Soneil Alfred Inc. v. 1645368 Ontario Inc. et al, 2014 ONSC 401
CITATION: Soneil Alfred Inc. v. 1645368 Ontario Inc. et al, 2014 ONSC 401
COURT FILE NO.: DC-13-36-00
DATE: 20140117
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Soneil Alfred Inc.
Plaintiff (Respondent)
– and –
1645368 Ontario Inc., o/a Affordable Car and Truck Rental, 962339 Ontario Inc. o/a Right Choice Motors, Andrew Goberdhan and Bhapnisham Goberdhan
Defendants (Appellants)
Sam Shah, In Person, Representative of Plaintiff (Respondent)
Jayson W. Thomas, for the Defendants (Appellants), 1645368 Ontario Inc., o/a Affordable Car and Truck Rental, Andrew Goberdhan and Bhapnisham Goberdhan
HEARD: December 13, 2013
SEPPI J.
REASONS FOR JUDGMENT
[1] On April 5, 2013, the Honourable Deputy Judge R.A. Filkin, of the Small Claims Court at Brampton, gave judgment for $12,627.77, plus $175.00 and $500.00 costs, and pre and post-judgment interest against the Defendants, 1645368 Ontario Inc. (tenant), Andrew Goberdhan (AG) and Bhapnisham Goberdhan (BG).
[2] This judgment is for $7,224.43 arrears of rent and $5,880.00 three months accelerated rent, pursuant to a duly executed lease for premises in Brampton. The tenant occupied the premises from August 2006 to July 2009, when it was locked out for non-payment of rent. The trial judge declined to give judgment for the balance of the lease term, correctly finding that "once the landlord elected to terminate the lease, the tenant's obligation to pay rent for the balance of the term ended."
[3] The trial judge also correctly dismissed the defendants' counterclaim for lack of evidence. The claim against the defendant, 962339 Ontario Inc. was withdrawn on consent.
ISSUE:
The issue raised in this appeal by the defendants is whether the trial judge erred in law for failing to declare the lease dated May 11, 2006 (the lease) void ab initio, and not dismissing the plaintiff's entire claim.
THE FACTS:
[4] There is no factual dispute about the term of the lease, its execution and the defendants' occupation of the premises of 1600 square feet at Unit 2, 3 Alfred Kuehne Boulevard in Brampton (premises). The lease was duly signed. The defendant, 1645368 Ontario Inc. was the tenant. Its business was car leasing. 962339 Ontario Inc., AG and BG were indemnifiers under the lease. All parties agreed to comply with its terms for a period of five years from May 5, 2006 to May 31, 2011.
[5] The appellants submit the lease required the tenant to use the premises in an illegal manner. The lease stipulates the use as an auto leasing office and prohibits any other use. The zoning bylaw, of which both parties were aware in August 2006, permits an auto leasing business in the premises "in conjunction with" a motor vehicle repair shop. A separate business leased adjacent premises for auto repair. There was no evidence at trial that it was being operated in conjunction with the defendants' auto leasing business. The tenant, with knowledge of this bylaw, its own circumstances and business plans, executed the lease and an amendment in August 2006. The latter provided an additional two months' free rent to the tenant during its occupancy of the premises.
[6] From August 2006 to December 2008 the appellant regularly paid the monthly rent and continued to occupy the premises. The default began in January 2009 when some of rent cheques bounced due to insufficient funds. By July 15, 2009 the outstanding rent owing totalled $7,860.44.
THE TRIAL DECISION:
[7] The trial judge correctly held that the lease terms "clearly put the obligation on the tenant to rectify any issues with respect to zoning, permits or occupancy." By paragraph 4 of the lease, the tenant covenanted to "accept the premises in the state and condition in which they are received, without any warrantee from the landlord as to the intended use of the leased premises."
Paragraph 3.7(a) of the lease states:
The tenant shall be solely responsible for obtaining, from all authorities having jurisdiction, all necessary permits, licences, approvals, as may be necessary, to permit the tenant to occupy the premises and conduct its business thereon, as required by all applicable laws. The tenant shall comply at its own expense with all applicable laws respecting the use, condition and occupation of the premises, and all leasehold improvements, fixtures, equipment and contents thereof.
