MTY Tiki Ming Enterprises Ltd. v. Wong, 2019 BCPC 248

Citation: MTY Tiki Ming Enterprises Ltd. v. Wong 2019 BCPC 248 Date: 20191028 File No: 18-60536 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: MTY TIKI MING ENTERPRISES LTD. CLAIMANT AND: KING-SING WONG DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE W. LEE Counsel for the Claimant: M. Larsen Appearing in Person for September 3 and 4, 2019 only: K. Wong Place of Hearing: Vancouver , B.C. Dates of Hearing: September 3, 4, October 8, 2019

Date of Judgment: October 28, 2019 INTRODUCTION [ 1 ] MTY Tiki Ming Enterprises Ltd. brings legal action against King-Sing Wong for unpaid rent and damages in relation to premises located at Royal Centre Mall in Vancouver B.C. Mr. Wong’s company, 0907190 B.C. Ltd. subleased the property for the operation of a Jugo Juice franchise. TRIAL PROCEEDINGS [ 2 ] MTY Tiki Ming Enterprises Ltd. filed the Notice of Claim on February 27, 2018. [ 3 ] Mr. Wong filed a Reply and Counterclaim on April 26, 2018. [ 4 ] A settlement conference was set for October 3, 2018. Mr. Wong requested an adjournment and the claimant agreed.

The settlement conference was rescheduled to December 14, 2018. [ 5 ] Mr. Wong then made a second adjournment request. The claimant refused but did agree to let Mr. Wong appear by phone. Mr. Wong instead attended the settlement conference in person. A settlement was not reached and a trial was set for September 3 and 4, 2019. [ 6 ] Mr. Wong then applied for an adjournment of the trial. This application came before Judge Philips on August 29, 2019, with Mr. Wong appearing by phone. Mr.

Wong sought an adjournment to give him time to speak to a possible witness, seek legal advice, and to attend to the care for his elderly mother. Judge Philips took into account that this was a third request for an adjournment and that the trial was set in December 2018, some 8 months earlier. Mr. Wong made no effort to contact the proposed witness after learning of him some 20 days earlier. Mr. Wong did not provide any evidence about the condition of his mother or that her condition would change if Mr. Wong remained with his mother rather than attend the trial.

On that basis, Judge Philips dismissed the adjournment request. [ 7 ] On September 4, 2019, the trial did not complete and Mr. Wong was in the midst of cross-examining a claimant witness. Mr. Wong asked that the trial continue on a school holiday so that it would not interfere with his work. He said he needed to care for his mother and that he may need to speak to a lawyer beforehand. [ 8 ] Mr. Wong proposed that he would fly back to Vancouver at Christmas time to speak to a lawyer and that the trial be rescheduled to either Spring Break in March 2020 or in the summer of 2020.

I refused this request as being inordinately long. Mr. Wong had months to consult a lawyer after the trial was set in December 2018. In addition, Mr. Wong’s son is a lawyer in Vancouver and has been in contact with claimant’s counsel, Mr. Larsen, regarding this matter. Mr. Wong has obviously consulted with his son. There was also no reason why speaking to a lawyer could not occur by phone rather than in person in December 2019. I set the continuation of the trial for October 8 and 9, 2019. [ 9 ] On September 6, 2019, Mr.

Wong filed with the BC Supreme Court a Petition under the Judicial Review Procedures Act to have my decision setting the trial date reviewed. The affidavit in support of the Petition asked to have the Small Claims Court trial rescheduled to a time from December 23, 2019 to January 2, 2020, March 11 to March 15, 2020, or the summer of 2020. [ 10 ] The claimant filed a Response to Petition on September 27, 2019. [ 11 ] The Petition was set down for hearing on October 7, 2019. [ 12 ] On October 4, 2019, Mr. Wong’s son sent an email to counsel for the claimant, Mr.

Larsen, to advise that the Judicial Review application would not proceed. Mr. Wong’s son stated in his email that there was an emergency involving his grandmother that required urgent attention and that the defendant would likely not attend the trial. No supporting medical information was provided. Mr. Larsen responded to Mr. Wong’s son by email to suggest that he attend the Small Claims Court trial and provide evidence to support the reason why the defendant was necessarily absent. [ 13 ] On October 8, 2019, the defendant, Mr. Wong, did not attend court. No one, including Mr.

Wong’s son, came to court on his behalf. [ 14 ] Small Claims Court Rule 19(26) states that if a defendant does not attend a trial, a judge may allow the claim and make a payment order or other appropriate order against the defendant. In my view, there has been a history of seeking to delay the legal proceedings. No evidence has been provided to me to show why Mr. Wong must be absent from court. This includes any current medical evidence showing the need for Mr. Wong to attend to his mother. Given the circumstances, I held that the trial would proceed.

