



COURT OF APPEAL FOR ONTARIO

CITATION: Tran v. Bloorston Farms Ltd., 2020
    ONCA 440

DATE: 20200706

DOCKET: C67545

Benotto, Zarnett and Thorburn
    JJ.A.

BETWEEN

Sang Thi Tran and 1835068
    Ontario Ltd.

Plaintiffs
(Respondents)

and

Bloorston Farms Ltd.

Defendant
(Appellant)

Mark A.
    Ross and Eric Brousseau, for the appellant

Evan L.
    Tingley, for the respondents

Heard: in writing

On appeal
    from the judgment of Justice William S. Chalmers of the Superior Court of
    Justice, dated September 10, 2019, with reasons reported at 2019 ONSC 4639.

Zarnett J.A.:

INTRODUCTION

[1]

The rule in
Foss v. Harbottle
(1843), 67 E.R. 189 (U.K.H.L.)
prevents
    shareholders from suing for a loss in the value of their shares brought about
    by a wrong done to the corporation. The rule, which is well-entrenched in
    Canadian law, is a consequence of the separate legal personality of the
    corporation. Just as shareholders (subject to limited exceptions) cannot be
    sued for acts, debts, defaults or obligations of the corporation, only the
    corporation has a cause of action for wrongs done to it.
[1]


[2]

The primary issue in this appeal is whether the
    rule should have been applied to deny the claim of the respondent, Sang Thi
    Tran (Sang), for the diminution in the value of her shares in 1835068 Ontario
    Ltd. (183), a corporation she solely owned. The shares lost value because 183
    was unable to carry on its restaurant business. It could not carry on that
    business because Sangs lease for the restaurants premises was terminated by
    the appellant, Bloorston Farms Ltd. (Bloorston).

[3]

As I explain below, the wrong in this case was
    not done to the corporation, but to the shareholder personally. Only Sang was a
    tenant under the lease and only she had a cause of action for its wrongful
    termination. In these circumstances, neither the rule in
Foss v. Harbottle
nor its rationale applied. The motion judge did not err, as Bloorston contends,
    in allowing Sangs claim for diminution in share value. Nor did the motion
    judge err, as Bloorston also contends, in the quantification of that diminution
    or in finding that Bloorston had breached the lease.

[4]

I would therefore dismiss the appeal.

BACKGROUND

[5]

In 2006, Sangs sister entered into a lease with
    the then-owner of the building at 252 Carlton Street, Toronto. The lease was
    for premises on the ground floor of the building and contemplated that the premises
    would be used as a restaurant. It required payment of Minimum Rent and Additional
    Rent for the tenants share of taxes, utilities and services to the building. The
    lease was to expire on October 31, 2016, subject to a five-year renewal option.

[6]

In 2010, Sangs sister assigned the lease to Sang.
    In an agreement with the then-landlord dated December 1, 2010 (the 2010
    Agreement), Sang was recognized as the new tenant. The 2010 Agreement made amendments
    to the amount of Minimum Rent and also specified the square footage of the
    leased premises (1,120 square feet). The other terms and conditions of the
    lease remained unchanged.

[7]

From December 1, 2010 to April 1, 2014, Sangs
    corporation, 183, of which Sang was the sole shareholder, operated a restaurant
    called Gingers on the leased premises. The motion judge found that Sang never
    assigned the lease to 183. In other words, Sang always remained the tenant
    under the lease.

[8]

Bloorston became Sangs landlord when, on March
    6, 2014, it purchased the building in which the leased premises were located.
    The next day, Bloorston emailed an architects certificate to Sang, showing that
    the leased premises were larger than what the 2010 Agreement specified.

[9]

On April 1, 2014, Bloorston demanded the payment
    of increased amounts of Minimum Rent and Additional Rent. The demand for
    increased Minimum Rent was based on the larger area in the architects certificate.
    The demand for increased Additional Rent was based on Bloorston having increased
    the allocation of the buildings property taxes to the leased premises (from 26.77
    percent to 43.59 percent).

[10]

On April 3, 2014, Bloorstons lawyer wrote to Sang
    advising that payment of the additional amounts was due by April 15, 2014,
    failing which Bloorston would take the position that Sang was in default of the
    lease.

[11]

The same day, Sang wrote to Bloorston through
    her lawyer to dispute the changes to the Minimum Rent and Additional Rent. She
    relied on the amount of Minimum Rent specified in the 2010 Agreement and took
    the position that the increased allocation of property taxes was unreasonable
    given the relationship of the area of the leased premises to that of the
    building. The letter stated that Sang would continue to pay the Minimum Rent
    and Additional Rent she had been paying.

[12]

Although Bloorston received and cashed a cheque
    representing payment of Aprils Minimum Rent and Additional Rent calculated in
    accordance with past practice, Bloorston terminated Sangs tenancy on April 25,
    2014 for her failure to pay the increased amounts it had demanded. The locks on
    the premises were changed, and other than being allowed a brief period to
    retrieve property from the premises, Sang was denied the benefit of the
    premises for the balance of the term of the lease.

[13]

As a result, 183s restaurant business ceased to
    operate.

