



COURT 
    OF APPEAL FOR BRITISH COLUMBIA




Citation:


Boutsakis 
          v. Kakavelakis,







2008 
          BCCA 13



Date: 20080115

Dockets: CA032956, CA032957, CA032958

Docket: CA032956

Between:

George Boutsakis and John Kakavelakis, a Partnership

and Alexis House Café Limited

Respondents

(Plaintiffs)

And

Diane Boutsakis doing business as Crown Travel,

and the said Crown Travel, and George Boutsakis

Appellants

(Defendants)

- and -

Docket: CA032957

Between:

George Boutsakis and John Kakavelakis, a Partnership

Appellants

(Plaintiffs)

And

Alexis House Café Limited

and John Kakavelakis

Respondents

(Defendants)

- and -

Docket: CA032958

Between:

George Boutsakis and John Kakavelakis, a Partnership

Appellants

(Plaintiffs. Defendants by Counterclaim)

And

Alexis House Café Limited, John Kakavelakis

and George Boutsakis and

John Kakavelakis, a Partnership

Respondents

(Defendants, Plaintiffs by Counterclaim)




Before:


The 
          Honourable Madam Justice Prowse




The 
          Honourable Madam Justice Ryan




The 
          Honourable Madam Justice Newbury








D.J. 
          Taylor


Counsel for the Appellants




G.K. 
          Martin


Counsel for the Respondents




Place 
          and Date of Hearing:


Vancouver, British Columbia




November 26 & 27, 2007




Place 
          and Date of Judgment:


Vancouver, British Columbia




January 15, 2008








Written 
          Reasons by
:




The 
          Honourable Madam Justice Newbury




Concurred 
          in by:




The 
          Honourable Madam Justice Prowse

The 
          Honourable Madam Justice Ryan



Reasons 
    for Judgment of the Honourable Madam Justice Newbury:

[1]

These appeals, in three separate actions, are brought from orders of 
    Madam Justice Baker dated April 12, 2005 following a summary trial of 14 days.  
    In addition to being the summary trial judge, Baker J. was the case management 
    judge in these and related proceedings from 1997 on, with a respite between 
    2001 and 2002, when Madam Justice Boyd assumed that role.  Baker J.s reasons 
    (which are indexed as 2005 BCSC 541) are long and detailed, and I do not intend 
    even to attempt to recount the extensive facts of this case and the related 
    litigation, dating back to 1987, between the Boutsakis and Kakavelakis 
    camps  litigation that Baker J. described as having all the hallmarks of 
    a bad marriage.

[2]

It may be sufficient to set the stage for these reasons by noting that 
    together, Mr. Boutsakis and Mr. Kakavelakis own a commercial building in Vancouver. 
     (They have been characterized as partners in connection with the building 
    and do not contest that finding.)  In 1980, they leased a portion of the front 
    of the building to Mrs. Boutsakis, doing business as Crown Travel, and leased 
    a similar portion to Alexis House Café Ltd. (Alexis), a company apparently 
    related to or controlled by Mr. Kakavelakis.  He guaranteed Alexis obligations 
    under its lease, just as Mr. Boutsakis guaranteed Crown Travels obligations 
    under its lease.  The two leases, combined with each partners propensity 
    to act in situations of obvious conflict of interest, have given rise to several 
    previous court proceedings. The present actions are to some extent parallel 
    with each other.  The so-called F action was brought on behalf of the Partnership 
    against Mrs. Boutsakis and her husband as her guarantor for various amounts 
    allegedly due under the Crown Travel lease; while the S action was brought 
    by Mr. Boutsakis on the Partnerships behalf against Alexis for rental arrears 
    and other amounts said to be owing under its lease, and against Mr. Kakavelakis 
    as its guarantor. Both proceedings are complicated, however, by various other 
    claims added by amendments to the pleadings, and the S action by a counterclaim 
    that purports to reach various defendants and to advance various allegations 
    unrelated to the original claim.  (A second S action is not germane to the 
    appeal.)

[3]

It is fair to say that having managed the case for some years, Baker 
    J. took a practical approach to the many issues before her, and that in terms 
    of procedure, she made every effort to maintain an even hand between the two 
    camps, sometimes by overlooking technical deficiencies of the kind that often 
    arise where, as here, the parties have acted largely without counsel prior 
    to trial.  On appeal, however, it is contended that the summary trial judge 
    made several errors of law.  Since most of the grounds of appeal are not likely 
    to be of interest to outside parties, I propose simply to deal with them one 
    by one, rather than to attempt an integrated narrative and analysis in the 
    usual manner.

THE F ACTION (SUPREME COURT FILE NUMBER F892474)

The Arbitration Clause and Court Jurisdiction

[4]

The lease between Crown Travel as tenant and Mr. Boutsakis and Mr. 
    Kakavelakis as landlords (whom I shall refer to as the Partnership) contained 
    an arbitration clause that read as follows:

6.03 
     Failing agreement by the parties, rent shall be determined by arbitration 
    pursuant to the provisions of the
Arbitration Act
.  There will be a 
    three man panel; one nominated by each party, and the third, who shall act 
    as chairman, selected by the two nominees.

The 
    reference to rent is to the rent payable during the renewal terms that were 
    the subject of Article 6 of the lease generally.  The rents payable for these 
    terms became germane to the F action when Mr. Kakavelakis amended his Statement 
    of Claim in October 1997, seeking rent that had gone unpaid by Crown Travel 
    during the second and third renewal terms, a declaration of arrears and an 
    order fixing the rent for those terms, or alternatively, an order referring 
    the matter to arbitration.  (Mr. Kakavelakis stated at para. 13 of his pleading 
    that Mr. Boutsaskis was joined as a Defendant pursuant to [his] guarantee 
    and in his capacity as part Landlord, pursuant to Rule 5(3).)  In the spring 
    of 2001, Mr. Kakavelakis sought an order compelling the defendants to appoint 
    an arbitrator to participate in the determination of the rental for what he 
    called the third and fourth renewal terms, and in default of such appointment, 
    asked the Court to do so.  His motion was brought pursuant to s. 17 of the
Commercial Arbitration Act
, R.S.B.C. 1996, c. 55.  Mr. Kakavelakis 
    said he had served notice on Crown Travel to appoint its arbitrator but that 
    the tenant had refused or neglected to do so.

[5]

In her outline of argument prepared in response to the motion, Mrs. 
    Boutsakis countered that there was no dispute between Crown Travel and the 
    Partnership concerning the rentals for the second and third terms.  Evidently, 
    she relied on the position taken by Mr. Boutsakis, who submitted that there 
    was no need to resort to arbitration because there has never been a disagreement 
    on the adjustment of rent and that the timing of the application is well 
    passed [
sic
] the time frame of the lease.

[6]

Mr. Kakavelakis motion and others came before Boyd J. on July 12, 
    2002.  She noted that the pleadings contained no reference either to the arbitration 
    clause or to any intention to arbitrate.  In her words:

Here, 
    notwithstanding the disagreement, which apparently dates back to 1988, neither 
    party, that is, neither Mr. Kakavelakis, the partnership, or, indeed, Ms. 
    Boutsakis, on behalf of Crown Travel, ever sought to pursue the appointment 
    of an arbitrator.  Rather, it appears that the plaintiff elected to commence 
    this action.  [At para. 20.]

Boyd 
    J. also noted the long background of the action, during which the plaintiff 
    had filed various notices of intention to proceed.  She continued:

So 
    the issue is:  Given the extensive period of delay, is the plaintiff entitled 
    to pursue the appointment of an arbitrator and the general arbitration of 
    these outstanding issues by a three-person panel, in accordance with clause 
    6.03 of the lease?  Mr. Martin, counsel for the defendants, reassures me that 
    those proceedings, that is, arbitration proceedings, would be most efficient, 
    that the arbitration proceedings which have already been conducted,
vis-à-vis
the Alexis lease, should act as a template to any arbitrator and that this 
    matter could readily and easily be dealt with in a day before an arbitration 
    panel.

