2502731 Nova Scotia Ltd. v. Plazacorp Retail Properties Ltd., 2009 NSCA 40

• Jurisdiction: Nova Scotia
• Judge: Oland, Saunders and Hamilton, JJ.A.
• Court: Court of Appeal of Nova Scotia (Canada)
• Citation: 2009 NSCA 40,(2009), 276 N.S.R.(2d) 364 (CA)
• Date: 21 April 2009

2502731 N.S. v. Plazacorp Retail Prop. (2009), 276 N.S.R.(2d) 364 (CA);

    880 A.P.R. 364

MLB headnote and full text

Temp. Cite: [2009] N.S.R.(2d) TBEd. AP.027

Plazacorp Retail Properties Limited, a body corporate (appellant) respondent on Cross-Appeal) v. 2502731 Nova Scotia Limited, a body corporate, carrying on business under the firm name and style of Mailboxes Etc. (respondent) (appellant on Cross-Appeal)

(CA 293910; 2009 NSCA 40)

Indexed As: 2502731 Nova Scotia Ltd. v. Plazacorp Retail Properties Ltd.

Nova Scotia Court of Appeal

Oland, Saunders and Hamilton, JJ.A.

April 21, 2009.

Summary:

A mall tenant (Mailboxes) sued its landlord for breach of an exclusivity clause in the lease. Mailboxes applied for an order requiring another tenant, The Business Depot Ltd. (Staples), to produce all information in its possession relevant to the derivation of net revenue respecting its gross copying and printing sales.

The Nova Scotia Supreme Court, in a decision reported at 224 N.S.R.(2d) 5; 708 A.P.R. 5, allowed the application. Staples sought leave to appeal and, if granted, appealed from the order.

The Nova Scotia Court of Appeal, in a decision reported at 227 N.S.R.(2d) 120; 720 A.P.R. 120, granted leave to appeal and dismissed the appeal.

The Nova Scotia Supreme Court, in a decision reported at 261 N.S.R.(2d) 120; 835 A.P.R. 120, allowed the action and awarded Mailboxes $125,000 damages, consisting of $75,000 lost net earnings and $50,000 loss of goodwill, for the period August 1, 2001 to January 31, 2005. The landlord appealed. Mailboxes cross-appealed the trial judge's decision not to award aggravated or punitive damages.

The Nova Scotia Court of Appeal dismissed the appeal and cross-appeal.

Damage Awards - Topic 1005

Contracts - General - Breach of contract - Loss of profits - A mall tenant (Mailboxes) sued its landlord for breach of an exclusivity clause in the lease - Mailboxes alleged that the landlord violated the clause in permitting another tenant, Staples, to open a store in the mall - The mall, originally named Woodlawn Mall, was renamed Staples Plaza - The trial judge allowed the action and awarded Mailboxes $125,000 damages, consisting of $75,000 lost net earnings and $50,000 loss of goodwill, for the period August 1, 2001 to January 31, 2005 - The Nova Scotia Court of Appeal affirmed both damage awards - The court referred to British Columbia v. Canadian Forest Products (2004, SCC) which "suggests that lack of an acceptable methodology is fatal to a claim for damages" - However, while the trial judge did not clearly accept the expert's methodology respecting loss of goodwill, neither did he clearly reject it - It appeared that despite whatever concern he might have had, he found that valuation useful and adjusted the quantum to take into account the evidence presented as a whole - See paragraphs 35 to 52.

Damage Awards - Topic 1006

Contracts - General - Breach of contract - Loss of goodwill - [See Damage Awards - Topic 1005 ].

Damages - Topic 101

General principles - Evidence and proof - General - [See Damage Awards - Topic 1005 ].

Damages - Topic 912

Aggravation - In contract - For breach - A mall tenant (Mailboxes) sued its landlord (Plazacorp) for breach of an exclusivity clause in the lease - Mailboxes alleged that Plazacorp violated the clause in permitting another tenant, Staples, to open a store in the mall - The mall, originally named Woodlawn Mall, was renamed Staples Plaza - The trial judge allowed the action and awarded damages for lost net earnings and loss of goodwill - However, the court rejected a claim for aggravated and punitive damages based on the stressful effects the whole episode had on Mailboxes' two owners and also on the conduct of Plazacorp's representatives in their dealings with them - The evidence indicated that the representatives were less than forthright when dealing with the two owners - They deserved better - The conduct of Plazacorp's representatives might have fallen short of what should be expected in the world of business, but it was not so egregious as to warrant a further award of punitive damages, nor did the situation warrant an award of aggravated damages - The Nova Scotia Court of Appeal held that the trial judge did not err in failing to award punitive or aggravated damages - See paragraphs 53 to 59.

Damages - Topic 1305

Exemplary or punitive damages - Breach of contract - [See Damages - Topic 912 ].

