Court of Appeal for Ontario

Date: 2017-10-18 Docket: C63330

Judges: Pepall, van Rensburg and Trotter JJ.A.

Between

Jay-Pee Drycleaners Inc. (Lee Byeongheon) Plaintiff (Appellant)

and

2321324 Ontario Inc. a.k.a. Jasaab Holdings Inc. Defendant (Respondent)

Counsel

For the Appellant: Byeongheon Lee, acting in person

For the Respondent: Kyle Van Schie

Heard: August 18, 2017

On Appeal

On appeal from the judgment of Justice Robert L. Maranger of the Superior Court of Justice, dated January 6, 2017, with reasons reported at 2017 ONSC 7874.

Reasons for Decision

[1] Following oral argument, we allowed the appeal with reasons to follow. These are those reasons.

Background Facts

[2] The appellant, Byeongheon Lee, had operated a dry cleaning business in premises that were subject to a 12-year commercial lease. Section 6.07 of the lease required the appellant to comply with all applicable statutes and regulations affecting the premises. When the lease expired on February 28, 2012, it was converted into a month-to-month tenancy subject to the existing terms of the lease.

[3] On April 5, 2012, the former landlord assigned the lease to the respondent landlord, 2321324 Ontario Inc.

[4] On April 20, 2012, the respondent's property manager wrote to the appellant advising that under s. 6.07 of the lease and Dry Cleaners, O. Reg. 323/94, a regulation under the Environmental Protection Act, R.S.O. 1990, c. E.19, which he attached, the appellant had to "successfully complete a course approved by the Director in the Management of Contaminants and Wastes in connection with the operation of dry cleaning equipment". The letter further stated that the appellant had to complete the course within 90 days and provide proof of completion to the office of the property manager.

[5] Subsection 2(1) of the Dry Cleaners Regulation provides that "[n]o person shall operate dry cleaning equipment at a commercial establishment unless a trained person works full-time at the establishment."

[6] Subsection 1(1) of the Regulation defines "trained person" as a person who has:

(a) successfully completed a course approved by the Director;

(b) otherwise satisfied the Director that he or she is qualified to manage contaminants and wastes in connection with the operation of dry cleaning equipment; or

(c) satisfied the Director that he or she holds a valid authorizing certificate that is in good standing issued by an out-of-province regulatory authority.

[7] The property manager wrote again on June 28, 2012, stating that in order to comply with the lease and the Regulation, the appellant was to successfully complete the course. The appellant was given until July 20, 2012 to comply and to provide proof of completion, failing which he would be seen to be in breach of the lease.

[8] On August 29, 2012, the property manager wrote reminding the appellant of the previous two letters and stating that, as the July 20 date had lapsed and the respondent's office had not received proof of completion, the appellant was in breach of the lease agreement. The property manager went on to advise that as of September 30, 2012, the appellant's lease was terminated. Apart from the failure to complete the course and provide evidence of completion, the respondent's property manager did not specify any other grounds for termination.

[9] On September 10, 2012, the Manager of Program Development of the Program Planning and Implementation Branch of the Environmental Programs Division of the Ontario Ministry of the Environment wrote to the appellant confirming that the Ontario Dry Cleaners Training Course had not been available since March, 2012 and that the Ministry anticipated that the course would be available again early in 2013.

[10] On October 4, 2012, a bailiff posted a notice to terminate on the door of the premises and changed the locks. The notice indicated that the appellant had five days to remove any assets from the premises and if he failed to do so, he would be charged storage costs.

[11] The appellant sued for damages arising from the unlawful termination of the lease and the respondent counterclaimed for damages flowing from, among other things, the appellant's failure to deliver vacant possession. The respondent then moved for summary judgment dismissing the appellant's action and seeking judgment on the counterclaim.

Summary Judgment Motion

[12] Before the motion judge, the appellant's evidence was that the Ministry of the Environment had checked his premises and that, as a result, he had told the respondent's property manager that the course was unnecessary. Ultimately however, he agreed to get the certificate as requested. He stated that he tried numerous times to contact the government and ultimately was advised that the course was unavailable. This was confirmed in the aforementioned September 10, 2012 letter from the Manager of Program Development of the Ministry of the Environment. The appellant advised the property manager that the course was unavailable. The reply affidavit of the respondent did not contradict the appellant's evidence that he had told the property manager that the course was both unnecessary and unavailable.

