ELI HUMBY FIRST APPELLANT AND: CENTRAL SPRINGS LIMITED SECOND APPELLANT AND: NEWFOUNDLAND v. LABRADOR, 2013 NLCA 7

Date: 20130121 Docket: 10/46 Citation: Humby v. Newfoundland and Labrador Housing Corporation, 2013 NLCA 7 IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR COURT OF APPEAL BETWEEN: ELI HUMBY FIRST APPELLANT AND: CENTRAL SPRINGS LIMITED SECOND APPELLANT AND: NEWFOUNDLAND AND LABRADOR HOUSING CORPORATION RESPONDENT Coram: Green, C.J.N.L., Rowe and Hoegg JJ.A. Court Appealed From: Supreme Court of Newfoundland and Labrador Trial Division (General) 200701T4090 Appeal Heard: June 4 and 21 and August 21, 2012 Judgment Rendered: January 21, 2013 Reasons for Judgment by Rowe J.A. Concurred in by Green C.J.N.L. and Hoegg J.A. Counsel for First and Second Appellant: Robert Anstey

Counsel for the Respondent: David Hurley, Q.C. Rowe J.A.: INTRODUCTION [ 1 ] This appeal relates primarily to two issues arising from the leasing by Central Springs Limited (wholly owned by Eli Humby) from Newfoundland and Labrador Housing Corporation (NLHC) of land in an industrial park in Gander. The first issue is whether a “Butler building” placed on the land by Mr. Humby could legally be removed by him. The second is the level of damages for which NLHC is liable in tort to Mr. Humby for communications made by NLHC to a tenant of Mr.

Humby (the RCMP), which caused that tenant to terminate its rental agreement with Mr. Humby. FACTS [ 2 ] The parties spent a great deal of time disputing matters that are irrelevant to the two main issues in this appeal. I will give a simplified review of the facts. [ 3 ] In April 1999, NLHC and Central Springs entered a lease for two parcels of land owned by NLHC in an industrial park in Gander. [ 4 ] Mr. Humby’s businesses fell on hard times. Lease payments were not made to NLHC.

There was much controversy as to the exact circumstances of the default to NLHC, but what is essential for this appeal is that the lease came to an end. [ 5 ] NLHC and Mr. Humby had discussions in which he sought to continue to occupy the smaller parcel. When these failed, Mr.

Humby sought to remove the “Butler building”, on the basis that it was his building, not Central Springs’. [ 6 ] In his decision, the Trial Division judge described the “Butler building” as follows: [ 7 ] … The smaller parcel contained a pre-engineered, steel frame and metal clad, industrial park type building known as a “Butler” building, and it measured some 1500 square feet and was some 14 feet in height. … [17] Ian Green, Engineering Technician with NLHC, provided a description of the construction of the building based on an inspection of it by him on August 21, 2006.

It was a steel building and it had external metal vertical siding with screws which turn upon being tapped (termed “self-tapping”). The siding is attached in this [manner] to metal beam supports, which are attached by bolts to vertical steel beams which are anchored to concrete by “L” shaped anchor bolts. Before the concrete is cured, these bolts are placed in it and became permanently embedded in the cured concrete. The metal beams are then bolted to the “L” shaped anchors in the concrete. The foundation was solid concrete with two feet of it exposed above the ground.

Typically, four to five additional feet would be in the ground. The floor was concrete, poured in one piece. The building was insulated with fiberglass and there was a vapor barrier. [18] Mr. Humby also confirmed that the foundation walls rested on concrete footings, eighteen inches wide and five to six inches deep. The foundation wall is located at the center of the footing and the footing is six inches wide, leaving six inches of footing on either side of the foundation wall, which is covered in with earth material on both sides. [19] Mr.

Humby confirmed the method of construction of the building, noting that there was no welding of any steel. Everything was screwed together and so could be unscrewed and taken down without difficulty, moved to another site, and erected again. [7] In September 2007, Mr. Humby was prevented from completing his removal of the “Butler building” by NLHC, which obtained an injunction to this effect. The building has deteriorated since, as it was partly dismantled. Mr.

