Court File and Parties

COURT FILE NO.: CV-22-28864 DATE: 2023-01-13 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

JD MARTINEAU HOLDINGS INC. Applicant – and – MATT CAUDLE and AMY JEFFRIES, operating as CRAZY 8 CONSTRUCTION Respondents

Counsel: Jesse Cond, for the Applicant Patricia Chehadé, for the Respondents

HEARD: May 19, 2022 Rasaiah J.

Reasons on Application

Overview

[1] This is an Application under Part III of the Commercial Tenancies Act, R.S.O. 1990 c.L.7 as amended for a declaration that the lease between the parties was terminated effective February 1, 2022, and for the issue of a Writ of Possession as the responding parties refuse to go out of possession amongst other relief.

[2] The responding parties’ response to this application is that this application concerns a landlord attempting to manufacture breaches of a lease and relying on alleged minor breaches of a lease to have the respondents removed from the leased premises well before the expiry of the term of the lease on July 31, 2023. The tenant believes the landlord is taking such action to obtain the benefit of the work the tenants have done to improve the leased premises. Further, if this court determines that the responding parties did breach the lease, then this is an appropriate case for this court to exercise its discretion to grant relief from forfeiture because:

(a) The responding parties have acted reasonably in their interactions with the moving party, and their conduct has been consistent with the provisions of the lease;

(b) The moving party has not established that the responding parties’ alleged breaches constitute a material breach of the lease; and

(c) There is a large disparity between the value of the tenancy and the amounts that maybe owing because of the alleged breaches.

[3] The responding parties seek relief from forfeiture.

Summary of Facts

Moving Party

[4] The moving party, JD Martineau Holdings Inc. (the “Landlord”) is a corporation with its head office in Sault Ste. Marie. Travis Martineau is the President.

[5] On June 1, 2021, the Landlord purchased property known municipally as 127 Black Road, Sault Ste. Marie, Ontario (the “Black Road Property”). Said property consists of three buildings, including the unit known as 113 Black Road (the “Subject Unit”).

[6] The previous owners of the property had an existing commercial lease with the responding parties, Matt Caudle & Amy Jeffries, operating as Crazy 8 Construction (the “Tenants”), who rented the Subject Unit. As part of the Landlord’s purchase of the property it agreed to assume the tenants of the Subject Unit. The Landlord and Tenants entered into a Commercial Lease Agreement effective March 1, 2021 (the “Lease”).

[7] The Lease sets out the respective covenants made by the Landlord and Tenants.

[8] In or about August 2021, the Landlord received complaints from other commercial tenants of the Black Road Property, with respect to the Tenants having equipment and/or a trailer parked in shared areas blocking the other tenants access in those areas. The Landlord believed that the Tenants accumulation of equipment and trailers in the common areas of the Black Road Property constituted a nuisance under the Lease as it interfered with the comfort and convenience of the other tenants.

[9] The Landlord approached the Tenants on or about September 2, 2021, to advise of the complaint and request that the exterior around the Subject Unit and the trailers in the laneway be addressed. In response, the Landlord states that responding party, Mr. Caudle, became aggressive and indicated he would not move any of his equipment or vehicles. The Landlord also observed at that time that there were numerous vehicles and trailers behind the Subject Unit, and when raised with Mr. Caudle the Landlord was asked to leave the Tenants’ unit.

[10] Following the Landlord’s observation of the vehicles and other “mess” (as termed by it) in the back of the Subject Unit, the Landlord believed that the accumulation of the items may be an infraction of local by-laws. As such, the Landlord requested a letter from counsel, Jesse Cond, be provided to the Tenants requesting that they move the trailers/equipment/vehicles from the laneway and other shared areas as well as address potential by-law issues.

[11] The Landlord states the Tenants did not comply with the request of the Landlord.

[12] In or about December 2021, the Landlord received additional complaints with respect the accumulation of vehicles and other items in the yard around the Subject Unit and thereafter requested that the Tenants address the issue. The Landlord states that the Tenants responded indicating they had made alternate arrangements with the other tenant and would otherwise need a formal letter listing their complaints. The other tenant disputed any such alternative arrangements and a letter from the other tenant was provided.

[13] On December 7, 2021, the Landlord reached out to all tenants requesting copies of their liability insurance certificates and requested an inspection of the renal units at the Black Road Property on January 10, 2022. The request related to the covenants under the lease which the Landlord states was for the purpose of allowing the Landlord to ensure there are no issues that need to be addressed.

[14] The Landlord states that the Tenants disputed the Landlord’s right to enter for the purposes of an inspection and refused to provide the Landlord with their liability insurance certificate.

