SUPERIOR COURT OF JUSTICE – ONTARIO
COURT FILE NO.: C-652-12
DATE: 2012-10-09
RE: Casual Restaurant Systems Inc. and
Philthy McNasty’s (Ontario) Inc.
and
Sun Life Assurance Company of Canada
COURT FILE NO.: C-794-12
RE: Sun Life Assurance Company of Canada
and
Philthy McNasty’s Restaurants Inc. and
Casual Restaurant Systems Inc.
BEFORE: The Honourable Mr. Justice P.B. Hambly
COUNSEL: Gregory Govedaris, Counsel for the Applicants (Casual Restaurant Systems Inc.
Philthy McNasty’s (Ontario) Inc.) and for the Respondent, Casual Restaurant
Systems Inc.
John C. Wolf/Ivan Y. Lavrence/Bradley Philips, Counsel for the Respondent,
Sun Life Assurance Company of Canada and for the Applicant, Sun Life
Assurance Company of Canada
HEARD: October 5, 2012
ENDORSEMENT
[ 1 ] The respondent, which is a landlord in an application brought against it by a tenant and a subtenant, has brought a motion for security for costs. It also seeks to strike out paragraphs in affidavits filed by the applicants. In a related application between the same parties, one of the applicants in the first application, which is a respondent in the second application, has brought a motion to convert the second application to an action.
[ 2 ] The applicants in the first application are Casual Restaurant Systems Inc. (the sub tenant) and Philthy McNasty's (Ontario) Inc. (the tenant). The respondent is the Sun life Assurance Company of Canada (the landlord). They are parties to a lease agreement dated January 8, 1999 for premises in the Westmount Place Shopping Centre in Waterloo Ontario in which the tenant and subtenant operate a restaurant. The tenants wish to operate their restaurant under a more friendly name. They seek an order that the landlord provide its consent to permit the applicants to change the name of their business from Philthy McNasty’s to “The Republic House”.
[ 3 ] In the second application the landlord seeks the following orders:
Declaring that the tenant and subtenant have defaulted in the performance of their obligations pursuant to the lease agreement.
Declaring that the tenant and subtenant have forfeited any right to renew the term of the lease and that the lease expires on April 30, 2014.
That the tenant and subtenant observe and comply with all of their obligations and covenants pursuant to the lease.
That the tenant and sub tenant pay all legal fees incurred by the applicant as a result of their defaults pursuant to the lease. In the alternative that the tenant and subtenant pay to the applicants damages in the amount of $25,000.
[ 4 ] The tenant and subtenant have filed affidavits from Joseph Siahou, sworn July 26, 2012 and August 16, 2012. He is a principal of the subtenant. The landlord has filed an affidavit sworn September 11, 2012 from John Minas. He is the vice president of Bentall Kenedy which is the property manager of the landlord. The tenant and subtenant have filed a further affidavit from Joseph Siahou, sworn September 20, 2012.
[ 5 ] The lease contains a term that the tenants must operate their business under the name Philthy McNasty’s. The name cannot be changed without the approval of the landlord, which approval shall not be unreasonably withheld. The lease requires that the tenants operate a full-service restaurant from the whole leased premises and do so continuously during shopping center hours. The landlord wants a restaurant in the shopping center that serves the customers of the shopping center. The landlord alleges that what the tenants plan to do is to operate different restaurants from the same premises. It alleges that this is what they have done for some years as a result of renovations that they have made. They are unhappy with the tenants. They do not want to renew the lease when it expires on April 30, 2014.
[ 6 ] The tenants point out that they have always paid the rent. Over the past five years they have had sales between $1 and $2 million. A current appraisal indicates that the value of their business is about $500,000. The paragraphs of the affidavits of Joseph Siahou, that the landlord wishes to strike, contain statements of the landlord during negotiations which they claim are untrue. The tenants also point out that there is no privilege attached to these statements and take the position that all negotiations and communications between the parties should be disclosed. There is considerable disagreement between the parties about what has happened in the past over 13 years during the course of the lease.
[ 7 ] The Rules of Civil Procedure which apply are as follows:
14.05 (3) A proceeding may be brought by application where these rules authorize the commencement of a proceeding by application or where the relief claimed is,
(d) the determination of rights that depend on the interpretation of a deed, will, contract or other instrument, or on the interpretation of a statute, order in council, regulation or municipal by-law or resolution;
(h) in respect of any matter where it is unlikely that there will be any material facts in dispute.
56.01 (1) The court, on motion by the defendant or respondent in a proceeding, may make such order for security for costs as is just where it appears that,
(d) the plaintiff or applicant is a corporation or a nominal plaintiff or applicant, and there is good reason to believe that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent; or
(e) there is good reason to believe that the action or application is frivolous and vexatious and that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent ;
[ 8 ] In my view the application of the tenants to change their name has considerable merit. They also clearly have substantial assets. I also agree with the tenants that all communications between the parties should be disclosed. If the Landlord wants to file further material in response to Mr. Siahou’s affidavits, it is free to do so. The Landlord's motion is dismissed.
[ 9 ] I agree with the tenants that the landlord's application requires viva voce evidence. There are many material facts in dispute. The motion of the tenants to convert the second application to an action is allowed. If the parties cannot agree on the terms of the order directing a trial either party may bring a motion for an order setting the terms.
[ 10 ] The tenants may file submissions on costs within 10 days and the landlord may have 10 days to respond.
P.B. Hambly J.
Released: October 9, 2012