Humby does not seek now to remove the building; rather, he seeks damages for its value as of when he was prevented from removing it. [ 8 ] The trial judge found against Mr. Humby on this issue. His reasons are as follows: [27] The building is assembled on site upon a concrete foundation seated on a concrete footing buried in earth. The foundation is a concrete wall system within which a full concrete floor is poured. Concrete is by its nature, when poured in the ground, effectively attached and fixed to the land; its removal results in its destruction and this is confirmed by the evidence, including Mr.

Humby’s. [28] The permanent concrete foundation has embedded in it “L” bolts. Again, these have to be taken as permanently placed in the concrete. Upon the concrete curing, these “L” bolts can no longer be removed in the manner by which they were placed when the concrete was curing. [29] A complete steel structure is then assembled upon this structure. The beams and vertical metal siding and roofing cover are then erected and constructed. Pre-existing, multiple pieces are put together in a manner that will result in a complete unit structure. The beams are bolted, not welded.

The siding is “self-tap” screwed. [30] The components then of the resulting unit compose a final structure. That composed structure, as a final product, can no longer be moved or removed in its final form. It is effectively fully annexed to the land. [31] The unit can only be removed by decomposing its parts. While it can be dismantled so as to retrieve the majority of its previous multiple parts, it loses the structure by which its permanence as a standing unit came to be composed.

Additionally, an integral part of the structure, the foundation and floor, cannot be extracted so as to continue to be available to it. As well, the insulation, vapor barrier and electrical have to be extracted from the component building. [32] In my view, there are not sufficient circumstances to alter the annexed character of these component parts which are patent for all

to see. While Mr. Humby testified as to an intention that the smaller building was for personal use, even to the extent of moving it if necessary, I cannot presume such intention from the extent and object of annexation manifested. While not necessary to inquire further into the intention of Mr. Humby, I would offer that both buildings served to give security to BDC and one was sold by BDC [that on the larger parcel]. [33] Based upon the foregoing, I conclude the building to be a fixture upon the demised land. [ 9 ] The second issue relates to a rental agreement that Mr.

Humby had with the RCMP for a storage building in Benton. This agreement was not renewed by the RCMP as a result (the trial judge found) of tortious statements by NLHC to the RCMP concerning Mr. Humby. [ 10 ] The evidence at trial disclosed that Mr. Humby gave the RCMP approval to store equipment there as an overflow from the storage facility that he rented to the RCMP in Benton. At least initially, NLHC believed that Mr. Humby’s agreement with the RCMP was to rent them the “Butler building” on the smaller parcel in Gander and not in Benton. [ 11 ] NLHC wrote to Justice Canada concerning Mr.

Humby, as the trial judge stated: alleging the lease to the RCMP by Mr. Humby was fraudulent, mistakenly believing the rent [from the RCMP] was being received for the building on the smaller parcel. (Paragraph 57.) However, the trial judge found that the RCMP paid rent to Mr. Humby for storage space in Benton. [ 12 ] The trial judge found that the misunderstanding concerning which property was rented by the RCMP from Mr. Humby was (or should have been) cleared up by correspondence to NLHC from Mr. Humby’s counsel in February 2007.

The trial judge then stated: [57] … NLHC’s position to Justice Canada was never clarified subsequently. In fact, NLHC maintained a claim for the Benton rent until after the trial had commenced and [RCMP] Sergeant Jackman had testified. In January 2008, Justice Canada confirms that the relationship had ended with Mr. Humby. NLHC was notified of its error almost a year earlier. Mr. Humby had rented without interruption to the RCMP since 1998, almost 10 years with renewals every two years.

The evidence of Sergeant Jackman is that he had done a thorough search in the Central Newfoundland area for very specific requirements, including an electronic door and power supply for the marine craft to allow for a warm start in cold conditions. His evidence was that he could find only one other option other than the Benton choice made and that other option was really not satisfactory. The evidence of Sergeant Jackman is that the RCMP continues to rent at another location in Gander. He could not explain why the RCMP moved from Benton. At the same time, his evidence identifies Mr.

Humby’s property as the most desirable. The lease called for renewals. In the midst of the legal exchanges between NLHC and Federal Services, without the allegation of fraud withdrawn or the error corrected by NLHC, Federal Services advises NLHC it is terminating its relationship with Mr. Humby. [58] The evidence is that NLHC was in error in representing to Justice Canada that the RCMP were renting the building on the smaller parcel from Mr. Humby. NLHC apparently initially misunderstood. Nevertheless, the error and the misrepresentations were those of NLHC.

