COURT OF APPEAL FOR ONTARIO

Bentall Retail Services LP, 2013 ONCA 718

DATE: 20131126

DOCKET: C56197

Laskin, Rosenberg and Tulloch, JJ.A.

BETWEEN

948298 Ontario Inc.

Plaintiff/Appellant

and

SREIT (Milton Mall) Ltd., Penretail II Ltd. and Bentall Retail Services LP

Defendants/Respondents

Jon-David Giacomelli and Jonathan Jacobs, for the appellant

Elizabeth Bowker, for the respondents

Heard: June 13, 2013

On appeal from the judgment of Justice Douglas K. Gray of the Superior Court of Justice, dated October 1, 2012, with reasons reported at 2012 ONSC 5537.

Laskin J.A.:

A. INTRODUCTION

[1] The issue on this appeal is whether the motion judge erred by granting summary judgment dismissing the plaintiff’s action on the ground that it was not started within two years from the date the claim was discovered. The central issue before the motion judge was when the plaintiff ought to have discovered its cause of action.

[2] The plaintiff 948298 operated a restaurant in the Milton Mall. It leased its premises from the defendant landlord Penretail. The defendant Bentall is the property manager of the mall.[^1]

[3] The plaintiff’s business declined between 2004 and 2007, and ultimately failed. It ceased operating in late February 2007. Two years later, the plaintiff sued Penretail and Bentall for negligence and breach of contract. It claimed that the defendants caused its business to fail by, among other problems, removing its signs and restricting parking during a lengthy period of construction.

[4] The motion judge concluded that the plaintiff ought to have discovered that it had a claim against the defendants in July 2006, eight months before it closed its business. Accordingly, he dismissed the plaintiff’s action as it was started beyond the two year limitation period in s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.

[5] On appeal, the plaintiff submits that it did not “discover” its claim against the defendants until it went out of business in late February 2007. Alternatively, the plaintiff submits the defendants’ actions amounted to a continuing nuisance, which had the effect of restarting the running of the limitation period. In my view, the date the plaintiff ought to have discovered its claim is an issue for trial. It should not have been decided by summary judgment. I would allow the appeal and dismiss the defendants’ motion.

B. Additional background

(1) The Plaintiff’s Restaurant Business

[6] The plaintiff operated a restaurant called Wright’s Corners. It had a ten year and nine months lease, which it signed in 2002, and it had the right to renew the lease for two additional five-year periods. The plaintiff claims that its restaurant was profitable until 2003.

(2) Construction Activities in the Mall

[7] In 2004, construction began in the mall. Construction included repairs to a drain near the plaintiff’s restaurant, the building of a new parking pad, and an addition to a Zellers store, a main tenant in the mall.

[8] The plaintiff alleges that during the construction, which lasted for a couple of years, signs advertising its restaurant were removed, and over half the parking spaces in the mall were closed. The plaintiff claims that the loss of signage and parking caused a drastic reduction in its revenue.

(3) The July 2006 Correspondence and the Plaintiff’s Discovery Evidence

[9] In July 2006, Kim Wright, the owner of the restaurant, wrote Bentall two letters. Each said that the construction in the mall had adversely affected the restaurant’s business.

[10] In the first letter, dated July 4, 2006, Wright said that new construction near the restaurant “has had an immediate and unanticipatedly negative effect on our business. Sales for us over the last four days…are down by about forty percent”. Wright was concerned about the short term loss of business over the summer, but “optimistic about the long term result”. He asked to discuss deferring base rent during July and August.

[11] In the second letter written a week later, on July 11, 2006, Wright sent sales journals, which showed a thirty percent drop in business “since the parking lot destruction/construction began”.

[12] Bentall did agree to defer the restaurant’s base rent. However, in his examination for discovery, Wright claimed that the deferral was “a bandage, not a solution”.

[13] Wright was also asked about his two July 2006 letters. In respect of the second letter, he gave the following answer that the motion judge relied on to dismiss the plaintiff’s claim:

Q. And you say there that, “Our sales over the last 11 days since the parking lot destruction and construction began, are down about 30 percent by about $8,200”. Sitting here today do you agree with that?

A. With some allowance for margin of error, in light of the immediacy with which these letters were prepared. Understand it’s like we hit an iceberg and we’re sinking, and I go to see Holly and I say, what are we doing, and she says put it in writing. And I put it in writing – to the best of my knowledge that’s fair, reasonable and accurate information.

Q. Did you think your business was sinking by July 2006?

A. No, I knew it was.

Wright’s statement that he knew his business was sinking in July 2006 supported the motion judge’s conclusion that he discovered his cause of action against the defendants at this time.

(4) The Closing of the Restaurant and the Commencement of the Action

[14] Saturday, February 24, 2007 was the last day Wright’s Corners was open for business. On Sunday, February 25, the defendants “excluded” Wright from the restaurant. On Monday, February 26, he handed over the keys and vacated the premises. In his affidavit filed in response to the defendants’ summary judgment motion, he said:

I did not have the requisite knowledge that I was entitled to commence a proceeding for damages and that it was appropriate to do so, until “Wright’s Corners” was forced to vacate the leased premises on February 26, 2007.

[15] Wright was not cross-examined on his affidavit.

[16] On February 25, 2009, the plaintiff issued a notice of action, and on March 26, 2009, it delivered a statement of claim.

