CITATION: Amexon Properties Corp. v. Bell Canada Inc., 2017 ONSC 5833

COURT FILE NO.: 2054/15

DATE: 2017-09-29

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

AMEXON PROPERTIES CORPORATION

Plaintiff

– and –

BELL CANADA INC.

Defendant

Inga B. Andriessen, for the Plaintiff

Brendan Wong and Graham Splawski, for the Defendant

HEARD: September 27, 2017

REASONS FOR JUDGMENT

gray J.

[1] This matter was tried in about one half day. Commendably, the parties cooperated in expediting the matter. There was filed an Agreed Statement of Facts; a Joint Document Book; and one Affidavit, that of Lizza Tecson, which was filed by the plaintiff. There was some brief cross-examination on Ms. Tecson’s affidavit, followed by submissions.

[2] In the action, the plaintiff claims that the defendant was an overholding tenant after expiry of a commercial lease, and claims overholding rent in the amount of $111,159.57, plus pre-judgment interest.

[3] For the reasons that follow, the action is dismissed.

Background

[4] At all material times, the plaintiff was the landlord of a commercial building located at 1550 Enterprise Road, Mississauga. The building is composed of three wings that are joined in the centre by a triangular atrium. The wings are known as “Building A”, “Building B”, and “Building C”.

[5] The defendant was the leasee of four sub-units. They were known as “Unit 100” and “Unit 101” in Building A and “Unit 120” and “Unit 126” in Building B.

[6] The defendant’s lease expired on January 31, 2015.

[7] In December, 2011, the defendant sublet Units 120 and 126 in Building B to Mash Media Solutions Inc.

[8] On June 13, 2014, the defendant gave notice to the plaintiff that it would not renew the lease upon its expiry on January 31, 2015.

[9] Representatives of the plaintiff and the defendant did a walk-through of Units 100 and 101 on December 30, 2014. The plaintiff did not request nor conduct a walk-through of Units 120 or 126 prior to January 31, 2015.

[10] At all material times, access to Units 100, 101, 120 and 126 was controlled through a card-access system administered by the plaintiff. On or before February 1, 2015, the plaintiff deactivated all key cards relating to Units 100, 101, 120 and 126 issued to the defendant and/or Mash Media.

[11] The plaintiff began negotiations with a new tenant for Units 100, 101, 120 and 126 in November, 2014. No new tenant took possession of those units prior to August 31, 2015.

[12] A considerable amount of furniture and equipment was left in the units occupied by Mash Media, namely Units 120 and 126, after expiry of the lease on January 31, 2015. This included a server owned by Mash Media, which contained data belonging to President’s Choice Bank, and which remained in the premises until March 16, 2015. The server was removed by the defendant, on a without prejudice basis, on March 16, 2015.

[13] In her affidavit, Ms. Tecson deposes that the plaintiff received payment of rent for all four units in one cheque from a third party payor on behalf of the defendant, until the end of January 2015.

[14] On cross-examination, Ms. Tecson confirmed that all four units are on the ground floor of the building. She confirmed that as of February 1, 2015, the only key cards permitting access to the units were held by the plaintiff.

[15] Ms. Tecson testified that the room in which the server was contained had a fan that was running after February 1, 2015. The monitor attached to the server was black, and she did not turn it on. She did not push any of the buttons on the server, or attempt to operate it. She did not know whether the server was sending or receiving any signals, or processing any information, performing any functions, or had any internet connection, after January 31, 2015. In fact, she did not know whether any of the equipment in that room was performing any work functions.

[16] Ms. Tecson testified that all she knew was that some of the lights on the server were on. All she knew was that the server was powered on, and nothing more. She did not know whether any signals were sent to or received from the server after January 31, 2015.

[17] Ms. Tecson confirmed that no one from the defendant or Mash Media could access the units after February 1, 2015, and as far as she knew no one did.

[18] On re-examination, Ms. Tecson testified that no one from the defendant or Mash Media asked for any key cards or any other means of access after January 31, 2015. She testified that the plaintiff paid for hydro-electric charges after January 31, 2015.

[19] It would appear that the plaintiff discovered the existence of the server sometime around February 6, 2015. On that date, an email was sent from the plaintiff’s solicitors to the solicitors for President’s Choice Services Inc. In the email, Ms. Andriessen noted that her client had received an email requesting that the plaintiff advise as to the location and whereabouts of the server, and that steps would be taken by the plaintiff to preserve the server. Among other things, Ms. Andriessen responded that the plaintiff had no knowledge of any relationship between President’s Choice and Mash Media or Bell Canada; that her client had no knowledge as to what, if anything, would house President’s Choice’s alleged data; and that President’s Choice should provide evidence that their data was stored on servers that were alleged to actually be within her client’s premises. She also stated that if President’s Choice required information from the servers, they would require a court order or an executed direction from Bell Canada, although as noted earlier the server was ultimately removed on consent on March 16, 2015 without a court order.

