COURT OF APPEAL FOR ONTARIO

DATE: 20000127

DOCKET: C32947

RE: 3P3W HOLDING CO. LTD. and 3 PIZZAS 3 WINGS LTD.
(Applicants/Respondents) v. NHAN VAN NGUYEN
(Respondent/Appellant)

BEFORE: CARTHY, DOHERTY and FELDMAN JJ.A.

COUNSEL: Robert S. Hart, Q.C. and David Sterns
for the appellant

Kenneth G. Hood
for the respondents

HEARD: January 17, 2000

On appeal from the judgment of the Honourable Mr. Justice
Archibald dated September 20, 1999.

E N D O R S E M E N T

[1] There is some confusion in the record as to the exact roles played by the various corporate entities. For our purposes, the respondents may be referred to collectively as the franchisor/tenant and the appellant may be referred to as the franchisee/sub-tenant.

[2] The respondents claimed possession of premises occupied by the appellant. The respondents had leased the property for a five-year period from the landlord in 1992 and subleased the premise to the appellant in conjunction with a franchise agreement in 1995. The lease expired late in 1997. The respondents did not exercise the option under the lease to renew the lease for a further 10-year period, but the appellant remained on the premise and continued to operate the franchise through most of 1998. By November 1998, the respondents had terminated the franchise agreement and the working relationship between the respondents and the appellant had ceased. It is accepted that the respondents were entitled to terminate the franchise agreement and their damage claim arising out of that termination remains to be tried.

[3] The respondents claim that they are entitled to possession of the premises based on a lease dated January 1, 1998 (the new lease) and, alternatively, they claim possession based on the overholding provision in the 1992 lease (the original lease). The appellant claims entitlement to possession based on the new lease. Strangely, the landlord is not a party to these proceedings.

[4] The respondents failed to make out a claim for possession based on the new lease. The respondents are not parties to that lease. On its face, it appears to be a lease between the appellant and the landlord. The respondents had no knowledge of the lease until after these proceedings were commenced. Nor, on the evidence produced by the respondents, could it be successfully argued that the appellant entered into the new lease with the landlord on behalf of the respondents. Finally, the respondents adduced no admissible evidence that the landlord intended to enter into a new lease with the respondents.

[5] The respondents’ claim based on the original lease arises out of the term of that lease that made the respondents month-to- month tenants if they remained in possession after the expiration of the five-year term and had not exercised their option to renew the lease. When the five-year term of the original lease expired late in 1997, the franchise agreement was still operating and, arguably, the appellant’s possession as franchisee amounted to possession by the respondents for the purpose of the lease.

[6] The respondents contend that as month-to-month tenants, they were entitled to one month’s notice from the landlord in order to terminate the monthly tenancy. They submit that as no such notice was given, the month-to-month tenancy continued despite any purported lease between the landlord and the appellant.

[7] Only the respondents and the landlord know whether the landlord did or did not give notice to terminate the month-to- month tenancy. The landlord is in Hong Kong and is not available. If the respondents did not receive notice, it would have been easy for them to so state in their affidavits. They had the onus of showing that no notice was given. Their material does not address the question of notice. In our view, they have failed to show that they did not get notice, and this failure defeats their claim for possession based on the overholding provision in the original lease.

[8] We do not have to decide what the result may have been had the respondents proved that the landlord did not give the notice of termination of the month-to-month tenancy but had entered into the new lease with the appellant. We would indicate, however, that as the landlord’s rights would be affected, he would have to be a party to any proceeding in which that issue was decided.

[9] The appeal is allowed, the judgment below is set aside, and the application is dismissed. The appellant is entitled to his costs here and in the court below on a party-and-party basis.