Prairie West Properties Ltd. - v. -, 2012 SKPC 26

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2012 SKPC 026 Date: February 8, 2012 File: SC# 340 of 2010 Location: Saskatoon _____________________________________________________________________________ Between: Prairie West Properties Ltd. - and - 101041996 Saskatchewan Ltd., Shirley Ber, Bruce Ber, Laurie Ber K.D. Clark and K. Remai For the Plaintiff R.T. Carlson For the Defendants _____________________________________________________________________________ JUDGMENT R.D.

JACKSON , J _____________________________________________________________________________ I INTRODUCTION [ 1 ] The plaintiff as landlord (the landlord) seeks judgment against the corporate defendant as tenant (the tenant) of a commercial lease and against the personal defendants as guarantors to the corporate tenant’s obligations in relation to:

a) overholding for the month of September, 2008 to complete restoration to the premises triggering double rent totalling $8,280.00 plus GST as well as double occupancy costs for the month totalling $3,006.48;

b) additional occupancy costs for the lease periods January 1, 2007 to December 31, 2007 and January 1, 2008 to August 31, 2008 in the amount of $8,858.56 plus GST (the landlord conceded any claimed amounts prior to 2007 were statute-barred);

c) judgment for these amounts jointly and severally against the individual defendants according to their personal guarantees;

d) Costs associated with late service of documents by the defendants necessitating a trial adjournment. [ 2 ] The defendants allege by counterclaim that the plaintiff:

a) obtained and negotiated three separate rent cheques for the month of February, 2006 resulting in a rent overpayment of $10,225.40;

b) demanded a 5% rent increase “as provided by the lease” commencing July 1, 2005 which in fact was not provided for in the lease resulting in rent overpayment of $180.00 per month for 36 consecutive months to the end of the term of the lease, totalling $6,480.00;

c) failed to adjust the GST payable on the rent from January 1, 2008 when the GST was reduced from 6% to 5%, resulting in an overpayment which the Court calculates to be approximately $390.00. II BACKGROUND [ 3 ] The tenant leased three commercial bays in a strip mall building owned by the plaintiff located at 323 Centennial Drive, Martensville. The nature of the business was that of a convenience store and liquor outlet. [ 4 ] The term of the lease between the parties was ten years commencing September 1, 1998 and continuing to August 31, 2008 inclusive.

The first five years of the lease called for a base rent plus fixed occupancy costs of $650.00 per month. The latter five years of the lease entailed payment of a base rent plus occupancy costs calculated upon a formula of actual costs divided by the percentage of square footage being leased by the tenant.

However, neither the landlord nor the tenant were alive to this provision such that the tenant continued to pay and the landlord continued to accept the fixed occupancy costs of $650.00 per month for the entire period of the lease. [ 5 ] On July 24, 2008 Shirley Ber, as principal of the tenant corporation, met with Jim Remai, principal of the landlord corporation, to discuss possibilities of re-leasing all or a portion of the subject premises following expiration of the term on August 31, 2008.

It was the first time the two had actually met face to face despite being in a landlord/tenant relationship for the previous ten years. [ 6 ] Over the next few days the parties negotiated by fax communication, however were unable to come to agreement and on August 10, 2008, Ms. Ber gave notice that they would be vacating the premises and asked what the landlord’s expectations were for restoring the premises to their original condition (P-6). [ 7 ] The very next day, August 11, Mr. Remai faxed a letter to Ms.

Ber setting out in general terms what needed to be done stating “. . . the foregoing are only thoughts that come to mind at the spur of the moment however when you are ready we will arrange to do a complete inspection” (P-7).

[ 8 ] Also contained in P-7 at para. 2 was the following: 2. Our accounting guys reviewed the lease and I attach Invoice #08-155 for operating costs that are due and payable under s. 3.04(4)(

b) of the lease for the period June 1, 2003 to December 31, 2007. The total amount, including GST, is $8,122.23, which amounts to $147.68 per month over the period. We will send copies of all the invoices if you wish. [ 9 ] It is useful at this point to reproduce precisely the attached Invoice 08-155 that was sent at this time by Mr. Remai: RE: MARTENSVILLE CONVENIENCE STORE, #1 - 323 CENTENNIAL DRIVE, OCCUPANCY COSTS UNDER

