Court File and Parties

Court File No.: CV-17-568789 Date: 2020-03-03 Ontario Superior Court of Justice

Between: Angela Beauty Parlour Ltd., Plaintiff And: Gurnam Multani and Surjit Multani, Defendants

Counsel: J. Wuthmann, for the Plaintiff D. Bourassa, for the Defendants

Heard: December 12 and 13, 2019

Chalmers J.

Reasons for Decision

Overview

[1] Angela Beauty Salon is operated by Perveen Khan and her husband, Shamim Ahmed Khan. Since January 1, 2016, Angela Beauty operates its business at 1430B Gerrard Street East, Toronto. This is a four-storey building with two commercial units on the ground floor and 25 residential apartments. The building is owned by Gurnam and Surjit Multani.

[2] Previously, Angela Beauty was located a short distance away at 1608 Gerrard Street East. It was looking to expand. In January 2014, Mr. Khan learned that one of the ground floor units in the building may be available for rent. He met with Mr. Multani and toured the space. Although the building was under construction, Mr. Multani advised that the unit was expected to be ready for occupation by January 2015.

[3] In July 2014, the parties entered into negotiations with respect to the lease of the unit. Angela Beauty alleges that in the course of the negotiations, Mr. Multani made the following representations:

• The adjoining commercial unit would be leased to a business operating a complementary business to the beauty salon such as a restaurant or clothing store;
• The residential apartments in the building would be rented to affluent families and there was already a waiting list to lease the apartments.

[4] Angela Beauty also alleges that during the negotiations Mr. Multani stated that if Angela Beauty leases the commercial space, it would be entitled to rent three of the residential units in the building for the use of its employees and/or the owners of the salon. The rent was $2,000 per month for each residential unit.

[5] Mr. Multani denies making representations to Angela Beauty that the residential units would be leased to affluent families or that the adjoining commercial unit would be leased to a complementary business. Mr. Multani testified that he advised Mr. Khan that Angela Beauty could lease three residential units, only if the units were available.

[6] Angela Beauty takes the position that it agreed to enter into the lease for the commercial unit as a result of the representations and promises made by Mr. Multani. The lease was signed by the parties on December 10, 2014, (the “Lease”). The term of the Lease was for an initial five-year period commencing on January 1, 2015 and expiring on December 31, 2019, with a tenant’s renewal option for two additional terms of five years. The rent was $5,000 plus HST, per month for the first year, $5,500 plus HST, per month for the second and third years, and $6,000 plus HST, per month for the fourth and fifth years.

[7] The Defendants allege that before the Lease was executed, there was a separate oral agreement between the parties to increase the rent by $500 per month, or $6,000 per year for each year of the term. Mr. Khan wrote five post-dated cheques each in the amount of $6,000. The cheques dated December 5, 2014 and December 7, 2014 were cashed by the Defendant. Mr. Khan put a stop payment on the other three post-dated cheques before the cheques could be cashed.

[8] Angela Beauty denies there was a separate agreement to increase the rent by $500 per month. According to Mr. Khan the parties had entered into an oral agreement to lease three residential units in the building for a five-year term. The rent for each unit was $2,000 a month. Mr. Khan stated that the five post-dated cheques each in the amount of $6,000 were an advance of one month’s rent for the three residential units for each year of the five-year term.

[9] The Lease provides that the landlord will use best efforts to give the tenant possession as nearly as possible to January 1, 2015, after completing ongoing construction, as required for the tenant’s intended use. The unit was not ready for occupancy by January 1, 2015. The rent was abated until Angela Beauty moved into the unit on January 1, 2016. Angela Beauty argues that the Defendants failed to complete the construction to allow the unit to be used as a beauty salon, and as a result it was required to do so. Angela Beauty is claiming for the cost of the renovations.

[10] After the Lease was executed, the Defendants entered into an agreement with the City of Toronto to lease the adjoining commercial unit and all residential units in the building for the use of the Red Door Shelter. As a result of the agreement with the City, the Defendant was unable to lease any residential units to Angela Beauty. The Defendants cashed two of the cheques in the amount of $6,000 which Angela Beauty states was an advance of one month’s rent for the three residential units. Angela Beauty claims unjust enrichment and seeks a return of the amount of $12,000.

[11] Angela Beauty takes the position that in leasing all of the residential units and the adjoining commercial unit to the City for the Red Door Shelter, the Defendants are in breach of Mr. Multani’s representations that the residential units would be leased to “affluent families” and the commercial unit would be leased to a “complementary business.” Angela Beauty seeks damages for fraudulent or negligent misrepresentations.

[12] Angela Beauty issued the Statement of Claim on February 18, 2017. The Defendants delivered its Statement of Defence and Counterclaim on March 13, 2017. In the Counterclaim, the Defendants seek damages for breach of the oral agreement pursuant to which it says Angela Beauty agreed to pay an additional $500 per month in rent for the commercial unit.

[13] This matter proceeded to trial on December 12 and 13, 2019. The trial was conducted pursuant to the Simplified Procedure Rules. Evidence in-chief was by way of affidavits. The affiants were cross-examined. There was no time limit imposed on the cross-examinations.

