REASONS FOR DECISION

Di Luca J.:

[1] This is an appeal of a Small Claims Court judgment by Deputy Judge R.G. Sparks dated February 10, 2015.

[2] Following a two-day trial, the trial judge awarded judgment to the plaintiffs/respondents, A. Breda Limited and A. Franzolini Limited o/a Toro Investments (“Toro Investments”) in the amount of $21,322.00 plus costs in the amount of $2,587.00. A claim against Jasmin Company Limited o/a Jasmin Used Cars was dismissed as was a counterclaim by the defendants/appellants, Perse Auto Sales and Kayvan Moslem.[^1]

[3] Perse Auto Sales and Kayvan Moslem appeal and raise the following grounds of appeal:

a. The learned trial judge made palpable and overriding errors of fact;

b. The learned trial judge erred in failing to find the existence of the doctrines of promissory estoppel and waiver; and,

c. The learned trial judge erred in law when he found that there was no agreement as to the rental reduction since such agreement was not reduced to writing.

[4] For the reasons that follow, the appeal is dismissed with costs.

The Facts

[5] The nature of the dispute between the parties is straightforward. The appellants operated a used car business and were tenants at a business premise owned by the respondents, located at 47A Toro Road in North York. The relationship was governed by the terms of a written lease dated December 15, 2008, providing for the lease of the business premise between February 1, 2009 and September 30, 2011. From February 1, 2009 until March 2010, the appellants met all their financial obligations and regularly paid rent in accordance with the terms of the lease.

[6] In April 2010, the appellant, Mr. Moslem, approached Mr. Eddie Breda, one of the owners of Toro Investments, and sought some rent relief as his business was experiencing some financial difficulties. Mr. Breda, on behalf of the respondents, agreed to provide rent relief for the months of April to September, 2010. This rent relief was documented in writing by facsimile dated April 14, 2010.

[7] Mr. Breda subsequently agreed to a further extension of the rent relief until December 2010. On the rent invoice for July 1, 2010, Mr. Breda’s assistant noted as follows:

Reminder This will be your new amount as of July 1^st, because of the implementation of the HST. Please make your cheque for this new amount up until December. Thank you Luisa

[8] The appellants paid the reduced rent until December 2010. However, instead of reverting to the scheduled rent payments in January 2011, the appellants continued to pay reduced rent until July 2011. The monthly rent paid for January and February 2011 was $4,525.20, the same amount of reduced monthly rent paid for the preceding months. From March until June 2011, the appellants paid $5,400 each month, which is more than the reduced rent but less than the lease rate. In July 2011, the appellants paid $4,000 in rent. No rent was paid in August 2011. The last month rent deposit was applied to September 2011.

[9] The respondents sent the appellants a letter dated January 17, 2011 reminding them that the rent had returned to the original monthly rate of $6,997.80. Mr. Moslem testified that he never received this letter.

[10] The critical issue before the trial judge was whether there was a further agreement to reduce rent beyond December 2010. Mr. Moslem’s position was that in February of 2011, he personally contacted Mr. Breda by telephone in Florida and they had a discussion about the rent reduction. According to Mr. Moslem, after he explained his financial situation and asked for a further extension of the rent reduction, Mr. Breda replied “do your best”. Mr. Moslem viewed this statement as an agreement to extend the rent reduction into 2011. According to Mr. Breda, when he pressed Mr. Moslem to pay his arrears, Mr. Moslem said he “would do his best.” For Mr. Breda, there was never an agreement to further extend the rent reduction beyond December 2010.

[11] Mr. Moslem asked the trial judge to accept his evidence that there was a verbal agreement by Mr. Breda to extend the terms of the rent reduction on a “do your best” basis beyond December 2010. He also advanced the argument that the doctrine of promissory estoppel and waiver arose on the facts of this case, and operated to prevent Mr. Breda from effectively back-tracking on his purported acceptance and tolerance of the reduced rent payments in 2011.