I 
    have seriously considered whether Mr. Martins view is realistic and I am 
    not persuaded, given the history between these parties, that that would be 
    the case.  It is quite obvious that these proceedings have been fractured 
    amongst many different actions.  In my view, regardless of however long it 
    takes to deal with the arbitration, the matter would come back before the 
    court for resolution of the action and the common debates which arise in the 
    F892474 action and the action which I have already referred to, which continues 
    to proceed before the registrar, on various references, as well as taxations.

In 
    my view, while I say this with a great deal of hesitation because of the burden 
    it creates for this court, the most efficient and best way of dealing with 
    this matter would be in the context of a Rule 18A application in this court.
There is strong authority for the proposition that, notwithstanding the 
    existence of a mandatory arbitration clause, a party can forfeit the right 
    to arbitration, given delay, and, in my view, the delay here has been horrendous.  
    In my view, that delay has resulted in a forfeiture of the right of arbitration
.

The 
    claim, however, nevertheless remains alive and it ought to be pursued, in 
    my view, by way of a Rule 18A application
, 
    which would be organized, brought before the court with whatever supporting 
    materials are required, answered by the defendants, in whatever way they choose, 
    by affidavit, and then determined by a single judge.  That strikes me as less 
    expensive, more efficient, and would be done by that judge, not simply in 
    the context of the action, but likely in the context of all of the various 
    tortured litigation which has been before this court since the 1980s.  [At 
    paras. 27-30; emphasis added.]

(For 
    some unexplained reason, Boyd J.s order, which was settled by the Registrar 
    on November 4, 2002, referred to and was filed in the S action only.)

[7]

In accordance with Boyd J.s direction, Mr. Kakavelakis sought a court 
    inquiry in April 2003 to determine Crown Travels rental arrears for the 
    first renewal term of the lease, an order fixing the rent payable during the 
    second and third renewal terms, and related relief.  In April 2003, the Boutsakis 
    defendants filed an Amended Statement of Defence in which the following appeared:

In 
    further answer to paragraph 10 of the Amended Statement of Claim, [Mrs. Boutsakis] 
    says that there has been no arbitration requested or conducted with respect 
    to [her] space and there has been no related arbitration.

They 
    also advanced various other pleas of estoppel against the plaintiffs action.

[8]

Madam Justice Baker dealt with the matter of the arbitration clause 
    at paras. 202-207 of her reasons.  After quoting from the judgment of Boyd 
    J., she continued:

Justice Boyd's decision was not appealed
. In my view, she had already decided that
this court 
    has jurisdiction to determine the rental rate applicable during the second 
    and third renewal terms
. If I am incorrect in that, then I am of the view 
    that the
Commercial Arbitration Act
, R.S.B.C. 1996, c. 55, and the 
    reasoning in
Gulf Canada Resources Ltd. v. Arochem International Ltd
. 
    (1992), 66 B.C.L.R. (2d) 113 (C.A.);
Stancroft Trust Ltd. v. Can-Asia Capital 
    Co.
(1990), 43 B.C.L.R. (2d) 341 (C.A.); and
Granville Shipping Co. 
    v. Pegasus Lines Ltd.
[1996] F.C.J. No. 481 (T.D.), and
Bott v. Sorley
[1998] B.C.J. No. 2023 support the conclusion that this court may determine 
    the rental rate to apply to the Crown lease during the second and third renewal 
    terms, notwithstanding the arbitration clause in the lease.

In effect, the application by Mr. Martin, brought on 
    behalf of the Lessor/Partnership, for the appointment of an arbitrator, was 
    an application to stay the action against Mrs. Boutsakis
in relation to rent owing during the second and third 
    terms. In determining that no order appointing an arbitrator should be made, 
    Justice Boyd refused the stay. In such circumstances the court is the appropriate 
    forum to determine the rental rate to be applied in the litigation.

This outcome is a fair one. Mr. Kakavelakis, perhaps 
    incorrectly in hindsight, believed that he needed Mr. Boutsakis' agreement 
    to invoke the arbitration clause in relation to the Crown lease. Mr. Boutsakis, 
    I am satisfied, would have thwarted any attempt to do so. At the very least, 
    he took no steps to invoke the arbitration clause in relation to the Crown 
    lease, while at the same time he initiated the arbitration in relation to 
    the Alexis House lease.

Mrs. Boutsakis had an equal right to invoke the arbitration 
    clause, but she chose not to. Given that she failed to exercise the right 
    given to her to invoke arbitration, she should not be permitted to avoid paying 
    a fair rent by reason only that no arbitration took place and that Justice 
    Boyd declined to order the parties to go to arbitration.  [At paras. 204-7; 
    emphasis added.]

[9]

On appeal, Mr. Boutsakis and Mrs. Boutsakis submit that the summary 
    trial judge was wrong to ignore the mandatory arbitration clause.  Counsel 
    notes that in other reasons dated February 21, 1997 concerning the Alexis 
    lease, the summary trial judge had ruled that the Court could not override 
    the arbitration provision the terms of which were almost identical to those 
    of the Crown Travel lease; and that the Court had previously authorized Mr. 
    Boutsakis to nominate an arbitrator on behalf of the Partnership in light 
    of Mr. Kakavelakis clear conflict of interest.  But Crown Travel does not 
    seek to have its rent determined by the three arbitrators: it argues not only 
    that the Partnership forfeited its right to go to arbitration as Boyd J. 
    found, but that the
Court
was also without jurisdiction,
by virtue 
    of the arbitration clause
, to proceed to determine the matter.  As a result, 
    it is said that no authority can now determine a rent that is any different 
    from that paid in the first renewal term of Crown Travels lease  that it 
    is entitled to have the rent for the Second Renewal Term, the Third Renewal 
    Term and the overholding period fixed at the same rental rate as established 
    for the First Renewal Term.

[10]

For their part, the plaintiffs support Boyd J.s finding that although 
    it may be too late to invoke the arbitration clause, the action remains a 
    live one and that this court should not interfere with the decision to permit 
    the Partnership to proceed under Rule 18A with its claim against Crown Travel.

[11]

Neither counsel cited any authorities to this court, but one of the 
    cases cited by Baker J.,
Bott v. Sorley
[1998] B.C.J. No. 2023, 
    refers to a venerable English case which provides a good starting point.  
    In
Doleman & Sons v. Ossett Corporation
[1912] 3 K.B. 257, 
    the Court of Appeal considered what was then s. 4 of the
Arbitration 
    Act, 1889
, 52 & 53 Vict., c. 49, the terms of which were somewhat 
    similar to those of s. 15(1) of our
Commercial Arbitration Act.
S. 15(1) states:

15
(1)  
    If a party to an arbitration agreement commences legal proceedings in a court 
    against another party to the agreement in respect of a matter agreed to be 
    submitted to arbitration, a party to the legal proceedings may apply, before 
    or after entering an appearance and before delivery of any pleadings or taking 
    any other step in the proceedings, to that court to stay the legal proceedings.

S. 
    15(2) also provides that in an application under s. 15(1), the court
must
make an order staying the legal proceedings unless it determines that the 
    arbitration agreement is void, inoperative or incapable of being performed.  
    This is a more restrictive provision than predecessor statutes have imposed, 
    but
Doleman
remains relevant to the question of jurisdiction 
    in cases where, as here, no stay has been sought.