THE ACTION

[14]

Claiming that the termination of her lease was
    wrongful, Sang sued Bloorston for the return of her deposit and for damages
    arising from Bloorstons breach of the lease. 183 was later added as a
    plaintiff. Bloorston counterclaimed against Sang for lost rent and other losses
    related to Sangs failure to pay the increased rental amounts.

[15]

In December 2016, Bloorston brought a motion for
    summary judgment to dismiss the action, which came before Lederer J. Although
    no specific disposition of the claim by 183 appears to have been made at that
    time, the reasons of Lederer J. proceed on the basis that 183 had no cause
    of action against Bloorston because it was not the tenant under the lease. Lederer
    J. refused to dismiss Sangs claim, giving her the opportunity to move to amend
    her claim to seek damages for the diminution in the value of her shares in 183:
Tran v. Bloorston
, 2017 ONSC 864.

[16]

On May 12, 2017, Lederer J. granted Sang leave to
    amend the statement of claim and dismissed the action against 183. After an
    exchange of expert reports about the amount of the damages sought by Sang, Bloorston
    again moved for summary judgment.

THE MOTION JUDGES DECISION

[17]

The motion judge granted summary judgment in
    favour of Sang and dismissed Bloorstons counterclaim.
[2]

[18]

The motion judge rejected Bloorstons argument
    that it was entitled to the additional amounts it had demanded. He concluded
    that nothing in the 2010 Agreement permitted Bloorston to adjust the Minimum
    Rent based on a recalculation of the square footage of the leased premises. Accordingly,
    the motion judge found that the Minimum Rent was set in the 2010 Agreement and
    that the demand for increased amounts was improper. He noted that prior to
    April 2014, the parties had operated on the shared assumption, giving rise to
    an estoppel by convention, that the size of the leased premises was the square
    footage specified in the 2010 Agreement.

[19]

With respect to Additional Rent, the motion
    judge noted that the lease gave the landlord the right, acting reasonably, to
    re-estimate the tenants share of relevant expenses. He found that Bloorston
    had not acted reasonably, and in any event, it was not entitled to change the
    method of allocation of property taxes that its predecessor had used. The
    motion judge therefore concluded that Bloorstons demand for increased
    Additional Rent was also unjustified.

[20]

The motion judge also rejected the argument that
    Sang had breached the lease by assigning it to 183 or by allowing 183 to use
    the leased premises. He found that there had been no assignment, and that the
    prior landlord and Bloorston were aware of 183s involvement and had made no
    objection.

[21]

Accordingly, the motion judge found that
    Bloorston had wrongfully terminated the lease when it locked Sang out of the
    premises.

[22]

The next issue was whether Sang could claim for
    the loss of value of her shares. The motion judge found that the termination of
    the lease caused the restaurant to close, as a result of which Sangs shares in
    183 became worthless. He rejected Bloorstons argument that Sang was not
    entitled to damages for that loss based on the rule in
Foss v. Harbottle
.
    He held that there was an exception to that rule when the company suffers a
    loss but has no cause of action to recover the loss; in such circumstances the
    shareholder may sue for the loss of the value of the shares. The motion judge referred
    to
Meditrust Healthcare Inc. v. Shoppers Drug Mart

(2002), 220
    D.L.R. (4th) 611 (Ont. C.A.), which quoted a passage from the House of Lords
    decision in
Johnson v. Gore Wood & Co.

(No. 1)

(2000),
    [2001] B.C.C. 820 (U.K.H.L), discussed in greater detail below. He also noted that
    the exception was relied on by Newbould J. in refusing to strike a shareholder claim
    for diminution in share value as disclosing no reasonable cause of action:

Quadrangle
    Group LLC et al. v. Attorney General of Canada
, 2015 ONSC 1521, 39
    B.L.R. (5th) 321, leave to appeal to Div. Ct. refused, 2015 ONSC 7346.

[23]

The motion judge then turned to the
    quantification of damages. The point of contention was the treatment of a $137,227
    sum which represented funds advanced to 183 by Sangs sister. Bloorstons
    expert took the position that this sum had to be deducted from the share value,
    reducing the share value to $3,387 at the time of the termination of the lease.
    The motion judge rejected that position, finding on the evidence of both Sang
    and Sangs sister that the advance was not a loanit bore no interest and was
    not repayable. The sum therefore formed part of the capital of 183 and was to
    be included when determining the value of 183s shares at the time of the
    termination of the lease.

[24]

The motion judge awarded Sang damages of $145,702,
    made up of the lost share value ($140,614) and a deposit that Bloorston was
    holding ($5,088). He dismissed Bloorstons counterclaim.

ISSUES ON APPEAL

[25]

Bloorston raises three grounds of appeal.

[26]

First, it submits that the rule in
Foss v.
    Harbottle
is part of Ontario law and bars Sangs claim for diminution in
    share value. Bloorston further submits that the exception relied on by the
    motion judge has not been accepted as part of Ontario law, and, in any event, is
    not available to Sang on the facts because her claim for diminution of share
    value was not reasonably foreseeable.

[27]

Second, Bloorston argues that the motion judge
    erred in failing to deduct the amount of Sangs sisters advance from the sum
    of damages, and in failing to reconcile conflicting evidence about whether the
    advance was a loan.

