CITATION: 6844987 Canada Inc. v. The United People of Canada, 2023 ONSC 3308
COURT FILE NO.: DC-22-2758
DATE: 2023/06/05
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
R.S.J. ELLIES, SACHS AND M. GIBSON JJ.
BETWEEN:
6844987 CANADA INC., FRANCIS HEALY, ROSEMARY O’BRIEN, PATRICK MCDONALD AND PATRICK KELLY
Applicants
(Respondents in the Appeal)
Gordon Douglas, for the Respondents in the Appeal
Saron Gebresellassi, for the Appellant in the Appeal
HEARD: By videoconference in Ottawa on May 30, 2023
– and –
THE UNITED PEOPLE OF CANADA
Respondents
(Appellant in the Appeal)
The court
[1] This is an appeal by the United People of Canada/ Les Peuples Unis du Canada (“TUPOC”) from the decision of Gomery J. dated September 23, 2022 granting an application brought by the Respondents to this appeal under Part III of the Commercial Tenancies Act, R.S.O. 1990, c. L.7 (the “Act”), to declare that the lease between the parties had been properly terminated and directing that a writ of possession be issued and enforced by the Sheriff.
[2] TUPOC advanced a number of arguments in support of its appeal in its factum (which will be briefly mentioned below). However, in its oral submissions it focused on one argument, which it described as forming the heart of its appeal – namely that the Notice of Termination served on TUPOC by the Respondents was deficient and thus, the Respondents’ efforts to repossess the premises were unlawful.
[3] In making its submission, TUPOC focused on the Notice of Termination that was sent to it on August 11, 2022 by email. In that email the Respondents’ realtor informed TUPOC that the deal between the parties was “null and void due to breach by the buyer [TUPOC]”. It advised TUPOC that it had 30 days to leave the premises provided it was current with its rent obligations.
[4] According to TUPOC, this notice did not comply with the requirements of s. 19(2) of the Act, which reads:
(2) A right of re-entry or forfeiture under any proviso or stipulation in a lease for a breach of any covenant or condition in the lease, other than a proviso in respect of the payment of rent, is not enforceable by action, entry, or otherwise, unless the lessor serves on the lessee a notice specifying the particular breach complained of, and, if the breach is capable of remedy, requiring the lessee to remedy the breach, and, in any case, requiring the lessee to make compensation in money for the breach, and the lessee fails within a reasonable time thereafter to remedy the breach, if it is capable of remedy, and to make reasonable compensation in money to the satisfaction of the lessor for the breach.
[5] According to TUPOC, under the provisions of s. 19(2) a notice must (1) specify the breach the lessor complained of; (2) require the lessee to remedy the breach if it is capable of being remedied; and (3) specify a reasonable time within which the breach must be remedied. The email of August 11, 2022, did none of these things. Further, it did not comply with the provisions of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, respecting service by email.
[6] After serving this notice the Respondents attempted to re-enter the premises on August 17, 2022.
[7] In its submissions TUPOC reviewed the caselaw surrounding s. 19(2) and established that the courts have insisted on strict compliance with the provision and have found that attempts to repossess premises in the face of a deficient notice are unlawful. Given this caselaw, according to TUPOC, the Respondents’ attempt to regain possession of the premises on August 17, 2022 was clearly unlawful.
[8] TUPOC acknowledged that the provisions of s. 19(2) do not apply when the right of re-entry is being exercised for non-payment of rent. However, according to TUPOC, s. 18(1) of the Act states that no right of re-entry can be exercised for non-payment of rent unless the tenant in default has been given at least 15 days notice of the landlord’s intention to exercise its right of re-entry for non-payment of rent. Further, if the lease between the parties specifies a longer notice period, it is that period that governs. According to TUPOC, the lease between the parties specified a 30-day notice period. In this case, the Respondents failed to give TUPOC 30 days notice that it was going to seek re-entry of the premises and thus, its attempt to re-enter because of non-payment of rent was also unlawful.
[9] There are a number of problems with TUPOC’s submissions concerning deficient notice. First, TUPOC has misread the provisions of s. 18(1) of the Act. It reads:
(1) Every demise, whether by parol or in writing and whenever made, unless it is otherwise agreed, shall be deemed to include an agreement that if the rent reserved, or any part thereof, remains unpaid for fifteen days after any of the days on which it ought to have been paid, although no formal demand thereof has been made, it is lawful for the landlord at any time thereafter to re-enter into and upon the demised premises or any part thereof in the name of the whole and to have again, repossess and enjoy the same as of the landlord’s former estate.
[10] Section 18(1) does not state that if a landlord intends to repossess for non-payment of rent, it must give the tenant at least 15 days notice of its intention to re-enter. What it says is that if the rent remains unpaid for at least 15 days, the landlord has the right to repossess the premises even if no formal demand for the payment of unpaid rent has been made.