[12]

In
Doleman
, the litigants were parties to a contract 
    that contained an arbitration clause.  The plaintiffs commenced a court action 
    and the defendants did not seek a stay.  Meanwhile, the arbitrator, an engineer, 
    proceeded to make an award without the knowledge or consent of the plaintiffs 
    and without giving notice to the parties.  The defendants pleaded the award 
    as a bar to the plaintiffs claims proceeding in a court of law.  In response, 
    the plaintiffs argued that since no order for a stay had ever been sought, 
    the courts jurisdiction could not be and had not been ousted, and that the 
    arbitrators award was invalid.

[13]

In the course of ruling that the court action could proceed, the majority 
    of the Court of Appeal (Vaughan Williams L.J. dissenting) explained that parties 
    to a contract cannot oust the jurisdiction of a court of law, but that a clause 
    in which they agree to refer their disputes to arbitration is valid and entitles 
    the defendant to apply to the court to stay the action before taking any step 
    in the proceeding.  If the defendant fails to do so, however, the court retains 
    jurisdiction.  Thus Fletcher Moulton L.J. observed:

the Legislature by the
Common Law Procedure Acts
introduced the machinery 
    which is now provided for by s. 4 of the
Arbitration Act, 1889
.  It 
    enables the defendant to an action brought in breach of an agreement to proceed 
    by arbitration to apply to the Court to stay the action, and the Court is 
    given power so to do.  Prior to the statutable provisions the Court could 
    not refuse to settle any such dispute which was brought before it, because
it not only had the jurisdiction but also the duty to decide that dispute 
    if called upon so to do
.  It has under these provisions power to refuse 
    its aid to a person who appeals to it in breach of an agreement to decide 
    the matter by arbitration.
But the statute very properly requires that 
    the necessary application so to do should be made by the defendant immediately 
    on appearance and before taking any step in the action.  If the defendant 
    allows the action to proceed for a while, he cannot subsequently withdraw 
    it from the Courts
.  If the Court thus refuses its assistance to the plaintiff, 
    he is driven to have recourse to arbitration as his sole means of obtaining 
    redress, and thus the original agreement to submit the matter to arbitration 
    is indirectly enforced.

The present position, therefore, of agreements to refer to private tribunals 
    may be shortly expressed thus.  The law will not enforce the specific performance 
    of such agreements, but, if duly appealed to, it has the power in its discretion 
    to refuse to a party the alternative of having the dispute settled by a Court 
    of law, and thus to leave him in the position of having no other remedy than 
    to proceed by arbitration.
If the Court has refused to stay an action, 
    or if the defendant has abstained from asking it to do so, the Court has seisin 
    of the dispute and it is by its decision, and by its decision alone, that 
    the rights of the parties are settled
.  [At 268-9; emphasis added.]

Farwell, 
    L.J. focussed in his reasons on the question of whether the plaintiffs plea 
    was a good one and agreed that the action could proceed.  He also reasoned:

It 
    is impossible to suppose that the Court, on refusing an application to stay, 
    and deciding that the action must go on, means to allow the arbitration to 
    go on also with the result that the decision first obtained will prevail, 
    or that one or other proceeding will be an idle waste of time and money.  
    The result is the same, if the defendant (as here) pleads to the action, and 
    disentitles himself to apply under s. 4.  He thereby submits to the jurisdiction 
    of the Court, which involves the same consequences as the refusal of an application 
    under s. 4, except, perhaps, that in the latter case any attempt to proceed 
    with the arbitration might be a contempt of Court, while in the former it 
    might not.  [At 273.]

[14]

Doleman
has been cited by many English and Canadian courts in 
    holding that where a defendant neglects to apply for a stay until after the 
    pleadings have been delivered or other steps have been taken in the proceedings, 
    the stay will generally not be granted, and that the court will proceed to 
    exercise its jurisdiction  unless the parties  agree otherwise: see
Czarnikow 
    v. Roth, Schmidt and Co
. [1922] 2 K.B. 478 (C.A.);
Windsor Construction 
    (1962) Ltd. v. International Union of Operating Engineers Local 115 et al
. 
    (1968) 1 D.L.R. (3d) 683 (B.C.S.C.));
Hudsons Bay Insurance Co. v. 
    Walker
(1914) 19 B.C.R. 87, 16 D.L.R. 275 (B.C.C.A.);
Armstrong 
    v. Camroux
[1995] B.C.J. No. 121 (B.C.S.C.); and
Bott v. Sorley
,
supra
.)  In the latter case, Boyd J. aptly summarized the law as follows:

On a review of the Act, (including the historical development 
    of that Act when s. 16 was added) and on a review of the authorities, but 
    more particularly the decision of the English Court of Appeal in
Doleman 
    & Sons v. Ossett Corporation
(1912) 3 K.B. 257, I am satisfied that 
    nothing in the Act prevents a litigant, in the face of an existing arbitration 
    proceeding, from bringing and maintaining a lawsuit with respect to the same 
    subject matter as that involved in the arbitration.  Historically, 
    at common law,
the superior Court has always retained the jurisdiction 
    over a contract containing an arbitration clause.  Neither an agreement 
    to arbitrate, nor the appointment of a specific arbitrator, was effective 
    to oust the jurisdiction of the Court.

In these circumstances, it is for the party who has been 
    made a party to the lawsuit for the same cause-of-action as that which is 
    covered by the arbitration agreement, to apply under s. 15 of the Act to obtain 
    an Order that the lawsuit be stayed pending arbitration.
Failure on the 
    part of the defendant to seek a stay under s. 15, leaves the Court with sole 
    and exclusive jurisdiction to adjudicate the claim
.  [At paras. 19-20; 
    emphasis added.]

[15]

In the case at bar, of course, no stay has ever been sought by either 
    party  even though Baker J. at para. 205 of her reasons stated that the plaintiffs 
    application for the appointment of an arbitrator had in effect been an application 
    to stay the action against Mrs. Boutsakis.  The defendants original Statement 
    of Defence was filed on June 20, 1989 and the Amended Statement of Defence 
    was filed on April 9, 2003 in response to the Amended Statement of Claim filed 
    in 1997.  In addition, many other steps in the proceedings have been taken 
    by both parties.  This fact, and the fact that Boyd J.s order was never appealed 
    lead in my respectful opinion to the conclusion that the summary trial judge 
    did not err in exercising jurisdiction over the action notwithstanding the 
    existence of the arbitration clause.  I would therefore dismiss this ground 
    of appeal.  (I note parenthetically that this makes it unnecessary to deal 
    with the appellants further argument that no event triggering the arbitration 
    had occurred, so that it could not be said the parties had any arbitrable 
    dispute or disagreement.  I will say, however, that this argument simply ignores 
    the dealings between the parties and that s. 17 of the
Commercial Arbitration 
    Act
provides a mechanism for either of them to initiate arbitral proceedings.)

The Plaintiffs Amended Statement of Claim and the Limitation 
    Act

[16]

I turn next to the arguments raised by the appellants concerning the 
    plaintiffs amendments to their Statement of Claim, the first of which was 
    carried out pursuant to Rule 24(1)(a) as of right in October 1997.  (It 
    appears a further amendment was sought in March 2004 and granted at trial 
    and that Alexis was added as a plaintiff at that time.)  It seems to be common 
    ground that the amendments incorporated new causes of action and sought new 
    remedies far beyond the simple claim for arrears of rent advanced in the original 
    Statement of Claim filed in 1989.