[28]

Third, Bloorston submits that the motion judge
    erred in his determination that Bloorston was not entitled to claim the
    additional amounts it did, and that his reasons were inadequate to justify his
    conclusion that Bloorston breached the lease.

ANALYSIS

(1)

The Claim for Diminution in Share Value

(a)

The Rule in
Foss v. Harbottle
and its Rationale

[29]

The rule in
Foss v. Harbottle
is part
    of Ontario law. It has been firmly established by jurisprudence of the Supreme
    Court of Canada and of this court:
Hercules Management Ltd. v. Ernst &
    Young
, [1997] 2 S.C.R. 165 at para. 59;
Meditrust
, at para. 14. The
    point of central importance in this case is the extent or reach of the rule.

[30]

The rule stipulates the following: a shareholder
    of a corporationeven a controlling or sole shareholderdoes not have a
    personal cause of action for a wrong done to the corporation:
Hercules
    Management
, at para. 59;
Meditrust
, at paras. 1,12, and 15.

[31]

There are two reasons for the rule. First, the
    corporation is a separate legal entity. The corporation, and not its
    shareholders, is liable for the corporations acts and defaults, and the
    corporation, not its shareholders, acquires causes of action when wrongs are
    committed against it. Second, the rule avoids a multiplicity of actions; without
    the rule, a shareholder would always be able to sue on the basis that a wrong
    done to the corporation, which caused harm to the corporation, indirectly harmed
    the shareholder:
Hercules Management
, at para. 59;
Meditrust
,

at paras. 12-13.

[32]

While the rule in
Foss v. Harbottle
prevents
    a shareholder from suing for any type of damage resulting from a wrong done to
    the corporation, it is frequently invoked when a shareholder attempts to recover
    for the diminution in value of his or her shares. Such claims offend the rule because
    a wrong done to the corporation that results in diminished share value does not
    ground a personal cause of action for the shareholder. The party with the cause
    of action for the wrong is the corporation. The loss in share value is simply
    reflective of the loss incurred by the corporation
as a result of the wrong
    done to it
, and would be remedied if the corporation took action to recover
    its loss from the wrongdoer. Both the wording of the rule, and its rationale,
    apply to bar such claims:
Meditrust
, at para. 42.

(b)

The Limit of the Rule

[33]

But the rule has a limit. It only provides that
    shareholders cannot raise individual claims in respect of a wrong done
to
    the corporation
 (emphasis in original):
Hercules
, at para. 62.
    See also
Robak Industries Ltd. v. Gardner
, 2007 BCCA 61, 28 B.L.R.
    (4th) 1, at para. 35: There are good reasons for not allowing a shareholder to
    claim the loss in value of its shares
where a wrong has been done to the
    company
 (emphasis added). The rule in
Foss v. Harbottle
does not preclude
    an individual shareholder from pursuing a claim for harm done directly to her,
    assuming the shareholder can make out all the elements of her own cause of
    action:
Meditrust
, at paras. 16-17.

[34]

The limited reach of the rule in
Foss v.
    Harbottle
is important in two different circumstances.

(i)

When Both the Corporation and Shareholder Have
    Causes of Action

[35]

The first circumstance is when the same or
    overlapping facts constitute actionable wrongs against both the corporation and
    shareholder. When that occurs, the limit on the rule operates to ensure that
    the shareholder is not deprived of his or her cause of action, even though the
    corporation also has a cause of action. As La Forest J. explained in
Hercules
    Management
, the shareholder may have a personal cause of action even
    though the corporation may also have a separate and distinct cause of action:
    at para. 62. See also
SFC Litigation Trust v. Chan
, 2019 ONCA 525, 147
    O.R. (3d) 145, leave to appeal refd, [2019] S.C.C.A. No. 314, at para. 86.

[36]

Of course, when wrongs have been committed so
    that both the corporation and shareholder have causes of action, care must be
    taken to ensure that the shareholders personal action is not really an action
    for a wrong done to the corporation (for which the corporation, and only the
    corporation, can sue). In other words, even when the shareholder has a personal
    claim, the rule in
Foss v. Harbottle
may apply to prevent the
    shareholder from going beyond that personal claim to recover for a wrong done
    to the company.

[37]

When the same or overlapping facts constitute
    actionable wrongs against both the corporation and shareholder, a shareholders
    claim for diminution in share value may or may not be permissible. Whether it
    is permissible in a particular case will depend on the nature of the wrong done
    to the shareholder, the nature of the wrong done to the corporation, and their
    respective causes of action. It is unnecessary in this case to opine on the
    precise contours of how the distinction is made other than to note that cases
    may fall on either side of the line.

[38]

For example, when a corporate director is
    responsible for misrepresentations that induce the acquisition of shares, the
    shareholders may have a statutory and common law cause of action to sue the
    director for loss of share value due to the misrepresentations, even though the
    director making such misrepresentations may also have breached his duty to the
    corporation and thereby given the corporation its own cause of action against
    the director: see
Borrelli v. Chan
, 2018 ONSC 1429, 58 C.B.R. (6th) 1,
    at paras. 130-134;
SFC Litigation Trust
,
at paras. 85-86, 131-132.

