Court File No. 347/02

Date: 20031201

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: Bohatti & Co. Ltd. (Plaintiff/Appellant) v. Vincenzo DeBartolo and Lucy Debartolo (a.k.a. Lucia DeBartolo) Defendants/Respondents

HEARD: November 20, 2003

BEFORE: John deP. Wright J.

COUNSEL: Richard Payne for the Landlord/Appellant

Stuart Ghan for the Defendants/Respondents

ENDORSEMENT

[1] This is an appeal from a judgment of Kilian J. of the Small Claims Court handed down on May 24, 2002. That judgment dismissed the landlord ‘s claim and awarded the defendant $10,000.

[2] The landlord sued for unpaid rent for the months of June 2001, July, August and September at the rate of $2,450 a month for a total of $9,800.

[3] The tenants did not dispute that they had not paid the rent for the period in question but alleged that they had been justified in considering the lease terminated because, amongst other reasons:

• The landlord had failed to contribute to the cost of the air conditioning unit,
• There was an obnoxious smell in the premises that drove customers away, and
• There was a water leakage and sewer smell on the premises.

[4] In addition to this the tenants put forward their own claim for damages based upon the failure of the landlord to consent to an assignment of the lease.

[5] In dealing with the various claims, the trial judge dealt with them in the order in which they had been raised. He dealt with the three justifications for the defendants’ withdrawal from the lease which are set out above. Having decided these issues in favour of the landlord he said:

“. . .as a result of that, I find the termination of the lease [by the tenants] was unjustified, and that rent was payable up to the end of the lease, which comes to over $10,000.

But having [said] that and now dealing with the defendant’s claim. . . .”

[6] The judge then went on to hold that:

“The refusal to agree to the sale to Mr. Lario could conceivably be justified . . .[but] I see no reason why the other offer for the Tie restaurant should not have been a reasonably acceptable alternative for $40,000 . . .”

“It is clear to me that at this point the landlord had no intention of consenting to anything, but merely wanted the tenants out of the premises. Therefore, I find that the landlord was unreasonable in withholding his consent to the transfer of the lease by the tenants to the purchaser in the offer that was made in May, which was the date that this offer would have closed or was supposed to close, the defendant no longer owes any further rent [from that date] because they should have been unable to vacate at that point, had the landlord consented to the assignment of the lease.”

[My emphasis in square brackets]

The judge then held:

“There will be a judgment on the tenants claim for $10,000 for damages as a result of the loss of the sale of the business and the landlord’s claim will be dismissed.”

[7] The landlord submits that the trial judge both allowed the defendant a set-off from the landlord’s judgment in the amount of approximately $10,000 and granted him a judgment for a further $10,000 thereby giving him relief worth a total of $20,000, far beyond the monetary jurisdiction of the Small Claims Court. The landlord submits that at the very least he is entitled to his judgment for outstanding rent.

[8] If this was in fact the situation the landlord would be correct. The case of ARS Trucking & Welding v. Greco (1987), 23 C.P.C. (2d) 95 (Alta. Q.B.) is authority for the proposition that a combined set-off and judgment may not exceed the monetary jurisdiction of the Court.

[9] However, the trial judge here did not in fact give judgment on the landlord’s claim. The trial judge had four arguments before him advanced by the tenants. He considered three of them and concluded that they were insufficient to deny the landlord his rent. He then dealt with the last argument, the alleged breach of the lease by the landlord. He found that there had indeed been a breach by the landlord. He concluded that this had two effects: the first was to terminate the landlord’s right to rent after May, the second was to give the defendant a cause of action for damages.

[11] While the form of his reasons is a bit misleading at first glance, his final decision and the reasons for it are very clear.

[12] The appeal is dismissed

[13] I may be spoken to regarding costs by telephone if counsel are so advised. Arrangements may be made through the court co-ordinator at 1-807-343-2727.

John deP. Wright J.

Released: