Taraxca Imports Ltd. v. Success Realty & Insurance Date:, 2012 BCPC 259

Citation: Taraxca Imports Ltd. v. Success Realty & Insurance Date: 20120726 2012 BCPC 0259 File No: 1238984 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: TARAXCA IMPORTS LTD. CLAIMANT AND: SUCCESS REALTY & INSURANCE LTD. DEFENDANT HECTOR ARAGON THIRD PARTY REASONS FOR JUDGMENT OF HIS WORSHIP DONALD YULE Appearing for the Claimants: Melissa Aragon & Hector Aragon Appearing for the Defendants: Jordan Eng & Edna Eng Appearing on their own behalf: Hector Aragon Place of Hearing: Vancouver , B.C. Date of Hearing: July 11, 2012

Date of Judgment: July 26, 2012 INTRODUCTION [ 1 ] The Claimant, Taraxca Imports Ltd. (the “Tenant”) claims for the return of a portion of the damage deposit with respect to the renting of commercial premises at 1834 West 4 th Avenue, Vancouver, BC. [ 2 ] The Defendant, Success Realty & Insurance Ltd. (the “Landlord”) says that no portion of the damage deposit is returnable on account of various offsetting items.

The Landlord has counter-claimed for $3,068.00, being the additional costs, over and above the amount of the damage deposit which the Landlord has paid to return the property to the condition in which the Landlord says the property was required to be left in at the termination of the lease. The Landlord has third partied Hector Aragon, personally, as he is also a party to lease and is alleged to be jointly liable with Taraxca Imports Ltd. for the damages claimed. BACKGROUND INFORMATION [ 3 ] The Landlord, the Tenant and Mr.

Aragon entered into a written Lease Agreement dated August 1, 2008 for the lease of commercial premises at 1834 West 4 th Avenue, Vancouver, BC (the “Lease”). The Lease was for a three year term ending August 1, 2011. [ 4 ] In December, 2010, an issue arose concerning the placement by the Tenant of a storage container in the Tenant’s designated parking stall (the “Container”). The Container was left in the stall from December, 2010 until it was removed by the Tenant upon the termination of the Lease.

The Landlord objected to the placement of the Container in the parking stall on a permanent basis, and requested that it be removed. The issue was not resolved during the term of the lease. [ 5 ] In April, 2011, there were discussions between the parties respecting the renewal of the Lease but they did not result in any agreement, and on June 18, 2011, the Landlord advised that upon expiration of the lease on July 31, 2011, the tenancy would revert to a month to month basis. On July 21, 2011, the Tenant gave notice that it would terminate the lease effective August 31, 2011. [ 6 ]

Section 12 of

Schedule “A” in the lease provides as follows: 12 Deposit There shall be an amount equal to $2200 as deposit with the Lessor to be refunded without interest after the Lessee has vacated the Premises only, and from which amount any damage to the Premise or payments in arrears will be deducted. The Deposit shall be held by the Lessor for a period of 30 days after the Lessee vacates the Premises. All expenses incurred by the Lessor, with respect to the Premises shall be deducted from the deposit.

The Lessor shall provide the Lessee with a statement of such expenses, if any, and return the balance to the Lessee within 35 days. [ 7 ] The Landlord did not return the deposit or provide a statement of expenses within 35 days of termination of the Lease. The Tenant did not hear from the Landlord at all. On November 5, 2011, the Tenant wrote the Landlord requesting return of its damage deposit and threatening legal action if there was no response. On November 14, 2011 the Landlord provided a security deposit reconciliation which showed that the Tenant owed $114.67.

This result was reached by deducting $900 for unauthorized trailer storage, $914.67 for over held keys, and $500 for signage removal and façade repair. [ 8 ] This response prompted a formal complaint by Ms. Aragon against the Landlord to the Vancouver Real Estate Board. By letter dated December 22, 2011, the Landlord “rescinded” it’s previous correspondence regarding the security deposit and advised it would provide “correct figures” shortly. By a letter sent January 23, 2012 (mis-dated January 23, 2011) the Landlord provided a revised calculation. It referenced a visit to the premises on December 23, 2011.

