Elia v. Chater, (1998) 167 N.S.R.(2d) 166 (CA)

• Judge: Roscoe, Pugsley and Cromwell, JJ.A.
• Court: Court of Appeal of Nova Scotia (Canada)
• Case Date: March 23, 1998
• Jurisdiction: Nova Scotia
• Citations: (1998), 167 N.S.R.(2d) 166 (CA)

Elia v. Chater (1998), 167 N.S.R.(2d) 166 (CA);

    502 A.P.R. 166

MLB headnote and full text

Temp. Cite: [1998] N.S.R.(2d) TBEd. AP.021

Elie Chater and George Chater (appellants) v. Antonios Elia and Marcelle Elia (respondents)

(C.A. No. 140459)

Indexed As: Elia v. Chater

Nova Scotia Court of Appeal

Roscoe, Pugsley and Cromwell, JJ.A.

March 23, 1998.

Summary:

A tenant leased three distinct spaces in a commercial building. He sold one of his businesses, a pizza shop, to Elia, with whom he entered into a sublease. Plumbing and water problems resulted in the business closing 10% of the time. The tenant became bankrupt. The landlords attempted to force out Elia and levied an unlawful distraint against her. Elia and her husband sued the landlords for damages for breach of the lease and illegal distraint and sought punitive and aggravated damages.

The Nova Scotia Supreme Court, in a decision not reported in this series of reports, awarded $3,025 for abatement of rent, $25,000 for loss of goodwill, $2,000 for loss of equipment, $1,234.16 for illegal distraint, $10,000 aggravated damages and $10,000 punitive damages. The landlords appealed.

The Nova Scotia Court of Appeal varied the judgment only to the extent of dismissing the husband's action and deleting the award with respect to the abatement of rent. The court dismissed the appeal in all other respects.

Contracts - Topic 1165

Formation of contract - Privity of contract - What constitutes - [See Landlord and Tenant - Topic 5001 ].

Damage Awards - Topic 1006

Contracts - General - Breach of contract - Loss of goodwill - [See Landlord and Tenant - Topic 8810 ].

Damage Awards - Topic 1208

Contracts - Lease of land - General dam­ages for breach by lessor - [See Landlord and Tenant - Topic 8810 ].

Damage Awards - Topic 2017

Exemplary or punitive damages - Illegal distress - A tenant leased three spaces in a commercial building - He sold one of his businesses, a pizza shop, to Elia - Elia subleased a space from the tenant - The tenant became bankrupt - The landlords engaged in a course of conduct designed to drive Elia out of the premises - They told Elia that her lease was void - They refused to accept her rent - They levied an unlaw­ful distraint - They told customers and suppliers that Elia was not in business - They urged police to arrest Elia for illegal entry - Elia sued the landlords for damages for breach of the lease and illegal distress and sought punitive and aggravated dam­ages - The trial judge awarded, inter alia, $10,000 aggravated damages and $10,000 punitive damages - The Nova Scotia Court of Appeal dismissed the landlords' appeal - Aggravated damages were warranted where Elia's anxiety, upset and distress flowed directly from the landlords' wrong­ful conduct - Punitive damages were justi­fied as they served a rational purpose - See paragraphs 50 to 63.

Damage Awards - Topic 2415

Aggravated damages - Illegal distress - [See Damage Awards - Topic 2017 ].

Landlord and Tenant - Topic 2761

The lease - Breach by landlord - What constitutes - [See Landlord and Tenant - Topic 5001 and Landlord and Tenant - Topic 5643 ].

Landlord and Tenant - Topic 3883

Rent - Abatement of rent - When available - [See Landlord and Tenant - Topic 8810 ].

Landlord and Tenant - Topic 5001

Assignment of lease - General principles - Assignment defined - A tenant leased three distinct spaces in a commercial building - He sold one of his businesses to Elia - With the landlords' consent, the tenant subleased one of his three spaces to Elia - Elia sued the landlords for, inter alia, breach of the lease - Elia argued that what was in form a subtenancy was in law an assignment because the tenant did not retain a reversion of the premises - The Nova Scotia Court of Appeal rejected Elia's argument where the subtenancy related only to a portion of the premises demised under the head lease - According­ly, the tenant did not give over to Elia his whole interest under the head lease - Elia was a subtenant - Since there was no privity of contract, the landlords did not breach the lease - See paragraphs 11 to 14 and 28.

Landlord and Tenant - Topic 5502

Subleases - General - What constitutes a sublease - [See Landlord and Tenant - Topic 5001 ].

Landlord and Tenant - Topic 5643

Subleases - Terms of sublease - Re termi­nation by sublessor - A tenant leased three distinct spaces in a commercial building - He sold one of three businesses to Elia - With the landlords' consent, the tenant subleased one space to Elia - The tenant became bankrupt - The tenant's wife con­tinued operating the two businesses - The landlords consented to have Elia remain under the same terms as before the bank­ruptcy and accepted rent directly from Elia - At issue was the status of the Elia subtenancy following the tenant's bank­ruptcy - The Nova Scotia Court of Appeal reviewed the distinctions between a surren­der and disclaimer and concluded that there was a surrender by operation of law of the head lease - Elia's rights under the sublease survived the bankruptcy and the landlords took the reversion subject to them - The landlords were therefore liable for any breach of the lease following the tenant's bankruptcy - See paragraphs 15 to 27 and 29 to 35.

