Court File and Parties
CITATION: 1095909 Ontario Inc. v. Westmount-Keele Limited, 2016 ONSC 2434
COURT FILE NO.: CV-14-513534
DATE: 20160412
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 1095909 ONTARIO INC. and 2162289 ONTARIO INC., Plaintiffs
AND:
WESTMOUNT-KEELE LIMITED, JOSEPH IERADI and TORONTO STANDARD CONDOMINIUM CORPORATION NO. 1786, Defendants
BEFORE: Mr. Justice Graeme Mew
COUNSEL: Alan Lenczner QC and Lindsay Beck, for Westmount-Keele Limited and Joseph Ieradi
Douglas Levitt and Spencer Toole for 1095909 Ontario Inc. and 2162289 Ontario Inc.
Megan Molloy for Toronto Standard Condominium Corporation No. 1786
HEARD: 29 March 2016, at Toronto
ENDORSEMENT
[1] The plaintiffs are respectively the owner and operator of a fitness club (“Wynn Fitness”) which is operated from premises located at 2737 Keele St., Toronto since 2008.
[2] Initially, the plaintiffs leased the premises occupied by Wynn Fitness from the defendant Westmount-Keele Limited.
[3] Westmount-Keele is a property development company. Joseph Ieradi is the President and sole director of Westmount-Keele.
[4] The premises occupied by Wynn Fitness consist of 10 commercial units comprising about 21,000 square feet.
[5] Westmount-Keele purchased the property at 2737 Keele Street (the “Property”) in 2005. At that time the property had on it a hotel and an adjacent, four story parking garage. Westmount-Keele developed the hotel into mixed use condominiums comprising residential and commercial units. The project was completed by July 2006. Westmount-Keele was the declarant of Toronto Standard Condominium Corporation No. 1786 (“TSCC 1786”). The commercial units in this first phase of the development of the Property comprised of about 53,000 square feet.
[6] By 2006, Westmount-Keele was also marketing and selling a second phase of the development of the Property, which contemplated building residential condominiums on top of the parking garage.
[7] The premises occupied by Wynn Fitness were leased pursuant to a lease agreement dated 1 April 2008 (the “Lease Agreement”).
[8] Article 18.3 of the Lease Agreement, entitled “Use of Common Facilities and Common Element Parking” provides, in respect of parking:
“At no extra cost, for the duration of the Term (and any renewals thereof) the Tenant will have access to 169 common element parking spaces on a non-exclusive, first come first serve basis for the commercial/retail occupants and their invitees, customers and guests in the Project. Notwithstanding the foregoing, the Landlord shall permit the Tenant to have exclusive use of approximately 29 outdoor parking spaces in the areas cross hatched on Schedule “F” attached hereto, as well as exclusive use of an additional 57 reserved spaces within the above ground parking structure located to the east of the Premises in the areas cross hatched on Schedule “F” attached hereto. The Tenant shall be permitted to insert appropriate signage to identify said 86 spaces as being reserved for the Tenant’s members. The Landlord makes no representations and warranties with respect to the Condominium Documents, zoning by-law or site plan and the Tenant’s ability to reserve parking spaces or install signage in that regard. If required by [TSCC 1786] or governmental authority, the Tenant acknowledges that it may be required to permanently remove its reserved parking signage and not be permitted to have exclusive reserved parking at the Project. …
If at any time, the use of the parking facilities are interrupted during construction, the Landlord shall immediately make available, at no cost to the Tenant, alternative adequate parking (paved and illuminated) on or near adjacent properties…” [emphasis added]
[9] Schedule “C” to the Lease Agreement consisted of an acknowledgement by Wynn Fitness of having received copies of the Declaration, the by-laws, and all rules and regulations of TSCC 1786 (the “Condominium Documents”).
[10] The Lease Agreement also contained clauses permitting the Tenant (Wynn Fitness) and the Landlord (Westmount-Keele) to exercise purchase and sale options with respect to the premises occupied by Wynn Fitness.
[11] Article 20.2 of the Lease contained a “Complete Agreement” provision in these terms:
“There are no covenants, representations, agreements, warranties or conditions in any way relating to the subject matter of this Lease or the tenancy created hereby, expressed or implied, collateral or otherwise, except as expressly set forth herein, and this Lease constitutes the entire by Landlord and Tenant [sic].”
[12] Westmount-Keele delivered a Right to Sell Notice on 1 August 2008 and, as a result, on 5 December 2008 the Lease terminated and Wynn Fitness entered into an agreement of purchase and sale for the units that it had been leasing (the “Purchase Agreement”).
