ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
898967 Ontario Limited
Applicant
- and -
Subryan Veersammy
Respondent
Jordan Epstein,
for the Applicant
Bernd Hahn,
for the Respondent
HEARD: March 25, 2015
WHITAKER J.
1This is a dispute between a commercial landlord and a tenant. The landlord locked the tenant out of the premises on December 29, 2014.
2The landlord takes the position that the tenant has breached the lease between the parties and a number of amendments, both verbal and written, that the parties have entered into after the original lease.
3By written agreement dated May 1, 2013, the tenant and the landlord agreed that the landlord would not collect rent for 8 months during the period of May 1, 2013 to December 31, 2013. This rent free arrangement was intended to compensate the tenant for renovations that were done to the building to suit the tenant’s business purposes.
4One week after signing the rent-free agreement, the landlord asked the tenant if he would defer the 8 month free rent period to the final 8 months of the lease because he was having financial problems. The tenant agreed to defer the rent-free period to the end of the lease. The landlord agreed that rent would be fixed at $1,250 without charges for HST or additional rent.
5From May 2013 through to September 2013, the tenant paid $1,250 in rent per month. The landlord presented the tenant with a formal lease agreement in October 2013. The lease was back-dated to April 30th to reflect the commencement of the rent term.
6From October 2013 to April 20, 2014, the tenant paid $1,420 per month.
7The landlord agreed to renew the lease for an additional one year time. This was in the lease agreement of April 23, 2014.
8The landlord unilaterally determined that the lease would terminate on April 30, 2015. The tenant took the position that insufficient rent had been paid to compensate the tenant for use of the premises up to April 30, 2015 and, further, that the tenant should not have to pay rent for the months of September 2014 to April 2015.
9I agree with the submission of the tenant that the rent-free agreement was a commercially absurd arrangement. The consequences were:
to delay the opening of the new business by 8 months;
to incur significant amounts of money in construction expenses;
to construct a substantial extension to the building that it was only renting for a 1 year lease;
to generally undergo a significant construction project that would provide no benefit to its use of the premises; and finally
to only receive the value of 8 months base rent ($10,000) in exchange.
10With respect to the validity of the lease, I conclude that the tenant’s interpretation of the rent-free agreement makes commercial sense and is likely the most reasonable interpretation of the agreement of the parties.
11If I am wrong on the first point, I would find that the tenant is entitled to relief against forfeiture. This is not a case where the default, if there is a default, was willful. Referring to the decision of this court in Kristen Lee Nesbitt v. RJH Reinsurance Services Inc., 2014 ONSC 2643, this court has commented that it will hesitate to put a tenant out of business when it is not a matter of bad faith if there appears to be a genuine dispute, and the monetary dispute may be resolved if the parties were given more time.
12I agree with the tenant’s submission that it has suffered material damage to the building and to its business, and there has been disruption to its employees as a result of being locked out of the premises.
13I find that the tenant is not in default of the lease and so declare. The landlord is to forthwith, permit the tenant’s return possession of the premises. With respect to compensation, the landlord is to pay monies lost by the tenant as a result of being locked out of the premises.
14The parties have agreed that the successful party is entitled to costs fixed at $3,000. Accordingly, the landlord is to pay the tenant $3,000 as costs inclusive of taxes and disbursements forthwith.
WHITAKER, J.
DATE: March 31, 2015
CITATION: 898967 Ontario Limited v. Veersammy, 2015 ONSC 2065
COURT FILE NO: CV-15-522026
DATE: 20150331
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
898967 Ontario Limited
Applicant
- and -
Subryan Veersammy
Respondent
REASONS FOR DECISION
WHITAKER J.
Released: March 31, 2015