Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20200213 DOCKET: C65613

Before: Feldman, Brown and Harvison Young JJ.A.

BETWEEN Vigin G.F.R. Holdings Ltd. Plaintiff (Respondent)

and Kinder Care Children’s Centre, Strong Foundation Inc., Kevin O’Neill and Andrea O’Neill Defendants (Appellants)

Counsel: David Fogel, for the appellants Michael Arbutina and Sam De Caprio, for the respondent

Heard: January 23, 2020

On appeal from the judgment of Justice Bryan Shaughnessy of the Superior Court of Justice, dated April 16, 2018, with reasons reported at 2018 ONSC 2429.

REASONS FOR DECISION

Overview

[1] The appellants, Kinder Care Children’s Centre, Strong Foundation Inc., Kevin O’Neill, and Andrea O’Neill, appeal from the trial judgment finding them liable for damages arising from their abandonment of a 10-year commercial lease entered into with the respondent, Vigin G.F.R. Holdings Ltd. (the “Lease”). The appellants do not appeal the damages awarded by the trial judge; their grounds of appeal are limited to his findings of liability.

[2] At the start of the hearing of the appeal, the appellants moved for leave to adduce fresh evidence. They also requested an adjournment to review documents recently obtained. Oral reasons were given at the hearing dismissing the motion because the proposed fresh evidence did not meet the criteria in Palmer v. The Queen, [1980] 1 S.C.R. 759, and denying the adjournment request.

[3] The appellants’ grounds of appeal can be grouped into two categories.

First Ground of Appeal: Was Kevin O’Neill a “Tenant” under the Lease?

[4] The appellants submit that the trial judge erred in finding that Kevin O’Neill was a tenant under the Lease. The Lease described the “Tenant” as: “Kinder Care Children’s Centre and Strong Foundation Inc. and or - Kevin & Andrea O’Neil”. That description of the “Tenant” was used throughout the Lease, including on the signature page. Below that identification of the “Tenant” on the signature page appeared the signatures of Andrea O’Neill and “K. O’Neill (President)”.

[5] The appellants contend that the Lease’s description of the “Tenant” was ambiguous. They argue that the trial judge erred in holding that there was no ambiguity and in failing to consider the appellants’ intention regarding the parties to the Lease.

[6] We are not persuaded by this submission. At para. 33 of his reasons, the trial judge wrote:

I find that the Lease was a common commercial lease and signed by the parties bargaining in good faith. The factual matrix establishes, and I find as a fact, that the parties all had past experience negotiating and signing commercial lease agreements and business contracts. I further find no ambiguity in the Lease, notwithstanding the arguments the Defendants advance. The Defendants had an opportunity to negotiate the rent, the ten-year term, and were asked to sign the Lease as “Tenants”. They entered the Lease after inspecting the property and investigating if the Premises were suitable for Kinder, a children’s day care centre.

[7] The appellants have not demonstrated any palpable or overriding error in those findings.

[8] The appellants renew their submission that the language of the Lease was ambiguous in specifying who the Tenants were and argue that the trial judge erred by failing to consider parol evidence on that issue. They contend that such evidence would lead to the conclusion that Kevin O’Neill had not signed the Lease in his personal capacity. As noted above, we see no error in the trial judge’s finding that the Lease was not ambiguous. In any event, the trial judge did go on to consider the evidence of the parties’ understandings about who the Tenants were.

[9] The trial judge stated, at paras. 24 and 36 of his reasons:

In cross-examination, Kevin agreed that he executed the Lease in his personal capacity. This evidence went uncontested and the Defendants have not directly addressed this admission in their closing submissions. In addition, Kevin admitted to using the Premises to store his personal items of value both in the yard and the building, including an antique fire truck and a collection of classic automobiles.

Even after examining the “factual matrix”, I am satisfied on a balance of probabilities that the Defendants signed the Lease knowing full well that they were signing personally as “Tenants.” I accept the Plaintiff’s evidence that their intent, and the purpose and intention of the language used in the Lease was to ensure that the Defendants would all bear responsibility under it.

[10] The appellants cannot point to any palpable and overriding error in those findings. Indeed, on the cross-examination of Kevin O’Neill the following exchange occurred:

Q: And beside your name here, Kevin O’Neill, you initially signed that in your personal capacity as Kevin O’Neill? A: Yes. Q: You didn’t insert the words, President? A: I did not put that. That, that is not my handwriting. No, I didn’t put that. [1]

[11] In light of that evidence and the factual findings made by the trial judge, we see no basis for appellate intervention in his conclusion that the tenants under the Lease included Kevin O’Neill.

Second Ground of Appeal: Permitted Uses of the Premises

[12] The appellants abandoned the premises about 1.5 years into the 10-year Lease. They did so after receiving a letter from the City of Vaughan stating that a site inspection of the premises had disclosed a contravention of that portion of the municipal zoning by-law that prohibited “open storage” of goods or materials on any corner lot. Kevin O’Neill testified that he planned to use the yard to store Strong Foundation’s equipment and materials. The appellants contend that such storage was a permitted use under the Lease and Vaughan’s letter preventing such storage resulted in a fundamental breach of the Lease that justified the appellants’ abandonment of the premises.

[13] Section 5(1) of the Lease stated: “During the Term of this Lease the Premises shall not be used for any purpose other than DAY CARE CHILDREN’S CENTRE AND COMPANY’S ADMINISTRATION OFFICE without the express consent of the Landlord given in writing.” Section 5(2)(e) stated: “The Tenant shall not do or permit to be done at the Premises anything which may: […] (e) constitute a breach of any by-law, statute, order or regulation of any municipal, provincial or other competent authority relating to the Premises.”

[14] The trial judge considered each of the appellants’ arguments, which they again raise on appeal: (i) the use of the Premises’ yard for outdoor storage was an implied term of the Lease; (ii) the Lease was fundamentally breached when the yard could not be used for outdoor storage; and (iii) the parties made a mutual mistake regarding the use of the yard space.

[15] The trial judge gave extensive reasons for not accepting the appellants’ submissions, holding that:

i. the appellants had not identified any ambiguity in the Lease’s language pertaining to permitted uses: at para. 82; ii. the evidence did not support a finding that “outside storage” was an implied term of the Lease: at paras. 85-88; iii. the appellants were aware of their responsibility to conduct due diligence about permitted uses but failed to do so: at para. 93; iv. the appellants were not entitled to rely upon their own mistake about uses permitted under municipal by-laws to re-allocate zoning risk to the respondent landlord: at para. 148; v. since there was no evidence of any discussion between the parties as to whether outside storage was a permitted or legal non-conforming use under the by-law, it could not be said that both parties assumed outside storage was a permitted use: at para. 144; and vi. the appellants had not established that the by-law prohibited outside storage: at para. 116.

[16] We see no error in the legal principles the trial judge applied to make those findings nor have the appellants demonstrated any palpable and overriding error in respect of those findings.

Disposition

[17] For the reasons set out above, the appeal is dismissed.

[18] The appellants shall pay the respondent its costs of the appeal fixed in the amount of $15,000, inclusive of disbursements and applicable taxes.

“K. Feldman J.A.”

“David Brown J.A.”

“A. Harvison Young J.A.”

[1] Andrea O'Neill, Kevin O'Neill’s wife, testified that she printed the word “President” on the signature line: see para. 47 of the trial judge’s reasons.