AGC Flat Glass North America Ltd. v. CCP Atlantic Specialty Products Inc.,

• Jurisdiction: Nova Scotia
• Judge: Bryson, J.
• Neutral Citation: 2010 NSSC 108
• Citation: (2010), 289 N.S.R.(2d) 290 (SC),2010 NSSC 108,1994 CanLII 4329 (NS SC),[2010] NSJ No 140 (QL),289 NSR (2d) 290,[2010] NS.J. No 140 (QL),289 NSR(2d) 290,(2010), 289 NSR(2d) 290 (SC),289 N.S.R.(2d) 290
• Date: 17 March 2010
• Court: Supreme Court of Nova Scotia (Canada)

AGC Flat Glass v. CCP Atlantic Specialty (2010), 289 N.S.R.(2d) 290 (SC);

    916 A.P.R. 290

MLB headnote and full text

Temp. Cite: [2010] N.S.R.(2d) TBEd. MR.061

AGC Flat Glass North America Ltd., carrying on business as AFG Glass Centre (applicant) v. CCP Atlantic Specialty Products Inc., carrying on business as The Roofing Connection (respondent)

(317065; 2010 NSSC 108)

Indexed As: AGC Flat Glass North America Ltd. v. CCP Atlantic Specialty Products Inc.

Nova Scotia Supreme Court

Bryson, J.

March 25, 2010.

Summary:

The applicant (AFG) sublet premises to the respondent (CCP) for a term concluding on December 30, 2007, one day prior to the expiry of the headlease. The monthly rent was less than AFG was paying under the headlease. CCP spoke to the head landlord which was agreeable to an early termination of the headlease with AFG. On March 22, 2007, the head landlord wrote to AFG and informed AFG that CCP would be vacating the premises on April 31, 2007. The head landlord also forwarded a lease amendment to AFG which allowed termination of the headlease on 15 days' notice. AFG did not reply and did not contact CCP regarding its intended departure. CCP did not write to AFG about terminating its sublease. CCP vacated the premises. In September 2007, AFG finally agreed to amend or terminate the headlease or sublease and the headlease was terminated effective October 9, 2007. AFG demanded 2007 rent of $54,992.78 from CCP to October 9, 2007. CCP paid partial rent of $18,377.49. AFG sought summary judgment for the difference. CCP alleged breaches of good faith and a failure to mitigate.

The Nova Scotia Supreme Court held that AFG was entitled to judgment in the amount claimed.

Damages - Topic 1062

Mitigation - In particular matters - Landlord and tenant - [See Landlord and Tenant - Topic 2423 ].

Estoppel - Topic 1156

Estoppel in pais (by conduct) - Representation - By conduct - Silence or standing by - General - [See second Landlord and Tenant - Topic 2335 ].

Landlord and Tenant - Topic 2335

The lease - Implied terms - Conditions or covenants - Exercise of obligations in good faith - The applicant (AFG) sublet premises to the respondent (CCP) for a term concluding on December 30, 2007, one day prior to the expiry of the headlease - The monthly rent was less than AFG was paying under the headlease - CCP spoke to the head landlord which was agreeable to an early termination of the headlease with AFG - On March 22, 2007, the head landlord wrote to AFG informing that CCP would be vacating the premises on April 31, 2007 - The head landlord also forwarded a lease amendment to AFG which allowed termination of the headlease on 15 days' notice - AFG did not reply and did not contact CCP regarding its intended departure - CCP did not write to AFG about terminating its sublease - CCP vacated the premises - In September 2007, AFG finally agreed to amend or terminate the headlease or sublease and the headlease was terminated effective October 9, 2007 - AFG demanded 2007 rent of $54,992.78 from CCP to October 9, 2007 - CCP paid partial rent of $18,377.49 - AFG sought summary judgment for the difference - CCP argued that AFG was losing money every month that the headlease was in existence and that AFG acted unreasonably and in breach of an obligation of good faith by not accepting the head landlord's proposal to amend and terminate the headlease in March - The Nova Scotia Supreme Court held that AFG was entitled to judgment in the amount claimed - CCP might have expected AFG to act "reasonably" by agreeing to a termination of the headlease, so as to reduce AFG's own losses on the rent spread between the headlease and the sublease - But AFG had no obligation to satisfy that expectation - AFG had its own reasons to hold itself to the headlease and to hold CCP to the sublease - It did not breach any legal obligations in doing so - See paragraphs 17 to 23.

