Court File and Parties

COURT FILE NO.: CV-18-75346 DATE: 2019/05/31 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

Luigi Caparelli Plaintiff – and – Rena Langevin O/A Baroness Bridal Defendant

COUNSEL: James Katz for the Plaintiff Aaron Heard for The Defendant

HEARD: April 23 & May 21, 2019

Reasons for Decision

O’Bonsawin J.

Background

[1] The Plaintiff, Mr. Caparelli, brings a motion seeking Summary Judgement against the Defendant, Ms. Langevin. The parties argued the motion on April 23 and May 21. On the latter date, I provided an oral decision granting Summary Judgment in favour of the Plaintiff. These are the Reasons for Decision.

[2] The following are my findings of fact on this matter.

[3] Mr. Caparelli passed away on November 16, 2018 and his son, Michael, has since taken over the daily operations of GoldKey Management Corp., the property management firm that manages the premises in issue. Michael is the director of GoldKey Management Corp. This management company is not the landlord in this matter. Mr. Caparelli was the registered owner of the premises until a transfer to 1750706 Ontario Inc. in 2007. Mr. Caparelli, his wife Teresa and Michael are directors of 1750706 Ontario Inc.

[4] On December 7, 2005, Ms. Langevin signed, in her personal capacity, an Offer to Lease (“Lease 1”) with Mr. Caparelli in trust. She leased retail space on the ground floor of 523 Bank Street, Ottawa (“premises”). The lease was for a period of five years, expiring on December 8, 2010. Ms. Langevin operated a bridal gown business, Baroness Bridal.

[5] On December 9, 2011, according to the lease title, Ms. Langevin as Baroness Bridal signed a subsequent lease for the same premises as above (“Lease 2”) in her personal capacity with Mr. Caparelli in trust. This lease was for a period of five years expiring on January 31, 2016. After January 31, 2016, Ms. Langevin continued to occupy the premises on a month-to-month basis.

[6] On December 4, 2013, according to the lease title, Ms. Langevin as Baroness Bridal signed a lease (“Lease 3”) for other premises at 519 Bank Street, Ottawa (“second premises”). This lease was for a period of five years expiring on December 31, 2018.

[7] It is important to note that none of the leases refer to the tenant being a corporation or provide a statement that Ms. Langevin executed the lease for a corporation to be formed.

[8] Ms. Langevin occupied both the premises and the second premises until approximately the end of March 2017 at which time she vacated both of them. She was in breach of both leases.

[9] The tenant ledgers were entered as evidence. The ledger for the premises demonstrates that by March 10, 2017, Ms. Langevin had accumulated rent arrears in the amount of $30,071.06 (inclusive of HST).

[10] The tenant ledger for the second premises demonstrates that Ms. Langevin had accumulated rent arrears in the amount of $26,665.00 (inclusive of HST).

[11] The second premises remained vacant until a new tenant took possession on August 1, 2017. The arrears had increased by a further $7,684.00 for a total of $34,349.00.

[12] Goldkey Management Corp. retained the services of a real estate broker to re-let both premises. An amount of $15,784.52 (inclusive of HST) was paid in commission to the real estate broker for both premises. This expense was incurred due to Ms. Langevin’s breach of her leases.

[13] On March 27, 2017, Mr. Caparelli sent an email to Ms. Langevin stating: “I need to know what you intend to do about the rental arrears you owe.” He advised her that if she did not respond by March 29, 2017, he would have no alternative but to file a legal action.

[14] Evidence was filed which demonstrated that Ms. Langevin incorporated a Canadian corporation named Baroness Bridal Boutique and Evening Wear Ltd. (“Baroness Ltd.”) on October 12, 2016.

[15] I find that there was no evidence to support Ms. Langevin’s claim that she signed leases 2 and 3 on behalf of her corporation, Baroness Ltd.

Issue

[16] Is a Summary Judgment appropriate in this matter?

Position of the Parties

[17] Mr. Caparelli argues that based on the evidence he has submitted, he has met his burden to establish liability on the part of Ms. Langevin and has proven the damages he claims. A Summary Judgment should be granted in this matter since there is no genuine issue requiring a trial.

