CITATION: Klub Kave Inc. v. 2330147 Ontario Inc., 2017 ONSC 7631

COURT FILE NO.: CV-17-00586542-0000

DATE: 20171219

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: KLUB KAVE INC., Applicant

AND: 2330147 ONTARIO INC., Respondent

BEFORE: JUSTICE FAVREAU

COUNSEL: David Schatzker, for the Applicant Gregory Azeff, for the Respondent

HEARD: December 18, 2017

ENDORSEMENT

Introduction

[1] The applicant, Klub Kave Inc. ("KKI"), seeks a declaration that a Notice of Termination of Tenancy dated November 8, 2017 (the "Termination Notice"), sent by the respondent, 2330147 Ontario Inc. ("233 Inc.") is invalid, and seeks a mandatory order requiring 233 Inc. to renew or obtain a City of Toronto Adult Entertainment Owner Licence ("Owner Licence"). Alternatively, KKI seeks interim and interlocutory orders precluding 233 Inc. from taking possession of the premises at issue and requiring 233 Inc. to maintain an Owner Licence on an interim basis.

[2] For the reasons set out below, I find that the Termination Notice is invalid. I also find that 223 Inc. is not required to obtain an Owner Licence and, as set out more specifically below, KKI is to be given a reasonable opportunity to obtain its own Owner Licence.

Facts giving rise to the application

[3] KKI has operated an adult entertainment club at 2847 Lake Shore Boulevard West since 2010 (the "Property"). KKI's club is located in the basement of the Property.

[4] Until recently, the owner of the Property was 1250240 Ontario Inc., which was a company controlled by Jack Cohen. Mr. Cohen also controlled another company, 760391 Ontario Limited ("760 Limited"). 760 Limited operated another adult entertainment club, Jay-Jay's, on the ground floor of the Property.

[5] In February 2010, KKI and 760 Limited entered into a lease, whereby KKI rented the basement of the Property for the purpose of operating its adult entertainment club (the "Lease"). The Lease ran for five years, ending on February 28, 2015.

[6] In accordance with City of Toronto by-law requirements, separate licences are required to own and to operate an adult entertainment club.

[7] Article 5(1) of the Lease explicitly provided that the premises could only be used to operate an adult entertainment business, and allocated responsibility between KKI and 760 Limited for maintaining the requisite licenses:

During the Term of this Lease the Premises shall not be used for any purpose other than: An Adult Entertainment Operation, Strip Club, Cabaret Club, Dance Club and the Landlord herein specifically acknowledges and agrees that it has a license to allow the Tenant to operate as such, and that the Tenant is relying on the Landlord license to allow Tenant to operate. The Tenant acknowledges that the Landlord relies on the Tenant to have and keep in good standing an Operating License from The City of Toronto.

[8] The Lease explicitly required KKI to abide by the City of Toronto by-laws and to keep the premises in good condition.

[9] The Lease contained the following renewal provision:

9. As long as the tenant is not in default of any of the terms of this Lease and shall have regularly, diligently and punctually paid Rent as and when due and duly and regularly performed its other covenants under the Lease through the Term, Tenant shall have the right to renew this Lease from it's [sic] Expiry Date for a further term of FIVE (5) years provided that the Tenant has notified the Landlord in writing not less than SIX (6) months prior to the expiration of the Term. In the event of failure to give written notice within the time or in the manner prescribed, this option shall be null and void. In the event that the exercise of this option shall be duly and properly completed by the Tenant, then all of the terms in this Lease shall apply during the renewal term except:

(a) There shall be an additional option to renew this lease for an additional 5(FIVE) years.

(b) Basic Rent shall be renegotiated in good faith by the Landlord and the Tenant and based upon prevailing rental rates, similar space in similar area, and to similar rates for a business operating with an Adult Entertainment License.

[10] The Lease contained the following inserted handwritten provision dealing with the eventuality that 760 Limited chose to cease operating its own adult entertainment club:

12. The Adult Entertainment License will remain with the building for the term of this Lease. If Landlord ceases to operate an Adult Entertainment Lounge, the license can be purchased by the tenant.

[11] Finally, the Lease contained the following provision dealing defaults:

10(1) An Act of Default has occurred when:

(b) The Tenant has breached his covenants or failed to perform any of his obligations under this Lease; and

(i) the Landlord has given notice specifying the nature of the default and the steps required to correct it; and

(ii) the Tenant has failed to correct the default as required by the notice.

