COURT FILE NO.: CV-12-446561

DATE: 20140429

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

PICKERING SQUARE INC.
Plaintiff

– and –

TRILLIUM COLLEGE INC.
Defendant

Alan Dryer and Orly Kahane-Rapport, for the Plaintiff

Courtney Raphael, for the Defendant

HEARD: 3 April 2014

MEW J.:

reasons for decision

(Motion for summary judgment pursuant to Rule 20.01)

[1] Trillium College Inc. (“the defendant”) previously leased commercial property from Pickering Square Inc. (“the plaintiff”). The plaintiff is seeking damages for the defendant’s alleged failure to comply with certain obligations under the lease. The defendant now moves for summary judgment on the grounds that the arrears for rent have been paid and all other claims are time-barred. In the alternative, it seeks leave to amend its statement of defence.

Factual Background

[2] The defendant operates a private vocational business school. Beginning 1 June 2006, it entered into a lease to operate its business out of space in a shopping centre owned by the plaintiff in Pickering, Ontario.

[3] The lease ran until 31 May 2011. It contained three provisions that are relevant to the issues raised by this motion. First, it required the defendant to pay monthly rent. Second, the defendant was required to operate its business “continuously, diligently and actively on the whole of the Leased Premises at all times” pursuant to Section 16.08 of the lease. If the defendant failed to comply, the plaintiff was entitled to the following remedies:

[T]he Landlord shall be entitled (i) to collect (in addition to the Minimum Rent, Additional Rent and all other charges payable hereunder), an additional charge at a daily rate of Ten Cents ($0.10) per square foot ($1.08 per square metre) of the Rentable Area of the Leased Premises or One Hundred Dollars ($100.00), whichever is the greater, for each and every day that the Tenant fails to commence to do or to carry on business as herein provided, the additional charge being a liquidated sum representing the minimum damages which the Landlord is deemed to have suffered as a result of the Tenant’s default, and is without prejudice to the Landlord’s right to claim a greater sum of damages; and (ii) to avail itself of any other remedies for the Tenant’s breach hereunder, including obtaining an injunction or an order for specific performance in a court of competent jurisdiction to restrain the Tenant from breaching any of the provisions of this Section 16.08 and to compel the Tenant to comply with its obligations under this Section 16.08, as the case may be, including a mandatory injunction to compel the Tenant to open or reopen the whole of the Leased Premises for business to the public fully fixture, stocked and staffed, …; and (iii) if the Tenant fails to open the Leased Premises for business within fifteen (15) days after the Commencement Date, to terminate this Lease without the necessity for any legal proceedings and without prejudice to any other rights or remedies.

[4] Third, the defendant agreed to certain covenants to repair and restore the premises. At “all times during the Term at its sole cost”, the defendant was to keep and maintain the property “in good order, first-class condition and repair”, under Section 11.01. In addition, the defendant had certain obligations at the termination of the lease, including the following:

Section 11.05 Surrender of the Leased Premises

At the expiration or earlier termination of the Term, the Tenant shall peaceably surrender and yield up the Leased Premises to the Landlord in as good condition and repair as the Tenant is required to maintain the Leased Premises throughout the Term, and the Tenant shall surrender all keys for the Leased Premises to the Landlord and shall inform the Landlord of any combinations of locks, safes and vaults, if any, in the Leased Premises. The Tenant shall, however, remove all its trade fixtures and any alterations or improvements if requested by the Landlord as provided in Section 11.09 before surrendering the Leased Premises, and shall forthwith repair any damage to the Leased Premises caused by their installation or removal. The Tenant’s obligation to observe and perform this covenant shall survive the expiration of the Term or earlier termination of this Lease.

Section 11.09 Removal and Restoration by the Tenant

(a) … (ii) the Tenant shall, at the expiration of the Term, at its own cost, remove all its trade fixtures and such of its leasehold improvements and fixtures installed in the Leased Premises as the Landlord requires to be removed.

[5] In December 2007, after giving notice to the plaintiff, the defendant vacated the leased premises. The plaintiff did not terminate the lease, but it did commence an action in June 2008 (“the 2008 action”), seeking payment for rent arrears and payment under Section 16.08 for the defendant’s failure to occupy and carry on business at the property from January to June 2008.

[6] The parties settled the 2008 action in August 2008. Under the resolution, the defendant was obligated to resume occupation of the leased premises by 1 October 2008, and all of the terms of the lease were to continue in force.

[7] Despite the settlement agreement, from 1 October 2008 until the expiration of the lease on 31 May 2011, the defendant failed to occupy and operate its business on the leased premises and no subtenant took its place. The defendant did, however, pay rent to the plaintiff during this period, although there were deficiencies in June 2010 and May 2011.

[8] The plaintiff commenced the present action on 16 February 2012. It seeks to recover (i) arrears for rent; (ii) damages under Section 16.08 for the defendant’s failure to occupy and carry on business at the premises from 1 October 2008 to 31 May 2011 (“the Section 16.08 claim”); and (iii) damages for the defendant’s failure to restore the premises to the required condition at the end of the lease term (“the restoration claim”).

Issues

[9] The defendant’s motion for summary judgment raises three issues:

(1) Should the claim for rent arrears be dismissed?

(2) Does the limitation period bar the plaintiff’s other claims?

(3) If summary judgment is not granted in the defendant’s favour, may the defendant amend its statement of defence to plead set-off and additional facts without paying compensation or costs to the plaintiff?

(Position of the Parties and the remainder of the judgment continue exactly as provided in the source text.)

Mew J.

Released: 29 April 2014

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

PICKERING SQUARE INC.
Plaintiff

– and –

TRILLIUM COLLEGE INC.
Defendant

REASONS FOR DECISION

Mew J.

Released: 29 April 2014