Ioannou v. Jurian Investments

Ioannou v. Jurian Investments Collection Decisions of the Court of Appeal Date 1998-12-18 Docket numbers C25869 Judges Finlayson, George Duncan; Austin, Allan McNiece; Sharpe, Robert J. Subject Civil Decision Content Date: 19981218 Docket: C25869 COURT OF APPEAL FOR ONTARIO RE: PETER IOANNOU (Respondent (Plaintiff/Defendant by Counterclaim)) v. JURIAN INVESTMENTS, a Division of Q & G Masonry Company Limited (Appellant (Defendant/Plaintiff by Counterclaim)) BEFORE: FINLAYSON and AUSTIN JJ.A. and Sharpe J. ad hoc COUNSEL: James D. Lockyer and Kenneth McCabe for the appellant Jurian Investments Albert Miller for the respondent HEARD: November 19, 1998 E N D O R S E M E N T [1] The trial judge found that "as of November 8 the existing deal between the plaintiff and the purchaser was dead". She also found that what killed the deal, amongst other matters, was the landlord's failure to acknowledge that the option to renew the banquet hall lease extended to the restaurant lease. [2] In our view, the trial judge erred in relying on this "failure". While it would have been helpful had the landlord confirmed that the option to renew was applicable to both the banquet hall lease and the restaurant lease, there was no legal obligation whatsoever on its part to do so. [3] More important, the plaintiff tenant never made it clear to the defendant landlord that the deal had to close on November 8, failing which the landlord would face a claim for damages. [4] That was not done and the tenant continued to negotiate with the landlord after November 8 as if the deal was still on foot. On November 9, the tenant's solicitors advised the landlord's solicitors by fax that the closing "has been rescheduled for November 14". [5] The landlord's solicitors responded on November 10 indicating, amongst other matters, that they were dealing directly with the purchaser's solicitor. [6] On November 11, the tenant's solicitor wrote to the landlord's solicitors and stated "I am advised that the purchaser's are not prepared to wait beyond November 14, 1994". [7] In fact, the tenant's solicitors had been advised on November 9 by the purchaser's solicitors that "our clients [the purchasers] have not given us instructions to extend the closing...to November 14, 1994". [8] It is not clear when, if ever, this information was conveyed to the landlord or its solicitors. It is clear, however, that as early as November 10 the landlord or at least his solicitors, were dealing with the purchaser's solicitors and were attempting to sort out their respective priorities. It was in this process that the landlord withdrew the condition, imposed by it earlier, that the exclusive use provision in the lease be waived as a condition of the landlord's consent to assignment of the lease to the purchaser. The tenant's solicitors were advised of this on November 15. [9] On November 18, the tenant's solicitors advised the landlord's solicitors that the tenant and the purchaser had agreed to comply with all of the landlord's remaining terms respecting assignment of the lease. The tenant's solicitors went on to ask the landlord to add to his consent to the assignment, a confirmation that the tenant's option to renew the banquet hall lease also applied to the restaurant premises. [10] The landlord's solicitors responded on the same day, November 18, to the effect that the proposed addition to the consent was not acceptable and that there was no option to renew the restaurant lease. [11] On November 25, the landlord's solicitors advised the tenant's solicitors that the landlord had executed the assignment and all that was required was confirmation from the tenant's solicitors that the proposed transaction was to go forward. [12] Further negotiations took place and a closing occurred on December 22. Under the arrangement as closed, the terms of both leases were extended. The exclusivity clause was not amended as such, but a clause was added to permit the landlord to lease to a doughnut shop to be built on the landlord's premises. [13] The tenant's position on the appeal was that the deal was in fact dead either on November 8 or shortly thereafter. He said he had to bring in a new real estate agent to revive the deal or to make a new one. He suggested that the agent did put together a new arrangement but the cost to the tenant was $50,000 by way of reduction of the sale price. [14] The tenant may very well have lost $50,000 but there is no indication that the landlord was ever warned that this might occur or that it had occurred. From the landlord's perspective, the negotiations went on from late October to well into December. Neither the risk nor the fact of a $50,000 reduction in the purchase price was brought home to the landlord. The major difficulty and delay appear to have been caused by the tenant's solicitors on November 18, by adding to the matters in contention, the question whether the option to renew the banquet hall lease was also applicable to the restaurant lease. In that regard, there was no legal obligation on the part of the landlord to give any such assurance. [15] The landlord's appeal should therefore be allowed. [16] Damages were awarded below to the tenant as follows: (a) Reduction of purchase price $50,000 (b) Fees of new real estate agen t $ 5,350 (c) Disallowance of landlord's demand for a further $3,000 on account of adjustments $ 3,000 (d) Reduction of legal fees paid by tenant on behalf of landlord $ 3,100 (e) Overpayment by tenant to landlord by reason of use of wrong multiplier $14,922.40 (f) Overpayment of taxes by tenant $ 4,046.08 Total $80,418.48 [17] The only items affected by this decision are items (1) and (2) totalling $55,350. These amounts must be deducted from the plaintiff's recovery. The balance of his judgment remains unchanged. [18] Insofar as interest is concerned, the trial judge allowed pre-judgment interest "at the prevailing rate" from January 16, 1995. That appears to have been the date of an offer to settle by the plaintiff. The statement of claim was issued on December 22, 1994. Having regard to the items upon which the plaintiff has been successful, we see no reason why pre-judgment interest "at the prevailing rate" should not be payable from that date. [19] The trial judge awarded costs to the plaintiff, on a party and party basis to January 16, 1995, and thereafter on a solicitor and client basis, by reason of an offer to settle made by the plaintiff on that date. The result of the decision of this court is that the plaintiff's success has been substantially limited; the major part of the plaintiff's claim has failed. At the same time, the plaintiff has had some success. In the circumstances, the appropriate disposition would be to award the plaintiff his costs of the action to and including the trial on a party and party basis and to award the defendant its costs of the appeal, also on a party and party basis. [20] The trial judge found that a landlord may be sued by a tenant for damages for unreasonably withholding consent to an assignment of lease. It was not necessary to deal with this question in order to dispose of the appeal and accordingly, we make no comment on it. [21] The appeal is allowed. The judgment below is set aside and in its place will go judgment in accordance with these reasons.