



COURT OF APPEAL FOR ONTARIO

CITATION:
McLean v. Shedden, 2012
    ONCA 860

DATE: 20121206

DOCKET: C54215

Sharpe, Rouleau and Hoy JJ.A.

BETWEEN

Lawrence
    McLean, Kevin Fehr and Sweeney Todds Microbrewery
    Pub and Restaurant Inc. Get Out of My Kitchen, 1422334 Ontario Inc., and
    Couple in Black Ltd.

Plaintiffs/Respondents

and

Callum Shedden
and
    David Brown

Defendant/Appellant

Michael Bordin, for the appellant

Marc Munro, for the respondents

Heard: November 2, 2012

On appeal from the judgment of Justice D. Crane of the
    Superior Court of Justice, dated July 21, 2011.

ENDORSEMENT

[1]

The appellant, a solicitor who had acted for the respondents when they
    purchased a pub, does not challenge the trial judges finding that he was
    negligent in failing to advise the respondents of the steps they needed to take
    to transfer the pubs liquor licence.

[2]

The appellant submits, however, that the trial judge erred in awarding
    the respondents damages of $65,000, measured by one half of the price they paid
    for the pub.

[3]

The appellant submits that the trial judge based his damage award on a theory
    not advanced by the respondents and for which there was no supporting evidence.
    We agree that the focus at trial appears to have been the respondents
    assertion that the restaurant was economically viable. They led expert evidence
    to support that claim. The trial judge scrutinized and rejected that evidence
    and found that the restaurant was not economically viable.

[4]

While that finding led the trial judge to reject the respondents claim
    for damages measured by the value of the pub as a going concern reduced by the
    amount of the indebtedness the respondents incurred operating the pub, in our
    view it was still open to the trial judge to find that despite its serious
    economic difficulties, the pub had some resale value. The trial judge fixed
    that resale value by substantially discounting the amount paid by the
    respondents to purchase the pub

[5]

The trial judge mentioned the good regular clientele the pub enjoyed,
    the opportunities of the Niagara Wine and Food Festival, the popularity of
    microbrewery specialty beers, and a favourable lease. These factors led him
    to conclude that despite the fact that, as run, the pub was not viable as a
    going concern under the respondents management, there was a reasonable basis
    to build the business, and that it therefore would have had some resale value
    if it had maintained a valid liquor licence. While the trial judges reasons
    certainly could have been clearer, we are satisfied that there was some
    evidence to support the award he made and that his assessment is entitled to
    deference on appeal.

[6]

The appellant also submits that the trial judge erred by failing to find
    that the respondents were the authors of their own misfortune. They should have
    read the liquor licence and had they done so, they would have realized it had
    to be renewed. Again, the trial judges reasons are admittedly not entirely
    satisfactory. However, we understand his analysis to have proceeded on the
    following basis. The sale of the pub closed in August 2000 and under the terms
    of their agreement with the vendor and the practice of the Liquor Licence
    Commission, the respondents had 90 days from the date of closing to obtain the
    then vendors signature and to have the licence transferred in the purchasers
    name.

[7]

Had the respondents read the license, all they would have learned is
    that it expired in September 2001. From simply reading the licence, they would
    have been unaware that approval of the change in control of the business had to
    be obtained within 90 days in order to maintain the licence. The appellant
    negligently failed to advise the respondents to take the necessary steps to
    have license transferred within that 90 day period. It follows, accordingly,
    that there was a basis on the evidence to support the trial judges award of
    damages for the resale value of the pub with a valid licence, despite his
    finding that the respondents were themselves at fault for failing to read their
    own licence.

[8]

Accordingly, the appeal is dismissed with costs fixed at $15,000
    inclusive of disbursements and taxes.

Robert J. Sharpe J.A.

Paul
    Rouleau J.A.

Alexandra
    Hoy J.A.


