Waters v. NPR Limited Partnership, 2018 NUCA 1

ᓄᓇᕘᒥ ᐅᓐᓂᓗᖅᓴᖅᑐᓄᑦ ᐃᖅᑲᖅᑐᐃᕕᒃ Nunavunmi Apiqhuidjutainut Uuktuffaarutit Nunavut Court of Appeal Cour d'appel du Nunavut Citation: Waters v. NPR Limited Partnership , 2018 NUCA 1 Date: 2018-03-02 Docket: 08-17-011-CAC Registry: Iqaluit Between: Donna Waters and Kim Waters o/a Waters' Edge Seafood & Steakhouse Appellants (Plaintiffs) - and - NPR Limited Partnership by its General Partner NPR GP Inc. Respondent (Defendant) _______________________________________________________ The Court: The Honourable Madam Justice Patricia Rowbotham The Honourable Madam Justice Jo'Anne Strekaf The Honourable Madam Justice Bonnie M.

Tulloch _______________________________________________________ Memorandum of Judgment

Appeal from the Judgment by The Honourable Mr. Justice P. Bychok Dated the 14th day of July, 2017 ( 2017 NUCJ 12 ; Docket: 08-17-316) _______________________________________________________ Memorandum of Judgment _______________________________________________________ The Court: I. Introduction [ 1 ] The lease of a restaurant space expired on August 31, 2017 and contained no option to renew.

At issue on appeal is whether the trial judge erred in concluding that there was no signed written agreement to amend the lease, and no part performance of an unsigned agreement so as to entitle the tenants to a renewal of the lease: Waters v NPR Limited Partnership, 2017 NUCJ 12 . [ 2 ] We dismiss the appeal. II. Background [ 3 ] The respondent landlord leased the restaurant and lounge of its hotel to the appellants (“tenant”) for a term which would expire on August 31, 2017. The lease had no clause providing for an option to renew.

The lease could not be modified or amended except in writing. [ 4 ] In December 2013, after some negotiations, the landlord prepared an agreement titled Lease Amending Agreement (“Amendment”) which contained an option to renew for a further period of five years if the tenant was in good standing. If it agreed to its terms, the tenant was to sign and return it. The tenant said it signed the Amendment and faxed it to its representative (not to the landlord). The landlord claimed it did not receive the signed Amendment, nor did it execute the Amendment.

The landlord concluded the Amendment was “off the table”. [ 5 ] In October 2014 the landlord, concerned about complaints about the premises and its state of repair, issued a notice to terminate the lease effective November 30, 2014. The tenant applied for an injunction to prevent the termination.

A chambers judge granted the injunction on the conditions that the tenant would replace the carpets and paint the premises no later than September 1, 2015, and provide to the landlord a plan for the ongoing maintenance and operation of the restaurant. [ 6 ] In September 2015 the landlord wrote the tenant asserting a number of breaches of the chambers judge’s order including the failure to carpet or repaint. The letter made clear that the lease would expire on August 31, 2017.

On February 21, 2017 the tenant wrote the landlord stating: “As our lease is coming to an end, August 31, 2017, we would like to take this opportunity to express our interest in renewing the lease.” The landlord replied that it was not prepared to do so. [ 7 ] The tenant brought this action, relying on the Amendment. It argued alternatively that it had expended substantial funds in reliance on the right to renew clause contained in the Amendment. The landlord applied for

summary dismissal of the claim on the basis that it lacked merit. [ 8 ] The trial judge heard five days of evidence including the testimony of the appellants, Kim Waters and Donna Waters; their representative, Mr Fraser; and the landlord’s representative, Mr Hayden. The trial judge found that the tenant had not communicated its acceptance of the Amendment to the landlord. He also considered the tenant’s alternative argument, that although there was no written and signed amendment as required by

section 4 of the Statute of Frauds:

An Act for the prevention of frauds and perjuries , 29 Charles II, c 3 (1677, UK), the tenant had partly performed in reliance on the Amendment. The trial judge concluded that there was no evidence to support the tenant’s assertion that it had invested $100,000 in reliance on the Amendment, and that any monies expended on repairs were not directly related to the Amendment. He dismissed the claim.

III. Grounds of Appeal and Standard of Review [9] The tenant’s numerous grounds of appeal can be distilled into two issues. [10] First, did the trial judge err in finding that there was no written and signed amendment to the lease which provided for an optionto renew? This is a question of fact reviewed for palpable and overriding error: Housen v Nikolaisen, 2002 SCC 33 at para 10, [2002] 2SCR 235. [11] Second and in the alternative, did the trial judge err in the articulation or application of the doctrine of part performance?

Thedetermination of the correct legal test is a question of law reviewed for correctness. If the legal test is correctly stated, deference is“owed to the findings of the trial judge on the factual foundation of the conclusion”: Haan v Haan, 2015 ABCA 395 at para 8, 609 AR371. IV. Analysis A. The Written Amendment [12] There is no copy of the Amendment signed by both the landlord and the tenant. Ms Kim Waters testified that she and her sistersigned the draft Amendment and faxed it to their representative, Mr Fraser. Mr Fraser denied receiving it and the trial judge found thathe did not receive it.

Ms Kim Waters also testified that Mr Fraser told her that Mr Hayden had agreed to the renewal terms, they shookhands on it and they flipped a coin to “seal the deal.” Mr Fraser denied saying this to Ms Waters, and Messrs. Fraser and Hayden deniedthat they reached an agreement, shook hands or tossed a coin. The trial judge accepted Mr Fraser’s version of the events. He rejected MsWaters’ version and commented adversely on her credibility.