In addition to the proposed $900 deduction for unauthorized trailer storage, and a revised amount of $784.00 for over held keys, the Landlord now indicated that $2800.00 should be deducted for interior and exterior repairs and additional amounts of $784.00 should be deducted for electrical repairs, resulting in an amount owing by the Tenant of $3068.00. [ 9 ] The Tenant does not dispute that it did not actually vacate the premises until September 7, 2011, at which time the keys were returned.

It accepts that the sum of $784.00 is properly deductible from the damage deposit of $2200.00. [ 10 ] The Tenant commenced this action on February 24, 2012. ISSUES [ 11 ] There are three issues in this dispute.

The first issue is whether the Landlord’s failure to identify any alleged damage within 35 days of the termination of the Lease precludes the Landlord from seeking recovery either by off-set against the damage deposit or by a separate claim for damages for subsequently discovered damage that was not hidden and would have been apparent upon any inspection of the premises. [ 12 ] The second issue is whether the Landlord is entitled to some charge for the Tenant’s placement of its Container in the Tenant’s designated parking stall. [ 13 ] The third issue is the condition of the leased premises at termination and the extent of any damage or repair that, under the terms of the lease, the Landlord was entitled to charge back against the Tenant.

FAILURE TO INSPECT AND RETURN THE DAMAGE DEPOSIT [ 14 ] The evidence of Ms. Edna Eng is that she did ask one of the Landlord’s inspectors to examine the condition of the premises within 30 days of the termination of the Lease. The inspector however went to the wrong location and reported orally that the premises were “ok”. No written inspection report was produced but according to Ms. Eng a written report would only be prepared if there were conditions that had to be remedied.

She also indicated that if the condition of the premises was reported to be “ok” following termination of a lease, she “did not pay much attention to it” and was “not counting the days”. This is a fairly cavalier approach to the Landlord’s obligation under s.12 of

Schedule “A” in the Lease. The Landlord conceded that it had failed to comply with its obligation under s.12. The question however is whether this failure to identify any alleged damage within the time limit set out in s.12 precludes the Landlord from recovering from the Tenant subsequently discovered damage that is properly the responsibility of the Tenant under the Lease. I agree that the Landlord is not precluded from advancing a claim.

Section 7 of

Schedule A specifically provides that the Landlord’s remedies under the lease are cumulative and the non-exercise by the Landlord of any right or remedy for the default of any term by the Tenant shall not prejudice any other right or remedy which the landlord may have for the same default or breach. [ 15 ] The Lease includes the following terms: The Lessee will leave the premises in good repair, reasonable wear and tear and damage by fire, lightning, tempest and earthquake excepted; (The Lessee) will not drive nails or screws into nor drill into nor cut, mark, nor in any way deface any part of the premises; (The Lessee) will indemnify and save harmless the Lessor from … any and all … damages, loss, costs or expenses which he may sustain, incur or be put to by reason of any advertising signs … which may hereafter be erected by the Lessee upon … the building or the premises …; If the Lessor shall suffer or incur any damage, loss or expense or be obliged to make any payment for which the Lessee is liable hereunder by reason of any failure of the Lessee to observe and comply with any of the covenants of the Lessee herein contained then the Lessor shall have the right to add the cost or amount of any such damage, loss, expense or payment to the rent hereby reserved, and any such amount shall thereupon immediately be due and payable as rent and recoverable in the manner provided by law for the recovery of rent in arrears. [ 16 ]

Schedule “A” to the Lease includes the following provisions:

Section 2 Indemnity to Lessor The Lessee shall indemnify and save harmless the Lessor from any and all liability, damages, costs, claims, suits or actions growing out of: (

a) any breach, violation or non-performance of any covenant, condition or agreement in this lease set forth and contained on the part of the Lessee to be fulfilled, kept, observed, and performed; And this indemnity shall survive the expiry or sooner determination of this lease. [ 17 ] There is nothing in the Lease to suggest that the provision respecting the security deposit should override other applicable provisions in the Lease respecting responsibility for damage to the premises. On the assumption that Ms.