[12] As noted above, the initial term of the Lease was set to end on February 28, 2015. KKI did not make a formal written request to renew the Lease six months prior to the Lease's expiration as required by the renewal provision. However, KKI takes the position that the lease was renewed for a five year term running until the end of February 2020. In support of that position, KKI's affiant on the application, Michel Abboud who is the applicant's principal, states that he met with Mr. Cohen and that they verbally agreed to the Lease renewal. Mr. Abboud also relies on a document prepared by Mr. Cohen's real estate agent that, inter alia, sets out a "Rent Schedule for Renewal Period" between 2016 and 2020.

[13] In reply to 223 Inc.'s evidence on the application, KKI also filed an affidavit sworn by Mr. Cohen in which he confirms KKI's understanding that the Lease was renewed for a five year term, providing the following evidence:

The original lease entered into with KKI, expressed to be made the first day of February 2010, provided KKI with a right of renewal on top of its five year term. At the end of that initial term, rather than prepare new lease documents, Mr. Abboud and I orally agreed to extend the lease for the additional five-year term, and waived the requirement to reduce the renewal to writing. We also agreed to increase the rent associated with the rental in accordance with Schedule "B" to the original lease.

After a few months, I realized that KKI was not paying the agreed-upon rent increases. I had my real estate agent, Bram Zeidenberg, prepare a document to explain how the renewal of the lease, as agreed to between the Original Landlord and KKI, established increased rent to be paid for the renewal period ending February 28, 2020. I met with Mr. Abboud to review that document, he agreed with its contents, rectified the earlier payments and paid the proper amounts going forward...

[14] In 2017, Mr Cohen listed the Property for sale. His evidence is that around that time, Mr. Abboud approached him to discuss the preparation of a lease renewal document, but that he told Mr. Abboud that "same was not necessary and that our renewal agreement was in force".

[15] 223 Inc. purchased the property from 760 Limited on September 18, 2017.

[16] 223 Inc.'s evidence is that it was not informed by Mr. Cohen that the Lease had been renewed for a five year term, and that it understood that KKI’s tenancy ran on a month to month basis. In support of this position, 233 Inc.'s affiant states that the company was never provided with a copy of the schedule of payments prepared by the real estate agent referred to in the affidavits of Mr. Abboud and Mr. Cohen, and that, at the time of the sale, the company was provided with a letter authored by Mr. Cohen in which he stated that "very recently Klub Kave has asked me to prepare a formal renewal document, which I have declined".

[17] 223 Inc. has also provided evidence about the negotiations with Mr. Cohen. From those documents, it is evident that 233 Inc. intended to terminate KKI’s tenancy and that Mr. Cohen understood that this was 223 Inc.'s intention. Originally, Mr. Cohen had agreed to assume responsibility for the termination as part of the agreement of purchase and sale. By the time the sale closed, Mr. Cohen agreed to a reduced purchase price on the basis that 233 Inc. would deal with the termination of the tenancy.

[18] There is some evidence about the course of dealings between KKI and 223 Inc. around the time of the sale and following the sale. It is evident that 223 Inc. never communicated with KKI prior to the sale to discuss the terms of its tenancy. In addition, after the sale, KKI's representative tried to contact 223 Inc.'s representative to introduce himself and to make arrangements to pay the rent. Rather than responding to these inquiries, it appears that 223 Inc. immediately engaged in a course of aggressive strategies to terminate the Lease.

[19] Representatives from both companies finally met at the Property on October 16, 2017. At that time, Mr. Abboud’s uncontradicted evidence is that 223 Inc.’s representative told him that KKI had no rights as a tenant and that it was to vacate the premises

[20] On October 19, 2017, 233 Inc.'s lawyer wrote to KKI purporting to give notice of default and termination on various grounds, taking the following positions:

a. The Owner Licence was no longer valid given that 760 Limited was no longer the owner, and 233 Inc. did not operate or intend to operate an adult entertainment business.

b. KKI was required to provide proof of licensing and insurance coverage by 5:00 pm that day, failing which 223 Inc. would lock KKI out of the Property.

c. KKI was in arrears of its rent.

d. KKI was only on a month to month lease, and 233 Inc. was exercising its right to terminate the lease. KKI was required to vacate the Property by November 30, 2017.

[21] There were a number of further exchanges between the parties. KKI paid the outstanding rent and provided proof of insurance. KKI also advised that it took the position that 223 Inc. was responsible for obtaining and maintaining an Owner Licence under the terms of the Lease and as had been done by the previous owner of the Property.