[15] The Landlord states the Tenants did not permit the Landlord access to inspect the Subject Unit on January 10, 2022.

[16] The Landlord asked their said counsel to provide the Tenants with formal notice of the various breaches of the Lease. Correspondence was delivered to the Tenants on January 21, 2022. Therein, the Tenants were asked to remedy the breaches by January 31, 2022. The alleged breaches of the lease outlined in the January 21, 2022, correspondence were:

(a) Failing to pay ¼ of winter maintenance snow plowing costs;

(b) Failure to permit the landlord at all reasonable times to enter the premises to inspect the same;

(c) Failure to provide the landlord with a Certificate of Liability Insurance; and

(d) Creating a nuisance which disturbs the comfort or convenience of the other tenants.

[17] The Landlord states the Tenants responded to Mr. Cond’s letter indicating they would not produce a certificate of liability insurance, would not permit an inspection of the Subject Unit, and disputed the winter maintenance costs. They further state the Tenants indicated it was their wish legal proceedings were commenced.

[18] In response to questions raised by the Tenants, further correspondence from Mr. Cond was delivered on January 26, 2022. Therein, the Landlord reiterated its position that there were breaches of the Lease and advised that the Landlord would take the position the lease was forfeited if the same were not corrected by February 1, 2022.

Responding Party (additional facts not set out above)

[19] The Tenants operate as a construction company.

[20] Since taking possession of the Subject Unit from the former landlord (“Former Landlord”), the Tenants have incurred expenses to improve the interior and exterior of the Subject Unit. These improvements include:

(a) Cleaning the exterior and interior of the Subject Unit, and disposing of the junk that was within and around the Subject Unit;

(b) engaging an electrician to update the electrical inside the Subject Unit; and

(c) engaging a plumber to update the plumbing inside the Subject Unit.

[21] Further to the above-listed improvements, the Tenants also cleaned the parking lot of the Subject Unit and disposed of the “junk” in order to convert it into a suitable parking space (the “Parking Lot”). The Tenants agreed to perform such work with the understanding that they will be able to use the Parking Lot for their business operations.

[22] Though the Tenants may temporarily off-load construction materials and equipment onto the Parking Lot before storing them inside the Subject Unit, since cleaning the Parking Lot, the Tenants have maintained the Parking Lot in good order and condition.

[23] When the Landlord purchased the Property from the Former landlord, the Landlord agreed to assume the Tenants’ tenancy and entered into the Lease, which they state was substantially the same terms as the previous lease they had with the Former Landlord, for a term effective March 1, 2021, and ending July 31, 2023.

[24] The Tenants state that they were under the impression that the Landlord would honour the arrangement they had with the Former Landlord with respect to the use of the Parking Lot. However, shortly after entering the Lease, the Tenants state the Landlord began to create issues and to frustrate the use and enjoyment of the Subject Unit. As an example, the Landlord began to impose strict restrictions on the Tenant’s use of the Parking Lot, blocking the Tenants vehicles from gaining access to, or exiting the Parking Lot, intentionally or without regards to the Tenants’ equipment, and causing damage to the Parking Lot, namely, a leak of hydraulic fluid in the Parking Lot.

[25] Furthermore, the Tenants state the Landlord has been attempting to manufacture breaches of the Lease. They allege the Landlord has:

(a) claimed that the Tenants refused to produce the certificate of insurance policy despite already having the certificate of insurance;

(b) claimed that the Tenants unreasonably denied the Landlord entry to inspect the Lease Premises during the midst of the COVID-19 pandemic, when the Tenants had been offering other options to inspect the premises; and

(c) claimed that the Tenants failed to pay ¼ of winter maintenance snow plowing costs, despite being aware that the Tenants plowed their own Parking Lot and not actually providing winter maintenance services to the Tenants during the 2021/2022 season.

Issues

Moving Party

[26] The Landlord submits that the following are the issues to be determined:

(a) Are the Tenants in breach of the covenants in the Lease?

(b) Did the Landlord properly terminate the Lease?

(c) Have the Tenants wrongfully refused to go out of possession of the Subject Unit?

(d) Is the Landlord entitled to a writ of possession?

Responding Parties

[27] The Tenants state the issues in dispute are:

(a) Did the Tenants breach the Lease?

(b) If the Tenants did breach the Lease, which is not admitted, but strictly denied, is this an appropriate case to grant relief from forfeiture?

