IN THE PROVINCIAL COURT OF BRITISH COLUMBIA

[1]           Mr. Tong Heintz Sun filed a Notice of Claim against the four defendants in relation to his use of leased property at 8050 Kaymar Drive, Burnaby, BC (the “Property”) for short-term rentals promoted through websites such as Airbnb, Expedia and Booking.com.

[2]           The defendants, Liang Zhi Duan and De H. Luo, whose correct name is De Heng Luo, are the owners of the Property.

[3]           The defendant, Green Team Realty Inc., through Mr. Peter Chen, represented the property owners in arranging the lease.

[4]           The City of Burnaby was originally named as a fourth defendant. The City issued a warning letter to the Property owner advising that Mr. Sun’s use of the Property for short-term rentals contravened zoning bylaws and that a violation notice may be issued with a fine of $400. On September 3, 2019, His Honour Judge Sudeyko dismissed the claim against the City of Burnaby, stating that there was no triable issue and that the claim against the City had no prospects of success. The City was therefore not involved in this trial.

[5]           This trial commenced on August 20, 2020. Prior to trial, I advised all parties that I was concerned that the claim appears to be for damages flowing from an illegal contract. I asked the parties to address this issue in their evidence and submissions.

[6]           Following the lunch break, court was scheduled to resume at 2:00 p.m. Mr. Sun did not appear. This matter was called back into court at approximately 2:20 p.m. and Mr. Sun was still not present. Rather than dismiss the claim, I elected to adjourn the matter to the next day. Any submissions by the defendants for payment of costs or for dismissal of the claim would be considered then. The trial did resume the next day with Mr. Sun in attendance.

[7]           Mr. Sun and his mother Lijun Zhao first visited the Property in December 2017.

[8]           Mr. Sun said he is involved in the operation of some 10 to 15 short-term rental properties in BC and has consulted on other such properties located outside BC. Mr. Sun said he received advice that the Property would be a profitable location for a short-term rental business.

[9]           Mrs. Duan, who spoke through an interpreter, was aware that Mr. Sun intended to use the Property for short-term rentals. She said Mr. Sun told her that the City of Burnaby permitted short-term rentals and that he had been in the short-term rental business for years. Mr. Sun said he was studying law, understood the policies of the City of Burnaby and could be trusted. Mrs. Duan indicated that she relied upon Mr. Sun when she leased the Property to him.

[10]        On December 16, 2018, Mr. Sun and Mrs. Duan signed a form agreement called a Residential Tenancy Agreement, even though the Property would be used for the commercial business of short-term rentals.

[11]        Mrs. Duan and Mr. Sun also signed a document titled “Lease Agreement Addendum of 8050 Kaymar Dr, Burnaby” (the “Addendum”). Clause 11 of the Lease Agreement Addendum states:

[12]        The term of the lease was from January 1, 2019 to December 31, 2019. The rent was $3,600 a month.

[13]        In order to furnish the Property, Mr. Sun purchased furnishings from the United States and from a website called Wayfair. Mr. Sun did not have receipts for the items purchased; nor did he have a list of the furnishings purchased.

[14]        Mr. Sun said the Property consisted of six or seven bedrooms, a large hall that held three king-sized beds and a downstairs hall that held two king-sized beds. Mr. Sun estimated that each bed was purchased for $250 (U.S.). He said that mattresses were purchased for $450 each. Mr. Sun estimated that the total price paid for furniture was $15,000.

[15]        Mr. Sun’s mother, Lijun Zhao, testified that she went with Mr. Sun to purchase certain furnishings from Sleep Country. She produced the following receipts from Sleep Country:

[16]        Ms. Zhao also sought to introduce into evidence certain receipts for purchases from the website Wayfair. However, she admitted that she was not involved in making any of these purchases as she does not know how to use a computer. I did not allow the entry of these receipts into evidence.

[17]        Mr. Sun did not produced any of the Sleep Country or the Wayfair documents prior to trial as was required by the document disclosure order made by His Honour Judge Wingham on December 19, 2020. Mr. Sun did not have these documents when he gave his evidence. He sought to introduce them the following day of trial through Ms. Zhao. I allowed the Sleep Country receipts to be put into evidence since Ms. Zhao was directly involved in the purchase of the items but I did not allow Mr. Sun to rely upon the Wayfair receipts.

[18]        Mr. Sun said the rental business commenced in January 2019 but he only had some of the records showing income received or bookings for the Property. These were in the form of emails or Airbnb website printouts. A summary of the information provided is as follows:

[19]        Ms. Zhao testified that the income from the short-term rental was divided between Mr. Sun, her husband and herself. Mr. Sun’s share of the income was $18,000, Ms. Zhao’s share was $29,638.70 and her husband received $17,360. Ms. Zhao did not have any financial records though to show how these sums were calculated.