[20] Certain provisions of the lease that are relevant to these proceedings are as follows:

2.00 DEMISE

In consideration of the rents, covenants and agreements hereinafter reserved and contained on the part of the Tenant to be paid, observed and performed, the Landlord doth demise and lease the Demised Premises unto the Tenant for use and occupation as a business office and for no other purpose. Subject to the Tenant’s acceptance of leasehold improvements (which for greater certainty shall not effect commencement of this Lease), the Tenant hereby accepts the condition and state of repair of the Demised Premises and all improvements made thereto by the Landlord.

2.02 OVERHOLDING

In the event that the Tenant holds over beyond the term hereby granted with or without the consent of the Landlord and without further written agreement, the tenancy resulting shall by a monthly tenancy only at the monthly rental equivalent to one hundred and fifty percent (150%) of the monthly payment last herein provided for and subject to termination at the election of the Landlord or the Tenant upon one month’s notice in writing and subject also to the terms, conditions and covenants herein set out, except as to the length of tenancy, it being understood that the acceptance of rent or any implied condition in no way renews this Lease as a yearly tenancy.

4.06 QUIET POSSESSION

Provided that it is paying the rent hereby reserved and performing the covenants herein on its part contained, the Tenant shall and may peaceably possess and enjoy the Demised Premises for the term hereby granted.

6.01 REMEDIES

(c) Whenever the Landlord becomes entitled to re-enter the Demised Premises under any provision of this Lease, the Landlord, in addition to all other rights it may have shall have the right, as agent of the Tenant to enter upon the Demised Premises and to take possession of any furniture or other property thereon and to sell the same at public or private sale without notice and to apply the proceeds thereof in the same manner as hereinbefore provided with respect to rent received from re-letting of the Demised Premises.

8.00 REMOVAL OF TENANT’S FIXTURES

Anything in the nature of leasehold improvements, which shall include, without limitation, all fixtures, improvements, fittings, installations, (other than the Tenant’s trade fixtures) made, entered or installed in the Demised Premises shall immediately upon their replacement be and become the property of the Landlord without compensation thereof to the Tenant. Except as may otherwise expressly agreed by the Landlord in writing, no leasehold improvements, trade fixtures, furniture, drapery or equipment shall be removed by the Tenant from the Demised Premises, either during or at the expiration or sooner termination of the term of this Lease.

Provided that notwithstanding the foregoing:

i. During the term of this Lease the Tenant may remove its furniture or equipment in the normal course of its business when and to the extent that such furniture, drapery or equipment has become excess for the Tenant’s purposes and the Tenant is substituting therefore new furniture, drapery or equipment. At the end of the term of this Lease, the Tenant may remove its trade fixtures, and may, if the Landlord so expressly agrees in writing, remove its drapery and hardware.

ii. The Tenant shall at the end of the term remove such trade fixtures in the Demised Premises as the Landlord shall require to be removed.

In the case of any removal either during or at the end of the term of its Lease, the Tenant shall at its expense, make good any damage caused to the Demised Premises by the installation or removal.

In all events where the Tenant is obligated to remove any fixtures, improvements, fittings, or installations and to make good any damage caused thereby and the Tenant does not do so, the Landlord shall have the right (but shall not be obligated to do so) to cause the removal of any or all of the foregoing and to make good any damage caused to the Demised Premises by the installation or removal and the cost thereof together with 15% therefore shall be payable as Additional Rent by the Tenant to the Landlord forthwith upon demand therefore. In the event that the Tenant does not remove any of its trade fixtures at the end of the term, the same shall become the absolute property of the Landlord, and, in addition to whatever other rights and remedies the Landlord may have, the Landlord may remove such trade fixtures and the cost of any such removal together with 15% thereof shall be payable as Additional Rent by the Tenant to the Landlord forthwith upon demand therefore. [Emphasis added]

Submissions

[21] Ms. Andriessen, counsel for the plaintiff, submits that the defendant or its subtenant, Mash Media, was overholding after January 31, 2015, at least until the server owned by Mash Media was removed in March, 2015.

[22] Ms. Andriessen notes that, pursuant to article 2.02 of the lease, an overholding occurs where the tenant “holds over beyond the term hereby granted with or without the consent of the Landlord”. Where that occurs, what results is a monthly tenancy at a monthly rental equivalent to 150 per cent of the last monthly rent, and subject to termination at the election of either party upon one month’s notice in writing.

[23] Ms. Andriessen submits that an overholding occurs where the tenant (or, as in this case, a subtenant) is using or occupying the premises after the expiry of the lease. Ms. Andriessen submits that that is what occurred here. Notwithstanding the expiry of the lease, a working computer owned by Mash Media remained on the premises, and data belonging to a client of Mash Media was on that computer.

