CITATION: Walkers Office Complex v. BJC Architects, 2010 ONSC 5534

COURT FILE NO.: DC-09-00000029-0000

DATE: 20101022

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

WALKER OFFICE COMPLEX INC.

David Cameletti, for the Plaintiff

Plaintiff

• and -

BJC ARCHITECTS INC.

Justin Heimpel, for the Respondent

Respondent

HEARD: September 17, 2010

REASONS FOR JUDGMENT

[On appeal from the judgment of Filkin J.

dated March 13, 2009]

Fragomeni J.

1This is an appeal by the Appellant Plaintiff from the judgment of Deputy Judge Filkin dated March 13, 2009. The Plaintiff was granted partial judgment in the amount of $1,791.20.

2The action related to a commercial tenancy with respect to the premises known as 111 Farquhar Street, Guelph, Ontario.

Overview and Factual Background

3The premises are a 150 year old building that was substantially renovated by the Plaintiff in or around 1993. The Plaintiff is the owner/landlord of the premises and the Defendant was the tenant of the main floor of the premises.

4The Defendant’s tenancy was pursuant to a written lease dated November 1, 2000 for a period of five years ending October 31, 2005. The tenancy was extended beyond October 31, 2005 on a month to month basis. In late September 2006, the Defendant gave written notice to the Plaintiff that it intended to vacate the unit on November 30, 2006 and it vacated the unit in accordance with this notice.

5The lease provided that the Defendant was required to leave the unit in a state of good repair, reasonable wear and tear and damage by fire, lightening and storm only excepted.

6The unit was previously occupied by a previous tenant for a period of 6 years prior to the Defendant’s tenancy. The unit was not repainted prior to the Defendant’s occupancy. The carpets in the unit when the Defendant took possession were the original carpets that were installed in or around 1994.

7The Plaintiff found a new tenant to occupy the unit. This new tenant required leasehold improvements to the unit and it arranged to lease the unit and begin paying rent for the unit on February 1, 2007 so that its leasehold improvements could be completed during this period.

8The Plaintiff’s claim was for damages on account of an alleged breach by the Defendant of its covenant to leave the unit in a state of good repair. The Plaintiff sought damages for: repairing and repainting the walls - $3,400; removal and disposal of the existing carpets - $525.00; supply and installation of new flooring - $7,460.00; clean out of the Defendant’s storage room - $130.00; replacement of ceramic wall tiles - $420.00; repairs to blinds - $390.00; repairs to lights - $131.20; and loss of rent for two months while these repairs were carried out - $7,100. The total of these claims is $19,556. The Plaintiff limited its claim to $10,000 so as to fall within the jurisdiction of the Small Claims Court.

9Deputy Judge Filkin granted partial judgment for repairs to the walls, replacement of ceramic wall tiles and replacement of lights for a total of $1,791.20. He dismissed the balance of the Plaintiff’s claims on the basis that the Defendant had not breached its covenant and had left the unit in a state of good repair, subject to reasonable wear and tear.

Issues on Appeal

10At the appeal hearing before me on September 17, 2010, the Plaintiff only requested the Court to deal with one area, namely the loss of rent.

Position of Appellant Plaintiff

11The Appellant submits that the trial judge did not allow for any loss of rent to the Appellant. The Appellant argues that this finding was not based on the evidence.

12The Appellant requests that this issue either be sent back to the trial judge so that he can properly determine that loss or in the alternative, that this Court make that calculation on the record before it at this appeal.

Position of Respondent (Defendant)

13The Respondent submits that there was sufficient evidence before the trial judge for him to determine that there was no loss on this head of damages. The Respondent argues that any work done after the Defendant vacated, for which the Defendant was responsible, could have been done concurrently with the work that was the responsibility of the Plaintiff and concurrently with the period allowed to the new tenant to do its leasehold improvements. In these circumstances there was no basis on the evidence to find that the Defendant was liable for any rent to the Plaintiff after it vacated the premises.

Reasons for Judgment of Deputy Judge Robert A. Filkin

14With respect to the loss of rent, Deputy Judge Filkin sets out the following at pages 10 to 12 of his judgment:

Loss of Rent

The Plaintiff claims the sum of $7,100.00 for lost rent for the months of December, 2006 and January, 2007, on the basis that the premises could not be rented during this period due to the condition in which the Defendant left the Premises. It is the Plaintiff’s position that it took two months for the Landlord to put the Premises into the state of repair that was the responsibility of the Defendant when it vacated the Premises. As set out in the letter from Human Systems Incorporated to Sev Peloso dated May 1, 2007, a copy of which was filed as Exhibit 5, the new Tenant commenced paying rent on February 1, 2007. If the Plaintiff’s position is correct the Defendant would have had to leave the Premises in a condition that the new tenant could move in the next day.