[14] For the reasons that follow, I allow Angela Beauty’s action in part, and award damages for unjust enrichment in the amount of $12,000, plus the cost to install the tile floor in the amount of $5,844, inclusive of HST. The Defendants’ Counterclaim is dismissed.

The Issues

[15] The following issues are to be determined:

A. The Plaintiff’s Claim

(i) Is Angela Beauty entitled to reimbursement of the costs it incurred to renovate the unit? (ii) Are the Defendants liable to Angela Beauty for unjust enrichment? (iii) Are the Defendants liable to Angela Beauty for negligent/fraudulent misrepresentations? (iv) Are the Defendants liable to Angela Beauty for breach of the lease with respect to the covenant of quiet enjoyment and the parking space? (v) What are Angela Beauty’s damages?

B. The Defendants’ Counterclaim

(i) Is Angela Beauty liable to the Defendants to pay the increased rent for the commercial unit in the amount of $500 per month?

Analysis

Credibility of the Witnesses

[16] Before turning to the analysis of the issues, it is necessary to comment on the credibility of Mr. Khan and Mr. Multani, who were the key witnesses at the trial. Their evidence on several issues was diametrically opposed.

[17] An issue which will be discussed in detail below, is whether five cheques, written by Mr. Khan to Mr. Multani were a payment towards the rent of three residential units in the building as asserted by Mr. Khan or were in payment of additional rent for the commercial unit (1430B) as asserted by Mr. Multani.

[18] Copies of the cheques were put into evidence. The cheques produced by the parties are not the same. The cheques produced by the Defendants state in the memo line, “Advance for [year] rent for 1430B”. The copies of the cheques produced by Angela Beauty, do not include the words “rent for 1430B”. Also, the cheques produced by Angela Beauty have a box around the words “Advance for [year]” and an oval around the cheque number. Mr. Khan admits that he modified his copy of the cheques on his computer to insert the box and oval to bring this to the attention of his lawyer. He denies removing the words “rent for 1430B”.

[19] Mr. Multani denies making any alterations to the cheques. He specifically denies adding the words, “rent for 1430B” to the memo line of the cheques. Mr. Multani testified that he cannot read or write English. He gave his evidence through a Punjabi interpreter. He stated that he could not alter the cheques because of his inability to read or write English.

[20] The cheque dated January 1, 2018 was returned by the Royal Bank of Canada on February 8, 2018 to Mr. Multani because Mr. Khan had put a stop payment of the cheque. In the memo line it states; “Advance for 2018 Rent for 1430B”. There is no box around the memo line or an oval around the cheque number. Mr. Multani denies making any alterations to the cancelled cheque and in particular denies adding the words, “rent for 1430B”.

[21] The cheques were clearly modified. Mr. Khan admits making the modifications to the cheques to include the box and oval, but denies removing the words, “rent for 1430B”. Mr. Multani denies making any modifications to the cheques.

[22] I am of the view that it is more likely that Mr. Khan removed the words, “rent for 1430B” from his copy of the cheques. He admitted that he modified the cheques on his computer by adding the box around the memo line and the oval around the cheque number. He would have had the opportunity to remove the words from the memo line at the time he made the other changes to the cheques. I also note that the copy of the cancelled cheque from the Royal Bank did not have the box or oval and contained the words, “rent for 1430B”. I find Mr. Khan’s evidence that he did not alter the cheques to be not credible.

[23] I am also of the view that Mr. Multani was not a satisfactory witness. In his affidavit sworn June 10, 2019, Mr. Multani states that he advised Mr. Khan that he could rent the three apartments to him only if the City of Toronto did not rent the entire building. At trial, he testified that he could not remember saying to Mr. Khan that he could rent the three apartments if they were available. When this apparent contradiction was put to him, he stated that the evidence in his affidavit was not correct. He suggested that the paragraph in his affidavit was not explained to him properly. He stated that it was possible other paragraphs in his affidavit were not correct.

[24] As a result of my findings with respect to credibility, I have focused on the documentary record, in making findings of fact. Unfortunately, the documentary record is somewhat lacking on key issues.

A. The Plaintiff’s Claim

(i) Is Angela Beauty entitled to reimbursement of the costs incurred to renovate the unit?

Background

[25] At the time the Lease was signed, the Defendants were completing the construction of the building, including the commercial unit leased to Angela Beauty. The parties contemplated that the construction might not be completed in time, and as a result there might be a delay in the commencement of the tenancy. The Lease provides that if the unit is not ready by January 1, 2015, the rent shall abate for the period of the delay. The Lease also provides that if possession of the unit is not granted by March 31, 2015, the tenant has the right to terminate the Lease.

[26] The renovation work on the commercial unit was not completed by January 1, 2015. Mr. Khan stated that he went into the unit on January 1, 2015 and was surprised to find it was not ready for occupancy. He stated that he wrote, and hand-delivered a letter to the Defendants with respect to the status of the renovations. In the letter he states that no work has been accomplished with respect to the framing, walling, plumbing, partitioning, flooring, and electrification enabling inspection by the City of Toronto for occupancy. The Defendants deny receiving this letter.

[27] Angela Beauty retained Iqbol Associates Engineering in early January 2015 to prepare plans with respect to the architectural, electrical, HVAC, plumbing, drainage and sprinkler works which it says were necessary to allow the unit to be used as a beauty salon. Iqbol prepared plans for the additional construction. Angela Beauty did not forward the Iqbol plans to the Defendants.

