Court File and Parties

Court File No.: 13-57696 Date: 2017/04/26 Superior Court of Justice - Ontario

Re: 1550988 Ontario Limited o/a Premier Drycleaners, Plaintiff And: Burnford Realty Limited, Defendant

Before: Madam Justice Sylvia Corthorn

Counsel: David Debenham, for the Plaintiff (Moving Party) Andrew J.F. Lenz, for the Defendant (Respondent Party)

Heard:

Ruling on Motion for Summary Judgment

Corthorn J.

Introduction

[1] The plaintiff (“Premier”) runs a dry-cleaning business, with a number of locations in the City of Ottawa. In November 2007, Premier became a commercial tenant of the defendant (“Burnford”). The parties entered into a month-to-month lease agreement for Unit 16 of a shopping mall, owned and managed by Burnford, located on Greenbank Road in the City of Ottawa (the “Mall”).

[2] The landlord-tenant relationship continued from November 2007 until March 31, 2013. During that period Premier moved from Unit 16 to Unit 9B of the Mall. In addition, the parties executed several documents, including the following:

• In November 2007, a month-to-month lease for Unit 16 (the 2007 “Lease”);
• In December 2007, a document titled “Lease Agreement for Store No-16, 250, Greenbank Sq.” (the “2007 Document”); and
• A lease dated March 18, 2008 for a term running from April 1, 2008 to March 31, 2013 for Unit 9B (the “2008 Lease”).

[3] In March 2013, as the expiration of the term of the 2008 Lease approached, the parties communicated with respect to a lease for Unit 9B to run from April 1, 2013 to March 31, 2018. Ultimately, Burnford chose not to continue to lease Unit 9B to Premier. In late March 2013, Burnford entered into a lease for Unit 9B with a competitor of Premier, Brown’s Cleaners (the “2013 Lease”). Premier was required to vacate Unit 9B by the end of the day on March 31, 2013.

[4] Within two months of the termination of the 2008 Lease, Premier commenced this action. The statement of claim has been amended twice. The relief originally claimed by Premier was limited to damages ($350,000) or, in the alternative, an accounting by Burnford for profits earned from the lease to Brown’s of Unit 9B.

[5] Relying on the contents of the 2007 Document, the plaintiff sought and obtained leave in January 2015 to amend the statement of claim. The amendments made are based on the final sentence of the 2007 Document, which reads as follows: “The Landlord agrees to provide a 5 year extension upon expiry of the lease.”

[6] The amendments made to the statement of claim in January 2015 include the addition to the prayer for relief of a request for rectification of the 2008 Lease. Premier requests that the 2008 Lease be rectified to include “the extension of lease provisions of the December 3, 2007 document”. Amendments were also made to the substantive portion of the statement of claim.

[7] The statement of claim was amended again in February 2015. The amendments made at that time provide particulars of the damages claimed and set out in detail allegations with respect to breach of the 2008 Lease and of the 2007 Document.

[8] In support of this motion for summary judgment, the plaintiff relies on the 2007 Document. The relief sought by the plaintiff is as follows:

a) Declaratory relief with respect to the defendant’s alleged breach of the 2008 Lease; b) Damages in the amount of $217,710 (rounded figure); and c) An order compelling Burnford to consent to an assignment from Brown’s to Premier of the 2013 Lease for Unit 9B.

[9] The evidence on the motion for summary judgment includes one or more affidavits from each of Shobha Vedantam (“Ms. Vedantam”) the president of Premier; Nitesh Naidu (Ms. Vedantam’s husband and “Mr. Naidu”); and Krista Aselford (the president of Burnford – “Ms. Aselford”). In addition, the record before me (the “Record”) includes transcripts from the examinations for discovery of Ms. Vedantam and Ms. Aselford in their respective capacities as representatives of the corporate plaintiff and corporate defendant. Ms. Aselford was the only affiant to be cross-examined. The transcript from that cross-examination is included in the Record. In total, the Record is comprised of over 1,000 pages.

The Issues

[10] The motion for summary judgment raises the following issues:

1. Did Burnford breach its contractual obligation to Premier by failing to lease Unit 9B to Premier for the five-year period from April 1, 2013 to March 31, 2018?
2. If the answer to Question 1 is “Yes”, is Premier entitled to damages in the amount of $217,710? and
3. Regardless of the answer to Question 1, is Premier entitled to an order compelling Burnford to assign the 2013 Lease from Brown’s to Premier?