[17]

The summary trial judge dealt with all amendments to pleadings filed 
    by all parties in both the F and S actions, in one section of her reasons, 
    at paras. 72-83.  She ruled at para. 81 that all proposed amendments should 
    be permitted without conditions limiting the period during which the claims 
    may be pursued.  She referred to a limitation argument advanced on behalf 
    of the appellants in resisting Mr. Kakavelakis application dated March 31, 
    2004 to further amend the Statement of Claim, and continued:

Aside from the fact that allowing an amendment to the 
    original claim will allow the Lessor/Partnership and Alexis House to pursue 
    claims that would potentially be barred by the
Limitation Act
if a 
    new action was commenced, there is no other prejudice to Mr. and Mrs. Boutsakis. 
    There is no evidence that documents helpful to them have been destroyed, or 
    gone missing, or that witnesses are no longer available. I am not persuaded 
    that they have acted to their detriment in the belief that the claims would 
    not be pursued.

Where the facts cannot be ascertained because of the 
    passage of time, or an appropriate remedy is no longer available because of 
    delay in pursuing that remedy, the Lessor/Partnership or Alexis House must 
    bear the loss, since they have the onus of proof in relation to the amended 
    claims against Mrs. Boutsakis and her guarantor.

Having weighed these factors, I am satisfied that I should 
    grant the proposed amendments and that I should not impose conditions limiting 
    the period during which the claims may be pursued.  [At paras. 79-81.]

[18]

On appeal, Mrs. Boutsakis/Crown Travel and Mr. Boutsakis submit that 
    the summary trial judge erred in permitting any of the new claims referred 
    to in the 1997 amendment to be advanced in respect of any time period prior 
    to October 14, 1991, i.e., six years before the filing.  I agree that this 
    argument can be made notwithstanding that the first amendment was made pursuant 
    to Rule 24(1)(a)  i.e., that the fact the amendment was valid procedurally 
    does not affect the operation of the
Limitation Act
.  I also 
    agree that the applicable limitation period is six years, as provided by s. 
    3(5) thereof.

[19]

Mr. Taylor on behalf of the appellants, however, relies on s. 4(4), 
    which states:

In 
    any action the court may allow the amendment of a pleading, on terms as to 
    costs or otherwise that the court considers just, even if between the issue 
    of the writ and the application for amendment a fresh cause of action disclosed 
    by the amendment would have become barred by the lapse of time.

Section 
    4(4) has been the subject of a few decisions of this court, notably
Med 
    Finance Co. S.A. v. Bank of Montrea
l 74 B.C.L.R. (2d) 222; 15 C.P.C. 
    (3d) 269,
Teal Cedar Products (1977) Ltd. v. Dale Intermediaries Ltd
. 
    (1996) 19 B.C.L.R. (3d) 282, and
Letvad v. Fenwick
[2000] 82 
    B.C.L.R. (3d) 296; 2000 BCCA 630.  In
Teal Cedar
, the Court 
    clarified certain issues arising from previous authorities and emphasized 
    that a decision under s. 4(4) is largely discretionary and dependant on various 
    factors.  In the words of Finch J.A. (as he then was):

On principle, therefore, it appears to me that the discretion 
    to permit amendments afforded by both Rule 24(1) and s. 4(4) of the Act was 
    intended to be completely unfettered and subject only to the general rule 
    that all such discretion is to be exercised judicially, in accordance with 
    the evidence adduced and such guidelines as may appear from the authorities.  Delay, 
    and the reasons for delay, are among the relevant considerations, and the 
    judge should consider any explanation put forward to account for the delay.  But 
    no one factor should be accorded overriding importance, in the absence of 
    a clear evidentiary basis for doing so.

In 
    concluding that a deliberate decision not to claim within the limitation period 
    was fatal to an application to amend, the learned chambers judge relied principally 
    upon the judgment of this Court in
Bank of

Montreal v. Ricketts
,
supra
.  That was an application under Rule 15(5)(a)(iii) 
    to add as defendants two individuals who were principals of a defendant corporation.  The 
    relevant provision of the
Limitation Act
was s. 4(1).  The 
    chambers judge granted an order permitting the addition of the new defendants.  This 
    decision was reversed on appeal, Chief Justice McEachern dissenting.  The 
    two judges who agreed in allowing the appeal, Locke and Gibbs JJ.A., both 
    wrote separate concurring reasons for judgment, but neither expressly agreed 
    with the reasons of the other.  Although various
dicta
of 
    both judgments have subsequently been cited and relied upon, I have had difficulty 
    in extracting any clear
ratio

decidendi
from this case.  [At 
    paras. 45-6.]

and:

In the exercise of a judge's discretion, the length of 
    delay, the reasons for delay and the expiry of the limitation period are all 
    factors to be considered, but none of those factors should be considered in 
    isolation.  Regard must also be had for the presence or absence 
    of prejudice, and the extent of the connection, if any, between the existing 
    claims and the proposed new cause of action.  Nor do I think that 
    a plaintiff's explanation for delay must necessarily exculpate him from all 
    "fault" or "culpability" before the court may exercise 
    its discretion in his favour.  [At para. 67.]

In 
    a similar vein, Chief Justice McEachern stated in
Teal Cedar
:

Applying the same principles regardless of whether the 
    application is to add new defendants, as in
Ricketts
or new causes 
    of action, as in
Med Finance
, I believe the most important considerations, 
    not necessarily in the following order, are the length of the delay, prejudice 
    to the respondents, and the overriding question of what is just and convenient.  
    [At para. 74.]

[20]

In
Letvad
, the Court clarified that the reference to 
    a completely unfettered discretion described by Finch J.A. at para. 45 of 
    his reasons quoted above, is to the fact that the discretion is not fettered 
    by the relevant legislation.  Esson J.A. noted that it is, however, fettered 
    to the extent that  it must be exercised judicially, in accordance with the 
    evidence adduced and such guidelines as may appear from the authorities.  
    (Para. 29.)

[21]

Returning to the case at bar, it seems to me that although the summary 
    trial judge did not mention the authorities, she did consider many of the 
    factors listed in
Teal Cedar
 the reasons for the plaintiffs 
    delay, the question of prejudice to the appellants; Mr. Kakavelakis difficulty 
    in obtaining Mr. Boutsakis cooperation in enforcing the Partnerships rights 
    against Crown Travel; and the overall context of the two actions generally.  
    Given the high degree of deference that is to be accorded to a discretionary 
    decision of this kind, I see no basis on which this court should interfere 
    with her conclusion that both amendments to the Statement of Claim in the 
    F action should be permitted and given effect to notwithstanding that between 
    the issuance of the writ in 1989 and the 1997 and 2004 motions to amend, fresh 
    causes of action advanced by those amendments would have become barred by 
    the lapse of time.

[22]

I would therefore dismiss this ground of appeal.

The Determination of Crown Travels Rental Rates

[23]

Having decided that the amendment to the pleadings should be allowed 
    and that the Court had jurisdiction to proceed notwithstanding the arbitration 
    clause, Baker J. dealt at paras. 208-218 of her reasons with the determination 
    of the rental rate payable by Crown Travel during the second and third renewal 
    terms of its lease.  She noted that the only evidence presented on this subject 
    was evidence of the results of the arbitrations that had been held relating 
    to the rates to be paid by Alexis, for virtually identical space (setting 
    aside the tenants own improvements) on very similar conditions, during its 
    second and third renewal terms.  Noting as well that during the first renewal 
    term, all the parties had agreed that Alexis and Crown Travels rental rates 
    should be identical, Baker J. concluded at para. 212 that the best evidence 
    of a fair rental rate for Mrs. Boutsakis premises during the second term 
    is the same rate the arbitrators - experienced real estate assessors  determined 
    for the front portion of the Alexis House premises.  At para. 218, she applied 
    similar reasoning to the third renewal term.