Landlord and Tenant - Topic 5664

Subleases - Relations between lessor and sublessee - Liability of lessor to sublessee - [See Landlord and Tenant - Topic 5001 and Landlord and Tenant - Topic 5643 ].

Landlord and Tenant - Topic 6002

Surrender and abandonment - Surrender - What constitutes a surrender - [See Land­lord and Tenant - Topic 5643 ].

Landlord and Tenant - Topic 6530

Termination, forfeiture and reentry - Term­ination - Effect of tenant's bankruptcy - [See Landlord and Tenant - Topic 5643 ].

Landlord and Tenant - Topic 8810

Distress - Relief or bars to distress - Wrongful distress - Damages - A tenant leased three spaces in a commercial build­ing - He sold one of his businesses, a pizza shop, to Elia, who paid $50,000 for good­will - Elia subleased a space from the tenant - Plumbing and water problems resulted in the business closing 10% of the time - The tenant became bankrupt - The landlords levied an unlawful distraint against Elia - Elia successfully sued the landlords for damages for breach of the lease and illegal distraint - The trial judge awarded, inter alia, $3,025 for abatement of rent, $25,000 for loss of goodwill, $1,234.16 for illegal distraint, $10,000 aggravated damages and $10,000 punitive damages - On appeal, the Nova Scotia Court of Appeal deleted the award for abatement of rent since there was no privity between Elia and the landlords prior to the tenant's bankruptcy - The court upheld the other damage awards.

Cases Noticed:

Mount Citadel v. Ibar Developments Ltd. (1976), 73 D.L.R.(3d) 584 (Ont. H.C.), refd to. [para. 14].

Ferguson v. Craig, [1954] 4 D.L.R. 815 (Ont. H.C.), refd to. [para. 19].

Daulat Investments Inc. v. Ceci's Home for Children (1991), 85 D.L.R.(4th) 248 (Ont. Gen. Div.), refd to. [para. 19].

Roane Holdings Ltd. v. Wood (Victoria) Development Corp. (1975), 8 O.R.(2d) 321 (C.A.), refd to. [para. 20].

Haack v. Martin, [1927] S.C.R. 413, appld. [para. 43].

Roose v. Hollett et al. (1996), 154 N.S.R.(2d) 161; 452 A.P.R. 161 (C.A.), refd to. [para. 46].

Sunshine Vacation Villas v. Governor & Co. of Adventurers of England Trading into Hudson's Bay (1984), 58 B.C.L.R. 33 (C.A.), refd to. [para. 48].

Michaels et al. v. Red Deer College, [1976] 2 S.C.R. 324; 5 N.R. 99; [1975] 5 W.W.R. 575; 75 C.L.L.C. 14,280; 57 D.L.R.(3d) 386, refd to. [para. 49].

Killorn v. Healthvision Corp. (1997), 156 N.S.R.(2d) 1; 461 A.P.R. 1 (C.A.), refd to. [para. 52].

Vorvis v. Insurance Corp. of British Co­lumbia, [1989] 1 S.C.R. 1085; 94 N.R. 321; [1989] 4 W.W.R. 218; 58 D.L.R.(4th) 193; 36 B.C.L.R.(2d) 273; 90 C.L.L.C. 14,035; 25 C.C.E.L. 81, refd to. [para. 53].

Parkes v. Howard Johnson Restaurant Ltd. (1970), 74 W.W.R.(N.S.) 255 (B.C.S.C.), refd to. [para. 58].

Sloan (M.D.) Consultants Ltd. v. Derrick­son (1991), 9 B.C.A.C. 241; 19 W.A.C. 241; 85 D.L.R.(4th) 449 (C.A.), refd to. [para. 58].

Stewart v. Canada Life Assurance Co. (1994), 132 N.S.R.(2d) 324; 376 A.P.R. 324; 118 D.L.R.(4th) 67 (C.A.), refd to. [para. 58].

Hill v. Church of Scientology of Toronto and Manning, [1995] 2 S.C.R. 1130; 184 N.R. 1; 84 O.A.C. 1; 126 D.L.R.(4th) 129; 25 C.C.L.T.(2d) 89; 30 C.R.R.(2d) 189, refd to. [para. 59].

Air Canada et al. v. Liquor Control Board (Ont.) et al., [1997] 2 S.C.R. 581; 214 N.R. 1; 102 O.A.C. 1, refd to. [para. 59].

Authors and Works Noticed:

Anger and Honsberger, The Law of Real Property (2nd Ed. 1985), pp. 289, 290 [para. 13]; 291, 292 [para. 19]; para. 811 [para. 20].

Houlden, Lloyd W., and Morawetz, Carl H., Bankruptcy and Insolvency Law of Canada (Revised 3rd Ed.), vol. 2 p. 5-143 [para. 19].

Williams and Rhodes, Canadian Law of Landlord and Tenant (6th Ed. 1988) (1998 Update), vol. 1, p. 3-54 [para. 13].

Counsel:

Colin D. Bryson, for the appellants;

W. Dale Dunlop and Alison W. Scott, for the respondents.

This appeal was heard on January 7, 1998, before Roscoe, Pugsley and Cromwell, JJ.A., of the Nova Scotia Court of Appeal.

On March 23, 1998, Cromwell, J.A., delivered the following judgment for the Court of Appeal.