2012 QCCQ 7788, 2012 QCCQ 7788

Salice c. LMNOP Children's Boutique Inc. 2012 QCCQ 7788 COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-22-196203-122 DATE: September 28, 2012 ______________________________________________________________________ BY THE HONOURABLE SCOTT HUGHES, J.C.Q. ______________________________________________________________________ PIERA MEDRI SALICE Plaintiff v. LMNOP CHILDREN'S BOUTIQUE INC.

Defendant ______________________________________________________________________ JUDGMENT ON A MOTION FOR THE ISSUANCE OF A SAFEGUARD ORDER ______________________________________________________________________ [ 1 ] Piera Medri Salice (Salice) is seeking a safeguard order to force LMNOP Children's Boutique Inc. (LMNOP), her tenant, to pay its monthly rent beginning October 1, 2012. [ 2 ] Salice and LMNOP are bound by a lease for the period of February 1, 2010 to October 31, 2013. LMNOP is in the children's retail clothes business. LMNOP has refused to pay its rent since July 2012.

A Motion to institute proceedings dated September 21, 2012, claming some $14,729.03 in arrears and $53,777.95 in accelerated rent has been served. The Motion for the issuance of a safeguard order was served at the same time. THE PARTIES POSITIONS [ 3 ] Salice argues that the lease gives her a clear right to her rent. According to Salice, LMNOP has no serious grounds to refuse to pay. She argues, in particular, the fact that the lease prohibits the tenant from making any claim of compensation. Salice continues by alleging that she will suffer serious prejudice if she is not paid.

On the other hand, if ordered to do so, LMNOP would only be paying what is due. For these reasons, Salice pleads that the balance of inconvenience is obviously in her favour. Lastly, according to Salice, it is urgent to act since without an order, LMNOP will continue to withhold its rent rendering future collection of these sums extremely difficult. [ 4 ] LMNOP has filed a detailed affidavit stating that the parties are involved in litigation before the Superior Court concerning renovations to the leased property further to a water infiltration and mould problem.

It alleges damages for an amount far larger than the rent that is due. The relevant paragraphs of the affidavit are as fallows: 32. THAT the cost incurred and paid for the Tenant LMNOP resulting from its forced evacuation of the leased premises in March 2012 are as follows; - Meldrum (material) $ 673.75 - Meldrum the mover storage $2,525.20 - Meldrum the mover (move) $ 854.26 - Bell Canada $ 106.97 - Removal of fixtures $ 229.95 - Fixtures $ 287.44 - BioVack Report $1,897.09 - BioVack Cleaning $ 212.70 - Westmount permits $ 229.95

- Sentenelle Alarm $ 582.89 - Signage $ 132.22 - Business cards $ 116.12 - Dr. Tint $ 227.85 - Carpet cleaning $ 546.13 TOTAL $8,568.58 32. THAT as a consequence of moving back into the leased premises at 4919 A Sherbrooke Street West, Westmount on or about June 21 st , 2012 the tenant LMNOP incurred the following expenses; - Signage To be Determined - Meldrum the Mover (Moving charges) $1,126.25 - Bell Canada installation $ 943.46 - Bell Canada installation $ 303.46 - ERM Design $ 459.90 - ERM Design $ 229.95 - Demenagment Roger $ 344.92 - Sentenelle Alarm $ 339.18 TOTAL $3,747.12 35.

THAT due to the fault of the Landlord/Plaintiff, the Tenant/Defendant LMNOP has suffered a loss of sales during the period from February 2012 to August 2012 with a consequent loss of profit in the amount of at least $31,934.00; [ 5 ] Basically, LMNOP argues that it has a right to compensate its claim for damages against the rent that is due: 42.

THAT the Defendant LMNOP has the right to refuse to pay rent to Plaintiff so long as it has not been compensated for the cost of its moves and so long as it does not have full use of the premises for the purpose for which they were intended and in light of the delays caused by Plaintiff and the failure in bad faith of the Plaintiff to have completed the necessary repairs and have advised the Tenant LMNOP by June 20, 2012 as required by judgment rendered by the Superior Court, the balance of convenience rests clearly with the Defendant LMNOP; THE RULES REGARDING A SAFEGUARD ORDER [ 6 ] The criteria for the issuance of a safeguard order are well known.

The Court must answer these questions: • Does the petitioner have an apparent right? • Does respondent have a serious defence? • Will petitioner suffer serious or irreparable prejudice? • In whose favour is the balance of inconvenience? • Is the matter urgent? [ 7 ] The Court will examine each of these criteria. Apparent right [ 8 ] The lease is clear. The rent is due. The lease also prohibits compensation on the part of LMNOP (art. 3.1.1). Serious defence [ 9 ] The sole defence put forward by LMNOP is one of compensation.

It argues that the prohibition of compensation contained in the lease does not apply to its claim since it is not only based on the lease but also on Salice's negligence during the renovations. This argument is not convincing. LMNOP's recourse is of a contractual nature; it is based on the lease. [ 10 ] It must be noted that no judgment has yet declared that Salice is liable. The claims for damages have yet to be evaluated by a Court. This being so, can compensation seriously be invoked at this point? [ 11 ] The Civil Code of Québec states:

1672. Where two persons are reciprocally debtor and creditor of each other, the debts for which they are liable are extinguished by compensation, up to the amount of the lesser debt. Compensation may not be claimed from the State, but the State may claim it. 1673. Compensation is effected by operation of law upon the coexistence of debts that are certain, liquid and exigible and the object of both of which is a sum of money or a certain quantity of fungible property identical in kind.