[24]

On appeal, Mr. Taylor argued strenuously that the summary trial judge 
    erred in referring to the Alexis rental rates as the best evidence of a 
    fair market value rental rate for Crown Travel, since, as noted by Baker J., 
    there was no evidence and in particular no expert evidence, aside from the 
    Alexis rates, of what would be a fair amount for the rental of Crown Travels 
    space.  Further, the appellants through counsel object to Baker J.s use of 
    the arbitrated rates that were determined in arbitrations between Alexis and 
    the Partnership, since Crown Travel did not participate in the arbitration 
    and had no opportunity to bring forward evidence or make submissions that 
    might have supported lower rates.

[25]

In my view, these arguments cannot prevail.  The appellants had notice, 
    through the pleadings and various other proceedings and correspondence, that 
    the plaintiffs would be asking the summary trial judge to determine the rental 
    rates for the second and third renewal terms payable by Crown Travel, yet 
    Mrs. Boutsakis brought forward no evidence, expert or otherwise, as to what 
    she believed would be appropriate rates.  Both sides were free to bring forward 
    evidence of comparable rentals in the neighbourhood of the subject property.  
    The plaintiffs brought forward the rates payable by Alexis.  Those rates had 
    been determined by qualified experts in relation to space almost identical 
    to that occupied by Crown Travel.  I agree with Baker J. that this was likely 
    the best evidence of appropriate rates, and the fact there was no other 
    evidence must be laid at the feet of the appellants.  Nor do I see anything 
    objectionable in the fact that Crown Travel had no say in the rates payable 
    by Alexis.  The same would have been true of any other comparables charged 
    for the rental of similar properties unconnected with the parties that could 
    have been adduced into evidence.

[26]

I would dismiss this ground of appeal.

The Second Washroom Issue

[27]

The final substantive issue arising in the appeal in the F action 
    relates to Crown Travels withholding $200 per month (later reduced to $100 
    per month) as a result, it is said, of the removal of one of two washrooms 
    from the so-called common area on the ground floor of the building.  (I 
    pause to note that the common area was in fact an area not leased or subject 
    to any easement to any person, and that in particular, Crown Travel had no 
    lease or other written agreement that entitled it to use the second washroom 
    exclusively or in common with others.)  Mr. Boutsakis, again obviously in 
    a conflict of interest, supported his wifes position and at one point wrote 
    to his partner that the claim for abatement was fully justified and that 
    her intention was absolutely right.

[28]

The summary trial judge addressed the second washroom issue at paras. 
    124-137 of her reasons.  The crux of her analysis was as follows:

Diane Boutsakis was not a party to that lawsuit. She 
    has claimed that under the terms of her lease, she was and is entitled to 
    the use of two washrooms in the "common area". For significant periods 
    of time during the first, second and third renewal terms of her lease, she 
    has either refused to pay rent, or arbitrarily paid an amount of rent significantly 
    less than that provided for in her lease, on the grounds that rent abatement 
    was due to her for the loss of use of a second washroom.

The Crown Travel lease does not contain any provision 
    entitling Crown Travel to the use of any washroom, let alone two. I find that 
    she has failed to prove, on the balance of probability, any representation 
    made to her by the Lessor/Partnership about the use of washrooms that entitles 
    her to either rent abatement or damages.

Mrs. Boutsakis had been carrying on business in the building 
    before August 1, 1980. She may have assumed that she would continue to have 
    access to two washrooms. She may have known of the existence of clause 5.01 
    in the Alexis House lease. However, I do not believe that the Lessor/Partnership 
    induced her to enter into the Crown lease by a representation that she would 
    continue to be able to use two washrooms in the [common] area, or that she 
    relied on that representation, or that she relied on it to her detriment.

Mrs. Boutsakis expressly agreed that she took the premises 
    without representation of any kind. Clause 5.07 of the Crown lease states:

5.07  Lessee 
    acknowledges that the Premises are taken without representation or warranty 
    of any kind on the part of Lessor and that they are sufficient for Lessee's 
    purposes.

The evidence does not establish that Mrs. Boutsakis has 
    suffered any economic loss or that she, her employees or customers have even 
    been inconvenienced by having the use of only one washroom in the common area. 
     [Paras. 133-7.]

[29]

In this court, the appellants say that their submission was not that 
    Crown Travel had been induced to enter the lease by any misrepresentation 
    concerning the washroom, but that since Mr. Boutsakis had agreed with Mrs. 
    Boutsakis position, Crown Travel ought not to be prevented from relying 
    on the conduct, and communications of one of the partners of the Lessor.  
    Alternatively, they submit that it was an implied term of the lease that amenities 
    in the common area at the time the lease was entered into, would remain 
    as part of the amenities throughout the balance of the lease terms.  As the 
    appellants state in their factum:

An 
    officious bystander would have had no trouble concluding that it was obviously 
    in the contemplation of and part of the agreement between the parties that 
    the two washrooms in the common area which existed when [Mrs. Boutsakis] entered 
    into her Lease would remain available to her, as tenant, for the duration 
    of her tenancy.

[30]

In support, the appellants cited this courts decision in
Olympic

Industries Inc. v. McNeill
(1993) 86 B.C.L.R. (2d) 273, where 
    reference was made to the well-known cases of
Reigate v. Union Mfg. 
    Co. (Ramsbottom), Ltd
. [1918] 1 K.B. 592 (C.A.) and
Luxor (Eastborne), 
    Ltd. v. Cooper
[1941] A.C. 108, 1 All E.R. 33 (H.L.).  Both cases 
    make it clear that a term will be implied in an agreement only where both 
    parties would have said, Of course, so and so will happen; we did not trouble 
    to say that; it is too clear.  Lord Wright in
Luxor
went on 
    to say:

This 
    does not mean that the court can embark on a reconstruction of the agreement 
    on equitable principles, or on a view of what the parties should, in the opinion 
    of the court, reasonably have contemplated.  The implication must arise inevitably 
    to give effect to the intention of the parties.

These 
    general observations do little more than warn judges that they have no right 
    to make contracts for the parties.  Their province is to interpret contracts.  
    [At 137.]

In
Olympic Industries
, the Court also added the following concerning 
    the burden of proof on the party who seeks to have a term implied in order 
    to give business efficacy to it:

The question as to what the parties must have intended 
    as a matter of necessity is a question of fact to be decided in the circumstances 
    of each case.  The party who seeks to have a term implied into the 
    contract bears the onus of persuading the court of that necessity.  It 
    is not sufficient to show that it would be reasonable or logical to imply 
    such a term, or that the parties would probably have agreed upon such a term 
    if they had put their minds to it, or, that having put their minds to it, 
    chose not to express it.  A higher burden of proof must be met, 
    upon the authorities referred to above.  [Para. 31.]

[31]

Dealing first with the appellants alternative argument, I see no basis 
    on which a court could reasonably conclude that the parties must be taken 
    to have agreed that Crown Travel would have a right to continued access to 
    the second washroom as a matter of giving business efficacy to its lease.  
    Such a result would involve implying a license or easement with respect to 
    space not otherwise referred to in the lease  a step that simply does not 
    follow from the circumstances of this case.  Further, Crown Travels argument 
    that it should be able to rely on Mr. Boutsakis conduct in consenting to 
    the abatement of rent payable by Crown Travel overlooks Mr. Boutsakis clear 
    conflict of interest in dealings with his wife, and the fact that Mr. Kakavelakis, 
    who as a partner was entitled to bind the Partnership, had been steadfast 
    in his opposition to the Boutsakis position.  I see no error in the trial 
    judges recognition of Mr. Boutsakis conflict of interest, which disentitled 
    Mrs. Boutsakis from relying on his statements even if she had done so to her 
    detriment  which the summary trial judge found had not occurred.

[32]

I would therefore dismiss this ground of appeal.

Costs

[33]

I will deal with costs at the end of these reasons.