[12] The key portion of the trial judge’s oral decision is set out below:

It’s clear that the parties had a good relationship up to the end of December 31^st, 2002 [sic]. The landlord plaintiffs cooperated with Mr. Moslem’s request to reduce the rent as times were difficult for his business, and that was a period of reduction for nine months. Mr. Moslem attempted to extend that and says that Mr. Breda indicated that she should pay the best he can. In other words he said do your best. But Mr. Breda says he never agreed to a reduction of the rent for the period remaining in 2011. Mr. Breda is a businessman. The earlier agreement to reduce the rent was put in writing. In other words Mr. Breda made sure a letter was written or emailed to the defendants indicating that there was an agreement to reduce the rent and specified the period of time that the reduction of rent was to be in effect. The initial letter was for a period of six months, when it was pointed out to Mr. Breda that the agreement was for nine months that was conceded. But as indicated the agreement with regard to the reduction of rent was reduced to writing at the instance of the plaintiffs. Plaintiffs took initiative to make sure that the defendants understood what the reduction in the rent would be and for what period it covered. On this issue I accept the evidence of Mr. Breda over that of Mr. Moslem. It makes more sense and I cannot envision Mr. Breda, as I say who is a businessman, involved in the business of leasing out commercial premises, saying simply to a tenant, do what you can, pay what you can. Mr. Moslem’s suggestion that it was left open under these circumstances for him to pay what he could does not really make good business sense. I do not accept the allegation that Mr. Breda would go along with such a loose arrangement. And any arrangement to change the terms of the lease with regard to rental payments I’m satisfied would have been reduced to writing by Mr. Breda. Conduct of Mr. Breda following or at least commencing in 2011 was consistent with the fact that he expected the tenants to recommence payments in accordance with the terms of the lease.

Analysis

[13] This appeal is brought under s. 31(a) of the Courts of Justice Act, R.S.O. 1990, C.43, which provides an appeal from the Small Claims Court to the Divisional Court in respect of an action for the payment of money in excess of a prescribed amount of $2,500.

[14] The standard of review of a decision of a deputy judge of the Small Claims Court is set out in Housen v. Nikolaisen, 2002 SCC 33. The decision of a deputy judge will only be interfered with where there has been an error of law, an error in principle in the exercise of discretion or misapprehended evidence resulting in palpable and overriding error of fact. The role of the reviewing judge is not to simply re-try the case.

[15] Consideration of the adequacy or sufficiency of the reasons of a deputy judge in a small claims matter must account for the context in which those trials are conducted. Small claims matters are intended to proceed expeditiously and more informally than regular trial matters. It would be an error to expect that reasons for judgment in small claims matters are as detailed, thorough and formal as the decisions in trial matters before the Superior Court; see Maple Ridge Management Ltd. v. Peel Condominium Corp., 2015 ONCA 520 at paras. 33-35.

Palpable and Overriding Errors of Fact

[16] The appellants submit that the trial judge erred, on a palpable and overriding standard, in finding that there was no agreement to extend the rent reduction into 2011, and that the trial judge further erred by ignoring and failing to consider the telephone conversation between Mr. Moslem and Mr. Breda.

[17] I disagree. The trial judge was entitled to weigh, assess and reject the evidence of the parties. He heard the evidence of both Mr. Moslem and Mr. Breda and assessed the divide in their evidence on this key factual issue. The trial judge preferred the evidence of Mr. Breda and he made a factual determination that there was no agreement reached in 2011 to extend the rent reduction. He further accepted the evidence of Mr. Breda in relation to the telephone call in Florida. The trial judge did not ignore, misapprehend or unreasonably determine any of this evidence. There is no merit in this ground of appeal.

Promissory Estoppel and Waiver

[18] The appellants submit that a review of the trial judge’s reasons demonstrates that he failed to apply the legal doctrines of promissory estoppel and waiver. The appellants submit that on the facts of this case, the issue was squarely raised and ought to have been explicitly addressed.

[19] The legal doctrines of promissory estoppel and waiver provide an equitable defence in cases where the party relying on the doctrines can establish that the other party, by words or conduct, made a promise or assurance which was intended to lead the defending party into believing that the strict rights of the contract would not be enforced; see John Burrows Ltd. v. Subsurface Surveys Ltd., [1968] S.C.R. 607 and Maracle v. Travellers Indemnity Co. of Canada, [1991] S.C.J. No. 43.

[20] Applied to this case, the appellants argue that the acceptance of the cheques in the reduced amounts in combination with Mr. Breda’s purported “do your best” comment signalled a clear intention to not rely on the strict terms of the lease. The appellants argue that Mr. Breda, by his conduct, led them to believe that he would not be claiming the full rent in 2011.

[21] The appellants are correct that the Reasons of the trial judge do not specifically allude to the concepts of promissory estoppel and waiver. However, as mentioned above, the reasons of a Small Claims Court trial judge are not held to a standard of perfection. Indeed, viewed in context, the standard expected in Small Claims Court may be lower than the standard expected in regular trial courts.

[22] Nonetheless, I am satisfied that the trial judge in this case properly assessed and applied the law of promissory estoppel and waiver for three reasons:

a. The submissions of counsel and the colloquy with the trial judge demonstrate that the issues of promissory estoppel and waiver, while not pleaded in the statement of defence, were clearly and thoroughly articulated. The trial judge’s comments demonstrate that he was aware of and appreciated the nature and scope of the defence being advanced; see Transcript of Submissions, November 13, 2014, at p. 26, l.21-30.

b. The trial judge made a specific factual finding that the conduct of Mr. Breda in 2011 was consistent with the fact that he expected the tenants to recommence payments in accordance to the terms of the lease. There was an ample evidentiary base for this finding. The July rent invoice indicated that the reduced monthly rent would apply until December 2010. In addition, there was evidence about the Florida telephone call, the letter sent on January 17, 2011 though purportedly not received, and the telephone calls made by Mr. Breda’s assistant to Mr. Moslem.

c. The trial judge also found that in the circumstances of this case, he would have expected any further reduction in rent to have been documented in some fashion, as it was in the earlier instances. The trial judge did not accept that Mr. Breda, experienced in the business of leasing property, would simply tell a tenant “do your best” on rent.

[23] The factual findings made by the trial judge are dispositive of the promissory estoppel and waiver argument. Put another way, the trial judge was clearly directed by counsel on the law of promissory estoppel and waiver, but the factual findings foreclosed its application.

[24] This ground of appeal is also without merit.

Error in Law – No Agreement in Writing

[25] As I understand this ground of appeal, the appellants submit that the trial judge erred in law by finding that there was no agreement to reduce the rent in 2011 because the agreement was not in writing.

[26] This mischaracterizes the trial judge’s finding. The trial judge did not find that any reduction in rent had to be in writing as a matter of law, even though that was the explicit term in the written lease agreement. Rather, he found that in view of the fact that the earlier rent reductions were memorialized in writing, he would have expected a similar memorializing of the final purported rent reduction if it had, in fact, occurred. It was the absence of written confirmation of the final agreement, viewed against the backdrop of the earlier written agreements as well as the trial judge’s acceptance of Mr. Breda’s testimony that he had not made such an agreement verbally, which caused the trial judge concerns when assessing Mr. Moslem’s evidence.

[27] This final ground of appeal is also without merit.

Conclusion

[28] The appeal is dismissed with costs.

[29] The respondents seek $15,450.00 in costs plus HST and disbursements on a partial indemnity scale for a total of $17,648.34. I note that the Bill of Costs includes an estimate eight hours for the day on which the appeal was finally heard and the appeal was completed in significantly less time. I also note that there was some duplication of effort given that the matter was not reached, through no fault of the parties, on earlier occasions. While the costs requested are not unreasonable, in view of the principle of proportionality as well as the above noted factors, I award costs to the respondents on a partial indemnity scale in the amount of $10,500 all-inclusive, payable within 30 days.

Justice J. Di Luca

Released: January 11, 2017

CITATION: A. Breda Limited v. Perse Auto Sales Inc., 2017 ONSC 241

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

A. BREDA LIMITED & A. FRANZOLINI LIMITED O/A TORO INVESTMENTS

Plaintiffs/Respondents

– and –

PERSE AUTO SALES AND KAYVAN MOSLEM

Defendants/Appellants

REASONS FOR DECISION

The Honourable Justice J. Di Luca

Released: January 11, 2017

[^1]: Neither of the dismissed claims have been appealed.

A. Breda Limited v. Perse Auto Sales Inc., 2017 ONSC 241

Case Summary

REASONS FOR DECISION

The Facts

Analysis

Palpable and Overriding Errors of Fact

Promissory Estoppel and Waiver

Error in Law – No Agreement in Writing

Conclusion

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Statutory Provisions 1

Legal Tests 2