S.C.A. No. 02678
IN THE SUPREME COURT OF NOVA SCOTIA
APPEAL DIVISION
Cite as: Silver Spoon Desserts Enterprises Ltd. v. Historic Properties Phase I Ltd., 1992 NSCA 21
Chipman, Roscoe and Freeman, JJ.A.
B E T W E E N:
SILVER SPOON DESSERTS ) James P. Boudreau and
ENTERPRISES LIMITED ) Duff Harper for appellant
)
appellant )
)
- and - ) Virve Sandstrom
) for respondent
)
HISTORIC PROPERTIES PHASE I )
LIMITED ) Appeal Heard:
) November 27, 1992
respondent )
) Judgment Delivered:
) November 27, 1992
THE COURT: Appeal allowed in part; counterclaim for $6,000 value of tenant's fixtures left behind on termination of tenancy allowed; per oral reasons for judgment of Freeman, J.A.; Roscoe, J.A., concurring; Chipman, J.A. dissenting in part, would have dismissed appeal on all issues.
FREEMAN, J.A.:
The appellant, Silver Spoon Dessert Enterprises Limited, operator of a well-known Halifax restaurant, has appealed a judgment of the trial division finding it liable to its former landlord, the respondent Historic Properties Phase 1 Limited, for disputed rental arrears and damages for repairs.
The appellant rented premises from the respondent in which it operated a restaurant from 1980 to August 31, 1990. The first lease was for 946 square feet; in 1983 a new lease was entered into for 3,280 square feet. A new two-year lease was entered into on June 1, 1988. Before the end of that lease the appellant bought its own building but it was not ready to move out as of June 1, 1990, the termination date. After some disagreement the landlord granted permission to remain until August 31.
The trial judge, Chief Justice Constance Glube of the Trial Division, found the appellant had left the premises owing rent of $10,559.68. The respondent landlord had numerous complaints as to damage to the building and to the state of disarray in which it was left. Chief Justice Glube assessed damages at $8,000 after a careful review of the facts.
The first three grounds of appeal relate to the appellant's claim that it was overcharged for common area costs. These were reckoned on a total area of 23,533 square feet. The calculation, based on a formula in the lease, did not include public areas related to 116,000 square feet leased to, and maintained at the expense of, the Nova Scotia College of Art and Design. The respondent argued that if those areas had been included in the common area maintained at the landlord's expense the cost to the appellant would have been much greater. The issues had been in dispute prior to the negotiation of the 1988 lease, which Chief Justice Glube found "dealt specifically with the space occupied by N.S.C.A.D." There was evidence that when the 1988 lease was negotiated the landlord had written off $9,175 previously claimed from the tenant including $4,270 shown as "write off 50% of Common Area."
Chief Justice Glube concluded with respect to the common areas:
"In any event, I find that Silver Spoon chose to resolve matters with their landlord in 1988 when they signed the new lease and the landlord wrote off $9,175. I find that the defendant has failed to prove on a balance of probabilities that it continued to claim against the plaintiffs after June 1st, 1988. I conclude that there is no evidence that the Silver Spoon was overcharged for the common area costs from 1983 to 1987."
The appellant objects to this finding. However, there were no expense figures relating to the College of Art in evidence upon which a recalculation of the common area costs could have been made, even if the trial judge had accepted the appellant's arguments. The mere addition of square footage occupied by the College of Art without taking all factors including expenses into account, as urged by the appellant, would lead to a conclusion unjustified upon a reasonable interpretation of the intention of the parties expressed by the lease. I am satisfied Chief Justice Glube committed no reversible error with respect to the common area rent.
Chief Justice Glube referred to ss. 19(b) and 28 of the lease. Section 19 required the tenant to keep the premises clean and in good repair. Section 28 required the tenant to leave the premises clean and in good repair, reasonable wear and tear excepted. The tenant was entitled to remove its own fixtures "making good all damage which may be occasioned to the demised premises by reason of such removal." The section provided for a Schedule B to list tenant's fixtures which were to become the property of the landlord. No Schedule B was included in the lease and Chief Justice Glube held the appellant was therefore entitled to remove all of the fixtures it had provided.
However, she found that the appellant had breached s. 28; the appellant acknowledges the premises were left "an unsightly mess." She considered reasonable wear and tear, the standard of repair for which the tenant was responsible, certain specific repairs, cost estimates, and leasehold allowances of $25,000 provided by the landlord to each of the two tenants which succeeded the appellant. She concluded:
"The court must try to arrive at a fair value of the work which had to be done. Without purporting to list everything, these include the cleanup, wall and floor patching and repairs where rotted, repairs to the plumbing and wiring and replacing doors. This applies to both the Scanway and Nemo sides of the premises. I award the amount of $8,000 to cover the work and repairs which should have been done by the defendant."
I would agree with this conclusion.
Chief Justice Glube found that the appellant had been entitled to remove air conditioning units which it had installed, but had failed to do so within a reasonable time after vacating the premises and so had forfeited its right. She assessed the value of the units at $6,000.
On September 14, 1990, a week or more after the landlord had changed the locks barring the appellant's access to the premises, a representative of the owner wrote the appellant offering to accept the air conditioning units as partial payment toward the $10,559.68 arrears of rent "provided we can agree on a price." The appellant did not reply. No notice was given by the respondent that the appellant would lose the units or their value if they were not removed by a fixed date or within a reasonable time. No offer of access was made for removal of the units. Chief Justice Glube took that letter, and the appellant's failure to respond, into account in concluding that "the Silver Spoon chose not to deal with the units."
There was, however, a general breakdown of communications between the parties at the time, and the appellant's concerns were in the hands of counsel. The respondent filed its originating notice and statement of claim on November 7, 1990. While much of the fault rests upon the appellant, the forfeiture of the air conditioning units represent a windfall to the respondent to which it laid no claim at times relevant to the tenancy. Given the appellant's well-documented sense of grievance as to the common area rent calculations, it cannot be fairly assumed that the tenant expected its actions, or lack thereof, to result in a transfer of the units to the respondent without compensation. Rather, it would not have been unreasonable for the appellant to have interpreted the letter of September 14 as acknowledgement by the respondent of the appellant's ownership of the units, and a recognition that any transfer of ownership would be for value.
Taking all matters of fact into consideration, I am of the opinion that, while the trial judge correctly stated the law, she erred in finding the appellants "chose not to deal with the units", thereby depriving the appellant of credit for their value. The appellant testified to negotiations for the sale of both units for $7,000; this sale would have involved the necessity of removing the units with attendant costs, including compliance with s. 28 of the lease. I would accept Chief Justice Glube's assessment that their value to the appellant was $6,000. I would allow the appellant's counterclaim in that amount. The effect of that would be to reduce the damages to be paid by the appellant from $8,000 to $2,000.
I have considered the submissions of the parties and I have reviewed the evidence. Chief Justice Glube's other findings of fact are supported by the evidence, and she has committed no reversible error of law. I would allow the appeal in part; success has been divided. I would order that the parties bear their own costs.
Freeman, J.A.
Concurred in: Roscoe, J.A.
S.C.A. No. 02678
IN THE SUPREME COURT OF NOVA SCOTIA
APPEAL DIVISION
B E T W E E N:
SILVER SPOON DESSERTS ENTERPRISES LIMITED ) REASONS FOR
)
appellant ) JUDGMENT BY:
)
- and - ) FREEMAN, J.A.
) CHIPMAN, J.A.,
HISTORIC PROPERTIES PHASE I LIMITED ) (Dissenting in
) part)
respondent ) ORALLY