With respect to the painting of the Premises it was Mr. Lake’s evidence that he commenced the work over the Christmas holidays and was finished the first week of January. Perhaps two weeks, but not two months. He also stated some days were half days. As stated above, the painting of the Premises was the responsibility of the Landlord. The only part of Mr. Lake’s work that was the responsibility of the Defendant was the additional preparation work and sanding required. No evidence was provided as to how long this took, but I suggest it would not have been more than a couple of days as opposed to weeks or months.

For the reasons set out above, the replacement of the carpeting was the Landlord’s responsibility. Any time associated with the removal of the old and installation of the new cannot be attributed to the Defendant. I also note that the invoice of Ferra Flooring attached to the claim shows the carpet and flooring being “shipped” to Human Systems and the invoice is dated February 28th, 2007, after the period claimed by the Plaintiff.

Similarly, the repair of the blinds was the responsibility of the Plaintiff. I also note that this invoice shows an order date of February 7, 2007, again outside the period claimed by the Plaintiff. With respect to the repair of the light fixtures, I have allowed one hour as the time required to do this work.

The plan attached to Exhibit 5 clearly shows substantial leasehold improvements undertaken by the new tenant. The letter dated May 1st, 2007 states that the plan shows the leasehold improvements now that the new tenant, Human Systems, had completed its leasehold improvements. Photograph 6 of Exhibit 1 shows new drywall installed in the Premises. Mr. Hornsby stated he took the pictures in early December, 2006. It would appear from the photograph that the new tenant was in and doing leasehold improvements in the Premises within days of the Defendant vacating the Premises. It would also appear that the arrangement between the Plaintiff and the new tenant was a rent free period of two months in order for the new tenant to undertake its leasehold improvements and that the Plaintiff is attempting to recover rent for this rent free period from the Defendant.

Any work done after the Defendant vacated which I have found would be the responsibility of the Defendant would be done concurrently with the work that was the responsibility of the Landlord and concurrently with the period allowed to the new tenant to do its leasehold improvements. I can find no basis on the evidence presented that the Defendant should be responsible for any rent to the Plaintiff after it vacated the Premises on November 30, 2009.

15The Plaintiff submits that there was no evidence to support the finding of the trial judge that there was a rent free period arranged between the Plaintiff and the new tenant.

16In support of this submission the Plaintiff points to a letter from the new tenants to the landlord dated May 1, 2007 which sets out the following:

May 1, 2007

Sev Peloso

Building Manager

Walker Office Complex

Guelph, Ont.

Hi Sev:

My apologies for the delay in getting this letter to you.

This confirms that we are leasing the space left by the architects under the terms and conditions of our current lease at the same lease rates. This new space will be rolled in under our new lease effective July 1, 2007 at revised rates. I am attaching a copy of the plan for the space as it exists now that we have finished leasehold improvements.

Details of our agreement are as follows:

Start of rental: February 1, 2007

Square footage: 2400 sq. ft.

Lease rate: $16 sq. ft. (same as existing lease) = $3,200 per month

Storage space: 2 additional storage spaces at $50 per month

Parking spaces: 8 additional parking spaces (to bring HIS to a total of 30 spaces) at a cost of an additional $30 per space.

To sum up: Feb – June 3200 + 100 (storage) + 240 (add’l parking) = $3540.00/month

This also confirms our intent to lease all the space we have right now for an additional five year term at the expiry of this lease at the end of June, 2007.

Sev, it has been a pleasure working with you to come to this agreement. If you agree with the above, please sign and return a copy of this letter to me.

Sincerely,

Sgd.

Rita Cupitt

Manager, Human Resources

Cc: Ron Boothby

Lisa Paczay

Tammy McKinnon

17The Plaintiff argues there is nothing in that letter to support the judge’s finding of a rent free period.

18Further, the Plaintiff makes reference to the evidence of Mr. Peloso, the general manager and one of the officers of the Plaintiff company. At pages 43 and 44 of the October 17, 2008 trial transcript:

EXHIBIT NUMBER 5 – Letter dated May 1, 2007 from Human Systems with attached floor plan.

• Produced and marked.

MR. HEIMPEL: Q. Now if you could turn to – well first of all on the front page Human Systems is indicating that they took possession of the premises on February 1, 2007?

A. Correct.

Q. I’m going to suggest to you that they completed their leasehold improvements prior to that, would you agree with that?

A. No.

Q. They didn’t complete their leasehold improvements prior to …

A. They had nothing to do with it. I was cleaning up the mess up to then. They took possession after I cleaned up the mess that Briestensky’s had left.

19It is important to note that the Plaintiff did not call a representative of the new Tenant, Human Systems, at trial to give evidence on this point.

20In essence, the Plaintiff argues that the trial judge misapprehended the evidence on the issue of a rent free period while the new tenant was doing renovations.