(5) The Motion Judge’s Reasons

[17] The motion judge concluded that the plaintiff ought to have discovered its claim by July 2006, not when it left the premises in February 2007. He gave two reasons: (1) Kim Wright’s discovery evidence, and (2) the absence of any explicit statement that the decision to close the restaurant was not made until February 2007. The motion judge said at paras. 22-23 of his reasons:

[22] In this case, the plaintiff’s discovery of its cause of action occurred, at the very latest, on the date it realized that it could no longer carry on business. I do not accept the plaintiff’s argument that this occurred on the date the plaintiff moved out of the premises. Common sense would suggest that the plaintiff would have decided it could no longer carry on business some time before the date it moved out, and a reasonable interpretation of Mr. Wright’s examination for discovery would suggest that he knew that that was the case in July, 2006.

[23] As discussed in Combined Air, supra, at para. 56, each side must put its best foot forward. If it was the case that Mr. Wright had not made a decision to close the business until the date the plaintiff moved out of the premises on February 25, 2007, one would have expected him to say so. However, nowhere in his affidavit does he say so.

C. analysis

[18] Section 4 of the Limitations Act, 2002 requires that a claim be brought within two years of the day “on which the claim was discovered”:

4. Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

[19] Section 5(1) of the Act deals with the discovery of a claim:

5. (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and [Emphasis added]

(b) the day on which a reasonable person with the abilities land in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

[20] If the plaintiff’s claim was not discovered until the restaurant was closed in late February 2007, then it was brought in time. The narrow question raised by this appeal is: when would a proceeding have been an appropriate means for the plaintiff to seek to remedy its alleged loss – February 25, 2007 when the plaintiff’s business closed, or much earlier, by July 2006, as the motion judge found? In my opinion, the answer to this question requires a trial. I do not agree with the motion judge’s two reasons for dismissing the plaintiff’s claim, which are reproduced again below.

(1) Wright’s Discovery Evidence

[21] Wright answered on discovery that he knew his business was sinking by July 2006. There is a difference between “sinking” and “sunk”. Wright did not acknowledge that his business was sunk by July 2006. His admission that he knew his business was sinking has to be considered in the context of the inevitable ups and downs of the restaurant business.

[22] Later in his discovery evidence, Wright adverted to these ups and downs and testified that often a restaurant comes out of a down cycle:

Q. And today you told us about the many problems you had with your business because of various construction going on, sorry the drain repair that was all done…

A. Counsel, if I may. A little latitude here. My counsel says to me to be specific and concise in my answers and not to ramble and not to go on, just answer the question. In the restaurant business there’s always problems. You hit the door running. First person you meet has a problem. Your wife waits for you in the parking lot for an hour at the end of the day while you solve a problem on the way out the door. They never stop and they never go away.

In my experience in the 36, 37 years I’ve been in the restaurant business is it’s a wave. You go through a cycle where everything’s great, you’re making money, its fine. Then you hit a cycle where things are tight. In the good cycle, like when the Blue Jays won the World Series and we were packed seven nights a week, you’ve got to be mindful that you know World Series isn’t going to go on forever, and there’s going to be a lull. So you save a little for when you know you’re going to get the dip.

You’re going through the dip, sometimes you think you’re never going to come out of it, something happens, Christmas happens. World Cup of Soccer happens, and you’re in a constant check and balance of always riding that wave up or down. Where [sic] there problems? Always problems. Were there significant problems like what we experienced after-the-fact with these new operators and owners, no.

[23] Further, the letters sent by Wright to Bentall in July 2006 indicate his belief that the economic downturn the business was experiencing that summer would be temporary; he remained “optimistic” that things would turn around.

[24] That Wright carried on his business for another eight months is perhaps the most cogent evidence that he thought he could turn it around. As he said in his affidavit, he did not “appreciate the gravity of the situation until the landlord excluded me from the premises on February 25, 2007”.

(2) Wright’s Failure to State When He Made the Decision to Close the Business

[25] The motion judge held that if Wright had not made the decision to close the business until the plaintiff moved out on February 25, 2007, he would have said so. The absence of an express statement to this effect does not justify dismissal of the claim. That Wright had not made a decision to close until February 25, 2007 is arguably implicit in his having carried on business until then and in his evidence that he did not appreciate the gravity of the situation until then.

[26] For these reasons, I would set aside the summary judgment dismissing the plaintiff’s claim. It is therefore unnecessary to address the plaintiff’s alternative argument based on a continuing nuisance.

D. conclusion

[27] Whether the plaintiff’s claim was brought within two years of the date it ought to have been discovered is a genuine issue requiring a trial. I would allow the appeal, set aside the summary judgment and dismiss the defendants’ motion.

[28] The plaintiff is entitled to its costs in the motion before the motion judge and the cost of the appeal. I would fix those costs in the amounts agreed to by counsel: $4,000 for the motion, and $13,500 for the appeal, each amount inclusive of disbursements and applicable taxes.

Released: November 26, 2013 (“JL”)

“John Laskin J.A.”

“I agree. M. Rosenberg J.A.”

“I agree. M. Tulloch J.A.”

[^1]: The third defendant, SREIT, was the previous owner and landlord of the mall. The action and cross-claim against SREIT have been dismissed.