Claim No: SCCH - 471839
IN THE SMALL CLAIMS COURT OF NOVA SCOTIA
Citation: Nova Scotia College of Art and Design v. 1108329 Nova Scotia Limited, 2018 NSSM 11
BETWEEN:
NOVA SCOTIA COLLEGE OF ART AND DESIGN
(Operating as NSCAD)
Claimant
- and -
1108329 NOVA SCOTIA LIMITED
Defendant
REASONS FOR DECISION
BEFORE
Eric K. Slone, Adjudicator
Hearing held at Halifax, Nova Scotia on February 20, 2018 Decision rendered on February 26, 2018
APPEARANCES
For the Claimant Adam Downie Counsel
For the Defendant Glenn Martin Owner
BY THE COURT:
[1] The Claimant, Nova Scotia College of Art and Design, is a well-known small and specialized university in Halifax (hereafter the “University”), with buildings close to the Halifax waterfront. Some of these are heritage buildings. One of them, which figures into this claim, opens to the pedestrian mall which is a continuation of Grafton Street, north of Duke Street. The University typically rents out some of the storefront spaces to commercial enterprises, of which the Defendant was one.
[2] On the 7th of April 2016, the Defendant entered into a commercial lease for the rental of a 681 square foot property in which it intended to operate a boutique selling local handmade crafts and other items. The University itself does not negotiate or draft leases, but uses the services of a professional company, Greenwood Lane Inc., as its agent. I mention this because the lease document is professionally drafted in such a way that it provides a great deal of protection to the University, which rigour we might not expect to find in a less formal document.
[3] The claim here is for arrears of rent resulting from the fact that the business operated by the Defendant was unsuccessful and could not keep up with its financial obligations.
[4] The Defendant has claimed that the failure of its business can be traced to a number of factors, for which it blames the Claimant. One factor is that the premises were, according to the principal of the Defendant, Glenn Martin, chronically hot to the point of being uncomfortable and unsuitable for operating a store. He says that this premises was overheated during all seasons. During
the winter, he often left the front door open just to allow some cold air to enter. During the warmer months, eventually an air conditioner was installed with the assistance of the Defendant.
[5] The second item of complaint concerns the fact that during the critical Christmas of 2016, the University leased an adjacent storefront on a short-term basis to an enterprise that sold merchandise similar to that which the Defendant was selling. Mr. Martin says that he never quite recovered from the loss of business that resulted from people buying gifts at the next-door operation. I note here that there is nothing in the lease which gives the Defendant any kind of exclusive rights. It is well known that in commercial leases, such as shopping centre leases, landlords are often required to protect a tenant from competition from similar businesses.
[6] Another complaint of the Defendant is that the cobblestone walkways outside the premises were very difficult for people to walk on. Also, some of the other businesses in the area had temporary patios during the summer season which made it difficult to get around the area. Mr. Martin also complained that there were, at times, vehicles parked right outside his door which made it that much more difficult for people to see the business and go into it. He also complains that there was an informal promise by the University to paint his storefront a different colour, so that it would be more obvious to the public that there was store there.
[7] On the subject of the latter complaints, the witnesses for the University testified that they had very limited control over the city property, which included the pedestrian mall. As for vehicles being parked illegally, again it would've
been the responsibility of the municipality to ticket and/or possibly tow away any improperly parked vehicles. The area outside the Defendant’s store was only to be accessed by vehicles for very specific short periods of time, such as for making deliveries or otherwise servicing the space. As for painting the storefront, it was explained that this was something that was being pursued but the heritage status of the building meant that the University could not paint any of the exterior facade of the building without municipal approval, which approval was not received in a timely way.
[8] The situation with the heat, as I understand it, is this. The building faces west, more or less. As such, much of the afternoon sun comes in the front window, and causes the space to heat up. The University was aware of the problem, and looked into whether or not there was anything about its heating system that was causing or contributing to the problem. It could not find any connection. There is apparently a large boiler which services the much larger building, but this boiler was no closer to the Defendant’s rental space than it was to any other part of the building, and as such could not be implicated in this particular problem. The University relies on the fact that there is nothing under the lease that would have obligated it to provide air conditioning to the building, although, as noted, it did assist the Defendant by installing an air conditioner which had evidently been left behind by a previous tenant.
[9] The relationship was difficult from an early stage as the Defendant fell into arrears. Throughout the time of the Defendant’s occupancy, there were discussions about possibly finding a subtenant for the premises. There is no purpose to reciting the various communications that went back-and-forth toward trying to resolve the situation through something other than formal legal process.
The bottom line is that a new tenant was ultimately found to take over the premises, which put a stop to rental losses. I find nothing in the evidence to suggest that the Defendant was misled or mistreated by the University or anyone operating on its behalf.
[10] In the end, the University in its capacity as landlord under the commercial lease re-took possession of the premises and seized all of the goods therein including sale merchandise as well as fixtures. Operating under the authority of the lease, it had the inventory evaluated and eventually sold for something less than its inventory value. In its financial reckoning, the Claimant gives the Defendant credit for the modest sale proceeds, though legally also charging to it the bailiff's costs as well as appraisal costs. The net amount of the claim, not including the costs of filing and serving this claim, adds up to $12,210.40.
[11] As already mentioned, the commercial lease in question is expertly drafted with a view to protecting the landlord and providing it with a wide range of powers to enforce its rights. The principal of the Defendant, Glenn Martin, is a reasonably experienced businessman who could have had legal advice, or indeed may have had legal advice. It was not stated which was the case. I can find nothing in the evidence to suggest that the Defendant was taken advantage of by the Claimant. Like many small businesses dealing with large commercial landlords, the Defendant simply was asked to submit to the terms of the lease that was inherently favourable to the landlord, but it did so with its eyes open.
[12] The lease in question has a standard Entire Agreement clause which precludes any collateral agreements or warranties. Such clauses are included specifically to confine the inquiry to the four corners of the document. Promises
allegedly made, especially verbal ones, that do not find themselves into the document, are worth little or nothing. As such, I am unable to fault the University for any of the problems that befell the Defendant.
[13] The problems with the heat were no doubt real, but it appears that they were ultimately the responsibility of the Defendant itself to address. Moreover, it has not been established to my satisfaction that any of the Defendant’s financial problems stemmed from the premises being too hot. For example, there was no evidence that customers came into the store and left because it was too hot, or that employees of the store were unwilling to work in a hot environment.
[14] The competition from the next-door business was no doubt a more serious problem, but the University was not obligated under the lease to refrain from renting to a business that would compete with the Defendant, and in the absence of such a provision, the Defendant has no recourse.
[15] The conditions respecting the cobblestones and the general area outside the storefront ought to have been known to the Defendant before the lease was signed, and even if that changed, it is difficult to fault the University for any of these problems. I am more inclined to the belief that the choice of this storefront was simply a poor choice and that events beyond the control of either party conspired to make the business unsustainable.
[16] In the end, the University cannot be held responsible for the Defendant’s business problems and is entitled to enforce its lease according to its terms. As such, there will be judgment against the Defendant for the amount sought,
$12,210.40, plus its costs of $199.35 for issuing the claim and $89.25 for service, for a grand total of $12,449.00.