Motions for Summary Judgment

[11] The framework for determination of motions for summary judgment has evolved because of recent amendments to the Rules of Civil Procedure, including to Rule 20. In addition, the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 established key principles to be followed in the context of a cultural shift mandated by the decision. The cultural shift to be made is the recognition by parties, lawyers, and judges alike “that a process can be fair and just, without the expense and delay of a trial, and that alternative models of adjudication are no less legitimate than the conventional trial.” Hryniak, at para. 27.

[12] As stated by the Supreme Court of Canada:

Summary judgment must be granted whenever there is no genuine issue requiring a trial.

There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process: 1) allows the judge to make the necessary findings of fact; 2) allows the judge to apply the law to the facts; and 3) is a proportionate, more expeditious and less expensive means to achieve a just result. Ibid, at paras. 47 and 49.

[13] At paragraph 66 of Hryniak, the Supreme Court of Canada set out the approach to be taken by the judge on a motion for summary judgment. The first step on a motion for summary judgment is for the judge to determine, based only on the evidence before the judge and without using the expanded fact-finding powers, sub-rule 20.04(2.1) of the Rules of Civil Procedure, whether there is a genuine issue requiring a trial. The analysis of whether there is a genuine issue requiring a trial is done by reviewing the factual record and granting a summary judgment if there is sufficient evidence to fairly and justly adjudicate the dispute and a summary judgment would be a timely, affordable and proportionate procedure.

[14] If, based only on the record before the judge, there appears to be a genuine issue requiring a trial, the judge must then determine whether the requirement for a trial may be avoided by the exercise of the expanded fact-finding powers. Those powers may be exercised, in the discretion of the judge hearing the motion, provided that the exercise of those powers does not run contrary to the interests of justice. The interests of justice will be served if the exercise of those powers will lead to a fair and just result and serve the goals of timeliness, affordability, and proportionality in the context of the case as a whole. Hryniak, at para. 66.

Issue No. 1: Alleged Breach of the 2008 Lease

[15] The parties differ in their respective positions as to the terms of the 2008 Lease. Before a determination can be made as to whether Burnford is in breach of the 2008 Lease, it is necessary to determine what the terms of that lease are.

a) Positions of the Parties

[16] Premier’s position is that the terms of the 2007 Document remained in force and effect – either as a written agreement independent of the 2008 Lease or by way of rectification of the 2008 Lease, the latter by incorporating the terms of the 2007 Document. Premier submits that Burnford was contractually bound to extend the terms of the 2008 Lease for a period of five years beyond March 31, 2013.

[17] Burnford’s position is that the parties entered into the 2008 Lease entirely independent of the discussions between the parties with respect to the 2007 Document. Burnford submits that the 2008 Lease sets out all of the terms pursuant to which Premier leased Unit 9B. Burnford further submits that it was not under any obligation to extend the 2008 Lease beyond March 31, 2013 or to renew the 2008 Lease for a period subsequent to that date.

b) Analysis

[18] Despite the voluminous record, there is a dearth of evidence with respect to the circumstances surrounding the negotiation of the terms and the execution of both the 2007 Document and the 2008 Lease. Ms. Vedantam is the only individual whose signature is on each of the 2007 Lease, the 2007 Document, and the 2008 Lease.

[19] The 2007 Lease and the 2008 Lease are both signed by Barbara Aselford, the widow of the late Mr. Aselford (“Mrs. Aselford”). In each document she is identified as the President of Burnford. There is no evidence before me from Mrs. Aselford. No explanation has been provided as to why there is no evidence from her.

[20] The 2007 Document is signed by the late Mr. Aselford on behalf of Burnford. In addition, his initials appear on one copy of Schedule ‘A’ to that document. Mr. Aselford passed away in 2014. His daughter, Ms. Aselford, did not begin to work at Burnford until 2009.

[21] Ms. Aselford has no first-hand knowledge of the events surrounding the negotiation and execution of either the 2007 Document or the 2008 Lease (the “Events”). By way of answer to an undertaking given at the examination for discovery of Ms. Aselford, Burnford confirmed that Miranda Rogers (a Burnford employee and “Rogers”) has no memory of the 2007 Document.

[22] The only evidence as to the Events is that of Ms. Vedantam, the president of Premier. Based on her evidence, I make the following limited findings of fact with respect to the Events:

Nov. 1/07 The parties entered into a month-to-month lease for Unit 16, the terms of which are set out in the 2007 Lease.

