Court of Appeal for Ontario

Date: 2018-09-13 Docket: C64999

Judges: Lauwers, Miller and Nordheimer JJ.A.

Between

Markham Village Shoppes Limited Plaintiff (Respondent)

and

Gino's Pizza Ltd., Gino's Pizza Inc., Baljit Gangar, Vick Darubra, Martin Bernard, Redwater Capital Realty Inc. and Haroon Amadi Defendants (Appellant)

Counsel

John G. Morrissey, for the appellant

Mitchell Wine, for the respondent

Heard: August 31, 2018

On appeal from the order of Justice Edward M. Morgan of the Superior Court of Justice, dated January 24, 2018, with reasons reported at 2018 ONSC 565.

Reasons for Decision

[1] The appellant, Gino's Pizza Ltd., entered into a 10 year lease of commercial premises owned by the respondent, Markham Village Shoppes Limited. Within four months of the commencement of the lease, the appellant determined that the premises were not suitable. It demanded rescission of the lease. The respondent refused and took the position that the appellant had abandoned or repudiated the lease. The respondent took possession of the premises, sued for damages, and attempted to re-let in mitigation.

[2] The respondent brought a motion for summary judgment for damages for unpaid rent and prospective damages for future rent. The motion judge rejected the appellant's various defenses and awarded judgment for $85,697.96, which included a claim for 22 months' prospective rent, discounted for present value. The motion judge accepted the respondent's evidence that the average time to lease one of the ten units in the building was 22 months, and the respondent's argument that 22 months would therefore be an appropriate measure for prospective damages.

[3] The appellant does not appeal the finding of liability. It originally appealed the award of damages on the basis that the motion judge (1) was premature in adjudicating damages; and (2) erred in granting summary judgment on the basis of the limited record before him. The appellant argued that the respondent tendered inadequate evidence in support of the claim for the loss of prospective rent, and failed to tender expert evidence in support of a calculation of the net present value of prospective rent.

[4] These grounds of appeal have since been overtaken by events. Within two months of the release of the decision, the respondent re-let the premises to a new tenant. The appellant sought leave to introduce fresh evidence on the appeal attesting to the new lease of the premises, which took place approximately 10 months after the appellant's repudiation of the lease. The respondent conceded before us that the fresh evidence should be admitted, and we agree.

[5] The appellant accepts that its original basis for the appeal is largely moot. There is no longer any dispute about how long it would take to re-let the premises. There remains, however, a significant dispute as to how damages should be assessed: whether it is just a matter of taxes, maintenance and insurance ("TMI") for the months in which the premises were vacant, or whether more is required for base rent or the value of an "ecologizer" unit that the appellant was obligated to install but did not.

[6] Although the principle of finality requires, generally, that damages for prospective loss be assessed as at the time of trial and not revisited, this court has recognized a limited exception where: (1) a supervening event occurs after trial but before the hearing of the appeal; (2) evidence of that event is needed to address issues raised on appeal; and (3) not receiving the evidence could result in an injustice: Mercer et al. v. Sijan et al. (1976), 14 O.R. (2d) 12 (C.A.); Sengmueller v. Sengmueller (1994), 17 O.R. (3d) 208 (C.A.), at p. 211. When these criteria are met, a court may admit the evidence under the tests for the admission of fresh evidence in Sengmueller, or R. v. Palmer, [1980] 1 S.C.R. 759. This is such a case, as the supervening event – the re-letting of the premises 12 months earlier than the motion judge projected – would mean that the respondent could receive double recovery over that period. A fresh review of the damages to which the respondent is legally entitled is required as a result of this development.

[7] That said, nothing in these reasons should be taken as an endorsement of the motion judge's treatment of the evidence on damages, particularly the proposition that the appellant's failure to adduce evidence as to the appropriate period for calculating prospective loss of rent in any way compensated for the weakness of the evidence on damages that the respondent tendered. The aphorism that every party to a summary judgment motion is required to put their best foot forward does not displace the burden of proof, which remained throughout on the respondent.

Disposition

[8] The motion to adduce fresh evidence is granted. We allow the appeal, set aside the award of damages, and return the matter to the Superior Court of Justice for a trial for the quantification of damages. There are no costs of the appeal awarded.

P. Lauwers J.A.

B.W. Miller J.A.

I.V.B. Nordheimer J.A.