ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-15-520385
DATE: 20150706
BETWEEN:
PREMIUM PROPERTIES LIMITED
Plaintiff
– and –
2362880 ONTARIO INC. o/a SERIOUS SANDWICH, RASIE BHUVANENDRAN also known as RANJANIDEVI BHUVANENDRAN and THOMAS FERNANDO
Defendants
John D. Campbell for the Plaintiff
Suvendu Goswami for the Defendants
HEARD: June 29, 2015
PERELL, J.
REASONS FOR DECISION
[1] The Plaintiff Premium Properties Limited is the landlord of a commercial building at 30 Eglinton Avenue West, Toronto. Premium Properties sues for damages for breach of a lease dated May 21, 2013. Premium Properties alleges that the Defendants, 2362880 Ontario Inc., Thomas Fernando, and Rasie Bhuvanendran, also known as Ranjanidevi Bhuvanendran, are the tenant under the lease.
[2] Rasie Bhuvanendran is, in truth, not also known as Ranjanidevi Bhuvanendran. Ranjanidevi is Mr. Bhuvanendran’s wife and a misnomer of Mr. Bhuvanendran. I, therefore, strike this misnomer from the style of cause. Order accordingly.
[3] There is no dispute that 2362880 Ontario Inc. was a tenant of the premises at 30 Eglinton Avenue West under a lease signed May 21, 2013 (“the Lease”). And, there is no dispute that a year later, on May 20, 2014, the tenant of the premises returned the key and abandoned the lease and their chattels.
[4] The issues in dispute are: (1) whether this case is an appropriate case for a summary judgment; (2) whether Mr. Fernando and Mr. Bhuvanendran are also tenants and liable for the Lease default; (3) whether Premium Properties mitigated its loss after its termination of the Lease for default; and (4) the calculation of Premium Properties’ damages.
[5] For the reasons that follow, I conclude that: (1) the case is an appropriate case for a summary judgment; (2) Mr. Fernando and Mr. Bhuvanendran are liable as tenants; (3) the Defendants have not shown any failure to mitigate by Premium Properties; and (4) Premium Properties should have judgment for $82,199 plus pre-judgment interest of $8,630 for a total judgment of $90,829.
[6] From the evidence proffered for this summary judgment motion, I find as a fact that on on May 9, 2013, Premium Properties was contacted by two real estate agents, who had been retained by the Defendants as their agents to locate premises for a restaurant business. The agents requested a copy of Premium Properties’ standard form Offer to Lease and a copy of its standard form Lease.
[7] Premium Properties responded, and what followed was a back-and-forth exchange of Offers to Lease and sign backs until on May 21, 2013, Premium Properties’ representative Andy Pollack met with Messrs. Fernando and Bhuvanendran and their real estate agents to sign the last of the Offers to Lease and also the formal Lease.
[8] On May 21, 2013, Premium Properties signed its standard Lease as landlord and 2362880 Ontario Inc., Mr. Fernando, and Mr. Bhuvanendran signed as tenant. The Lease shows Mr. Fernando and Mr. Bhuvanendran signing in their personal capacity and also signing on behalf of 2362880 Ontario Inc. Their signatures were witnessed by the real estate agents. Mr. Fernando testified that he did not read what he signed. He said he just signed whatever his real estate agents asked him to sign. I find as a fact that because of the exchange of Offers to Lease and sign backs between May 9, 2013 and May 21, 2013, that Messrs. Fernando and Bhuvanendran expected to be tenants and they knew that they were signing the Lease in their personal capacity and not just as signing officers for 2362880 Ontario Inc.
[9] All subsequent invoices and tenant communications were addressed to 2362880 Ontario Inc. and Messrs. Fernando and Bhuvanendran.
[10] Although Messrs. Fernando and Bhuvanendran deny that they were tenants, this denial is contradicted by the Lease that they signed. They do not allege that they misunderstood the nature of the Lease. They do not allege misrepresentation.
[11] I conclude that 2362880 Ontario Inc. and Messrs. Fernando and Bhuvanendran are all bound by the terms of the Lease.
[12] The Defendants’ May 1, 2014 rent cheque was returned “NSF”, and Premium Properties levied distress.
[13] On May 20, 2014 the Defendants abandoned the premises by dropping off the key at Premium Properties’ office. They abandoned the chattels for use by Premium Properties or the next tenant.
[14] Premium Properties cleaned up the premises and then put a notice on a real estate agent database indicating that the space was available for rental. It was an open listing.
[15] Premium Properties found a new tenant for a new tenancy commencing on November 15, 2014. There was a rental shortfall. Premium Properties incurred a leasing commission of $11,833.36.
[16] The Defendants’ chattels, which had been seized under the distress, were sold to the new tenant for $2,825.
[17] On January 21, 2015, the Defendants were sent a Statement of Account indicating they owed $82,199 as of that date. That amount includes interest at 2% per month calculated pursuant to sections 6.07 and 9.11(d) of the Lease.
[18] The Lease required the Defendants to pay monthly rent that included estimated taxes and operating costs. The 2013 reconciliation statement, finalized after the Defendants abandoned the premises, shows the Defendants are entitled to a credit for that year of $1,011. The 2014 reconciliation statement shows the Defendants owe $12,367 due to an increase in municipal property taxes and an increase in other expenses. The net additional amount owing of $11,356 has not been claimed in this action.
[19] 2362880 Ontario Inc. advanced no defence.
[20] In the defence that they were not tenants, Messrs. Fernando and Bhuvanendran relied on one case; namely Winfull Supplies (Canada) Ltd. v. Goritas, [2003] O.J. No. 5402 (S.C.J.). The case, however, is substantially different than the case at bar. Unlike the case at bar, the defendant Goritas signed an offer to lease on behalf of a corporation to be incorporated, and it was clear that he would have no personal liability, assuming the corporation was in fact incorporated and it adopted the offer to lease. Unlike the case at bar, in Winfull Supplies, after the offer to lease, the parties never signed a formal lease. Indeed, Justice Lofchik held that the execution of a formal lease was contemplated by both parties, and, therefore, he held that the offer to lease, being subject to formal contract, was not an enforceable agreement. In short, Winfull Supplies (Canada) Ltd. v. Goritas is of no assistance to Messrs. Fernando and Bhuvanendran.
[21] Premium Properties has proven a loss of $82,199. The onus is on the Defendants to prove a failure to mitigate. The Defendants have failed to lead any evidence to establish that Premium Properties is claiming for an avoidable loss. Premium Properties, however, has established that it took reasonable steps and found a replacement tenant. I find no failure to mitigate.
[22] Premium Properties is entitled to prejudgment interest of $8,630.
[23] There should be judgment accordingly.
[24] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with Premium Properties’ submissions within 20 days of the release of these Reasons for Decision followed by the Defendants’ submissions within a further 20 days.
Perell, J.
Released: July 6, 2015
COURT FILE NO.: CV-15-520385
DATE: 20150706
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
PREMIUM PROPERTIES LIMITED
Plaintiff
– and –
2362880 ONTARIO INC. o/a SERIOUS SANDWICH,RASIE BHUVANENDRAN also known as RANJANIDEVI BHUVANENDRAN and THOMAS FERNANDO
Defendants
REASONS FOR DECISION
PERELL J.
Released: July 6, 2015