CITATION: Lee v. 2321324 Ontario Inc., 2021 ONSC 7926
COURT FILE NO.: DC-21-2646
DATE: 20211203
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
SWINTON, J.A. RAMSAY AND FAVREAU JJ.
BETWEEN:
Byeongheon Lee
Appellant self-represented
Plaintiff, Appellant (Respondent on cross appeal)
– and –
2321324 ONTARIO INC.
Defendant, Respondent (Appellant on cross appeal)
Diane Magas for the Respondent
HEARD: November 19, 2021 at Ottawa by videoconference.
REASONS FOR JUDGMENT
J.A. RAMSAY J.
[1] The plaintiff appeals under s.19(1)(a) of the Courts of Justice Act from the order of Hackland J., who awarded damages in the amount of $16,000 for breach of a commercial tenancy. The defendant cross appeals and asks that the award of damages be set aside. Hackland J.’s decision is reported at 2020 ONSC 1473.
[2] The standard of review is correctness on a question of law and palpable and overriding error on a question of fact: Housen v. Nikolaisen, 2002 SCC 33.
[3] The appellant plaintiff is a commercial tenant. He operated a dry-cleaning business. The respondent defendant is the landlord. The landlord terminated the tenancy. The tenant sued. The Superior Court granted summary judgment to the landlord. The Court of Appeal reversed the Superior Court, gave judgment to the tenant and remitted the matter to the Superior Court, differently constituted, to assess damages: Jay-Pee Drycleaners Inc. v. 2321324 Ontario Inc., 2017 ONCA 798.
The appeal
[4] Mr Lee testified at the trial before Hackland J. The defendant called no evidence. Mr Lee testified that the eviction resulted in the closure of his business. The landlord disposed of his equipment. He ended up living in his car. Mr Lee sought $200,000 in general and aggravated damages, $100,000 for punitive damages, $350,000 for the loss of the equipment, and between $260,000 and $450,000 for lost income.
[5] While the judge concluded that general damages were not available for breach of a commercial lease, he awarded $5,000 for aggravated damages, $6,000 for loss of income, and $5,000 for loss of the dry-cleaning equipment disposed of by the landlord.
[6] Mr Lee submits that the trial judge’s award has the effect of negating the judgment of the Court of Appeal. We disagree. The judge proceeded correctly on the principle that when a party sustains a loss by reason of a breach of contract, damages are to be awarded in an amount that will place him in the same position as if the contract had been performed: Dasham Carriers Inc. v. Gerlach, 2013 ONCA 707, para. 17. The evidence, which consisted of Mr Lee’s testimony without any documentary support, would not have justified the amounts claimed. Mr. Lee presented no evidence at trial that the business was worth enough to justify awards in the range of hundreds of thousands of dollars. Furthermore, the decision not to award general and punitive damages and damages for mental suffering reflects no error of law or fact. As well, the fact that the trial judge treated the tenancy as month to month was not an error, as the Court of Appeal had held that the tenancy was month to month.
The cross appeal
[7] The respondent cross appeals, alleging that the judge made three errors:
a. The award for lost income was not justified on the evidence, especially in view of the judge’s omission to take into account the amount the plaintiff would have had to pay in rent if the eviction had not taken place;
b. The judge erred in law in making a separate award for aggravated damages;
c. The judge erred in awarding damages for loss of equipment, which the tenant must be taken to have abandoned; and
d. The judge erred in declining to award costs to the defendant in view of the fact that the award was in the jurisdiction of the Small Claims Court.
Lost income
[8] The evidence was that the plaintiff operated two dry cleaning establishments. Mr Lee did the dry cleaning for both at the premises from which he was evicted. As a result of the eviction, he lost the income from both premises. The judge awarded damages for loss of income on the basis of two months’ loss of income. It was not unreasonable for him to find that it would probably have taken two months in total for the defendant to exercise its right to terminate on one month’s notice if it had acted properly. His award of $6,000 appears to reflect the deduction of the rent that the plaintiff would have had to pay.
Aggravated damages
[9] Aggravated damages are not the norm in commercial cases. It was open, however, for the judge to increase damages by the modest amount of $5,000 in the particular circumstances of this case. See Honda Canada Inc. v. Keays, 2008 SCC 39. The trial judge found that the appellant had been treated unfairly and that the landlord had relied on a cause for termination that was a pretext. He found that it was reasonably foreseeable that the termination could destroy Mr. Lee’s dry-cleaning business. The eviction put the plaintiff out of his business and his home and ended his life as a businessman.
[10] Ms Magas argued that the judge also erred in ordering aggravated damages because none were claimed. This argument was not made in the notice of cross appeal or the defendant’s factum. As the judge noted during oral argument at the trial, however, the statement of claim did raise aggravated damages, although not by that name. The judge pointed this out to counsel for the defendant at the trial during closing argument.
Loss of equipment
[11] The plaintiff did not abandon his dry-cleaning equipment. As a result of the eviction he did not have the means to retrieve it. At some point the defendant may have had the right to dispose of it, but not without accounting for its value. The judge’s award of $5,000 was supported by the uncontradicted evidence that the equipment had been bought for $32,000 ten years earlier.
Costs at trial
[12] The appeal from the costs order made at trial must be dismissed because the defendant has not sought or been given leave to appeal. In any event, the judge adverted to the fact that the damages awarded were within the jurisdiction of the Small Claims Court. He was aware that he had the right to award costs in favour of the unsuccessful defendant, but he chose not to do so because of its conduct. That decision was open to him in his discretion.
Conclusion
[13] I would dismiss the appeal and the cross-appeal. In view of the divided success I would make no order as to costs.
J.A. Ramsay J.
I agree _______________________________
Swinton J.
I agree _______________________________
Favreau J.
Released: December 3, 2021
CITATION: Lee v. 2321324 Ontario Inc., 2021 ONSC 7926
COURT FILE NO.: DC-21-2646
DATE: 20211203
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Swinton, J.A. Ramsay and Favreau JJ.
BETWEEN:
Byeongheon Lee
Plaintiff, Appellant (Respondent on cross appeal)
– and –
2321324 ONTARIO INC.
Defendant, Respondent (Appellant on cross appeal)
REASONS FOR JUDGMENT
J.A. Ramsay J.
Released: December 3, 2021