[8] The trial judge rejected the argument of the appellant that Section 45(1) of the Planning Act[^1] places the obligation for rectification of zoning on the owner. That section states as follows:
45(1) The committee of adjustment, upon the application of the owner of any land, building or structure affected by any by-law that is passed under section 34 or 38, or a predecessor of such sections, or any person authorized in writing by the owner, may, despite any other Act, authorize such minor variance from the provisions of the by-law, in respect of the land, building or structure or the use thereof, as in its opinion is desirable for the appropriate development or use of the land, building or structure, if in the opinion of the committee the general intent and purpose of the by-law and the official plan, if any, are maintained.
[9] The section, as the trial judge correctly notes, requires the owner to consent to any such application. The person making the application for a variance has to be "authorized in writing" by the owner. By signing the lease the owner implicitly gave its consent for the tenant to make the necessary application. There is no evidence that any further authorization for a variance application was ever requested by the tenant.
POSITION OF THE APPELLANT:
[10] The appellant relies on paragraphs 1.7 and 3.6 of the lease, and submits these provisions mean the contract could not be lawfully performed. These paragraphs state as follows:
1.7 Use of Premises: "For the specific purposes of Auto Leasing Offices."
3.6 Use of Premises:
The Tenant covenants that it shall not use and shall not permit the Premises to be used for any purpose other than the Use as provided in section 1.7 above.
[11] Referencing authority of Halsbury[^2], the appellant argues that "[a] contract to do a thing which cannot be performed without a violation of the law is void, whether the parties knew the law or not."
[12] The appellants also reference the following quote from the case of Cope v. Rowlands[^3]:
[W]here the contract which the plaintiff seeks to enforce, be it express or implied, is expressly or by implication forbidden by the common or statute law, no court will lend its assistance to give it effect. It is equally clear that a contract is void if prohibited by a statute, though the statute inflicts a penalty only, because such a penalty implies a prohibition.
[13] The appellants submit that paragraph 3.6 of the lease, prohibiting the tenant from using the premises for any purposes other than auto leasing offices, renders it impossible to fulfill the lease terms without violating the bylaw. The appellants submit this makes the contract void ab initio, and therefore unenforceable.
ANALYSIS:
[14] This argument is rejected. This is not a case in which the contract could not be performed without violating the law.
[15] The authorities referenced by the applicants did not have specific terms that place the obligation on one of the parties to ensure compliance at its own expense with all applicable laws respecting the use of the premises, and in particular, obtaining all the necessary approvals for occupation as required by all applicable regulations and bylaws. Despite this clear obligation imposed on the tenant by the contract for this purpose, it made no effort to seek the zoning approval or otherwise modify its business to ensure compliance. The parties were aware of the zoning impediments and expressly contracted upon terms requiring the tenant to pursue any requisite remedy to make the use conform with the city's requirements. As found by the trial judge, that obligation was clearly and entirely assumed by the appellant tenant by the terms of the lease. He states"These provisions clearly put the obligation on the tenant to rectify any issues with respect to zoning, permits, or occupancy." The tenant's neglect or failure in this regard does not negate the contract. Nor does it render the contract void ab initio on that account.
[16] The bylaw referenced by the appellants permitted operation of a car leasing business in conjunction with car repair. No effort was made by the tenant to approach the adjoining car repair business to arrange operations in conjunction with that tenant. The car leasing business was permitted without any variance as per the existing bylaw in conjunction with the car repair business. Moreover, as the trial judge found, the appellant provided no evidence to support its allegation the City of Brampton had ordered it to stop its business.
RESULT:
[17] In the result therefore, the appeal is dismissed.
[18] The respondent as the successful party on the appeal is entitled to costs. As the respondent did not provide a costs outline and appeared without counsel on consent of the appellant, nominal costs only are awarded to the respondent, fixed at $1,000.00 payable in 30 days.
Seppi J.
DATE: January 17, 2014
CITATION: Soneil Alfred Inc. v. 1645368 Ontario Inc. et al, 2014 ONSC 401
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Soneil Alfred Inc.
Plaintiff (Respondent)
– and –
1645368 Ontario Inc., o/a Affordable Car and Truck Rental, 962339 Ontario Inc. o/a Right Choice Motors, Andrew Goberdhan and Bhapnisham Goberdhan
Defendants (Appellants)
REASONS FOR JUDGMENT
Seppi J.
Released: January 17, 2014
[^1]: R.S.O. 1990, c. P.13 [^2]: Vol. 7, p.150, quoted in Gross v. Pohl, 1948 CarswellBC, 1948 468 (BC SC), [1949] 1W.W.R. 54 (B.C. Co. Ct.), at para. 16 [^3]: (1836), 2 M. & W. 149, 150 E.R. 707 (Eng. Exch.), at p. 710