THE S ACTION (SUPREME COURT FILE NO. S035202)

Claims and Counterclaims

[34]

There were in fact two S actions, one with Docket No. S021480, which 
    was commenced in March 2002.  It is described in general terms at paras. 53-57 
    of Baker J.s reasons and need not concern us here.  The second action, Docket 
    No. S035202, was commenced in September 2003 and was brought in the name of 
    Mr. Boutsakis and Mr. Kakavelakis against Alexis and Mr. Kakavelakis.  Since 
    the pleadings were filed by the law firm that has acted in this appeal for 
    Mr. and Mrs. Boutsakis, however, we may assume that Mr. Kakavelakis did not 
    participate in instructing counsel and that Mr. Boutsakis did so, on behalf 
    of the Partnership.

[35]

It will be recalled that the summary trial judge allowed various amendments 
    to the pleadings in the two actions.  It appears that a Statement of Counterclaim 
    was filed on November 10, 2003 by the defendants against Mr. and Mrs. Boutsakis, 
    and that on the last day of trial, March 31, 2004, a further amendment was 
    sought.  The summary trial judge described the claims and counterclaims as 
    follows:

This action was commenced on September 29, 2003, and 
    the Statement of Claim was amended on March 1, 2004. The Plaintiff is described 
    as George Boutsakis and John Kakavelakis, A Partnership, and the Defendants 
    are Alexis House and John Kakavelakis. This action repeated claims for rental 
    arrears; property tax, and interest and penalties on property tax; and insurance 
    premiums during the terms of the lease. In addition, the Lessor/Partnership 
    claimed for rent owing after the expiry of the lease on July 31, 1996, and 
    in the alternative, claimed against Alexis on grounds of unjust enrichment. 
    The action also includes claims related to property tax and insurance premiums 
    during the period Alexis House has been over-holding after the expiry of the 
    lease.

A Counterclaim was filed by John Kakavelakis and Alexis 
    House, naming Diane Boutsakis and George Boutsakis as defendants by counterclaim. 
    During the hearing of the summary trials, the defendants amended their counterclaim. 
    In the Counterclaim, Alexis House and Mr. Kakavelakis claim for rent owing 
    by Diane Boutsakis for the period after the Crown lease expired on July 31, 
    1996; claim for rent for additional space alleged to have been appropriated 
    by Diane Boutsakis in 1980, and used continuously and exclusively by her after 
    1980; and claim for damages based on various alleged breaches of the lease. 
    The counterclaim also contains a claim for monies alleged to be owed by Diane 
    Boutsakis to Alexis House on account of hydro and water paid for by Alexis 
    House and allegedly used by Diane Boutsakis in connection with the operations 
    of Crown.  [At paras. 58-9.]

[36]

The purported Statement of Counterclaim, then, was a mixture of claims 
     at paras. 6 and 7, claims in respect of space allegedly appropriated by 
    Mrs. Boutsakis, presumably a wrong against the Partnership; at paras. 8 and 
    9, claims by Alexis against Mrs. Boutsakis in respect of utilities; at para. 
    11, a claim (for improperly charging for plate glass insurance) by Alexis 
    stated to be against Mr. Boutsakis, but obviously against him
qua
partner 
    and therefore against the Partnership; and at paras. 10, 12, and 14-17 of 
    the
Amended
Counterclaim, allegations against Mr. Boutsakis for rent 
    retained or not collected from a third tenant and for failing to defray the 
    cost of property tax appeals taken on behalf of the Partnership against  the 
    City  claims advanced for Mr. Kakavelakis benefit
qua
partner.  Baker 
    J. added the Partnership as a plaintiff to the Counterclaim as part of her 
    order following trial.

[37]

On appeal, the appellants submit that the counterclaim, before and 
    after amendment, was not a proper one in that it did not come within the terms 
    of Rule 21(8) of the
Supreme Court Rules
.  It provides:

Where 
    a defendant sets up a counterclaim that raises questions between that defendant 
    and the plaintiff along with any other person, the defendant may join that 
    person as a party against whom the counterclaim is made.

The 
    appellants submit that at least some aspects of the counterclaim do not come 
    within the terms of the Rule  i.e., that some of the counterclaim raises 
    a question between the defendant and Third Parties or strangers to this action, 
    namely Diane Boutsakis and George Boutsakis.  The Counterclaim does not in 
    certain instances raise claims that involve both the landlord
and
the 
    Defendant by Counterclaim.  They say the subject matters of the counterclaim 
    are essentially foreign to the existing action and should have been advanced 
    in a separate proceeding commenced by the issuance of a separate writ.

[38]

We were referred to
Abney v. Silcorp Ltd.

et al
. 
    [1999] B.C.J. No. 2420, the circumstances of which were somewhat similar to 
    those here.  Particularly apt is the Courts reasoning,
per
McEwan 
    J., that:

The term counterclaim, in ordinary use, implies a reflexive 
    action, one that comes back upon the original claimant. While a counterclaim 
    may be filed where the original claimant and others are involved, the plain 
    meaning of the language of the Rule precludes a counterclaim against others 
    altogether.  In this regard I am not persuaded by Hung Fook's argument 
    that, because Form 15 does not specify "counterclaim against the plaintiff", 
    the rule must be permissive of "counterclaims" including or not 
    including the plaintiff. The phrase "against the plaintiffs" would 
    be a redundancy attached to a proper counterclaim.  [Para. 14.]

McEwan 
    J. concluded that the counterclaim filed in
Abney
set up a 
    completely separate action in that it made no claim against the plaintiff 
    and should originally have been brought by the issue of a distinct writ.  
    (Para. 17.)  He declined, however, to grant a declaration that the counterclaim 
    was a nullity, relying on Rules 2(1) and 2(3) to find that the pleading was 
    at least an originating process and could therefore be salvaged under Rule 
    2(3).  He ordered that the purported counterclaim be severed and stand as 
    the originating process in a new action, which was to be amended to conform 
    in form to the Rules respecting pleadings and to be heard at the same time 
    and place as the original action.

[39]

In the case at bar, it is clear that the claims of Alexis against Mrs. 
    Boutsakis in respect of certain utilities allegedly appropriated by her 
    were not a proper counterclaim.  The same is true of the claims by Mr. Kakavelakis 
    (
qua
partner) against Mrs. Boutsakis, even if one accepts that Mr. 
    Kakavelakis, who was sued
qua
the guarantor of Alexis lease, could 
    counterclaim in a different capacity: see
Halsburys Laws of England
(4th ed., 1999) vol. 42, at para. 488.  The claim regarding plate glass insurance, 
    on the other hand, does appear to be a truly reflexive pleading.  The position 
    with respect to the counterclaims of Mr. Kakavelakis against Mr. Boutsakis
qua
partner is less clear, especially since the Partnership was added 
    both as a plaintiff in the original Statement of Claim and as a plaintiff 
    by Counterclaim.  This result is unusual to say the least.

[40]

Mr. Kakavelakis arguments as set forth at paras. 31 and 32 of his 
    factum were not responsive to the appellants argument based on Rule 21(8).  
    However, he did note the similarity, or symmetry, between the positions of 
    Mr. Boutsakis and Crown Travel on the one hand, and himself and Alexis on 
    the other.  Each of the Partners was a lessor but was in an obvious position 
    of conflict.  The disputes which were the subject of the counterclaim were 
    long-running and the court below was making an effort to determine them fairly 
    by hearing them all at once on their merits, notwithstanding procedural defects.  
    In these unusual circumstances, it seems to me that although Baker J. may 
    have erred in a technical sense in permitting all aspects of the counterclaim 
    to stand in the form filed, form should not be permitted to prevail over substance, 
    and that the claims at paras. 6, 7, 8, 9, 10, 12, and 14-17 of the amended 
    pleadings filed March 31, 2004 should to the extent necessary be regarded 
    as severed and as standing as originating process in separate actions.  I 
    would therefore allow the appeal in respect of the approval of the Amended 
    Counterclaim in its entirety, but would leave the claim at para. 11 (regarding 
    plate glass insurance) in place, sever the balance of the claims and order 
    that they be taken as standing as originating actions that have been dealt 
    accordingly with by the summary trial judge.