[22] Ultimately, on November 8, 2017, 223 Inc. sent the Termination Notice to KKI, purporting to end what it stated was a month to month tenancy, and requiring KKI to vacate the Property by December 31, 2017.

[23] After this application was commenced, on November 28, 2017, 223 Inc. also sent a notice to KKI about alleged electrical and HVAC deficiencies, requiring KKI to remedy the deficiencies by December 1, 2017, failing which the deficiencies would be acts of default which 223 Inc. stated would give it the right to exercise its remedies under the Lease.

Positions of the parties

[24] KKI commenced this application on an urgent basis on November 15, 2017. KKI takes the position that the lease renewal is valid, and that the Lease runs until February 28, 2020. KKI also takes the position that the Lease requires 223 Inc. to obtain and maintain an Owner's Licence for its adult entertainment club. KKI further argues that 223 Inc. has acted in bad faith in its attempts to terminate the Lease.

[25] In response, 223 Inc. takes the position that it has the authority to terminate the Lease on a number of grounds. During argument, counsel for 233 Inc. focused his client's position on arguments that the lease extension was not valid because it is contrary to the Statute of Frauds, R.S.O. 1990, c.S.19, and because the Lease was not registered under the Land Titles Act R.S.O. 1990, c.L.5. 233 Inc. also argues that, in any event, the applicant is in default of its obligations under the Lease because it does not hold an Owner Licence.

[26] I note that 223 Inc. did not pursue arguments in relation to the alleged HVAC and electrical deficiencies, from which I take that 223 Inc. no longer seeks to terminate the Lease based on these alleged deficiencies.

Issues and analysis

[27] The issues on this application are as follows:

a. Is there a valid lease extension to February 28, 2020?

b. Is the lease extension binding on 223 Inc.?

c. Does 233 Inc. have an obligation to renew and/or maintain an Owner Licence for an adult entertainment club?

d. Is the notice of termination valid?

Lease extension

[28] I am satisfied that there was a valid extension of the Lease to February 28, 2020.

[29] While the Lease required notice by the applicant in writing six months prior to the end of the original Lease, the evidence of both the applicant and Mr. Cohen is that this condition was waived. The parties initially had a verbal agreement, which was subsequently confirmed through the schedule of amounts owed between 2015 and 2020 prepared by Mr. Cohen's real estate agent and in another handwritten document attached to Mr. Cohen's affidavit.

[30] The respondent argues that the lease extension was not valid because it is contrary to section 4 of the Statute of Frauds, which requires that certain transactions involving the real property be in writing:

4 No action shall be brought to charge any executor or administrator upon any special promise to answer damages out of the executor's or administrator's own estate, or to charge any person upon any special promise to answer for the debt, default or miscarriage of any other person, or to charge any person upon any contract or sale of lands, tenements or hereditaments, or any interest in or concerning them, unless the agreement upon which the action is brought, or some memorandum or note thereof is in writing and signed by the party to be charged therewith or some person thereunto lawfully authorized by the party.

[31] In this case, notably the party disputing the agreement to extend the Lease is the subsequent owner, and not Mr. Cohen. In any event, while it appears that the Lease extension was originally done verbally, it was later memorialized in two documents, one of which appears to be initialed by the parties.

[32] More significantly, even if the agreement between KKI and Mr. Cohen was only verbal, I accept that the doctrine of part performance would preclude the application of section 4 of the Statute of Frauds. Part performance is an equitable doctrine to the effect that where parties have performed part of their obligations under an oral agreement regarding lands, the Statute of Frauds cannot be raised as a defence to enforcement of rights under the agreement: Erie Sand & Gravel Ltd. v. Seres' Farms Ltd., 2009 ONCA 709, at paras. 49-64.

[33] Up until the sale of the property, KKI has been abiding by its obligations under the Lease. When 223 Inc. purchased the property, it explicitly agreed to assume KKI as a tenant, as reflected in a waiver contained in the agreement of purchase and sale, thereby stepping into the former owner’s shoes. Accordingly I am satisfied that part performance applies in this case.

[34] Therefore, the extension is valid, and the Lease runs to the end of February 2020.

Lease extension enforceable against the respondent

[35] 223 Inc. argues that, even if the Lease was validly extended, it is not binding on 223 Inc. because the Lease was not registered as required by the Land Titles Act.

