SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 12-54792
DATE: 2012/07/20

RE: 7867786 CANADA LIMITED cob as MD SERVICE CENTRE and MARWAN SABLANI, Plaintiffs/Applicants

AND

UGARRIT INC., cob as Riverside Garage and GAMAL JABEHI, Defendants/Respondents

BEFORE: Aitken J.

COUNSEL:
Ernest G. Tannis, for the Plaintiffs/Applicants
Melynda Layton, for the Defendants/Respondents

HEARD: July 10, 2012

ENDORSEMENT

Nature of Proceeding

[ 1 ] The Plaintiffs seek an interlocutory injunction restraining the Defendants from interfering with or evicting the Plaintiffs from that portion of the premises known municipally as 1335 Bank Street, Ottawa where they were operating a garage. In the alternative, the Plaintiffs seek interim relief from forfeiture of a lease between the Defendant, Urgaritt Inc. (carrying on business as Riverside Garage) as Landlord and the Plaintiff, 7867786 Canada Inc. (carrying on business as MD Service Centre) as Tenant.

Background

[ 2 ] The Defendant, Ugarrit Inc. (owned by Jebahi’s brother in Lebanon), is the owner of the land and buildings known as the Riverside Garage at the corner of Bank and Riverside Streets in Ottawa. In the spring of 2011, the Plaintiff, Sablani, and his business associate, Diego Morales, were looking for a service station location to run a small auto repair business. On approximately May 18, 2011, Jebahi and Sablani negotiated a lease pursuant to which 7867786 Canada Limited would rent the existing two garage bays and part of the office at 1335 Bank Street commencing June 1, 2011. There are discrepancies in the evidence as to the term of the lease. Reference is made to the total rent payable under the lease being $54,000, which represents a monthly rent of $4,500 over 12 months. However, the term of the lease was expressed as being from June 1, 2011 to June 31, 2012, which is a term of 13 months. The lease contained an option to renew for an additional five years. The lease listed the Defendant, Ugarrit Inc., as the Landlord and the Plaintiff, 7867786 Canada Limited, as the Tenant. At some point, during the course of the lease, rent was increased to $5,000 monthly.

[ 3 ] The option to renew was referenced twice in the body of the lease, and in one place was referred to as an option to renew for five years. The details relating to the option to renew were contained in Schedule A to the lease.

[ 4 ] A handwritten entry in the space immediately under the paragraph dealing with the rent stated that the Tenant was to pay the first and last month’s rent upon signing the lease. To the side of this entry was a handwritten note “deposit $9,000”.

[ 5 ] The lease was signed by Jebahi on behalf of Ugarrit Inc. and Sablani on behalf of 7867786 Canada Limited. Morales, who was to be the mechanic at Sablani’s garage, signed as the witness.

[ 6 ] The evidence of Sablani is that the copy of the lease he was provided by Jebahi was missing pages 2, 9, and 11 along with Schedules A and B, but he did not discover this until early in 2012. Jebahi denies that this was the case and claims that Sablani was provided with a copy of the entire lease when it was signed.

[ 7 ] Sablani complains that, in several respects, Ugarrit Inc., and its representative, Jebahi, have not lived up to the Landlord’s responsibilities under the lease in regard to provision of an office, hours of operation of the garage, provision of power, access to the garage, provision of two operable lifts, heating, and hydro. Sablani also alleges that Jebahi interfered with MD Service Centre’s relations with its clients. Jebahi denies all of these allegations and makes allegations in return against Sablani in regard to products going missing from Ugarrit’s gas bar and convenience store, making unauthorized changes to electrical circuits and doors, not operating the business for an extended period of time, blocking access to the gas pumps, and holding himself out as owning the equipment in the garage.

