Unisys Canada Inc. v. York Three Associates Inc. et al., (2001) 150 O.A.C. 49 (CA)

• Judge: Osborne, A.C.J.O., Finlayson and Weiler, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: September 25, 2001
• Jurisdiction: Ontario
• Citations: (2001), 150 O.A.C. 49 (CA)

Unisys Can. Inc. v. York Three Assoc. (2001), 150 O.A.C. 49 (CA)

MLB headnote and full text

Temp. Cite: [2001] O.A.C. TBEd. SE.038

Unisys Canada Inc. (plaintiff/appellant) v. York Three Associates Inc. and George H. Cancilla (defendants/respondents)

(C33543)

Indexed As: Unisys Canada Inc. v. York Three Associates Inc. et al.

Ontario Court of Appeal

Osborne, A.C.J.O., Finlayson and Weiler, JJ.A.

September 25, 2001.

Summary:

Cancilla controlled York Three Associates Inc. By virtue of a sub-sublease, York Three rented premises from Unisys. In turn, York Three re-leased the premises to David and Cancilla. David occupied 80% of the premises. Cancilla the other 20%. David went bankrupt. Cancilla was unable to find new tenants. Unisys refused to renegotiate the sub-sublease for a lower rent. Cancilla found cheaper premises for himself and abandoned the Unisys premises. York Three defaulted in its payments to Unisys. Unysis sued York Three for payment of rent under the sub-sublease and for payment of damages equal to the balance of the unexpired term. Unisys also sued Cancilla on his limited personal guarantee. Finally, Unisys claimed against Cancilla for inducing a breach of the sub-sublease, for intentional interference with contractual relations and for improperly using York Three to unlawfully breach the sub-sublease. In an amendment to its statement of claim dated October 25, 1998, Unisys made allegations of misconduct tantamount to fraud against Cancilla. Cancilla consented to judgment on his limited personal guarantee.

The Ontario Superior Court, in a decision reported [1999] O.T.C. 85, allowed the action against York Three in part. The action against Cancilla was dismissed. The court ordered Unisys to pay 98% of Cancilla's costs on a party and party basis up to October 25, 1998, and on a solicitor and client basis after that date. Unisys appealed. The claim against Cancilla for improper use of York Three was abandoned.

The Ontario Court of Appeal allowed the appeal with respect to the action against York Three. The appeal was dismissed for the rest.

Damages - Topic 1002

Mitigation - General principles - Duty to mitigate - A landlord refused to renegotiate a lease for a lower rent - When the landlord successfully sued for payment of rent and for damages equal to the balance of the unexpired term of the lease, the trial judge reduced the award because the landlord had failed to mitigate his damages by refusing to renegotiate - The landlord appealed, arguing that it was under no obligation to renegotiate in order to mitigate its damages in the event that the tenant should default - The Ontario Court of Appeal agreed and allowed the appeal - See paragraph 8.

Damages - Topic 6229

Contracts - Lease of land - Breach by lessee - Owner's duty to mitigate - General - [See Damages - Topic 1002 ].

Practice - Topic 7462.1

Costs - Solicitor and client costs - Entitlement to solicitor and client costs - Unproven allegations of dishonest or improper conduct - The Ontario Court of Appeal affirmed an award of solicitor and client costs in favour of a defendant after the plaintiff had made unsubstantiated allegations of fraud, misconduct or dishonesty in its action for damages for intentional interference with contractual relations - See paragraphs 15 and 16.

Practice - Topic 7470

Costs - Solicitor and client costs - Entitlement to solicitor and client costs - Unproved allegation of fraud - [See Practice - Topic 7462.1 ].

Torts - Topic 5208

Interference with economic relations - Contracts - Inducing or procuring breach of contract - The defendant controlled the lessee corporation - The defendant, along with another person, physically occupied the premises leased by the corporation after leasing them from the corporation - The other person went bankrupt - The defendant was unsuccessful in getting new tenants and in renegotiating the lease for a lower rent because of market conditions - The defendant abandoned the premises - The landlord sued the defendant for inducing a breach of the lease and for intentional interference with contractual relations - The Ontario Court of Appeal affirmed the dismissal of the action where the elements of the tort of intentional interference with contractual relations had not been proven - In particular, the defendant had not performed any intentional act to cause the corporation to breach the lease - See paragraphs 12 to 14.

Cases Noticed:

Montreal Trust Co. of Canada et al. v. ScotiaMcLeod Inc. et al. (1995), 87 O.A.C. 129; 26 O.R.(3d) 481 (C.A.), consd. [para. 10].

Normart Management Ltd. v. West Hill Redevelopment Co. et al. (1998), 113 O.A.C. 375; 37 O.R.(3d) 97 (C.A.), refd to. [para. 11].

ADGA Systems International Ltd. v. Valcom Ltd. et al. (1999), 117 O.A.C. 39; 43 O.R.(3d) 101 (C.A.), leave to appeal refused (2000), 254 N.R. 400; 134 O.A.C. 400 (S.C.C.), refd to. [para. 11].

Colonia Life Holdings Ltd. v. Fargreen Enterprises Ltd. (1990), 1 O.R.(3d) 703 (Gen. Div.), refd to. [para. 13].

Posluns v. Toronto Stock Exchange, [1964] 2 O.R. 547 (H.C.), affd. [1966] 1 O.R. 385 (C.A.), affd. [1968] S.C.R. 330, refd to. [para. 13].

Murano et al. v. Bank of Montreal et al. (1995), 41 C.P.C.(3d) 143 (Ont. Gen. Div.), affd. (1998), 111 O.A.C. 241; 163 D.L.R.(4th) 21 (C.A.), refd to. [para. 15].

Counsel:

K. Scott McLean and Charles J. Brannen, for the appellant;

Martin Sclisizzi, for the respondent, George H. Cancilla.

This appeal was heard on August 28, 2001, by Osborne, A.C.J.O., Finlayson and Weiler, JJ.A., of the Ontario Court of Appeal.

The decision of the Court of Appeal was released on September 25, 2001, by Finlayson, J.A.