[39]

In other cases, the mere fact that the
    shareholder has a personal claim has been held not to justify a claim for
    diminution in share value because the shareholders loss has not flowed from her
    cause of action but from a wrong done to the corporation. In order to
    distinguish what a shareholder may claim from claims that are properly made
    only by the corporation, some courts have required that the shareholders claim
    result from an independent relationship with the wrongdoer and be for an
    independent loss from that of the corporation to whom the wrong has been
    done:

Robak Industries
, at para. 38 (discussed in more detail
    below);
Walsh v. T.R.A. Company Limited
, 2015 NLTD(G) 27, 38 B.L.R.
    (5th) 256, at para. 32.

(ii)

When Only the Shareholder Has a Cause of Action

[40]

The second circumstance where the limit on the
    rule is germane is the one applicable here. Unlike the situation envisaged by
    the rule, this case does not involve a shareholder suing for a wrong done to
    the corporation for which the corporation can sue. Similarly, this case is unlike
    the circumstances discussed in paras. 35 to 39 above (when the same or
    overlapping facts constitute actionable wrongs against both the corporation and
    shareholder and give rise to separate and distinct causes of action in each).

[41]

Here the corporation has no cause of action
    whatsoever. Only the shareholder, Sang, has a cause of action. Since the rule
    in
Foss v. Harbottle
applies only to prevent a shareholder from suing
    for a wrong done to the corporation, the question is whether the rule has any
    application when the corporation has no cause of action and the shareholder,
    who does have a cause of action, makes a claim for diminution in share value.

[42]

Bloorstons argument is essentially that the
    rule applies because the claim is for diminution in share value, even though the
    predicate to the rule, a shareholder claim for a wrong done to the corporation,
    is absent. As I explain in the next sections, I do not accept that argument,
    which, if accepted, would expand the rule rather than respect its limits and its
    rationale.

(c)

Claims for Diminution in Share Value Under the Second
    Proposition in
Johnson

(i)

The Second Proposition in
Johnson

[43]

The main source for the motion judges holding that
    a claim for diminution in share value is permissible in this case is a
    statement of Lord Bingham in the House of Lords decision in
Johnson
. As
    mentioned, the motion judge referred to a passage from
Meditrust
that quoted
    this statement (which was also quoted in
Quadrangle
). The statement, which
    has come to be known as the second proposition in
Johnson
, provides that
    a shareholder may claim for diminution in share value resulting from a
    corporations loss when the wrong done is to the shareholder, who thus has a cause
    of action, and the corporation has no cause of action: at p. 838.

[44]

It is this proposition that Bloorston argues is
    not part of Ontario law.

[45]

To appreciate the second proposition in
Johnson
,
    it is important to consider it in the context of the three propositions set out
    in that case by Lord Bingham about the ability of a shareholder to sue for
    diminution in share value:

1. Where a company suffers loss caused by a
    breach of duty owed to it, only the company may sue in respect of that loss. No
    action lies at the suit of a shareholder suing in that capacity and no other to
    make good a diminution in the value of the shareholder's shareholding where
    that merely reflects the loss suffered by the company. A claim will not lie by
    a shareholder to make good a loss which would be made good if the company's
    assets were replenished through action against the party responsible for the
    loss, even if the company, acting through its constitutional organs, has
    declined or failed to make good that loss [citations omitted].

2. Where a company suffers loss but has no
    cause of action to sue to recover that loss, the shareholder in the company may
    sue in respect of it (if the shareholder has a cause of action to do so), even
    though the loss is a diminution in the value of the shareholding [citations
    omitted].

3. Where a company suffers loss caused by a
    breach of duty to it, and a shareholder suffers a loss separate and distinct
    from that suffered by the company caused by breach of a duty independently owed
    to the shareholder, each may sue to recover the loss caused to it by breach of
    the duty owed to it but neither may recover loss caused to the other by breach
    of the duty owed to that other [citations omitted].

[46]

While it is the second proposition in
Johnson

that supports Sangs claim, it is pertinent to observe that the first and
    third propositions in
Johnson
are consistent with Ontario law. The first
    proposition, dealing with the situation where only the corporation has a cause
    of action, restates the rule in
Foss v. Harbottle
. The third
    proposition deals with the situation where both the shareholder and corporation
    have causes of action. It allows both to sue for their respective claims, but neither
    to sue for the others claim. One can draw from this

that, at least as
    far as the House of Lords was concerned, the second proposition fits
    consistently into a legal framework that is otherwise consistent with Ontario law.

[47]

The second proposition in

Johnson
was partly derived from an earlier case,

George Fischer (Great Britain)
    Ltd v. Multi Construction Ltd.
(1994), [1995] B.C.C. 310 (C.A.), in
    which the facts bore a relevant similarity to those present here. In

George

Fischer
, a holding company of several subsidiary companies entered
    into a contract for the defendant to build a warehouse for one of the subsidiary
    companies. The warehouse would also be used by the other subsidiaries for
    business operations. The defendants negligence in constructing the warehouse
    caused the subsidiaries, which were not parties to the contract, loss in
    revenue. The holding company succeeded in its personal claim for the diminution
    in value of its shares in the subsidiaries because the contract was between the
    holding company and the defendant and not between the subsidiaries and the
    defendant: see also Joyce Lee Suet Lin, 
Barring Recovery for Diminution in
    Value of Shares on the Reflective Loss Principle
 (2007) 66:3 Cambridge
    L.J. 537 at p. 545.