He was not satisfied that the tenant sent the signed Amendment to MrFraser. [13] Mr Hayden testified that the landlord never received a copy of the Amendment signed by the tenant, and that he had no furtherdiscussion with Mr Fraser or the tenant concerning the Amendment. Moreover, one of the terms of the Amendment was that the tenantwould make a capital investment to improve the restaurant and it did not do so. Mr Hayden concluded that the Amendment was off thetable. The trial judge found that Mr Hayden had “every right” to come to that conclusion. [14] These are findings of fact.

The trial judge preferred the evidence of Mr Fraser and Mr Hayden to that of Kim and Donna Watersas he was entitled to do. The trial judge did not misapprehend, ignore or misconceive the evidence. There is no reviewable error in thetrial judge’s conclusion that there was no signed Amendment. B. Doctrine of Part Performance [15] The tenant also argued that the Amendment was supported by part performance. [16] The trial judge had regard to the Statute of Frauds and stated that for this agreement to be enforceable, the parties must haveacted upon the unsigned agreement.

In describing part performance, he stated “those acts must have been directly related to the lateragreement”, i.e., referring to the Amendment. [17] The trial judge found: [17] …There was no need to refer to the capital infusion by the plaintiffs in the “Lease Amending Agreement”. The plaintiffs werealready legally obligated under the lease to keep the rental space in good and proper repair. The “Lease Amending Agreement”specifically incorporated those obligations under the original lease. …. […] [19] Ms. Donna Waters testified. She said she and her sister invested about $100,000 in the restaurant, believing Mr.

Fraser that theyhad secured a right to renew. She provided no documentary evidence of any investment to support her claim. Her testimony concerningwhat investments they made was vague and imprecise. The facts demonstrate that the plaintiffs did make some investment, but not until2015. [18] The tenant submits that the chambers judge erred in concluding that the tenant’s investments in the repair and maintenance of therestaurant were not unequivocally related to the Amendment. The tenant contends that this is an error of law.

If the trial judge used thewrong legal test, this would be an error of law but we are not persuaded of any such error. [19] Part performance may overcome the Statute of Frauds when there is an unsigned agreement: Maddison v Alderson (1883), 8 AppCas 467.

See also Merrett Management Ltd v Sellars (1986), (AB KB), 76 AR 64, 50 Alta LR (2d) 25 (QB) andCanadiana Gifts Ltd v Friedman (1981), (AB KB), 32 AR 354, 15 Alta LR (2d) 237 (QB), both involving unsignedleases. [20] For the doctrine of part performance to apply, the acts said to constitute part performance must unequivocally relate to thechallenged agreement: Haan at para 6. The test is strict: ibid at para 15.

The claimant must “prove, on a balance of probabilities, whatthe parties said and did up to and after the time of the alleged agreement, as well as the acts said to constitute part performance”: ibid.Second, “the acts must not be equally explainable as … possibly an agreement of some kind that did not relate to the land itself”: ibid.“Part performance that is ‘consistent with’ several different types of contractual arrangement is insufficient”: ibid.

[ 21 ] In describing the legal test, the trial judge used the words “directly related to the later agreement” not the word “unequivocally”. But it is clear that he understood the legal test and if anything, the word “directly” rather than “unequivocally” might be seen as more favorable to the tenant’s position. [ 22 ] In relation to the application of the law to the facts, the tenant must establish that the trial judge made a palpable and overriding error in finding that the work done and investment made by the tenant did not unequivocally relate to the Amendment.

The tenant’s main submission is that following the discussion of a renewal in late 2013 until 2015 when the injunction was obtained, it invested the following in the restaurant: i. about 60-70 chairs were replaced “about 6 months ago” (likely about May 2014) at a cost of about $15,000; ii. a range and griddle were replaced at a cost of $5,463.55 (timing not specified); iii. window and vent cleaning was completed in 2014; iv. re-piping was done in 2013; v. propane supply flow issues were corrected (timing not specified); vi. supply and shipment of a second stage regulator (timing not specified); and vii. a boiler was replaced in 2015. [ 23 ] Under the lease, the landlord owned the equipment but it was the tenant’s obligation to maintain and repair it.

Most (if not all) of the tenant’s expenditures are equally explicable by reference to clause 4.02 of the lease (and its schedule) which required the tenant at its expense, to keep the premises, furniture and appliances “in clean and sanitary condition and in good and substantial repair”. When there are two possible agreements to which the acts of the tenant can refer, this is insufficient to find part performance. Given the tenant’s obligations under the lease, it cannot be said that the repairs were done “unequivocally” in reliance upon the Amendment.

There is no palpable and overriding error in the trial judge’s conclusion with respect to the acts described above. [ 24 ] As regards the time period after the injunction, it is important to emphasize that the tenant obtained the injunction on the condition that it would repaint and re-carpet the premises before September 1, 2015.

The tenant ultimately did this (although not in the time mandated), but it cannot be said that these acts were unequivocally related to the option to renew when they were ordered to do so by a judge in the context of an injunction preventing the tenant from being evicted. [ 25 ] In the result, on this record it was open to the trial judge to find that monies expended on repair and maintenance were not unequivocally related to the Amendment. V.

Conclusion [ 26 ] The tenant has not persuaded us of any reviewable error in the trial judge’s conclusion that there was no enforceable written Amendment which contained an option to renew. Further, the trial judge’s conclusion that the tenant could not rely upon part performance to support the enforceability of the unsigned agreement is entitled to appellate deference. [ 27 ] We dismiss the appeal. Appeal heard on February 13, 2018 Memorandum filed at Iqaluit, Nunavut this 2 nd day of March, 2018 Authorized to sign for: Rowbotham J.A. Authorized to sign for: Strekaf J.A.

Tulloch J.A. Appearances: J. Morton for the Appellants S. MacPherson and T. Kruger for the Respondent