[13] A Lease Termination Agreement was entered into which provided, inter alia:
Tenant and Landlord hereby releases and forever discharges each other (and their respective directors and officers and successors and assigns) of and from all manner of actions, causes of action, suits, debts, dues, account, bonds, covenants, contracts, liens, claims, costs and demands whatsoever which the parties hereto ever had, now has or hereafter can, shall or may have for or by reason of any action, cause, matter or thing whatsoever relating to or arising from the Lease existing up to the Termination Date with the exception of the obligation to reconcile any Rents paid under the Lease and of the obligation of the Landlord to provide alternative parking pursuant to Section 18.3 of the Lease.
[14] Accordingly, the only recorded obligation, in respect of parking, that survived the end of the Lease, was the obligation of Westmount-Keele to provide alternative parking during the period of construction that was contemplated in respect of the second phase of the Project.
[15] There was a similar provision, and release, in the Purchase Agreement.
[16] The plaintiffs did not purchase any parking units. In respect of parking units, the Condominium Declaration provides, by Article IV (4)(d):
“Any or all of the Parking Units in this Condominium may at any time be sold, leased, charged, transferred or otherwise conveyed, either separately or in combination with any other Units, including without limitation to any person, corporation or other entity which must also coincidentally be an Owner of a Residential or Commercial unit.”
[17] As will be seen, since 2012, the plaintiffs have not been happy with the availability of parking spaces at the Property, which, they say, has caused them to lose members and, hence, business, at Wynn Fitness.
[18] According to the plaintiffs, the issue of parking was a paramount concern to them when they initially leased and subsequently purchased the units occupied by Wynn Fitness.
[19] They say that specific representations were made to them by Mr. Ieradi, on behalf of Westmount-Keele, on which they relied, namely that:
(a) There were 169 common element parking spaces at the Property which were reserved for use by the owners of the commercial units and their invitees which would be available for use by the members of Wynn Fitness;
(b) The plaintiffs would be able to have exclusive use of some of the common element spaces, being:
(i) 29 outdoor parking spaces located on the lands directly in front of the units occupied by Wynn Fitness;
(ii) 57 reserved parking spaces located in the parking garage; and
(c) The plaintiffs would have non-exclusive access to the rest of the common element parking spaces.
[20] As already noted, clause 18.3 of the Lease Agreement, part of which was preserved after the termination of that agreement, provided for alternative adequate parking being provided to Wynn Fitness and its members in the event that parking access was interrupted as a result of construction on Phase Two.
[21] The plaintiffs say that the representations made by Mr. Ieradi were false in that he and the other defendants knew that the 29 outdoor parking spaces located on the lands directly in front of the Wynn Fitness premises had been conveyed to the City of Toronto (and have subsequently been converted into a road) and that none of the 169 parking spaces, referred to above, form part of the common elements of TSCC 1786.
[22] The plaintiffs also allege that the defendants failed to provide alternative and sufficient parking when, between November 2012 and the autumn of 2015, the parking structure was closed due to the Phase Two redevelopment.
[23] The defendants, Westmount-Keele and Ieradi bring a motion for summary judgment seeking a dismissal of the action against them. They argue that the plaintiffs’ claims based on the alleged misrepresentations of Mr. Ieradi are barred by virtue of the contents of the Condominium Documents, the Lease Agreement and the releases contained in those documents and by the effluxion of time. They also assert that there is no evidentiary foundation for the plaintiffs’ allegations that the defendants breached their obligations to provide adequate alternative parking and that this issue can be resolved summarily without the need for a trial.
The Misrepresentations
[24] Westmount-Keele and Mr. Ieradi deny the allegations that they misrepresented anything.
[25] They do, however, acknowledge that none of the parking units referred to in the Lease Agreement were at any material time part of the common elements of the Condominium.
[26] Until fairly recently, Westmount-Keele did own 79 parking spaces contained within the parking garage. There were negotiations between Wynn Fitness and Westmount-Keele for the purchase, by Wynn Fitness, of additional commercial units in Phase One owned by Westmount-Keele, as well as its 79 parking spaces. No deal was concluded by the parties and, in December 2014, Westmount-Keele conveyed its commercial units and its 79 parking units to Keele Medical Properties Limited (thereby bringing an end to Westmount-Keele’s ownership interest in the Property).
[27] While, according to the evidence of Mr. Ieradi, there were, as of 2 March 2015, approximately 15 parking units available for purchase at the Property (not owned by Westmount-Keele), Wynn Fitness does not appear to have entered into any agreement with respect to those units.