[24] In these circumstances, Ms. Andriessen submits that it can only be concluded that the property was being occupied or used, thus giving rise to an overholding. In this connection, she submits that the court should adopt, or adapt, the concept of “technological neutrality” to commercial tenancies. Under that concept, it should be concluded that a state of affairs that arises through the use of technology should be approached on the same basis as would be the equivalent case where technology is not used. She notes that this concept is now used in cases of copyright infringement, where works are copied through the use of technology, and the courts now consider that to be equivalent to the copying of works by means of mechanical printing. By analogy, she submits that where property is being used to house computers and useful activities are being performed with them, this should be considered to be occupation and use of the property to the same degree as would be the case if physical activities are being performed.

[25] Ms. Andriessen submits that the fact that the key cards to the premises had been cancelled by the plaintiff is of no moment. The defendant and/or Mash Media could have accessed the premises merely by asking the plaintiff for the re-activation of one or more key cards, but no such request was ever made.

[26] For these reasons, Ms. Andriessen submits that the plaintiff should be granted judgment in the amount claimed.

[27] Mr. Wong, counsel for the defendant, submits that there was no overholding on the part of the defendant or Mash Media. He submits that the plaintiff was in possession of the premises after January 31, 2015.

[28] Mr. Wong points out that in correspondence with the plaintiff’s solicitors dated February 17, 2015, the defendant made it clear that it delivered possession of the premises to the plaintiff on the expiry of the lease, and the defendant made no claim to, and had no interest in, any chattels left on the premises by Mash Media. He submits that this would include any server left on the premises by Mash Media.

[29] Mr. Wong points out that there is nothing in the lease that would require the defendant to deliver “vacant” possession of the premises to the plaintiff upon expiry of the lease. Furthermore, articles 6.01 (c) and 8.00 of the lease make it clear that upon re-entry by the Landlord, all chattels and other equipment on the premises are the property of the Landlord.

[30] Mr. Wong submits that in any event the plaintiff failed to make reasonable efforts to mitigate its damages. He points out that the two groups of units were in different wings of the building, and could have been leased separately. Furthermore, while the plaintiff was notified in June, 2014, that it would not seek to renew the lease, it would appear that efforts to secure a new tenant only commenced in November, 2014.

[31] Authorities relied on by the parties include AIM Health Group Inc. v. 40 Finchgate Limited Partnership (2012), 2012 ONCA 795, 113 O.R. (3d) 187 (C.A.); Eansor v. T.J. Eansor and Sons Limited, [1952] O.W.N. 81 (H.C.J.); 1162994 Ontario Inc. v. Bakker, [2004] O.J. No. 2565 (C.A.); Robertson v. Thomson Corp., 2006 SCC 43, [2006] 2 S.C.R. 363; Canadian Broadcasting Corp. v. SODRAC 2003 Inc., 2015 SCC 57, [2015] 3 S.C.R. 615; Century 21 Canada Ltd. Partnership v. Rogers Communications Inc. (2010), 2011 BCSC 1196, 338 D.L.R. (4th) 32 (B.C.S.C.); EAD Property Holdings (103) Corp. v. Greyhound Canada Transportation ULC, 2015 ABQB 239; Yonge-Rosedale Developments Ltd. v. Levitt (1978), 1978 CanLII 1475 (ON SC), 18 O.R. (2d) 295 (H.C.J.); 7Marli Ltd. v. Pet Valu Canada Inc., 2017 ONSC 1796; Daulat Investments Inc. v. Ceci’s Home for Children (1991), 1991 CanLII 8325 (ON SC), 85 D.L.R. (4th) 248 (Ont. Gen. Div.); Brown v. Draper, [1944] 1 All E.R. 246 (C.A.); and M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., 1999 CanLII 677 (SCC), [1999] 1 S.C.R. 619.

Analysis

[32] I do not accept, in these circumstances, that any overholding has occurred.

[33] The only circumstance relied on by the plaintiff to establish use and occupation of the premises by the tenant or subtenant is the discovery of a computer server on the premises after expiry of the lease. All that is known about the computer is that it was functional, and had data on it that belonged to a client of Mash Media. There is no evidence that the computer did anything except store that data, and there is no evidence that any transactions or business of any kind were performed through the computer. There is no evidence that the computer was connected in any way with the outside world.

[34] The only thing that is known about the computer is that when President’s Choice discovered that a computer was possibly in the premises and that it may have had data belonging to President’s Choice on it, inquiries were made. Once it was discovered that that was indeed the case, efforts were made by President’s Choice to retrieve the data, which presumably meant securing access to the computer.

