Executive Summary: Key Legal and Evidentiary Issues

• Scope of the Small Claims Court damages trial following a prior Superior Court declaration that the commercial lease was valid and that the landlord had unlawfully interfered with the tenant’s quiet enjoyment and access.
• Characterization and quantification of business loss, loss of reasonable enjoyment/quiet enjoyment, special damages, and punitive damages arising from the landlord’s conduct, including lockout and failure to repair.
• Admissibility and weight of a forensic accountant’s expert report filed under Small Claims Court r. 18.02 without the expert’s attendance, and reliance on the tenant’s oral testimony for damages.
• Whether the Deputy Judge’s reasons were sufficiently detailed, properly framed the heads of damages (quiet enjoyment vs “loss of reasonable enjoyment” and emotional distress), and remained within the monetary and subject-matter scope of the claim.
• Alleged breaches of procedural fairness based on the Deputy Judge’s questioning of the tenant, assessed against the limits of judicial intervention and the “entering the arena” concern.
• Correct application of prejudgment interest rules, particularly the appropriate start date for interest on damages where problems arose years after the lease began.

Background and prior Superior Court findings
The dispute arises out of a commercial lease for premises where the respondent, Eloisa Slimmon-Weber, operated a yoga and wellness business. The appellant, Vincenzo Racco, was the landlord. Their relationship deteriorated over time, leading to a multi-stage litigation process. In an earlier Superior Court of Justice decision (2021 ONSC 3108), which was not under appeal in this proceeding, the court determined the foundational rights and obligations under the lease. That court found that the lease was a valid and binding commercial lease and rejected the landlord’s attempts to characterize the arrangement otherwise. The Superior Court held that the landlord had engaged in a “policy of harassment” designed to force the tenant to vacate the premises, deliberately undermining the valid lease and substantially interfering with the tenant’s normal and lawful use of the premises—her right to quiet enjoyment—as well as her right to safe access to the property. As part of the non-monetary relief, the landlord was declared to have unlawfully and invalidly terminated the lease and was ordered to complete necessary repairs and to refrain from interfering with the tenant’s business operations. The remaining issue of damages, including business loss and related monetary claims, was directed to a trial of an issue and transferred to the Small Claims Court.

Small Claims Court damages trial
The transferred proceeding in the Small Claims Court focused on quantifying damages for the landlord’s unlawful termination, interference with quiet enjoyment, failure to repair and maintain the premises, and potential punitive or aggravated damages. Both parties were represented by paralegals. Only the tenant testified; the landlord did not give evidence but cross-examined the tenant through his representative. The Deputy Judge accepted that the tenant began operating her studio on February 1, 2015, under a ten-year lease, and that the first few years were largely uneventful. Problems emerged in July 2017 when significant repairs were needed. The landlord refused to arrange and pay for them, forcing the tenant to undertake the work herself and incur costs. The dispute escalated further in August 2018 when the landlord attempted to evict the tenant through the Residential Tenancies Act, 2006. The Landlord and Tenant Board declined jurisdiction on the basis that this was a commercial tenancy, yet repair issues continued and the landlord still refused to address them, leaving the tenant to manage and fund remedial steps. Matters intensified in August 2019 when, in the middle of the night, the landlord changed the locks. The lockout, captured on surveillance video and accompanied by derogatory comments, kept the tenant out of the premises for about a week. She retained counsel, incurred further expenses, and took what the Deputy Judge described as remarkable steps to mitigate her losses. Nevertheless, the disruption prevented her from organizing the annual or regular retreats she would normally conduct in Mexico, causing further lost profits. At trial, the tenant tendered a forensic accountant’s expert report quantifying business losses in a range between $32,000 and $48,000 (although the Deputy Judge mis-stated the upper figure as $38,000 in her reasons). The report was admitted under rule 18.02 of the Small Claims Court Rules, which allows documents to be received without the author being present where proper notice has been given. The landlord had notice, could have summonsed the expert, and had the opportunity to cross-examine the tenant on the report’s contents and the underlying business losses. The Deputy Judge expressly treated the expert report as subject to weight rather than conclusive. Ultimately, the Deputy Judge found the tenant’s oral testimony “compelling” and afforded it greater weight than the expert report. For example, the tenant explained that profits from Mexico retreats fluctuated between $10,000 and $15,000, whereas the expert had used the higher $15,000 figure; the Deputy Judge adopted the lower figure as part of a conservative assessment. On this evidence, the Deputy Judge quantified several heads of damages. Business loss and related harms were assessed such that the overall damages award totalled about $53,000. Within that total, the Deputy Judge awarded $5,000 for what she described as “loss of reasonable enjoyment” and emotional distress linked to the landlord’s numerous breaches and the steps the tenant had to take in response. Special damages were assessed at $8,295.18 for out-of-pocket expenditures, and punitive damages of $5,000 were imposed in light of the landlord’s malicious, oppressive and high-handed conduct, particularly his misuse of his position of power to try to force the tenant out. However, because the monetary jurisdictional limit of the Small Claims Court is $35,000, the award was reduced to that maximum cap, and prejudgment interest was ordered from February 1, 2015.