SECTION 3.04(4)(

b) OF LEASE FOR PERIOD JUNE 1, 2003 TO DECEMBER 31, 2007 Pro Rata Calculation: 3,344 square feet out of 7,526 in Gateway Plaza North (45%) equals 22.5% og Total Gateway Plaza. June 1, 2003 to December 31, 2003 : A. Snow Removal (22.5% of $286.23) $64.40 B. Parking Lot Maintenance (22.5% of $6,507.74) $1,464.24 SUB TOTAL $1,528.64 January 1, 2004 to December 31, 2004: A. Snow Removal (22.5% of $1,249.24) $281.08 B. Parking Lot Maintenance (22.5% of $3,609.83) $812.21 SUB TOTAL $1,093.29 January 1, 2005 to December 31, 2005: A. Snow Removal (22.5% of $919.69) $206.93 B. Parking Lot Maintenance (22.5% of $9,246.22) $2,080.40 SUB TOTAL $2,287.33 January 1, 2006 to December 31, 2006:

A. Snow Removal (22.5% of $2,141.83) $481.91 B. Parking Lot Maintenance (22.5% of $2,800.50) $630.11 SUB TOTAL $1,112.02 January 1, 2007 to December 31, 2007: A. Snow Removal (22.5% of $2,021.76) $454.90 B. Parking Lot Maintenance (22.5% of $5,596.80) $1,259.28 SUB TOTAL $1,714.18 TOTAL $7,735.46 GST $386.77 TOTAL OWING $8,122.23 GST #885685156RT0001 2% interest charges (23% Per annum) if not paid in 30 days [ 10 ] It is significant regarding this invoice 08-155 that:

a) the period covers only up to December 31, 2007;

b) no supporting invoices or statements are provided to the tenant regarding a breakdown of actual work completed or by whom, to support the bare invoice amounts [1] and in fact would not be provided until several years hence, after the commencement of the litigation. [ 11 ] By fax reply of August 13, 2008 (D-1) Ms. Ber stated in paragraph 2: 2. Your bill for operating costs covering the period June 1, 2003 to December 31, 2007 is a total surprise. We assumed that the additional costs paid each month included the operating costs - which would be normal business procedures.

Accumulating expenses for nearly five years, then submitting a bill hardly meets normal accounting practices. Time of payment of the operating costs is stipulated by clause 3.04 - Addition Rent Charges. Ms. Ber also refers to work to be done and expresses concern that when GST was reduced from 6% to 5% there was no adjustment in their favour. She closes this letter with the following:

Your facility inspection and written comments for restoration requirements should be in our possession by August 15 to allow us to take complete and appropriate action by August 31. [ 12 ] On August 18, Ms. Ber faxed a letter to Mr. Remai suggesting a walk through stating they are available any time “August 25 and on” (D-2). [ 13 ] On August 26, Ms. Ber faxed Mr.

Remai again expressing concern that the request in the August 13 correspondence to him to forward a list of requirements by August 15 had not yet been answered stating inter alia “. . . time is of the essence” (D-3). [ 14 ] By return fax that day, August 26, Mr. Remai finally replied stating “. . . I have made arrangements for a walk-through with Abe at 10:00 a.m. tomorrow morning, Wednesday, August 27, 2008.

See you then.” Also provided in the correspondence is a list of what needs to be done although he cautions “. . .The above does not represent in any fashion a complete list . . . .” [ 15 ] The following day, August 27, Ms. Ber accompanied by Abe Loewen, met Mr. Remai on site and did a walk-through to confirm what remained to be done. During this walk-through Ms. Ber testified that she expressed concern about a few items being able to be done on time such as replacement of some out of stock floor tile.

She stated emphatically that she raised the issue of not being responsible for any additional rent past August 31if matters could not be completed on time: “I asked him on the 27 th directly if we were going to be charged extra if went over August 31 - he said absolutely not and that he was happy to get it done. I relied on this statement.” [ 16 ] The issue of no further rent being charged was corroborated by Mr.

Loewen who produced a memo at trial which he had made dated August 27, 2008 and placed in his file wherein this was referred to (D-5). [ 17 ] When asked by his counsel in examination-in-chief about this critical issue Mr. Remai responded as follows at page 47, lines 3 - 12: Q So did you have any discussions as to what would happen if they weren’t able to complete the work by the end of the month? A I gave them the option, I pointed out that, on the - on the positive side we didn’t have it leased, so nobody was going to be hammering at the door.

We talked about the fact that they were stretched pretty thin, and I indicated to them they had been good tenants, if the rent was - the lease was in good standing we would work with them on it. Then again at page 48, lines 6 - 14: A My intention was that, if they bring up - if they bring everything up to date and, you know, acknowledge that we have invoices that still need to come, I wasn’t planning to charge them. Q And - and this was a conversation you had with them on August 27? A I was - I didn’t - I don’t think I said it in that fashion. I left that option open for them, I didn’t get a reaction.