Orders Requested

Moving Party

[28] The Landlord requests:

(a) A Declaration that the Tenants are in breach of the Lease, effective March 31, 2021;

(b) A Declaration that the Lease was terminated by the Landlord by notice effective February 1, 2022;

(c) An Order that the Tenants pay the Landlord damages for lost income from February 2022 until such time as the Tenant vacates the Subject Unit;

(d) A Declaration that the Tenants wrongfully refuses or neglects to go out of possession of the Subject Unit demised to the Tenant under the Lease;

(e) An Order that a writ of possession be directed to the Sheriff of the District of Algoma commanding him or her forthwith to place the Landlord in possession of the Subject Unit at 113 Black Road, Sault Ste. Marie, Ontario; and,

(f) An Order that the Tenants pay the Landlord for winter maintenance costs incurred until such time as the Tenants vacate the Subject Unit;

(g) An Order that the costs of the Application be fixed and made payable forthwith by the Tenants on a full indemnity scale, or in the alternative on a substantial indemnity scale.

Responding Party

[29] The Respondents request that this court order:

(a) a Declaration that the applicants are not in breach of the Lease;

(b) a Declaration that the purported termination of the Lease by letter dated January 21, 2022 is of no force or effect;

(c) in the alternative, and in the event that this court determines that the Tenants are in breach of the Lease, an Order for relief from forfeiture pursuant to section 20 of the Commercial Tenancies Act, R.S.O., 1990, c. L. 7 (the “CTA”) and section 98 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”);

(d) a Declaration that the Lease remains in full force and effect;

(e) an Order restoring the Applicants’ rights as they existed prior to the purported termination of the Lease;

(f) costs of this application;

(g) pre-judgement and post-judgement interest in accordance with the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended; and

(h) such further and other relief as counsel may advise and to this court may seem just.

Law and Authorities

[30] Under Section 74(1) of the Commercial Tenancies Act, R.S.O. 1990, c. L.7, where a Tenant, after the Tenant’s Lease, has been determined by the Landlord by a notice to quit, wrongfully refuses or neglects to go out of possession of the land demised to the tenant, or which the tenant has been permitted occupy, the tenant’s landlord may apply upon affidavit to a judge of the Superior Court of Justice to make the inquiry hereinafter provided for and the application shall be made, heard and determined in the county or district in which the land lies: Commercial Tenancies Act. R.S.O. 1990 c. L.7, Section 74(1).

[31] Pursuant to Section 74(2) of the Commercial Tenancies Act, the judge of the Superior Court of Justice is to enquire and determine whether the Tenant having no longer the right to continue possession wrongfully refuses to go out of possession: Commercial Tenancies Act. R.S.O. 1990, c. L.7, Section 74(2).

[32] If it appears to the judge that the Tenant wrongfully holds against the right of the Landlord, he or she may order the issue of a writ of possession: Commercial Tenancies Act. R.S.O. 1990, c. L.7, Section 74(3).

[33] A right of re-entry or forfeiture for breach of a covenant is not enforceable by an application, action, entry or otherwise, unless the lessor serves on the lessee a notice specifying the particular breach complained of, and if the breach is capable of remedy, requiring the lessee to remedy the breach, and, in any case, requiring the lessee to make compensation in money for the breach, and the lessee fails within a reasonable time thereafter to remedy the breach, if it is capable of remedy and to make reasonable compensation in money to the satisfaction of the lessor for the breach: Commercial Tenancies Act, R.S.O. 1990, c. L.7, Section 19(2).

[34] An application under the Commercial Tenancies Act, is specifically authorized by Rule 14.05(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194: Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Rule 14.05(2).

[35] A proceeding may also be commenced by an application where the relief sought is: the determination of rights that depend on the interpretation of a contract or statute (Rules of Civil Procedure, R.R.O. 1990 Reg. 194, Rule 14.05(3)(d)), the declaration of an interest in land: Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Rule 14.05(3)(e).

[36] Where a party is entitled to proceed by application, it may so proceed even if there are material facts in dispute. It will be up to the judge hearing the application to decide whether to direct the trial of an issue and if so, which issues. If it is possible for the court to determine in a summary proceeding an issue which might well be determinative of the overall dispute thus saving the parties the time and expense of a trial and permitting the fragmentation of certain issues that can be decided by way of application, it is an expeditious and proper way to proceed. Doing so would be permitted under Rule 38.10 of the Rules of Civil Procedure: E.J. Hannafin Enterprises Ltd. v. Esso Petroleum Canada, 17 O.R. (3d) 258.

[37] The hearing process under Part III of the Commercial Tenancies Act is intended to be summary: A. M. Machining Inc. v. Silverstone Marble & Granite Inc., 2010 ONSC 71 at para. 12-13.

