Upcountry v. Heros International Date:, 2013 BCPC 109

Citation: Upcountry v. Heros International Date: 20130509 2013 BCPC 0109 File No: NVA-PC-1122558 Registry: North Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: UPCOUNTRY DEVELOPMENTS (LGBP) INC. CLAIMANT AND: HEROS INTERNATIONAL FOOD EXPORT & IMPORT LTD. DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE CHALLENGER Counsel for the Claimant: David Moriarty Counsel for the Defendant: Scarlett Mirzaian Place of Hearing: North Vancouver , B.C. Dates of Hearing: February 20 and March 6, 2013 Date of Judgment: May 9, 2013 [ 1 ] On March 6 th 2013 I granted judgment to the claimant for damages for default under a lease. At that time I reserved judgment

[ 1 ] On March 6 th 2013 I granted judgment to the claimant for damages for default under a lease.

At that time I reserved judgment as to the specific details of the amount of the judgment and with respect to two further issues being: - whether the claimant is entitled to recover legal and other service fees which were incurred by them as a result of taking steps to have the defendant surrender the lease and when that failed, to terminate the lease and also legal fees related to litigating the matter in Provincial Court under the provisions of the Small Claims Act and Rules . - whether pursuant to Rule 10.1 a penalty should be assessed against the defendant if the amount of the judgment exceeds the offer to settle made by the claimant. [ 2 ] As to the amount of the damages for default under the terms of the lease I award damages as follows: Rent $15,129.41 Commission to Leasing Agent $ 4,879.29 Interest (calculated according to term 7.16 of the lease at 18% per annum compounded monthly on both amounts commencing July 1 st , 2011) $ 6,699.90 TOTAL $26,708.60 Recovery of Fees for Services and Legal Fees [ 3 ] The Lease provides: “7.11 Landlord’s Expenses Enforcing Lease If it shall be necessary for the Landlord to retain the services of any person for the purpose of assisting the Landlord in enforcing any of its right hereunder or otherwise available at law, the Landlord shall be entitled to collect from the Tenant the cost of all such services including, but not limited to, all legal fees and disbursements incurred in enforcing the landlords’ rights hereunder and in connection with all necessary court proceedings at trial or on appeal on a solicitor and own client basis, as if the same were Rent reserved and in arrears hereunder.” [ 4 ] Section 19 (4) of the Small Claims Act provides: “The Provincial Court must not order that one party in a proceeding under this Act or the rules pay counsel of solicitor’s fees to another party to the proceeding.” [ 5 ] Counsel for the claimant brought the following authorities to the attention of the Court: Gordhill Log Homes Ltd. v.

Cancedar Log Homes (B.C.) Ltd. , 2006 BCPC 480 , Lyle MacLean and MacLean Distribution Inc. v. Robert Miles , 2007 BCPC 98 and Wetterstrom v. Craig Management Enterprises

(1992) Ltd. 2009 BCPC 165 . [ 6 ] I agree with the analysis of the case law and the finding of Judge Frame in the Wetterstrom v Craig Management case where she found that in a proceeding in Provincial Court under the Small Claims Act a claimant can recover any legal or other expenses to which they are entitled under the terms of a lease or contract up to the time of the preparation and filing of the claim. This conclusion accords with the purpose of the Small Claims Act as set out in

Section 2 which is “to allow people who bring claims to the provincial Court to have them resolved and to have enforcement proceedings concluded in a just, speedy, inexpensive and simple matter” and gives due regard to the binding nature of the terms of a lease or contract. A claimant may elect to proceed in Supreme Court where the fees for services are sufficiently significant to justify the more involved process.

However, if they elect to proceed in Provincial Court they will not be entitled to recover the legal fees incurred for litigation of their claim. [ 7 ] I find that the Claimant is entitled to the cost of services, including legal fees, incurred after June 30 th 2011 as a result of seeking to have the defendant surrender the lease and to gain re-entry and terminate the lease up to the preparation and filing of their claim on September 6 th 2011. [ 8 ] Should there be any dispute about the amounts of those fees the parties have leave to apply for further directions from the Court.

Penalty under Rule 10.1 [ 9 ] Having now obtained judgment in excess of $20,000.00 which was the all in amount offered in a formal offer to settle delivered to the defendant on March 29 th 2012, the claimant is asking the Court to consider a penalty in the amount of 20% of that amount. [ 10 ] Pursuant to Rule 10.1

(8) I must consider the difference in the amount awarded at trial and the amount of the offer to settle. In

this matter the offer to settle represented the amounts owing for default of rent and agents fees for re-leasing the space to new tenants. It forgave the interest and costs and was then rounded down by just over $8.00. It was a reasonable offer and should have been accepted. [ 11 ] I also take into consideration that at the time the defendant gave notice that he was vacating the premises the claimant attempted to have the defendant surrender the lease and requested payment of default costs of $12,000.00 which represented only the lost rent for the rent free re-fixturing period granted to the new tenants.

The defendant refused to execute the surrender on the mistaken belief that, as the landlord had found a new tenant immediately, there would be no loss of rent. This was not in fact the case and is not the usual course for commercial leases in general. [ 12 ] I must also consider the interests of the parties in proceeding to trial to determine the credibility of witnesses or a point of law. The case for the claimant was fully documented.

The credibility of the witnesses for the claimant was not challenged nor was it materially in issue as they were able to rely on emails, letters and other documents to establish the time line and course of events. [ 13 ] At the end of the day, the defendant mounted a defense which was not pleaded i.e. there was no binding lease in place. The defense pleaded i.e. an oral agreement outside the terms of the lease allowing the defendant to vacate the premises on less than 30 days notice and without any penalty whatsoever, was not supported by reasonable

interpretation of the lease and related documents, the chronology of events or the law relating to commercial leases. In determining liability I found that the defendant had confused the chronology of events and had in particular misunderstood the binding nature of a Proposal to Lease signed May 21 st 2011. This is not to say that I found the defendant to be dishonest or vexatious. Rather, I found the defense position to be one honestly held but based on a confused and rather hopeful recollection of events. [ 14 ] Clearly, the offer to settle was provided in a timely way to the defendant.

It was delivered three and a half months before a trial date which was being adjourned by consent at that same time. [ 15 ] I am satisfied that a penalty is warranted but in all the circumstances I am not satisfied that the full 20% is appropriate and instead award the claimant 10% or $2000.00. ______________________________ The Honourable Judge Challenger