(ii)

Has the Second Proposition been Rejected in
    Ontario?

[48]

Bloorston submits that the second proposition in
Johnson
is not part of Ontario law because (i) it was rejected by
    this court in
Meditrust
; (ii) that rejection was not questioned in the
    decisions of this court that have followed
Meditrust
;
[3]
and (iii) it was also rejected
    by the British Columbia Court of Appeal in
Robak

Industries
.

[49]

Bloorston therefore argues that the motion judge
    was wrong to give effect to this rejected proposition (which the motion judge
    treated as an exception to the rule in
Foss v. Harbottle
).

[50]

I disagree with Bloorstons submission.

[51]

Bloorston relies on para. 43 of
Meditrust
(the very passage cited by the motion judge and the court in
Quadrangle
),
    where Laskin J.A., writing for the court, stated:

Meditrust, nonetheless, submits that [the rule
    in
Foss v. Harbottle
]should be reconsidered in the light of recent
    English case law. I think that submission is untenable for two reasons. First,
    Canadian appellate jurisprudence has consistently invoked
Foss v. Harbottle
to reject this kind of claim. Second, the most recent English authority, the
    House of Lords decision in
Johnson v. Gore Wood & Co.
, [2001] 1
    All E.R. 481, does not support Meditrusts position. In
Johnson
, Lord
    Bingham admittedly put a gloss on the rule in
Foss v. Harbottle
when
    he [provided the second proposition above]. But, to rely on this proposition to
    claim the loss in the value of its shares, Meditrust must at least show that it
    has a cause of action and the subsidiaries do not. This, Meditrust has failed
    to do. Therefore, in my view, Meditrust cannot maintain its claim for damages
    resulting from the loss in the value of its shares in its subsidiaries.

[52]

I do not read this passage as a rejection of the
    second proposition in
Johnson
for three reasons.

[53]

First,
Meditrust
involved a shareholder
    (Meditrust) seeking to sue for the diminution in value of its shares in
    subsidiary companies due to losses suffered by the subsidiaries
because of
    wrongs done to them
. Accordingly, when Laskin J.A. stated that the rule in
Foss
    v. Harbottle
has been applied by Canadian appellate jurisprudence to reject
    this kind of claim, he was referring to the kind of claim made in
Meditrust
where
    the alleged wrong was to the corporation (Meditrusts subsidiaries), and not to
    the shareholder (Meditrust itself). He was not referring to the kind of claim contemplated
    by the second proposition in
Johnson

(and present in this case)where
    the alleged wrong was to the shareholder, and not to the corporation.

[54]

Second, if the second proposition from
Johnson
was being rejected in
Meditrust
, it would have been unnecessary for Laskin
    J.A. to explain, as he did, why on the facts of
Meditrust
the
    proposition did not apply, namely that
Meditrust
was not a case where
    the shareholder had a cause of action and the corporation did not. As noted by
    Laskin J.A, Meditrust must at least show that it has a cause of action and
    the subsidiaries do not. This, Meditrust has failed to do:
Meditrust
,
    at para. 43.

[55]

Third, the passage quoted followed statements by
    Laskin J.A. earlier in the decision about the limit of the rule in
Foss v.
    Harbottle
. Following
Hercules Management
, Laskin J.A. explicitly
    noted that the rule does not preclude a shareholder who has her own cause of
    action from suing for harm suffered by her:
Meditrust
, at paras. 16-17.
    These statements are more consistent with the second proposition in
Johnson
than with its rejection.

[56]

None of the decisions of this court since
Meditrust

(referred to in footnote 3 of these reasons) suggest that
Meditrust

rejected the second proposition in
Johnson
. Indeed, only one of
    the decisions (
Midland Resources
) involved a shareholder suing for a
    wrong done to the shareholder in circumstances where the corporation had no
    cause of action for that wrong. In
Midland

Resources
,
    this court held that the rule in
Foss v. Harbottle

did not
    apply in that circumstance:
Midland

Resources
, at
    para. 120.

(iii)

The Decision in
Robak Industries

[57]

The appellants reliance on
Robak Industries
is also misplaced.
Robak

Industries
involved
    shareholders suing for wrongs done to the corporation as well as for personal
    wrongs: see paras. 7-9. It did not involve the circumstance contemplated by the
    second proposition in
Johnson
and present in this case. In upholding
    the striking of certain portions of the claim on the basis of the rule in
Foss
    v. Harbottle
, including the claim for diminution in the value of shares,
    it was pivotal to the courts reasoning that the allegations included alleged
    wrongs done to the corporation for which the corporation could sue.

[58]

For example, Levine J.A. described the rule in
Foss
    v. Harbottle
as providing that only the company, not individual shareholders,
    may
sue for wrongs done to the company
 (emphasis added):
Robak
    Industries
, at para. 4. She concluded that the chambers judge did not err in
    striking the appellants claims as there was no basis in the law to conclude that
    the alleged wrongs to Getty [the corporation]

give rise to a cause of
    action on the part of either Mr. Lepinski or Robak [the shareholders], or
    permit Robak to claim as damages the loss of value in its shares of Getty:
Robak
    Industries
, at para. 5. In paraphrasing the chamber judges analysis, Levine
    J.A. noted that the diminution in the value of their shares of Getty was not
    an independent loss
in respect of the allegations of wrongdoing to Getty. Any
    loss suffered from wrongs to Getty was for Getty to claim
,
and any
    loss in the value of Gettys shares was not an independent loss but a loss
    suffered in common with all Getty shareholders (emphasis supplied):
Robak
    Industries
, at para. 15.