On that basis, no further evidence was called and I heard closing submissions from the claimant. ISSUES [ 15 ] The primary issues at trial were: (

a) What is the termination date of the sublease between Mr. Wong's company, 0907190 B.C. Ltd., and MTY Tiki Ming? (

b) Is Mr. Wong required to reimburse MTY Tiki Ming for the sums it paid to Royal Centre for unpaid rent and other expenses? If so, then what amount is payable? (

c) Is MTY Tiki Ming liable to compensate Mr. Wong for the value of property and equipment removed from the store premises by MTY Tiki Ming?

EVIDENCE [ 16 ] MTY Tiki Ming called as witnesses Garth Danyluk, Kendall Pupp and Prokopios Klimos. Mr. Wong commenced the cross- examination of Mr. Klimos, which was to continue on October 8, 2019. It did not complete due to Mr. Wong’s absence. Having failed to attend court on October 8, 2019, Mr. Wong also did not call any evidence. [ 17 ] The property in question is part of the food fair at Royal Centre Mall in Vancouver B.C.

The legal name of the owner and landlord of the Royal Centre Mall changed over time, from Brookfield Properties (Vancouver) Ltd. to Royal Centre (BOPC) Inc., then to Royal Centre (KREC) Inc. For ease of reference, I will simply refer to the owner/landlord as Royal Centre. [ 18 ] The actual tenant has also changed over time. The original tenant was Jugo Juice Canada Inc.

In 2011, the claimant MTY Tiki Ming Enterprises Inc. purchased Jugo Juice Canada Inc. and it continued to carry on the Jugo Juice business. [ 19 ] The documents put into evidence provide a timeline for the relevant events. [ 20 ] On February 1, 2007, a lease was entered into between Royal Centre as landlord and Jugo Juice Canada Inc. as tenant, with Philip Lam and Shawn Lam as indemnifier under the lease. A copy of an executed Indemnity Agreement was not provided. A sample Indemnity Agreement was attached to the lease though.

The sample Indemnity Agreement provided that Philip Lam and Shawn Lam would indemnify the Landlord Royal Centre if the tenant Jugo Juice Canada Inc. failed to comply with the lease, including paying the monies due under the lease. [ 21 ] Philip and Shawn Lam had a franchise agreement with Jugo Juice International Inc. to operate a Jugo Juice franchise at Royal Centre. The Lams became subtenants to the lease between Jugo Juice Canada Inc. and Royal Centre, where the business would operate.

Through this arrangement then, Royal Centre leased the premises to Jugo Juice Canada Inc., who in turn sub-let the premises to Philip and Shawn Lam. Philip and Shawn Lam owed rent to Jugo Juice Canada Inc., who in turn owed rent to Royal Centre. The Lams also agreed to indemnify Royal Centre in case of any default in payment of rent by Jugo Juice Canada Inc. [ 22 ]

Section 1.01 of the February 1, 2007 head lease set out a start date of October 1, 2007 and an expiry date of September 30, 2017. [ 23 ] On August 1, 2007, a Lease Amending Agreement was entered into between Jugo Juice Canada Inc. as tenant, Royal Centre as landlord and Philip Lam and Shawn Lam as indemnifier.

The Lease Amending Agreement gave an estimated commencement date for the lease of December 3, 2007 and the estimated expiry date of the term as November 30, 2017. [ 24 ] On November 28, 2007, Jugo Juice Canada Inc. signed a form called an Acknowledgement of Commencement Date, which acknowledged to Royal Centre that the lease expiry date was now December 31, 2017. The claimant did not provide any document showing that Philip Lam or Shawn Lam were aware of the new expiry date. [ 25 ] The defendant King-Sing Wong and his wife Karen Wai-Yin Chui became interested in operating a Jugo Juice franchise.

On December 16, 2010, King-Sing Wong and Karen Wai-Yin Chui signed a document called a Receipt by Prospective Franchisee and Guarantor, where they acknowledged receipt of certain documents providing information about Jugo Juice franchises in general. [ 26 ] In 2011, King-Sing Wong and Karen Wai-Yin Chui decided to purchase the Jugo Juice business from Philip Lam and Shawn Lam and to that end, they executed a number of documents to purchase the business and assets, obtain the Jugo Juice franchise and take over the sublease. [ 27 ] A company called 0767407 BC Ltd., which was controlled by Philip Lam and Shawn Lam, owned the assets for the Jugo Juice business at Royal Centre.

An Asset Purchase Agreement dated January 21, 2011 and signed January 25, 2011 was entered into between Philip Lam, Shawn Lam and 0767407 BC Ltd. as Vendor and King-Sing Wong and Karen Wai-Yin Chui as Purchaser. [ 28 ] On February 7, 2011, a Store Transfer Agreement was signed by Philip Lam and Shawn Lam and/or 0767407 BC Ltd. as Seller and King-Sing Wong and Karen Wai-Yin Chui as Buyer. Jugo Juice International Inc. was a party to the agreement as the named Franchisor.

