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Appeal by the defendant from summary judgment allowing the respondent’s claim for loss in share value. The appellant argued the claim was barred by the rule in Foss and Harbotttle. The respondent was the sole shareholder in a corporation that operated a restaurant in premises leased by the respondent from the appellant. When the appellant terminated the respondent’s lease for non-payment of increased additional payments charged, the restaurant ceased operations. The motion judge found that the termination of the lease was unlawful and caused the restaurant to close, because of which the respondent’s shares became worthless. In assessing damages, the motion judge refused to deduct the amount of an advance made by the respondent’s sister to the respondent from the amount of damages, finding that the advance was not a loan. The appellant argued the claim for diminution in share value in this case was not a reasonably foreseeable consequence of the termination of the lease and that the motion judge failed to make a finding on the reasonable foreseeability of the respondent’s damages.

HELD: Appeal dismissed. The rule in Foss and Harbottle was premised on precluding a personal action by a shareholder for a wrong done to the corporation. The wrong in this case was not, however, done to the corporation, but to the respondent shareholder personally. Only the respondent 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 and Harbottle nor its rationale applied. The respondent was pursuing her own cause of action, not a cause of action that belonged to a separate legal person, the corporation. The motion judge did not award damages for a type of loss that was beyond those that were reasonably foreseeable. The type of loss suffered was damage to the respondent’s property caused by the premature non-availability of the restaurant premises that she leased. The fact that the diminished property was her stake in the corporation operating the restaurant did not take the loss outside of the type that would naturally and ordinarily be expected to occur from the breach of this commercial lease. The restaurant’s occupation and use of the premises was known and was not objected to. The motion judge clearly considered the issue of whether the advance was a loan owing to the respondent’s sister and found that it was not based on evidence he considered credible from both the respondent and her sister. There was 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.

Tran v. Bloorston Farms Ltd., [2020] O.J. No. 2949, Ontario Court of Appeal, M.L. Benotto, B. Zarnett and J.A. Thorburn JJ.A., July 6, 2020. Digest No. TLD-August102020010