Nov. 29/07 Following discussions with Mr. Aselford, Ms. Vedantam signed the document that became Schedule ‘A’ to the 2007 Document. Schedule ‘A’ identified the work to be done by Premier to Unit 16, as consideration for the terms subsequently set out in the 2007 Document.

The contents of Schedule ‘A’ are as set out in exhibit ‘B’ to the June 17, 2015 affidavit of Mr. Naidu. [7]

Dec. 3/07 No later than December 3, 2007, Premier and Burnford executed the 2007 Document. That document bears the title “Lease Agreement for Store No-16, 250, Greenbank Sq.”. The 2007 Document was signed by Ms. Vedantam on behalf of Premier and by Mr. Aselford on behalf of Burnford. The 2007 Document is addressed to Burnford from Premier. The contents of the 2007 Document are, in their entirety, as follows:

I Shobha Vedantam, owner of 1550988 Ontario Ltd, agree to perform the following services as agreed with Mr. Garth Aselford, C/o Burnford Realty Ltd.

Schedule of services:

1. As per the attached document SCHEDULE-A ( estimate and schedule of services given to landlord), the said lease store will be cleaned as agreed upon. (see note signed by Shobha Vedantam on 29 th of Nov 2007). [8]

In view of the above mentioned services/agreement, the Landlord, Mr. Garth Aselford, C/o Burnford Realty Ltd, agrees to convert the existing monthly lease to a full 7 year lease as per the terms and conditions already agreed upon.

The Landlord agrees to provide a 5 year extension upon expiry of the lease . (Emphasis added.)

Mar. 18/08 The parties executed the 2008 Lease for Unit 9B. The terms of the 2008 Lease are as set out in exhibit ‘F’ to the June 12, 2015 affidavit of Ms. Vedantam.

[23] For the purpose of this Ruling, I highlight the following terms of the 2008 Lease:

2.2 Term

TO HAVE AND TO HOLD the Premises for and during the term (the “Term”) of five (5) years, days, which shall commence from and including the 1 st day of April, 2008 and from thenceforth next ensuring and fully to be completed and ended on the 31 st day of March, 2013. YIELDING AND PAYING THEREFORE during the Term, the rents described in section 4 which shall be paid on the days and times in section 4.

12.7 Entire Agreement

No prior stipulation, representation, agreement or undertaking, verbal or otherwise of the parties or their agents shall be valid or enforceable unless embodied in the provisions of this Lease or made in writing and signed by all parties hereto.

15.1 Prior Lease

The Landlord and the Tenant agree that the provisions of the lease dated November 1, 2007 between the same parties have been completely replaced by the provisions of this Lease and therefore are of no further force and effect.

[24] I am unable, based on the Record, to determine whether the parties intended that the terms of the 2007 Document were to be incorporated into the 2008 Lease. I find that the issue of rectification of the 2008 Lease, as requested by Premier, is a genuine issue requiring a trial.

[25] I am unable, by exercising the discretionary powers available pursuant to rules 20.04(2.1) and (2.2) of the Rules of Civil Procedure, to eliminate the need for a trial. The absence of evidence as to the Events precludes me from using the fact-finding powers in those rules. This aspect of the motion for summary judgment is therefore dismissed.

[26] A determination of the terms of the 2008 Lease is critical to the outcome of the other issues raised in this action. In my view a timely, affordable, and proportionate method by which to resolve the issue of the terms of the 2008 Lease is to proceed to a mini-trial pursuant to rule 20.04(2.2) of the Rules of Civil Procedure.

[27] Once the terms of the 2008 Lease are determined, it will then be necessary to determine whether Burnford breached its contractual obligations to Premier by leasing Unit 9B to Brown’s effective April 1, 2013. The Record includes a significant amount of evidence as to what transpired between the parties, in February and March 2013, leading to Burnford’s decision to enter into the lease with Brown’s. Taking into consideration the goals of timeliness, affordability, and proportionality identified in Hryniak, at para. 66 it is appropriate, in the context of this motion, to make findings of fact to be relied upon in due course in determining the extent, if any at all, to which Burnford breached its contractual obligations to Premier.

[28] Based on my review of the affidavits, transcripts of the examinations for discovery, transcript of the cross-examination of Ms. Aselford, and documents that are properly evidence before me, it is clear that to a large extent, the facts as to what transpired in February and March 2013 are not in dispute. With respect to the events during those months, I make the findings of fact set out below. These findings are, unless otherwise identified, based on uncontroverted evidence:

Feb. 28 Burnford provided Premier with three unsigned copies of a lease for the term April 1, 2013 to March 31, 2018 (the “Lease Documents”). Burnford stated that, “All copies [of the lease] must be signed and returned on or before March 15, 2013.” The unsigned copies of the lease and cover letter were delivered by hand to Unit 9B.