[35] This evidence is consistent, in my view, with the likelihood that the computer server had simply been abandoned by Mash Media, along with the other furniture that was left in the unit. As I suggested to Ms. Andriessen during argument, in these circumstances, the server was in much the same conceptual situation as a filing cabinet that contains files belonging to a client. Ms. Andriessen agreed, and submitted that in those circumstances, that would also constitute use and occupation of the premises, and thus create an overholding.

[36] I do not agree with Ms. Andriessen’s submission. In my view, one must examine all the circumstances, and not merely the fact that a piece of equipment with data in it was left on the premises.

[37] In this case, there is no suggestion that the defendant or Mash Media were conducting any business in the premises after January 31, 2015. No personnel from either organization were there. All access cards had been deactivated by the plaintiff. Any furniture or other equipment left on the premises was available to be used by the plaintiff, or, at its option, to be removed or destroyed. Any costs incurred by the plaintiff in removing or destroying them might be claimed by the plaintiff pursuant to article 8.00 of the lease.

[38] I do not accept that merely because one piece of equipment with some data on it had been left in the premises, that that constitutes use and occupation sufficient to constitute an overholding. The situation would be much different, in my view, if the evidence showed that a computer system had been left on the premises, and business of the defendant and/or Mash Media were being regularly conducted as before. In such a case, it could be contended that the premises were being used “as a business office” as contemplated under article 2.00 of the lease. However, that is a long way from the situation here.

[39] I do not think the cases relied on by the plaintiff, particularly AIM Health and Bakker, are of assistance.

[40] The issue in AIM Health was whether an overholding without the consent of the landlord could arise in view of the wording of the particular lease under consideration. The majority of the Court of Appeal held that it could not, because of the unequivocal covenant by the tenant to surrender and give up to the landlord vacant possession of the premises on expiry of the lease, and because the overholding clause, unlike the overholding clause in the case before me, did not say that an overholding could occur without the consent of the landlord. The issue did not arise, in that case, as to the circumstances that would be required in order to conclude that an overholding had occurred.

[41] Bakker was a case involving a residential tenancy, and the issue was whether, as contemplated under s.86 of the Residential Tenancies Act at the time, the tenant was in possession of the rental unit. In the context of the statutory provision, and in the context of the purposes of the statute as a whole, Doherty J.A. at para. 20 stated that the concept of possession “connotes some form of control over the thing said to be possessed.” He stated “In my view, possession of a rental unit refers to some form of control over that unit as demonstrated by factors such as access to, use of, or occupation of the unit.”

[42] I am not convinced that the issue of possession arising under the Residential Tenancies Act is necessarily the same as whether there has been an overholding under a commercial tenancy. However, even applying the concept as articulated by Doherty J.A., I do not agree that the definition of “possession” he adopted there has been met. Clearly, neither the defendant nor Mash Media had access to the premises, at least without the consent of the plaintiff. As articulated already, I do not agree that they had the use of the premises, nor did they occupy the premises, simply because a computer server was left on the premises, and that some data was left on the server.

[43] I also think the intention of the parties has some relevance. For example, in Gray v. Bompas (1862), 11 C.B. (N.S.) 520; 142 E.R. 899, the issue was whether the retention by the tenant of a key to the premises for two days after expiry of the lease led to an overholding. The court answered the question in the negative. At pp.524 and 525 C.B. (N.S.) and 901 E.R., Willes J. noted that it was clear that the tenant intended to quit at the expiration of the lease, and the landlord intended that she should then cease to be his tenant. At p.525 C.B. (N.S.), p.902 E.R., he stated “It is hardly necessary to say more than that there is no evidence of an intention by keeping the key to continue the tenancy,” and on the same page he stated “...the mere fact of not returning the key on the 6th of April did not constitute an occupation or evidence of an occupation either on a quantum merit or under a contract for payment of a full quarter.”

[44] In the case before me, it is clear that all parties intended that the tenancy end on January 31, 2015. Just as the retention of a key in Gray did not constitute an overholding, the mere leaving of a server on the premises did not constitute an overholding.

[45] In the result, I conclude that there was no overholding after expiry of the lease.

[46] For the foregoing reasons, the plaintiff’s action must be dismissed.

[47] I will entertain brief written submissions with respect to costs, not to exceed five pages, together with a bill of costs. Mr. Wong shall have five days, and Ms. Andriessen shall have five days to respond. Mr. Wong shall have three days to reply.

Gray J.

Released: September 29, 2017

CITATION: Amexon Properties Corp. v. Bell Canada Inc., 2017 ONSC 5833

COURT FILE NO.: 2054/15

DATE: 2017-09-29

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

AMEXON PROPERTIES CORPORATION

Plaintiff

– and –

BELL CANADA INC.

Defendant

REASONS FOR JUDGMENT

GRAY J.

Released: September 29, 2017