[20]        Ms. Zhao said there is no written partnership agreement.

[21]        I note that Mr. Sun is the only named claimant rather than the entire partnership even though the claim is for compensation for amounts lost by the partnership.

[22]        Ms. Zhao went on to estimate that if the short-term rental business were allowed to run for the entire year, the likely income was $200,000. The claimant did not provide any expert financial opinion to justify this calculation. Ms. Zhao also said she was not aware of what the net income would be. She did know that the monthly rent was $3,600. She estimated that annual expenses would have been from $30,000 to $40,000 per year but this was clearly wrong. With rent at $3,600 a year, the annual rental expense alone was $43,200. Ms. Zhao said that she was confused about numbers and this was quite evident.

[23]        On April 3, 2019, Johnny Tran, Property Use Manager with the City of Burnaby, sent a letter to Mr. Luo. The letter stated that a review of online advertisements showed that the Property was being used as short-term or vacation accommodations rather than a single-family dwelling.

[24]        The letter went on to say the Property is zoned as “Residential District (R2)” and that the Zoning Bylaw does not permit use of the Property for anything other than a permanent home or residence of one family. The letter said that the Property must immediately cease to be used as a hotel and to restore the Property back to single-family use. Any advertisements on www.airbnb.ca and www.booking.com were to be removed immediately.

[25]        The letter went on to say:

[26]        As a result of receiving this letter, the owners told Mr. Sun that he had to stop using the Property for short-term rentals. Mr. Sun and Peter Chen, on behalf of the property owners, then entered into discussions about terminating the lease agreement. The May 2019 rent was also not paid, resulting in Mrs. Duan issuing a Residential Tenancy Act document called a “10 Day Notice to End Tenancy for Unpaid Rent or Utilities.”

[27]        The dispute appeared to have been resolved when Mr. Sun and Mrs. Duan signed a Residential Tenancy Act document called a “Mutual Agreement to End a Tenancy.” This agreement stated that the tenant would vacate the premises on May 31, 2019.

[28]        Mr. Sun and Mrs. Duan also signed a document called “Addendum of Mutal (sic) Agreement to End Tenancy of 8050 Kaymar Dr., Burnaby”. This document stated the landlord would waive the rent due for May to December 2019. In addition, clause 5 of this document read:

[29]        I will be referring to both the Mutual Agreement to End a Tenancy and the Addendum as the “Mutual Agreement.”

[30]        One of the named defendants was De H. Luo. The correct legal name for Mr. Luo is De Heng Luo. Mr. Sun said he obtained the name from a title search for the Property. Mr. Luo has been involved in all steps in these proceedings and a Reply was filed on his behalf under his correct legal name.

[31]        Mr. Sun asks for an order to amend the pleadings to reflect Mr. Luo’s proper legal name. Given that Mr. Luo has been involved in the defence of this claim throughout each step, there will be no prejudice suffered if the claim is amended.

[32]        I order that pursuant to Small Claims Rule 8(1)(b), the name of the defendant De H. Luo is amended to read De Heng Luo.

[33]        The claimant produced no evidence in support of a claim against De Heng Luo, who did not sign the lease or the Mutual Agreement to terminate the lease. Mr. Sun said that because Mr. Luo was married to Mrs. Duan, he thought that Mr. Luo was a proper defendant. In and of itself, marriage does not make a person legally liable for a breach of contract claim when that person was not a party to the contract. I order that the claim against De Heng Luo be dismissed.

[34]        The claimant also produced no evidence in support of a claim against Green Team Realty Inc. The claimant did not even put forth any allegations of wrongdoing against the company. As such, I order that the claim against Green Team Realty Inc. be dismissed and for Tong Heintz Sun to pay to Green Team Realty Inc. the sum of $50 representing the fee for the filing of a Reply by Green Team Realty Inc.

[35]        The claim against Mrs. Duan is for breach of the Property lease agreement. Mr. Sun claims for lost income because of the termination of the lease and a further loss on the sale of furniture purchased for the short-term rental business. Mrs. Duan says that she did not break the lease agreement and that Mr. Sun agreed to terminate the lease pursuant to the Mutual Agreement. Mr. Sun says the Mutual Agreement is not binding on him.

[36]        Mr. Sun argues that he signed the Mutual Agreement to terminate the lease under duress and that it is not binding upon him. He also says that clause 5 of the addendum, which says neither party would “make any further prosecutions regarding any aspects” of the lease agreement, does not prevent him from bringing this legal action.