[59]

This reasoning was again underscored when Levine
    J.A. summarized her conclusions at para. 38:

The appellants arguments, based on the
    consideration of the rule in
Foss v. Harbottle
in other jurisdictions,
    does not reveal that the chambers judge made any error in striking out the
    portions of the Further Amended Statement of ClaimShe applied binding Canadian
    law, which has been considered and affirmed in a persuasive judgment of the
    Ontario Court of Appeal in
Meditrust
. In both [
Rogers v. Bank of
    Montreal
, [1985] 5 W.W.R. 193

(B.C.S.C.), affirmed [1987] 2 W.W.R.
    364

(B.C.C.A.)] and
Meditrust
, shareholders claimed losses in
    the value of their shares as the result of an alleged conspiracy against them
involving
    wrongs done to the company
,
and in both cases the claims were
    dismissed. The chambers judge did not decide, contrary to the appellants
    arguments, that a shareholder may
never
[emphasis in original] bring a
    claim for the diminution in the value of the shareholders shares, but confirmed,
    by reference to [
Hercules Management
] and

[
Haig v. Bamford

(1976), [1977] 1 S.C.R. 466], that a shareholder may have a cause of action
    for loss in the value of shares where the shareholder has both an independent
    relationship with the wrongdoer and an independent loss
from that of the
    company to whom the wrong has been done
.
She decided that in this
    case, the appellants had not shown that they have a cause of action for an
    "independent loss"
in respect of wrongs done to Getty
. I agree
    with her conclusion [emphasis added].

[60]

The shareholders claims in
Robak Industries
for diminution in share value flowed from wrongs allegedly done to the
    corporation and were therefore for the corporation to claim. The shareholders
    had not alleged any proper basis to claim that lossasserted as a claim for
    diminution in share valuepersonally. On those facts, the shareholders were
    wrong to assert that the second proposition in
Johnson
allowed them to
    claim diminution in share value. Any hesitation to accept
Johnson
as a
    statement of Canadian law in
Robak Industries

must be read in
    light of the facts there and the way it was sought to be used: see paras.
    27-28. The second proposition had no application; the facts fell within the
    third proposition, requiring the court to carefully separate claims that
    belonged to the corporation from claims that could be asserted by the
    shareholders personally.

[61]

The rationale expressed in
Robak Industries
as to why the shareholders  could not claim diminution in share value (lack of
    both an independent relationship with the wrongdoer and a loss independent of
    the loss caused by the wrong to the company) does not foreclose a shareholders
    claim in circumstances where the wrong done is only to the shareholder and the
    corporation has no cause of action. In those circumstances, there is both an
    independent relationship with the wrongdoer (hence the wrong done to the
    shareholder) and a loss that is independent of the loss to the corporation to
    whom the wrong was done (as there is no legal wrong done by the wrongdoer to
    the corporation).

(iv)

Conclusion on the Second Proposition

[62]

I therefore conclude that nothing in
Meditrust
nor this courts subsequent jurisprudence constitutes a rejection of the second
    proposition in
Johnson
or forecloses the claim that was advanced here.
    Nor do I view the decision in
Robak Industries
as warranting the
    rejection of the proposition in a case such as this one.

(d)

A Shareholder With a Proper Cause of Action May
    Sue a Wrongdoer for Diminution in Share Value When the Corporation Has No Cause
    of Action

[63]

It is a matter of semantics whether the second proposition
    in
Johnson
is a gloss on the rule in
Foss v. Harbottle
, an
    exception to the rule, or simply a statement of a circumstance beyond the
    rules application. The second proposition in
Johnson
should be treated
    as good law in Ontario. Where the wrong was not committed against the
    corporation and the corporation therefore has no cause of action, the rule in
Foss
    v. Harbottle
does not prevent a shareholder who has her own cause of
    action from suing for any damages properly recoverable under that cause of
    action, including, in appropriate cases, loss or diminution of share value.

[64]

This conclusion is entailed by the wording of
    the rule which, to repeat, is premised on precluding a personal action by a shareholder
    for a wrong done to the corporation.

[65]

It is also consistent with the rationale for the
    rule. When a shareholder sues because of a wrong done to her, and in the
    absence of a wrong to the corporation that gives the corporation a cause of
    action, allowing the shareholders action for any properly recoverable damages
    respects the separate legal identity of the corporation. The shareholder is
    pursuing her
own
cause of action, not a cause of action that belongs to a
    separate legal person (the corporation). Moreover, a claim for loss of share value
    is a claim for damage to the shareholders property (the shares), not a claim
    for anything that belongs to the corporation. Shares in a corporation are property
    of the shareholder, not of the corporation. As a general matter, the
    corporation is prohibited from owning its own shares:
BCE Inc. v. 1976 Debentureholders
,
    2008 SCC 69, [2008] 3 SCR 560, at paras. 34-35;
OBCA
, ss. 28(1)
    and 41;
Chevron Corp. v. Yaiguaje
, 2015 SCC 42; 3 S.C.R. 69, at para. 95.

