COURT OF APPEAL FOR ONTARIO

CITATION: St. Joseph (Township) v. Rowe, 2015 ONCA 128

DATE: 20150225

DOCKET: C58251

Weiler, Epstein and Brown JJ.A.

BETWEEN

The Corporation of the Township of St. Joseph

Respondent

and

Peter Rowe

Appellant

Jamie Spotswood, for the appellant

Hugh MacDonald, for the respondent

Heard: February 10, 2015

On appeal from the judgment of Justice Edward E. Gareau of the Superior Court of Justice, dated September 4, 2013.

ENDORSEMENT

[1] Peter Rowe, as sub-tenant, entered into a sublease made May 1, 2004, with The Corporation of the Township of St. Joseph, as sub-landlord, for premises in a marina from which he operated a restaurant. By Notice of Termination of Sublease dated September 19, 2008, the Township gave Rowe notice that unless he paid certain arrears due under the Sublease, which included realty tax arrears, by September 22, 2008, the Township would terminate the Sublease and sue for the arrears. Rowe vacated the premises, and the Township brought action to collect the arrears. Following a 10-day trial at which Rowe represented himself, Gareau J. gave judgment in favour of the Township for the sum of $35,176.41, which included an amount for realty tax arrears he fixed at $18,060.42.

[2] Rowe limits his appeal from the Judgment to the $18,060.42 in respect of realty tax arrears. He advances three main arguments, none of which was raised before the trial judge: (i) the terms of the Sublease did not permit the retroactive collection of realty taxes; (ii) the Township lacked the authority to sue for realty tax arrears; and, (iii) the Township’s claim for realty tax arrears was estopped by the doctrine of laches.

[3] By way of a brief chronology, Rowe and the Township entered into an Offer to Lease dated April 8, 2004, for restaurant space at the Richards Landing Municipal Marina. The Marina lands were owned by the federal Crown and leased by the Township. At the time of the Offer to Lease the Marina had not been assessed for municipal realty tax purposes. Section 9 of the Offer to Lease stated: “Tenant shall be responsible to pay any and all realty taxes and assessments applicable to the leased premises”.

[4] By letter dated June 4, 2004, Rowe’s lawyer, Mr. Dumanski, wrote to him advising: “You should determine in advance what those realty taxes are so you can determine whether you can afford to lease the premises”. Rowe did not do so: the trial judge rejected Rowe’s testimony that the Township had represented to him that the realty taxes on the premises would be minimal. On October 27, 2004, Rowe’s lawyer wrote the Township advising that Rowe was “prepared to pay his proportionate share of the taxes based on the percentage of square footage that he is occupying” Rowe and the Township ultimately entered in a formal Sublease on May 19, 2005, section 6 of which stated: “The Subtenant shall be responsible to pay all realty taxes and assessments applicable to the subject property”.

[5] The Municipal Property Assessment Corporation (“MPAC”) did not provide the Township with a property assessment notice for the leased premises until November, 2007. The following month the Township sent Rowe tax notices for the leased premises for the years 2005, 2006 and 2007 in the principal amount of $11,345.68. Rowe did not pay the Township any amount for realty taxes before vacating the leased premises in September, 2008.

[6] Rowe submits that the language of s. 6 of the Sublease did not authorize the Township to collect retroactively realty taxes for 2005, 2006 and 2007. That argument was not advanced before the trial judge. The trial judge did interpret s. 6 of the Sublease. He concluded, at paras. 66 and 67:

[66] In the end, the defendant did not heed the warning of Mr. Dumanski in his letter dated June 4, 2004 that Mr. Rowe should “…determine in advance what those realty taxes are so you can determine whether you can afford to lease the premises.” The defendant is bound by the provisions of heading 9 of the accepted offer to lease dated April 8, 2004 and paragraph 6 of the executed sublease that reads as follows:

“The subtenant shall be responsible to pay all realty taxes and assessments applicable to the subject property.”

[67] Considering all of the evidence, the defendant cannot escape his contractual obligation set out in both the offer to lease and the sublease and is responsible for taxes owing on the rental property during the duration of his tenancy.

[7] Rowe submits that the Township could not retroactively collect realty taxes for the premises absent express language in the Sublease dealing with the issue of past taxes. We see no merit in that argument. Section 6 of the Sublease made Rowe, as sub-tenant, responsible for all realty taxes “applicable to the subject property”, language which would cover all realty taxes that arose during the term of the Sublease.

[8] Rowe next argues that the Township could not collect realty taxes from him by suing for tax arrears under the Sublease, but was limited to the realty tax recovery mechanisms available to a municipality under sections 349 to 351 of the Municipal Act, 2001, S.O. 2001, c. 25. Rowe did not plead this position in his Statement of Defence and Counterclaim, he did not raise it before the trial judge, and he did not provide this court with authority to support his position. In such circumstances, we cannot give any effect to his argument, especially in light of the clear language of s. 6 of the Sublease under which Rowe contracted with the Township, in its capacity as sub-landlord, to pay realty taxes.

[9] Finally, Rowe submits that the Township was estopped from collecting realty taxes under the Sublease by operation of the doctrine of laches. That doctrine permits a court to deny relief to a claimant who has unreasonably delayed or who has been negligent in the assertion of its rights and, in consequence, the party opposite has acted to his detriment: Matharu v. Mid-West Sportswear Ltd., 2002 SKQB 522, at para. 7.

[10] We see no merit in this submission for two reasons. First, the trial judge made clear in para. 49 of his reasons that responsibility for the delay in assessing the value of the leased premises lay with MPAC, not the Township. The Township issued tax notices to Rowe as soon as it was in a position to do so, within a month of receiving the MPAC property assessment notice.

[11] Second, the record did not support Rowe’s contention that he had acted to his detriment as a result of any conduct by the Township in respect of the treatment of realty taxes under the Sublease. The trial judge found, at paras. 62 and 65, that a Township employee had never represented to Rowe that the taxes on the leased premises would be non-existent or minimal. Rowe ignored the advice of his lawyer to determine the amount of the realty taxes before signing the Sublease. Section 6 of the Sublease expressed the reasonable expectations of the parties regarding the payment of realty taxes. By agreeing to that provision, Rowe assumed the financial risk of the future assessment of realty taxes on the leased premises during the term of the lease.

[12] Further, after receiving the Township’s tax notice in December, 2007, Rowe operated the restaurant during the 2008 summer season. As noted by the trial judge at para. 61, on September 10, 2008, some nine months after receiving the tax notices, Rowe emailed the Township’s lawyer about the tax bill. Rowe did not protest that the Township lacked authority under the Sublease to issue tax notices for the previous years. Instead, his complaint was that the Township was asking him to pay the taxes for the whole property “even though we occupy only a percentage of same”, a position at odds with that which Rowe took on this appeal that the Township was not entitled to collect any back realty taxes for the premises.

[13] In sum, we see no error in the trial judge’s interpretation of s. 6 of the Sublease or any merit in the new submissions of Rowe advanced for the first time on this appeal.

[14] The appeal is dismissed.

[15] Based upon the agreement of the parties on the issue of costs, we order Rowe to pay the Township its costs of the appeal fixed at $15,000, inclusive of disbursements, plus H.S.T., together with an additional $2,600 in respect of an appeal-related matter.

“K.M. Weiler J.A.”

“Gloria Epstein J.A.”

“David Brown J.A.”