Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20210319 DOCKET: C68588

Lauwers, Trotter and Zarnett JJ.A.

BETWEEN

Courtney Campbell Applicant (Appellant)

and

1493951 Ontario Inc. and Tri-Echo Restaurants Inc. Respondents (Respondents)

Counsel: Zachary Parrott and Russell Bennett, for the appellant Raj Sharda, for the respondent 1493951 Ontario Inc. Ryan Wilson, for the respondent Tri-Echo Restaurants Inc.

Heard: March 15, 2021 by video conference

On appeal from the order of Justice Breese Davies of the Superior Court of Justice dated June 29, 2020, with reasons reported at 2020 ONSC 4029.

Reasons for Decision

[1] The appellant, Courtney Campbell, appeals from the dismissal of his claim that his sublease of commercial premises in Brampton, Ontario (the “premises”) was terminated improperly, and from the dismissal of his request for relief from the forfeiture of his sublease.

[2] Mr. Campbell commenced occupying the premises in January 2019, under what the application judge found was an oral sublease granted to him by the tenant of the premises, the respondent Tri-Echo Restaurants Inc. (“Tri-Echo”).

[3] Tri-Echo’s lease required business conducted on the premises to comply with federal, provincial, and municipal law. The application judge found that, as a subtenant, Mr. Campbell was bound to comply with that obligation.

[4] Mr. Campbell operated 1Tonamara Cannabis Boutique, a cannabis store, on the premises. He did so without either a licence or any valid exemption from the licensing requirements under the Cannabis Control Act, 2017, S.O. 2017, c. 26, Sched. 1 and the Cannabis Licence Act, 2018, S.O. 2018, c. 12, Sched. 2.

[5] In July 2019, the respondent 1493951 (“149”) purchased the property on which the premises were located and became the head landlord.

[6] In August 2019, 149 gave notice that Tri-Echo was in breach of its lease because the premises were being used for the sale and distribution of cannabis without a licence. The notice gave 10 days to rectify the breach, failing which 149 would repossess the premises. Doing so would terminate Tri-Echo’s lease and, as a consequence, Mr. Campbell’s sublease.

[7] Although the cannabis store continued to operate, 149 did not act on the notice until April 21, 2020. On that date, following a police raid of the premises, 149 changed the locks and retook possession, purportedly terminating the lease. 149 did not issue a fresh notice of default before doing so. 149 accepted payments of rent between the August 2019 notice and the April 2020 retaking of possession.

[8] The application judge rejected Mr. Campbell’s argument that 149 was not entitled to terminate the lease (and thus the sublease) and retake possession in April 2020 without issuing a fresh notice and giving further time to cure the default. She found that, following the August 2019 notice, 149 had been misled by information provided by Mr. Campbell that he had a valid exemption from licensing requirements and thus could lawfully run a cannabis store on the premises. She found that 149 did not act earlier to terminate the lease in reliance on that misleading information. She concluded that it was only when the police advised 149 in April 2020 that no licence or exemption existed for the premises that 149 came to understand that it had been misled. The application judge held that 149 was entitled at that point to act on the original notice, which had clearly indicated that 149 was not prepared to continue the lease if the cannabis store was operating illegally.

[9] Mr. Campbell argues that the application judge’s conclusion that 149 was entitled to act on the August 2019 notice was unjustified. He submits that it rests on the premise that Mr. Campbell intentionally misled 149. Although he concedes (at least in this court) that he had no licence or exemption, Mr. Campbell argues that at the relevant time he believed he was entitled to an exemption and therefore did not intentionally mislead 149 when he provided information that he had a lawful exemption. He submits that the application judge should not have made a finding adverse to his credibility on an application.

[10] We reject this argument. The application judge did not premise her conclusion – that 149 was not obligated to issue a further notice before retaking possession and terminating the lease – on a finding that Mr. Campbell had intentionally misled 149. Nor was it necessary for her to make such a finding.

[11] The issue before the application judge was whether, by reason of the delay in proceeding under the August 2019 notice and the acceptance of rent, 149 had waived the breach of lease referred to in that notice, thus requiring 149 to issue a fresh notice in April 2020.

[12] A waiver involves a knowing relinquishment of rights. “Waiver will be found only where the evidence demonstrates that the party waiving had (1) a full knowledge of rights; and (2) an unequivocal and conscious intention to abandon them”: Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., [1994] 2 S.C.R. 490 at para. 20. The application judge was entitled to find that since 149 was misled by Mr. Campbell into believing that an exemption existed for his business, the requirements for a waiver were not established and the waiver argument could not succeed. Mr. Campbell was the source of the misleading misinformation. It did not matter whether he believed it.

[13] Mr. Campbell also argues that, even if the lease was properly terminated in April 2020 (ending the sublease with it), the application judge erred in not granting relief from forfeiture. He contends that, in denying that relief, the application judge inappropriately relied on a finding that Mr. Campbell had provided intentionally misleading information to 149 about the existence of an exemption.

[14] We also reject this argument.

[15] The application judge was entitled to reject the request for relief from forfeiture based on the factors set out in Saskatchewan River Bungalows at para. 32. Those factors include the seriousness of the breach; the reasonableness of the defaulting party’s conduct; and, the disparity between the value of the forfeited property and the damage caused by the breach. The application judge considered each factor. Her rejection of the request for relief from forfeiture was not dependant on a finding that Mr. Campbell’s information to 149 was knowingly deceptive.

[16] Further, the application judge was not required to accept the argument that relief should have been granted to allow Mr. Campbell to operate a non-cannabis business on the premises. She was entitled, based on the record before her, to reject the suggestion that he had, and would operate, a bakery business unconnected to the cannabis business.

[17] For these reasons the appeal is dismissed.

[18] The respondents are entitled to costs payable by the appellant in the sum of $6500 each, inclusive of disbursements and applicable taxes.

“P. Lauwers J.A.”

“Gary Trotter J.A.” “B. Zarnett J.A.”