Appeal to the Divisional Court
The landlord appealed to the Divisional Court, challenging both the substantive damages decision and the Small Claims Court costs order. He argued that the Deputy Judge had misapprehended the scope of the trial, exceeded jurisdiction by awarding amounts beyond the pleading, made factual and legal errors in her damages analysis, breached procedural fairness through her questioning of the tenant, erred in admitting and relying on the expert report and hearsay, and misapplied prejudgment interest principles. The Divisional Court applied the standard appellate framework from Housen v. Nikolaisen, emphasizing correctness for questions of law and palpable and overriding error for questions of fact and mixed fact and law (unless an extricable question of law was identified). On the alleged misapprehension of the trial’s scope, the court held that the Small Claims Court was properly implementing the earlier Superior Court order, which defined the scope to include damages for unlawful termination, interference with quiet enjoyment, failure to repair and maintain, and punitive or aggravated damages, together with quantification of those losses. Although the landlord emphasized that the Deputy Judge’s raw total of approximately $53,000 exceeded the $48,000 pleaded in the amended claim, the Divisional Court noted that the actual enforceable award did not exceed $35,000 because it was reduced to the Small Claims Court’s jurisdictional limit. As such, there was no jurisdictional overreach. On the characterization of damages, the landlord objected that the Deputy Judge spoke of “loss of reasonable enjoyment” and emotional distress, language more commonly used in residential tenancies, instead of using the term “quiet enjoyment.” The Divisional Court concluded that, read fairly and contextually, the reasons reflected classic commercial quiet-enjoyment concepts: substantial interference rendering the premises significantly less fit for the business purpose. The court emphasized that the tenant’s damages were not awarded for a freestanding tort of emotional distress or under the Residential Tenancies Act, 2006, but as a proper commercial quiet-enjoyment claim grounded in commercial landlord-tenant law.

Evidentiary rulings, procedural fairness, and interest
The appeal also attacked evidentiary rulings and procedural fairness. The Divisional Court held there was no error in admitting the forensic accountant’s report under rule 18.02. The rule expressly permits admission of documents without calling the author where the other side has notice and the opportunity to summons the witness. In addition, the flexible, efficiency-oriented approach in Small Claims Court—given its monetary cap and mandate—supported this pragmatic evidentiary framework. The Deputy Judge properly exercised a gatekeeping function by treating the report as one piece of evidence, ultimately preferring the tenant’s detailed oral evidence on certain key points such as the amount of lost profits from the retreats. No reversible error was shown in the Deputy Judge’s causation and remoteness findings regarding business losses. On punitive and special damages, the Divisional Court noted that the earlier application decision and the Small Claims Court reasons together provided ample support for the conclusion that the landlord’s conduct was malicious, oppressive and high-handed, justifying a punitive component. The evidence also supported the special damages figure without any palpable and overriding error or error in principle. The landlord’s challenge to the increased-scale costs award in Small Claims Court similarly failed. Rule 14 permits costs of up to 30% of the amount claimed where a valid offer to settle has been made. The Deputy Judge had accepted that the tenant made such an offer and applied the increased scale, awarding $15,680.62. The Divisional Court found no misdirection in principle and no palpable and overriding error in the finding that a qualifying offer existed. The procedural fairness argument centred on the Deputy Judge’s questioning of the tenant during her evidence. The landlord contended that these interventions created a reasonable apprehension of bias, amounting to the judge “entering the arena.” After reviewing the transcript, the Divisional Court rejected this submission. It held that the Deputy Judge was entitled to ask clarifying questions, particularly in an informal Small Claims Court setting, and that the landlord retained and exercised his right to cross-examine thereafter. The questioning did not cross the line into advocacy or partiality. The only aspect on which the Divisional Court found legal error was prejudgment interest. The Deputy Judge had selected February 1, 2015—the start of the lease—as the interest commencement date, despite the tenant’s own evidence that no problems arose until July 2017. The Divisional Court held that the appropriate interest start date should be no earlier than July 2017 and that there was nothing in the reasons to show that the Deputy Judge had turned her mind to the governing legal principles for interest or consciously exercised discretion to depart from the usual accrual date. The court therefore corrected the start date to July 31, 2017.

Outcome and monetary consequences
In the final result, the Divisional Court dismissed the appeal in substance, leaving intact the Deputy Judge’s findings on liability and the quantum and heads of damages, as well as the Small Claims Court costs award. The only modification was the correction to the start date for prejudgment interest, moved from February 1, 2015 to July 31, 2017. The court noted that this adjustment had a very small monetary impact overall. Given the tenant’s success on nearly all issues, the Divisional Court awarded her fixed costs of $12,500 for the appeal. When the various components are combined, the tenant, Eloisa Slimmon-Weber, emerges as the successful party across the Superior Court application, the Small Claims Court damages trial, and the Divisional Court appeal. In monetary terms, she holds a Small Claims Court judgment for damages capped at $35,000 (even though the assessed total was about $53,000 before application of the jurisdictional limit), together with Small Claims Court costs of $15,680.62 and Divisional Court appeal costs of $12,500. The exact dollar value of prejudgment interest cannot be determined from the reasons, as the court specifies only the commencement date and not the resulting sum. Accordingly, the determinable total monetary award in her favour, excluding interest, is $63,180.62, with additional prejudgment interest calculated from July 31, 2017 in an amount not specified in the decisions.