Sage Creek Village North Ltd v Nasberg et al, 2023 MBCA 53

Citation: Sage Creek Village North Ltd v Nasberg et al, 2023 MBCA 53 Date: 20230609 Docket: AI22-30-09848 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Freda M. Steel Mr. Justice Christopher J. Mainella Madam Justice Jennifer A. Pfuetzner BETWEEN : sage creek village north ltd. ) ) (Plaintiff) Respondent ) ) L. B. Nasberg - and - ) for the Appellants ) benjamin jordan nasberg and ) J. D. Kendall and joseph paletta ) B. E.

Roach ) for the Respondent (Defendants) Appellants ) ) Appeal heard and - and - ) Decision pronounced: ) June 9, 2023 Carbone coal fired pizza inc. ) ) (Defendant) ) mainella JA (for the Court) : [ 1 ] This appeal arises from a commercial leasing dispute over unpaid rent in a failed restaurant development. The plaintiff is the owner and was the landlord for the property in question. The individual defendants were the directing minds of the corporate defendant and were signatories to an indemnity agreement forming part of the commercial lease. The individual defendants appeal an order granting

summary judgment in favour of the plaintiff for $100,000 and costs.

Three issues are raised on the appeal, namely: • Did the motion judge err when he determined that the nature of the obligation for the individual defendants was that of an indemnity and not a guarantee? • Did the motion judge err when he determined that the plaintiff had provided sufficient notice to the individual defendants of the corporate defendant’s default of payment of rent so as to engage the individual defendants’ obligations under the indemnity agreement? • Did the indemnity of the individual defendants end when the plaintiff terminated the lease due to the corporate defendant’s default? [ 2 ] The decision to grant or deny

summary judgment is a discretionary decision entitled to deference on appeal absent a material error as to the facts or the law, or a decision that is so clearly wrong as to amount to an injustice (see Hryniak v Mauldin , 2014 SCC 7 at paras 81-84 ; and Virden Mainline Motor Products Limited v Murray et al , 2018 MBCA 82 at para 17 ). [ 3 ] The first issue raises a question of contractual

interpretation. In our view, the motion judge appropriately examined the ordinary meaning of the indemnity agreement in light of the whole of the commercial lease and the relevant surrounding circumstances. We see no reversible error in his conclusion that the nature of the obligation the individual defendants entered into was that of an indemnity, not a guarantee.

[4] The second issue concerns the motion judge’s finding that, by way of default notices, the plaintiff gave sufficientnotice of default—failure to pay rent for the leased property—to trigger the individual defendants’ obligations under the indemnityagreement. This finding is reviewable on a standard of palpable and overriding error.

In our view, the conclusion was reasonably opento the motion judge given that there is no question the rent was unpaid; the individual defendants were experienced businessmen; and thelanguage of the default notices, the commercial lease and the indemnity agreement was plain as to the consequences of default ofpayment of rent. [5] Finally, we reject the plaintiff’s submission that the third issue is a new issue raised on appeal. That said, there is nomerit to that ground of appeal.

The fact that the plaintiff ultimately terminated the commercial lease on April 24, 2020 did not extinguishits common law right to sue the individual defendants for losses resulting from breaching their contractual obligations prior to the date oftermination (see Highway Properties Ltd v Kelly, Douglas & Co, (SCC), [1971] SCR 562 at 570). Moreover, theindemnity agreement clearly states that the “obligations of [the] lndemnitors will not be released, discharged, mitigated, impaired oraffected by . . . the expiration of the Term” of the lease. [6] In

summary, we have not been persuaded that the motion judge erred in a material way or that his decision is soclearly wrong as to amount to an injustice. The appeal is therefore dismissed with costs. JA JA JA