DATE: 20041125

DOCKET: C39572

COURT OF APPEAL FOR ONTARIO

RE: 1037328 ONTARIO LIMITED O/A SUNNY BOY RESTAURANT (Respondent (Plaintiff)) – and – THE STANDARD LIFE ASSURANCE COMPANY (Appellant (Defendant))

BEFORE: DOHERTY, MOLDAVER and GILLESE JJ.A.

COUNSEL: Albert G. Formosa and Krista R. Chaytor For the appellant

Giulia F. Ahmadi For the respondent

HEARD: November 10, 2004

On appeal from the judgment of Justice Nancy L. Backhouse of the Superior Court of Justice dated January 23, 2003.

E N D O R S E M E N T

The Appeal

[1] The appellant appeals from the judgment of Backhouse J. awarding damages to the respondent for losses stemming from the wrongful termination of the respondent’s lease and the aborted sale of the respondent’s business. The appellant contests both the finding of liability and the award of damages.

[2] In the final analysis, we see this as a case that is largely fact driven. The trial judge assessed the credibility of the parties and made strong findings of fact in favour of the respondent. We are not persuaded that she erred.

[3] Based on those findings, it was open to the trial judge to conclude, as she did, that the appellant wrongfully terminated the lease (thereby effectively evicting the respondent), that it unreasonably withheld its consent to assign the lease, and that in combination, those factors contributed to the extent required in law to hold the appellant liable for damages arising out of the aborted sale of the respondent’s business. The trial judge’s conclusion that the wrongful termination of the lease and the attendant unreasonable withholding of consent to assign supported the respondent’s claim, is sustainable on either of two legal grounds: collateral contract (arising out of the oral agreements between the parties) or promissory estoppel (arising out of the oral representations made by the appellant and relied upon the by respondent to its detriment).

[4] Where we take issue with the trial judge is in her assessment of damages. In particular, we think it was wrong to credit the respondent with $10,000 for legal fees that it supposedly spent defending an action by the purchaser for the return of its deposit. The evidence indicates that to date, the respondent has not paid a penny to its lawyers for the work performed in connection with that action and it denies owing them anything. In those circumstances, we fail to see why the damages awarded to the respondent should not be reduced to reflect the $10,000 in deposit monies kept by the respondent following the settlement of the purchaser’s action.

[5] With respect to the $5,000 awarded for the special tabletops, the respondent was entitled to compensation for them. The trial judge used, as the best approximation of their value, the sum that the respondent had paid to the artist. We see no reason to interfere with that aspect of the award.

[6] Finally, based on the evidence of the respondent that it requested the return of its chattels to no avail, the respondent was entitled to some compensation for them and the sum of $2,000 awarded by the trial judge was in our view appropriate.

[7] Accordingly, we would allow the appeal in part and vary paragraph 1 of the judgment to read that the defendant shall pay $31,656.45 to the plaintiff. In all other respects, the appeal is dismissed.

The Cross-appeal

[8] The respondent submits that the trial judge erred in failing to award punitive and aggravated damages against the appellant. We disagree.

[9] While aspects of the appellant’s conduct were admittedly reprehensible, we are not persuaded that they were sufficiently high-handed or oppressive to warrant a punitive sanction. The damages awarded to the respondent, the dismissal of the appellant’s counter-claim for unpaid rent and the costs incurred by the appellant will in our view, serve as a sufficient deterrent to prevent the appellant and others from engaging in conduct of this sort in the future.

[10] As for aggravated damages, any goodwill built up by the respondent was adequately taken into account in the damage award.

[11] Accordingly, the cross-appeal is dismissed.

Costs

[12] The respondent was largely successful on the appeal. It was entirely unsuccessful on the cross-appeal. Taking those factors into account, we would award costs to the respondent on a partial indemnity basis in the sum of $7,500 inclusive of G.S.T. and disbursements.

Signed: “D. Doherty J.A.”

“M. J. Moldaver J.A.”

“E.E. Gillese J.A.”