DATE: 2019-05-27 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: DAVID COOPER by his Litigation Guardian, ANNETTE COOPER and ANNETTE COOPER, Applicants AND: THE LAUNDRY LOUNGE, INC. and ANDRÉ FISET, Respondents
BEFORE: Schabas J.
COUNSEL: André Fiset, for himself and the Laundry Lounge, Inc., Respondents Krista Chaytor and Caitlin Steven, Counsel for the Applicants
HEARD: May 24, 2019
ENDORSEMENT
[1] The applicants seek an order terminating two commercial leases for non-payment of rent, an order requiring vacant possession of the premises, an order granting leave for the Registrar to issue a writ of possession, and orders requiring payment of arrears of rent and damages for lost future rent.
[2] At the outset of the hearing, I considered a motion by the respondents seeking to stay or dismiss the application on several grounds. I heard the motion and application on the same day and reserved on both issues.
The Motion to Stay or Dismiss
[3] With respect to the motion, a number of the grounds had been resolved or were not advanced, but two points were pressed by Mr. Fiset for the respondents.
[4] First, he argued that the application should not proceed because the applicant, Annette Cooper, who is also litigation guardian for her husband David Cooper, has limited knowledge of the facts and of the litigation, having delegated management of the property and litigation to her son, Allen. Mr. Fiset could point to no authority suggesting that this was improper or should prevent the application from proceeding.
[5] Mr. Fiset drew my attention to Granasiuk v. Granasiuk, 2018 ONSC 2904 at paras. 30-32; however that case simply provides that a litigation guardian shall ensure the interests of the person under disability are properly attended to, which is clearly the case here. Ms. Cooper is 82 years old and has quite reasonably allowed her son to take on the day to day management of these commercial properties for herself and her husband, including related litigation. She is aware of the circumstances and the proceedings. Her son, Allen Cooper, has provided evidence and has been extensively cross-examined, and there is no unfairness to the respondents arising from her limited involvement.
[6] The other ground advanced by the respondents was that the matters should be addressed in an action they commenced by way of a statement of claim prior to the issuance of the application, although not served until after the application was served. Mr. Fiset complains that he sought to serve the claim and that counsel was not responsive, which is why there was delay. However, in my view little turns on which party issued or served their proceeding first. The issue is whether an application is appropriate in these circumstances. I find that it is appropriate and in fact is the more appropriate way to proceed.
[7] This matter involves termination of a lease over non-payment of rent following a pipe-freezing incident in January 2018. The essential facts – the leases, the amounts of rent outstanding, the time the business was inoperative - are all known, as are the facts of the failure to pay rent for many months afterwards, and Mr. Fiset’s continued occupation of the premises that has prevented the landlord from taking possession of what is a commercial property. Mr. Fiset has put forward no evidence that persuades me that the lengthy process of discovery is necessary or that the issues in the application cannot be fairly and fully canvassed in the application process.
[8] It is also significant that the respondent has not advanced his claim in any material respect since serving it nine months ago, and that the motion to stay the application was only brought in March 2019, long after much of the factual evidence had been exchanged in the application. Accordingly, the motion is dismissed.
The Application
[9] Turning to the application, the applicants seek an order terminating two leases for non-payment of rent, an order requiring vacant possession of the premises, an order granting leave for the Registrar to issue a writ of possession, and orders requiring payment of arrears of rent and damages for lost future rent.
[10] The leases relate to adjoining premises at 527 Yonge Street and 6 Maitland Street in Toronto. One lease, first entered into in 2003 between David Cooper with the Laundry Lounge, Inc., relates to premises at the rear of 527 Yonge (with an entrance at 6 Maitland St.) which was used for a laundromat. The other lease, between David Cooper and “The Laundry Lounge or a yet-to-be incorporated corporation” which was signed by Mr. Fiset, commenced in 2010 for the front corner part of the first floor for use as a dry cleaning business. Mr. Fiset and his company, the Laundry Lounge, Inc., then connected the two premises and the leases were effectively combined. This was reflected in an amendment to one of the leases which recognized that “both premises will be integrally involved with each other” and provided that both leases would have the same termination date of May 30, 2020.