And further in cross-examination at page 88, lines 9 - 15: Q Do you recall the discussion though saying, don’t worry, you can do some of these things in September? A I do specifically recall saying; hey, if need some extra time, we don’t have a tenant coming in, you’ve been a good tenant, your lease is up to date, we’ll work with you on it. [ 18 ] At trial, Mr. Remai produced a typed later with the date handwritten at the top “August 28, 2008” (P-8) which he testified he faxed that date to Ms. Ber.

The salient portions to this action are contained in paras. 3 and 4: On reviewing your note respecting the additional occupancy costs, I require a clarification as to whether or not you intend to pay these along with the charges that will be due for 2008 through to the end of your lease. Your note seems to suggest that you believe they are not payable given the delay in invoicing - are you intending to pay them this month?

Please understand that my offer to allow overholding at no cost was predicated on the understanding that you would bring your account to date in its entirety including the invoice for occupancy cost accumulated over the past years and the invoice that we will forward in September for the costs for January to September 2008. If your intention is not to pay then the normal provisions in the lease for overholding apply. Beyond that the lease provides that you are responsible for legal fees that we encountered collecting all amounts due under the lease. [ 19 ] Ms. Ber testified that she never received this fax.

She explained that her store was dismantled and moved August 28 which included the disconnecting of office equipment including the fax and that SaskTel was not available to reconnect the fax in her new location until September 5, 2008. [2] Consequently, if this fax was sent, it was never received by her. When asked in cross-examination about a transmission record with confirmation that the fax had been received, Mr. Remai stated he was not able to locate same. [ 20 ] Apart from whether Ms. Ber actually would have ever received this fax dated August 28, what is significant is the condition that Mr.

Remai was imposing in order that overholding at no cost would be granted. He does not say that unless the work is completed by the lease termination date of August 31, normal overholding will apply, but rather unless the invoice for accumulated occupancy costs “. . . including . . . the invoice that we will forward in September for the costs for January to September, 2008 are paid”, overholding will apply.

In other words, the tenant is being asked to agree to pay the accumulated occupancy costs up to the end of 2007 as well as occupancy cost expenses for 2008 which they have never seen and would have no idea what they would be agreeing to. No invoice for 2008 occupancy cost amount was in fact forwarded until July, 2009. [ 21 ] The remaining items to be completed according to the landlord’s requirements were replacement of missing floor tile, fixing of a door lock and replacement of an outside grate on the air conditioning unit as well as cleaning and waxing the floors.

All of this was finally completed on September 12, 2008. Ms. Ber communicated this to Mr. Remai on this date (P-9) stating: Hi Jim: We have now completed the clean up and renovations of 1 - 323 Centennial Drive. I think it would be beneficial for us to do another walk through. Please let me know when you are available. Yours truly, Shirley Ber Martensville Corner Store Also on this letter is a check mark with the word “done” beside it and underneath “keys on table”.

[ 22 ] On October 25, 2008 Ms. Ber faxed a letter to Mr. Remai stating that all work had been done and that the final rent cheque for August had been cashed “ . . . and we are not aware of any other monies owing.” [ 23 ] Handwritten onto this fax correspondence dated October 28/08 is Mr. Remai’s response referring again to the unpaid occupancy costs and stating “ . . . In addition, there will be an invoice for the year to date. If the occupancy costs for the past years are not paid, we will seek compensation for those, plus one month of overholding as I advised you . . .” (P-10). [ 24 ] Ms.

Ber testified she did not receive this response back. The Court notes that only one transmission record at the top is shown with a date of October 27, 2008 10:12 a.m. i.e. the day before the handwritten date of October 28 placed by Mr. Remai. [ 25 ] No further exchanges occurred between the parties until July 6, 2009 when Mr.

Remai forwarded invoices 09-72 for September, 2008 rental and occupancy costs totalling $10,059.00 and 09-75 for occupancy costs for all years 2003 to September 30, 2008 (the first time any invoice had appeared for 2008 occupancy costs albeit again just a bare statement) totalling $15,324.57. When asked by his counsel in chief as to why these invoices were now being sent Mr. Remai explained [3] : Q Okay. I’m going to show you document P-12 which I believe is referenced in the letters invoice 09-72. And just generally can you explain what that invoice is for?

A This invoice represents the double rent and double occupancy costs as provided for under s. 21.01 of the lease agreement. Q And what time period are you charging double base rent and double occupancy costs? A I - I’m sorry? Q What - what time period are we looking - what does this invoice relate to on a calendar? A September. Q September of 2008, and why now in June of 2009, are you charging them for this? A Frustration; the invoices that I had just assumed would be paid weren’t paid, the work that was to be done went into September, and this is the requirement under the lease, this is our right.