[38] Section 20 of the Commercial Tenancies Act gives the court certain discretionary rights to relieve from forfeiture. Factors militating against the exercise of the court’s discretion are: Koumoudouros v. Marathon Realty Co., 21 O.R. (2d) 97:

(a) Evidence of earlier complaints being made to the Tenant before being served with a Notice of breach of covenant;

(b) Failure by the Tenant to take steps immediately to deal with & cease the continued breach of covenant;

(c) The wilful nature of the breach of covenant by the Tenant;

(d) The degree of loss or damage to the landlord or the premises;

(e) The length of time the breach of covenant has gone on and whether it still continues.

[39] Where a Tenant has been given appropriate notice of a breach of covenant and a full opportunity to rectify the problem of which the landlord complains but nevertheless continues to perpetrate the same type of conduct such that the breach of covenant is persistent and substantial, the court should decline to exercise its discretion to grant relief from forfeiture: 931576 Ontario Inc. v. Bramalea Properties Inc., [1992] O.J. No. 808.

[40] In exercising the discretion of the court in granting or withholding relief under s. 20(1) of the Commercial Tenancies Act, the court should take into account all relevant circumstances surrounding the lessor-lessee relationship, which may include breaches of covenants other than the particular ones complained of, the history of the relationship, the gravity of the breaches, the tenant’s conduct or misconduct, and its good faith or bad faith: Godfrey Estates Ltd. v. Ken Cambridge Ltd., 5 O.R. (2d) 23 at para. 14, Beaver Fuels Management Ltd. v. Baker’s Dozen Holdings Corp., [2006] O.J. No. 5743 at para. 43.

[41] Section 98 of the Courts of Justice Act, provides that “a court may grant relief against penalties and forfeitures, on such terms as to compensation or otherwise as are considered just.”

[42] The law on forfeiture is clear, this is a serious remedy that should be avoided.

[43] In Michele’s Italian Restorante Inc v 1272259 Ontario Ltd., 2016 ONSC 4888, the Superior Court of Justice (the “SCJ”) stated: "What should not be lost sight of is that a landlord undoubtedly is always going to be able to point to misconduct by the tenant, else there would be no grounds for forfeiture in the first place, but the ultimate question is whether the court should exercise its equitable jurisdiction to relieve against the forfeiture imposed by the common law because it is an excessive remedy in all the circumstances."

[44] In 2324702 Ontario v. 1305 Dundas, 2019 ONSC 1885, the SCJ noted that a party who seeks to obtain relief in equity, must come to the court with "clean hands". To determine if a person has "unclean hands," for the purposes of a claim in equity, the impugned conduct must have an immediate and necessary relation to the equity sued for. The court does not concern itself with the parties conduct generally, but only the conduct that relates directly to the very transaction concerning which the complaint is made.

[45] In the SCC case of Saskatchewan River Bungalows Ltd v Maritime Life Assurance Co, [1994] 2 SCR 490, the SCC states: The power to grant relief against forfeiture is an equitable remedy and is purely discretionary. The factors to be considered by the court in the exercise of its discretion are the conduct of the applicant, the gravity of the breaches, and the disparity between the value of the property forfeited and the damage caused by the breach.

[46] The three-element test for relief from forfeiture requires the court to consider and balance all three elements to determine whether equitable relief should be granted.

[47] In Monk v Farmers' Mutual Insurance Company (Lindsay), 2019 ONCA 616, the court noted that when considering the first factor the court ought to review the conduct of the breaching party and examine the reasonableness of the breaching party’s conduct as it relates to all facets of the contractual relationship, including the breaching issue and the aftermath of the breach.

[48] The second factor looks at both the nature of the breach itself and the impact of that breach on the contractual rights of the other party.

[49] The third factor required the courts to engage in a proportionality analysis. If there is a large difference between the value of the property to be forfeited and the amount owing as a result of the breach, equity will favor relief from forfeiture.

[50] The Lease sets out the rights and obligations of the parties.

[51] The Landlord has the burden of proving that Tenants engaged in conduct that is contrary to the covenants of the Lease, on a balance of probabilities.

[52] The Tenants submit that the Landlord has not established, on a balance of probabilities, a material breach of the Lease.

[53] This inquiry “looks at both the nature of the breach itself and the impact of that breach on the contractual rights of the other party.” In cases where a tenant’s breach is immaterial as to whether or not a loss would have occurred, it will not be considered grave.

[54] The Landlord has not established a material breach of the Lease or a corresponding loss. Even if the alleged breaches were material, the Landlord has not responded to the Tenants inquiries about why the Landlord had been making its requests given the Tenants’ belief that they had already complied with their obligations under the Lease.