Section 1 of the Store Transfer Agreement defined the effective date of the lease as the later of (

i) April 11, 2011 and (ii) upon the Buyer successfully completing and satisfying all of the requirements set forth in

Section 5 of this Agreement (Conditions for Acceptance of Proposed Franchise Transfer Submission Package). [ 29 ] On February 17, 2011, a Franchise Agreement was entered into between Jugo Juice International Inc. and King-Sing Wong and Karen Wai-Yin Chui. Jugo Juice Canada Inc. is not a party to this agreement and does not benefit from any of its terms. [ 30 ] On April 1, 2011, Mr. Wong’s company 0907190 BC Ltd. was incorporated. [ 31 ] On April 5, 2011, an Assignment of Franchise Agreement and Consent agreement was entered into between King-Sing Wong and Karen Wai-Yin Chui as Transferor, 0907190 B.C.

Ltd. as Transferee and Jugo Juice International Inc. as Franchisor. The numbered company 0907190 B.C. Ltd. now held the Jugo Juice franchise. [ 32 ] On April 5, 2011, a sublease was entered into between Jugo Juice Canada Inc. and 0907190 BC Ltd. Mr. Wong did not provide a personal guarantee of this sublease. [ 33 ]

Article 2.2(

c) of the sublease defined “Effective Date” to mean April 11, 2011 and

Article 3.3 stated that the term of the sublease was defined in

Article 2.2(e).

Article 2.2(

e) actually refers to rent. It is

Article 2.2(

f) that refers to the term and defines it to mean “the term of this sublease which shall commence on the Effective Date, plus any renewals or extensions of the term provided for in the Headlease, and will terminate on the date set out in the Headlease less one day.” [ 34 ] As I stated earlier, the original lease set out an expiry date of September 30, 2017. The Lease Amending Agreement referred to

an estimated expiry date of November 30, 2017. The Acknowledgement of Commencement Date form signed November 28, 2007 by Jugo Juice Canada Inc. referred to a lease expiry date of December 31, 2017. [ 35 ] On April 11, 2011, a document called an Assignment of Interest in Asset Purchase Agreement was entered into between King- Sing Wong and Karen Wai-Yin Chui as assignor, 0907190 BC Ltd. as assignee and Philip Lam and Shawn Lam as vendor.

By way of this assignment, 0907190 BC Ltd. became the purchaser of the business assets owned by Philip and Shawn Lam. [ 36 ] In mid-2011, MTY Tiki Ming Enterprises Ltd. purchased Jugo Juice Canada Inc. As part of this transaction, MTY Tiki Ming requested that 0907190 BC Ltd. execute an estoppel letter to confirm the lease terms, which included the termination date of the lease. On June 20, 2011, Mr. Wong signed a document called an Estoppel Letter dated for reference June 6, 2011. The Estoppel Letter stated that the lease of the property ended December 31, 2011. [ 37 ] On August 16, 2011, Mr.

Wong executed a Consent to Assignment of Lease agreement dated for reference June 21, 2011 between Royal Centre as landlord, Jugo Juice Canada Inc. as assignor, MTY Tiki Ming Enterprises Inc. as assignee and King-Sing Wong as the “2 nd Indemnifier.” The Consent to Assignment of Lease referred to an indemnity agreement dated February 24, 2011 as the “2 nd Indemnity Agreement.” I will discuss the Indemnity Agreement in detail below. [ 38 ] Clauses 2 and 3 of the Consent to Assignment of Lease set out the landlord’s consent to the assignment of the lease from Jugo Juice Canada Inc. to MTY Tiki Ming, which would now be bound by and pay all rent and other monies due under the lease. [ 39 ]

Preamble I of the Consent to Assignment of Lease stated that the 2 nd Indemnifier, Mr. Wong, agreed to unconditionally indemnify the Landlord, Royal Centre, “from and against any and all damages, costs or expenses” that the Landlord may incur as a result of the failure of the Tenant to promptly pay, honour, observe or perform.” The Consent does not state the name of the Tenant but

preamble A refers to the Tenant leasing the premises in the original lease dated February 1, 2007 from Brookfield Properties (Vancouver) Ltd. I am satisfied this refers to the head lease where the tenant was at first Jugo Juice Canada Inc. and then MTY Tiki Ming. The reference to an indemnity found in the Consent to Assignment of Lease is to an indemnity that Mr. Wong would give the landlord for any default on the part of the tenant. [ 40 ] Clause 12 of the Consent goes on to state: The 2 nd Indemnifier (Mr.