[36] In response, KKI relies on section 44(1) of the Land Titles Act, which provides that leases that are "yet to run" for a period of no more than three years do not have to be registered:

(1) All registered land, unless the contrary is expressed on the register, is subject to such of the following liabilities, rights and interests as for the time being may be subsisting in reference thereto, and such liabilities, rights and interests shall not be deemed to be encumbrances within the meaning of this Act:

4. Any lease or agreement for a lease, for a period yet to run that does not exceed three years, where there is actual occupation under it.

[37] In this case, the remainder of the Lease extension runs for less than three years, as it comes to an end on February 28, 2020.

[38] In argument, counsel for 223 Inc. argued that the Lease runs for more than three years because it contains a further option to renew for another five years. However, that option is subject to agreement by the parties, and accordingly in my view cannot be counted as part of the length of the Lease.

[39] KKI argues that, even if the exception in section 44(1)4 of the Land Titles Act does not apply, the Lease extension would still be enforceable against 223 Inc. because it had actual notice of the Lease. In this case, there is no dispute that 223 Inc. had actual notice of the Lease and notice that KKI was a Tenant in the basement of the Property. The only issue is whether 223 Inc. was aware that the Lease ran until the end of February 2020. There is some conflict in the evidence regarding 223 Inc.’s knowledge of the term of the Lease.

[40] However, I do not have to resolve this factual dispute because the case law indicates that what is required is knowledge of the encumbrance, and not knowledge of the details of the encumbrance. Once a party has knowledge of an encumbrance, as was held in Bank of Montreal v. Smith, [2008] O.J. No. 2353 (Sup Ct.), at paras. 52, the party is in a position to make necessary inquiries:

In Canadian Imperial Bank of Commerce v. Rockway Holdings Ltd., (1996) 1996 CanLII 8007 (ON SC), 29 O.R. (3rd) 350 at p. 356, aff'd. (1998) 1998 CanLII 17692 (ON CA), 108 O.A.C 231 (Ont. C.A.), Salhaney J. concluded that the term "actual notice":

... means actual notice (as opposed to constructive notice) of the nature of the prior agreement and its legal effect. There is no requirement that there be actual notice of the precise terms of the agreement, such as the amount of the consideration passing between the parties or the term of the agreement. The test, in my view, it is whether the registered instrument holder is in receipt of such information as would cause a reasonable person to make inquiries as to the terms and legal implications of the prior instrument.

See also Little Shoe Palace v. Pelmark Developments Ltd., 2017 ONSC 5268 (Sup. Ct.), at paras. 61-62.

[41] In this case, knowledge of the Lease should have been sufficient to lead 223 Inc. to make appropriate inquiries to satisfy itself as to the length of the Lease.

[42] 223 Inc. argues that it made inquiries of Mr. Cohen, and that Mr. Cohen assured the respondent there was no lease renewal and that the Lease was month to month. For his part, Mr. Cohen claims that he did advise 223 Inc. of the Lease extension. Ultimately, I do not need to resolve this issue because 223 Inc. had sufficient knowledge to know that KKI was a tenant. Whatever issues may exist between Mr. Cohen and 223 Inc. are not relevant to the issue of whether 223 Inc. had notice of the tenancy and was thereby in a position to make further inquiries.

[43] Accordingly, I am satisfied that the Lease as extended to the end of February 2020 is enforceable against 223 Inc.

Owner's obligation to obtain a licence

[44] As referred to above, the City of Toronto by-laws require adult entertainment clubs to have two types of licences, an Owner Licence and an Operator Licence.

[45] Up to the time of the sale of the Property, KKI had an Operator Licence and 760 Limited held the Owner Licence. There is evidence that Jay-Jay's stopped operating on the ground floor of the Property sometime before the sale, and that at that point 760 Limited continued to maintain an Owner Licence and that KKI reimbursed it for the cost of maintaining that licence.

[46] KKI's Operator Licence is still valid, and does not expire until the end of June 2018.

[47] However, the Owner Licence that was held by 760 Limited was automatically terminated at the time of the sale of the Property in accordance with the City of Toronto, By-Law No. 545-373, Licensing - Adult Entertainment Clubs - Licensing Requirements of Owners and Operators (July 1, 2013) (the "By-Law"):

A. No owner's licence shall be transferred, and if an owner sells, leases or otherwise disposes of his or her adult entertainment club or the premises part thereof upon or in which an adult entertainment club is operated to any person, his or her licence in respect of such adult entertainment club or premises shall, notwithstanding any other provision of this chapter, terminate.

