Ossory Canada Inc. v. Wendy's Restaurants of Canada Inc., (1997) 105 O.A.C. 321 (CA)

• Judge: Finlayson, Doherty and Charron, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: October 29, 1997
• Jurisdiction: Ontario
• Citations: (1997), 105 O.A.C. 321 (CA)

Ossory Can. v. Wendy's Restaurants (1997), 105 O.A.C. 321 (CA)

MLB headnote and full text

Temp. Cite: [1997] O.A.C. TBEd. DE.053

Ossory Canada Inc. (plaintiff/respondent) v. Wendy's Restaurants of Canada Inc. (defendant/appellant)

(C20321)

Indexed As: Ossory Canada Inc. v. Wendy's Restaurants of Canada Inc.

Ontario Court of Appeal

Finlayson, Doherty and Charron, JJ.A.

December 22, 1997.

Summary:

The plaintiff sued the defendant for breach of an alleged agreement to lease the plain­tiff's property.

The Ontario Court (General Division) allowed the plaintiff's action and awarded damages. The defendant appealed with respect to liability and damages. The plain­tiff cross-appealed concerning damages.

The Ontario Court of Appeal allowed the defendant's appeal with respect to liability and dismissed the plaintiff's action.

Contracts - Topic 1444

Formation of contract - Agreements that are not contracts - Agreements to agree - [See Landlord and Tenant - Topic 12 ].

Contracts - Topic 1505

Formation of contract - Consensus or agreement - Essential terms - What consti­tutes - [See Landlord and Tenant - Topic 12 ].

Damages - Topic 1040

Mitigation - In contract - Effect of plaintiff improving his position - [See Damages - Topic 1042 ].

Damages - Topic 1042

Mitigation - In contract - What constitutes reasonable remedial measures - Under a proposed lease agreement, the defendant was to build a Wendy's restaurant on the plaintiff's land and the plaintiff was to contribute $300,000 to its cost - The de­fendant terminated negotiations - The plaintiff sued the defendant for breach of the lease agreement - The plaintiff later built a three story multi-use building at a cost of $2.4M on the land - The trial judge awarded the plaintiff damages of $1,227,819 - The Ontario Court of Appeal stated, in obiter, that the trial judge's damages award, which charged to the de­fendant the full costs of a radically differ­ent use than contemplated by the lease, did not fall within any accepted principle of mitigation - See paragraphs 41 to 64.

Damages - Topic 1100

Liquidated damages - General - The plain­tiff sued the defendant for breach of an alleged agreement to lease the plaintiff's property - The defendant attempted to rely on a clause of the lease agreement which provided that if the defendant failed to pay any instalment of rent or perform promptly any other affirmative covenant of the lease, the plaintiff could, at its sole option, declare the lease to be terminated - How­ever, all of the defendant's obligations under the lease would then be terminated and its liability would be limited to three months' rent or the shortfall in reletting the leased premises - The Ontario Court of Appeal, in obiter, stated that the defendant could not rely on the clause because the plaintiff did not exercise the option to terminate - See paragraphs 33 to 40.

Landlord and Tenant - Topic 12

Creation of relationship - Essential elements - Agreement to lease by parties - The plaintiff sued the defendant for breach of contract, alleging that the parties had reached an agreement to lease the plain­tiff's property - The trial judge found there was an agreement to lease - The Ontario Court of Appeal allowed the defendant's appeal and dismissed the plaintiff's action - The court reviewed the requirements of a valid lease and held that there was no basis for the trial judge's conclusion that the parties had agreed between themselves as to all the items necessary for a valid lease - There was no agreement to lease - The parties failed to reach a consensus as to certain essential terms of the proposed lease agreement - See paragraphs 1 to 28.

Landlord and Tenant - Topic 2220

The lease - Essential terms - General - [See Landlord and Tenant - Topic 12 ].

Cases Noticed:

Canada Square Corp. v. Versafood Ser­vices Ltd. (1981), 34 O.R.(2d) 250 (C.A.), refd to. [para. 21].

Bawitko Investments Ltd. v. Kernels Pop­corn Ltd. (1991), 53 O.A.C. 314; 79 D.L.R.(4th) 97 (C.A.), refd to. [para. 28].

Collins (J.G.) Insurance Agencies Ltd. v. Elsley's Estate, [1978] 2 S.C.R. 916; 20 N.R. 1, refd to. [para. 34].

80,100 Canada Corp. v. Reid (1994), 17 O.R.(3d) 810 (Div. Ct.), refd to. [para. 36].

Roanne Holdings Ltd. v. Victoria Wood Development Corp. (1975), 8 O.R.(2d) 321 (C.A.), refd to. [para. 39].

Highway Properties Ltd. v. Kelly, Douglas & Co., [1971] S.C.R. 562, refd to. [para. 45].

Hadley v. Baxendale (1854), 9 Exch. 341, refd to. [para. 46].

Michaels et al. v. Red Deer College, [1976] 2 S.C.R. 324; 5 N.R. 99; [1975] 5 W.W.R. 575; 57 D.L.R.(3d) 386, refd to. [para. 47].

Darbishire v. Warran, [1963] 1 W.L.R. 1067 (C.A.), refd to. [para. 50].

Grouse Mechanical Co. v. Griffith (1990), 14 R.P.R.(2d) 233 (B.C.S.C.), refd to. [para. 59].

West Edmonton Mall Ltd. v. McDonald's Restaurant of Canada Ltd., [1994] 2 W.W.R. 230; 144 A.R. 331 (Q.B.), refd to. [para. 59].

Authors and Works Noticed:

McGregor on Damages (15th Ed. 1988), p. 279 [para. 52].

Counsel:

R. Nairn Waterman and John S. Contini, for the appellant;

Gordon Cameron and Nancy K. Brooks, for the respondent.

This appeal was heard on October 29, 1997, before Finlayson, Doherty and Charron, JJ.A., of the Ontario Court of Appeal. On December 22, 1997, Finlayson, J.A., released the following decision of the court.