Wong) hereby acknowledges this Agreement and confirms that the 2 nd Indemnifier’s obligations under the 2 nd Indemnity Agreement continue in accordance with the provisions of the 2 nd Indemnity Agreement, notwithstanding this Agreement, the assignment of the Lease from the Assignor to the Assignee or the granting of the Landlord’s consent to the assignment of the Lease from the Assignor to the Assignee… [ 41 ] Also on August 16, 2011, an Indemnity Agreement dated for reference February 24, 2011 was entered into between King-Sing Wong as indemnifier and Royal Centre as landlord.

This is the “2 nd Indemnity Agreement” referred to in the Consent to Assignment of Lease. The 2 nd Indemnity Agreement named Jugo Juice Canada Inc. as the tenant under a lease agreement dated February 1, 2007. It further stated that Philip Lam and Shawn Lam were obligated to indemnify Royal Centre from any damages or losses that resulted from a failure by the tenant Jugo Juice Canada Inc. to perform its obligations under the lease. The

preamble goes on to say Mr. Wong’s company, 0907190 B.C. Ltd., has agreed to sublease from Jugo Juice Canada Inc. and that Mr. Wong will now act as an indemnifier in place of Philip Lam and Shawn Lam. The 2 nd Indemnity Agreement also states: The Indemnifier [Mr. Wong] shall be jointly and severally bound with the Tenant [Jugo Juice Canada Inc.] to the Landlord [Royal Centre] for the performance of the obligations of the Tenant under the Lease, and its liability shall be that of a direct and primary obligor and not merely that of a surety… [ 42 ] A dispute arose about the end date of the lease. Mr.

Wong contends that the lease ended September 30, 2017. MTY Tiki Ming says the end date is December 30, 2017. There was clearly confusion about the end date. For instance, in an email dated June 7, 2017 from Kendall Pupp of MTY Tiki Ming to Mr. Wong, he states that the lease ends on September 30, 2017. [ 43 ] In August 2017, 0907190 B.C. Ltd. did not pay the rent. [ 44 ] In an email dated August 2, 2017, Kendall Pupp advised Mr.

Wong that the correct lease end date is December 31, 2017. [ 45 ] On August 22, 2017, Warrington PCI Management, the management company acting for Royal Centre, sent a letter to MTY Tiki Ming demanding payment of unpaid rent and other charges of $6,236.70. [ 46 ] On August 23, 2017, MTY Tiki Ming sent a letter to 0907190 BC Ltd. and to King-Sing Wong and Karen Wai-Yin Chui demanding payment of rental arrears of $6,236.70. [ 47 ] In September 2017, 0907190 B.C.

Ltd. did not pay the rent. [ 48 ] On September 11, 2017, MTY Tiki Ming sent a letter to 0907190 BC Ltd. and to King-Sing Wong and Karen Wai-Yin Chui demanding rental arrears of $12,683.23. The letter also cautioned that any failure to operate the Jugo Juice business until December 30 will considered be a major default.

The letter attached a copy of the Acknowledgement of Commencement Date document signed by Jugo Juice Canada Inc. on November 28, 2007 stating that the lease expiry date is December 31, 2017. [ 49 ] In October 2017, 0907190 BC Ltd. did not pay the rent. [ 50 ] On October 2, 2017, MTY Tiki Ming sent a letter to 0907190 BC Ltd. and to King-Sing Wong and Karen Wai-Yin Chui demanding rental arrears of $18,835.35. The letter stated that a failure to operate the business until December 31 would be a major default. I note that the September 11, 2017 letter stated that the business had to operate until December 30, 2017.

This letter also attached

another copy of the Acknowledgement of Commencement Date document as well as the Estoppel Letter signed by Mr. Wong on June 20, 2011 and which referred to a sublease agreement expiry date of December 31, 2017. [ 51 ] On October 27, 2017, Royal Centre and MTY Tiki Ming entered into an agreement called a Surrender of Lease.

MTY Tiki Ming agreed to pay to Royal Centre as settlement the following: the rent due for August to November 2017 in the amount of $24,607.48; hoarding costs of $5,013.75; the costs for the removal of signage and equipment; and repair costs. [ 52 ] In November 2017, 0907190 BC Ltd. did not pay the rent. [ 53 ] On November 5, 2017, Royal Centre boarded up the premises to prevent any further access by 0907190 BC Ltd. or Mr.

Wong. [ 54 ] On November 6, 2017, the surrender of lease became effective. [ 55 ] Also on November 6, 2017, MTY Tiki Ming sent a letter to 0907190 BC Ltd and to King-Sing Wong and Karen Wai-Yin Chui terminating the franchise agreement and claiming arrears of $29,622.23 ($28,211.65 plus GST $1,410.58).