Mar. 4 Premier requested additional time within which to “complete the necessary formalities” and undertook to return the Lease Documents to Burnford by end of day on March 31. The request and undertaking were set out in an email message sent by Ms. Vedantam to Ms. Aselford on the evening of the March 4.

Mar. 5 Burnford granted an extension to Premier within which to complete the Lease Documents. The extension was granted by way of an email from an employee of Burnford (Rogers) sent to Ms. Vedantam. Premier was advised that if it was their intention to renew the lease with Burnford they were to sign and return the Lease Documents during the week of March 18.

Mar. 20 Premier requested a meeting with Burnford, to occur prior to the end of the week of March 18, to review 10 points for which Premier was seeking clarification and to “complete all formalities”. Premier advised Burnford that it also wanted to discuss opportunities to increase business by adding services available at the dry cleaning store.

Mar. 21 Premier entered into a sub-lease of a portion of Unit 9B, with a shoe repairer. The sub-lease was signed by Ms. Vedantam on behalf of Premier and Alfredo Duran Diaz (the “shoe repairer”).

Mar. 22 Ms. Aselford and Ms. Vedantam met for approximately 90 minutes at Burnford’s office. Also in attendance was Mr. Naidu. During the meeting, the three individuals reviewed each of the 10 points raised by Premier. Nine of the points were addressed in some way at the meeting. The tenth point – Premier’s request for revision of the ‘CPI Clause’ and elimination of a contribution towards general promotion expenses – was not addressed. Ms. Aselford undertook on behalf of Burnford to consider Premier’s request in that regard and follow-up with Ms. Vedantam.

Mar. 25 Mr. Aselford contacted Brown’s to see if they would be interested in leasing Unit 9B.

Mar. 26 A representative of Brown’s met with Mr. Aselford at Burnford’s offices at which time Brown’s was provided with a lease, for Unit 9B, identical in its terms to the lease provided to Premier on February 28.

Burnford advised Premier that it was not prepared to make any changes to the Lease Documents.

Mar. 27 Premier, aware that Burnford would not make any changes to the Lease Documents, informed Burnford that the Lease Documents would be signed and returned to Burnford on March 28.

Brown’s returned executed copies of the lease to Burnford and provided the latter with a copy of a sub-lease between Brown’s and the shoe repairer, the latter for a portion of Unit 9B.

Mar. 28 Premier was informed by the shoe repairer that he had executed a sub-lease with Brown’s for a portion of Unit 9B. Premier attended at the office of Burnford, in an attempt to deliver to the latter executed copies of the Lease Documents. Burnford refused to accept the executed Lease Documents. Burnford provided Premier with a letter stating that the former would not be entering into a new lease with the latter.

[29] In addition, I find that at no time prior to March 28, 2013 did Burnford inform Premier that:

a) It was considering leasing Unit 9B to someone other than Premier; b) It was in discussion with any other dry cleaner, including Brown’s, with respect to a lease for Unit 9B commencing April 1, 2013; and c) It had entered into a five-year lease with Brown’s for Unit 9B, effective April 1, 2013.

[30] Burnford’s position as to why it decided not to sign another lease with Premier is that, following the March 22, 2013 meeting, Ms. Aselford became concerned about the viability of Premier as a tenant in the Mall. It is Ms. Aselford’s evidence that her concerns arose from the negative tone of Mr. Naidu, in particular with respect to the dry-cleaning business. Ms. Aselford’s evidence is that with Burnford having had a negative experience with another tenant (a bakery) leaving the Mall without notice, Burnford did not want to be without a dry cleaner in the Mall.

[31] There is competing evidence as to the nature and extent of the discussion during the March 22, 2013 meeting by Mr. Naidu of his concerns with respect to the dry cleaning business in general, changes in the economy, and the viability of the dry cleaning business, the latter whether generally or specifically related to Premier’s business. To the extent that evidence is relevant to the outcome of issues to be determined in this action, it will be necessary for the parties to call evidence. I am unable, based on the Record, to make any findings in that regard.

[32] In the concluding section of this Ruling, I provide directions with respect to the mini-trial and the determination of Issue No. 1.

