Court of Appeal for Ontario

CITATION: 997484 Ontario Inc. v. Extreme Properties Inc., 2009 ONCA 368

DATE: 20090504

DOCKET: C49708

BEFORE: Winkler C.J.O., MacPherson and MacFarland JJ.A.

BETWEEN:

997484 Ontario Inc.

Plaintiff (Appellant in Appeal)

and

Extreme Properties Inc. and Extreme Retail (Canada) Inc.

Defendants (Respondents in Appeal)

COUNSEL:

Wolfgang Kaufmann, for the appellant

Keith D. Nelson, for the respondent

HEARD AND ENDORSED ORALLY: April 29, 2009

On appeal from the judgment of Justice L.B. Roberts of the Superior Court of Justice dated November 24, 2008.

APPEAL BOOK ENDORSEMENT

[1] The plaintiff landlord brought action against its tenant and subtenant for damages for breach of the lease agreements among the parties. The plaintiff landlord then moved for summary judgment and the defendant tenants brought a cross-motion to dismiss the plaintiff’s action.

[2] The motion judge granted the cross-motion and dismissed the plaintiff’s action. It is from this ruling that the plaintiff appellant appeals.

[3] There is no dispute that the subtenant 2007 vacated the subject premises February 27, 2006 without notice to the plaintiff or its co-defendants and that the terms of its sublease did not end until May 30, 2006.

[4] 2007 had paid rent to the end of February and to that point in time, the parties do not dispute that the defendants were in compliance with all their obligations under the lease and sublease.

[5] Further it is not disputed that on February 27, 2008 the landlord notified the Extreme defendants that the 2007 defendant had left the premises. By the time Extreme arrived at the premises March 1, 2006 the plaintiff landlord had already changed the locks to the premises, taken possession of the premises and Extreme was unable to gain access to the premises. The plaintiff landlord’s Notice of Repudiation and Termination of the Lease dated February 28, 2006 states that the landlord was treating 2007’s departure as a repudiation and termination of the lease agreement by the tenant and that it had taken possession of the premises. That notice was received by the Extreme defendants March 2, 2006.

[6] The plaintiff landlord never invited the Extreme defendants to remedy the alleged breach caused by 2007’s departure and although Extreme had a rent cheque for the rent due March 1, 2006 – it was never delivered to the plaintiff landlord.

[7] The Extreme defendants are the successor tenants to the premises as the landlord is the successor landlord. There have been a number of changes over the years from the time the original lease was entered in 1988.

[8] As the motion judge found:

…there is no question that, prior to the rent due date of March 1/06, the plaintiff had changed the locks and prepared its notice of repudiation dated February 28, 2006. …

[9] The consent to sublease executed by the landlord provided that the tenant was not released from the performance of any of the terms of the lease.

[10] The tenants were not in default when the landlord took possession of the property, changed the locks and prepared its Notice of Repudiation.

[11] Here the landlord relies on the tenants’ alleged repudiation of the lease in which circumstances it would be excused from giving the tenant notice under section 19(2) of the Commercial Tenancies Act.

[12] The difficulty with the landlord’s position here is the fact that the subtenant moved out is not a breach of any provision of the lease or any related documents. At that point in time – the lease was fully paid and there was no default.

[13] Had the landlord not jumped the gun and waited to see if the rent was paid on March 1st – and if not – repossessed the premises the result may have been different. It did not – it moved before there was any default, fundamentally breached the terms of the lease agreement and entitled the respondents to treat the lease as at an end – as the motion judge found.

[14] The appeal is dismissed.

[15] The respondent shall have its costs in the amount of $3,000 including disbursements and G.S.T.