Q So because they hadn’t paid the outstanding invoices - A Yeah. [ 26 ] Follow up correspondence from Ms. Ber’s solicitor requesting detail of how these figures were arrived at was not responded to. III DETERMINATION

Overholding [ 27 ]

Section 21.01 of the subject lease states: OVERHOLDING 21.01 No Tacit Renewal If the Tenant remains in possession of the Premises after the end of the Term and without the execution and delivery of a new lease or a written renewal or extension of this lease, there is no tacit or other renewal of this lease, and the Tenant will be considered to be occupying the Premises as a tenant from month to month at a monthly rental payable in advance on the first day of each month equal to the sum of: (

a) twice the monthly installment of fixed basic rent payable for the last month of the Term; and (

b) one-sixth (1/6) of the amount of additional rent and charges payable by the Tenant for the year immediately preceding the last Lease Year of this lease, and otherwise upon the terms and conditions set forth in this lease so far as applicable. [ 28 ] The plaintiff claims that the defendant corporation was an overholding tenant for the 12 days in September, 2008 that it took to complete the restoration repairs for which the calculated sum owing is $10,059.00 according to P-11. [ 29 ] The plaintiff asserts that it would be nonsensical for the tenant to expect to stay in possession for these 12 days and not pay rent, citing ECW Leaseholds Ltd. v.880072 Alberta Ltd. [4] In this case, the tenant purported to terminate the tenancy July 15, 2001 but thereafter stayed in the premise carrying on business as usual.

One of the issues that arose therefrom related to the tenant’s statement that they were allowed to remain in the premise without having to pay any rent. The Court stated however in para. 19 of the decision: . . . The Defendant stayed in possession after July 15 and continued carrying on the business it was carrying on. If it remained in possession after July 15 with the Plaintiff’s consent it still had to pay rent. The lease requires it. The Defendant cannot remain in possession rent free without a written variation of the lease. [ 30 ] Ms. Ber asserts that she was told specifically by Mr.

Remai that no rent would be charged past August 31, 2008 which she relied upon. When questioned in cross-examination as to whether she thought this should be in writing, she stated “I didn’t think it had to be in writing if he gave us his word”. Further, as to her understanding of overholding she stated “staying over the end of the lease and doing business then you are overholding - if you can’t leave and still doing business”. Ms. Ber’s position is that, firstly, she should be able to rely upon the statement of Mr.

Remai - this being promissory estoppel [5] (or perhaps waiver), and that secondly, she was not “in possession” as contemplated by s. 21.01 of the lease. [ 31 ] Dealing with the first issue, that of promissory estoppel, after a careful review of the evidence the Court finds as a fact that Mr. Remai told Ms. Ber during the walk through on August 27 that no rent would be charged for September 2008. Further, the Court draws the inference from the evidence that this statement was relied upon by Ms. Ber. The Court reaches these conclusions based upon the following:

a) It was Ms. Ber on August 13 (D-1) who requested the list of what needed to be done asking that it be provided by August 15 in order to complete by August 31. She again corresponded on August 26, 2008 reminding Mr. Remai that the list that was to be provided August 15, had not yet been sent, stating “time is of the essence.”

b) Ms. Ber testified this continued to be a concern and stated emphatically she was given assurance by Mr. Remai on August 27 that no rent would be charged which was corroborated by Abe Loewen. However, Mr. Remai was equivocal when asked by his counsel directly as to whether he would have told Ms. Ber that overholding would apply if she was not finished on time ( supra at para. 17).

c) Mr. Remai by comparison makes no reference in any correspondence passing back and forth in August that all work had to be completed by August 31 or overholding would apply, corroborated by his testimony that “we didn’t have it leased, so nobody was going to be hammering at the door” and “hey, if you need some extra time, we don’t have a tenant coming in, you’ve been a good tenant, your lease is up to date, we’ll work with you on it.”

d) The only references at all to overholding are contained in the August 28 letter (P-8) and October letter (P-10), respectively. Neither however refers to having to complete by August 31 but rather that unless outstanding occupancy costs are paid (including some not yet even billed), overholding would apply.

e) The Court is satisfied in any event on the evidence that Ms. Ber did not receive the August 28 letter as her fax machine was inoperable, supported by the fact that there is no evidence of any reaction or reply from her to this letter. Nor can the Court find her letter dated August 25, 2008 was ever returned to her (dated October 28) by Mr. Remai since the only fax transmission markings evidenced the date of October 27 at 10:12 a.m. i.e. the day prior to Mr. Remai’s handwritten notes on the letter. As well, once again, there is no evidence of any reply by Ms. Ber which would be curious given her continued demonstrated concern about completing the work before August 31.

f) Ms. Ber continued to work diligently to complete everything taking 12 days into September to do so. It is inconceivable that absent such assurances that no rent would be charged, she would blithely continue on past August 31placing her company in jeopardy of paying in excess of $10,000.00 for double rent and occupancy costs, particularly when only three or four minor jobs were left.