21The Defendant argues that there was sufficient evidence before the trial judge to make the findings he did. Further, it was incumbent on the Plaintiff to call a representative of the new tenant to give evidence on this issue if the Plaintiff wished to establish this head of damages.

22The Defendant refers to the following evidentiary basis to support his position:

1. The photo filed as Exhibit 6 at trial was taken in late December according to the testimony of K. Hornsby, a photographer hired by the Plaintiff. This photograph depicts new drywall. The Defendant argues that the trial judge’s reference in his judgment to early December and not late December is not a palpable and overriding error;

2. Mr. Hornsby testified that on his third trip in when he took the photo marked as Exhibit 6, he noted there were all sorts of construction going on. The following exchange is relevant on this point:

MR. CAMELETTI: Q. Okay. Number six?

A. Number six is actually my third trip in. This is my second trip in for taking pictures, my third trip into the building. This is after the carpets were removed. The floor, this is where the floor had been patched, again probably from the chair damage and where the carpets were probably salt.

Q. Just tell us what you saw. We will leave that to another witness if we need that. Is there anything else about number six? And number six, how many floors were like that in the premises?

A. Not all of them but there was a scattered amount. I had come in when there was all sorts of construction going on so I didn’t really get all over the place but there was several.

3. Mr. Lake, a handyman and painter, confirmed that there was new drywall at the relevant time. The following testimony is relevant on this point:

Q. Exhibit number one is a pack of photos here. Can you turn to photo number six. This is a photograph of the underneath floor after you patched it up, right?

A. Yes. It was one spot, yes.

Q. Now in the background – do you see the wall in the background?

A. Yes.

Q. That’s new drywall.

A. That’s what I said, it was probably done after.

Q. So there was no wall in the premises when you – there was no wall in the premises when you first attended that looked like that, right?

A. No. They were doing some work later on in the latter part of the …

Q. Who was doing work?

A. That’s when I was done there.

Q. Who was doing work?

A. I don’t know. They had some contractor in there doing some work in the front lobby part.

Q. They were doing that work while you were in there?

A. No, when I was finished.

Q. So you saw them because you were working on other stuff for Mr. Peloso, or you’re just assuming that because of the …

A. I seen them when I was doing work for Eagle’s Flight later in the week.

Q. So later in the same week?

A. In January. The second week of January, yes.

Q. So that’s a new wall that is put in after you’ve done your work?

A. Yeah, which I think the new people hired for that.

4. Mr. Johnson, a representative of the defendant testified about new drywall in December:

Q. The background in photo number six is a newly drywalled wall. At the time you left, you vacated the premises at the end of November. Were there any walls in the unit that were newly drywalled in the condition that appears in the background of photo number six?

A. No.

23The Defendant submits that the trial judge reasonably inferred from all of this evidence that the new tenants were doing renovations prior to taking over the premises on February 1, 2007.

Standard of Review

24The standard of review with respect to errors of fact or mixed fact and law is that of palpable and overriding error. In Housen v. Nikolaisen (2002) 2002 SCC 33, 2 S.C.R. 235, the Court set out the following at paragraphs 10 and 19:

10 The standard of review for findings of fact is that such findings are not to be reversed unless it can be established that the trial judge made a "palpable and overriding error": Stein v. The Ship "Kathy K", [1976] 2 S.C.R. 802, at p. 808; Ingles v. Tutkaluk Construction Ltd., [2000] 1 S.C.R. 298, 2000 SCC 12, at para. 42; Ryan v. Victoria (City), [1999] 1 S.C.R. 201, at para. 57. While this standard is often cited, the principles underlying this high degree of deference rarely receive mention. We find it useful, for the purposes of this appeal, to review briefly the various policy reasons for employing a high level of appellate deference to findings of fact.

19 We find it necessary to address the appropriate standard of review for factual inferences because the reasons of our colleague suggest that a lower standard of review may be applied to the inferences of fact drawn by a trial judge. With respect, it is our [page252] view, that to apply a lower standard of review to inferences of fact would be to depart from established jurisprudence of this Court, and would be contrary to the principles supporting a deferential stance to matters of fact.

25When a trial judge misapprehends the evidence, this constitutes a palpable and overriding error that merits intervention by the appeal court. See Estate of Turansky v. Alandy Auto Sales Ltd..

26The issues raised on this appeal are essentially fact-driven.

27In my view the findings of the trial judge are supported by the evidence and there is no basis for this Court to interfere. It was open to the trial judge in considering all of the evidence, that it was the Appellant’s responsibility to do the work set out for which no damages were awarded at trial, and that that work was being done after the Respondent vacated. There was sufficient evidence for the trial judge to find that this work, which admittedly was the responsibility of the Appellant, was being done during the same time that the new tenants were doing their leasehold improvements.

28In all of these circumstances, therefore, the appeal is dismissed.

29The parties shall file written submissions on costs within 20 days.

Fragomeni J.