DATE: 20051026

DOCKET: C42038

COURT OF APPEAL FOR ONTARIO

RE:

DAGARSHO HOLDINGS LIMITED (Plaintiff by Counterclaim (Respondent)) – and – GARY BLUESTONE and LILLIANA BLUESTONE (Defendants by Counterclaim (Appellants))

BEFORE:

DOHERTY, FELDMAN and LANG JJ.A.

COUNSEL:

David Preger

for the appellant

Gavin J. Tighe and James R. G. Cook

for the respondent

HEARD:

October 24, 2005

On appeal from the judgment of Justice A. Karakatsanis of the Superior Court of Justice dated June 18, 2004.

E N D O R S E M E N T

[1] The appellants appeal from the judgment of Justice Karakatsanis where she dismissed the appellants’ claim and granted judgment to the respondent on its counterclaim.

[2] The action was brought by the appellants, Gary and Lilliana Bluestone, to compel Dagarsho Holdings Limited (“Dagarsho”) to convey certain lands to Gary Bluestone. Dagarsho, named after the three children of Anna and Murray Bluestone, held title to the lands, in addition to other assets.

[3] In his capacity as son and property manager, Gary Bluestone, and subsequently his wife Lilliana, occupied the lands from 1974. In 1995, Gary had a falling out with his mother. She then took various steps to reclaim possession of the property, culminating in her counterclaim to the appellants’ action.

[4] In careful and reasoned reasons, the trial judge found in favour of the respondent and ordered the appellants to pay damages in the form of occupation rent on three bases: unjust enrichment, trespass, and registering a certificate of pending litigation without a reasonable claim to an interest in the lands.

[5] The appellants raise several grounds for appeal. For the reasons that follow, we dismiss the appeal.

Refusal to Discontinue

[6] The appellants argue that the trial judge erred in refusing the appellants’ request for leave to discontinue their action.

[7] The appellants, however, only made this request on the first day of trial, after three years of litigation, and after a Master’s refusal to join this action with a subsequent action commenced by the appellants with regard to alleged breaches of the Bluestone family trust.

[8] When leave to discontinue is sought at such a late stage of a proceeding, the trial judge is entitled to take into consideration, among other factors, the trial-readiness of the proceeding and any consequent prejudice to the parties. In this case, the trial judge noted both the preceding three years of interlocutory steps taken by the parties and their readiness for an immediate trial.

[9] Although the appellants were prepared to accept the cost consequences of a discontinuance and indicated they had no intention to recommence the proceedings at a later point, the trial judge was also entitled to take into consideration any prejudice to the parties.

[10] Gary Bluestone swore an affidavit suggesting potential prejudice; however, he only said that he sought leave to discontinue to avoid “confusion” with the breach of trust action. He did not particularize that confusion in argument before the trial court, or before this court, otherwise than to state that he did not want to be faced with a later argument based on res judicata.

[11] In those circumstances, the trial judge was entitled to her conclusion that the appellants had not met the onus on them to show that they would suffer prejudice from a denial of the discontinuance.

[12] Furthermore, after the trial judge refused leave, it was open to the appellants to call evidence. They chose not to. It was that failure to call evidence that led to the dismissal of their action and not the trial judge’s refusal of leave to discontinue.

[13] In those circumstances, we see no reason to interfere with the trial judge’s exercise of her discretion to refuse leave to discontinue.

Amendments

[14] The trial judge granted leave to the respondent to amend its pleadings at the conclusion of trial to particularize unjust enrichment and to increase the general damages claimed.

[15] This decision was based on the respondent’s references to unjust enrichment and the calculation of damages in its opening statement at trial and in its statement of defence incorporated into its counterclaim. The respondent’s allegations in the statement of defence were expressly relied upon for the purpose of its counterclaim. In addition, occupation rent was specifically contemplated by an earlier interim motion for that relief. On the quantum of that occupation rent, the respondent sought an amendment to increase its general damages but in an amount that was still less than the aggregate damages sought.

[16] In these circumstances, considering the opening address and the evidence called at trial, the trial judge was entitled to her conclusion that the appellants were not taken by surprise or prejudiced by the proposed amendments.

[17] In any event, the respondent was also entitled to judgment for the same occupation rent on its alternative claims for trespass and for damages arising from the registration of the certificate of pending litigation without a reasonable claim.

[18] Accordingly, we would not give effect to this ground of appeal.

Trespass

[19] The appellants argue that the respondent was not entitled to damages for trespass because the appellants could no longer be trespassers once they were granted permission to occupy the premises by the interim order of Lederman J.

[20] That order, granted on the respondent’s interim motion, required the appellants to pay a monthly sum as either occupation rent or owners’ expenses, as would be deter-mined by the trial judge.

[21] There is nothing in the order of Lederman J. that finally determines the appellants’ right to possession. On its face, the motion judge made an order “in the interim”, leaving the very issue of entitlement to possession and ownership for determination at trial.

[22] Alternatively, the appellants argue that they occupied the property as tenants and that the trial judge erred in failing to accord them that status and the protections of the Tenant Protection Act, 1997, S.O. 1997, c. 24.

[23] We disagree. The appellants could not benefit from the Tenant Protection Act. As found by the trial judge, the appellants were not tenants and did not occupy the premises as rental units within the meaning of the Act; their rent-free occupation of the lands arose by reason of their family relationship.

Certificate of Pending Litigation

[24] Section 103(4) of the Courts of Justice Act, R.S.O. 1990, c. C.43 provides:

A party who registers a certificate under subsection (2) without a reasonable claim to an interest in the land is liable for any damages sustained by any person as a result of its registration.

[25] The appellants registered the certificate of pending litigation to stop the respondent’s proposed sale of the lands in 2001. The appellants argue that the damages suffered by the respondent are restricted to those arising from the aborted sale. Since the respondent failed to adduce evidence of the current value of the lands, including their current market rentals, the appellants argue that the respondent failed to establish these damages.

[26] We disagree with this submission. First, the assessment of damages was not restricted to a calculation based on the respondent’s capital loss resulting from the aborted sale. Second, the trial judge was entitled to determine damages by considering what award would put the respondent in the position it would have been in if it had earned rental income on the lands after the aborted sale and during the appellants’ continued occupation. Third, in determining the quantum of that loss, the trial judge was entitled to look at actual rentals for the lands.

Calculation Error

[27] The appellants argue that the trial judge made a mathematical error in the rent for 49 Cecil arising from a misapprehension of the evidence and then erred further by applying that rent to her calculation of occupation rent for 47 Cecil. In her reasons, the trial judge adverted to the rent of 49 Cecil at $3200 per month plus utilities of $500 monthly.

[28] The appellants argue that the trial judge was bound to accept Mr. Bluestone’s evidence that the rent for 49 Cecil was $2,700 plus $500 for utilities. In our view, however, the trial judge’s conclusion of $3,200 rent plus utilities was consistent with the rental agreement filed at trial. The trial judge was entitled to prefer that documentation to the unconfirmed oral evidence of Mr. Bluestone.

[29] In those circumstances, we see no misapprehension of the evidence on the part of the trial judge.

Result

[30] In the result, we dismiss the appeal. The respondent is entitled to its costs fixed at $15,000, inclusive of disbursements and GST.

“Doherty”

“K. Feldman J.A.”

“S. E. Lang J.A.”