[28] An email dated 7 March 2008 from the lawyer representing Westmount-Keele to Paul Wynn, one of the principals of the plaintiffs, which was copied to the lawyer then representing the plaintiffs in the lease negotiations (and the subsequent purchase of the condominium units) made reference to a “‘right of way’ which will soon be a public road”. This is held up as a reference, albeit a somewhat cryptic one, to the fact that there was disclosure of the plan to convey the outdoor parking spaces in front of the Wynn Fitness premises to the City of Toronto for dedication as a public roadway. Although, as already noted, Westmount-Keele and Mr. Ieradi acknowledged that the Lease Agreement refers to “common element” parking spaces, they say that it would have been clear from an examination of the Condominium Documents that the 169 spaces were not common element parking units and, furthermore, that any parking unit could be sold.
[29] The plaintiffs themselves recognised as much when they sued the lawyer who had represented them on the lease and condominium purchase transactions for failing to determine, or competently advise the plaintiffs about, the status of parking for persons using the property.
[30] There are, however, what are described in paragraph 21 of the statement of claim as “some lesser amount” of parking spaces on TSCC 1786’s exterior common elements, which are not specifically delineated in the Condominium Documents as parking spaces and, presumably, the long-term availability of which for use by the members of Wynn Fitness cannot be assured.
Discussion
[31] Whatever Mr. Ieradi may or may not have represented to the plaintiffs, they have two significant hurdles to overcome in their action against him and Westmount-Keele in connection with those misrepresentations.
[32] First, in order to overcome the “four corners” clause of the Lease Agreement (and the effect of the releases) the misrepresentations would have to be fraudulent. “A fraudulent misrepresentation consists of a representation of fact made without any belief in its truth, with the intent that the person to whom it is made shall act upon it and actually causing that person to act upon it”: G.H.L. Fridman, The Law of Contract in Canada, 6th ed. Toronto:Carswell, 2011 at p. 285; see also Chen v. Lin 2016 ONSC 1255 (Div. Ct.) at para. 11.
[33] The plaintiffs correctly argue that if there is fraudulent misrepresentation, the fact that the victim of the misrepresentation had the means to find out, and could have found out that it was fraudulent, but did not do so, and thus could have avoided the consequences of the deception, will not deprive the plaintiff of a remedy: 1565831 Ontario Ltd. v. Klupt, [2005] O.J. No. 4946 (SCJ).
[34] However, the onus to establish that a misrepresentation is fraudulent rests with the plaintiffs. Although the representation, implicit from the lease, that the 169 parking spaces formed part of the common elements, was incorrect, there is no evidence, other than the bald assertion made by the plaintiffs, that the statement was made fraudulently or otherwise in a deceptive way.
[35] Furthermore, as already alluded to, the fact remains - and the plaintiffs all but concede this - that a review of the Condominium Documents would have revealed what was and what was not available at the Property in terms of parking. Accordingly I find that there was no concealment. And while the plaintiffs complained about further misrepresentations from Mr. Ieradi, made after 2008, it is trite law that unless a false representation is be made before the contract is formed, it can have no bearing on the validity of the contract itself.
[36] The second hurdle is one of limitation. All of the alleged misrepresentations occurred prior to December 2008. Presumptively, a claim arises on the day that the act or omission on which the claim is based took place: Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, s. 5(2).
[37] Fraudulent concealment that has the effect of suspending a limitations period requires three findings:
(1) That the defendant perpetrated some kind of fraud;
(2) That the fraud concealed a material fact; and
(3) That the plaintiff exercised reasonable diligence to discover the fraud: Ambrozic v. Burcebski, 2008 ABCA 194, [2008] A.J. No. 552 (C.A.) at para. 21.
[38] As already discussed, fraud has not been established in this case.
[39] Rather, the issue is one of discoverability. In that regard, the question is whether the plaintiff knew, or ought to have known, of the material facts giving rise to the claim. In this context, the information that was available to the plaintiffs, had they reviewed the Condominium Documents, becomes pertinent. A claim is discovered when the prospective plaintiff knows enough facts on which to base a claim against the defendant: Lawless v. Anderson, 2011 ONCA 102, at para. 23.
[40] While the plaintiffs have not pleaded, by way of a reply to the limitation defence raised by the defendants in their statement of defence, the basis upon which they assert that the presumption in s. 5(2) of the Limitations Act, 2002 is displaced, the plaintiffs’ evidence and argument is that they did not discover the true position with respect to the parking spaces until July 2013, which was when the current lawyers for the plaintiffs undertook an appropriate review of the Condominium Documents and searched title.
[41] I do not accept that position. The Condominium Documents showed what was and was not available at the Property in terms of parking. Those documents were, or were capable of being, reviewed by the plaintiffs (or their lawyers) in 2008.