Landlord and Tenant - Topic 2348

The lease - Terms - Covenants - Shopping mall leases - A mall tenant (Mailboxes) sued its landlord for breach of an exclusivity clause in the lease - Mailboxes alleged that the landlord violated the clause in permitting another tenant, Staples, to open a store in the mall - The mall, originally named Woodlawn Mall, was renamed Staples Plaza - The Nova Scotia Court of Appeal interpreted the exclusivity clause and the restriction of use clause in Mailboxes' lease and affirmed that the landlord breached the lease - Photocopying, although only 4.5% to 5% of Staples' sales, was a "significant portion" of Staples' operations and was "distinctly similar in mix and style" to that of Mailboxes - For Mailboxes, photocopying was consistently its main revenue generator and a critical aspect of its business - Copy services was identified as "a primary service" - The exclusivity clause specifically provided protection against competition within the mall regarding its "primary services" - See paragraphs 16 to 33.

Landlord and Tenant - Topic 2847

The lease - Restrictive covenants - Business lease - Restriction on landlord respecting other tenants - [See Landlord and Tenant - Topic 2348 ].

Words and Phrases

Significant - The Nova Scotia Court of Appeal discussed the meaning of this word as contained in the phrase "a significant portion of their operations", as found in an exclusivity clause in a commercial lease agreement - See paragraphs 26 to 31.

Cases Noticed:

White v. E.B.F. Manufacturing Ltd. et al. (2005), 239 N.S.R.(2d) 270; 760 A.P.R. 270; 2005 NSCA 167, refd to. [para. 14].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1, refd to. [para. 14].

H.L. v. Canada (Attorney General) et al., [2005] 1 S.C.R. 401; 333 N.R. 1; 262 Sask.R. 1; 347 W.A.C. 1; 2005 SCC 25, refd to. [para. 14].

McPhee v. Gwynne-Timothy (2005), 232 N.S.R.(2d) 175; 737 A.P.R. 175; 2005 NSCA 80, refd to. [para. 14].

Saturley v. Lund et al. (2008), 269 N.S.R.(2d) 198; 860 A.P.R. 198; 2008 NSCA 84, refd to. [para. 15].

Cheevers v. Halifax (Regional Municipality) (2006), 243 N.S.R.(2d) 184; 772 A.P.R. 184; 2006 NSCA 54, refd to. [para. 15].

Kern v. Steele (2003), 220 N.S.R.(2d) 51; 694 A.P.R. 51; 2003 NSCA 147 (C.A.), refd to. [para. 15].

Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., [1980] 1 S.C.R. 888; 32 N.R. 488; 112 D.L.R.(3d) 49; [1980] I.L.R. 1-1176, refd to. [para. 16].

Eli Lilly & Co. et al. v. Novopharm Ltd. et al., [1998] 2 S.C.R. 129; 227 N.R. 201, refd to. [para. 16].

McDonald's Restaurants of Canada Ltd. v. West Edmonton Mall Ltd. (1994), 159 A.R. 120 (Q.B.), refd to. [para. 20].

Currie (Bankrupt), Re (2000), 258 A.R. 303 (Q.B.), refd to. [para. 20].

Wormell v. Royal Insurance Co. of Canada (2001), 234 N.B.R.(2d) 236; 604 A.P.R. 236 (T.D.), refd to. [para. 20].

Silver Sands Ltd. and Trynor Construction Co. Ltd. v. Nova Scotia (Minister of Lands and Forests) and Nova Scotia (Attorney General) (1977), 23 N.S.R.(2d) 273; 32 A.P.R. 273 (C.A.), refd to. [para. 42].

Elia v. Chater (1998), 167 N.S.R.(2d) 166; 502 A.P.R. 166 (C.A.), refd to. [para. 42].

British Columbia v. Canadian Forest Products Ltd. (2004), 321 N.R. 1; 198 B.C.A.C. 1; 324 W.A.C. 1; 2004 SCC 38, refd to. [para. 44].

Vorvis v. Insurance Corp. of British Columbia, [1989] 1 S.C.R. 1085; 94 N.R. 321, refd to. [para. 56].

Fidler v. Sun Life Assurance Co. of Canada, [2006] 2 S.C.R. 3; 350 N.R. 40; 227 B.C.A.C. 1; 374 W.A.C. 1; 2006 SCC 30, refd to. [para. 57].

Counsel:

David P.S. Farrar, Q.C., and John T. Shanks, for the appellant/respondent on cross-appeal;

D. Timothy Gabriel, for the respondent/appellant on cross-appeal.

This appeal was heard in Halifax, N.S., by Oland, Saunders and Hamilton, JJ.A., of the Nova Scotia Court of Appeal. Oland, J.A., delivered the following reasons for judgment for the court on April 21, 2009.