Réno-Dépôt Inc. v. Wonderland Commercial Centre Inc.

CITATION: Réno-Dépôt Inc. v. Wonderland Commercial Centre Inc., 2008 ONCA 786

DATE: 20081124

DOCKET: C47037

COURT OF APPEAL FOR ONTARIO

Gillese, Armstrong and Rouleau JJ.A.

BETWEEN:

Réno-Dépôt Inc.

Plaintiff (Respondent)

and

Wonderland Commercial Centre Inc.

Defendant (Appellant)

Counsel:

Stuart R. MacKay for the appellant

William A. Chalmers for the respondent

Heard and released orally: November 20, 2008

On appeal from the judgment of Justice T. David Little of the Superior Court of Justice dated March 30, 2007.

BY THE COURT:

[1] Réno-Dépôt Inc. (“Réno”) entered into an agreement of purchase and sale with Wonderland Commercial Centre Inc. (“Wonderland”) in July 2000 to purchase the northern part of a plot of land in London, Ontario, owned by Wonderland. The parties’ common intention was for Réno to construct a retail home and garden supply store on the northern part of the land, while Wonderland would commercially develop the southern portion.

[2] The agreement contained a number of conditions precedent to be performed by Wonderland prior to closing, including: rezoning of the land; obtaining site approval for the entire property from the city of London; and, the execution of an additional agreement between the parties for the development and operation of their respective portions of the property. This agreement, the Reciprocal Enforcement Agreement (the “REA”), was executed on February 6, 2001, and provided that the first party to begin development on its property could, on notice, perform construction on the other party’s land and obtain reimbursement for such work.

[3] Réno was first to start construction. Wonderland has yet to begin construction. In January 2001, Réno advised Wonderland that a minor change to the size of the building it intended to build would be necessary. Wonderland gave its approval and the parties executed the REA. Réno then incurred expenses in developing Wonderland’s property and, as contemplated by the REA, sought reimbursement from Wonderland. When Wonderland refused to pay, Réno brought an action against it for damages for breach of contract.

[4] Wonderland initially defended the action on the basis that Réno had fundamentally breached the agreement by making changes to the site plan without its approval. Later, Wonderland amended its statement of defence and counterclaim to allege that Réno had made fraudulent misrepresentations to induce it to enter into the REA; it sought rescission or damages for misrepresentation or fraud.

[5] As the trial judge noted, Wonderland’s main complaint related to the removal and/or relocation of 27 parking spaces. Wonderland said that Réno must have known about the changes to the parking spaces in January 2001 when it told Wonderland only that it would make minor changes to the size of its building. However, the trial judge found that Réno had not made a false misrepresentation because, at the time the representation was made, Réno was not aware that reconfiguration of the building would cause a relocation of the parking spaces. Thus, according to the findings of the trial judge, the representation was true when it was made. The trial judge also found that there had been no detrimental reliance and no timely repudiation on the part of Wonderland. He further held that there had been no breach of contract and, even if there had been, that Wonderland’s damages were “so speculative and tenuous as to merit little consideration”.

[6] The trial judge awarded Réno damages of approximately $480,000 plus interest for breach of contract. Without hearing submissions on the matter of costs, he ordered that Réno was to have its costs on a substantial indemnity basis because Wonderland had maintained claims of fraud and dishonesty. The trial judge then heard submissions on the quantum of costs and awarded Réno costs of approximately $384,000 based on a substantial indemnity scale throughout the proceedings.

[7] Wonderland appeals both the decision below and the costs award.

[8] The essence of the appeal on the merits is that the trial judge erred in his factual determinations. Even if the court were persuaded that the trial judge misapprehended the evidence in finding that Wonderland either consented to the changes to the original site plan, or waived its right to enforce its contractual remedies, Wonderland did not prove damages flowing from the alleged breach. Accordingly, there is no basis for interfering with the decision below.

[9] In respect of the costs appeal, we begin by noting that it is an error in law to fail to provide counsel with the opportunity to make submissions regarding the scale of costs before deciding that matter: see Metzler v. Shier, [2002] O.J. No. 3609 (C.A.).

[10] Having said that, we are of the view that an award of costs on a substantial indemnity basis was warranted but only from the point in time when allegations of fraud and dishonesty were made. Those allegations were made when the pleadings were amended in May 2006. While Réno is entitled to costs on a substantial indemnity basis from May 2006 forward, it is entitled only to costs on a partial indemnity basis prior to that date. Accordingly, a reduction in the costs award is necessary. The parties have agreed that the quantum of such a reduction is $48,225 plus G.S.T.

[11] Accordingly, the appeal is allowed in part. Paragraph one of the judgment on costs dated November 6, 2007 is varied so that the costs payable by Wonderland to Réno are reduced by the sum of $48,225 plus G.S.T.

[12] Costs of the appeal to the respondent fixed at $7200 all inclusive.

RELEASED: November 24, 2008 (“E.E.G.”)

“Eileen E. Gillese J.A.”

“Robert P. Armstrong J.A.”

“Paul Rouleau J.A.”