Family Delicatessen Ltd. v. Covent Garden Market Corporation, 2009 ONCA 181

CITATION: Family Delicatessen Ltd. v. Covent Garden Market Corporation, 2009 ONCA 181

DATE: 20090226

DOCKET: C48441

COURT OF APPEAL FOR ONTARIO

Sharpe, Juriansz and LaForme JJ.A.

BETWEEN:

Family Delicatessen Ltd., 643254 Ontario Inc., 687810 Ontario Inc., The Donut Shoppe Inc., London Bakery Co. Limited, Paul Smith, carrying on business as Hasbeans, Arshaluice Aintablian carrying on business as Knickerbockers Fine Food Emporium, Efthalia Froussios carrying on business as Albert’s At The Market Restaurant, Tom Maglaris and John Maglaris carrying on business as Covent Garden Restaurant, Paul Smith and Son Limited, Will Pawlowski and Dorothy Pawlowski carrying on business as Annador Farms, Carol Medynski carrying on business as C. Marko Produce and Cookie King Limited

Plaintiffs (Respondents)

and

The Corporation of the City of London and Covent Garden Market Corporation

Defendants (Appellant)

Kirk F. Stevens for the appellant Covent Garden Market Corporation

Angela Assuras for the respondent Family Delicatessen Ltd.

Heard & released orally: February 23, 2009

On appeal from the judgment of Justice W.A. Jenkins of the Superior Court of Justice dated February 5, 2008.

ENDORSEMENT

[1] The respondent leased premises to carry on business as a delicatessen in a market owned by the appellant. The appellant served notice under the demolition clause in the lease. The respondent refused the terms offered by the appellant and recovered damages for breach of a demolition clause.

[2] The demolition clause required the appellant to offer the respondent “space of comparable size and quality to include a storefront operation visible from the street” on the same terms as offered to the majority of other tenants in the rebuilt market. It is common ground that the space the appellant offered the respondent was smaller and did not include a storefront operation visible from the street.

2. Causation

[3] The appellant submits that the trial judge erred in finding that the appellant’s breach of the demolition clause (admitted for the purpose of this argument) was the cause of the respondent’s decision to close their business.

[4] This was a finding of fact and appellate deference is owed. While the trial judge appears to have erred in characterizing the appellant’s business as a restaurant, that error in our view, did not impact on the result and therefore, was not “overriding”. There was evidence that the space the appellant offered to the respondent in the new market did not meet the respondent’s needs as a delicatessen.

[5] The appellant submits that the trial judge erred in finding that, if the appellant had been offered the space to which it was entitled, the appellant would not have agreed to pay the going rate for the rent in the new market. It is clear from the record that the appellant was concerned about the increase in rent, but that concern did not stand in isolation – it was tied to the appellant’s concern about the space it was being offered. There was also evidence of the pattern of negotiations by an agent representing the respondent offering to pay rent at or above the ultimate rate charged for the new market. In our view, the record as a whole reveals sufficient evidence to support the trial judge’s inference that had the appellant offered the respondent the size and quality of space to which the respondent was entitled, the respondent would have paid the applicable rate charged to all tenants for rent.

2. Renewal of the lease

[6] The appellant’s second ground of appeal is the contention that the respondent failed to give proper notice to renew the lease and, therefore, was not entitled to rely on the demolition clause. We disagree.

[7] First, the appellant invoked the demolition clause during the term of the appellant’s lease and thereby triggered its obligations under the demolition clause.

[8] Second, on the assumption that the respondent was required to renew its lease to invoke the demolition clause, we would not interfere with the trial judge’s finding that the respondent had done so. There was evidence the trial judge accepted that the appellant had given oral notice of its intention to renew the lease and that the appellant’s agent had agreed to renew the lease. The appellant would, in our view, be estopped by its own conduct from insisting upon formal compliance with the renewal cause in the lease. The appellant had acted on oral renewals several times in the past. Moreover, the appellant purported to satisfy the demolition clause. It advanced the position that the respondent was not entitled to the benefit of the demolition clause only when the respondent objected to the space it was being offered and commenced this proceeding.

Conclusion

[9] For these reasons, the appeal is dismissed. In accordance with the agreement of counsel, costs are fixed at $25,000 inclusive of GST and disbursements.

“Robert J. Sharpe J.A.”

“R.G. Juriansz J.A.”

“H.S. LaForme J.A.”