Landlord and Tenant - Topic 2335

The lease - Implied terms - Conditions or covenants - Exercise of obligations in good faith - The applicant (AFG) sublet premises to the respondent (CCP) for a term concluding on December 30, 2007, one day prior to the expiry of the headlease - The monthly rent was less than AFG was paying under the headlease - CCP spoke to the head landlord which was agreeable to an early termination of the headlease with AFG - On March 22, 2007, the head landlord wrote to AFG informing that CCP would be vacating the premises on April 31, 2007 - The head landlord also forwarded a lease amendment to AFG which allowed termination of the headlease on 15 days' notice - AFG did not reply and did not contact CCP regarding its intended departure - CCP did not write to AFG about terminating its sublease - CCP vacated the premises - In September 2007, AFG finally agreed to amend or terminate the headlease or sublease and the headlease was terminated effective October 9, 2007 - AFG demanded 2007 rent of $54,992.78 from CCP to October 9, 2007 - CCP paid partial rent of $18,377.49 - AFG sought summary judgment for the difference - CCP argued that AFG was not acting reasonably or in good faith by failing to respond to correspondence from the head landlord - The Nova Scotia Supreme Court stated that "AFG had no obligation to respond. Its silence cannot found an estoppel. There is no evidence of reasonable reliance by CCP on anything that AFG did or failed to do and this is not pleaded. Moreover, the correspondence came from the head landlord, not CCP. It is the head landlord that might have expected a reply from AFG, not CCP" - See paragraphs 24 to 25.

Landlord and Tenant - Topic 2423

The lease - Repudiation - Options of landlord on repudiation by tenant - The applicant (AFG) sublet premises to the respondent (CCP) for a term concluding on December 30, 2007, one day prior to the expiry of the headlease - The monthly rent was less than AFG was paying under the headlease - CCP spoke to the head landlord which was agreeable to an early termination of the headlease with AFG - On March 22, 2007, the head landlord wrote to AFG informing that CCP would be vacating the premises on April 31, 2007 - The head landlord also forwarded a lease amendment to AFG which allowed termination of the headlease on 15 days' notice - AFG did not reply and did not contact CCP regarding its intended departure - CCP did not write to AFG about terminating its sublease - CCP vacated the premises - In September 2007, AFG finally agreed to amend or terminate the headlease or sublease and the headlease was terminated effective October 9, 2007 - AFG demanded 2007 rent of $54,992.78 from CCP to October 9, 2007 - CCP paid partial rent of $18,377.49 - AFG sought summary judgment for the difference - CCP argued that AFG could have mitigated its loss by accepting the head landlord's offer to amend and terminate the headlease - The Nova Scotia Supreme Court rejected the mitigation argument - AFG did not terminate the lease upon CCP's repudiation - Thus, the first option in the Highway Properties case was at play (i.e., CPP could insist on performance of the terms and sue for rent or damages on the basis that the lease remained in force) - Even if the mitigation argument were sustainable, it would not avoid a summary judgment on liability - The court would grant judgment, subject to quantification of the loss - See paragraphs 29 to 35.

Landlord and Tenant - Topic 2827

The lease - Breach by tenant - Duty of landlord to mitigate - [See Landlord and Tenant - Topic 2423 ].

Practice - Topic 5702

Judgments and orders - Summary judgments - Jurisdiction or when available or when appropriate - [See Landlord and Tenant - Topic 2423 ].

