The respondent, Elena Cherny, leased a house to the applicants, 10381187 Canada Inc. and Elias Markos, for a 10-year term, with the understanding that it would be renovated into six units for short-term rentals.
Cherny completed the renovations without proper planning permission or building permits.
After a City of Toronto Order to Comply, Cherny restored the house to a single-family dwelling and locked out the applicants.
The applicants sought specific performance of the lease and damages, registering a certificate of pending litigation (CPL) on the property.
Cherny brought a motion to discharge the CPL.
The court found that damages would be an adequate remedy for any breach of the lease, as the property was not unique in the commercial context of short-term rentals, and specific performance was not possible given the unlikelihood of obtaining the necessary zoning variances.
The CPL was discharged with conditions to protect the applicants' potential damages award, and a trial was ordered to determine the legality of the lease and whether Cherny breached it.