E. Upon sale, lease or other disposition of an adult entertainment club, every operator's licence issued in respect of such adult entertainment club shall terminate, and the Municipal Licensing and Standards Division may, subject to the provisions of this chapter, permit the purchaser, lessee or other person obtaining an interest in such adult entertainment club to operate the adult entertainment club by an endorsement to that effect upon an owner's licence issued to him or her or may issue a new operator's licence to any person previously licensed as an operator in respect of such adult entertainment club.

[48] KKI takes the position that, under the Lease, 223 Inc. is required to obtain an Owner Licence so that it can operate its adult entertainment club. For its part, 223 Inc. takes the position that KKI is required to hold an Owner Licence, and that its failure to do so is a default under the Lease giving rise to a right of termination.

[49] 223 Inc. relies on the wording of the By-Law and the Lease to support its position that KKI is required to hold an Owner Licence.

[50] The wording of the By-Law, including the provisions referred to above, certainly suggest that, even as a tenant, KKI as the owner of the business is entitled to, and may even be required to, obtain an Owner Licence. In other words, it does not appear that the use of the word "owner" in the by-law refers to the owner of the building, but rather the owner of the business. For example, Chapter 545-369(A) provides that "No adult entertainment club may open for business or operate or be operated unless its owner is licensed as such under this chapter".

[51] Similarly, Chapter 545-369(B) provides as follows:

(1) Every person applying for an owner's licence shall file with the Municipal Licensing and Standards Division documentation satisfactory to the Municipal Licensing and Standards Division demonstrating the applicant's right to possess or occupy the premises used by him or her as an adult entertainment club; and if such person is not the registered owner or owner in fee simple of the property upon which the adult entertainment club is located, such person shall file with the Municipal Licensing and Standards Division at the same time a copy of his or her lease, if any, and of any other document constituting or affecting the legal relationship between the said applicant and the said registered owner in fee simple of the real property.

[52] For the purposes of this application, I do not have to resolve the issue of whether the By-Law requires KKI to have an Owner Licence if 223 Inc. were to apply for and obtain a licence, because I am satisfied that the Lease does not require 223 Inc. to obtain an Owner Licence for KKI's benefit.

[53] While the Lease provided that the previous landlord was responsible for maintaining the Owner Licence, it also made clear that there was no such obligation if the landlord stopped operating an adult entertainment club. In such a circumstance, the Lease provided that the licence could be purchased by KKI. This did not require the landlord to maintain an Owner Licence if it stopped operating its own club. More importantly, it is evident that the by-law precludes the private sale of licences. Accordingly, while KKI and the previous landlord may have operated for some period of time on the basis that KKI reimbursed the landlord for the cost of the Owner Licence, this is not what was contemplated by the Lease and it may not have accorded with what is permitted under the By-Law.

[54] In any event, in my view, 223 Inc. cannot be required to obtain an Owner Licence under the Lease as it is not operating Jay-Jay's or any other adult entertainment club on the Property. Therefore, in order to comply with the by-law, it appears that KKI is required to obtain its own Owner Licence.

Validity of termination notice

[55] 223 Inc. has given different reasons in support of its efforts to terminate the Lease. However, by the time the matter was argued in Court, 223 Inc. only relied on its position that the Lease renewal was invalid or unenforceable, or, alternatively, that KKI was in default under the Lease because it failed to obtain an Owner Licence.

[56] As already reviewed above, there is no justification for terminating the Lease on the basis that of a month to month tenancy. However, given that 223 Inc. does not have an obligation to obtain an Owner Licence, 223 Inc. may be justified in giving notice of default with respect to the fact that KKI does not have an Owner Licence. However, in my view, the manner in which 223 Inc. gave notice and its failure to give KKI an opportunity to obtain an Owner Licence was completely unreasonable.

[57] Section 19(2) of the Commercial Tenancies Act, R.S.O. 1990, c. L.7, requires that commercial tenants be given notice of a default and a reasonable opportunity to cure the default:

A right of re-entry or forfeiture under any proviso or stipulation in a lease for a breach of any covenant or condition in the lease, other than a proviso in respect of the payment of rent, is not enforceable by action, entry, or otherwise, unless the lessor serves on the lessee a notice specifying the particular breach complained of, and, if the breach is capable of remedy, requiring the lessee to remedy the breach, and, in any case, requiring the lessee to make compensation in money for the breach, and the lessee fails within a reasonable time thereafter to remedy the breach, if it is capable of remedy, and to make reasonable compensation in money to the satisfaction of the lessor for the breach.