[66]

Nor in permitting such a claim is there a risk
    of a multiplicity of proceedings as a result of the corporation and shareholder
    making the same claims. Where there has been a wrong to the shareholder, but
    not to the corporation such that the corporation has no cause of action, there can
    be no multiplicity of proceedings; the corporation cannot bring an action.

[67]

Finally, in these circumstances, a claim for
    diminution in share value is not simply a claim for loss that is reflective of
    the loss suffered by the corporation (for which the corporation, and only the
    corporation, can sue):
Meditrust
, at para. 42. When the corporation
    has no cause of action, the shareholder cannot be seen as pursuing a loss
    which would be made good if the companys assets were replenished through
    action [by the company] against the party responsible for the loss:
Johnson
,
    at p. 838. The claim for diminution in share value results from a relationship
    with the wrongdoer that is independent of any relationship the corporation had
    with the wrongdoer. For example, in this case, only Sang, and not 183, was in a
    contractual relationship with Bloorston. The loss is independent of any
    suffered by the corporation
as a result of a legal wrong done to the
    corporation
.

[68]

Accordingly, the rule in
Foss v. Harbottle
does not preclude a claim for diminution of share value when the shareholder
    has her own cause of action because of a wrong done to her, and the corporation,
    which suffered a loss but not because of a legal wrong done to it, has no cause
    of action.

[69]

This does not, of course, mean that in every
    such case damages for diminution in share value should be allowed. A claim for
    this head of damages is subject to all the same requirements of proof, causation,
    foreseeability, and quantification as a claim for any head of damages flowing
    from the wrong that grounds the shareholders cause of action. In the section
    below, I address Bloorstons argument that this head of damages was not
    reasonably foreseeable. I then address its argument about quantification.

(2)

Were Damages for Diminution in Share Value
    Reasonably Foreseeable?

[70]

Bloorston submits that the motion judge should have
    rejected the claim for diminution in share value in this case because it was
    not a reasonably foreseeable consequence of the termination of Sangs lease.
    Bloorston also submits that the motion judge failed to make a finding on the
    reasonable foreseeability of Sangs damages.

[71]

Damages for breach of a lease are reasonably
    foreseeable if (i) in the usual course of things, they arise fairly,
    reasonably, and naturally as a result of the breach of contract; or (ii) they
    were within the reasonable contemplation of the parties at the time of contract:
Saramia Crescent General Partner Inc. v. Delco Wire and Cable Limited
,
    2018 ONCA 519, at para. 36.

[72]

The lease in this case specified that the
    premises were for use as a restaurant. The original tenant under the lease was Sangs
    sister, who, like Sang, also operated a restaurant on the premises through a
    corporation. Additionally, the motion judge found that Bloorston and its
    predecessor were aware of and did not object to 183s occupation of the
    premises. Bloorstons demands for additional payments show that it was aware of
    the operation of a restaurant on the premises; indeed, the demands were
    addressed to Gingers, the name of the restaurant.

[73]

The test under the first branch of remoteness is
    objective:
Saramia
, at para. 38. That a restaurant operating on
    leased premises would cease to operate if the lease were wrongly terminated was
    reasonably foreseeable. If the tenant benefitted from the continuation of the
    lease and the operation of the restaurant, loss from the inability to continue
    in operation would arise in the usual course of things from a breach of the
    lease.

[74]

Bloorston does not argue that if Sangs property
    had been the restaurant business itself, that is, if she operated the
    restaurant directly as a sole proprietorship, the loss in value of that
    property would not have been a reasonably foreseeable consequence of the
    wrongful termination of the lease. Instead, Bloorston argues that the loss of
    share value was not reasonably foreseeable because it did not know that Sang
    owned the shares of the corporation that operated the restaurant.

[75]

I do not accept that distinction in the
    circumstances here. The requirement of reasonable foreseeability refers to the
    type of loss suffered:
Saramia
, at para. 36. As explained in
Saramia
,
    at para. 39:

The inquiry is whether, as a general matter
    and objectively viewed, [the type of loss suffered] is a type of loss that
    foreseeably and naturally arises according to the usual course of things from
    the breach of a commercial lease. One of the factors that could be used to
    define the foreseeable and natural types of losses recoverable upon breach of
    contract is the objective bargain inherent in the contract. In a commercial
    lease, the tenant's bargain is the use of the premises for trade or commerce

[76]

The fact that it was Sangs shares in the
    restaurant business that lost value due to the premature unavailability of the
    premises is not a different type of loss for the purposes of the reasonable
    foreseeability analysis. The type of loss suffered was damage to Sangs property
    caused by the premature non-availability of the restaurant premises that she
    leased. The fact that the diminished property was Sangs stake in the
    corporation operating the restaurant does not take the loss outside of the type
    that would naturally and ordinarily be expected to occur from the breach of
    this commercial lease.

[77]

Moreover, in this case, from the time of the
    lease, and from the time of the 2010 Agreement, a corporation operated the
    restaurant. As the motion judge found, 183s occupation and use of the premises
    was known, and was not objected to. Bloorston would not be able to complain if
    Sang claimed losses for the discontinuance of the restaurant business she
    operated herself; that her interest was as a shareholder does not take the loss
    out of the type that would have been in the reasonable contemplation of the parties
    at the time of contracting.