Cases Noticed:

United Gulf Developments Ltd. et al. v. Iskandar et al. (2004), 222 N.S.R.(2d) 137; 701 A.P.R. 137; 2004 NSCA 35, refd to. [para. 10].

Eikelenboom v. Holstein Association of Canada (2004), 226 N.S.R.(2d) 235; 714 A.P.R. 235; 2004 NSCA 103, refd to. [para. 10].

MacNeil v. Bethune et al. (2006), 241 N.S.R.(2d) 1; 767 A.P.R. 1; 2006 NSCA 21, refd to. [para. 10].

Cherubini Metal Works Ltd. v. Nova Scotia (Attorney General) et al. (2007), 253 N.S.R.(2d) 144; 807 A.P.R. 144; 2007 NSCA 38, refd to. [para. 10].

Guarantee Co. of North America v. Gordon Capital Corp., [1999] 3 S.C.R. 423; 247 N.R. 97; 126 O.A.C. 1, refd to. [para. 10].

Hercules Management Ltd. et al. v. Ernst & Young et al., [1997] 2 S.C.R. 165; 211 N.R. 352; 115 Man.R.(2d) 241; 139 W.A.C. 241, refd to. [para. 10].

Montreal Trust Co. of Canada v. Quad-Ram Development Group Ltd. et al. (1994), 136 N.S.R.(2d) 333; 388 A.P.R. 333 (C.A.), refd to. [para. 11].

Ungerman (Irving) Ltd. et al. v. Galanis and Haut (1991), 50 O.A.C. 176 (C.A.), refd to. [para. 12].

Lameman et al. v. Canada (Attorney General) et al., [2008] 1 S.C.R. 372; 372 N.R. 239; 429 A.R. 26; 421 W.A.C. 26; 2008 SCC 14, refd to. [para. 14].

Great Western Railway Co. v. Smith (1876), 2 Ch. D. 235 (C.A.), refd to. [para. 15].

Roanne Holdings Ltd. v. Victoria Wood Development Corp. (1975), 58 D.L.R.(3d) 17 (Ont. C.A.), refd to. [para. 15].

Dawson et al. v. Rexcraft Storage and Warehouse Inc. et al. (1998), 111 O.A.C. 201; 164 D.L.R.(4th) 257 (C.A.), refd to. [para. 16].

Aguonie v. Galion Solid Waste Material Inc. (1998), 107 O.A.C. 114; 156 D.L.R.(4th) 222 (C.A.), refd to. [para. 16].

Gateway Realty Ltd. v. Arton Holdings Ltd. and LaHave Developments Ltd. (1991), 106 N.S.R.(2d) 180; 288 A.P.R. 180 (T.D.), affd. (1992), 112 N.S.R.(2d) 180; 307 A.P.R. 180 (C.A.), dist. [para. 19].

Highway Properties Ltd. v. Kelly, Douglas & Co., [1971] S.C.R. 562, consd. [para. 29].

607190 Ontario Inc. v. First Consolidated Holdings Corp. et al. (1992), 60 O.A.C. 285 (Div. Ct.), refd to. [para. 31].

Toronto Housing Co. v. Postal Promotions Ltd. (1982), 140 D.L.R.(3d) 117 (Ont. C.A.), refd to. [para. 32].

Windmill Place v. Apeco of Canada Ltd., [1978] 2 S.C.R. 385; 19 N.R. 124, refd to. [para. 32].

B.G. Preeco 3 Ltd. v. Universal Explorations Ltd. (1987), 80 A.R. 225; 42 D.L.R.(4th) 673 (Q.B.), refd to. [para. 32].

Counsel:

Matthew Pierce, for the applicant;

Andrew Trider, for the respondent.

This application was heard in Chambers on March 17, 2010, at Halifax, N.S., before Bryson, J., of the Nova Scotia Supreme Court, who delivered the following decision on March 25, 2010.