COURT FILE NO.: 349/05

DATE: 20070220

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

B E T W E E N:

KAI FAN LI

Plaintiff

(Appellant)

• and -

SYMPHONY SQUARE LIMITED

Defendant

(Respondent)

Christopher Goldson, for the Plaintiff (Appellant)

David A. Weisman, for the Defendant (Respondent)

HEARD at Toronto: February 20, 2007

FERRIER J.: (Orally)

1The plaintiff/appellant appeals the trial decision of His Honour Deputy Judge Kilian of the Small Claims Court, rendered on August 22, 2005.

2The plaintiff was one of three tenants who rented an apartment from the defendant landlord. The lease was for a one year period and provided for a single up-front payment of $32,400.00 for the rent. The lease provided for three parking spaces. Shortly before taking possession, the landlord required the tenants to provide $2,500.00 as a security deposit and $300.00 as a “key deposit” in addition to the sums provided for rent.

3The landlord ultimately provided two of the three parking spaces and the learned trial judge found on the evidence that the value of the missing parking space was $960.00. Accordingly, the trial judge found that there was owing to the plaintiff the sum of $2,500.00 for the security deposit which at the time of trial had not been repaid to the plaintiff; $300.00 for the key deposit which was owing to the plaintiff and $960.00 for the parking space. In addition, the learned trial judge awarded the plaintiff $162.00 as interest on what was the equivalent of one month’s rent.

4The plaintiff had claimed punitive damages and the learned trial judge awarded such damages in the sum of $500.00.

5The defendant had counter-claimed for damages as a result of the condition in which the apartment was left when the tenants vacated. There was evidence before the trial judge on which he could make a finding that there were indeed damages incurred by the defendant as a result of the state in which the apartment was left when the tenants vacated.

6It is agreed among counsel that the learned trial judge made a mathematical error when calculating the amount of the defendant’s damages and counsel have agreed that assuming that the trial judge was correct in awarding damages for the items he found to have been suffered by the defendant, the correct amount of the counter-claim of the defendant would be $1,768.71.

7The plaintiff takes issue with the trial judge’s judgment in the following respects:

(i) the plaintiff claims that she should have been awarded interest at the rate of six percent on the $32,400.00 pre-payment of rent;

(ii) that the punitive damages should have been $5,000.00, rather than $500.00;

(iii) that the counter-claim of the defendant should have been disallowed because of the lack of evidence to support it; and

(iv) the counter-claim should have been disallowed because in rendering his decision, the learned trial judge dismissed the counter-claim after applying a set-off against the plaintiff’s claim.

8The plaintiff argues that the punitive damages did not take into account the severity of the illegality entered into by the landlord in entering into a lease with the security deposit, key deposit and payment upfront for the whole year’s lease.

9I am satisfied that the trial judge exercised his discretion appropriately in the circumstances. There is no basis in law for interfering with his determination that $500.00 for punitive damages is an appropriate amount.

10The appellant attempted to suggest that there was a breach of the Human Rights Code in that the plaintiff and her two associate tenants were Asian and that this was the reason for the landlord seeking to obtain upfront rent. There is no evidence to support that proposition.

11In reference to the counter-claim of the defendant, I am satisfied that there was ample evidence at trial, oral evidence that support the judge’s findings on the state of the apartment when it was vacated by the plaintiff.

12The appellant argued that there were photographs in the court file which came to the attention of the trial judge which in effect tainted his findings concerning the damages. Those photographs were not admissible documents because they had not been properly served. Nevertheless, there was evidence of a witness who testified as to his inspection of the apartment following the vacating of the apartment by the plaintiff and that witness testified concerning the details of the state of the apartment.

13In addition there were invoices concerning the cost of making the necessary repairs to the apartment. In short, I am satisfied that there was evidence upon which the trial judge could come to the conclusion that he did concerning the counter-claim.

14The trial judge set off the amounts owing to the defendant by the plaintiff against the plaintiff’s claim and then dismissed the counter-claim. That is a technical matter which can readily be corrected on this appeal and is not fatal to the decision below.

15The final item argued by the appellant had to do with the fact that the trial judge failed to award interest on the entire $32,400.00 for the period of the lease to the extent that figure would reduce monthly as the sum of $2,700.00 was accounted for each month.

16In this respect, and with all due respect to the learned trial judge, I am of the view that the trial judge erred in failing to award such interest. The issue is not one that arises under the Tenant’s Protection Act or the former Landlord and Tenant Act, but rather arises under the wording of the lease that was entered into between the parties.

17Paragraph 7 of the lease states:

“The Tenant agrees to deposit with the Landlord the sum of $32,400.00 as prepaid rent to be applied towards the month’s rent of the term of this agreement and the Landlord agrees to pay interest annually on such prepaid rent in accordance with the Landlord and Tenant Act.”

18As I have already indicated, the agreement to provide $32,400.00 prepaid rent was illegal in the sense that it was prohibited by the former Landlord and Tenant Act and the new Tenant Protection Act, but the exercise the trial judge was faced with which he did not undertake was to interpret the agreement to discern the intention of the parties concerning the payment of interest.

19In my view, the agreement, although somewhat defective in its wording makes it clear that the tenant was to be paid interest at the rate provided by the Landlord and Tenant Act or the Tenant Protection Act which is six percent on the reducing balance of the $32,400.00. Otherwise there would have been no reason to have such a provision in the agreement.

20It was argued by the respondent/landlord that what was really intended was that which was found by the trial judge, namely that this was a one month rent provision in the usual form which would carry interest at the rate of six percent.

21With respect to that submission and with respect to the learned trial judge, in my view, the agreement provides otherwise.

22Accordingly, it is my finding that there should be paid interest on the reducing balance at the rate of six percent. I advised counsel of that determination and invited them to come to an agreement on what the dollar figure of the interest would be and I am pleased to say that they have been able to do the mathematics and come to an agreement and it has been agreed that the appropriate amount is $826.97, for the interest in accordance with paragraph 7 of the lease.

23Accordingly, to the extent indicated by these reasons, the appeal is allowed. There will be judgment for the plaintiff in the total sum of $5,086.97. In addition, there will be judgment on the counter-claim for the defendant in the sum of $1,768.71. The defendant will be entitled to set off the amount of the judgment on its counter-claim against the sums owing to the plaintiff on the plaintiff’s judgment. Accordingly, there will be owing to the plaintiff on its judgment the sum of $3,318.26.

24I have endorsed the appeal book as follows: “For oral reasons delivered, the appeal is allowed. Judgment for the plaintiff in the amount of $5,086.97. Judgment for the defendant on its counter-claim in the amount of $1,768.71, to be set off against the plaintiff’s judgment. Amount owing to the plaintiff is therefore $3,318.26, plus the costs awarded at trial plus pre-judgment interest. Costs to the plaintiff/appellant fixed at $1,000.00, including disbursements and GST. (The only issue on which the appellant was successful on the appeal has a value of $826.97.)”

FERRIER J.

Date of Reasons for Judgment: February 20, 2007

Date of Release: February 22, 2007

COURT FILE NO.: 349/05

DATE: 20070220

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

B E T W E E N:

KAI FAN LI

Plaintiff

(Appellant)

• and -

SYMPHONY SQUARE LIMITED

Defendant

(Respondent)