Sage Creek Village North Ltd v Nasberg et al, 2023 MBCA 84

Citation: Sage Creek Village North Ltd v Nasberg et al, 2023 MBCA 84 Date: 20230928 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 : ) L. B. Nasberg sage creek village north ltd. ) for the Appellants ) ) J. D. Kendall and (Plaintiff) Respondent ) B. E.

Roach ) for the Respondent - and - ) ) No appearance benjamin jordan nasberg and ) for Carbone Coal Fired joseph paletta ) Pizza Inc. ) ) Appeal heard and (Defendants) Appellants ) Decision pronounced: ) June 9, 2023 - and - ) ) Motion under r 46.2 of Carbone coal fired pizza inc. ) the Court of Appeal Rules ) (Civil) ) (Defendant) ) Decision pronounced: ) September 28, 2023 Per curiam [ 1 ] The individual defendants move for an order pursuant to r 46.2 of the Manitoba, Court of Appeal Rules (Civil) , Man Reg 555/88R , for a rehearing of their appeal that was dismissed on June 9, 2023 (see 2023 MBCA 53 ).

No certificate of decision has been entered yet. [ 2 ] The individual defendants filed a memorandum of argument in support of their motion; the plaintiff filed a memorandum of argument in response to the motion; and then the individual defendants filed a reply. [ 3 ] For the following reasons, we are satisfied that oral argument on the motion for a rehearing is not required (see r 46.2(9)) and that the motion should be dismissed as the individual defendants have not met their heavy burden of establishing “exceptional circumstances, where the interests of justice manifestly compel” the Court to rehear the appeal ( Willman v Ducks Unlimited (Canada) , 2005 MBCA 13 at para 9 ). [ 4 ] By way of background, the individual defendants appealed an order granting the plaintiff

summary judgment in an action relating to a “commercial leasing dispute over unpaid rent in a failed restaurant development” (at para 1). Key to the underlying dispute was the meaning of the indemnity agreement that the individual defendants signed as part of the commercial lease between the plaintiff landlord and the corporate defendant, who was the tenant. [ 5 ] The appeal turned on the motion judge’s

interpretation of the indemnity agreement and his determination of the parties’ legal obligations before and after the plaintiff terminated the commercial lease. The standard of review we had to apply was deferential (see

para 2). We decided that the motion judge made no reversible error in exercising his discretion to grant

summary judgment in favour ofthe plaintiff against the individual defendants and that his decision was not so clearly wrong as to amount to an injustice (see para 6). [6] The individual defendants make several arguments on the motion for a rehearing of the appeal but, central to each one, is theassertion that a “patent error” was made by failing to recognize the distinction in law and on the wording of the commercial lease here(including the indemnity agreement) between an expiration event and a termination event.

The individual defendants argue that thisCourt’s reasons “appear to rely” on expiration as the legal basis for the plaintiff’s recovery as opposed to termination. Particularattention is paid to the last sentence of paragraph 5 of the Court’s reasons and a suggestion of ambiguity with the wording is made withrespect to the comment: . . .

Moreover, the indemnity agreement clearly states that the “obligations of (the) Indemnitors will not be released, discharged,mitigated, impaired or affected by . . . the expiration of the Term” of the lease. [7] It is trite but, important to recall, that a court’s reasons should not be parsed “in a search for error”, rather they should be “read incontext and as a whole, in light of the live issues” (R v GF, 2021 SCC 20 at para 69).

Ambiguity in reasons should be resolved on thebasis of the correct application of the law as opposed to error (see Interlake Reserves Tribal Council Inc et al v Government of Manitoba,2021 MBCA 17 at para 17). [8] A functional and contextual reading of our reasons dismissing the appeal begins with the findings of the motion judge, whichwere: (

i) The last rent was paid in November 2019. No attempt was made to bring rental arrears current.

The plaintiff could not re-leasethe premises until February 2021; (ii) The plaintiff terminated the lease on April 24, 2020, by notice to all of the defendants; and (iii) The plaintiff’s legal right as landlord to recover based on the termination was governed by the common law as explained inHighway Properties Ltd v Kelly, Douglas & Co Ltd, (SCC), [1971] SCR 562 [Highway Properties]. [9] The motion judge discussed the plaintiff’s legal rights, as per Highway Properties, and his findings of fact in the case this way: . . .