The Limitation Act as Applied to the Counterclaim

[41]

As noted earlier, the summary trial judge permitted all the applications 
    before her at trial to amend the pleadings and rejected the argument that 
    the added claims should be restricted to those arising in the six-year period 
    ending as at the date of the filing.  At paras. 157-8 of her reasons, she 
    referred specifically to the Counterclaim in the S action:

In Action S035202, Alexis House and Mr. Kakavelakis filed 
    a Counterclaim naming Diane Boutsakis and George Boutsakis as defendants by 
    counterclaim. As earlier stated, I have granted leave for the amendments proposed 
    to the Counterclaim during trial. I am also directing that "John Kakavelakis 
    and George Boutsakis, a Partnership" be added as a plaintiff by counterclaim 
    in Action S035202.

The Amended Counterclaim alleges that since July 31, 
    1996, Mrs. Boutsakis has remained in the premises as an over-holding tenant. 
    In the Counterclaim, most of the claims advanced in Action F892474 are also 
    made in relation to the over-holding period.

[42]

The appellants again argue that the summary trial judge erred in permitting 
    the counterclaim to be filed in circumstances where the new claims alleged 
    were barred in whole or in part by the
Limitation Act
.  Both 
    in the appellants factum and in counsels oral arguments, it was assumed 
    that the same considerations apply to the counterclaim as to the other amendments 
    to pleadings discussed earlier in these reasons.  However, where a counterclaim 
    is involved, it is s. 4(1) of the
Limitation Act
that applies, 
    rather than s. 4(4).  Section 4(1) states that if an action has been commenced, 
    the lapse of time limited for bringing an action is no bar to proceedings 
    by counterclaim, including the adding of a new party as a defendant by counterclaim,
with respect to any claims relating to or connected with the subject matter 
    of the original action
.

[43]

Section 4(1) was considered by a five-judge panel of this court in
Lui v. West Granville Manor Ltd.
(1987) 11 B.C.L.R. (2d) 273.  
    Mr. Justice Lambert for the majority reviewed the previous authorities and 
    concluded at para. 49 that the legislative purpose underlying s. 4(1) was 
    to eliminate any limitation defence in all proceedings described in paras. 
    (a)  (d) of that section.  Section 4(1) must be considered to bear the meaning 
    that carries that purpose into effect.  (At 295.)  Further, his Lordship 
    stated at para. 71:

The legislative purpose must surely have been to permit 
    those proceedings which are brought within the applicable limitation period 
    to go ahead, and to permit
all subordinate proceedings which are dependent 
    on the main proceedings
to go ahead with them, but to
prevent any proceedings 
    which are truly independent from using bogus subordinate status to avoid a 
    limitation period
which would otherwise be applicable.

Although 
    the Court was dealing with third party proceedings in
Liu,
it 
    was suggested at para. 85 that similar considerations applied to counterclaims 
    against a new party and to other additions of parties.

[44]

The question in this case is therefore whether there is a real and 
    substantive connection between the original action and the counterclaims 
    in this case.  As I have indicated above, the only true counterclaim in this 
    instance was that made by Alexis in para. 11 of the Statement of Counterclaim 
    as filed, dealing with the Partnerships charging Alexis for plate glass insurance 
    when allegedly, the only tenant with plate glass was Mrs. Boutsakis.  Section 
    4(1)(a) of the
Limitation Act
has the effect of permitting that 
    counterclaim to proceed even if it would be otherwise statute-barred, as it 
    is clearly related to the original claims against Alexis for amounts due under 
    its lease.  As for the other aspects of the counterclaim, I do not, for 
    the reasons already given, regard them as sufficiently related to or connected 
    with the subject matter of the plaintiffs action as to engage s. 4(1).  These 
    claims are instead truly independent ones and as stated in
Lui
,
supra
, cannot be used to avoid limitation periods that would otherwise 
    apply.  To this extent, I would allow the appeal, with the result that the 
    claims advanced at paras. 6, 7, 8, 9, 10, and 12 of the so-called Statement 
    of Counterclaim (filed March 10, 2003) may be extended back only six years 
     i.e., to November 10, 1997.  In respect of
new
claims advanced in 
    the
Amended
Counterclaim (filed November 31, 2004), i.e., those at 
    paras. 13-19, I would order that they may extend back no further than March 
    31, 1998.

Claims of the Partnership against Alexis

[45]

The summary trial judge dealt with the above-captioned claims at paras. 
    302-312 of her reasons.  At para. 308 she noted Mr. Boutsakis assertion that 
    a new contract had been formed between Alexis and the Partnership to pay 
    a higher rate of rent from and after July 31, 1996 (when the lease expired), 
    than that paid during the last renewal term.  She observed:

He asserted that this contract was formed when he wrote to Alexis House informing 
    them of the new rental rate and advising that unless Alexis House agreed to 
    pay that rate, Alexis House should immediately vacate the premises. Alexis 
    House did not reply to the letter and did not vacate the premises. Mr. Boutsakis 
    alleges that by its silence, and by remaining in the premises, Alexis House 
    agreed to pay higher rent.

In my view, no new contract was created in this way.
Alexis House had no obligation to reply to the letter, and its silence 
    cannot be interpreted as assent. Similarly, the fact that Alexis declined 
    to vacate the premises does not signify its agreement to pay higher rent
. 
    Alexis House was and is an over-holding tenant by virtue of clause 5.05 of 
    the Alexis House lease and until steps were taken to effectively terminate 
    that over-holding tenancy, and evict Alexis House, it was and is entitled 
    to rely on clause 5.05.  [At paras. 308-09; emphasis added.]

[46]

The appellants submit in their factum that the question of whether 
    conduct unaccompanied by any verbal or written undertaking, can constitute 
    an acceptance of an offer so as to bind the purported acceptor to the fulfilment 
    of the contract is an objective one:
St. John Tug Boat Co. Ltd. v. Irvine 
    Refining Ltd
. [1964] S.C.R. 614.  The Supreme Court of Canada in that 
    case cited the well-known statement of Lord Blackburn in
Smith v. Hughes
(1871) L.R. 6 Q.B. 597:

If, 
    whatever a mans real intention may be, he so conducts himself that a reasonable 
    man would believe that he was assenting to the terms proposed by the other 
    party and that other party upon that belief enters into the contract with 
    him, the man thus conducting himself would be equally bound as if he had intended 
    to agree to the other partys terms.  [At 607.]

In 
    the absence of a governing provision in the lease, a case could be made for 
    the proposition that by staying in the leased premises notwithstanding Mr. 
    Boutsakis letters, Alexis should be taken to be consenting to the terms set 
    forth in the letter.  However, by clause 5.05 of the Alexis lease, the tenant 
    and the Partnership had agreed that:

Overholding


If 
    Lessee holds over after the expiration of this lease, this holding over shall 
    not operate as a renewal or extension of this lease, but shall result only 
    in a tenancy from month to month which lessor may terminate on one months 
    previous notice and which shall be otherwise subject to all other terms, conditions 
    and agreements in this lease.)

I 
    agree with Baker J. that by virtue of this provision, the parties must be 
    taken to have agreed its terms would apply in the event of any overholding.  
    This is a simple matter of the parties having agreed ahead of time on the 
    legal effect of overholding by the tenant.  This makes it all the more difficult 
    for Mr. Boutsakis to override that clause unilaterally by correspondence with 
    Mr. Kakavelakis.  A reasonable bystander would be unlikely, in the face of 
    clause 5.05, to impute an agreement on Alexis part to jettison that clause
and
assent to the terms proposed by Mr. Boutsakis.  I would dismiss 
    this ground of appeal.