Eng initially believed that the premises had been left in a satisfactory condition, the Landlord ought to have refunded the security deposit. When it subsequently discovered damage that the Landlord considered to be properly the responsibility of the tenant, the Landlord would then have been free to advance its own claim. Because the security deposit was not returned, the tenant was forced to sue for it and so all of these issues come to be determined in this action in which the Landlord has advanced its own counterclaim. THE PARKING STALL ISSUE [ 18 ]

Schedule “A” to the Lease, s.20, provides as follows: 20 Parking The Lessor will provide one parking stall at the rear of the building for the Lessee’s exclusive use during business hours. The Lessee will be responsible for all signage to identify its stall. [ 19 ] In the application to rent the premises, opposite the word ‘parking’, is handwritten “business hours – one”. Mr. Eng identified this as his own handwriting, indicating that the prospective tenant was entitled one parking stall during business hours. It is agreed that Mr.

Eng showed the prospective tenants the premises prior to the inception of the lease. The parties disagree regarding what was said. They do agree that there was a discussion of the meaning of “business hours”. The Tenant was concerned that they could use the stall if they worked long business hours eg. until 10pm, and the stall was not restricted to 9am – 5pm. Mr. Eng agreed that the Tenant could use the stall for parking in such extended business hours. Mr. Eng however says that he told the Tenant that after “business hours” the stall would be used by one of the upstairs residential tenants in the building.

The building has two commercial tenants and two upstairs residential tenants and only two parking stalls. Ms. Aragon’s recollection is different. She understood that the stall was “ours to use” although the residential tenants upstairs could use the stall if Taraxca was not using it. Taraxca did, at its expense, install a sign to identify its stall, as it was entitled to do. [ 20 ] The wording of s.20 in Appendix “A” should prevail over any oral conversation prior to the commencement of the lease. The wording of s.20 is in my view potentially ambiguous.

It imposes an obligation on the Landlord to supply a parking stall for the exclusive use of the Tenant during business hours. It does not address the use of the parking stall outside of business hours. It certainly does not say that the upstairs residential tenants were to have “first call” or “priority” over the use of the stall outside business hours. At best, it

indicates that anyone had a right to use the stall outside of business hours. If the Landlord’s expected use of the stall, outside of business hours was by the residential tenant, then the lease with this Tenant should have been much clearer. I conclude that there was a misunderstanding between the parties following their discussion prior to the inception of the lease. I conclude Mr. Eng did say something to indicate that the residential tenants could use the space outside of business hours but I also accept Ms.

Aragon’s evidence that the Tenant was not told that the residential tenants had first call or priority over use of the stall outside business hours. [ 21 ] The analysis does not end there, however, because the lease refers to a parking stall and the Tenant’s use of the stall was not for parking but rather for storage of a non-mobile Container. I think it is implicit in the reference to “parking stall” that the stall is to be used for parking vehicles and not for the placement of storage containers.

Therefore, I conclude that the Tenant was using the stall for a purpose not contemplated by the lease. [ 22 ] During the term of the lease, the Landlord, while objecting to the presence of the Container, simply requested its removal. The Landlord did not take the position during the currency of the lease that it would commence to charge a “storage” fee of any stated amount if the Container was not removed by a specified date.

In an email dated April 19, 2011, during the discussions respecting a possible renewal of the lease, the Landlord did raise the question of whether it was not entitled to rent for the “trailer space” used. I view that comment as part of the Landlord’s encouragement to have the Tenant remove the Container. Both parties agree that it was implicit in their discussions respecting potential renewal of the lease that the Container would have to be moved.

Because the Landlord did not take the position, prior to the termination of the lease, that it would charge $100 per month for the continuous placement of the Container in the parking stall, which was never the objective of the Landlord in any event, as it wanted the stall freed up for use out of business hours by the residential tenant, I do not think the Landlord can unilaterally and arbitrarily charge the tenant for the use of the space after the lease has terminated. Accordingly, I would not allow a deduction from the security deposit on account of the parking stall issue.

