at Owen Sound on September 20, 2006.
van RENSBURG J
[1] There are two appeals arising out of proceedings at trial before the Honourable Deputy Judge G. Barycky on September 20, 2006 at Owen Sound, Ontario.
[2] In the first appeal the defendant appeals from judgment against it in the sum of $5,136.00 plus $425.00 in costs in the main action. In the second appeal the defendant appeals from the dismissal of its claim against the plaintiff. The appeals were argued separately one after the other. These reasons address both appeals.
Background
[3] The plaintiff 1598240 Ontario Inc. o/a Northridge Property Management (“Northridge”) owns and operates a large warehousing facility exceeding 60,000 square feet in the City of Owen Sound. Under a written lease, Fred Pearce Moving and Storage (“Pearce”) rented 13,230 square feet from Northridge, of which it sublet 2,500 square feet to the defendant Proactive Recycling Ink (“Proactive”) for $856.00 per month, including GST. There was no consent by the landlord to the sublease. Pearce fell into arrears and its lease was terminated. The plaintiff and the defendant then began dealing directly with one another. Commencing in November 2004, the defendant paid $856.00 per month directly to the plaintiff and continued to store its property in the warehouse.
[4] There was no issue between the parties for the first four months of their direct relationship. In March 2005 however the defendant stopped paying rent, asserting that its space had been encroached upon, that its goods had been moved and that there had been some water and other damage to its goods in the course of the plaintiff’s renovations to the warehouse. On July 28, 2005 the defendant removed its goods from the premises. The plaintiff sued for six months rent. The defendant counterclaimed for damage to and loss of its property.
The Main Action
[5] In their pleadings both parties referred to the arrangement between them as a “lease”. The trial judge however found that the arrangement was more in the nature of a license to use. He concluded that the parties had made a verbal deal to permit the defendant to occupy space at the plaintiff’s warehouse facility at $856.00 per month inclusive of GST. He also concluded that there was no meeting of the minds or consensus as to any other essential terms. The trial judge concluded that the arrangements were “far removed from what even the minimum requirements of what a lease would entail”.
[6] The appellant argued that the trial judge erred in his characterization of the relationship between the parties, in that the parties’ reasonable expectations were consistent with a lease, with a covenant of quiet enjoyment and security from trespass to goods, theft and damage. In the alternative, the appellant argued that, having found a mere license, the trial judge erred in failing to conduct a quantum meruit assessment of damages. The appellant also submitted that the court erred in failing to consider an abatement of rent or compensation for inconvenience in favour of the defendant and in including in the measure of damages one month’s notice. Certain grounds of appeal in respect of the judge’s conduct of the trial (grounds 4, 5 and 6 of the notice of appeal) were abandoned by the appellant.
[7] The respondent asserted that there was no palpable and overriding error in the trial judge’s evaluation of the evidence, and that his findings were amply supported by the testimony of the witnesses.
[8] The first two grounds of appeal must fail. It was open to the trial judge on the evidence to conclude that the relationship between the parties was a license and not a lease, notwithstanding how the claim was pleaded and the references by both parties to terms consistent with a tenancy. I find that the trial judge made no patent error in his characterization of the relationship between the parties. His conclusion that the parties had not reached agreement on the minimum terms that would be incorporated in a lease was supported by the evidence. While the appellant previously had a written lease with Fred Pearce, its terms were not known to Northridge. No specific arrangements were made with Northridge, other than a verbal agreement that Proactive would continue to store its goods at the facility for the same monthly fee. The trial judge heard the evidence of the witnesses which made it clear that terms had not been discussed and the parties did not share a common understanding. In my view, there was no error on his part in failing to “read into” the relationship obligations on the part of Northridge to safeguard the goods, to maintain security and for quiet enjoyment.
[9] There was no evidence before the trial judge that would have informed a quantum meruit assessment of damages and there was no palpable error in the judge’s conclusion that the parties’ agreed rate of $856.00 per month was appropriate for the defendant’s license to use space within the plaintiff’s warehouse.
[10] I find however that the trial judge erred in awarding the plaintiff the equivalent of six months’ rent as damages. A key issue for determination at trial was whether there had been a breach of any obligation owed by the plaintiff to the defendant when the defendant’s goods were moved and access to the goods was impeded. If the judge had found that there had been a lease, he might have embarked on a consideration of the tenant’s right to quiet enjoyment. After concluding that the relationship was one of license, and finding that the parties had not agreed on other key terms of their relationship, it appears that he did not consider whether any duty was owed by the plaintiff to the defendant in respect of the defendant’s goods.
[11] Inherent in a license to use space to store goods is the licensee’s right to enter the space and to access its goods without interference. It was admitted at trial that the defendant’s access to its goods was impeded for a period of 2.5 months, and the plaintiff had acknowledged that the defendant was entitled to an allowance of one month’s rent to compensate for the interference. On the evidence, this is the best measure of the defendant’s damages for interference with its interest, and the rent owing should have been reduced by one month to account for this interference. The award of damages equal to six months’ rent does not appear to take into account this deduction.
