



COURT OF APPEAL FOR ONTARIO

CITATION: L'Ouvrier Inc. v. Leung, 2017 ONCA
    589

DATE: 20170707

DOCKET: C63222

MacPherson, Cronk and Benotto JJ.A.

BETWEEN

L'Ouvrier Inc.

Plaintiff (Respondent)

and

Yen Ping Leung and Michael Cheng

Defendants (Appellants)

AND BETWEEN

Yen Ping Leung and Michael Cheng

Plaintiffs by Counterclaim (Appellants)

and

L'Ouvrier Inc., and Justine Fowler and Angus
    Bennett

Defendants by counterclaim (Respondents)

J. Gardner Hodder and Christopher Stienburg, for the
    appellants

David Barbaree, for the respondents

Heard: July 6, 2017

On appeal from the judgment of Justice Thomas R. Lederer
    of the Superior Court of Justice, dated December 7, 2016, with reasons reported
    at 2016 ONSC 6993.

REASONS FOR DECISION

[1]

The appellants, Yen Ping Leung and Michael Cheng, appeal from the
    judgment of Lederer J. of the Superior Court of Justice granting the respondents
    L'Ouvrier Inc., Justine Fowler, and Angus Bennett summary judgment and
    dismissing the appellants counterclaim.

[2]

The action related to a dispute involving the renewal of a commercial
    lease. In March 2011, L'Ouvrier and Leung entered into an agreement to lease a
    unit (to be used as a restaurant) in a building owned by Leung and managed by
    her husband Cheng (the Agreement).

[3]

The Agreement governed the relationship between the parties. It
    contained an option for renewal that could be exercised by L'Ouvrier so long as
    it was not in default of the terms of the Agreement and provided written notice
    of its intention to exercise the option. In addition to the rental payments of
    $3,300 per month, L'Ouvrier was also liable for additional rent to be paid in
    monthly installments calculated as the estimated proportionate share of direct
    costs associated with the occupancy and use of the premises.

[4]

In 2013, the appellants demanded a further amount in additional rent. L'Ouvrier
    took the position that this demand did not comply with the Agreement and
    refused to pay it. The matter was not resolved.

[5]

On September 25, 2015, L'Ouvrier sent the appellants son a text message
    essentially indicating that it wanted to exercise its renewal option under the
    Agreement. The appellants took the position that they would not renew the Agreement
    due to L'Ouvriers refusal to pay the additional rent demanded. They did not
    allege, then or later, that the notice of renewal was deficient or in
    non-conformity with the Agreement.

[6]

The parties tried to negotiate a renewal of the Agreement but negotiations
    broke down in November 2015. During this time period, L'Ouvrier was trying to
    sell its business to a third party.

[7]

In early 2016, L'Ouvrier commenced an action seeking specific
    performance, an injunction to prevent the appellants from interfering with its
    rights under the Agreement, and damages for losses caused by the appellants
    breach of contract.

[8]

L'Ouvrier then brought a motion for an injunction to prevent the
    appellants from evicting it on February 29, 2016. After a series of
    adjournments, the parties agreed to settle the matter. However, the appellants
    failed to honour the settlement.

[9]

In September 2016, the appellants locked the doors of the premises,
    posted a notice of distress, and took over L'Ouvriers liquor licence as a
    landlord in possession. As a result, L'Ouvriers planned sale of its restaurant
    business fell through.

[10]

L'Ouvrier then brought a motion for summary judgment seeking damages
    associated with the loss of its ability to sell the business, the money it paid
    in furtherance of an arbitration hearing and the settlement agreement, and the
    amount it paid as a security deposit at the beginning of the tenancy. L'Ouvrier
    also sought punitive damages.

[11]

The appellants brought a counterclaim alleging unpaid arrears, damage to
    rental property, and punitive damages.

[12]

The appellants unsuccessfully sought an adjournment of the hearing of
    the summary judgment motion.

[13]

The motion judge found that L'Ouvrier was not in breach of the
    Agreement. He also held that the appellants had breached the Agreement and
    engaged in conduct warranting the imposition of punitive damages.

[14]

The motion judge awarded these damages: $140,000 for loss of the ability
    to sell the business; $12,000 relating to the aborted settlement agreement;
    $6,837.49 relating to the arbitration; $5,000 for the security deposit, and
    $20,000 in punitive damages.

[15]

By reasons dated December 7, 2016, the motion judge granted judgment in
    favour of L'Ouvrier. The reasons did not refer to the appellants counterclaim.
    On a motion for directions made on March 2, 2017, the motion judge dealt with
    the counterclaim and dismissed it on the merits. His formal judgment deals with
    both the respondents claim and the appellants counterclaim.

[16]

The appellants appeal on several grounds.

[17]

First, the appellants contend that the motion judge erred by not
    granting an adjournment because they did not have a lawyer, were representing
    themselves, and speak Cantonese and are not fluent in English.

[18]

We disagree. The appellants had been represented by a lawyer earlier in
    the proceedings. They had also filed a notice of intent to act in person. An
    interpreter was present and participated in the hearing. The request for an
    adjournment came 90 minutes into the hearing. In these circumstances, the
    motion judges discretionary decision to refuse an adjournment was reasonable.

[19]

Second, the appellants submit that LOuvrier did not give proper written
    notice of its intent to exercise its renewal option.

[20]

We do not accept this submission. As we have said, the appellants did
    not advance this complaint at the time of the notice. Nor is there any
    suggestion that they did not receive actual notice of the intention to renew.
    Further, LOuvriers text message to the appellants son led to extensive
    negotiations between the parties. Accordingly, the appellants, by their
    conduct, acknowledged receiving notice of LOuvriers desire to renew the
    lease.

[21]

Third, the appellants claim that the motion judge erred in finding that LOuvrier
    was not in rent default of the Agreement, especially with regard to not paying
    the required additional rent.

[22]

We disagree. The motion judge carefully considered this issue and agreed
    with LOuvriers submission that it was not subject to additional rent in the amounts
    sought by the appellants. We see no error in his analysis.

[23]

Fourth, the appellants assert that the motion judge erred by failing to
    address the issue of non-rent default.

[24]

We disagree. The appellants position before the motion judge was that
    LOuvrier had breached the Agreement by not making sufficient rental payments.
    The appellants did not raise potential non-rent default issues on the summary
    judgment motion. They cannot do so now: see
Sawdon Estate v. Sawdon
,
    2014 ONCA 101, at para. 75.

[25]

Finally, the appellants claim that Cheng was not properly named as a
    party in these proceedings and that the motion judge erred in granting summary
    judgment against him.

[26]

We disagree. This issue was not raised in the court below. In addition
    to the fact that the appellants should not be permitted to raise on appeal an
    issue that was not before the motion judge, Cheng fully participated in the
    proceedings and never requested that he be removed as a named party.
    Accordingly, the motion judge committed no error in granting summary judgment
    against him.

[27]

The appeal is dismissed. The respondents are entitled to their costs of
    the appeal fixed at $18,000, inclusive of the costs of the motion before Pardu
    J.A. dated February 17, 2017, disbursements and HST. It is also ordered that
    the $75,000 paid into court to the credit of the proceeding be released to the
    respondents.

J.C. MacPherson J.A.

E.A. Cronk J.A.

M.L. Benotto J.A.