[11] Second, the lease between the parties does not expand the period mentioned in s. 18(1) to more than 15 days. The clause relied upon by TUPOC appears in Schedule A to the Agreement of Purchase and Sale. It states, “The aforementioned lease shall be terminated immediately on the earlier of: a) 30 days following notice of material default by the Buyer; b) 30 days following written notice of termination from the Buyer; and c) the Completion Date.” Taken in context, the reference to material default is a reference to a material default under the Agreement of Purchase of Sale. The provision is not meant to alter the terms of s. 18(1) of the Act.
[12] Third, TUPOC’s argument ignores the fact that the Respondents gave it two notices of default – one on August 10/11 and another on August 17, when it attempted to exercise its right to re-enter the premises. The first notice was a notice of default concerning TUPOC’s failure to pay the deposits required under the Agreement of Purchase and Sale. Pursuant to Schedule A of the Agreement of Purchase and Sale, the Respondents gave TUPOC 30 days notice of its intent to exercise its right to re-enter the premises. The second notice was its notice dated August 17, 2022 in which the Respondents notified TUPOC of its intention to immediately repossess the premises since TUPOC was in arrears of rent in the amount of $10,000.00.
[13] Gomery J. found, as a matter of fact, that TUPOC’s lease took effect on June 13, 2022 when TUPOC executed the Agreement of Purchase and Sale. She also found, as a matter of fact, that “TUPOC was required, pursuant to the unmodified terms of the Agreement, to pay rent of $5,000 on June 13, 2022, and then the same amount every month thereafter that TUPOC occupied the premises mentioned in the Agreement.” Thus, pursuant to these findings, TUPOC was required to pay the Respondents $5,000 per month on June 13, 2022, July 13, 2022 and August 13, 2022. The evidence is uncontroverted that TUPOC only made one rent payment of $5,000 on July 24, 2022. Therefore, by the time the Respondents delivered the notice of August 17, 2022, TUPOC was in arrears of rent, those arrears amounted to $10,000.00, and TUPOC had been in arrears on its rent for more than 15 days. Given this, pursuant to s. 18(1), the Respondents were entitled to re-enter the premises on August 17, 2022. This finding is sufficient to dispose of TUPOC’s argument that the appeal should be allowed on the basis of deficiency of notice.
[14] We note that in its factum TUPOC challenged Gomery J.’s factual findings concerning the terms of the lease and when rent was payable. In order to disturb those findings on appeal, TUPOC must demonstrate that Gomery J. made a palpable and overriding error. It has not done so.
[15] TUPOC also submitted in its factum that the Respondents exercised their right to re-enter the premises after it alleged to the Respondents that they were discriminating against it under Ontario’s Human Rights Code, R.S.O. 1990, c. H.19, (the “Code”). According to TUPOC, the Respondents’ exercise of their right to re-enter was an act of reprisal. In the absence of any evidence of behaviour by the Respondents that could constitute a violation of the Code, Gomery J. committed no error in refusing to give any effect to this submission.
[16] In its factum, TUPOC alleged that Gomery J. erred in failing to find that the Respondents had breached their obligations under the Agreement of Purchase and Sale, which in turn justified its breach of the Agreement. Again, Gomery J’s findings on this issue were factual findings and TUPOC has failed to establish that Gomery J. made a palpable and overriding error with respect to these findings.
[17] Finally, TUPOC alleged in its factum that Gomery J. erred in accepting that TUPOC’s failure to pay the deposits due under the Agreement could be considered a material breach of the Agreement of Purchase and Sale. We find no merit to this argument. Gomery J. examined the three decisions on point from the Superior Court of Justice to which she was referred and accepted the general principle (which was accepted in two of those decisions) that if a prospective purchaser of real property that is subject to a commercial agreement of purchase and sale that includes a “time is of the essence” clause fails to pay a deposit when their agreement requires them to do so, the vendor can treat this failure as a material breach of the agreement entitling the vendor to terminate the agreement. The Agreement between the parties contained a “time is of the essence” clause, which Gomery J. found as a fact had not been waived. Her conclusions in this regard demonstrate neither a palpable and overriding error nor an error in law.
[18] For these reasons the appeal is dismissed. As agreed by the parties, TUPOC shall pay the Respondents their costs of the appeal, fixed in the amount of $12,000, all inclusive.
Ellies RSJ.
Sachs J.
M. Gibson J.
Released: June 5, 2023
CITATION: 6844987 Canada Inc. v. The United People of Canada, 2023 ONSC 3308
COURT FILE NO.: DC-22-2758
DATE: 2023/06/05
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
R.S.J. ELLIES, SACHS AND M. GIBSON JJ.
BETWEEN:
6844987 CANADA INC., FRANCIS HEALY, ROSEMARY O’BRIEN, PATRICK MCDONALD AND PATRICK KELLY
Applicants
(Respondents in the Appeal)
– and –
THE UNITED PEOPLE OF CANADA
Respondents
(Appellant in the Appeal)
REASONS FOR JUDGMENT
THE COURT
Released: June 5, 2023