[ 8 ] According to Sablani, in March 2012 he was considering selling the garage business to a third party and referred to the lease to confirm what steps he would need to take in regard to an assignment of the lease. According to Sablani, at that time he realized that he did not have a complete copy of the lease and he asked Jebahi to provide him with one. According to Sablani, Jebahi did not do so. Jebahi denies that any request was ever made to him at that time for another copy of the lease.

[ 9 ] On May 23, 2012, Sablani had his leasing consultant, Richard Jackman, send a letter to Jebahi to deal with the renewal of the lease and outstanding issues between the two men. Jackman asked for a complete copy of the lease. He also advised that Sablani wished to renew the lease for a five-year period. On June 6, 2012, Jebahi responded through his lawyer that he would not agree to renew the lease in that the option to renew had to have been exercised under the lease on or before April 30, 2012. During the first week of June, Jebahi placed a “for rent” sign in front of the garage. Sablani tore it down. Police were called, and the dispute between the parties escalated.

[ 10 ] Prior to June 1, 2012, Sablani sent Jebahi a cheque payable to Ugarrit Inc. in the amount of $5,000, representing June’s rent. The cheque was cashed. Sablani takes the position that this was evidence that the lease was carrying on into the renewal period, because he had already provided Ugarrit Inc. with the first and last month’s rent when he entered the lease, as evidenced in the lease. Jebahi takes the position that what Sablani paid initially was a deposit of $9,000 – not the first and last month’s rent. Therefore, when Ugarrit Inc. cashed the cheque for $5,000 dated June 1, 2012, it considered the cheque payment of June’s rent – the last month during the lease period.

[ 11 ] In addition to the affidavits of Sablani, Jackman, and Jebahi, there was an affidavit of Morales, who worked with Sablani as a licensed mechanic at another location and moved with Sablani to the Riverside and Bank location. According to Morales, he and Sablani negotiated the lease with Jebahi. The lease was for a term of one year commencing June 1, 2011, but Jebahi gave Sablani and Morales permission to move into the premises on May 10, 2011 in return for the provision of certain services. Morales states that he obtained a complete copy of the lease when it was signed and, as far as he knew, Sablani received one as well. Morales claims that many of the allegations made by Sablani regarding problems created by Jebahi are false and that Sablani did not live up to numerous provisions in the lease. Due to disagreements between Sablani and Morales, their relationship ended in April 2012 when Sablani locked Morales out of the garage. Following Morales’ departure, Sablani was unable to continue operating the garage business because Morales had been the only licensed mechanic on site. At some point in May 2012, Sablani was able to find another licensed mechanic, and the business was reopened.

[ 12 ] On June 29, 2011, 7867786 Canada Limited commenced this action against the Defendants seeking, amongst other things, an interim interlocutory injunction preventing the Defendants from evicting the Plaintiffs from the premises. McLean J. adjourned the motion until July 10, 2012 to allow the Defendants time to respond to the Plaintiffs’ materials on the understanding that no fresh steps would be taken in the interim. Consequently, the Plaintiffs have remained in possession of the premises.

Interlocutory Injunction

[ 13 ] In order to obtain an injunction, an applicant must demonstrate that:

• there is a serious issue to be tried;

• irreparable harm will result if the relief is not granted;

• the balance of convenience favours the applicant.

Is there a serious issue to be tried?

[ 14 ] In my view, there is a serious issue to be tried. At least in two respects, there are questions of fact arising from the evidence tendered on the motion that could impact on the parties’ respective legal rights under the lease. First, there is a dispute as to whether Sablani asked Jebahi in March 2012 for copies of the missing pages in his lease and whether Jebahi refused to provide them. Second, there is a dispute regarding the significance of the payment of $5,000 by the Tenant to the Landlord on June 1, 2012. Sablani states that this was paid as June’s rent in circumstances where the Landlord already had been paid the last month’s rent. Therefore, according to Sablani, by cashing the cheque, the Landlord was signifying that the lease would continue beyond June 30. Jebahi states that the $5,000 was accepted by the Landlord as June’s rent in circumstances where the initial payment of $9,000 by the Tenant to the Landlord did not reflect payment of the first and last month’s rent but instead reflected payment of a deposit unrelated to the first and last month’s rent. Both of these factual disputes could have some relevance to the Plaintiffs’ claims under the Statement of Claim. It would not be appropriate for the Court hearing a motion for an interlocutory injunction to venture into the realm of fact finding regarding contentious issues where credibility comes into play.