[28] The Defendants continued with the construction of the unit. The unit was not ready for occupancy on March 31, 2015. Angela Beauty did not exercise its option to terminate the Lease. On May 31, 2015, Mr. Khan visited the premises and noted that the work had not been completed which would enable inspection by the City for occupancy. Mr. Khan testified that on May 31, 2015, he wrote, and hand-delivered a letter to the Defendants in which he asked that they take immediate action to construct the premises in accordance with their obligations pursuant to the Lease. The Defendants deny receiving this letter.

[29] Mr. Khan states that in response to this letter, Mr. Multani told him that Angela Beauty could take over the construction of the premises and the Defendants would reimburse it for the cost to do so. Mr. Multani denies that the Defendants agreed to pay the cost to complete the construction. Mr. Khan did not write a letter to the Defendants confirming the conversation with Mr. Multani in which he says Mr. Multani agreed to pay for the renovations.

[30] In the first week of June 2015, Mr. Khan contacted Andras Andorko, the President of Andy’s Masonry and Renovation Ltd. with respect to the additional construction work. Mr. Andorko attended at the premises with Mr. Khan. In his affidavit sworn November 25, 2019, Mr. Andorko stated that he attended the premises in the first week of July 2015. He noted that the ceiling, drywall, flooring and piping were incomplete. He noted that the lights had been installed but the wires had not been connected. In cross-examination, Mr. Andorko confirmed that there was drywall on the exterior walls and the ceiling. There was a concrete floor, but the floor was not tiled.

[31] Mr. Andorko prepared a quotation to complete the work, dated July 23, 2015. The quotation to install seven partitions with sliding doors, the additional electrical work and plumbing for each partitioned area was $30,170.83, inclusive of HST. Angela Beauty did not provide a copy of the quotation to the Defendants.

[32] On August 1, 2015 Angela Beauty entered into an agreement with Andy’s Masonry to complete the construction. Andy’s Masonry was retained to install seven partitioned areas in the space, each with its own power outlets and plumbing. This created seven salon stations. To install the plumbing for each partitioned area, it was necessary to dig a trench in the concrete floor for the pipes. Mr. Andorko testified that in creating the seven partitioned areas, it was not necessary to disturb the drywall along the exterior walls. Some areas of the ceiling were opened to allow for separate electrical outlets to the partitioned areas. Angela Beauty did not provide a copy of its agreement with Andy’s Masonry to the Defendants.

[33] During the construction, Angela Beauty asked Andy’s Masonry to perform additional work that was not set out in the quotation. Andy’s Masonry was asked to install a door from the salon to the elevator lobby. There was additional electrical work performed to install fluorescent lights and outlets in each partitioned area, to install a power line for the TV and cashier, to install 220 Volt power for a laser machine and to install outlets in the kitchen for the refrigerator and microwave. Angela Beauty asked Andy’s Masonry to install and supply a new vanity, mirror, faucet and toilet in the bathroom and to supply and install cabinets in the kitchen. Andy’s Masonry was also asked to paint each room, the hallway and common areas.

[34] After the pipes in the floor were installed, Andy’s Masonry was required to tile the floor. The Lease provides that the landlord is to complete ongoing construction such as flooring. The Defendants agreed to pay for the cost of the tiles and on September 21, 2015, the Defendants forwarded a cheque in the amount of $5,000. Angela Beauty is claiming for the cost of the labour to install the tiles, in the amount of $5,844, inclusive of HST.

[35] Andy’s Masonry completed its work on November 12, 2015 and provided an invoice for the work in the amount of $78,213.02, inclusive of HST. Angela Beauty is taking the position that the work set out in the invoice was required for its intended use of the unit as a beauty salon and is therefore the responsibility of the Defendants.

[36] On December 31, 2015, Mr. Khan wrote to the Defendants to advise that the work was complete. In the letter, Mr. Khan states that the Defendants owed $155,473 for the costs incurred in completing the construction of the unit. This included the Andy’s Masonry invoice in the amount of $78,213.02, plus Mr. Khan’s administrative fee of $25,000. The amount also included miscellaneous supplies, signage, appliances, furniture, alarm system and moving costs. Mr. Khan testified that he knew the additional items, including the supplies for the salon, were not the responsibility of the Defendants. He did not provide a reasonable explanation at trial for why he initially made a claim for items which he knew did not relate to the renovations to the unit.

[37] At trial, Angela Beauty reduced its claim to $103,213 which consists of Andy’s Masonry invoice in the amount of $78,213, plus Mr. Khan’s administrative fee of $25,000.