[13] The motion judge granted summary judgment to the respondent dismissing the appellant's claim and allowing the respondent's counterclaim in part by awarding $23,122.56 to the respondent.

[14] The motion judge held that the respondent had lawfully terminated the tenancy. This conclusion was based on the motion judge's findings that the appellant had failed to provide evidence that he had taken a dry cleaning course or that he had a trained person working at all times on the premises. The motion judge determined that the regulations governing dry cleaning businesses required this designation.

[15] The appellant appeals from that judgment. He argues that the motion judge erred in concluding that the tenancy was lawfully terminated and in finding that the tenancy was month-to-month. In addition, he submits that the motion judge's reasons were insufficient.

[16] Before the motion judge and before this court, the appellant was self-represented.

Analysis

[17] As the motion judge noted, the appellant's claim could only succeed if the landlord unlawfully terminated his tenancy. In our view, the motion judge erred in law in determining that there had been a lawful termination.

[18] Subsection 19(2) of the Commercial Tenancies Act, R.S.O. 1990, c. L.7 provides that a landlord's right of re-entry for breach of any covenant or condition in the lease, other than in respect of the payment of rent, is not enforceable unless the landlord serves on the tenant a notice specifying the breach, and if the breach is capable of remedy, the tenant has failed within a reasonable time thereafter to remedy the breach.

[19] In reaching his conclusion, the motion judge relied in part on the appellant's failure to provide evidence that he had a trained person working at all times on the premises. However, this was not a ground relied upon by the respondent in the notice of termination given to the appellant. As noted in 780046 Ontario Inc. v. Columbus Medical Arts Building Inc., 20 O.R. (3d) 457 (C.A.), courts considering a landlord's termination of a lease have insisted upon strict compliance with the notice requirement in s. 19(2) of the Act. The particular breach must be identified: Mason Homes Ltd. v. Woodford, 2014 ONCA 816, 48 R.P.R. (5th) 1.

[20] Furthermore, the motion judge failed to consider that the Regulation could be satisfied in one of three ways and failed to address the appellant's uncontradicted evidence that the Ministry had checked the premises and that a course was unnecessary. In essence, the appellant's contention was that he met the definition of a "trained person" within the meaning of the Regulation because he had satisfied the Director that he was qualified to manage contaminants and wastes in connection with the operation of dry cleaning equipment.

[21] The motion judge also failed to consider the appellant's evidence that, contrary to the position of the respondent, the course was unavailable and the breach was incapable of being remedied in the time provided. As such, the appellant, to the knowledge of the respondent, could not comply in the time specified. The respondent therefore did not give the appellant a reasonable amount of time to remedy the breach before exercising its right of re-entry, as required by s. 19(2).

[22] Lastly, in oral argument before this court, the respondent submitted that the tenancy could have been terminated under s. 28 of the Commercial Tenancies Act, which provides for one month's notice of termination for a month-to-month tenancy. The problem with this submission is that the respondent never gave any notice relying on this provision as the basis for termination. The only ground advanced was the appellant's failure to take the course and to provide the property manager with evidence of same.

[23] The appellant raised other grounds in support of his appeal, namely that the motion judge's reasons were inadequate and that he erred in treating the appellant's tenancy as being month-to-month. We would not give effect to either of these arguments. The motion judge's reasons explained how and why he reached the conclusions he did, and allowed for effective appellate review. Additionally, the record fully supported the finding of a month-to-month tenancy.

Disposition

[24] For these reasons, we have allowed the appeal. The summary judgment, including the judgment on the counterclaim, is set aside. We are granting judgment to the appellant for wrongful termination of his tenancy and are remitting the action to the Superior Court for an assessment of any damages suffered by him. In addition, we are setting aside the costs award of $10,000 in favour of the respondent and are remitting the costs of the summary judgment motion to the judge hearing the assessment of damages.

[25] The appellant is awarded costs of the appeal in the amount of $1,000 inclusive of disbursements and applicable tax.

"S.E. Pepall J.A."

"K. van Rensburg J.A."

"G.T. Trotter J.A."