[18] For her part, Ms. Langevin argues that a Summary Judgment is not warranted in this matter since there is a live issue of whether or not the leases were adopted by Baroness Ltd. and GoldKey Management Corp. respectively. In addition, Ms. Langevin argues that there is a claim for set-off advanced by Baroness Ltd. for losses suffered due to GoldKey Management Corp.’s failure to maintain the lease premises and she has raised a defence of promissory estoppel.

Analysis

[19] As per Rule 20.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“Rules”), after a Defendant has delivered a Statement of Defence or served a Notice of Motion, a Plaintiff may move for Summary Judgment on all or part of the claim in the Statement of Claim. As per Rule 20.04(1), the Court shall grant a Summary Judgment if it is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence. The framework for the granting of Summary Judgments is stated by the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87. At paras. 47-49, the Court states:

Summary judgment motions must be granted whenever there is no genuine issue requiring a trial. …There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process: (1) allows the judge to make the necessary findings of fact; (2) allows the judge to apply the law to the facts; and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

[20] Furthermore, Hryniak sets out the obligations of a judge on a motion for summary judgment. In order for a judge to first determine if there is a genuine issue requiring a trial, he/she must make a determination based only on the evidence before him/her without using the new fact-finding powers. The new powers can be used by a judge if there appears to be a genuine issue requiring a trial. The new powers under Rule 20.04(2.1) include the weighing of evidence, evaluating the credibility of a deponent, and drawing any reasonable inference from the evidence. In addition, as per Rule 20.04(2.2), a judge may order that oral evidence be presented by one or more parties, with or without time limits on its presentation. As per Ray J. in Ali v. Toyota Canada Inc., 2016 ONSC 5909, at para. 8, when a Defendant brings a motion for Summary Judgment, the Plaintiff must put his/her best foot forward. The parties must “lead trump of risk losing” (Da Silva v. Gomes, 2018 ONCA 610, para. 18).

[21] The burden of proof on a motion for Summary Judgment rests with the moving party. The burden only shifts to the responding party after the moving party has discharged its evidentiary burden of establishing that there is no genuine issue for trial (Clearway Construction Inc. v. City of Toronto, 2018 ONSC 1736).

[22] With regards to the law of default under the lease, Perell J. found in Premium Properties Limited v. 2362880 Ontario Inc., (Serious Sandwich), 2015 ONSC 4306, that a breach of a commercial lease resulting in damages are appropriate for a Summary Judgment.

[23] In order to calculate damages for breach of a lease, Perell J. concluded in Morguard Corporation v. Bramalea City Centre Equities, 2013 ONSC 7213, at paras 23 & 34, as follows:

The proper measure of damages for a terminated lease is the unpaid rent to the date of the breach (the arrears of rent) plus the present value of the loss of the future rent, which is the present value of the unpaid rent for the unexpired period of the lease less the actual rental value of the premises for that period…The proper calculation of the Landlord’s damages is present value of the unpaid future rent for the unexpired period of the lease less the actual rental value of the premises for that period plus reasonably foreseeable consequential losses.

[24] I turn to a review of the Canada Business Act, R.S.C. 1985, C-44 (“CBCA”). In accordance with the CBCA, a corporation must set out its name on all contracts and legal documents. Subsections 10(1) and (5) are as follows:

Name of corporation

10 (1) The word or expression “Limited”, “Limitée”, “Incorporated”, “Incorporée”, “Corporation” or “Société par actions de régime fédéral” or the corresponding abbreviation “Ltd.”, “Ltée”, “Inc.”, “Corp.” or “S.A.R.F.” shall be part, other than only in a figurative or descriptive sense, of the name of every corporation, but a corporation may use and be legally designated by either the full or the corresponding abbreviated form.

Publication of name

(5) A corporation shall set out its name in legible characters in all contracts, invoices, negotiable instruments and orders for goods or services issued or made by or on behalf of the corporation.

[25] Section 14 of the CBCA deals with the issue of personal liability. It states as follows:

Personal liability

14 (1) Subject to this section, a person who enters into, or purports to enter into, a written contract in the name of or on behalf of a corporation before it comes into existence is personally bound by the contract and is entitled to its benefits.