Analysis

[38] Angela Beauty argues that pursuant to section 1B) of the Lease, the Defendants are to pay for the construction carried out by Andy’s Masonry which it says was required to allow for the tenant’s intended use of the unit as a beauty salon. Under the heading, “Term”, the Lease provides as follows:

1. Term A) The landlord hereby leases the Leased Premises shown in Drawing enclosed as Exhibit 1 to the Tenant and the Tenant hereby leases the same from the Landlord for an initial term beginning January 1, 2015 (the “Commencement Date”) and ending on December 31, 2019. B) The Landlord shall use its best efforts to give Tenant possession as nearly as possible to the Commencement Date after completing ongoing construction in all respects such as flooring, ceiling, drywalling, partitioning, electrical, inspections, etc. as required for the Tenant’s intended use. C) If the Landlord is unable to provide possession of the Leased Premises by the Commencement Date, rent shall abate for the period of delay. Tenant shall make no other claim against the Landlord for any such delay. D) The Tenant shall have a right to terminate the lease if possession is not granted on or before March 31st, 2015. (emphasis added)

[39] Angela Beauty argues that the “intended use” of the unit was as a beauty salon, and that this intended use was known by the Defendants at the time the parties entered into the Lease. Angela Beauty argues that section 1B of the Lease requires the Defendants to provide more than simply a shell unit. The section specifically refers to completing construction of flooring, ceiling, drywalling, partitioning and electrical work. The section also states that the work is to be completed as required for the tenant’s intended use, which was as a beauty salon. Angela Beauty argues that a beauty salon requires completed drywall, ceiling and flooring as well as individual partitioned areas with separate plumbing and electricity.

[40] Angela Beauty notes that although there was drywall on the walls and ceiling, the floor had not been tiled. There were no partitions. There was no electricity or plumbing in partitioned areas. Angela Beauty takes the position that the premises were not in the condition required for use as a beauty salon, and as a result the Defendants were in breach of section 1B of the Lease.

[41] The Defendants argue that section 1B is under the heading “Term” and deals with the rights of the tenant if the ongoing renovations are not completed by the time the term of the Lease is to commence. The Defendants take the position that they complied with their obligations pursuant to the Lease to complete the construction that was “ongoing” at the time the Lease was entered into. The only work which was ongoing at the time the Lease was entered into was to build out the shell of the space. The Defendants installed drywall on the exterior walls and ceiling. There was a concrete floor. The HVAC, electrical and plumbing had been installed. The “ongoing” construction was completed and approved by the building inspectors. The MPAC building permit report notes that all permits were marked closed.

[42] The Defendants argue that the “ongoing” renovations could not have included the work set out in the Iqbol plans which were not prepared until after the Lease was signed.

[43] Although the Defendants were aware that the premises were to be used as a beauty salon, there is no evidence that Angela Beauty advised the Defendants of any specific requirements when the parties entered into the Lease. For example, there is no evidence that the Defendants were advised that seven partitioned areas with separate plumbing and electrical were required for the intended use.

[44] The Defendants state that they provided a finished basic unit to Angela Beauty in accordance with their obligations pursuant to the Lease. The Defendants refer to the description of the leased premises set out in the Lease. The Lease includes a floor plan of unit B. The drawing depicts an open space consisting of 2,180 square feet. There are no separate partitioned areas depicted on the floor plan.

[45] The Defendants argue that if Angela Beauty requires alterations or modifications to the basic unit, it is responsible for the cost of those modifications. The Defendants rely on section 6 A of the Lease which provides:

6. Alterations & Improvements A) The Tenant at the Tenant’s expense, shall have the right following the Landlord’s consent to remodel, redecorate, and make additions, improvements and replacements of and to all or any part of the Leased Premises from time to time as Tenant may deem desirable, provided the same are made in a workmanlike manner and utilizing good quality materials.

[46] The Defendants also argue that the Lease is to be interpreted in accordance with the standards of commercial reasonableness. They argue that if Angela Beauty’s interpretation of the Lease was accepted, there would be a “blank cheque” requiring the landlord to pay for renovations and alterations which were not known at the time the parties entered into the Lease. The Defendants note that the total rent for the unit over a five-year period is $330,000. If it is required to pay for the Plaintiff’s renovations and alterations, it would have a significant impact on the economic viability of the Lease.

[47] It is my view that a reasonable reading of the Lease supports the Defendants’ position. The Lease includes a floor plan of the leased premises. The floor plan depicts an open area without partitions. Section 1B provides that the landlord is to complete “ongoing” construction. The only ongoing construction at the time the Lease was executed was the work being performed by the landlord to build out the basic shell of the unit. The ongoing construction could not have included the renovations to create seven separate partitioned areas, set out in the Iqbol report or the Andy’s Masonry quote which had not yet been prepared.

[48] Section 1B must also be read with section 6A of the Lease. Section 1B refers to ongoing construction which was being carried out by the Defendants at the time the Lease was entered into. If the tenant wishes to carry out additional renovations and alterations to adapt the basic unit to meet its specific needs, section 6A provides that the cost of those renovations is at the expense of the tenant. In reading sections 1B and 6A together, it is my view that the landlord was responsible for the cost of providing a basic unit to the tenant and the tenant was responsible for the cost of modifying the space to fit its specific requirements.

[49] The Defendants provided a unit that had drywall on the exterior walls and ceiling. There was HVAC, plumbing and electrical. The unit did not have a tiled floor. I am of the view that the basic space to be provided by the Defendants required a tiled floor. It appears that the Defendants recognized that they were responsible for the floor and paid for the cost to supply the tiles. The Defendants did not however pay for the cost to install the tiles. The Plaintiff claims that it spent $5,844 (inclusive of HST) to complete the installation of the flooring.