[37]        The concept of “duress” is discussed in the decision Dairy Queen Canada, Inc. v. M.Y. Sundae Inc., 2017 BCCA 442 where the court stated:

[38]        Based on Mr. Sun’s evidence, it was clear he was under pressure to cancel the lease. The landlord was taking the position that the rental business had to end but that the lease payments were still required.

[39]        There were a number of emails that detail the discussions about the termination of the lease and Mr. Sun’s move out of the Property.

[40]        In an email dated April 16, 2019, to Johnny Tran, Property Use Coordinator of the City of Burnaby, with a copy to Peter Chen, Mr. Sun set out his position that the short-term rental of the Property was proper and that there was no bylaw prohibiting the short-term rental in an area zoned as R2. Mr. Sun went on to say that home-based businesses are permitted at all approved residential locations.

[41]        In his evidence, Mr. Sun conceded that the Property did not have a business licence and that the City of Burnaby refused his request for a licence.

[42]        In another email dated April 16, 2019, from Mr. Sun to Johnny Tran, Mr. Sun said that it was almost impossible to delete the online advertisements from an online database or to shut down his listing on the website Booking.com.

[43]        In an email dated April 17, 2019, from Mr. Sun to Johnny Tran, with a copy to Peter Chen, Mr. Sun said he has deactivated the Airbnb listings.

[44]        In another email dated April 17, 2019, from Mr. Sun to Peter Chen, and copied to Johnny Tran, Mr. Sun said in part:

[45]        In another email sent on April 17, 2019, from Mr. Sun to Peter Chen, with a copy to Johnny Tran and others, Mr. Sun said in part:

[46]        In an email dated April 24, 2019, from Mr. Sun to Peter Chen, with a copy to Johnny Tran, Mr. Sun apologized for missing a phone call and said he has been busy drafting an agreement “for one or two leases in Vancouver and London (near Hammersmith and Ealing broadway).” Mr. Sun went on to say he has scheduled the move for some time after May 15 and likely around May 25.

[47]        In another email dated April 24, 2019, from Mr. Sun to Peter Chen, with a copy to Johnny Tran, Mr. Sun said he reviewed a Tort textbook on the topic of an actionable nuisance involving the unreasonable use of land, and the bylaw does not provide that his use of the Property is unreasonable.

[48]        There is no evidence of any court action brought against Mr. Sun claiming that his use of the Property was a nuisance.

[49]        In an email dated April 30, 2019, from Mr. Sun to Peter Chen, with a copy to Johnny Tran, Mr. Sun said that the furniture disassembly is likely to occur sometime around May 3 to 10.

[50]        In an email dated May 1, 2019, from Mr. Sun to Peter Chen, with a copy to Johnny Tran, Mr. Sun said he will be back in Vancouver around May 6 or 7 and should be available to sign the agreement to end the tenancy.

[51]        In an email titled “Furniture disassembly to start tomorrow” dated May 3, 2019, from Mr. Sun to Peter Chen, with a copy to Johnny Tran, Mr. Sun described his concerns with neighbours watching the Property and suggested that this may be criminal harassment. He also said he is contemplating an action against the City of Burnaby.

[52]        In an email dated May 7, 2019, to Peter Chen, Mr. Sun stated:

[53]        Mrs. Duan and Mr. Sun executed the Mutual Agreement to terminate the lease on May 8, 2019.

[54]        In an email dated May 19, 2018, from Mr. Sun to Peter Chen with a copy to Johnny Tran, Mr. Sun said there was a problem with moving any furniture to a new house by May 31. Mr. Sun said he asked his mother to request an extension from the owner to provide more time to sell furniture.

[55]        The evidence as a whole fails to show that Mr. Sun was under any duress when he signed the agreement ending the lease. I am satisfied that the parties freely negotiated the termination of the lease as shown by the back and forth discussions about the terms for the termination and the efforts to move the furnishings out.

[56]        Mr. Sun is actively involved in the business of short-term rentals and gives advice to others in the same business. He says he is studying law. It is clear to me that he is more than capable of negotiating an agreement. There is no basis to find that the Mutual Agreement was voidable for reasons of duress.

[57]        I will set out again clause 5 of the “Addendum of Mutal (sic) Agreement to End Tenancy of 8050 Kaymar Dr, Burnaby.” It states:

[58]        Counsel for the Property owners argues that this clause prevents Mr. Sun from bringing this legal action.

[59]        I note first that the Mutual Agreement was entered into between Mrs. Duan and Mr. Sun. It does not prevent a legal action against Mr. Luo.