[55] The court is required to compare the disparity between the value of the property of which forfeiture is claimed as compared with the damage caused by the breach. In Liscumb v Provenzano et al. (1985), 51 OR (2d) 129 (Ont HC), aff'd (1986) , 55 OR (2d) 404 (Ont CA), the trial judge, in granting relief from forfeiture, observed that the property to be forfeited was worth between three and four times the amount owing on the debt giving rise to the breach. The trial judge relied on this disproportionality between the debt owing and the consequences of the forfeiture as a factor in favour of granting relief from forfeiture.

Moving Party’s Position

[56] In the context of the present application, the following facts are relevant to the exercise of the court’s discretion:

(a) The fact that the Tenants have been provided with notice of earlier complaints before being served with the Notice of breach;

(b) Failure by the Tenant to take any steps to immediately deal with and cease the continued breaches;

(c) Wilfuly breaches covenants to the lease;

(d) The fact that the Tenants continue, even to the date of the hearing of the application be in breach of the covenants of the lease;

(e) The indifference showed by the Tenants to the breaches of the lease;

(f) The object of the Landlord’s termination of the Lease is not to secure the payment of money. It is to protect the Landlord’s investment in the Black Road Property and Subject Unit.

Responding Party’s General Position

[57] The Tenants believe that the Landlord operates a masonry company out of one of the other buildings on the Property and that the Landlord’s true motive is to evict the Tenants so that the Landlord may relocate or expand its operation into the Subject Unit.

[58] In doing so, the Landlord is attempting to take advantage of, and effectively profit from, the improvements that have been made to the Subject Unit by and at the expense of the Tenants.

Analysis

Allegations Based in Nuisance

[59] The Lease does not define nuisance and leaves same to the “reasonable opinion” of the Landlord.

[60] There is only one letter of complaint filed.

[61] In Antrim Truck Centre Ltd v Ontario (Ministry of Transportation), 2013 SCC 13, the Supreme Court of Canada stated that private nuisance cannot be established where the interference with property interests is not, at least, substantial. Nuisance” is the wrongful interference with a neighbour's property. To be wrongful, the behaviour complained of must lead to “physical injury to land or substantially interfering with the use or enjoyment of land […] where, in light of all of the surrounding circumstances, injury or interference is held to be unreasonable”.

[62] The burden is on the claimant to show that the interference is substantial and unreasonable.

[63] I do not find that the Landlord has met this burden with one letter of complaint and bald allegations of there being others. I note as well that the time frame of the letter overlaps with the Tenants complaint that the Parking Lot area they had been using had been damaged by the Landlord and complaint as to having to park elsewhere as a result.

[64] The Tenants, in my view, have established that they maintained and/or improved the exterior and interior of the Subject Unit, including the Parking Lot.

[65] The Tenants cleaned the Parking Lot of the Subject Unit and disposed of the “junk” in order to convert it into a suitable parking space. The Tenants agreed to perform such work with the understanding that they will be able to use the Parking Lot for their business operations. This arrangement was made with the former Landlord.

[66] The Tenants have substantially improved the physical state of the Subject Unit. There is no evidence to the contrary. Photographs were filed to demonstrate what the Tenants stated they cleaned up/removed to improve the property. The Landlord is not able to confirm or deny same.

[67] The Tenants filed a photograph of the cleanup that the Tenants undertook in accordance with an agreement with the Former Landlord and used the property in accordance with this agreement. There are no parameters outlined in the lease on the use of the Parking Lot. The tenant assumed his previous agreement on use would be honoured based on improvements made. It was not unreasonable for them to do so in the circumstances.

[68] Throughout their Lease, the Tenants state they have maintained, and continue to maintain a positive relationship with the other tenants on the Property. The Tenants never received complaints, verbal or written, until they received the single letter included in the Landlord’s Application Record. The Tenants correspondence indicates that all the tenants were working together and that vehicles and/or trailers were being moved when asked. The Tenants’ correspondence identifies that the Landlord was blocking access to the Subject Unit and damaged an area of the property where the Tenants used to park. The Tenants repaired the area. The Tenants also alleged that the Landlord’s actions included leaking hydraulic fluid over the Parking Lot and leaving garbage in everyone’s way. This information was provided to the Landlord by the Tenants on or about September of 2021. The next time the issues are brought up is December 9, 2021. To that the Tenants responded informing that they believed the actions of the Landlord to be ridiculous and childish, bringing to the Landlord’s attention their action of leaving contaminated barrels on the property and interference with the Subject Unit by the Landlord’s employees including but not limited to going on their subject unit property to cross same and/or to smoke. The Tenants also identify that the Landlord’s counsel was not returning their calls and/or emails. The response from the Landlord is only to suggest that they were now getting complaints from others and to take care of what they were asking. None of the Tenants’ concerns were responded to despite their attempts to speak to the Landlord and/or Landlord’s counsel.