If such jeopardy existed she would no doubt have simply turned the keys back on August 31 and have the landlord finish the jobs at her expense. [ 32 ] Thus, the Court finds that even if the tenant was on the facts found to be in an overholding position (which on the evidence the Court does not so find, infra ) the landlord is estopped in law from claiming any additional rent therefor.

Alternatively, on the evidence, the landlord by its assurances and conduct implicitly waived any requirement for the tenants to pay overholding rent. [ 33 ] Dealing with the second issue of whether the tenant remained “in possession” of the premises such that s. 21.01 would be triggered, the Court determines that it did not. Unlike the tenant in ECW, supra , Ms.

Ber’s company had completely relocated the business by the lease termination date of August 31, taking the extra 12 days into September only to satisfy the landlord’s restoration requirements. [ 34 ] The plaintiff’s assertion that it would be nonsensical for the defendant corporation to expect to stay in possession and not pay rent (as was stated in ECW ) would of course apply if the tenant was simply staying put and carrying on business in the space.

Further, to accede to the landlord’s request to complete the items on his restoration list, is not a variation of the lease requiring a written amendment, in the Court’s view. [ 35 ] Mr. Remai himself appears to endorse such

interpretation as he at no time ever took the position that the overholding provision should apply by reason of the tenant staying past the termination of the lease. Rather, as indicated previously, he threatened overholding if the occupancy costs were not paid. This condition in itself was patently unreasonable given the delay, lack of detail, non- compliance with the lease and the fact that he had not even invoiced the tenant for occupancy costs for 2008 and would not do so until July 2009, again evidencing no detail whatsoever as to how such costs were arrived at.

Such detail was provided ultimately at trial, much of it in highly questionable form as evidenced hereafter. [ 36 ] For all of the foregoing reasons, this portion of the plaintiff’s claim is dismissed. Occupancy Costs

[ 37 ] At trial, the landlord submitted two binders of purported occupancy cost expenses to support the bare invoices provided to the tenant for the subject years 2007 and the portion of 2008 up to August 31. The expenses were then fractioned on the basis of the tenant’s square footage. [ 38 ] Mr. Remai testified that these expenses were made and invoiced appropriately by him.

He conceded however that s. 3.05 “Payment of additional rent charges” of the subject lease was not complied with, in particular: . . . the landlord will make a final determination of the tenant’s proportionate share of the amount for the lease year and will furnish the tenant with a statement of the operating costs and HVAC costs attributable to the premises for the relevant financial year or years of the landlord, the real estate taxes attributable to the premises for the relevant calendar year or years and all other amounts referred to s. 3.04(1) paid or payable for any relevant period and in each case the amount thereof payable by the tenant relating to the lease year and showing in reasonable detail the information necessary for the determination of the costs and the calculation of the tenant’s proportionate share of the amount, accompanied by the signed opinion of the landlord’s accountant stating that he has examined the statement, that his examination included such test of the landlord’s books and records as he considered necessary under the circumstances and that the statement is accurate. . . . [Emphasis added] [ 39 ] When questioned in cross-examination as to why s. 3.05 was not complied with, in particular not providing the signed opinion of the landlord’s accountant, Mr.

Remai stated [6] : A lot of this is additional costs, and one has to assess that we are not Olympia and York, and Ms. Ber is not Tim Horton’s, and so a lot of what here is fairly straightforward, so the idea is, I mean there’s a reason why we dump the snow on the - on the adjacent lot, it’s cheaper for everyone. To obtain an accountant’s - I mean if somebody wants it we’ll gladly provide it, but it costs money and if all you’re doing is verifying snow bills, it’s our general consensus of our clients, I’ve never had anyone question me in terms of why we don’t do this.