Will irreparable harm result if the relief is not granted?

[ 15 ] The Plaintiffs have not established that irreparable harm will occur if the interlocutory injunction is not granted. The evidence of Morales is that, prior to moving to the Riverside Garage location, he and Sablani operated a garage business on Seiverigth Street. Their landlord at that location ordered them to vacate the premises at the end of April 2011. They were then able to rent the Riverside Garage location and take possession early in May. The evidence of Sablani is that his business survived the earlier move and has prospered – despite all of the roadblocks he alleges Jebahi put up. There is no evidence that another move of the Plaintiffs’ garage business would cause the Plaintiffs irreparable harm. In fact, considering all of the allegations levied by Sablani against Jebahi, it is equally plausible that a further move would be helpful to the business. There is no evidence that the location of the Plaintiffs’ business is central to its success. In fact, Sablani attributes its success to “great customer service, excellent workmanship and word of mouth advertising”. He makes no mention of the location of the business being significant to its success.

Balance of Convenience

[ 16 ] Since the Plaintiffs have not succeeded in establishing irreparable harm, I need not consider the question of balance of convenience.

Interim Relief from Forfeiture

[ 17 ] In the alternative to an interlocutory injunction, the Plaintiffs seek interim relief from forfeiture of the lease.

[ 18 ] In Ross v. T. Eaton Co. (1992), 11 O.R. (3d) 115 (C.A.), Morden A.C.J.O. stated at para. 30:

It appears to be clear that at least one condition necessary for the jurisdiction to be exercised in favour of a tenant who seeks to be relieved from the consequences of failure to comply with the requirements of the lease respecting the exercise of the option of renewal is that the tenant has made diligent efforts to comply with the terms of the lease which are unavailing through no default of his or her own.

[ 19 ] The Plaintiffs cannot meet this condition. Sablani’s evidence is that in March 2012 he asked Jebahi for the missing pages from the copy of the lease that he possessed and Jebahi refused to provide them to him. Even if I take this evidence at face value, Sablani made no formal request in writing for a copy of the lease – either directly or through a lawyer – and he took no further steps to get a copy of the lease until after the date to exercise the option to renew had passed. Sablani could have provided the Landlord with notice of his exercising the option to renew at any time once he had formed the intention to renew. According to Sablani, he had always had that intention. Nevertheless, he left it until just over one month prior to the end of the term of the lease to notify Jebahi of that intention and enter negotiations in that regard. In these circumstances, I cannot conclude that the Tenant made diligent efforts to exercise its option to renew or that missing the deadline to provide notice of its intention to renew resulted from no fault on the part of the Tenant. (See 1383421 Ontario Inc. v. Ole Miss Place Inc. (2003), 67 O.R. (3d) 161 (C.A.) at para. 80.)

Disposition

[ 20 ] The Plaintiffs’ motion for an interlocutory injunction and for interim relief from forfeiture of the lease is dismissed.

Aitken J.

Date: July 20, 2012

ONTARIO SUPERIOR COURT OF JUSTICE RE: 7867786 CANADA LIMITED cob as MD SERVICE CENTRE and MARWAN SABLANI, Plaintiffs/Applicants AND UGARRIT INC., cob as Riverside Garage and GAMAL JABEHI, Defendants/Respondents BEFORE: Aitken J. COUNSEL: Ernest G. Tannis, for the Plaintiffs/Applicants Melynda Layton, for the Defendants/Respondents ENDORSEMENT Aitken J.

Released: July 20, 2012