[58] Section 20(1) of the Commercial Tenancies Act gives the Court broad remedial powers in the enforcement of notices of default:

Where a lessor is proceeding by action or otherwise to enforce a right of re-entry or forfeiture, whether for non-payment of rent or for other cause, the lessee may, in the lessor's action, if any, or if there is no such action pending, then in an action or application in the Superior Court of Justice brought by the lessee, apply to the court for relief, and the court may grant such relief as, having regard to the proceeding and conduct of the parties under section 19 and to all the other circumstances, the court thinks fit, and on such terms as to payment of rent, costs, expenses, damages, compensation, penalty, or otherwise, including the granting of an injunction to restrain any like breach in the future as the court considers just.

[59] In this case, it is evident that 223 Inc. is motivated by a desire to terminate the tenancy and that its notice of default in respect of the licensing issue was unreasonable. In the October 19th notice, 223 Inc. demanded production of the licence that day. When it became evident KKI did not have an Owner Licence and took the position that 223 Inc. was responsible for obtaining the Owner Licence, 223 Inc. did not give KKI an opportunity to obtain an Owner Licence of its own, but quickly moved to terminate the Lease. On November 8, 2017, 223 Inc. served its Termination Notice, purporting to terminate the Lease on the basis that it was a month to month lease.

[60] At the hearing of the application, in response to concerns raised about the lack of reasonable notice, counsel for 223 Inc. argued that KKI has now had two months since the October 19th notice to obtain an Owner Licence and, in any event, the notice was reasonable given that 223 Inc. is at risk of legal trouble with the City of Toronto for allowing an adult entertainment club to operate unlawfully in the building.

[61] In my view, neither of these positions has merit.

[62] On the first point, it is evident that there was disagreement between the parties over whether KKI had an obligation to obtain an Owner Licence. While I have found that it is required to obtain such a licence, given KKI’s history with Jay-Jay’s, this was a legitimate point of disagreement and KKI should not be expected to have obtained the licence in advance of the Court's determination of the issues. In any event, the notice itself did not purport to give an opportunity to obtain an Owner Licence, but simply stated that KKI would be shut down if it could not produce its licence within less than 24 hours.

[63] On the second point, there is no evidence that 223 Inc. faces any imminent regulatory proceedings. On the contrary, the evidence put forward by KKI demonstrates that the City of Toronto is aware of this dispute and that it was at least willing to await until the hearing date before taking any enforcement steps with respect to KKI. There is no evidence that 223 Inc. is in any way under threat of regulatory proceedings to be taken by the City. I expect that KKI will make the City aware of this decision and will communicate with the City about steps necessary to apply for an Owner Licence, and that it will otherwise abide by any requirements imposed by the City during the course of the application process.

[64] Accordingly, while it is evident that KKI must obtain an Owner Licence, it should be given a reasonable opportunity to obtain such a licence. I therefore exercise my discretion under section 20 of the Commercial Tenancies Act to relieve KKI from forfeiture and to require that it be given a reasonable time to obtain an Owner Licence from the City of Toronto.

[65] There was no evidence on the application about the time that would be required for KKI to obtain an Owner Licence. I would give KKI until January 31, 2018, to obtain its Owner Licence, subject to reasonable extensions if any delays are due to the City's processes rather than any lack of diligence on KKI's part in obtaining the licence.

Conclusion

[66] Based on the foregoing, I make the following declarations and orders:

a. The application for a declaration that the Notice of Termination dated November 8, 2017 is invalid is granted;

b. The application to require 223 Inc. to obtain an Owner Licence is dismissed;

c. The request for interim and interlocutory relief is dismissed as moot; and

d. The respondent is to refrain from taking any steps to initiate default or termination proceedings against the applicant in relation to the requirement that the applicant obtain an Owner Licence until after January 31, 2018, which date shall be extended if the applicant has been diligent is applying to the City of Toronto for a licence and the delay in obtaining a licence is due to the City’s processes.

[67] The applicant is entitled to its costs on a partial indemnity basis in the amount of $18,440.00 inclusive of disbursements and HST. These costs are reasonable given the urgency and issues on the application. I note that they are also comparable to the partial indemnity costs in the respondent's costs outline. Costs are payable within 30 days of this decision.

FAVREAU J.

Date: December 19, 2017