2016 ONSC 3746
COURT FILE NO.: CV-08-10757CM
DATE: 20160630
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
2105582 Ontario Ltd. o/a Performance Plus Golf Academy and 627496 Ontario Ltd. o/a D & D Electric
Plaintiffs
– and –
375445 Ontario Limited o/a Hydeaway Golf Club and Nicholas Panasiuk, Jr., also known as Nick Panasiuk
Defendants
Owen D. Thomas, for the Plaintiffs
Nick Panasiuk, acting in person and on behalf of 375445 Ontario Limited o/a Hydeaway Golf Club
AND BETWEEN:
375445 Ontario Limited o/a Hydeaway Golf Club and Nicholas Panasiuk, Jr., also known as Nick Panasiuk
Plaintiffs by Counterclaim
– and –
2105582 Ontario Ltd. o/a Performance Plus Golf Academy, 627496 Ontario Ltd. o/a D & D Electric and David Forcellini
Defendants by Counterclaim
Nick Panasiuk, acting in person and on behalf of 375445 Ontario Limited o/a Hydeaway Golf Club
Owen D. Thomas, for the Defendants by Counterclaim
HEARD: May 17, 18 and 19, 2016
REASONS FOR JUDGMENT
Patterson J.:
[1] I will refer to the plaintiffs as Performance Golf or David Forcellini and the defendants as Hydeaway Golf or Panasiuk.
[2] In or about March of 2006, David Forcellini had discussions with the defendants who owned and operated a golf course known as Hydeaway Golf Club with the intent that Mr. Forcellini would create and operate a driving range on a portion of the defendants’ golf course. In May 2006, a lawyer was retained for the purpose of preparing a draft commercial lease with a discussion being that it would be for a 15 or 20 year period. Lease payments discussed were $3,000 a month, save and except November, December, January and February of each year when it would be $2,000 per month and the discussion included some percentage of profits of the driving range for the landlord, namely the defendants herein.
[3] Various drafts of the lease were prepared but none were signed and the parties have agreed that there was no written agreement between them and that the oral agreement included the right of the plaintiffs to go on the property, construct the necessary structures or buildings to operate the driving range and that the payments would be $3,000 per month save and except the four mid-winter months when it would be $2,000 per month.
[4] Despite there being no written lease, Performance Golf expended $189,035.28 which included the wooden poles and netting for the driving range, golf mats, golf balls, driving range deck with steel canopy, vending machine and various other items including relocating of an electrical line, renovation to the Golf Academy building and the ball shack.
[5] It is not disputed that the location of the driving range was determined by Mr. Panasiuk which location had the impact on the golf course itself which involved relocating or repositioning of certain holes of the golf course.
[6] Mr. Panasiuk now complains that the location of the driving range had an adverse impact on the golf course but I am satisfied that it was he who determined the driving range location. Further, there is no dispute that although some of the draft leases contained initialling, no formal lease was ever signed between the parties and, as a result, the plaintiffs were tenants at will.
[7] Despite the lack of an agreement or the terms of the lease being finalized, with the consent of the defendants, Performance Golf made extensive renovations and started to operate the driving range and golf academy in the fall of 2007.
[8] The plaintiffs allege that the defendants failed to properly maintain the driving range area and without Performance Golf’s approval, Hydeaway offered Performance Golf’s services in at a discount, advertised that the driving deck could be used for consumption of alcohol even though this was not true and that there was damage to the deck by a golf course customer. Further, there were other items of dispute including the allegation that Panasiuk made disparaging remarks to customers about the Performance Golf driving range business. These are a few examples of the allegations and how the relationship between the landlord and tenant seriously deteriorated. At this time period Performance Golf failed to pay its verbal agreement to pay monthly lease payments for the months of September, October and November 2007.
[9] This resulted in Panasiuk, on November 26, 2007, giving Performance Golf notice that their lease arrangement would terminate at 11:59 p.m. on Thursday, December 6, 2007.
[10] On December 17, 2007, Mr. Forcellini forwarded a financial reconciliation statement on the basis that the lease arrangement was terminated and requested $14,545.91 be paid by Hydeaway Golf. This was followed up with a letter on December 20, 2007, from Performance Golf’s lawyer acknowledging that the months of September, October and November 2007 were owing in the sum of $8,000 but that there was an offsetting balance owing by Hydeaway for hydro installation and removal invoices totalling $22,545.91, leaving a net owing payable by Hydeaway to Performance Golf of the previously noted $14,545.91.