[69] Thereafter it appears that the Landlord then sent another letter to the Tenants about snow plowing costs, failing to allow the inspection as requested, failing to provide the insurance certificate as requested, and creating a nuisance disturbing other tenants, plural. The Landlord demands compliance and notifies of intention to forfeit the Lease if there is non-compliance. The Tenants reply that they have been attempting to address the issues. There is no reply-communication back to them. They wanted to communicate with the Landlord this demonstrates to clarify issues.

[70] Further, since receiving the letter, the Tenants moved their vehicles from the laneway adjacent to the Subject Unit and to the best of the Tenants’ knowledge there has not been any further complaints. On the record, it appears that the Tenants notified the Landlord that this equipment was removed on or about February 16, 2022. The application was issued February 17, 2022.

[71] As to “accumulated equipment and trailers” the Landlord has not established that the Tenants conduct constitutes a substantial and/or unreasonable interference with the land or with the use and enjoyment of the property that amounts to nuisance. There is nothing specific in the Lease regarding same.

[72] There is insufficient evidence on this motion to satisfy me that that access was being blocked to the property and any of the Landlord’s claims amount to nuisance.

[73] There are no parameters outlined in the Lease on the use of the Parking Lot. The Tenants assumed their previous agreement on use would be honoured based on improvements made. It was not unreasonable for them to do so in the circumstances, and they were attempting to address these issues with the Landlord.

[74] There is no evidence of the City of Sault Ste. Marie alleging breach of any bylaws.

Allegations with Respect to the Certificate Insurance (Responding Party)

[75] At all material times, the Tenants had and continue to have a valid insurance policy. It is stated that the Landlord received the Tenants certificate of insurance upon purchasing the Property.

[76] In or around December 7, 2021, the Landlord requested copy of the certificate of insurance policy. After receiving the request, the Tenants requested clarification from the Landlord as the Tenants believed that the Landlord was already in possession of the certificate of insurance policy. The email from the Tenants sent December 9, 2021, does not indicate that they were outright refusing to provide same, advised that they had liability insurance, and asked the Landlord to clarify why a copy was required.

[77] The Landlord did not reply to Tenants request, nor did he provide any clarification.

[78] To the best of the Tenants’ knowledge, the Landlord was already in possession of the Tenants’ certificate of insurance policy.

[79] In respect of the Tenants’ statement that a certificate of insurance was provided to the Landlord at the time the Black Road Property was going to be purchased on or about March of 2021, in response, the Landlord is not able to say that this did not happen, only that they do not recall being provided with it.

[80] I do agree that communication between the Landlord and the Tenants by the documents filed appears to be strained, but at all times notwithstanding, reflects efforts on the part of the Tenants to want to address same.

[81] The Landlord does not explain why they did not answer the inquiry of the Tenants as to why a copy was being requested. While I appreciate that the Tenants should be familiar with the Lease, in my respectful view, I cannot interpret the Tenants as intending to breach the Lease.

[82] I do agree that the Lease required provision of the certificate on renewal.

[83] The Tenants have since produced copies of their certificate of insurance for the period of August 2020 to August 2022 to demonstrate they had insurance.

[84] I do agree that this failure to provide the certificate when requested arguably amounts to a breach, but not one that is substantial nor capable of relief from forfeiture. On a side note, by simply responding to the Tenants’ inquiry as to the need for it, may have in my view, resolved the issue. There was insignificant impact on the Lease by this failure and forfeiture would be disproportionate to same.

Denying the Landlord Entry to Inspect

[85] Schedule A of the Lease provides that the Tenant covenants to “permit the Landlord at all reasonable times to enter the premises to inspect” [emphasis mine].

[86] During or around the time the Landlord requested to inspect the Subject Unit, the Province of Ontario was facing a spike in Omicron cases as it entered the fourth wave of the COVID-19 Pandemic.

[87] Concerned by the risk of infection, the Tenants’ recommended a virtual inspection of the Subject Unit as an alternative option more than once, and cannot be stated to have outright denied the request.

[88] The tenant had closed its doors to the public.