This subjective and somewhat cavalier attitude however misses the point in the Court’s view. The purpose of the reasonable detail and independent accounting review is to satisfy and protect the tenant concerning the landlord’s expenditures for which the tenant is expected to pay by way of its portion of occupancy costs. [ 40 ] The tenant, in fact, raised several concerns at trial regarding the invoices, which supplemented by a careful review of same by the Court, include: Timeliness of Presentation of the Invoices

Section 3.04(1)(

a) requires the tenant to pay additional operating costs “for the corresponding financial year of the Landlord attributable to the Lands and Buildings.” It would be difficult, if not impossible otherwise, for the Defendant to challenge any expense invoices for work done several years prior. Conflict of Interest It was established in cross-examination of Mr. Remai that a good portion of the occupancy cost expense invoices were billed to the landlord by Alsask Contract Property Services Ltd., a company in fact managed by Mr. Remai, and that he prepared the content of the invoices.

He defended the exclusive use of this company in part by stating: None of these invoices - not a single one of these invoices, would be excessive, by any stretch of the imagination, they would all be less than if we had gone out and got the pricing from various people to do the work, and in most instances, by the time we did that we would have had a serious problem. Q You are assuming that? A I know that.

Q Did you go - whenever of these particular items of work are done, did you go out and get a third party quote, or do you just bill it? A Mr. Carlson, we have a build up of snow, okay, it’s going to come down on top of somebody. I don’t have time to get a price, I know generally what it should cost per hour for someone to go up - go up and shovel it off - and that’s what I do, and I phone the companies around - around Martensville, if I am able to or I call on some folks that I know are there.

So it’s just not possible. [7] This non-arm’s length relationship does not appear to have ever been disclosed to the tenant, and based upon the evidence demonstrated at trial, may well have merited even closer scrutiny than what might normally be expected in such a commercial arrangement; Multiple Invoices Showing Payment by Same Cheque Number Several invoices show payment by the same cheque number notwithstanding different dates and amounts which may or may not be significant, however would warrant explanation at the very least by the landlord; Exorbitant Labour Charges All of the invoices billed by Alsask to Mr.

Remai as the landlord show a labour rate of $50.00 per hour for what appears to be non-skilled and uncomplicated labour. As indicated, this seems excessively high even for 2012 never mind that these costs were incurred five years ago in 2007. Examples are as follows: (

i) invoice #84733 from Alsask dated February 15, 2007 evidencing “snow and ice removal and temporary repair to frost created penetrations in the eavestrough” - “two men - 3 hours - $300.00”. ii) invoice #90329 from Alsask dated March 29, 2007 for “inspection of attic” and “affect a ‘possible’ short term patch”, March 28 - 2 ½ hours - $125.00; March 29 - 3 hours - $150.00; (iii) invoice #84840 from Alsask dated April 3, 2007 re: “checked and renailed, replaced shingles where necessary but only as a temporary repair”, 2 men - 3 hours - $300.00; (iv) invoice #84850 from Alsask dated April 30, 2007 for $381.60 re: “attended at Canada Post building to survey damage to the roof, now that the snow is gone, determined extensive wind damage, advised client and patched on an interim basis - two men - 3 hours - $300.00”.; (

v) invoice #84732 from Alsask re: “attended at 223 Centennial Drive (Canada Post building) to determine why there were shingles missing and repair as best as possible - two men - 4 hours - $400.00”. Further this bill is dated December 12, 2006 however was submitted for 2007 expenses; Lack of Detail Explaining Breakdown of the Expenses Several of the invoices show a bare number with no breakdown or explanation as to time spent, cost of the material or equipment used and so forth, examples of which are as follows: (

i) invoice #84841 from Alsask dated April 30, 2007 for $890.40 to “sweep parking lot and paint lines ...”;

(ii) invoice #84842 from Alsask dated August 31, 2007 for $890.40 to again “sweep parking lot and paint lines . . .”. ; (iii) invoice #85243 from Alsask dated February 20, 2008 re: “snow removal from roof of 323 Centennial Drive - $400.00”; (iv) invoice #85245 from Alsask dated March 31, 2008 re: “pavement repair - $1,100.00”; (

v) invoice #85256 from Alsask dated April 30, 2008 re: “lot sweeping and cleaning - $840.00”; (vi) invoice #85257 from Alsask dated April 30, 2008 re: “replacement of vent caps and installation of 4 whirleys - $1,200.00”; (vii) invoice #85258 from Alsask dated the same day, April 30, 2008 re: “cleaning of eavestroughs checking and adjustment of fastening - $450.00”; (viii) invoice #85270 from Alsask dated June 30, 2008 re: “relocation and safetization of bollards as per Town of Martensville requirements - $500.00”; (ix) invoice #85272 from Alsask dated July 31, 2008 re: “weed control - $250.00”; (

x) invoice #85267 from Alsask dated August 31, 2008 re: “repair of parking posts, sidewalks and soffit - $1,270.00”; (xi) invoice #85268 from Alsask dated again August 31, 2008 re: “caulking - supply and installation for external walls - $950.00”; (xii) invoice #85269 from Alsask dated August 31, 2008 for a whopping $11,000.00 re: “staining and pressure washing of external walls”; (xiii) invoice #85271 from Alsask dated August 31, 2008 re: “lot sweeping and cleaning - $840.00”. (xiv) invoice #85274 from Alsask dated August 31, 2008 for $5,274.44 re: removal and/or repair of old shingles on 50% of roof.

