2015 ONSC 7032
COURT FILE NO.: CV-15-537665
DATE: 20151113
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DRAGONA CARPET SUPPLIES LTD.
Applicant
– and –
EARL O’NEIL ELECTRIC SUPPLY LIMITED, 1309485 ONTARIO INC., LLOYD NEWTON, JEFFREY NEWTON and BRENDA BERGER
Respondents
Arnie Herschorn and David T. Ullmann, for the Applicant
William Reid, for the Respondents
HEARD: November 13, 2015
G. DOW, j
REASONS FOR JUDGMENT
[1] The applicant, Dragona Carpet Supplies Ltd. ("Dragona Carpet"), seeks to restrain the respondent, Earl O'Neil Electric Supply Limited ("Earl O'Neil Electric"), from proceeding with steps to terminate the sublease of 13,000 square feet of 40,000 square feet at the rear of 85 Progress Avenue. The parties entered into the sublease commencing August 3, 2010, and it is scheduled to conclude June 29, 2018. The remaining respondents are the owners of the property on which this industrial building is situate.
[2] The main application is scheduled to be heard on December 18 with cross-examinations on affidavits tentatively scheduled to proceed November 30 and December 2, 2015.
[3] Dragona Carpet is operated by Nizar and Wendy Hamam who have six sons, some of whom operate a similar business, Dragona Flooring. Both businesses operate on the same street. In fact, at the heart of the dispute are criminal charges laid against two of the sons arising out of police searches that located lumber and other material within the subject premises on August 18, 2015.
[4] Earl O'Neil Electric issued a Notice of Termination to Dragona Carpet September 23, 2015, attempting to rely on various clauses in the sublease and/or head lease (clauses 5.01(g), 6.01 or even 12.07(j)) and also to avoid the requisite 10 days' notice stipulated. Since September 23 and with counsel involved, Earl O'Neil Electric has been steadfast in its intention to evict Dragona Carpet with emails as recently as November 3 advising "THAT DRAGONA HAS 10 DAYS FROM TODAY'S DATE TO REMOVE ITS PROPERTY FROM 85 PROGRESS AVENUE". To the contrary, after changing the locks, Earl O'Neil has allowed a representative of Dragona Carpet Supplies to access the premises during business hours (7:00 a.m. - 5:00 p.m.).
[5] The legal test to be applied for interlocutory relief is that set out in R.J.R.-MacDonald Inc. v. Canada (Attorney General) 1994 CanLII 117 (SCC), [1994] S.C.J. No. 17, which sets out three factors to consider.
[6] First, there must be a serious question to be tried. As a motions court judge, I am only required to conduct a preliminary investigation into the merits. Although there is clear evidence of criminal activity related to the premises in question, it is not clear that it involved Dragona Carpet or its stated owners, Nizar and/or Wendy Hamam. I conclude the first part is satisfied.
[7] The second stage is to demonstrate irreparable harm. My concern is that if the injunction is not granted on a temporary basis, it may be contrary to the ultimate determination of this application which would allow Dragona Carpet to return to the premises. As a result, this part is also met.
[8] The third branch of the test is to assess the balance of inconvenience to the parties. On one hand, if the relief sought is not granted, Dragona Carpet faces the immediate expense of removal of what it has testified is $1,500,000 of inventory. Earl O'Neil Electric has testified that it does not require the space for its own business and has no intention of releasing the space in the (immediate) future if it were to become vacant. As a result, the balance would appear to favour Dragona Carpet remaining in the premises pending the hearing of the application.
[9] This conclusion is reinforced by the fact there has been payment of rent up to date and there has been no evidence of any problem in the payment of rent.
[10] As a result, I would order the following:
Earl O'Neil will continue to abide by the current interim arrangements under which Dragona Carpet and its usual representatives will have supervised access to the premises during the agreed to hours until the decision with respect to the application is rendered, (subject to a motion to vary by Earl O'Neil Electric on new and cogent evidence of direct criminal activity such as charges being laid against Nizar and/or Wendy Hamam);
Dragona Carpet will continue to pay rent as it has been doing;
The cross-examination of Nizar Hamam will proceed on November 30, 2015, and of Greg Curran on December 2, 2015, subject only to variation on the consent of both parties.
[11] Dragona Carpet failed to provide a Costs Outline as required by r. 57.01(6) but did not disagree with the Costs Outline of $10,500 inclusive of fees, HST and disbursements provided by counsel for Earl O'Neil Electric. In the circumstances, I would fix costs in the amount of $10,500, all inclusive, but will defer to whom they should be paid to the judge who determines the application.
Mr. Justice G. Dow
Released: November 13, 2015
2015 ONSC 7032
COURT FILE NO.: CV-15-537665
DATE: 20151113
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DRAGONA CARPET SUPPLIES LTD.
Applicant
– and –
EARL O’NEIL ELECTRIC SUPPLY LIMITED, 1309485 ONTARIO INC., LLOYD NEWTON, JEFFREY NEWTON and BRENDA BERGER
Respondents
REASONS FOR JUDGMENT
Mr. Justice G. Dow
Released: November 13, 2015