[89] Further, given the substantial health risk associated with COVID-19, I find the Tenants had valid reasons to be concerned about the timing of the inspection and whether it was reasonable in the circumstances. The email filed, sent by the Tenants to the Landlord, demonstrate that the Tenants were concerned, and apologized for the inconvenience. On my review, the email can be interpreted as stating that this position was being taken until the COVID-19 was under control, to manage safety.

[90] In addition, the Tenants state that the Landlord has not since attempted to reschedule the inspection to a later date, even though COVID-19 restrictions are now largely lifted. There appears to be no opposition to an inspection now.

[91] In addition, the Tenants pointed out that the Landlord’s realtor took “100’s of pictures of both inside and outside of the building” when the Landlord purchased it, and the Landlord had a full walk through at that time. This was at some date prior to the purchase in June of 2021, approximately six months prior to the request to inspect.

[92] COVID-19 was an experience unique to many. I find that I may take notice of this fact. Further, the Tenants filed a news release close to the time frame of the request that Omicron was being reported as highly transmissible to support their position.

[93] While a commercial space, and different rules existed in respect of Covid, discretion existed and I find, in this jurisdiction, Covid concerns were valid at the time. A virtual walk through was offered, but the Landlord felt this was inadequate. The Landlord had access to numerous photographs taken by the realtor which I find further reduces the strength of this allegation of breach.

[94] This asserted breach by the Landlord is not established for these reasons. And even if I am wrong, given the circumstances at the time, and the alternatives offered by the Tenants, the circumstances are such, having regard for conduct, nature, impact and disproportionality, circumstances for which relief from forfeiture would apply. There is no evidence that the Lease was significantly impacted. The Tenants’ conduct was reasonable. There is insufficient evidence that the property itself was not in a good state of repair. Forfeiture would be disproportionate in these factual circumstances.

Snow Removal Services

[95] Under the Lease, the Tenants are responsible to pay for one quarter of the cost incurred in relation to the snow plowing services on the Property.

[96] The Tenants state that the Former Landlord was aware that the Tenants were plowing their own Parking Lot, there was an agreement that the Tenants performed the snow removal work along with strict guidelines about where to place the excess snow. They understood the rule to be that snow plowing was required when 4 to 6 inches or snow had accumulated. There is no evidence to the contrary on this record regarding this previous agreement and their understanding. However, there is no evidence to support that the Landlord agreed this would continue. The agreement of the Landlord was to take on the same lease, not any other agreements between the Former Landlord and the Tenants.

[97] I acknowledge that the Tenants further state that the Landlord did not provide any winter maintenance services to the Tenant during the 2021/2022 winter season except for 2 to 3 times of a 4-foot area. The Tenants stated this to the Landlord in writing on or about January 6, 2022. The communication included that they had pictures and camera footage. No camera footage was filed. One photograph was filed purporting that the photograph depicted 16 inches of snow allegedly not plowed for the Subject Unit along with what I interpret as a complaint and notice that they plowed their side themselves as a result. I have no reason to reject this. Snow removal records were not filed that contradict same.

[98] They further state that the Landlord (or its agent) plowed the Parking Lot in a manner that interfered with the Tenant’s ability to park its vehicles, or to enter or exit the Property.

[99] The letter from the snow removal contractor is not helpful for many reasons beyond what I have stated above.

[100] First, snow removal protocols are not in place.

[101] Second, while the letter suggests that the Tenants have made it difficult to plow, the letter does not identify what, if any, efforts were made by the contractor and/or Landlord to ask the Tenants to move their vehicles or to put a protocol in place. Further, the record reflects that the Tenants have indicated that they have moved their vehicles and notwithstanding the contractor failed to plow the area.

[102] It is only January 26, 2022, when the Tenants are emailed by the Landlord’s counsel to respond to the various emails that the Tenants had been sending and which seem to follow emails of January 23, 2022 and 25, 2022 from the Tenants advising that they would have to resort to attending counsel’s office to get a reply to try to deal with the issues. They are told not to do so because of acrimony. This letter also does not address all the issues the Tenant raised, but simply reiterates the Landlord’s position, with the exception of the snow removal issue implying that if the Tenants removed vehicles, snow removal would be better facilitated. The letter supports that the Tenants were trying to deal with the issues and request for compliance before the threatened February 1, 2022, forfeiture of the Lease. The response of the Tenants no doubt in my view can be interpreted as being one of frustration as a result. The Tenants continued to try to deal with outstanding issues/address non-breach issues (parking in their own spots)(use of the laneway) /missing information required (detailed snow removal bills) (confirmation from the City of alleged breach of bylaws) with the Landlord as at January 29, 2022.

