ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: C-1009-13
DATE: 2013-12-12
BETWEEN:
140 West LP by its general partner
2191941 Ontario Inc.
Applicant
– and –
Prica Tower Inc. and KW4Rent Inc.
Respondent
Jarvis K. Postnikoff, Counsel for the Applicant
Dennis G. Crawford, Counsel for the Respondents
HEARD: November 21, 2013
The Honourable Mr. Justice Patrick J. Flynn
reasons for JUDGMENT
[1] The Respondent, Prica Tower Inc., is the owner of a commercial property in Waterloo, Ontario, known as Campus Court Shopping Centre. The Respondent, KW4Rent Inc., is Prica’s property manager.
[2] Pursuant to a written 6 year lease commencing 01 May 2009, the Applicant is a Tenant in the shopping centre and operated a licensed nightclub.
[3] The Tenant fell behind in its rent and on November 16, 2013, the Landlord changed the locks and terminated the lease.
[4] The Tenant now seeks relief from forfeiture, mainly, because it argues that the Landlord gave no notice of the default or the action it took.
[5] The president of the Tenant deposes that since it was expecting a credit on account of overpaid Additional Rent, it has not paid the base rent for three months.
[6] The Tenant complains that the Landlord has failed to provide any accounting or adjustment of the Additional Rent for the past three years.
[7] After discussions with the Landlord and property manager failed to cause the audit the Tenant sought, the Tenant’s president offered to pay the outstanding base rent and ongoing base rent until the audit was completed. Of course, this was the Tenant’s obligation all along.
[8] But that e-mail offer and those discussions merely resulted in the changing of the locks and the posting of a Notice of Termination of Lease for failure to pay rent in the amount of $44,104.77, plus costs.
[9] This wasn’t the first or only time that this Tenant was locked out of these premises for non-payment of rent.
[10] A document executed by the Tenant on October 16, 2012 sets out that it happened that month as well and, in fact, recites that “the Tenant has had a history of default with respect to payment of rent due”.
[11] It seems ironic that this document, entitled Consent to Termination of Lease Agreement, is relied upon by the Tenant in this proceeding.
[12] That Consent sets out that in the event of a future default in the payment of rent, the Landlord could “terminate the lease without any further notice to the Tenant five (5) business days after Notice of Default is given the Tenant”.
[13] That Consent is not signed by the Landlord and surely doesn’t bind it. It does not form part of the Lease.
[14] The Lease itself provides for immediate re-entry by the Landlord whether or not legal demand for the rent has been made.
[15] As of the first of November 2013, the Tenant owed about $20,000 in base rent.
[16] It may well be the case that the Tenant has not been advised of the amount it owes on account of Additional Rent, save for the Notice of Termination instant, but the Lease provides for re-adjustment at the end of the term.
[17] This Tenant didn’t require notice that it was in default of rent payments. It was a serial defaulter and cannot now rely on a so called notice provision of its own Consent to Terminate from an earlier default to obtain relief in these circumstances.
[18] When the plaza came under new management in January 2013, the property manager (KW4Rent Inc.) sent a notice to the Tenant stipulating the amounts payable both for base rent and Additional Rent.
[19] The Tenant may well be correct in its assessment that some accounting for Additional Rent was due, but that is not an acceptable rationale for refusing to pay all rent, including base rent.
[20] The law is clear. The Court of Appeal wrote in Rahawanji v. Gwendolyn Shop (1973) Ltd., 2011 ONCA 771 at para. 2:
… Relief from forfeiture is a discretionary remedy and is not granted as a matter of course. As Doherty J.A. noted in Ontario (Attorney General) v. 8477 Darlington Crescent, 2011 ONCA at para. 93 … :
Relief from forfeiture is very much the exception and will be granted only where the party seeking that remedy clearly makes the case that forfeiture would be an inequitable and unjust order in all the circumstances.
[21] I might have been more favourably disposed to the Applicants’ plight had it paid all of the base rent arrears and most of the Additional Rent claim before coming to court.
[22] The rent arrears are significant, just as they were about a year before. This is a commercial matter. The Lease is the governing instrument.
[23] There is nothing inequitable or unjust in allowing the Landlord to enforce its contractual rights.
[24] Hence, the application must be dismissed.
Costs
[25] At the conclusion of the hearing, I invited the parties to seal and deliver their Costs Outlines to me.
[26] It is clear that the Respondents were completely successful and that the Lease provides that the Tenant is required to pay such legal expenses as the Landlord may have incurred. In my view that translates to entitlement to substantial indemnity costs.
[27] The Respondents seek costs of just over $3,000 on a substantial indemnity basis.
[28] The Applicants’ Cost Outline, on a partial indemnity basis, would have, had they been successful, claimed just over $3,100.
[29] I therefore accept that the Respondents’ claim for costs meets the Boucher test and so I order that the Applicants pay to the Respondents costs in the amount of $3,000.
P. J. Flynn J.
Released: December 12, 2013
COURT FILE NO.: C-1009-13
DATE: 2013-12-12
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
140 West LP by its general partner
2191941 Ontario Inc.
Applicant
– and –
Prica Tower Inc. and KW4Rent Inc.
Respondent
REASONS FOR judgment
P. J. Flynn J.
Released: December 12, 2013
/lr