The Claim for Double Rent

[47]

The appellants originally advanced an argument on appeal that that 
    s. 15 of the
Commercial Tenancy Act
, R.S.B.C. 1996, c. 57, ought 
    to apply to entitle the Partnership to double rent from Alexis for the period 
    of its overholding.  However, they abandoned this ground of appeal.

Interest at Rates Higher than Specified in the Court Order Interest Act

[48]

The summary trial judge dealt at paras. 181-185 of her reasons with 
    the interest rate to be paid on all arrears of all kinds by all parties.  
    In connection with the S action, she noted that Mr. Boutsakis had taken 
    the position that he and Mr. Kakavelakis had agreed that arrears of rent owing 
    by both tenants would bear interest at 10%  an allegation disputed by Mr. 
    Kakavelakis.  Baker J. continued:

Mrs. Boutsakis has taken no position, but there is no evidence she agreed 
    to this rate of interest on arrears. There is no term in the lease providing 
    for the payment of interest on arrears. In judgments and orders relating to 
    previous disputes among these parties, the court has consistently awarded 
    court order interest on sums found to be owed.

The evidence does not establish a contractual right to 
    interest on any sums found to be outstanding among the parties to this litigation. 
    No interest rate higher than payable under the
Court Order Interest Act
, 
    R.S.B.C. 1996, c. 79 is warranted. Mr. Boutsakis' various claims for an interest 
    rate different from or higher than the prevailing rates under the
Court 
    Order Interest Act
are dismissed.  [At paras. 181-82.]

[49]

In their factum, the appellants urge that there was evidence before 
    the Court to the effect that Mr. Boutsakis on behalf of the Partnership had 
    incurred interest costs at rates higher than those provided under the Act 
    and that to do justice between the parties, the rate payable by Alexis (and 
    guaranteed by Mr. Kakavelakis) to the Partnership should be adjusted to a 
    higher rate.

[50]

It is readily apparent from the summary trial judges reasons, however, 
    that both sides were found to have wrongfully withheld rent and to have dealt 
    with each other improperly over the years.  Singling out Mr. Boutsakis carrying 
    costs would not be in keeping with the balance achieved by the summary trial 
    judge in dealing with the claims between the two camps.  The summary trial 
    judge has not been shown to have exercised her discretion under s. 1(1) of 
    the
Court Order Interest Act
on a wrong principle or incorrectly.  
    I would dismiss this ground of appeal.

Arrears of Property Taxes

[51]

As the summary trial judge noted at para. 248 of her reasons, the two 
    partners were in agreement on one thing  that their tenants should be required 
    to pay their proportionate share of the interest, penalties and other costs 
    paid or outstanding to the City of Vancouver in respect of their premises.

[52]

The summary trial judge did not agree.  In her analysis:

The lease requires Mrs. Boutsakis to "pay to the Lessor" her share 
    of the property taxes. She has no obligation to pay directly to the City. 
    The payment of property taxes in the first instance is the responsibility 
    of the Lessor/Partnership as owner of the land and building. If it fails to 
    pay its taxes when due, and thereby incurs interest charges, penalties, and 
    other associated costs, those remain the responsibility of the Lessor/Partnership. 
    Mrs. Boutsakis' obligation is to pay 20% of what the property taxes were without 
    reference to interest or penalties imposed by the City. The same is true of 
    Alexis House's obligation to pay property taxes based on the Alexis House 
    lease.

There is also a practical difficulty with the claim advanced 
    by the Lessor/Partnership against Mrs. Boutsakis and against Alexis House, 
    and that arises from the fact that at times all three tenants have been in 
    arrears of property taxes owed to the Lessor/Partnership. It would not be 
    possible, in my view, to determine which, if any, tenant's default resulted 
    in the Lessor/Partnership defaulting on its obligation to pay taxes.  [At 
    paras. 249-50.]

Baker 
    J. ruled that Mrs. Boutsakis was liable to pay interest on any arrears of 
    property taxes owed by her to the Partnership during the terms of the Crown 
    lease and the overholding period, to be calculated in accordance with the
Court

Order Interest Act
.

[53]

On appeal, the appellants take the position that since the partners 
    agreed that the interest calculations relating to arrears of property tax 
    attributable to late or non-payment by tenants, was to mirror the charges 
    levied by the City of Vancouver and paid by the Partnership, the summary 
    trial judge erred in deciding to determine the issue.  With respect, the fact 
    the two partners may now agree that their tenants should pay a particular 
    amount of arrears cannot override the terms of the leases, if they provided 
    otherwise.  The summary trial judge found that they did, i.e., that each tenant 
    was required to pay the specified percentage of all realty taxes or other 
    taxes levied against the Lessor in lieu of realty taxes without reference 
    to interest or penalties that might result from default on their part or the 
    Partnerships part.  I see no basis on which such a term could be implied.

[54]

Alternatively, counsel for the appellants argued that having breached 
    its contractual obligation (contained in the lease) to pay its share of the 
    taxes, Alexis is liable for the damages flowing naturally therefrom, and that 
    such damages would include the arrears levied by the City.  This argument 
    assumes that penalties and other charges were losses that could be expected 
    to flow directly from the tenants breach of its obligation, but the summary 
    trial judge included at para. 250 of her reasons that such a chain of causation 
    could not be found on the evidence before her.  We were not referred to any 
    evidence on appeal that would indicate this finding is clearly wrong, and 
    accordingly, this ground must also fail.

COSTS IN BOTH ACTIONS

[55]

The summary trial judge concluded at para. 313 of her reasons that 
    there had clearly been divided success among the parties. She therefore ordered 
    that each party pay her, his, or its own costs of the summary trial proceedings 
    and related references and accountings.  The appellants submit that she thereby 
    erred, that the Partnership had very substantial success against the respondents 
    and that the Partnerships claims occupied a relatively smaller portion of 
    the time taken at trial.

[56]

As the summary trial judge noted at para. 66, the parties had originally 
    estimated that the trial would take two to four days, but in the end it took 
    14 days, distributed over a five-month period, and there were several adjournments 
    before the proceedings got underway.  The summary trial judge also noted that 
    Mr. Peter Kakavelakis, the son of John Kakavelakis, had occupied a good deal 
    of the trial time in attempting to explain various computer-generated spreadsheets 
    he had prepared, but that most of his calculations were based on assumptions 
    with which the Court did not agree.  As a result, it was necessary to make 
    certain references to the Registrar even post-trial.  These factors would 
    normally have weighed in favour of a costs award against the Kakavelakis parties; 
    but at the end of the day, Baker J. felt it best to order that the parties 
    bear their own costs.  Costs orders are, of course, best made by the trial 
    judge (in this case, also the case management judge), who knows exactly what 
    tactics and positions were taken by the parties at trial and the extent to 
    which they contributed to the length of the proceedings.  Again, I see no 
    basis on which we could conclude that Baker J. erred in the exercise of her 
    discretion in this regard, and I would dismiss this ground of appeal.

[57]

In the result, I would allow the appeal only to the extent described 
    at paras. 40 and 44 of these Reasons.  A cross-appeal is to be dismissed by 
    consent.

Costs

[58]

Although the appellants have prevailed in my reasons on two points, 
    one of those points is without substantive significance and the other will 
    have only minor effect. Thus I regard the respondents as having been largely 
    successful in this appeal. I would award them 80% of their costs in this appeal 
    as against the appellants.

The 
    Honourable
Madam Justice Newbury

I Agree:

The Honourable
Madam Justice Prowse

I Agree:

The Honourable
Madam Justice Ryan