[11] On December 21, 2007, Mr. Panasiuk wrote a letter to the lawyer for Mr. Forcellini indicating that Performance Golf and Mr. Forcellini were no longer allowed on the property and that there would be no further communications or otherwise until they settle in court.
[12] Previously, on December 6, 2007, just prior to the lease being terminated as of 11:59 p.m. that date, the plaintiffs attempted to remove the trade fixtures but was prevented from doing so by Mr. Panasiuk.
[13] Subsequently, the defendants sought a peace bond alleging fear of personal injury from the defendants which reinforced his notice that the defendants could not attend at the property. At the court hearing, it was held that Mr. Panasiuk was trying to get a leg up on his civil suit and that a motion for non-suit was granted against Mr. Panasiuk.
[14] It is not disputed that Mr. Panasiuk continued to operate the driving range and use all of all of the improvements that were provided by the defendants for approximately an eight year period.
[15] Mr. Panasiuk, who self-represented the defendants, appears to have confused “fixtures” from “trade fixtures” and that he had no legal right to distrain after he had terminated the lease. The law is quite clear that you cannot terminate and forfeit the lease and distrain at the same time.
[16] Mr. Panasiuk acknowledged in his final closing that in the event I determine that the improvements made by the plaintiffs to the property totalling in excess of $189,000 are trade fixtures, then he is liable.
[17] In my opinion, all of the items noted in Schedule A attached are trade fixtures. As a result, the defendants are liable for damages owing to the plaintiffs.
[18] As noted by the plaintiffs, “It is trite law that the Defendants (as landlord) must elect between the remedy of terminating the tenancy of the Plaintiffs or distress upon exigible chattels. The Defendants may not exercise both remedies”: see Mundel v. 796586 Ontario Ltd. (1996), 1996 CarswellOnt 2620 (Ont. Gen. Div.); and Ngo v. 664978 Ontario Ltd., 1998 CarswellOnt 1420 (Ont. Gen. Div.).
[19] As noted in the Ngo case, if the landlord exercises both remedies of terminating the lease and distress the landlord is liable in damages.
[20] The plaintiffs also point out that distraint which is improper, unreasonable or excessive constitutes an intentionable tort of conversion and a strict liability tort where “mistake as to the legal or factual consequences of one’s conduct does not constitute a defence if the physical consequences of taking the property were intended”: see 889267 Ontario Ltd. v. Norfinch Group Inc., 1998 CarswellOnt 3696, (Ont. G.D.); and Excellent Fashion v. Namdev Property Management, 2003 CarswellOnt 426 (Ont. S.C.J.).
[21] In the Norfinch case above-mentioned at para. 25
Conversion will result in a “forced sale” which allows the plaintiff to recover the market value of the chattel at the time of the conversion. In addition to receiving the value of the converted chattel, the plaintiff may be entitled to additional damages for the loss of use of the chattel and, in some cases, exemplary damages.
[22] The plaintiffs herein are also claiming loss of the use of the chattels and exemplary damages.
[23] The poles and the netting for the driving range were significant fixtures with the poles being inserted several feet into the ground to hold the net. The golf driving platform and canopy were placed on concrete cylinders that were installed in the ground and that two heaters in the golf academy were installed with venting through the roof but were hung from the ceiling by brackets.
[24] In 859587 Ontario Ltd. v. Starmark Property Management Ltd., 1997 CanLII 12153 (ON SC), 1997 CarswellOnt 2308, the fixture was automotive spray booth and equipment that were bulky – 28 feet by 14 feet, nine inches and weighed 3500 pounds – and were attached to the floor of the premises and connected with electrical, water and air and with venting through the roof with a vent being bolted to the roof.
[25] In that case, at para. 31, the judge stated:
I further conclude that the booth was a trade fixture. Winkler J., in Deloitte & Touche Inc. v. 1035839 Ontario Inc., defined a trade fixture as one which is installed for the purpose of trade. It is a chattel which is annexed by the tenant during the term of the lease, and becomes a fixture, but which may later be severed by the tenant, at which time it ceases to be a fixture and resumes its character as a chattel.
[26] In this case, as I have indicated, Mr. Panasiuk forfeited the lease and, therefore, he had no right to distrain.
[27] At para. 35 of the Starmark case, it states:
In Canadian Law of Landlord and Tenant, 6th edition, at p. 8-65, the learned authors, Williams and Rhodes, state flatly that “[F]ixtures, so long as they continue as such, are absolutely exempt from distress, whether they are irremovable (“landlord’s fixtures”), or severable by a tenant (“tenant’s fixtures)”.