[78]

Although the motion judge did not use the words reasonably
    foreseeable, he did not award damages for a type of loss that was beyond those
    that were reasonably foreseeable. This is not a case where any alleged
    insufficiency of reasons in the court below prevents meaningful appellate
    review. I would not give effect to this ground of appeal.

(3)

Quantification of Damages

[79]

Bloorston argues that the motion judge should
    have deducted the sum of $137,227 from the value of Sangs shares. It points to
    183s financial statements and tax returns, which record this amount as a
    shareholder loan. It also points to a passage from Sangs sisters examination,
    which it says contains equivocal evidence about the terms on which the funds
    were advanced. It submits that the motion judge failed to deal with or
    reconcile this evidence with his finding that the amount was not a loan, or
    explain why, in light of the evidence, he nonetheless found Sang and her
    sisters evidence that the advance was not a loan to be credible. Finally, Bloorston
    submits that the motion judges findings that the advance did not bear interest
    and was not repayable did not mean that it was not a loan.

[80]

I would not give effect to these arguments. A
    motion judges findings of fact and mixed fact and law on a motion for summary
    judgment are entitled to deference:
Hryniak v. Mauldin
, 2014 SCC 7,
    [2014] 1 S.C.R. 87, at paras. 81-82. The motion judge clearly considered the
    issue of whether the advance was a loan owing to Sangs sister, and found that
    it was not based on evidence he considered credible from both Sang and her
    sister. He was not required to refer to all of the evidence in expressing his conclusion:
Hersey v. Hersey
, 2016 ONCA 494, at para. 13. There can be no
    suggestion that the motion judge overlooked or misapprehended the evidence. I also
    see no basis for the suggestion that even if the advance was not repayable as
    the motion judge found, it should still have been deducted in calculating
    shareholder value.

(4)

The Findings of Breach of Lease

[81]

Bloorston makes a number of arguments about the
    motion judges findings that its demands for increased Minimum Rent and
    Additional Rent were unjustified. It submits that the motion judge erred: in interpreting
    the lease and the 2010 Agreement as providing for fixed amounts of Minimum Rent
    rather than amounts based on square footage; in finding that the parties were
    bound to the amount of square footage specified in the 2010 Agreement or had
    operated on a shared assumption, giving rise to an estoppel by convention, that
    the square footage was 1,120 square feet as specified in the 2010 Agreement; and
    in finding that Bloorston was not entitled to change the method of allocation
    of property taxes as it did. Bloorston adds that the motion judges reasons
    were inadequate on each matter.

[82]

These arguments attack the motion judges interpretation
    of commercial agreements, which is subject to a deferential standard of review
    absent extricable legal error:
Sattva
Capital v. Creston Moly
,
    2014 SCC 53, [2014] 2 S.C.R. 633, at para. 55. No extricable legal error has
    been shown. They also attack the motion judges findings of fact and mixed fact
    and law, which are also entitled to deference. I am not satisfied that any
    palpable and overriding error has been shown. The motion judges reasons
    explain why he reached the conclusions that he did. I am not persuaded that any
    basis has been shown to justify appellate interference.

CONCLUSION

[83]

For these reasons, I would dismiss the appeal. If
    the parties are unable to agree on costs of the appeal, they may make written
    submissions, not exceeding three pages each, within ten days of the date of
    these reasons.

Released: M.L.B. July 6, 2020

B.
    Zarnett J.A.

I
    agree. M.L. Benotto J.A.

I
    agree. Thorburn J.A.





[1]
See
Business Corporations Act
, R.S.O. 1990,
    c. B.16, s. 92 (
OBCA
). Section 246 of the
OBCA
permits a shareholder, in some
    circumstances, to pursue a derivative action in the name of and on behalf of
    the corporation when the directors of the corporation are unwilling to bring
    the action. When a derivative action is authorized, it is still the
    corporations cause of action that is pursued for the benefit of the
    corporation. The issue in this appeal is whether the respondent had a
personal
cause of action for diminution in share value.



[2]
The motion judge noted that Sang did not bring a cross-motion for
    summary judgment. He proceeded on the basis that he was permitted to grant
    judgment in favour of Sang because of this courts decision in
Hunter-Rutland Inc. v. Huntsville (Town of),
2015 ONCA 353, at para. 5.



[3]
Bloorston points to
Malata
    Group (HK) Ltd. v. Jung
, 2008 ONCA 111, 89 O.R. (3d) 36;
Harris v. Leikin Group Inc.
, 2014 ONCA
    479, 120 O.R. (3d) 508;
Rea v. Wildeboer
,
    2015 ONCA 373, 126 O.R. (3d) 178;
Midland
    Resources Holding Limited v. Shtaif
, 2017 ONCA 320, 135 O.R. (3d) 481,
    leave to appeal refd, [2017] S.C.C.A. No. 246;
Yaiguaje v. Chevron Corporation
,
    2018 ONCA 472, 141 O.R. (3d) 1, leave to appeal refd, [2018] S.C.C.A. No. 255;
    and
SFC Litigation Trust
.