[50] I find that the Defendants are required to pay for the cost to install the tile floor in the amount of $5,844 inclusive of HST. All other work performed by Angela Beauty constituted “renovations and alterations” to the basic unit. Pursuant to section 6A of the Lease, the cost of the renovations and alterations to the basic unit is the responsibility of Angela Beauty.

(ii) Is Angela Beauty entitled to damages for unjust enrichment?

Background

[51] According to Mr. Khan, during the negotiations, Mr. Multani stated that if Angela Beauty leased the commercial unit, it could rent three residential units for its employees or for Mr. and Mrs. Khan and their family. According to Mr. Khan, the offer of the three apartments was important to the decision to enter into the Lease for the commercial unit. Occupancy of the residential apartments by Mr. and Mrs. Khan would allow them to operate the salon for an additional five hours a day and eliminate two hours commuting from their home to the salon.

[52] In his affidavit, Mr. Multani states that he advised Mr. Khan that he would rent the residential units to Angela Beauty only if the units were available. At the time of the negotiations with Mr. Khan, Mr. Multani was in negotiations with the City of Toronto. The City agreed to lease all of the units and therefore there were no residential units available to be leased to Angela Beauty.

[53] According to Angela Beauty, the parties entered into an oral agreement to lease three residential units in the building, each for a five-year term. The rent was $2,000 per unit, per month. There is no written lease agreement for the residential units. Mr. Khan did not write a letter to the Defendants in which he confirms his understanding that there was an agreement to rent three residential units.

[54] According to Mr. Khan, Angela Beauty took certain actions which confirm the agreement to lease the residential units. During its alterations to the commercial unit, Angela Beauty asked Andy’s Masonry to build an opening for a door from the salon to the elevator lobby. This would allow Mr. and Mrs. Khan easy access from their residential unit to the salon. I note that such a door would also allow easier access to customers of the salon who live in the building. Although the door was roughed in, it was not completed.

[55] Angela Beauty also argues that the cheques written by Mr. Khan, each in the amount of $6,000, is further support for its position that there was an agreement to lease the three residential units. According to Mr. Khan, the cheques were an advance of one month rent for the three residential units for each of the five years of the term. The cheques dated December 5, 2014 and December 7, 2014 were cashed by the Defendants. Mr. Khan put a stop payment on the remaining three cheques before they were cashed by the Defendants.

Analysis

[56] Angela Beauty argues that the Defendants cashed the cheques for $12,000 which were for the rent for the residential units. The units were not received and therefore the Plaintiffs claim damages in this amount for unjust enrichment.

[57] I find that Angela Beauty failed to prove on a balance of probabilities that there was an agreement to lease three residential units. There is no documentation, either by way of a lease agreement or any correspondence which confirms an intention of the parties to lease three residential units. Although Angela Beauty built an opening for a door directly into the elevator lobby, I am not satisfied that this was done because there was an agreement to lease residential units. The door could have also allowed access to the salon to other residents of the building. As noted earlier in these reasons, the cheques were modified by Mr. Khan. As a result of this finding, I reject Angela Beauty’s argument that the cheques support its position that there was an agreement to lease the three residential units.

[58] The Defendants take the position that the cheques were not for the residential units, but instead for the increased rent for the commercial unit. The Defendants argue that Mr. Khan, on behalf of Angela Beauty, orally agreed to pay additional rent of $500 per month ($6,000 per year) for the commercial unit. This is consistent with the words “rent for 1430B” found on the Defendants’ copies of the cheques and the cancelled cheque from the Royal Bank. Mr. Khan testified that there was no such agreement. There is nothing in writing with respect to the alleged agreement with respect to additional rent. Not only is the additional rent not in the written lease, but there is also no correspondence from Mr. Multani which confirms his understanding that the rent amount was increased by $500 per month.

[59] Pursuant to the final agreement clause in the Lease, the Lease supersedes all prior agreements, and may only be modified in writing:

23. The Final Agreement This agreement terminates and supersedes all prior understandings or agreement on the subject matter hereof. This agreement may be modified only by a further writing that is duly executed by both parties.

[60] The final agreement clause limits the expression of the parties’ intentions to the written agreement. The Lease sets out the annual rent for each year of the term. There is no reference in the Lease to an agreement to increase the amount of the rent by $500 per month. There is no written document executed by both parties which modifies the Lease. I am of the view that based on the wording of the final agreement clause, an oral agreement to modify the Lease to increase the rent by $500 per month is not enforceable.

[61] The Defendants cashed the cheques dated December 5, 2014 and December 7, 2014, which total $12,000. The two cheques were for the higher rent for the commercial unit, which was based on an unenforceable pre-contractual agreement. I find that Angela Beauty is entitled to the return of $12,000.

(iii) Negligent Misrepresentations

Background

[62] Angela Beauty seeks damages for negligent misrepresentation. It argues that during the lease negotiations, Mr. Multani made the following representations:

• the residential units would be leased to affluent families;
• the adjoining commercial unit would be leased to a complementary business.

[63] According to Mr. Khan, the representations were “crucial” to the decision to open the beauty salon at the building. It was expected that affluent residents and a complementary business in the adjoining commercial unit would generate increased traffic and business for the salon. The representations do not appear in the Lease. There is no correspondence from Mr. Multani in which he makes the representations. There is no letter from Mr. Khan in which he confirms that Mr. Multani made the representations.