[60]        The next question is whether an agreement to abandon the right to make any further prosecutions prevents a civil action against Mrs. Duan.

[61]        The interpretation of a contract is based on the intention of the parties and the scope of their understanding: Sattva Capital Corp. v. Creston Moly Corp., [2014] 2 SCR 633, 2014 SCC 53 (CanLII) at paragraph 47. The court went on to say at paragraph 47:

[62]        I refer to Webster’s Ninth New Collegiate Dictionary (1991), where the word “prosecution” is defined as:

[63]        I have also referred to the online version of Black’s Law Dictionary found at the website https://thelawdictionary.org/prosecution/ where the definition of “prosecution” refers to determining the guilt or innocence of a person charged with a crime.

[64]        The ordinary meaning to the term “prosecution” relates to criminal charges. As this matter before me is a Small Claims Court action and not a criminal proceeding, I conclude that clause 5 of the addendum to the Mutual Agreement does not prevent Mr. Sun from bringing this legal action.

[65]        Mr. Sun argues that the landlord breached the lease agreement. The evidence is clear that the landlord and Mr. Sun entered into negotiations for the termination of the lease.  Mr. Sun benefitted by having the requirement to pay rent waived for the period from May to December 2019. The landlord benefitted by securing possession of the Property and avoiding any Bylaw infraction fines. There was an exchange of consideration as both parties benefitted from the Mutual Agreement terminating the lease. As I already stated, Mr. Sun was not forced by reason of duress to enter into the Mutual Agreement. I conclude that there was no breach of contract, whether on the part of Liang Zhi Duan or any of the other defendants.  The agreement to terminate the lease was binding on Mr. Sun. For that reason, I dismiss Mr. Sun’s claim.

[66]        Mr. Sun was of the view that the City of Burnaby had no right to issue the warning notice and that there was no Bylaw preventing the use of the Property for short-term rentals or to allow the City to issue a $400 fine. He suggested that the City in fact induced a breach of contract between himself and the owners of the Property.

[67]        Mr. Sun said that he made a search to see what Bylaw may have been broken and what authority would allow the City to levy a $400 fine. Having failed to find any enabling legislation, he argues that the operation of the short-term rental was legal.

[68]        An inability to locate the relevant legislation does not excuse a person from obeying the law. I was in fact able to locate the relevant Bylaws with a quick search.

[69]        Section 102.1 of Schedule R2 of the Burnaby Zoning Bylaw states that the permitted use of homes are as follows:

[70]        The April 3, 2019, letter from the City of Burnaby states that the property at 8050 Kaymar Drive is zoned as Residential District (R2). I heard no evidence to contradict this. Section 16(1) of the Small Claims Act allows me to accept any evidence I consider necessary and reliable. In my view, the April 3, 2019, letter from the City of Burnaby is necessary to determine the zoning for the Property. I also consider the letter reliable as the City is seeking to enforce its Bylaws and has no motivation to be deceitful.

[71]        I conclude that when a home is zoned as Residential District (R2) in Burnaby, then the use of the Property for short-term rentals is contrary to the Burnaby Zoning Bylaw.

[72]        Mr. Sun also disputes whether the City of Burnaby had any authority to threaten to issue a $400 fine. I refer to City of Burnaby Bylaw 12657, also cited as the Burnaby Bylaw Notice Enforcement Bylaw 2009. Schedule A to the Bylaw provides for a fine of $400 for the “Use or occupation of land, building or structure, including the surface of water, in a manner that does not confirm with the bylaw.” I am satisfied that the City of Burnaby could have issued a $400 fine for the improper use of the Property.

[73]        Ms. Loh, counsel for Mrs. Duan and Mr. Luo, also argued that the lack of a business licence made the operation of the short-term rental business illegal. Ms. Loh cited City of Burnaby Bylaw No. 13809 (A Bylaw respecting business licencing and regulation), which defines a “business” as meaning the:

[74]        The only stated exceptions were various activities or operations involving the provincial government.

[75]        Section 11.1 of the Bylaw states that no person may carry on a business within the City without a business licence.

[76]        Mr. Sun admitted that his short-term rental business was a commercial business and that he lacked a business licence. This is clearly in contravention of City of Burnaby Bylaw No. 13809.

[77]        None of the defendants filed a Reply arguing that this court should not award compensation for the loss of income from an illegal business. The decision Stevens Pools Ltd. v. Carlsen and Carlsen, 2015 BCPC 23 (CanLII) says that this is not necessary. At paragraph 44 of the decision, the court stated:

[78]        The BC Court of Appeal also agreed that, even if there is no pleading of illegality, the court should not assist a claimant where the evidence proves there is illegality: see Top Line Industries v. International Paper Industries, 2000 BCCA 23 at paragraph 15.