When the error was brought to its attention, it continued in its position. It had consequences in requiring Justice Canada to investigate, withhold funds and conclude that NLHC had not submitted an adequate legal basis to allow the continued holding of funds from Mr. Humby. In its interest to attempt to have these funds withheld, false misrepresentation of Mr. Humby’s actions as being illegal and fraudulent were made by NLHC.

I conclude, without evidence to the contrary, that the non-renewal of the then existing ten year historical relationship was as a result of these actions by NLHC. [ 13 ] The trial judge held NLHC liable to Mr. Humby on the basis of negligent misrepresentation. He awarded damages as follows: [62] Mr. Humby claims the sum of $13,200.00, being the amount of rent of the last two year terms. I consider that as a reasonable projection of the loss in the circumstances. The lease contemplated renewals that could have extended the lease to the end of April 2010.

This serves to support the parties’ interest in continuing the then long-term relationship. There is no evidence that this revenue is offset by any expenses. The only evidence of any possible cost to [the] landlord is the lease provision by which the landlord was to effect public liability insurance. [ 14 ] The award of damages was later rectified by the trial judge to be $26,400, which was the correct amount for two years rent from the RCMP. [ 15 ] Mr.

Humby seeks to have this Court increase the quantum of damages, including an award of punitive damages. [ 16 ] The trial judge ordered that the parties each bear their own costs, as NLHC had been successful on the issue of whether the building on the smaller parcel could legally be removed by Mr. Humby, while Mr. Humby had been successful on the RCMP contract in Benton, as well as in his “defence of the contamination claim” (which has not been appealed). ISSUES [ 17 ] The issues are: (1) did the trial judge err in holding that the building on the smaller parcel had become attached to the land such that Mr.

Humby could not legally remove it (the “fixtures” issue); (2) did the trial judge err in his award of damages to Mr. Humby for termination by the RCMP of its rental for his property in Benton (the “misrepresentation” issue);

(3) what costs should be awarded? ANALYSIS The Fixtures Issue [ 18 ] A useful general statement of the law concerning fixtures is set out in Christopher Bentley et al, eds, Williams & Rhodes Canadian Law of Landlord and Tenant , loose-leaf (updated on 1 November, 2009), 6th ed (Toronto: Carswell, 1988) vol 2 at para. 13:3:2: Things which a tenant has fixed to the freehold for the purposes of trade or manufacture may be taken away by him during the term whenever the removal is not contrary to any express or implied stipulation in his lease. But the items must be capable of being removed without causing material injury… or “irreparable damage”… Whether a machine or any other

article has been so fixed and attached to the freehold as to become a part of it is a question of fact depending on the circumstances of each case. The primary factors are: (1) the mode of annexation and the extent to which severance can take place without undue damage to the fabric of the building or to the fixture itself; and (2) the object and purpose of the annexation, whether it was for a temporary purpose or for the permanent and substantial improvement of the inheritance. [ 19 ] This two part test - mode of annexation, as well as purpose of the annexation - arises from the seminal case of Hellawell v.

Eastwood , infra , referred to by the trial judge: [23] In St. Lawrence, Town Council of v. Fishery Products Limited , (1983) 44 Nfld. & P.E.I.R. 2 , Noel, J., stated at paragraph 7: In Hellawell v.

Eastwood (1851), 155 E.R. 554, at 561, Parke, B, said that whether a chattel has been affixed to the premises so as to become a fixture is a question of fact which principally depends first on the mode and extent of the annexation, and especially on whether the chattel can easily be removed without injury to itself or to the premises; and secondly on the object and purpose of the annexation, that is whether it was for the permanent and substantial improvement of the premises or merely for a temporary purpose or for the more complete enjoyment of the chattel.

In the present case, much of the equipment was not attached to the premises in any manner except by its own weight and, in the cases in which there was some attachment, it was only for the purpose of receiving water and electricity. The equipment was in the building to be used and protected and not for any purpose related to the building. [ 20 ] What is obvious from the foregoing, as well as other authorities, is that they most often address the mode and purpose of attachment of an object to a structure.

Here, we are not considering something being attached to a structure; rather, we are dealing with the structure itself. [ 21 ] For most structures, the answer is obvious. A conventional building becomes part of the realty because of the permanent way it is attached to the land and because that is the purpose of conventional buildings.

By contrast, a tent does not become part of the realty, as it is not permanently attached to the land and because it is the purpose of tents to be set up, taken down and set up elsewhere, as needed. [ 22 ] What about a “Butler building”, one that bolts together and then is bolted to metal brackets set in a concrete base?

Such a building is designed so that it can be dismantled and moved to another location; it is annexed to the land in such a fashion that it can readily be removed. (Thus, in its mode of attachment, it is more like a tent than it is like a permanent building.) As well, the purpose for using such a building is so that when you want to, you can move it. (Again, a “Butler building”, in its purpose, is more like a tent than it is like a permanent building.) [ 23 ] I would note the decision by the English Court of Appeal in Webb v. Bevis, Ltd. , [1940] All E.R. 247. The facts in that case closely parallel those here.

The appellant company carried on business as manufacturers of cement products. For the purpose of housing their machinery and warehousing their plant and materials, they erected on leased land a shed 135 ft. long and 50 ft. wide, built of corrugated iron. The roof rested on timber posts; the posts rested on a concrete floor, but they were not embedded in it. Each post was connected to the concrete floor by metal straps on opposite sides, and was held in position by a bolt which ran horizontally through each post.

The straps, which were fixed in and protruded from the concrete floor, were fastened by a nut screwed on one end of the bolt. Once the roof and sides of the shed had been removed (these could be removed in panels), the posts could be removed by undoing the bolts. It was contended by the respondent that the shed along with the concrete floor constituted a single unit affixed to the soil and that, accordingly, the shed was not a tenant’s fixture.

The court disagreed; it held that the shed and the concrete floor were not a single unit and that the shed was removable by the tenant. [ 24 ] In Webb , Scott L.J. (for the Court) wrote at 251-2: … To my mind, it is inconceivable that the tenant at will should go to the expense of putting up such a structure unless it was for “the purpose and object,” first, of himself using it, and, secondly, of taking it away if he ceased to be tenant. The condition of the legal quality of removability - namely, that the subject-matter should not, by the process of removal, lose its essential character or value (see Fisher v.

Dixon) [(1845), 12 Cl. & Fin. 312] was plainly satisfied by the judge’s own finding to which I have referred, and I see nothing in the evidence to raise a doubt as to the propriety of that finding. For these reasons, I think that the appeal should be allowed on the issue as to the shed. [ 25 ] Webb was dealt with in Cheshire and Burn’s Modern Law of Real Property , 14th ed (Butterworths: London, 1988) at 137: If a superstructure can be removed without losing its identity, it will not in general be regarded as a fixture.

Examples are a Dutch barn, consisting of a roof resting upon wooden uprights, the uprights being made to lie upon brick columns let into the ground [ Elwes v. Maw (1802), 3 East 38 at 55 ; Wiltshear v. Cottrell (1853) 1 E. & B. 674]. … The case is the same if the posts that support the roof of a corrugated iron building are not embedded in the concrete floor, but are held in position by iron strips fixed into the floor. The concrete

foundation, which is of course a fixture, is regarded as a separate unit from the superstructure [ Webb, supra ]. … [ 26 ] The House of Lords referred to Webb in Elitestone Ltd. v. Morris , [1997] 2 All E.R. 513 at 517 : [W]hen one looks at Scott L.J.’s judgment in Webb v. Frank Bevis Ltd. it is clear that the shed in question was not a chattel. It was annexed to the land, and was held to form part of the realty.

But it could be severed from the land and removed by the tenant at the end of his tenancy because it was in the nature of a tenant’s fixture, having been erected by the tenant for use in his trade. … Thus, the House of Lords implicitly affirmed Webb . [ 27 ] These English cases do not bind Canadian courts. However, they can be persuasive, especially when they apply the same principles that operate in Canada in a parallel fact situation and there is no Canadian case dealing with similar circumstances. I adopt the reasoning set out in Webb and affirmed in Elitestone .