CONDITION OF THE PREMISES AT TERMINATION [ 23 ] The lease requires that the Tenant will leave the premises “in good repair, reasonable wear and tear … excepted”. It further provides that the Tenant will not drive nails or screws into nor drill into or cut, mark or in any way deface any part of the premises. The Landlord asserts that the premises were left in a “deplorable” condition.

The Tenant asserts that apart from the paint on the walls, the premises were left in the same condition as they were at the inception of the lease and any minor damage is attributable to reasonable wear and tear. [ 24 ] The Landlord claims for three categories of damage. One is for interior repairs; another is for exterior work. These two categories are included in a single invoice of $2800.00. These repairs were made and paid for (Defendant’s Trial Statement, Exhibit 22). The third category of damage is electrical in the total amount of $784.00.

This work was also done and an invoice and cancelled cheque are also included at the Defendant’s Trial Statement, Exhibit 22. An invoice for the additional sum of $224.00 was not annexed as an Exhibit. [ 25 ] The Landlord’s photographs show that the interior required repainting. The ceiling had been painted black, the walls brown, except for various white areas which had not been painted because something had been placed up against the wall. The Tenant asserts that screw holes that it made were reasonable wear and tear. That position is not viable in view of the specific prohibition in the lease.

The Tenant says that there were some screw holes in the walls when they took occupancy which were fixed by the T enant. The Landlord’s photographs also show wall hooks left in place and supports for shelves left screwed into the wall. In addition, the parties agree that a ceiling fan, installed by the Tenant, had been left in place. [ 26 ] The Landlord’s photographs show that the removal of the Tenant’s large sign, on the storefront above the window, left marks on the external façade. The Tenant says the sign was not nailed to the building front but affixed with double sided tape.

There was also a strip on the exterior façade below the front window containing a design pattern which also had to be removed, as well as a sign “I Love Silver.ca” affixed to the window. I conclude that the Landlord was justified in doing all of this work in order to return the premises to a state of “good repair” and the Landlord is entitled to charge this expense to the Tenant. [ 27 ] With respect to the electrical repairs, the Tenant’s photographs demonstrate that upon renting the premises, there were no electrical ceiling fixtures.

The Tenant installed them, and removed the ceiling fixtures at the end of the lease. There were electrical wires left hanging at the inception of the lease and similarly after termination of the lease. The Landlord takes the position that the light fixtures, once installed, became part of the premises and therefore belonged to the Landlord.

The electrical accounts include the cost of installing new, temporary light fixtures and dealing with the electrical wires left hanging. [ 28 ] Part of the Landlord’s claim for interior work discussed previously is the cost to remove an electric ceiling fan that had been installed by the Tenant. It seems to me that the Landlord cannot have it both ways, ie. charge the Tenant for the cost of removing a fixture (the ceiling fan) left by the Tenant, and also charge the Tenant for the cost of replacing a fixture (the ceiling lights) removed by the Tenant.

The ceiling fan was just as much a fixture as the light fixtures. I do not know what part of the $2800.00 account dealt with removal of the ceiling fan. I also think there is some elemental fairness between the parties for the premises to be left, in terms of electrical wiring in the absence of fixtures, in the same state as it was in at the inception of the lease. Accordingly, I disallow the amount claimed by the Landlord for electrical repairs.

SUMMARY [ 29 ] The amount of the damage deposit was $2200.00. The amounts that I have found the Landlord was entitled to charge the Tenant for are over holding keys of $784.00 and repairs to interior and exterior damage of $2800.00 for a total of $3584.00. Offsetting the damage deposit against this sum, the net result is that the Tenant and Mr. Aragon are jointly liable to the Landlord for $1384.00.

In addition, I award costs to the Landlord of $26.00 for filing its Reply and counter-claim and $35.00 for filing a Third Party Notice for a total of $61.00. [ 30 ] Finally, I award Court ordered interest on the sum of $1384.00 from May 11, 2012 to the date of judgment. The Claimant’s action is dismissed and the Defendant will have judgment on its Counterclaim against the Plaintiff and judgment in its Third Party

proceedings against the Third Party jointly in the amount set out above. _________________________ Justice of the Peace, Donald W. Yule, Q.C.