[103] Based on these facts, I find no substantial breach incapable of relief from forfeiture.

[104] The value of the breach claimed by the Landlord is $610.20 CAD.

[105] The value of the property forfeited is worth approximately is $50,525 CAD, which represents the amount of rent paid to the Landlord since March 1, 2021, and the value of the Lease over the remainder of the term at the time the application was argued. Pursuant to the Lease, the rent rate is set at:

(a) $1600 CAD per month during the first 12 months beginning August 1, 2020;

(b) $1625 CAD per month during the second 12 months beginning August 1, 2021; and

(c) $1650 CAD per month during the third 12 months beginning August 1, 2022.

[106] The Tenants have paid rent on time and have continued willingness to pay rent to the Landlord for each month since the Purported Termination.

[107] The Tenants have invested approximately $10,000 CAD to better the interior and exterior of the Property and of the Subject Unit.

[108] As such, the debt owed to the Landlord is disproportionate the consequences of the forfeiture. Where there is a substantial disparity between the value of the tenancy and the damage caused to the Landlord by the breach, equity favours granting relief from forfeiture.

[109] The Tenants have made their best efforts to seek clarifications and to provide satisfactory responses/solutions to the Landlord’s requests, neither the Landlord nor its lawyers ever responded to the inquiries of the Tenants. The Landlord and its lawyers failed to engage in any meaningful discussions with the Tenants before the Landlord purported to terminate the Lease on February 1, 2022 (the “Purported Termination”), without any legitimate breach.

[110] The breach is insignificant and for a minor amount of money which can be remedied. The property was plowed, albeit by both the Tenants and the contractor.

Rent

[111] The Tenants state they paid their rent on-time and monthly. They were willing to continue to do so, but same has not been accepted by the Landlord. Based on the materials filed, the payments of rent are not grossly outside of the Lease, with some minor late payments; one day late. The landlord has not accepted rent to avoid allegation of waiver. This in my view is a minor issue and of no impact and disproportionate to forfeiture.

Conclusion

[112] For any breaches identified I find that relief from forfeiture would be in order.

[113] The Tenants state that they have been good tenants until the alleged issues arose. There is no evidence filed to the contrary. I accept they attempted in good faith to address the Landlord’s concerns and were seemingly ignored at times.

[114] I find no substantial breaches. I find no significant impacts.

[115] In all the circumstances:

(a) The Tenants remedied the alleged issue with respect to parking by removing the vehicles from the laneway and the Tenants are not aware of any complaints since;

(b) at all material times, the Tenants had and continue to have a valid insurance policy.

(c) The Tenants were willing and able to conduct a virtual inspection with the Landlord. The Landlord did not engage in any discussions with the Tenants about how the inspection may be conducted to address the Tenants safety concerns. COVID-19 was a reasonable concern at the time in respect of the Landlord’s request.

(d) The debt the Landlord is claiming with respect to the winter maintenance services is disproportionate to the consequences and costs of the forfeiture to the Tenants.

(e) Nuisance is not established to the standard required.

[116] Questioning the Landlord and attempting to understand and enforce lease terms by a tenant is not always behaviour that amounts to coming with unclean hands. I do not find unclean hands on the facts of this case.

[117] I find overall that the breaches complained of do not rise to the level of forfeiture based on the conduct of the Tenants, on gravity, and disparity of value between the property and damages of the breach.

[118] I conclude for the reasons I have stated and considerations I have outlined, the Lease is not terminated and no writ of possession should issue.

[119] I find that directing a trial of the issues is not necessary nor does same meet the ends of proper administration of justice. The affidavit materials filed were sufficient to assess all issues.

Order

[120] Based on the above, this court orders:

(a) The tenant shall pay $610.20 CAD for snow removal to the Landlord within 30 days of today’s date without prejudice to any claim they may choose to make for abatement which on this record the court is of the view cannot be calculated.

(b) The tenant shall endeavour to provide the certificate of insurance to the Landlord in accordance with the Lease going forward as required.

(c) I declare the Lease is not terminated.

(d) The purported termination of the Lease by letter dated January 21, 2022 is of no force or effect;

(e) I declare that the Lease remains in full force and effect;

(f) The Respondent’s rights as they existed prior to the purported termination of the Lease are hereby restored.

(g) Except for the issue of costs, the other claims for relief are dismissed.

(h) If costs on the application are in issue, counsel are to submit written submissions no longer than five type written pages, excluding offers to settle and bills of costs, which are to be served and filed with the court no later than 4:00 p.m. within 30 days of today’s date.

Rasaiah J. Released: January 13, 2023