I hasten to add that the trial judge did not have before him these cases. [ 28 ] It is with great respect that I must conclude that the trial judge erred in his application of the legal test for a fixture, based on the reasoning set out in the English cases. [ 29 ] I would add a further comment. In his application of the mode of annexation part of the test, I see the trial judge as having erred. The key to this error, it seems to me, is in his paragraph 31: [31] The unit can only be removed by decomposing its parts.

While it can be dismantled so as to retrieve the majority of its previous multiple parts, it loses the structure by which its permanence as a standing unit came to be composed. Additionally, an integral part of the structure, the foundation and floor, cannot be extracted so as to continue to be available to it. As well, the insulation, vapor barrier and electrical have to be extracted from the component building. [ 30 ] It simply does not matter that to remove the building it must be disassembled; such is the nature of “Butler buildings”.

Nor does it matter that while the building can be removed, the concrete slab to which it was bolted cannot. That the slab remains behind does not affect the mode of annexation of the building itself, as was noted in Webb . [ 31 ] Mr. Humby was legally entitled to remove his “Butler building”. NLHC prevented him from doing so. The building has now deteriorated. Mr. Humby should have his damages for the value of the “Butler building” as of the time when NLHC prevented him from removing it. What is the quantum of such damages? [ 32 ] The trial judge made no determination, as he held the building was a fixture.

The evidence at trial was sparse. Very little of the argument before this Court was directed to the issue. Nevertheless, I am satisfied in accordance with the considerations discussed in Matchim v. BGI Atlantic Inc. , 2010 NLCA 9 at paragraphs. 93-109 that the appeal record is sufficient to enable this Court to make an assessment of damages and that it is, in light of the extent of this protracted litigation and the relatively modest sums at stake, appropriate to do so instead of referring the matter to the Trial Division for rehearing. [ 33 ] In his testimony, Mr.

Humby referred to an offer he received for purchase of the building in 2007. It was by an unnamed “refrigeration company out of Gander” for $120,000. However, this self-serving evidence was not substantiated by other evidence, e.g. correspondence. This evidence is difficult to square with Mr. Humby’s other evidence that the replacement cost for a new similar “Butler building” would be $120,000 to $140,000.

Why would the “refrigeration company” be willing to pay $120,000 for a used building when it could get a new one for that sum or a little more? [ 34 ] In his testimony, Christopher Mahar, an employee of NLHC, agreed with Mr. Humby as to the cost of a new similar “Butler building”. However, he estimated that Mr. Humby’s used building had a market value of $45,000 to $50,000. Mr.

Mahar supported this range as follows: What I’m saying is back then … I looked at some comparable sales for similar properties in Gander, and was working it around $30.00 to $35.00 a square foot, and which in the middle would be around $32.00 a square foot. So, you multiply that by the size of this building here, you’re up around [the] $45,000.00, $50,000.00 range … . Mr. Mahar also testified that NLHC (believing they owned the building) had offered it for sale to a company called Sun Holdings for $32,000. [ 35 ] Mr. Humby testified that he had bought the building 10 years earlier for $60,000.

This bolsters the credibility of Mr. Mahar’s estimate of $45,000 to $50,000. Accordingly, I would award $50,000 to Mr. Humby as damages relating to his building. This award will bear prejudgment interest at the statutory rate from the date on which Mr. Humby was enjoined from removing his building, being September 27, 2007. Quantum of Damages for the Misrepresentation [ 36 ] In its factum, NLHC asserts that the trial judge was factually incorrect when he found that the RCMP had a rental agreement with Mr. Humby for storage in Benton.

Rather, NLHC asserts that the agreement was for storage at the smaller parcel in Gander. [ 37 ] In the absence of a cross-appeal, it is not open to NLHC to challenge these findings of fact by the trial judge, nor is it open to NLHC to ask this Court to overturn the trial judge’s conclusion that NLHC was liable to Mr. Humby for the loss of his rental contract with the RCMP. [ 38 ] I would note that while the trial judge grounded liablity in the tort of negligent misrepresentation, Mr. Humby in his factum presents the basis of liability as the tort of intentional interference with economic relations.

I express no view whether the liability of NLHC is properly grounded in negligent misrepresentation or in intentional interference in economic relations. I would say only that, on the facts of this case, the measure of damages would be the same in either case.