Issue No. 2: Claim for Damages

[33] Premier seeks damages in the amount of $217,710. That amount is alleged by Premier to represent the total of profits lost in the five-year period from April 1, 2013 to March 31, 2018. That amount is based on the following:

• The average annual profit earned by Premier when it occupied Unit 9B for the full calendar years from 2009 to 2012;
• Reduction for mitigation achieved by Premier since March 31, 2013; and
• Expenses incurred by Premier for equipment purchased in 2012 in anticipation of occupying Unit 9B from April 1, 2013 to March 31, 2018.

[34] In light of the mini-trial ordered, an assessment of damages is not required in this Ruling. There are, however, three matters with respect to the issue of assessment of damages that I shall address.

[35] First, based on the Record it appears that the examination for discovery of Ms. Vedantam was commenced on January 27, 2015 and adjourned prior to completion of the examination. As I understand it, the examination for discovery of Ms. Vedantam was adjourned to:

a) Allow Premier, through its counsel to arrange for copies of the financial statements and records of Premier, including those relied on by the plaintiff’s expert, to be provided to counsel for Burnford; b) Allow counsel for Burnford to review the financial statements and records; and c) Be continued for another half-day to be arranged in the future.

[36] There is nothing in the Record to indicate that the examination for discovery of Premier, in particular with respect to the issue of damages, was continued at any time. In the concluding section of this Ruling, I address the completion of the discovery stage of this action.

[37] Second, in support of its claim for damages, Premier relies on a report prepared in May 2013 by K.E. Koshy (“Mr. Koshy” and the “Koshy Report”). That report is included in the Record as an exhibit to the affidavit of Mr. Naidu sworn in September 2015. There is no affidavit from Mr. Koshy.

[38] For the following reasons, Burnford questions whether Mr. Koshy is an expert witness:

• Mr. Koshy is identified as both a C.P.A. and a C.A. in the signature line of the Koshy Report and of a January 2015 document that he authored.
• The Koshy Report begins as follows, “you have requested my opinion as to the quantum of damages suffered by [Premier]”.
• The contents of the Koshy Report include more than arithmetic calculations. Mr. Koshy applied a number of accounting principles and followed a specific approach (contribution margin) to quantify the losses alleged to have been suffered by Premier.
• The concluding sentence of the Koshy Report includes the following reservation of rights, “we reserve the right to revise our opinions in light of any new facts…”
• Premier has not served a Form 53 (expert’s acknowledgment of duty) with respect to either document authored by Mr. Koshy.

[39] Assuming Premier intends to rely on Mr. Koshy’s to give expert opinion evidence, steps remain to be taking to comply with Rule 53 of the Rules of Civil Procedure.

[40] Third, and assuming that Mr. Koshy is intended to be an expert witness, Burnford takes issue with the manner in which Premier has placed the Koshy Report before the Court for the purpose of the motion for summary judgment. I agree with the concerns expressed in that regard.

[41] In a number of decisions from this Court on motions for summary judgment, one or more of the parties is criticised for relying on an expert’s report attached as an exhibit to an affidavit in the name of someone other than the expert. See: Danos v. BMW Group Financial Services Canada, 2014 ONSC 2060; aff’d 2014 ONCA 887; Toronto Dominion Bank v. Schrage (2009), 65 B.L.R. (4th) 277; and Beatty v. Waterloo (Regional Municipality), 2011 ONSC 3599.

[42] Regardless of the outcome on Issue No. 1, I would not have assessed damages based on the Koshy Report filed as an exhibit to Mr. Naidu’s September 2015 affidavit. I would have adjourned that aspect of the motion for summary judgment to allow the parties to deliver additional materials, with evidence filed in accordance with the Rules of Civil Procedure, on the issue of damages.

Issue No. 3: Assignment of the 2013 Lease

[43] The issue of assignment of the 2013 Lease is capable of determination independent of Issue Nos. 1 and 2.

a) Positions of the Parties

[44] Premier’s position is that Brown’s consents to an assignment to Premier of the 2013 Lease. Premier is aware that for the assignment to be made, it requires Burnford’s consent. Premier submits that Burnford is unreasonably withholding consent to the assignment.

[45] Burnford submits that it is acting reasonably in refusing to consent to the assignment. It argues that the Court is to exercise caution in substituting its views for those of the landlord with respect to the assignment.

b) The Evidence

i. The Consent

[46] Included in the Record is a consent to assignment of the 2008 Lease signed on behalf of Brown’s on June 16, 2015 (the “Consent”). The Consent is (a) set out in a document that includes the title of proceeding in the matter before me, (b) included in the Record as a document on its own, and (c) not an exhibit to one of the affidavits included in the Record.