This letter referred to MTY Tiki Ming as the franchisor even though, by the terms of the franchise agreement, the franchisor was Jugo Juice International Inc. and not Jugo Juice Canada Inc. or MTY Tiki Ming Enterprises Inc. [ 56 ] On January 5, 2018, Warrington PCI Management sent a letter to MTY Tiki Ming and to Mr. Wong demanding removal of Jugo Juice signage, equipment and food items by January 10, 2018. [ 57 ] On January 9, 2018, Kendall Pupp sent an email to Mr. Wong and to his son attaching a letter from the landlord requiring the removal of equipment and property.

The email said “If you do not take care of this to the satisfaction of the landlord they will complete the work properly and the expense will be passed on to you.” [ 58 ] On January 19, 2018, Mr. Wong’s son sent an email to Warrington PCI Management on behalf of Mr. Wong stating that Mr. Wong attempted to arrange for the removal of property in November 2017 and was rebuffed. The email went on to say: …it was due to MTY and you that the personal property is still left in the Premises.

Consequently, this is a matter that you will have to arrange with MTY to remove the property, and if MTY does not, you will have to recuperate your costs of removing the property directly from MTY as per your surrender of lease signed with them. We are incapable of sustaining any further costs and losses associated with the Premises and the store. [ 59 ] On January 29, 2018, Warrington PCI Management retained Bee Clean Building Maintenance to clean three fridges at the property. Bee Clean charged Warrington PCI Management $650 plus taxes of $32.50 for a total of $682.50.

In turn, Warrington PCI Management issued an invoice to MTY Tiki Ming dated May 2, 2018 for $682.50. [ 60 ] MTY Tiki Ming also arranged for the sale of the equipment left by 0907190 BC Ltd. and Mr. Wong to Dunlevy Food Equipment Ltd. for the price of $3,800. In order to remove the equipment, the existing hoarding had to be cut open to allow for the removal of the equipment. [ 61 ] On January 5, 2018, Warrington PCI Management retained Raider Contracting Ltd. to cut open the existing hoarding. Raider Contracting invoiced Warrington PCI Management the sum of $300 plus taxes, for a total of $315, for this work.

In turn, Warrington PCI Management invoiced MTY Tiki Ming on May 28, 2018 the $300 cost plus a 15% administration fee of $45.00, plus taxes of $17.25, a total of $362.25. [ 62 ] Dunlevy Food Equipment Ltd. subsequently removed the equipment. In order to do so though, a counter was cut to permit access. Dunlevy Food Equipment Ltd. charged $800 for this work. This sum was deducted from the purchase price of the equipment.

An invoice dated May 29, 2018 from Jugo Juice to Dunlevy Food Equipment Ltd. described the transaction as follows: EQUIPMENT SALES – ROYAL CENTRE $3,800.00 REMOVAL OF L COUNTER $-800.00 EMPTY CONTENTS OF STORE – EQUIP. ETC $0.00 [ 63 ] The invoice totalled $3,000 plus GST of $150, for a total of $3,150. Dunlevy Food Equipment Ltd. paid this sum to Jugo Juice/MTY Tiki Ming Enterprises Inc. by way of a cheque dated May 28, 2018 for $3,150. [ 64 ] The BC Registrar of Companies has since dissolved 0907190 B.C. Ltd. for failure to file annual reports. ANALYSIS [ 65 ] There is no dispute that Mr.

Wong’s company, 0907190 B.C. Ltd., is indebted to MTY Tiki Ming pursuant to the sublease dated April 5, 2011. There is some issue about the lease end date. However, whether the lease ended in September or December 2017, the fact is that 0907190 B.C. Ltd. remained on the premises until November 2017 and did not pay the rent starting in August 2017. If the lease end date was in December 2017, then rent was due from August to December 2017. If the lease end date was in September 2017, then rent was due for August and September 2017. Furthermore,

section 17.04 of the head lease applies. That

section states as follows:

Section 17.04 – Overholding – No Tacit Renewal If the Tenant remains in possession of the Premises after the end of the Term with or without the prior written consent of the Landlord but has not executed and delivered a new lease, there shall be no tacit renewal of this Lease or the Term, notwithstanding any statutory provisions or legal presumption to the contrary. If the Tenant remains in possession without the prior written consent of the Landlord, the Tenant’s continued occupancy will be deemed a tenancy-at-will which the Landlord may terminate at any time on no less that thirty

(30) day’s prior written notice. If the Tenant remains in possession with the Landlord’s written consent, the Tenant shall be deemed to beoccupying the Premises as a tenant from month-to-month.

In either event, the Tenant shall pay to the Landlord, in advance on the firstday of each month of such overholding period, a monthly Base Rent equal to one hundred and fifty percent (150%) of the monthlyamount of the aggregate Base Rent and Percentage Rent payable during the last Lease Year of the Term and shall otherwise occupy thePremises upon the same terms, covenants and conditions as are set forth in this lease, mutatis mutandis, including, for greater certainty,liability for all Additional Rent but excluding any obligation of the Landlord to pay, advance or credit to the tenant, or to perform,provide, confer, conduct or assume, as the case may be, any Lease Inducement. [66] The effect of s. 17.04 is that, after the end of the lease term, if the tenant remains in the premises, the tenant is obligated to pay abase rent equal to 150% of the monthly amount due.