[11] In December 2017, sometime between December 17 and 22, the heat failed in the back part of the premises where the laundromat was located. Due to the need for parts and extreme cold, the heat was not fixed until approximately the middle of January. The laundromat was closed during this period, reopening by January 17, 2018. The dry cleaning business remained open throughout this period.
[12] A frozen pipe burst and there was some water damage in the laundromat. The landlords offered to cover all expenses and damages related to the loss of heat and repairs needed and also offered to pay for replacement heaters, which the tenant acquired and subsequently charged back to the landlord in setting off December rent. However the tenants have not, to date, provided any details of any damage suffered or of any expenses incurred for the repairs. Not a single receipt has been provided, despite the landlord’s written offer to pay upon production of receipts since January 2018.
[13] Instead, after the landlords had agreed to an abatement of rent for both leases for January 2018, despite a lack of any proof of losses, the tenant stopped paying rent and threatened legal proceedings.
[14] At the end of August 2018, the landlords commenced this application.
[15] In October 2018, proposals were made to reach some interim arrangements pending the application which were unsuccessful, and rent continued to be unpaid. The landlords then took steps to terminate the leases and sent a bailiff to change the locks and take possession. This was unsuccessful. Mr. Fiset was staying at the premises and although the lock for the laundromat entrance was changed, the bailiff was unable to change the lock for the door to the dry cleaning portion. As noted, the two premises are connected and the landlords are unable to bar Mr. Fiset from the rear of the building while he continues to operate the dry cleaning business. Although there was some evidence that Mr. Fiset had put up some kind of a barrier, albeit a “flimsy” one, in the door between the two businesses, I accept that the landlords have not had possession of either portion of the property and that they have therefore been unable to mitigate their losses.
[16] In December 2018, Mr. Fiset did pay $35,000.00, and in January started paying about $7,000.00 per month, or about half of what was owing. He made those payments towards his obligations under the dry cleaning lease and the landlords have accepted that position.
[17] Mr. Fiset’s position appears to be that he was entitled to withhold rent because he or the Laundry Lounge, Inc., had suffered damages which can be set off against rent; and he submits that the lease for the Laundromat was terminated by the landlord in or about October 31, 2018 and therefore he has no liability on that lease.
[18] However, s. 35 of the Commercial Tenancies Act, R.S.O. c. L-7 only permits set off in limited circumstances which require identification of a debt in an ascertainable amount. There is no unilateral right to set-off and to withhold rent, and there are other requirements, such as formal notice under Form 2, Notice to Landlord, which have not been followed here: Telford v. Holt, [1987] 1 S.C.R. 193 at para. 25; Ro-Am Holdings Ltd. V. Cianfarani, 2008 CarswellOnt 8083 (Ont. S.C.) at para. 47; Girotte (In Trust) v. Martin, 2011 ONSC 3871 at paras. 12 – 14.
[19] In any event, the amount of rent in arrears for either or both properties (approximately $187,000.00 for the laundromat and approximately $167,000.00 for the dry cleaning premises), appears to be far more than any conceivable damages that might validly be claimed by Mr. Fiset or his company, and on which he has led no evidence.
[20] I conclude, therefore, that the applicant is entitled to the relief sought in the notice of application. An order shall issue terminating the two leases effective immediately, and requiring vacant possession of the premises effective immediately. The order shall also grant leave to the Registrar to issue a writ of possession. The applicants are entitled to an order that all arrears of rent and other amounts for damages and interest contained in the summary, dated as of May 24, 2019, provided to me by the applicants during submissions on May 24, 2019, are owed to the applicants by the respondent tenants.
[21] The applicants are entitled to costs. I ask them to submit a bill of costs together with submissions not exceeding 2 pages within 10 days of this decision. Mr. Fiset will have 7 days from the date of receipt of those submissions to respond in submissions which shall also not exceed 2 pages.
Schabas J.
