DATE: 20040615

DOCKET: C40634

COURT OF APPEAL FOR ONTARIO

RE: 1357277 ONTARIO INC., operating as PAPE VILLAGE COIN LAUNDRY (Applicant/Respondent in appeal) – and – DEMETRA GREKOS (Respondent/Appellant)

BEFORE: MOLDAVER, GILLESE and BLAIR JJ.A.

COUNSEL: Arnie Herschorn for the appellant

Christos Papadopoulos for the respondent

HEARD: June 2, 2004

RELEASED ORALLY: June 2, 2004

On appeal from the judgment of Justice Keith A. Hoilett of the Superior Court of Justice dated August 21, 2003.

E N D O R S E M E N T

[1] The landlord appeals from the judgment of Hoilett J. dated August 21 2003, granting the respondent tenant relief from forfeiture and declaring that a tenancy exists between the two on certain terms. The judgment was granted following a dispute concerning the renewal of a lease.

[2] The tenant operates a coin laundry in the premises, which are located at 941 Pape Avenue in the City of Toronto, and which were leased pursuant to a written lease that expired on November 30, 2002. The lease contained an option to renew for two further five-year terms and required the tenant to notify the landlord in writing six months prior to the expiry of the lease if it wished to renew.

[1] It is common ground that no such written notice was given. However, the tenant’s agent advised the landlord orally in September 2002 that the tenant wished to renew the lease, and on November 27, 2002, the tenant’s solicitor wrote the landlord’s solicitor to that effect. There followed two months of negotiations respecting the rent to be paid.

[2] By letter dated December 6, 2002, the landlord’s solicitor advised that the landlord was willing to grant a renewal of “the Lease” for a further five-year period and set out the proposed rent “during the first renewal period” of that lease. (There were two other conditions as well, but it is agreed that they are not in issue). The tenant’s solicitor responded with a counter-offer with respect to rental rates. The landlord was not flexible on this point, but discussions continued.

[3] Three letters were exchanged between the solicitors in January that are brief but important.

[4] On January 17, 2003, the landlord’s solicitor wrote to the tenant’s solicitor re-affirming the December 6^th^ offer. The letter stated:

Further to your letter dated January 14, 2003, the Landlord has advised that she is only willing to grant a renewal of the Lease on the basis of the rent set out in our letter dated December 6, 2002. If your client is not agreeable, the Landlord asks that you instruct your client to vacate the premises at the end of this month. Please advise if the rental terms are acceptable to your client as soon as possible so that the Landlord can know whether or not she needs to find a new tenant.

[5] The clients continued to talk, and no steps were taken by the tenant to leave or by the landlord to compel the tenant to do so prior to January 31. There is evidence that Ms. Grekos, the landlord, indicated to the tenant’s representatives that she could not agree to a lower rental without speaking to her mother (the former landlord, who still relied upon the rents) who was out of the country at the time.

[6] On January 31, 2003, the landlord’s solicitor wrote again to the tenant’s solicitor, stating the following:

We have been advised by our client that she is unable to agree with the Tenant upon satisfactory terms and conditions for renewal of the existing Lease and accordingly, we ask that your instruct your client to vacate the above premises on or before February 28, 2002 at which time the Lease will be terminated. The last month rental security deposit will be applied against the rent due for the month of February 2002.

We have also been advised that the Tenant still owes a further $100.00 for the rent for January, 2002 which ask that you have your client immediately pay to the Landlord.

[7] The landlord submits this letter implicitly revoked the December 6 offer. The tenant does not accept this and later that same day, its solicitor wrote to the landlord’s solicitor as follows:

I have your letter of January 17, 2003 and your subsequent letter of January 31, 2003.

The parties have been in discussions since your January 17^th^ correspondence and, to my client’s understanding, the discussions were continuing, although at a standstill pending your client’s mother’s return from a trip to Chicago, Michigan. In view of your recent letter, however, it appears that the Landlord has terminated discussions without advising the Tenant of her intentions.

In any event, the terms of renewal demanded by the Landlord as outlined in your letter of December 6, 2002 have not been withdrawn and I have instructions to accept those terms on behalf of the Tenant.

Kindly prepare the renewal agreement and forward same to my office for review.

[8] Rather than resting his decision on whether it remained open to the tenant to accept the terms of the December offer in the circumstances, Hoilett J. validated the Lease by granting relief from forfeiture, an alternative relief that had been sought by the tenant. He gave several reasons for doing so. While we do not agree that the avenue of relief from forfeiture was open to the motions judge in the circumstances of this case – given the relatively narrow confines of that equitable remedy in situations involving the exercise of a renewal right in a lease (See Ross v. The T. Eaton Co. Ltd. (1993), 1992 7470 (ON CA), 11 O.R. (3d) 115 (C.A.); 120 Adelaide Leaseholds Inc. v. Oxford Properties Canada Ltd., [1993] O.J. No. 2801 (C.A.)) – we are of the view that the judgment must be upheld for the following reasons.

[9] First, it is clear on the evidence the landlord waived the written notice requirement in the Lease, or is at the very least estopped in the circumstances from relying on that provision. She offered to renew the Lease subject to the rental terms being determined. Having agreed to a renewal of the Lease, she was bound by the provisions that called for that issue to be resolved by arbitration if the parties did not agree. The parties did agree however, as the tenant has accepted the landlord’s proposed rent and indeed, has been paying rent on that basis, and the landlord has been accepting that rent, ever since.

[10] Secondly, and apart from the issue of waiver/estoppel, Mr. Herschorn agreed that if the landlord’s letter of January 31^st^ did not constitute a revocation of the landlord’s offer, that offer has been accepted and an agreement to renew the Lease on the terms set out in the December 6^th^ letter exists. In our view, the language of the January 31^st^ letter is not sufficiently clear to constitute a revocation of the offer. In addition, even if the letter could be construed as intending to revoke the offer, given its ambiguity and the circumstances of this case, where it is not contested that negotiations were continuing, we would be reluctant to hold that the letter is tantamount to a revocation of the offer. Therefore, a tenancy exists on the terms set out and the judgment below accurately and correctly reflects that fact.

[11] The appeal is therefore dismissed.

[12] The respondent in appeal is entitled to its costs fixed at $8,000 inclusive of fees, disbursements and GST.

“M. J. Moldaver J.A.”

“E.E. Gillese J.A.”

“R.A. Blair J.A.”