Pursuant to clause 5.1 of the sublease dated April 5, 2011 between Jugo JuiceCanada Inc. and 0907190 B.C. Ltd., the numbered company agreed to be bound by the terms of the head lease. Accordingly, in the caseof any “overholding” beyond the end of the lease term, 0907190 B.C. Ltd. remained liable to pay rent. [67] MTY Tiki Ming is not claiming for 150% of the monthly rent against 0907190 B.C. Ltd. Its claim relates to the amounts paid toRoyal Centre. [68] Based on the above, it is clear that 0907190 B.C.

Ltd. remained obligated to pay the rent pursuant to the sublease even if theterm expired in September 2017. [69] Due to the non-payment of rent, MTY Tiki Ming was obligated to pay rent to Royal Centre pursuant to the head lease. MTYTiki Ming resolved the claim by way of an agreement called Surrender of Lease dated October 27, 2017. This agreement required MTYTiki Ming to pay the full gross rent for August to November 2017 of $24,608.48. This is in addition to the other costs such as that paid toclean the premises and to install the hoarding. [70] The question turns to whether Mr.

Wong is required to reimburse MTY Tiki Ming for the sums paid to Royal Centre. MTYTiki Ming bases its claim on the equitable remedy of unjust enrichment and the doctrine of recoupment. The doctrine is discussed in thedecision I.C.B.C. v. Hosseini, 2006 BCCA 4, where there is reference to the decision of Cockburn, C.J. in Moule v. Garrett (1872), L.R.7 Ex. 101. In Moule v.

Garrett, recoupment is described as follows: Where the plaintiff has been compelled by law to pay, or, being compellable by law, has paid money which the defendant was ultimatelyliable to pay, so that the latter obtains the benefit of the payment by the discharge of his liability; under such circumstances the defendantis held indebted to the plaintiff in the amount. [71] MTY Tiki Ming argues that unjust enrichment allows this court to grant relief based on recoupment. The elements of unjustenrichment are set out in Garland v. Consumers’ Gas Co., 2004 SCC 25 at para. 30: 1. An enrichment of the defendant; 2.

A corresponding deprivation of the plaintiff; and 3. An absence of juristic reason for the enrichment. [72] Where a person has been unjustly enriched at the expense of another, that person is required to make restitution: see Peel(Regional Municipality) v Canada, (SCC), [1992] S.C.J. No. 101. [73] MTY Tiki Ming submits that Mr.

Wong has been unjustly enriched by having avoided paying the rent and other claims due toRoyal Centre, and that MTY Tiki Ming has been deprived because it paid the claim. [74] The discharge by one party of a liability owed by another party is a benefit conferred on the second party: see Peel (RegionalMunicipality) v Canada at paras. 36 and 37. [75] MTY Tiki Ming refers to the Indemnity Agreement executed August 16, 2011 and dated for reference February 24, 2011. Thatagreement made Mr. Wong jointly and severally liable with Jugo Juice Canada Inc. for the performance of the lease terms.

MTY TikiMing argues that by paying the sums claimed by Royal Centre, Mr. Wong was able to avoid the liability owed to Royal Centre. [76] Both MTY Tiki Ming and Mr. Wong were indebted to Royal Centre pursuant to the terms of the head lease, the sublease, andthe Indemnity Agreement. I find that the payment by MTY Tiki Ming to Royal Centre enriched Mr. Wong because he avoided anyliability pursuant to the Indemnity Agreement.

MTY Tiki Ming suffered a deprivation due to the payment. [77] I have not identified any juristic reason for the enrichment. [78] Having paid the entire debt to Royal Centre, I find that MTY Tiki Ming is entitled to claim from Mr. Wong due to their jointliability based on the principle of unjust enrichment. The question then turns to the extent of Mr. Wong’s liability to MTY Tiki Ming. AsI stated, MTY Tiki Ming and Mr. Wong were jointly and severally obligated to Royal Centre. The sublease obligated 0907190 B.C. Ltd.to pay the full rental arrears and other damages. However, Mr.

Wong never provided a personal guarantee for the obligations owed by0907190 B.C. Ltd. Given this, Mr. Wong is in the same position as MTY Tiki Ming in relation to the debt owed to Royal Centre. Bothwere responsible for the same debt. [79] Paragraph 26 of the Notice of Claim states: “Pursuant to the Indemnity, Wong is liable to MTY for the same amount as theDefendant’s Corporation is liable to MTY.” The Indemnity Agreement does not state this though. The Indemnity Agreement is betweenMr. Wong and Royal Centre and is a promise by Mr. Wong to be equally liable for any debt due under the head lease by MTY TikiMing.