He goes on to conclude that, in regard to trade fixtures, there is no right to distrain against them also on the basis that as trade fixtures depending on the circumstances, they may be removed by the tenant as a matter of law.
[28] In the Starmark case the spray booth was determined to be a trade fixture even though it was connected by electrical, water, air, its size in bulk and the fact that it was vented through the roof with the vent being bolted to the roof. In the appeal decision in the Starmark case, 1998 CanLII 7138 (ON CA), 1998 CarswellOnt 2937, at para. 8, it was held:
As indicated above, Dambrot J. found that the spray booth was a trade fixture. A trade fixture is a thing which has become part of the property, is used by the tenant in the tenant’s business and is removable at the instance of the tenant.
It goes on to quote Meredith C.J. in Stack v. T. Eaton Co. (1902), 4 O.L.R. 335 (Ont. Div. Ct.) at 338 :
That, even in the case of tenants’ fixtures put in for the purposes of trade, they form part of the freehold, with the right, however, to the tenant, as between him and the landlord, to bring them back to the state of chattels again by severing them from the soil….
[29] I am satisfied that the removal of the poles and of the golf driving platform and its canopy could be removed without damage to the golf course property. The concrete support pillars could be removed below ground level and soil put on it where appropriate and if the area was asphalted they could be asphalted over. There is no question that all of the items requested by the landlord which they attempted to remove were trade fixtures and that the plaintiff illegally prevented him from doing so and converted them for his own use and he is liable in damages.
[30] Therefore, I order that the defendants are liable to the plaintiffs for the value of the trade fixtures in the sum of $189,035.28. I further add to this amount the cost of two furnaces that were trade fixtures and capable of being removed in the sum of $5,000 and further the sum of $6,000 for trusses that were stored on the property. Therefore, the total owing is $200,035.28.
[31] An expert report was provided that there was use made by the tenant prior to the termination on December 6, 2007, and with an annual depreciation factor of four percent, a six percent reduction is appropriate as there was a year and a half of use by the plaintiff resulting in a reduction of $12,002.11 for a total owing for the market value of the goods as of December 6, 2007, $188,033.17.
[32] In addition to this amount, the plaintiffs are claiming unjust enrichment, loss of use, general damages, punitive damages, exemplary damages, trespass and conversion as the defendants continued to use the trade fixtures of the plaintiffs for a period of approximately eight years. Mr. Panasiuk alleges he did not make money and ultimately the golf course has closed but the fact is he was using the plaintiffs’ equipment illegally.
[33] The plaintiffs claim under these various headings of damages as previously noted that based on the expert report filed with the court that for similar work including cost of material, equivalent labour, profit and overhead at 2006 prices that the poles and netting would have a value of $123,000 and that the cost valuation of the covered deck, ball shack, site preparation and lighting to be $140,000 for a total of $263,000 but in final submissions indicated that this amount could be reduced by $150,000 with the balance being an appropriate amount for the additional exemplary damage claim.
[34] Mr. Panasiuk alleges that the golf course, because of the relocation of certain of the holes to accommodate the driving range, had an adverse impact on the golf course itself which ultimately ended up in it being closed but as I have indicated previously it was he who selected the location of the driving range and it was he who terminated the lease and used the driving range equipment and structures illegally for his own purpose.
[35] In my opinion, the plaintiffs were entitled to additional damages and that $80,000 is the appropriate dollar amount for the exemplary damages claim being $10,000 per year for eight years use.
[36] Therefore, the total owing by the defendants to the plaintiffs is $188,033.17 plus $80,000 is $268,033.17.
[37] I will receive cost submissions from the plaintiffs within 30 days of the date of the release of this decision and reply from the defendants within 15 days thereafter.
Original signed by Justice Terrence L.J. Patterson
Terrence L.J. Patterson
Justice
Released: June 30, 2016
2016 ONSC 3746
COURT FILE NO.: CV-08-10757CM
DATE: 20160630
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
2105582 Ontario Ltd. o/a Performance Plus Golf Academy and 627496 Ontario Ltd. o/a D & D Electric
Plaintiffs
– and –
375445 Ontario Limited o/a Hydeaway Golf Club and Nicholas Panasiuk, Jr., also known as Nick Panasiuk
Defendants
REASONS FOR JUDGMENT
Patterson J.
Released: June 30, 2016