[47] The signature on the Consent is identified as that of Malcolm MacGregor, an individual who has authority to bind Brown’s. There is no evidence before me in which that signature is confirmed as the signature of Malcolm MacGregor. However, Burnford does not dispute that the signature is that of Mr. MacGregor. I find that the signature is that of Mr. MacGregor. I also find that Brown’s consents to the assignment requested by Premier.

ii. Emails Between Counsel

[48] Also included in the Record is a series of emails, exchanged between counsel for the parties, the subject of which is Premier’s request for an assignment to be made of the 2013 Lease (the “emails”). The emails are included as independent documents; they are not included as exhibits to an affidavit.

[49] In his affidavit sworn on June 17, 2015, Mr. Naidu refers to the Consent and to the emails. However, the emails are not included as an exhibit to his affidavit.

[50] I find that the emails are not evidence properly before the Court.

iii. MacGregor Transcript

[51] Premier includes in its motion record the transcript from an examination for discovery of Brian MacGregor (a principal of Brown’s and the “transcript”). The transcript is from an action commenced by Premier against Brown’s arising from the 2013 Lease. There is no evidence that Brown’s consented to the use of the transcript for a purpose that is unrelated to this other action. In the absence of evidence in that regard, I am unable to determine whether Premier is in breach of or has complied with the ‘Deemed Undertaking Rule’ Rule 30.1 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. I therefore find that the transcript is not evidence properly before the Court.

iv. Summary

[52] In making my decision with respect to the issue of the assignment I have not considered the contents of either the emails or the transcript.

c) Analysis

[53] Burnford’s explanation for refusing to consent to the assignment is as follows:

• Burnford remains concerned about the viability of Premier’s business given the statements made by Mr. Naidu in that regard during the March 22, 2013 meeting;
• The existence of the action commenced by Premier against Burnford is a significant impediment to a harmonious landlord-tenant relationship between the parties. As a result of the lawsuit, Burnford has lost trust in Premier and the relationship between the two businesses has been damaged; and
• Burnford wishes to have Brown’s remain a tenant in the Mall until at least March 31, 2018.

[54] The possibility of an assignment was first raised by Premier in September 2014 during a telephone conversation between counsel for the parties. It appears that a formal request for Burnford’s consent to the assignment was made in June 2015, after Premier obtained the Consent from Brown’s. In response to the formal request, Premier was advised that Burnford would not assign the 2013 Lease to Premier. That response was set out in a June 17, 2015 letter from counsel for the defendant addressed to counsel for the plaintiff.

[55] In Burnford’s formal response, it was reiterated that it has, since the subject of an assignment was first raised, been Burnford’s position that for the reasons set out in paragraph 54, above, it would not consent to an assignment. In addition, the formal response referred to an April 2013 Ottawa Citizen article regarding Premier leaving the Mall. Burnford’s view is that the article was an attempt on Premier’s part to negatively affect the reputation of Burnford.

[56] Ms. Aselford’s evidence is that during the 90-minute meeting she had with Ms. Vedantam and Mr. Naidu on March 22, 2013 she became concerned about the viability of Premier’s operation as a dry cleaner. When cross-examined on her affidavit, Ms. Aselford summarized the discussion as follows:

Again, this was a presentation from [Mr. Naidu]. These are his numbers that he presented to show the general state of his business which directly went to his comments on the economy and how the negative turn in the economy had been affecting his bottom line and he was concerned with where his business was going and how it was going to move forward. [14]

[57] Premier characterizes Ms. Aselford’s concerns as a matter of subjective perception (not a misconception) of the tone and content of the statements made by Mr. Naidu during the March 22, 2013 meeting. Premier submits that Ms. Aselford’s subjective perception is not sufficient to support a finding that Burnford is reasonably withholding consent to the assignment.

[58] Premier describes Burnford’s response to the commencement of the action – the loss of trust in and the damage to the relationship with Premier – as “petulance” on the part of Burnford.

i. Terms of the Lease

[59] The terms of the 2013 Lease, between Burnford and Brown’s, with respect to assignment are as follows:

9.1 Assignment or Subletting or Other Transfer

9.1.1 The Tenant shall not assign, sublet or part with or share possession of the Premises or any portion thereof (a “Transfer”) without the prior written consent of the Landlord and such consent shall neither be required in respect to a Transfer to an Eligible Corporation as defined in section 9.4 nor be unreasonably withheld, provided that, without limiting the generality of the foregoing, it shall not be considered unreasonable for the Landlord to take into account the following factors:

the restrictive clauses entered into with other tenants by the Landlord, the financial background, the business history and capability in the Tenant’s line of business and the quality of merchandise of the proposed assignee, subtenant or occupant (a “Transferee”). Consent by the Landlord in any instance shall not constitute a waiver of the necessity for such consent in another instance. This prohibition includes any sub-letting or assignment which would otherwise occur by operation of law. If this Lease is Transferred in any case without the consent of the Landlord when required, the Landlord may collect Rent from the Transferee and apply the net amount collected to the Rent, but no such collection will be considered a waiver of this covenant, or the acceptance of the Transferee as tenant. Despite a Transfer the Tenant remains fully liable under this Lease. Any Transfer shall be prepared by the solicitor of the Landlord, and all legal costs in respect thereto shall be paid by the Tenant.

[60] I pause to note that Premier is not an “Eligible Corporation” as referred to in clause 9.1.1 and defined in clause 9.4 of the 2013 Lease.

ii. Statutory and Case Law

[61] Assignment of a lease in a commercial setting is governed by section 23 of the Commercial Tenancies Act, R.S.O. 1990, c. L.7. That section provides as follows:

(1) In every lease made after the 1st day of September, 1911, containing a covenant, condition or agreement against assigning, underletting, or parting with the possession, or disposing of the land or property leased without licence or consent, such covenant, condition or agreement shall, unless the lease contains an express provision to the contrary, be deemed to be subject to a proviso to the effect that such licence or consent is not to be unreasonably withheld.

(2) Where the landlord refuses or neglects to give a licence or consent to an assignment or sub-lease, a judge of the Superior Court of Justice, upon the application of the tenant or of the assignee or sub-tenant, made according to the rules of court, may make an order determining whether or not the licence or consent is unreasonably withheld and, where the judge is of opinion that the licence or consent is unreasonably withheld, permitting the assignment or sub-lease to be made, and such order is the equivalent of the licence or consent of the landlord within the meaning of any covenant or condition requiring the same and such assignment or sub-lease is not a breach thereof.

[62] In his 2003 decision in 1455202 Ontario Inc. v. Welbow Holdings Ltd., [2003] O.J. No. 1785 (S.C.), Cullity J. summarized the factors to be considered in determining whether a landlord has reasonably withheld consent to the assignment of a lease:

1. Would a reasonable person have withheld consent? The tenant has the burden of establishing that consent is being unreasonably withheld.
2. Reasonableness of the refusal to consent is to be determined on the basis of the information available to, and the reasons given by the landlord, at the time consent is initially refused. Additional or different facts and/or reasons subsequently given are not relevant.
3. Reasonableness must be determined in light of the terms of the lease that govern the matter of assignment, including the rights, respectively of the Tenant to assign and the landlord to withhold consent.
4. In some circumstances, the probability that the proposed assignee will default on its obligations pursuant to the subject lease may be a reasonable ground for the landlord to withhold consent.
5. The financial position of the proposed assignee may be a relevant factor.
6. The commercial realities of the marketplace and the economic impact of the assignment on the landlord are circumstances to be considered. In the end, the question of reasonableness is “essentially one of fact that must be determined on the circumstances of the particular case.” 1455202, at para. 9.

[63] In his decision, Cullity J. concluded that “the court should be slow to substitute its judgment for the business judgment of the landlord.” 1455202, at para. 23.

[64] The decision of Lord Denning in Bickel et al. v. Duke of Westminster et al., [1976] 3 All E.R. 801 (H.L.) has been referred to by the Ontario Court of Appeal as “the high-water mark in this area of the law.” Re Griff et al. and Sommerset Management Services Ltd. (1978), 19 O.R. (2d) 209 (C.A.). Lord Denning’s approach to assignment clauses of this kind is as follows:

The words of the contract are perfectly clear English words: “Such licence shall not be unreasonably withheld”. When those words come to be applied in any particular case, I do not think the court can, or should, determine by strict rules the grounds on which a landlord may, or may not, reasonably refuse his consent. He is not limited by the contract to any particular ground. Nor should the courts limit him. Not even under the guise of construing the words. The landlord has to exercise his judgment in all sorts of circumstances. It is impossible for him, or for the courts, to envisage them all . . . Seeing that the circumstances are infinitely various, it is impossible to formulate strict rules as to how a landlord should exercise his power of refusal . . . The reasons given by the judges are to be treated as propositions of good sense - - in relation to the particular case - - rather than propositions of law applicable to all cases. Bickel, at pp. 804−805, quoted in Re Griff, at p. 219.