[42] In conclusion, the misrepresentation claims brought by the plaintiffs against the moving parties fail because of:
a. the “four corners” clause;
b. the releases; and
c. the expiry of the two year limitation period in s. 4 of the Limitations Act, 2002.
[43] That leaves the issue of adequate alternative parking during the period of construction.
[44] The record discloses that parking consultants were retained to provide a preliminary parking management plan. A memorandum from those consultants, BA Consulting Group Ltd., dated 16 January 2013, concluded:
“1. The shared parking strategy which is in operation under existing conditions is appropriate and will serve the needs of all users of the site under the proposed temporary condition (approximately 18 months).
- Based on the existing parking supply of 207 spaces and peak parking demand of approximately 200 spaces, users will experience over 95% parking occupancy on weekday evenings (for approximately one hour). A minimum of 200 parking spaces should be maintained [for residential and commercial users]…”
[45] The plaintiffs’ evidence is that during the first few weeks after arrangements were made for the provision of alternative parking spaces, their use was restricted to residents, with the result that fitness club members who parked in those spaces were given parking tickets and/or towed. It is alleged that, as a result, a number of members cancelled their memberships.
[46] The difficulty with this evidence is that it comes from statements made by representatives of the plaintiffs that are not corroborated by an acceptable documentary record. It does not strike me as particularly reliable evidence. While the plaintiffs have provided evidence of fluctuations in membership, there is insufficient detail to ascertain why the members withdrew. Furthermore, the plaintiffs refused to provide membership data from other fitness facilities which they run which would have enabled some sort of comparison of membership trends to have been made.
[47] The only tangible evidence coming from a third party (as opposed to internal correspondence between representatives of the plaintiffs) that members withdrew because of parking comes from a letter from Modern Niagara Toronto Inc. dated 29 November 2012. Workers from Modern Niagara were working at the site of the new Humber Memorial Hospital, which was nearby and under construction at the time. Modern Niagara had taken out 45 monthly and 10 bi-weekly memberships of Wynn Fitness. The moving party suggests, and I am inclined to agree, that the interests of Modern Niagara were primarily served by the availability of convenient parking spaces for employees working at the nearby building site. The impact that the parking restrictions had on the ability of Modern Niagara’s employees to use the plaintiffs’ fitness facilities does not emerge as a genuine concern.
[48] Indeed, the cancellation letter from Modern Niagara, which is predicated upon “the recent change to your parking facility which has severely limited the availability of parking spaces, resulting in unsuitable parking accommodations” is conditional. The letter goes on to say that it is understood “that you are working on a solution to this issue and maintain the expectation for a final conclusion by December 15, 2012. If suitable parking arrangements are confirmed and provided on or by this date we will recant this cancellation”. There is no reference to use of the fitness club itself.
[49] The record also includes the letter from the Property Management firm for TSCC 1786 to Wynn Fitness on 1 August 2013, asking Wynn Fitness to stop selling memberships to construction workers for the purpose of providing parking, and referencing prior warnings to the same effect. A monthly membership at the Wynn Fitness branch at the Property cost $45 at the time, which would average $2.25 per day for parking if a person was working for 20 days per month. A very favourable rate for a day’s parking. And although the evidence of the plaintiffs is that Wynn Fitness was clear with its members that parking was limited to two hours, it evidently took no or limited steps to enforce the parking time limit. The plaintiffs’ representative conceded that the gym would not know if a member was in fact parked for a longer period of time.
[50] On a summary judgment motion, a responding party, even if, as in the present case, it takes the position that an issue should be resolved at trial, rather than summarily, nevertheless has an obligation to place its evidence before the court for the hearing of the motion.
[51] In the absence of more compelling evidence that cancellations of memberships at the plaintiffs’ facility were linked to the inability of members using the fitness facility to park, I reject the plaintiffs’ contention that Westmount-Keele was in breach of its parking obligations during the construction period.
[52] I am therefore satisfied on the evidentiary record that there is no triable issue with respect to the parking obligations of Westmount-Keele Limited during the period of construction, and, accordingly, find that the plaintiffs’ claim in this regard also should be dismissed.
Result
[53] By reason of the foregoing, the defendants Westmount-Keele Limited and Ieradi are entitled to summary judgment for dismissal of the plaintiffs’ claims against them.
[54] I am presumptively of the view that the moving parties are entitled to their costs of the motion and of the action. If counsel are unable to agree on the quantum of the costs, bills of costs and written submissions of not more than four pages in length with respect to the quantum and scale of costs should be delivered as follows:
− By the moving parties on or before 29 April 2016; and
− By the responding parties on or before 9 May 2016.
Graeme Mew J.
Date: 12 April 2016