[64] Mr. Multani denies that he made the alleged representations. With respect to the residential units being rented to “affluent families”, he stated that the units are all between 700-1000 square feet which would likely be too small to attract affluent families.

[65] Soon after the parties entered into the Lease, the Defendants leased all of the residential units and the ground floor commercial unit to the City of Toronto to be used by the Red Door Shelter. Angela Beauty takes the position that the persons occupying the residential units are not “affluent families” and that the Red Door Shelter is not a “complementary business”. Angela Beauty claims damages for loss of profit as a result of the breach of the representations.

Analysis

[66] To succeed in a claim in negligent misrepresentation, Angela Beauty must establish the following elements:

1. A duty of care based on a special relationship between the representor and representee;
2. An untrue or misleading statement;
3. The representor must have acted negligently in making the representation;
4. The representee must have relied in a reasonable manner on the negligent misstatement; and
5. Damages must have resulted from the reliance on the misrepresentations: The Queen v. Cognos Inc., [1993] 1 S.C.R. 87 at para. 33.

[67] Angela Beauty has not proven on a balance of probabilities that the alleged representations were made by Mr. Multani. Mr. Multani denies making the representations. There is no written documentation or correspondence which refers to the representations. The only evidence about the representations is the evidence of Mr. Khan. As noted above, I have concerns with Mr. Khan’s credibility.

[68] Angela Beauty has also not established that the statement that the residential units would be leased to affluent families is untrue or misleading. There is no evidence before me as to what would constitute an “affluent family”. There is no evidence as to the income of the residential tenants. Angela Beauty asks that I find as a fact that persons who rent residential units from the Red Door Shelter could not be considered “affluent”. I note that the Red Door Shelter provides services to people experiencing homelessness and domestic violence. I am prepared to accept as a general common-sense proposition that people who require shelter services because of homelessness tend to have lower incomes. However, I am also prepared to accept as a general common-sense proposition that people of all income levels can experience domestic violence. In the absence of any evidence with respect to the income level of the residents in the building, I am not prepared to conclude that persons residing in the building are not “affluent”.

[69] In addition, there is no evidence Angela Beauty sustained any damages as a result of the alleged misrepresentations. No analysis was provided as to what the salon could have received in revenue if the residential units were leased to “affluent families” as opposed to the current residents. Similarly, there is no evidence that the salon lost any revenue as a result of the fact that the adjoining commercial unit was leased to the Red Door Shelter.

[70] Even if Angela Beauty had established the elements of the cause of action, the representations are not contained in the Lease and therefore are not enforceable. The final agreement clause of the Lease provides that the Lease supersedes all prior understandings or agreements. If the Defendant orally agreed that he would lease the residential units to affluent families and the commercial unit to a complementary business, the agreement to do so terminated when the parties entered into the written Lease.

[71] I therefore conclude that there is no liability on the Defendants based on fraudulent or negligent misrepresentations.

(iv) Are the Defendants liable to Angela Beauty for breach of the Lease?

Quiet enjoyment

[72] Angela Beauty takes the position that the Defendants are in breach of the covenant of quiet enjoyment in the Lease. Article 14 provides:

The Landlord covenants and warrants that upon performance by the Tenant of its obligation hereunder, the Landlord will keep and maintain the Tenant in exclusive, quiet, peaceable and undisturbed and uninterrupted possession of the Leased Premises during the term of this Lease.

[73] Angela Beauty references four separate occasions when the Defendants allowed third parties to enter the leased premises without prior notice or approval of Angela Beauty. According to Mr. Khan, the details of the incidents are as follows:

• On September 19, 2016, an individual from Terrain Appraisal Corporation attended at the leased premises during lunchtime. He took photographs of the salon. Mr. Khan asked Terrain to delete the photographs. He was later advised that the photographs had been deleted.
• On December 13, 2016, three appraisers who had been hired by the Defendants entered the building for the purposes of carrying out an inspection. The individuals left when they were asked to do so.
• On February 17, 2017 an individual attended at the leased premises who was apparently hired by the Defendants to carry out various repairs. In the course of the work, the heat was turned off in the building. When this was brought to the attention of the Defendants, the heat was turned back on.
• On June 8, 2007 a contractor from Classic Fire attended at the premises to carry out a fire safety inspection. Mr. Khan stated that the contractor did not have prior consent to enter the leased premises.

[74] Mr. Khan, in his affidavit, states that the intrusions “significantly impacted” the business of the salon. Angela Beauty did not adduce any evidence which establishes a loss of revenue or other impact on the business other than inconvenience.

[75] Although Angela Beauty argues that the breach of the covenant of quiet enjoyment caused emotional distress, there was no evidence to support this. Mr. Khan stated that the persons entering the premises left when asked to do so. He confirmed in cross-examination that the infringements were brief and minor in nature.

[76] There was very little evidence at trial with respect to the claim for breach of the covenant of quiet enjoyment. I find that the infringements were minor in nature. There is no evidence of any actual harm which resulted from the brief attendances.