Supply and installation of new shingles on 50% of roof. Questionable Timing and Reasonableness of August 31, 2008 Invoices The last five invoices of 2008 are all dated for August 31, the last day of the tenancy totalling in excess of $20,000.00 work done on that day. Irrespective of whether only a portion of these invoices such as for staining and shingles were allotted to the Defendant corporation, this begs the question as to whether the cost itself was necessary or reasonable in the circumstances.

As an aside, it appears fortuitous in hindsight that the tenant was not prepared to agree to the 2008 occupancy costs in advance. Questions As To Whether the Work Was Completed

a) Bruce Ber, son of Shirley Ber, at trial questioned whether in fact work had even be done or had been done satisfactorily; including repair to sidewalks and soffits, pothole repair, lot sweeping, caulking windows and the fact that the bundles of shingles for roof repair sat on the roof long after the tenant vacated at the end of August. Miscellaneous

a) invoice #270211 from Geransky dated 02/02/2007 - showing snow removal, for inter alia February 3, i.e. the day following the date of the invoice. [ 41 ] Additionally, the tenant raised several more concerns surrounding the landlord’s accounting procedures relating to the basis for the Counterclaim i.e. 5% increase in rent that was not warranted, failure to reduce GST from 6% to 5% starting January 1, 2008 and the demand of Mr. Remai on three different occasions for rent cheques for the month of February, 2006, all resulting in overpayment to the landlord in excess of $17,000.00.

Further, the landlord requested three separate times in writing on July 31, August 11 and August 31, 2008 for June 2008 rent which was already paid. [ 42 ] All of these very legitimate concerns emphatically underscore the necessity that s. 3.05 be properly complied with by providing sufficient detail to the tenant to reasonably assess the costs and, more importantly, an independent accounting opinion relating to an examination of the landlord’s books and verifying the accuracy of the expenditures. Even at trial, Mr.

Remai simply entered the invoices with his own explanation rather than having any independent accounting verification to substantiate same. The Court, like the tenant, can no more determine whether such expenses are appropriate and legitimate given the passage of time and the absence of the independent accounting opinion.

Given the tenor of many of the invoices, the tenant undoubtedly would have raised multiple concerns over what and how they were being charged at the very earliest opportunity. [ 43 ] In conclusion, the failure of the landlord to abide by clause 3.05 is fatal to this portion of the plaintiff’s claim and is incapable of being remedied by the evidence presented at trial for the reasons as stated, and is dismissed accordingly.

Guarantors [ 44 ] The plaintiff claims against the three individual defendants according to their personal guarantees given to support the obligations of the corporate tenant. [ 45 ] This claim must also fail for two reasons:

a) no evidence was presented by the plaintiff of any formal demand ever being made upon the personal defendants as guarantors (corroborated by the evidence of the personal defendants themselves) which is a condition precedent to any such obligation of a primary debtor [8] ;

b) no liability has been established upon the tenant as primary debtor and therefore no liability can accrue to the guarantors. Counterclaim [ 46 ] The defendants seek in excess of $17,000.00 wrongfully paid to the plaintiff ( supra at para. 2). [ 47 ] The Court finds on the evidence that all three of the defendants’ claims have been established:

a) February 1, 2006 Cheque 2085 - $5,112.70 *February 1, 2006 Cheque 2196 - $5,112.70

*February 1, 2006 Cheque 2368 - $5,112.70 *Rent Overpayment $10,225.40

b) correspondence of June 27, 2005 (D-15) “as per our lease agreement, your rental is to increase by a minimum of 5%. As such, please increase your July 1 rental payment and the subsequent by $180.00 (5% of $3,600.00).” As was evidenced at trial, no such provision existed in the lease and accordingly there was a rental overpayment of 36 consecutive payments at $180.00 $6,480.00

c) failure to reduce GST on base rent January 1, 2008 to August 31, 2008 admitted by the landlord - approximately $390.00 Total $17,095.40 [ 48 ] The question then is whether the defendants made these claims within the statutory time limit. The last payment made by the tenant was for August, 2008 rent. The action was commenced by the landlord August 31, 2010. The defence to the claim was filed November 16, 2010.