Pre-incorporation and pre-amalgamation contracts

(2) A corporation may, within a reasonable time after it comes into existence, by any action or conduct signifying its intention to be bound thereby, adopt a written contract made before it came into existence in its name or on its behalf, and on such adoption

(a) the corporation is bound by the contract and is entitled to the benefits thereof as if the corporation had been in existence at the date of the contract and had been a party thereto; and

(b) a person who purported to act in the name of or on behalf of the corporation ceases, except as provided in subsection (3), to be bound by or entitled to the benefits of the contract.

Application to court

(3) Subject to subsection (4), whether or not a written contract made before the coming into existence of a corporation is adopted by the corporation, a party to the contract may apply to a court for an order respecting the nature and extent of the obligations and liability under the contract of the corporation and the person who entered into, or purported to enter into, the contract in the name of or on behalf of the corporation. On the application, the court may make any order it thinks fit.

Exemption from personal liability

(4) If expressly so provided in the written contract, a person who purported to act in the name of or on behalf of the corporation before it came into existence is not in any event bound by the contract or entitled to the benefits thereof.

Conclusion

[26] Based on all of the evidence before me, I find that Mr. Caparelli has met his burden of proof and demonstrated that there is no genuine issue requiring a trial. Ms. Langevin’s argument that she signed leases 2 and 3 on behalf of her corporation has no merit. I conclude that Ms. Langevin signed all of the leases in her own personal capacity. Firstly, the leases do not contain the terms as listed in ss. 10(1) of the CBCA. Had the lease stated Ms. Langevin, as Baroness Bridal Boutique and Evening Wear Ltd., the outcome of this matter could have been different. Secondly, leases 2 and 3 did not refer to the tenant being a corporation or provide a statement that Ms. Langevin executed the lease for a corporation to be formed. Thirdly, I find that there is no evidence to support that Ms. Langevin’s corporation, by its action or conduct, signified its intention to be bound by leases 2 and 3 as per the requirements of ss. 14(2) of the CBCA. There is simply no evidence to support Ms. Langevin’s claim that she was signing on behalf of her corporation, Baroness Ltd.

[27] Ms. Langevin argues that she dealt directly with GoldKey Management Corp. and not Mr. Caparelli. She paid her rent to GoldKey. I find that Ms. Langevin’s argument has no merit. The evidence supports that Mr. Caparelli was the landlord.

[28] Ms. Langevin submits that Mr. Caparelli failed to mitigate his damages. The evidence supports quite the contrary. I find that Mr. Caparelli took steps to mitigate his losses and in August 2017, the premises were leased to another tenant. Consequently, damages for unpaid future rent were no longer accruing.

[29] Lastly, Ms. Langevin raises the defence of promissory estoppel. I reject this argument. Ms. Langevin has failed to establish that a “clear and unequivocal” promise to change the nature of the legal relationship was made by Mr. Caparelli, which she then relied and acted upon (Vista Sudbury Hotel Inc. v. The Oshawa Group Limited, 2018 ONSC 1164, 94 R.P.R. (5th) 300, at paras 46-48). Other than her self-serving Affidavit, she has not provided any other evidence to support this defence. She described that she understood from Mr. Caparelli that her rental arrears were forgiven. Ms. Langevin provided very little context. The overall reliability of her statements is highly suspect given that the only other witness to this “discussion” is deceased.

[30] With regards to the issue of damages, the ledgers demonstrate the amounts in arrears owed by Ms. Langevin and the receipts from the real estate brokers demonstrate the expenses that were incurred by Mr. Caparelli to replace Ms. Langevin as a tenant after she breached leases 2 and 3 and abandoned the premises. I find that the damages in this matter amount to $80,204.58 calculated as follows: $64,420.06 for unpaid rent and $15,784.52 for real estate commissions. In addition to damages, I grant pre and post-judgment interest.

Costs

[31] Mr. Caparelli is the successful party in this case. If the parties cannot agree as to costs, they may provide my office with brief written submissions on costs not exceeding three pages, exclusive of the Bill of Costs. Mr. Caparelli will have 10 days from the date of these Reasons for Decision to provide his submissions and Ms. Langevin will have 10 days thereafter to do the same. Mr. Caparelli will be allowed a brief reply if deemed necessary, of no more than one page which shall be provided within the next 5 days.

Justice M. O’Bonsawin Released: May 31, 2019