The Indemnity Agreement does not require Mr. Wong to be personally liable for the debts owed by his corporation 0907190 B.C.Ltd. What it does is to make MTY Tiki Ming and Mr. Wong jointly and severally liable for the same debt.

[80] I refer to the decision Hawrish v. Peters et al., [1982] 1 SCR 1083, (SCC), where the court stated: The rule ordinarily applicable in actions for the recovery of money from fellow guarantors is set out in Halsbury, 4th ed., vol. 28, p. 302(para. 671) and Halsbury, 4th ed., vol. 20, p. 122 (paras. 224-5). The former reads as follows: 671. Co-sureties etc. As between co-sureties, co-contractors, or co-debtors, the statute of limitation runs against the right of contributionof one who has paid more than his share from the time of such payment.

It is immaterial that at the time of action for contribution thestatute may have run between the principal creditor and the co-surety who is sued for contribution. The text, Rowlatt on Principal and Surety (4th ed. 1982), states the rule this way, at p. 197: No claim for contribution accrues till a surety has paid more than his share of what is unpaid by the debtor… As soon as the surety haspaid his share he can sue his co-sureties toties quoties for every further payment made by him.

To the same effect is the comment in Holmstead and Gale, Rules of Practice, (Annotated), 1273: Until one surety has paid more than his due proportion of the entire debt, he cannot call on a co-surety to contribute merely because hehas paid more than he presently ought to pay… and later on the same page: Strictly speaking, a right to indemnity, as such, arises only when the surety has paid the debt… These and other texts writing to the same effect draw their authority for the statements as quoted above from a line of cases commencingwith Davies v.

Humphreys (1840), 6 M. & W. 152, as followed and applied in Ex parte Snowdon. In re Snowdon (1881), 17 Ch. D. 44(C.A.), per Brett M.R. at p. 48; Gardner v. Brooke and Others, [1897] 2 I.R. 6, per O’Brien J. at p. 12; Stirling and Burdett, [1911] 2Ch. 418 at p. 423; In re Richardson. Ex parte The Governors of St. Thomas’s Hospital, [1911] 2 K.B. 705; and In re Beavan. Davies,Banks and Co. v. Beavan, [1913] 2 Ch. 595, at p. 600. In Davies v.

Humphreys, supra, Baron Parke, giving judgment for the Court ofExchequer Chamber, stated at p. 169: In truth, therefore, until the one has paid more than his proportion, either of the whole debt, or of that part of the debt which remainsunpaid by the principal, it is not clear that he ever will be entitled to demand any thing from the other; and before that, he has no equityto receive a contribution, and consequently no right of action, which is founded on the equity to receive it… But, whenever it appears thatone has paid more than his proportion of what the sureties can ever be called upon to pay, then, and not till then, it is also clear that suchpart ought to be repaid by the others, and the action will lie for it. [81] The decision Piscine Energetics Inc. v.

Choi, 2010 BCSC 874 , states as follows: [65] The claim for contribution from Fisher arises as an incident of the payment of a disproportionate share of the debt by one of twoco-sureties. Choi has paid more than one-half of the debt of the Numbered Company. I cannot find on the evidence that there was anyagreement between Fisher and Choi to depart from that rule. Some of the offers exchanged prior to the Fisher-Choi share purchaseagreement made express provision for dealing with the debt on the note. The issue was clearly in the contemplation of the parties.

In theabsence of any provision in the final agreement between the parties the only conclusion that should be drawn, in my opinion, is that theparties were content to let claims for contribution be dealt with according to established principles. [66] The Supreme Court of Canada noted in Hawrish v.

Peters et al., (SCC), [1982] 1 S.C.R. 1083, at p. 1086, citingwith approval Rowlatt on Principal and Surety (4th ed. 1982), at p. 197: [82] No claim for contribution accrues till a surety has paid more than his share of what is unpaid by the debtor… As soon as thesurety has paid his share he can sue his co-sureties toties quoties for every further payment made by him. [67] To the same effect, the Court cited Holmstead and Gale, Rules of Practice, (Annotated), 1273: Until one surety has paid more than his due proportion of the entire debt, he cannot call on a co-surety to contribute merely because hehas paid more than he presently ought to pay… Strictly speaking, a right to indemnity, as such, arises only when the surety has paid the debt… [68] Choi is, therefore, entitled to an order for contribution to the extent he has paid more than half of the obligation to Piscine underthe note.

The total indebtedness stood at $243,387.52 on May 1, 2008. Choi’s pro rata share of that debt amounted to $121,693.76. He isentitled to judgement for contribution from Fisher in the amount of $34,024.73 (the difference between his share of the liability of theNumbered Company on the note and the amount garnished). In addition, he is entitled to interest on that sum from the date of thegarnishment. [83] To reiterate, both MTY Tiki Ming and Mr. Wong were jointly and severally liable for the debt owed to Royal Centre.