The defendants thereafter did not raise the issues relating to the counterclaim until June 30, 2011. [ 49 ] The relevant sections of the Limitation Act [9] relating to this matter are 5 and 6: Basic limitation period 5 Unless otherwise provided in this Act, no proceedings shall be commenced with respect to a claim after two years from the day on which the claim is discovered. Discovery of claim 6

(1) Unless otherwise provided in this Act and subject to subsection (2), a claim is discovered on the day on which the claimant first knew or in the circumstances ought to have known : (

a) that the injury, loss or damage had occurred; (

b) that the injury, loss or damage appeared to have been caused by or contributed to by

an act or omission that is the subject of the claim; (

c) that the act or omission that is the subject of the claim appeared to be that of the person against whom the claim is made; and (

d) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it.

(2) A claimant is presumed to have known of the matters mentioned in clauses (1)(

a) to (

d) on the day on which the act or omission on which the claim is based took place, unless the contrary is proved. [Emphasis added] [ 50 ] Regrettably, the Court is of the view that the overpayments were certainly capable of discovery through due diligence and therefore are outside the two year limitation period to commence the action.

Further, this is not a circumstance wherein s. 20 would apply to permit amendment to the pleadings when the limitation period would otherwise have expired. [10] COSTS [ 51 ] On June 30, 2011, the reconvened date for trial, plaintiff’s counsel advised that she had just been presented with a significant packet of documents from the defendants’ counsel which necessitated an adjournment of the proceedings. Following argument from both sides, the Court concluded that the adjournment was necessary.

The plaintiff sought costs in any event of the cause for the added delay. [ 52 ] The packet of documents in fact, for the most part, related to the records of rent payments supported by cancelled cheques. As found by the Court, the tenant demonstrated through these documents, as well as other trial exhibits, that the landlord had wrongfully extracted overpayments in excess of $17,000.00.

But for the effluxion of time, all of these monies would rightfully have been ordered to be paid back to the tenant. [ 53 ] Considering all of the circumstances, it would be unjust to further burden the defendants financially by any order of costs. IV RESULT [ 54 ] The plaintiff’s claims against all defendants are dismissed. The defendants’ counterclaim is dismissed. There is no order as to costs. _______________________________________ R.D.

Jackson, J [1] Providing details as to how costs were arrived at was a practice apparently not followed by this landlord: Transcript p. 75, line 1- 19. [2] Confirmed also by Bruce Ber in his evidence. [3] Transcript p. 60, lines 2 - 23 inclusive [4] [2002] A.J. No. 661, 2002 ABQB 503 , 113 A.C.W.S. (3d) 1075 (Alta.Q.B.) [5] Most famously pronounced in Central London Property Trust Ltd. v. High Trees House Ltd. [1947] K.B. 130, where the landlord sought to increase post-war rents when previous assurances had been made to the tenants that this would not happen.

The doctrine has been adopted in many Canadian cases with some expressing that estoppel (equitable or promissory) is virtually indistinguishable from

waiver, but nonetheless producing the same result. In Re Tudale Explorations Ltd. v. Bruce (1978), (ON SC), 88D.L.R. (3d) 584 (Ont. Div. Ct.) at p. 587 Grange, J. stated he was applying the doctrine of estoppel however it did not matter “whether itbe called waiver or promissory estoppel or variation of the contract or simply binding promises.” [6] Page 79, lines 20 - 26, page 80, lines 1 - 5 [7] Transcript p. 96, lines 7 - 26 - This statement by Mr.

Remai is quite remarkable in itself i.e. that the cost to shovel snow could nothave been obtained in 2007 (or even today) for less than $50.00 per hour - a sum that many skilled tradesmen wouldn’t achieve. [8] See Quality Construction Ltd. v. Scholler , [1995] 9 W.W.R. 604 (Sask. Q.B.); BNS v. Williamson, 2009 ONCA754 CanLII, 2009 ONCA 754, 97 O.R.(3d) 561 at para. 13. [9]

Chapter L - 16.1 of The Statutes of Saskatchewan, 2007 [10] Amendment of pleadings in certain cases 20 Notwithstanding the expiry of a limitation period after the commencement of a proceeding, a judge may allow an amendment to the pleadings that asserts a new claim or adds or substitutes parties if: (

a) the claim asserted by the amendment, or by or against the new party, arises out of the same transaction or occurrence as the original claim; and (

b) the judge is satisfied that no party will suffer actual prejudice as a result of the amendment.