The Supreme Court considered options open to a landlord for a tenant in default on the lease. At paragraph 14, the court explained threerecognized mutually exclusive courses of action a landlord could take and then set out the proposed fourth alternative: (as read) Mainly that the landlord may elect to terminate the lease but with notice to the defaulting tenant, the damages will be claimed on thefooting of the present recovery of the damages for losing the benefit of a lease over the unexpired term. The court went on to adopt this alternative as a viable and pragmatic procedure against defaulting tenants.

And that is at paragraphs 25to 27 of that case. As noted in the headnote: (as read) But on repudiation, a right of action damages arose and it was open to the landlord to terminate the lease, having at the same time noticedthe tenant the damages would be claimed and respected of the unexpired term. This is what happened here to -- by notice to the tenant and the indemnitors on April 24 of 2020. And in that particular respect, I have the notice of termination in front of me. Starting on the -- obviously, the date, April 24 of 2020. This is one of the exhibits that was filed. The tenant is Carbone.

The indemnitors are listed as Nasberg and Paletta. It talks about thelease. It talks about the indemnity agreement in the heading. And then starting at paragraph 2, it refers to the termination. And at paragraph 2: (as read) Such termination is without prejudice to and shall not limit any claim to which the landlord is entitled for damages in respect of the lossof rent and other income the landlord expected to derive during the period which would otherwise have constituted the unexpiredremainder of the term of the lease. As I read that, I realize it is almost verbatim from the case that I just mentioned.

And then there’s other aspects that I’ll refer to later on. Finally, as an aside, I find it rather remarkable there is no evidence whatsoever that Mr. Nasberg, on behalf of Carbone or personally asan indemnitor, and on behalf of Mr. Paletta or Mr. Paletta individually, took any steps whatsoever to deal with the default on rent. . . . [emphasis added]

[10] In this appeal, this Court was reviewing the decision of the motion judge, who clearly was of the view that the plaintiff’s legalright to recover against the individual defendants was based on a termination event, and the effect of that finding based on hisinterpretation of the indemnity agreement and the commercial lease as a whole. [11] All the last sentence of paragraph 5 of our reasons points out is the modest and rather unremarkable comment that nothing in theindemnity agreement departed from the plaintiff’s common law rights as per Highway Properties. To suggest, as the individualdefendants seem to argue, that this Court embarked on its own

interpretation of the indemnity agreement overlooks our limited role inthis appeal, given the standard of review that applies generally to contractual

interpretation (see Ledcor Construction Ltd v NorthbridgeIndemnity Insurance Co, 2016 SCC 37 at paras 21-25). Absent a material error in fact or law of the motion judge, we were required todefer to his contractual

interpretation. Given our conclusion that he made no reversible error, we were not called upon to give thejudgment, which ought to have been pronounced, based on our own contractual

interpretation (see The Court of Appeal Act, CCSM cC240 at section 26(2)). [12] At their core, the arguments of the individual defendants on the rehearing motion are nothing more than another attempt tolitigate the meaning of the indemnity agreement and the parties’ legal obligations before and after the plaintiff terminated thecommercial lease; that ship has long sailed. This type of submission falls far short of the high threshold for the rehearing of an appeal.

As was explained in Jhanji v The Law Society of Manitoba, 2023 MBCA 15, “[a] rehearing is not available to a party who merely‘disagrees’ with the result or wishes to ‘reargue’ the appeal (Hancock v College of Registered Nurses of Manitoba, 2021 MBCA 59 atpara 14; see also Oliver et al v Blais et al, 2015 MBCA 115 at paras 9-11). The threshold is far higher” (at para 5). [13] The plaintiff has asked for solicitor-client costs on the motion for a rehearing. We agree with the individual defendants thatsuch a costs award would be inappropriate.

While we have dismissed the motion, we are not persuaded that it amounted toreprehensible, scandalous or outrageous conduct, which is the general requirement for solicitor-client costs (see Young v Young, (SCC), [1993] 4 SCR 3 at 134). [14] In the result, the motion for a rehearing of the appeal is dismissed with tariff costs. JA JA JA