[ 39 ] The trial judge awarded Mr. Humby damages equal to the revenue from rental of the Benton property for two years, i.e., one further renewal of the contract with the RCMP. This appears to accord with what Mr. Humby sought at trial. [ 40 ] However, in this appeal, Mr. Humby seeks damages equal to ten years rental, i.e., 10 X $13,200 or $132,000. The rationale for this seems to be that, having rented storage space in Benton to the RCMP for the preceding ten years, Mr. Humby should be compensated for a loss of expected revenue for a further ten years.

I cannot say that I find this persuasive. [ 41 ] To award damages for loss of revenue for 10 years would be to assume that the two year rental contract would be renewed on five occasions. This is speculation. The trial judge made no reversible error when he awarded damages based on a single renewal of the rental contract. [ 42 ] As to the issue of punitive damages, I will address it below, along with costs. Costs and Punitive Damages [ 43 ] In this appeal, Mr. Humby has succeeded on one of the two main issues, “fixtures”, but has not succeeded on the other main issue, damages in tort.

From that perspective, one might expect each party to bear their own costs. However, in my view, that would not be a just result. [ 44 ] On the main issues in this case, Mr. Humby has achieved success, on “fixtures”, on tort liability and on contamination of the smaller parcel (decided in his favour at trial and not appealed). Accordingly, Mr. Humby will have his costs from NLHC in this appeal and in the Trial Division. [ 45 ] The ordinary scale is party and party. Mr. Humby seeks solicitor- client costs. NLHC says that any costs should be party and party. [ 46 ] Mr.

Humby’s claim for solicitor-client costs was rejected by the trial judge. He wrote concerning costs and punitive damages: [67] The Defendants [Humby and Central Springs] had, at the close of trial, asked for punitive damages and solicitor and clients costs and both parties filed written submissions on those topics in January 2010. The Defendants’ submissions in this regard flow substantially from its being successful on the issues of ownership of the building and termination of the lease which has not been determined in their favour.

While not specifically made a basis for the award of such damages and costs, the error and misrepresentation by Plaintiff respecting the Benton RCMP lease appears to have been a misunderstanding of all counsel initially. In any event, the award of damages serves to adequately compensate the Defendants in this regard. [68] On the question of the Defendants’ success in defence of the soil contamination and loss of future rent, I do not find the conduct of the Plaintiff at levels attracting such awards.

The Plaintiff’s actions cannot be said to be shocking or outrageous in the context of punitive damages or high-handed and unfair in the context of solicitor-client costs. In this latter regard, Defendants’ loss following from Plaintiff’s conduct has been adequately compensated in the damage award. [ 47 ] I am in accord with the trial judge that no basis has been shown to award either solicitor-client costs or punitive damages. While confusion and acrimony have plagued this case, and while NLHC took an aggressive approach in interfering with Mr.

Humby’s contractual relations with the RCMP, this is not a sufficient basis for such awards. [ 48 ] Having regard to this Court’s decision in Holloway v. Holloway , 2001 NFCA 17, 199 Nfld. & P.E.I.R. 1 at para. 69 , the relevant factors of “scandalous, outrageous, reprehensible, deserving of reproof or rebuke, bad faith, serious misconduct, flagrant acts meriting censure, acting on improper motives, serious dereliction of duty and gross neglect” for an award of solicitor-client costs were not present. [ 49 ] Nor was there, in the words of the Supreme Court of Canada in Whitten v.

Pilot, 2002 SCC 18 , [2002] 1 S.C.R. 595 at para. 36 , “malicious, oppressive and high-handed” misconduct that “offends the court’s sense of decency” on the part of NLHC, so as to warrant an award of punitive damages. CONCLUSION [ 50 ] The appeal is allowed in part. NLHC is liable to Mr. Humby for $50,000 as the value of the “Butler building” as it was when Humby sought to remove it; this award will bear prejudgment interest from September 27, 2007. Mr. Humby’s appeal seeking increased damages for loss of his rental contract with the RCMP is dismissed. Mr.

Humby will have his costs of the trial and this appeal on a party and party basis. _____________________________ M. H. Rowe J.A. I Concur: ____________________________ J. D. Green C.J.N.L. I concur: ____________________________ L. R. Hoegg J.A.