Parking Space

[77] Angela Beauty is claiming that the Defendants are in breach of the Lease for failing to provide a parking spot. The Lease provides at Schedule A that the leased premises includes one parking space behind 1430B Gerrard Street East. Angela Beauty takes the position that it has not received access to the parking spot.

[78] On March 8, 2017, counsel for Angela Beauty wrote to the Defendants’ lawyer and advised that the salon did not have access to the parking space. On March 23, 2017, the Defendants’ lawyer advised that all belongings have been removed from the area around the parking space. Angela Beauty argues that even after this exchange of correspondence, the fence to the parking space remained locked. Mr. Multani denied that the parking space behind the locked gate was the space allocated to Angela Beauty. He also noted that Angela Beauty had four additional spaces available at the side of the building.

[79] I find that Angela Beauty had parking spaces available to it. Even if the Defendants failed to provide a specific parking space to Angela Beauty, there was no evidence at trial that any damages were sustained as a result.

[80] I conclude that Angela Beauty failed to prove any damages related to the breach of the Lease with respect to the covenant of quiet enjoyment or the parking space.

(v) Angela Beauty’s Damages

[81] Angela Beauty is seeking the following damages:

• Construction costs of $103,213, consisting of the Andy’s Masonry invoice in the amount of $78,213, plus Mr. Khan’s administration fee of $25,000;
• Return of $12,000 which Angela Beauty says was paid as an advance for the three residential units;
• Lost profits of $240,664, consisting of a loss of profit of $101,914 at 1608 Gerrard Street East and lost profit of $138,750 at 1430B Gerrard Street East;
• $22,500 for lost profits related to an inability to purchase a Laser Machine because of the costs incurred for the renovations;
• $52,350 that Angela Beauty paid for leasehold improvements which it would not have incurred if it had not been induced by the Defendants to move from its previous location; and
• Punitive Damages.

[82] For the reasons set out above, it is my view that Angela Beauty is entitled to the cost to install the tile floor in the amount of $5,844, inclusive of HST. I find that the balance of the work set out in Andy’s Masonry’s invoice is with respect to the cost to renovate and alter the basic unit provided by the Defendants and is the responsibility of Angela Beauty pursuant to section 6A of the Lease.

[83] In addition to the amounts set out in the Andy’s Masonry invoice, Angela Beauty is seeking payment of the administration fee charged by Mr. Khan, in the amount of $25,000. There was no evidence at trial as to the work carried out by Mr. Khan to justify the amount of the administration fee. There was no agreement between Angela Beauty and the Defendants that it would be responsible for the payment of an administrative fee. In any event, I find that the administrative fee primarily related to the renovations and alterations to the basic unit which was the responsibility of Angela Beauty. I find that Angela Beauty is not entitled to payment of the administrative fee.

[84] Angela Beauty is seeking a return of the $12,000 which is the total amount of the two cheques cashed by the Defendants in December 2014. Angela Beauty argues that these payments were advances on the rent for the three residential units. The units were not provided and as a result, Angela Beauty seeks a return of the money.

[85] According to the Defendants, the parties orally agreed that the rent for the commercial unit was an additional $500 per month, and that the cheques were for the increased rent. The final agreement section of the Lease provides that the written agreement terminates and supersedes all prior agreements and may be modified only by a further writing executed by both parties. The Lease sets out the rent for the commercial unit. The Lease was not modified in writing, and therefore an oral agreement to increase the rent is unenforceable. As a result, Angela Beauty is entitled to the return of $12,000 which was paid pursuant to the unenforceable oral agreement to increase the rent.

[86] Mr. Khan argues that one of the reasons they decided to move the business to the building was the Defendants’ promise to lease three residential units to Angela Beauty. Angela Beauty argues that if the Defendants had leased the residential units to it, it could have stayed open five additional hours a day and therefore would have earned greater profit. Mr. Khan’s evidence was that Angela Beauty lost $138,750 in profits at 1430B Gerrard Street East as a result of the Defendants’ failure to lease the residential units to it.

[87] For the reasons set out above, I find there was no agreement to lease the residential units to Angela Beauty. Even if I had found there to be an agreement, there is no evidence to support the claim for lost profits. No accounting evidence was tendered which set out the revenue or profit that could have been expected if the salon was open longer hours. There was no analysis of the fact that if the residential units had been leased to Angela Beauty, it would have paid an additional $2,000 a month for three units for five years ($360,000). Angela Beauty did not introduce evidence that it could not have rented a residential unit close to the salon in a different building, which would have eliminated or reduced their commuting time. I find that Angela Beauty is not entitled to any damages arising out of the failure to rent the residential units.

[88] Angela Beauty also failed to prove any damages as a result of the alleged representations that the residential units would be leased to “affluent families” and the adjoining commercial space would be leased to a “complementary business”. As stated above, there is no evidence as to what the salon could have received in revenue if the residential units were leased to “affluent families” or if the adjoining commercial unit was leased to a restaurant or clothing store. There is no evidence that establishes a loss of revenue or profit arising out of the breach of the alleged representations.

[89] Angela Beauty claims a loss of profit of $101,914, that it could have earned at 1430B Gerrard Street East. It is the position of Angela Beauty that its intention was initially to operate the salon out of both locations, but because of the cost to complete the renovations, it was necessary to close the location at 1608 Gerrard Street East. Angela Beauty takes the position that the lost profit at the 1608 Gerrard Street East location would have been $101,914. There was very little evidence at trial with respect to the operation of 1608 Gerrard Street East. There was no expert evidence with respect to how the profit at 1608 Gerrard Street East was calculated.