A person may apply for judicial liquidation of a debt in order to set it up for compensation. (Emphasis added) [ 12 ] LMNOP's claims are not certain, liquidated and exigible. It may well prove Salice's liability and the extent of its damages on the merits; however, for now this remains an allegation. Justice Riordan, J.C.S. wrote in CSH (Honoré Beaugrand) Inc . et al. c.

Société de Transport de Montréal [1] : [30] […] Bien que nous voyions certains moyens de défense potentiels ouverts aux défendeurs, tels que mentionnés ci-avant, cela n'enlève pas le caractère apparent des droits de Métrocom en vertu des baux . (Emphasis added) This comment wholly applies here. Compensation may well be an argument in defense. However, at this stage, it is not sufficient to erase Salice's apparent rights.

Serious prejudice [ 13 ] The Court will again refer to justice Riordan's reasons, which also apply here: [31] Quant au préjudice grave ou irréparable , l'accumulation progressive de sommes importantes en guise de loyer quotidien risque de mettre Métrocom dans l'impossibilité d'exécuter un possible jugement favorable. Ajouté à cela, il y a la situation financière précaire dans laquelle les demandeurs se trouveraient s'ils perdaient leur cause. Si aucune somme n'est mise de côté à ce stade, le préjudice à Métrocom pourrait certainement être grave et irréparable.

Nous concluons que Métrocom s'est acquittée de son fardeau sur ce point. Salice will suffer serious prejudice in the same fashion [2] . Balance of inconvenience [ 14 ] LMNOP continues to occupy the premises and carry on business. The evidence does not show that it is suffering any serious inconvenience in doing so. Apparently, some gyproc work is still to be done.

It does not appear to be a serious problem for LMNOP since it is requesting that such repair work be put off until after the Christmas season when business is slow. [ 15 ] Salice on the other hand risks being hard-pressed to obtain payment from LMNOP if no payments are made until the end of this litigation. Again justice Riordan wrote: [34] Si l'ordonnance de sauvegarde était refusée complètement, les demandeurs pourraient continuer à occuper leurs magasins en payant le loyer de 2003-2004, un montant nettement inférieur au loyer quotidien dans tous les cas, sauf un.

Cette situation perdurerait vraisemblablement jusqu'à ce que jugement final soit rendu dans la présente cause, ce qui pourrait prendre des années. [35] Si en vertu de ce jugement final les demandeurs avaient à payer le loyer quotidien accumulé pendant toute cette période, tout en étant obligés de quitter leurs magasins, il n'est pas farfelu de croire qu'une bonne

partie de ce groupe n'aurait aucune possibilité d'acquitter le montant dû. L'inconvénient possible causé à Métrocom est évident et sérieux . [3] (Emphasis added) Is this matter urgent? [ 16 ] Salice has acted quickly. No claim is being made in this Motion for the rent for July, August and September. This claim will be debated on the merits. She is now requesting that beginning October 1, 2012, LMNOP be ordered to pay its monthly rent. [ 17 ] The goal of such an order is to protect the parties' rights.

It is issued in order to "rétablir un certain équilibre et maintenir l'intérêt des parties à résoudre rapidement leur litige" [4] . [ 18 ] The Court is satisfied that Salice has met all the applicable criteria for the issuance of the safeguard order. [ 19 ] Therefore, LMNOP will be ordered to pay its monthly rent to Salice's attorneys in trust. These sums will remain in trust, in an account garnering interest, until a final judgment is rendered in this matter or until it is settled. [ 20 ] This is sufficient to protect both parties.

It also provides for readily available sums to execute the final judgment, what ever it may be. [ 21 ] Salice's Motion also contains this conclusion: ALLOW Plaintiff, in the event of a breach of the safeguard order and in addition to Defendant's foreclosure to plead, to execute the safeguard order for all rent owed pursuant to the safeguard order;

[ 22 ] The Court will not allow this conclusion since it is an attempt to obtain an accelerated default judgment. The other conclusions of this order are sufficient.

FOR THESE REASONS THE COURT: GRANTS in part, the Motion for the issuance of a safeguard order; ORDERS Defendant to pay to Plaintiff's attorneys, in trust, (Tutino Edwards Joseph), the upcoming monthly rent due, namely an amount of $3,252.15, on the first day of each month, as of October 1, 2012 until a final judgment is rendered on the Motion to institute proceedings in this Court file, or until a settlement is reached by the parties; ORDRES that the rent remain in trust until such final judgment or settlement; ORDERS that the amounts received by Plaintiff's attorneys be deposited in a trust account, or other vehicle, garnering interest; If Defendant neglects to respect this order, it will be foreclosed from contesting the Motion to institute proceedings; ORDERS provisional execution of this safeguard order notwithstanding appeal; AUTORIZES Plaintiff to serve this judgment upon Defendant and its attorneys by serving it upon Defendant's attorneys; THE WHOLE with costs. __________________________________ Scott Hughes, J.C.Q.

Me Nadine Afif Tutino Edwards Joseph For the Plaintiff Me Mark L. Zimmerman For the Defendant Date of hearing: September 25 th , 2012