Mr.Wong did not provide a personal guarantee or agreement to be liable for the debts owed by 0907190 B.C. Ltd. In relation to RoyalCentre, MTY Tiki Ming and Mr. Wong stand on equal footing and therefore each party should be equally liable for the debt. I find thatMr. Wong’s share of the debt is 50% and MTY Tiki Ming is entitled to contribution from Mr. Wong for half the debt paid to RoyalCentre. COUNTERCLAIM [84] Mr. Wong’s counterclaim deals with property left at the store premises, which were disposed of by MTY Tiki Ming. AsMr. Wong did not call any evidence, there was no basis to support the counterclaim.

[85] The counterclaim is also brought by Mr. Wong and not his company. There is no evidence to show that Mr. Wong owned the property. The document called Assignment of Interest in Asset Purchase Agreement indicates that 0907190 B.C. Ltd. owned the business assets and not Mr. Wong. [86] Given the failure to pay rent, I am also satisfied that MTY Tiki Ming had a right of re-entry onto the premises and to levy distress against the property pursuant to clause 16.03 of the head lease, which 0907190 B.C. Ltd. was bound by pursuant to clause 2.8 of the sublease. [87] Accordingly, I dismiss the counterclaim.

THE AMOUNT OF THE CLAIM [88] Pursuant to the Surrender of Lease Agreement, the rental arrears totalled $24,608.48, which is also the sum set out in the Notice of Claim. [89] The Notice of Claim seeks interest on rental arrears based on the lease but there is no interest payment required in the Surrender of Lease agreement. I dismiss the claim for interest. [90] The claims for cleaning and securing the premises are all reasonable and proper items payable pursuant to the head lease as part of the costs for re-possessing the property.

The following charges are proper claims: • Payment to Warrington PCI Management for the Bee Clean cleaning - $682.50 • Payment to Warrington PCI Management invoice for the Raider charge - $362.25 [91] The disposal of the property resulted in Dunlevy Food Equipment Ltd. paying the claimant the sum of $3,000, plus GST of $150.

Clause 8.3 of the sublease deals with MTY Tiki Ming’s right of distress and states: The Subtenant [0907190 BC Ltd.] waives the benefit of any statute limiting the Sublandlord’s [MTY Tiki Ming] right of distress and agrees that none of the property of the Subtenant or of any other person on the Premises will be exempt from distress for Rent in arrears. [92] The clause specifically refers to the remedy of distress being used to pay for any arrears in rent.

In such a case, the sum of $3,000 received by MTY Tiki Ming from Dunlevy Food Equipment Ltd. should be applied toward the rent arrears owed by 0907190 BC Ltd. [93] The next question is whether this credit should benefit only Mr. Wong or both parties. Although Mr. Wong owned 0907190 BC Ltd., the company remained a separate and distinct legal entity. The parties to this legal action are jointly and severally liable for the unpaid rent and other lease charges. Pursuant to clause 8.3 of the sublease, the funds received from the distress remedy are applied to reduce the rental arrears owed by both parties.

Royal Centre could have exercised the right of distress pursuant to clause 16.03 of the head lease to reduce the rent owed to it but did not do so. Had Royal Centre exercised this right, it would have reduced the rent owed by both MTY Tiki Ming and Mr. Wong. In light of this, I will apply a credit of $3,000 to the overall debt shared equally by the parties. [94] I calculate the sum owed as follows: • Rental arrears $24,608.48 • Less $3,000 to be applied to rental arrears • Bee Clean costs $682.50 • Raider charge $362.25 This totals $22,653.23 and 50% of this is $11,326.62 payable by Mr. Wong to MTY Tiki Ming.

In addition, Mr. Wong will pay to MTY Tiki Ming the court filing fee of $156 and the service fee of $80. The total sum due is $11,562.62. SUBMISSIONS REGARDING PENALTY COSTS [95] Counsel for the claimant advised that if they were successful, there may be further submissions regarding costs payable pursuant to Small Claims Court Rule 20. If counsel wishes to make submissions regarding this, then counsel may do this in writing provided to the court, with a copy to Mr. Wong, no later than 21 days after this decision is issued. Mr.

Wong will then have 21 days to file with this court any written reply, with a copy sent to claimant’s counsel. I am giving Mr. Wong some extra time to respond because he resides in Ontario. I will then issue a further written decision in due course.

SUMMARY [96] King-Sing Wong will pay to MTY Tiki Ming Enterprises Ltd. the sum of $11,326.62, the court filing fee of $156 and the service fee of $80, for a total of $11,562.62. _____________________________ The Honourable Judge W. Lee

Provincial Court of British Columbia