[65] The circumstances in which Burnford and Premier find themselves are, in my view, one of the “infinitely various” sets of circumstances in which a landlord and proposed assignee, respectively, may find themselves.

[66] In the words of Lord Denning, it “makes good sense” that Burnford is acting reasonably in withholding its consent to the assignment. For the following reasons, I find that the decision of Burnford in refusing to consent to the assignment is one that could have been made by a reasonable person:

• Burnford is not restricted to the grounds for refusal set out in clause 9.1.1 of the 2013 Lease.
• Pursuant to the terms of the Lease, Burnford was entitled to consider the “capability” of Premier as a dry cleaning business.
• Burnford’s concerns with respect to the capability of Premier as a dry cleaning business arose from statements made on behalf of Premier on March 22, 2013.
• Whether the statements made by Mr. Naidu were intended as negotiating tactics only (as is alleged by Premier) and the concerns which arose from the statements were unintended, the concerns are validly held by Burnford.
• A reasonable person would be affected by the commencement of an action of this kind. The loss of trust and damage to the relationship cited by Burnford is not an unexpected consequence of this action. The consequence of the change to the relationship is that Premier is an “undesirable” tenant. St. Jane Plaza Limited v. Sunoco Inc., [1992] O.J. No. 1339, 24 R.P.R. (2d) 161, at p. 8.

[67] In summary, the motion on behalf of Premier for summary judgment in the form of an order requiring Burnford to assign the 2013 Lease to Premier is dismissed.

Conclusions

[68] For the reasons set out above, I order as follows:

1. The motion for summary judgment is dismissed in its entirety.
2. The parties shall proceed to a mini-trial of the following issues: a) Is Premier entitled to rectification of the 2008 Lease to include the terms of the 2007 Document? b) If the answer to (a) is “No”, are the parties bound by the terms of the 2007 Document, as a stand-alone document independent of the 2008 Lease?
3. Within a reasonable time following the mini-trial, and subject to further order of the Court, the parties shall proceed to a trial of the following issues:
   1. Did Burnford breach its contractual obligation to Premier by failing to lease Unit 9B to Premier for the five-year period from April 1, 2013 to March 31, 2018?
   2. If the answer to Question (1) is “Yes”, is Premier entitled to: a) Damages in the amount of $217,710; and b) Any other relief?

[69] I am mindful of the monetary amount claimed as damages, the expenses incurred by the parties to date for examination for discovery, cross-examination, and the motion for summary judgment, and the principle of proportionality. In my view, it is important that the parties give consideration to the steps they intend to take prior to proceeding with either the mini-trial or the trial. For example, are there further steps in the discovery process that either of the parties intends to take prior to proceeding with the trial proper? Such a step might be the completion of the examination for discovery of Ms. Aselford in her capacity as the representative of Burnford.

[70] Prior to giving any additional directions and setting any further terms with respect to either the mini-trial or the trial thereafter of the remaining issues, I require the parties to attend before me to make submissions with respect to the matters set out in rule 20.05(2) of the Rules of Civil Procedure. The parties are to arrange, through the office of the Trial Co-ordinator, for that appearance.

Costs

[71] In the event the parties are unable to agree upon costs of the motion for summary judgment, they may make written submissions as follows:

a) The submissions shall be limited to a maximum of four pages, exclusive of a bill of costs; b) Written submissions shall comply with Rule 4 of the Rules of Civil Procedure; c) Hard copies of any case law or other authorities shall be provided with the submissions and shall comply with Rule 4 of the Rules of Civil Procedure with respect to font size; d) The submissions, the documents referred to therein, case law, and other authorities, shall be on single-sided pages; e) Written submissions shall be delivered by 5:00 p.m. on the tenth business day following the date on which this Ruling is released; and f) In the event any party wishes to deliver a reply to the costs submissions of the opposing party, the reply submissions shall be delivered by 5:00 p.m. on the fifteenth business day following the date on which this Ruling is released. Reply submissions shall comply with paragraphs (a) to (d) above.

Madam Justice Sylvia Corthorn

Released: April 26, 2017

Footnotes

[7] This copy of Schedule ‘A’ is signed only by Ms. Vedantam. A second copy of Schedule ‘A’ exists, that includes Ms. Vedantam’s signature and Mr. Aselford’s initials. The contents of the two copies of the document are otherwise identical. [8] The line through a portion of the text is as it appears in the original document. [14] Transcript of cross-examination of Ms. Aselford on October 14, 2015 at page 11, question 48.