



COURT OF APPEAL FOR ONTARIO

CITATION: Marsland Centre Limited v. Wellington Partners

International Inc., 2017 ONCA 631

DATE: 20170802

DOCKET:
C62536

Simmons, Lauwers and Hourigan
    JJ.A.

BETWEEN

Marsland Centre Limited

Plaintiff (Respondent)

and

Wellington Partners International Inc.,
    Henri Stephen Machowski,

also known as Steve Machowski and Linda
    Machowski

Defendants (Appellants)

Randell K. Thomson, for the appellant

Sahil Shoor, for the respondent

Heard:
February 10, 2017

On appeal from the order of Justice Robert D. Reilly of
    the Superior Court of Justice, dated July 11, 2016.

Lauwers J.A.:

[1]

The appellant,
Wellington Partners International Inc., was the
tenant under a commercial lease with the respondent, Marsland Centre Limited,
    as landlord. The personal appellants are the tenants principals. The lease
    started on November 1, 2012 and was to terminate on October 31, 2017.

[2]

By the fall of 2013, the appellants were, as the
    motion judge observed, suffering from business challenges and economic difficulties.
    They sought relief from the respondent but were refused. On September 24, 2014,
    the appellants returned the keys and current monthly parking passes to the respondent
    and vacated the building. The respondent sued for damages in the amount of
    $200,000, representing the total rent owed through the term of the lease,
    together with the costs incurred to bring the action.

[3]

The motion before the motion judge was for
    partial summary judgment. Specifically, the respondent sought an order and
    declaration that the individual defendants are liable pursuant to s. 50 of the
Commercial
    Tenancies Act,
R.S.O. 1990, c. L.7, for twice the value
    of certain goods and chattels removed by them from the premises or with their
    knowing assistance. This was because the tenant removed most of its
    furnishings and other assets. As the motion judge noted: It would appear that
    the assets that were removed from the Marsland building moved to Wellington [Partners]
    other location in Cambridge. Not to be overly dramatic, but in effect, the
    premises were stripped of most assets of any value.

[4]

The motion judge granted judgment and found 
Wellington Partners International Inc., Henri Stephen
    Machowski, also known as Steve Machowski and Linda Machowski

are liable pursuant to s. 50 of the
Commercial Tenancies Act
for twice the value of certain goods and chattels removed by them
    or with their knowing assistance to the corporate defendant from the rented
    premises at the Marsland Centre. He added that if the parties were unable to
    agree on the value of the assets, there would be a summary trial or reference [taken]
    to determine a specific value.

[5]

There are two issues on this appeal. The first
    is whether the motion judge properly exercised his authority under rule 20 of
    the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194
. The second is whether he properly applied ss. 48 and 50 of the
Commercial
    Tenancies Act
. Because I would resolve this appeal on the
    basis of the first issue, I would not reach the second and take no view on it.

A.

ANALYSIS

Did the motion judge properly exercise his authority under rule
    20 of the
Rules of Civil Procedure
?

[6]

In my view, the motion judge fell into error by failing to take the two-step
    analytical approach mandated by the Supreme Court of Canada in
Hryniak v. Mauldin
, 2014 SCC 7, [2014] 1
    S.C.R. 87,

and
Bruno Appliance and Furniture, Inc. v. Hryniak
,
    2014 SCC 8, [2014] 1 S.C.R. 126, at para. 22. See also
Trotter Estate
, 2014 ONCA 841, 122 O.R.
    (3d) 625, at paras. 72 and 75, and
1615540 Ontario Inc. (Healing Hands
    Massage Therapy Clinic) v. Simon
, 2016 ONCA 966, at paras. 20-25.

[7]

The motion judge addressed the first step of the
Hryniak
analysis and found that he was able to
    make necessary findings of fact and apply the law to those facts in order to
    achieve a fair and just adjudication of the case on the merits.

[8]

However, it does not appear that he turned his
    mind to the second step of
Hryniak
, which is
    whether and how the factual issues in dispute between the parties should be
    determined.
There is no doubt that genuine factual issues existed between
    the parties on the evidence, as the motion judge expressly noted.

[9]

The motion judge observed, at para. 19, that the
    affidavit evidence, on which there had been no cross-examination, was very much
    in conflict:

I have carefully considered the affidavits
    provided by Bradley Marsland and Linda
Machowski
, though
in all candor, I would much have preferred this
    had been a matter of trial where their evidence had been subject to
    cross-examination
. Based on their affidavits, I have no
    hesitation in preferring the affidavit of Bradley Marsland to that of Linda
Machowski.
Suffice to say their affidavits are significantly in conflict.
    At the risk of overly summarizing the evidence of Linda
Machowski
on her affidavit, she testified that Mr. Marsland was content that
    they vacate the premises and take virtually anything they wished with them. The
    evidence of Bradley Marsland is quite in conflict with that of Linda
Machowski.

As a matter of common sense, I do not believe
    that Bradley Marsland, knowing full well that the tenancy was in jeopardy,
    would freely permit the tenants to leave and take with them what they wished.
    Mr. Marsland was an experienced landlord. The quantums of the reserve tenancy
    was significant. I cannot believe that he would freely permit the tenants to
    depart with the assets which were in fact or could be his security for rent
    owed. [Emphasis added.]

[10]

In my view, the motion judges intuition,
    revealed by the emphasized words, was correct, but he did not give effect to
    it. Instead of turning his mind to how the conflicts on the evidence were to be
    resolved, the motion judge simply picked one partys version over the other.
    While the respondents version might well be more plausible or, as he put it,
    more in keeping with common sense, that bald conclusion, standing alone, was
    not a proper basis on which to make a credibility finding in the circumstances
    of this case, where sworn statements were in conflict on a fundamental issue
    and where significant amounts of money were involved.

[11]

On this basis alone the order must be set aside.

B.

DISPOSITION

[12]

I
    would allow the appeal, set aside the order granting summary judgment, and
    leave the parties free to pursue their claims including, if so advised, on another
    motion for summary judgment, without being bound by any of the determinations
    made in the decision under appeal.

[13]

The
    appellants are entitled to their costs in the agreed amount of $6,000,
    inclusive of disbursements and taxes. If the costs of the motion below are not
    agreed upon, the parties may file brief written submissions (no more than three
    pages) within 15 days of the release of these reasons.

P. Lauwers J.A.

Janet Simmons J.A.

C.W. Hourigan J.A.

Released: August 2, 2017


