ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
2074144 Ontario Inc.
Applicant
- and -
6167918 Canada Ltd.
Respondent
Philip Cho,
for the Applicant
Ian J. Cantor,
for the Respondent
HEARD: March 19, 2015
WHITAKER J.
1This is an application for a declaration that the applicant tenant has the right to renew the lease and, further, has properly exercised its option to renew the lease.
2The landlord, 918, takes the position that the renewal option contained in the lease has been exercised and therefore spent. The option is no longer available.
3The lease is dated May 5, 2005.
4The amendment provides that all terms and conditions of the lease are to remain the same except those that are expressly amended and, further, does not provide any amendment of the renewal option.
5The tenant takes the position that it has exercised its option to renew and has provided appropriate notice to the landlord.
6Both tenant and landlord are successors to what the parties refer to as the original tenant and the original landlord. On January 2001, the original parties executed a written lease agreement dated January 10, 2001. The lease provided for a term of 10 years beginning September 1, 1997 through to August 31, 2007.
7The lease also provided the tenant with an option to renew the lease for a further 5-year term.
8At the time that it purchased the property, the current landlord obtained an estoppel certificate dated October 26, 2005 from the tenant. In the certificate the tenant certified that there was no renewal option by leaving entirely blank the section on which she was to identify a renewal option. Although the tenant had a copy of the estoppel certificate in his possession 10 months before commencing this application, the tenant did not disclose the existence of it in the Application Record.
9Even if the option to renew was not spent by the renewal, the tenant lost her right to renew as a result of being in default under the lease for the majority of the term of the lease.
10The tenant’s rental account balance was outstanding for 76 of the 89 months between August 2007 and February 2015.
11Section 16.1 of the lease provides that notices given “shall be writing” and signed by the party giving such notice. The purported notice letter dated July 18, 2014 did not comply with the renewal option.
12The tenant has the onus to demonstrate its strict compliance with the conditions stipulated for the exercise of an option to renew and that did not occur here.
13Where the exercise of an option is conditional on the tenant meeting its obligations in the lease covenants, it is the tenant who bears the burden of proof that the covenants have been complied with.
14The court should interpret option to renew provisions so as to fall within sound commercial principles and good business sense.
15A landlord need not give notice of a tenant default or take any steps as a result in order to refuse a renewal.
16With respect the request for relief against forfeiture: in order to exercise this right, the tenant must show that it has made diligent efforts to comply with the terms of the lease – and it has not done so through no fault of its own. Where the tenant was in default under the lease as result of its own deliberate acts, as was the case here, the tenant has no right to equitable relief.
17I find the tenant spent its option to renew and did not provide notice to the landlord that it was exercising the renewal option.
18It is apparent from the plain language of the lease that it contemplates the possibility of one renewal with the terms and conditions remaining as for previous terms.
19I am not prepared to exercise my discretion to award relief for forfeiture. The application is dismissed.
20The parties have agreed on costs to the successful party fixed at $17,500 inclusive of taxes and disbursements payable forthwith.
WHITAKER, J.
DATE: March 23, 2015
CITATION: 2074144 Ontario Inc. v. 6167918 Canada Ltd., 2015 ONSC 1833
COURT FILE NO: CV-15-520404
DATE: 20150323
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
2074144 Ontario Inc.
Applicant
- and -
6167918 Canada Ltd.
Respondent
REASONS FOR DECISION
WHITAKER J.
Released: March 23, 2015