[12] The trial judge also erred in including in the plaintiff’s damages rent for one month after the defendant had vacated the premises. The plaintiff’s statement of claim included a claim for notice under the Commercial Tenancies Act. Having concluded that this was not a lease and that there was no agreement as to the specific terms of the license other than as to rental amount, there was no basis to impose an additional month’s rent as “notice” and there would have been no other basis for adding a month into the equation.
[13] Accordingly the plaintiff should have been awarded damages equal to four months’ rent at $856.00 per month, or $3,424.00 and the appeal is allowed to this extent. I do not find any error in the award of costs, as the plaintiff was successful in maintaining its action, even if the amount of damages awarded was excessive.
The Defendant’s Claim
[14] In disposing of the defendant’s claim, the trial judge stated:
The defendant claims, as against the plaintiff, for damages for breach and in negligence. As there were no clear terms other than as set out above and found in my reasons, there is no basis for any damages arising from any breaches of either non-existent or not agreed upon terms. That aspect of the defendant’s claim thus fails. As to damages for negligence and damage to the defendant’s goods, the defendant has failed to discharge its onus to prove, on a basis of probabilities, liability on the part of the plaintiff. Accordingly, the second half of the defendant’s claim fails.
[15] The judge went on to assess damages at $7,250.00 for repairs and replacement cost for the motor of the defendant’s ink mixer and $5,000.00 for the “Should” mixer, in the event that he had erred on the issue of liability.
[16] In the second appeal, the defendant argued that its counterclaim should not have been dismissed by the trial judge. It was asserted that the judge ignored evidence that the defendant’s goods (and in particular the Should mixer) had been handled by the plaintiff’s employees, and that liability should have been found under the law of bailment, or the torts of trespass to goods or negligence.
[17] The plaintiff argued that the trial judge was correct in concluding that the defendant failed to prove negligence or some other breach of duty by the plaintiff that caused the defendant damage and loss.
[18] The evidence at trial was quite clear that the defendant’s goods were moved by the plaintiff at least three times and that this occurred without the defendant’s permission. It was argued that the trial judge should have considered the defendant’s claims under the laws of trespass and bailment once it was apparent that the defendant’s goods had been moved by the plaintiff without its consent.
[19] Under the law of bailment, upon proof of damage, the onus shifts to the bailee to prove that the damage did not occur while the goods were in its possession and control. The trial judge, in his remarks during closing argument, appears to have considered and rejected the doctrine of bailment in this case. I agree with this conclusion as there was no evidence of voluntary delivery of control of the goods by the defendant to the plaintiff.
[20] I accept the defendant’s argument that the plaintiff committed a trespass in moving the defendant’s goods on three occasions without permission. In order to establish more than nominal damages for trespass however, as with negligence, the injured party must establish that the wrongdoer’s misconduct was the cause of certain specific damage or loss. There is no reversal in the onus of proof.
[21] The defendant pointed to certain statements of the trial judge during closing arguments to suggest that the judge neglected to consider relevant evidence in dismissing the defendant’s claim. At p. 123 of the transcript, the judge stated:
I didn’t hear anybody asked directly – to Trevor Heathers, for example, “Did you move that mixer? Did you see that mixer being moved? Do you have knowledge of where the mixer was? Where was it put? Who moved it?” I didn’t hear anything like that.
[22] At pages 29 and 30 of the transcript however, in cross-examination Trevor Heathers was shown a photograph of the Should mixer and he acknowledged that the mixer was moved by his men, untrained, with a forklift or possibly a pallet truck.
[23] While the trial judge may not have recalled this specific testimony about the plaintiff’s employees handling the Should mixer, this oversight is not determinative. It is clear from his other comments during argument that he had turned his mind to the correct questions in considering whether liability was established. After stating (incorrectly) that there was no evidence that anybody saw this equipment being moved, he went on to observe:
We don’t know what the condition of this mixer is at the time of occupancy. We don’t know whether it gets damaged during the move out or some subsequent time...So how do we know that the loss didn’t occur at time (sic) or post-move? What responsibility is there on the part of the owner of the property to ensure that these things don’t walk, there’s no break-in? How do we know that the stuff was stolen? What liability is there on the part of the owner? Are they bailor, bailee? Well, I don’t think it was a bailment of goods; we don’t have any evidence of the duty of care or standard of care or anything like that, so I have a strong problem with the evidence that I’ve heard on your part...
[24] The trial judge noted that there was a lack of evidence as to when and how the damage to the defendant’s equipment occurred. While there was clearly some evidence supportive of the defendant’s claim, in circumstances where other parties, tenants and contractors, were coming and going from the building, where Mr. Wakeford himself subsequently stated that it was likely the construction workers who damaged the equipment, and where the damage was noted only after the defendant had removed its goods from the premises, the trial judge did not commit any “palpable and overriding error” in dismissing the defendant’s claim.
[25] Accordingly the appeal is dismissed.
Costs
[26] If the parties cannot agree on costs, a telephone conference call may be arranged through my assistant to address this issue.
van RENSBURG J.
Released: November 16, 2007
COURT FILE NO.: 106/06 and 107/06
DATE: 20071116
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
PROACTIVE RECYCLING INK
Appellant
- and –
1598240 ONTARIO INC o/a NORTHRIDGE PROPERTY MANAGEMENT
Respondent
REASONS FOR JUDGMENT
van RENSBURG J.
Released: November 16, 2007