[90] Angela Beauty argues that if it was not required to pay for the renovations, it would have purchased a laser machine in 2016. Angela Beauty claims that it would have earned $22,500 in profit from the laser machine. The evidence at trial did not support this loss of profit claim. Mr. Khan assumed gross revenue from the laser machine in the amount of $50,000 per year. There is no evidence that supports this figure. He also assumed that the profit from the laser machine would have been 15% of gross revenue. Again, there is no evidence to support this figure.

[91] Quantification of lost profit requires an expert to provide opinion evidence with respect to the calculations: TD Bank v. Cambridge, 2006 NBQB 134 at para. 7. Angela Beauty did not call an expert witness to provide his or her opinion on the loss of profit, either at 1608 Gerrard Street East, 1430B Gerrard Street East or for the laser machine. There is no evidence as to the assumptions underlying the claim for lost profits or whether the assumptions were reasonable. The evidence put forward by Angela Beauty falls well short of what is required to establish a loss of profits: Glionna v. Stiller, 2015 ONSC 2431 at para. 99.

[92] Angela Beauty argues that if it had not been induced by the Defendants to move to the Defendants’ building, it would not have had to incur $52,350 that was allegedly spent to outfit the premises. Angela Beauty is seeking reimbursement for the cost of fixtures at 1430B Gerrard Street East which were already in place at its previous location. There was no evidence at trial as to the age or condition of the fixtures or leasehold improvements at 1608 Gerrard Street East, and whether they required upgrades. Angela Beauty failed to prove that it would not have had to incur any costs for leasehold improvements if it had not moved to the building.

[93] Punitive damages are to punish the Defendants’ conduct. I am satisfied that the conduct of the Defendants does not justify an award of punitive damages in the circumstances.

Summary

[94] The Defendants were required to provide a basic unit to the Plaintiff. The basic unit provided by the Defendants did not include a finished tiled floor. I am of the view that the basic unit required a tiled floor. Although the Defendants paid for the cost to supply the floor tiles, they did not pay for the cost of installation. I find that the Defendants are required to pay for the cost to install the floor in the amount of $5,844, inclusive of HST.

[95] With respect to the claim in unjust enrichment, Angela Beauty failed to prove that the Defendants agreed to lease to it three residential units. I am of the view that the payment of $12,000 was made with respect to an unenforceable oral agreement to increase the rent on the commercial unit by $500 per month. I find that Angela Beauty is entitled to a return of the amount of $12,000.

B. The Defendants’ Counterclaim

(i) Is Angela Beauty liable to the Defendants for increased rent for the commercial unit in the amount of $500 per month?

[96] The Defendants argue that there was an oral agreement between the parties to increase the rent of the commercial unit by $500 per month, or $6,000 per year. According to the Defendants, the five post-dated cheques in the amount of $6,000 were for the increased rental amount for the five-year term. Two cheques in the amount of $6,000 were cashed by the Defendants on December 5 and 7, 2014. Mr. Khan put a stop payment on the remaining three cheques. The Defendants are now seeking $18,000 which they say is the increased rent for the last three years of the term of the Lease.

[97] Angela Beauty argues that there was no agreement to pay additional rent. Alternatively, it argues that an agreement to pay additional rent was an oral agreement and therefore unenforceable pursuant to the final agreement clause in the Lease.

[98] As stated above, it is my view that the oral agreement to increase the rent on the commercial unit by $500 per month is unenforceable. The final agreement clause provides that the Lease terminates and supersedes all prior agreements. The clause also provides that the Lease may be modified only by a further writing executed by both parties. The rental amount set out in the Lease was not modified in writing executed by both parties.

[99] Angela Beauty made all rental payments required in the Lease. The Defendants are not entitled to any damages for the increased rent. I dismiss the Counterclaim.

Disposition

[100] I allow Angela Beauty’s action and award the following damages:

• $5,844 for the cost to install the tile floor, inclusive of HST; and
• $12,000 for the amount paid by the Plaintiff for the increased rent for the commercial unit.

[101] Angela Beauty is entitled to pre-judgment interest on the amounts set out above in accordance with the Courts of Justice Act, R.S.O 1990, c. C.8.

[102] The Defendants’ Counterclaim is dismissed.

[103] There was divided success in the action. Although Angela Beauty obtained judgment in the amount of $17,844, plus pre-judgment interest, this was significantly less than the amount claimed. If the parties are unable to agree on the issue of costs, I direct counsel for Angela Beauty to serve on the counsel for the Defendants a Bill of Costs accompanied by written submissions of no more than five pages in length within 20 days of the release of these reasons. The Defendants shall serve their response within 10 days of receiving the costs submissions of Angela Beauty also limited to five pages, excluding Bill of Costs and caselaw. Angela Beauty may serve reply submissions limited to three pages in length within 10 days of receiving the Defendants’ submissions. Once all cost submissions have been exchanged, counsel for Angela Beauty shall forward the submissions to my attention.

Chalmers J. Date: March 3, 2020