[79]        I conclude that the failure to allege an illegal contract in the Reply does not prevent me from considering whether the court should assist the claimant where an illegal contract is proven.

[80]        Although I accept that Mr. Sun may have believed that short-term rentals were legal in Burnaby, the letter from the City of Burnaby put him on notice that short-term rentals at the Property were contrary to City of Burnaby bylaws. Furthermore, Mr. Sun conceded that he was operating a commercial business without a business licence.

[81]        The BC Court of Appeal referred to a number of older cases in the Top Line Industries decision at paragraph 15, emphasizing that no court should “allow itself to be made an instrument of enforcing obligations alleged to arise out of a contract or transaction that is illegal”.

[82]        Mr. Sun’s claim is for compensation flowing from his operation of a short-term rental business that he was operating contrary to City of Burnaby bylaws. If this court were to allow Mr. Sun’s claim, it would be sanctioning an illegal business and allowing Mr. Sun to profit from that illegal business. This court will not be used to support such a claim. Accordingly, I will also dismiss Mr. Sun’s claim for reasons of illegality.

[83]        De Heng Luo and Liang Zhi Duan filed a Counterclaim to seek compensation for legal costs and inconvenience. Mr. Sun filed a Reply

[84]        Section 19(4) of the Small Claims Act prevents this court from making any award for legal fees and so that claim was destined to fail. This court also has no power to order costs or reimbursement for inconvenience.

[85]        The Counterclaim also sought a penalty of 20%. Small Claims Court Rule 20(5) allows the court to order a penalty of 10% if a trial was pursued with no reasonable basis for success. A request for a penalty is not sought by way of Counterclaim though and is normally made during submissions.

[86]        For these reasons, I dismiss the Counterclaim.

[87]        As I detailed earlier, Mr. Sun failed to attend court at the scheduled time the afternoon of the first day of trial, resulting in an adjournment.

[88]        This trial was scheduled for two days. It completed by the lunch break of the second day. Had Mr. Sun appeared the afternoon of the first day of trial, there was a possibility the trial would have completed in one day.

[89]        Ms. Loh argues that Mr. Sun should be liable for unnecessary expenses due to his failure to attend court. She provided me with an invoice from the translator used by her clients. The translator charged $720 each day, $16 each day for parking, plus GST. The total invoice was $1,544.00.

[90]        The failure to attend court when scheduled is a serious waste of judicial resources and a waste of time for all others. Small Claims Rule 20(6) allows me to order a party whose conduct causes another party or witness to incur expenses to pay all or part of those expenses.

[91]        Had Mr. Sun appeared at court on the afternoon of the first day of trial when he was scheduled to appear, I am of the view that at least part of the interpreter costs could have been avoided. There remained some possibility that the trial would have gone over to the start of the second day of trial but it would have certainly completed prior to noon. Mr. Sun will be responsible for some of those costs and I fix that amount at $500.00 payable to De Heng Luo and Liang Zhi Duan.

[92]        Small Claims Court Rule 20(5) allows the court to order a penalty of 10% if a trial was pursued with no reasonable basis for success.

[93]        There was no reasonable basis for Mr. Sun to sue Mr. Luo as he was not a party to the lease agreement, or because he is married to Mrs. Duan.

[94]        There was no reasonable basis for Mr. Sun to sue Green Team Realty Inc. given that Mr. Sun made no allegations against Green Team Realty Inc.

[95]        There was also no reasonable basis for Mr. Sun to pursue a claim against Mrs. Duan, Mr. Luo and Green Team Realty Inc. given that Mr. Sun voluntarily agreed to terminate the lease.

[96]        The Counterclaim by Mrs. Duan and Mr. Luo against Mr. Sun also had no reasonable basis for success in that it sought orders this court cannot make.

[97]        Given that Mrs. Duan and Mr. Luo, and Mr. Sun all had claims against each other that were without any reasonable basis for success. I will not award any penalty against any of these parties.

[98]        Green Team Realty Inc. did not seek payment of a penalty and so I will not award such.

[99]        Mr. Sun owes Mrs. Duan and Mr. Luo the sum of $50 representing the fee for the filing of a Reply to the Notice of Claim. At the same time, Mrs. Duan and Mr. Luo owes Mr. Sun for the $50 fee paid for his filing a Reply to the Counterclaim. These amounts will be set off against each other and there will not be an order for payment of these sums.

[100]     I order as follows: