Superior Court of Justice – Ontario

Re: A and B Auto Leasing & Car Rentals Inc., Applicant/Landlord And: Amer Al-Dabbas also known as AMMER AL-DABAS and Canada Auto Centre Canadians Central Auto Ltd., Respondents/Tenants

Before: Ricchetti, J.

Counsel: M. Teitel for the Applicant/Landlord P. Di Monte for the Respondents/Tenants

Heard: June 5, 6, 7 and 11, 2018

Judgment

Background to the Proceeding

[1] This proceeding was commenced by way of an application on January 25, 2017 under s. 74 of the Commercial Tenancies Act, R.S.O. 1990, c. L.7 and the Rules of Civil Procedure.

[2] The Application seeks the following:

a) A declaration that the Respondents were and are in breach of a Commercial Lease Agreement dated April 12, 2008 (“Lease”) for 3443 Wolfdale Road, Unit 2, Mississauga (“Leased Premises”); b) Damages in the amount of $234,804.05; c) Damages to be assessed “caused by alterations” and an “oil spill”; d) A declaration the Lease is terminated; and e) An order for possession.

[3] The Respondents disputed the claims made in the Application and sought a dismissal of the Application.

[4] The Applicant filed various affidavits.

[5] The Respondents filed various affidavits.

[6] Cross-examinations were conducted.

[7] On December 12, 2017, Van Melle J. ordered the trial of the issue. The court ordered that the affidavits filed were the evidence in chief at trial. The opposing parties could cross-examine the parties at trial.

[8] At trial Rafiq and Al-Dabbas gave viva voce evidence.

[9] The parties relied on their factums and additional written submissions made at the conclusion of trial.

Damages to be Reserved for a Further Assessment

[10] At the commencement of trial, counsel for both parties agreed to a bifurcation of this trial to permit the following be tried at a future date, if necessary:

a) Further and future damages relating to the Tenant's unpermitted alterations (described below) to the Leased Premises; and b) Further and future damages caused by any environmental contamination caused by the Tenant’s oil spill at the Leased Premises.

[11] This court agreed to the bifurcation sought as it was apparent these issues could not be determined and assessed at this time.

The Lease

[12] The Leased Premises is one unit at 3443 Wolfdale Road, Mississauga (the “Property”). The Property is an auto plaza. Operating on the Property is a variety of auto service providers, a restaurant and a haulage parking facility.

[13] The Applicant is the landlord (the “Landlord”). The Respondents are the tenants (the “Tenants”).

[14] The Tenants have rented the Leased Premises since 1998 under various tenancies.

[15] For the most recent tenancy, the parties entered into a written commercial lease agreement on April 21, 2008 (the “Lease”).

[16] The Lease provided for a term from November 1st, 2008 to October 31, 2013.

[17] Lease payments under the Lease were as follows:

FROM	RENT	GST	TMI	TOTAL
1st Nov 2008	3,333.00	166.65	667.00	4,166.65
1st Nov 2011	3,499.00	174.98	700.00	4,374.65
1st Nov 2013	3,673.00	183.70	735.00	4,592.44

The Tenant paid the Landlord rent in advance, from May 2008 to the end of April 2011.

If not defaulted under this lease, the tenant has right to renew this lease for further term of 5 years exercisable by giving written notice of the renewal to the Landlord by July 31, 2013 before expire of the original fixed terms of this lease. The renewal lease is granted on the same terms set out in this lease on the rent agreeable by the Landlord.

Note: rent will increase 5% every year on the next five years renewal from 2013 13 July as it showing on page one.

[18] On state of repair, cleanliness and alteration of the Leased Premises, the Lease provided:

The Tenant shall keep the Premises in a reasonable state of repair and cleanliness and shall not make improvement or alteration to the Premises without the written consent of the Landlord, which consent shall not be unreasonably withheld.

The Issues

A) Limitation Period

[19] The Tenants submitted that any rent claimed prior to January 23, 2015 was statute barred by the Limitations Act. Counsel were subsequently asked to provide written submissions on the applicability of the Real Property Limitations Act.

[20] The Real Property Limitations Act provides:

17 (1) No arrears of rent, or of interest in respect of any sum of money charged upon or payable out of any land or rent, or in respect of any legacy, whether it is or is not charged upon land, or any damages in respect of such arrears of rent or interest, shall be recovered by any distress or action but within six years next after the same respectively has become due, or next after any acknowledgment in writing of the same has been given to the person entitled thereto or the person’s agent, signed by the person by whom the same was payable or that person’s agent.

[21] The Tenants’ counsel conceded that the limitation period for unpaid rent is 6 years under the Real Property Limitations Act.

[22] All amounts claimed in the Application are within 6 years of the date the Application was commenced. As a result, no limitation period is engaged.

B) One or Two Renewal Terms

[23] Initially, the Tenants took the position there were two renewal terms of 5 years each after October 31, 2013. However, the Tenants have abandoned that position and accept there was only a single 5 renewal term in the Lease from November 1, 2013 to October 1, 2018.

C) Renewed, Yearly or Month-to-Month?

[24] The Landlord's position is that:

a) No written notice was delivered to renew the Lease; b) In any event, the Tenants were in breach of the Lease and could not renew for the Second Term (which breach the Tenants deny); and c) In the further alternative, by written notice, the Landlord terminated the Lease in May, 2016.

[25] The Tenants' position is that they gave written notice in July 2013 renewing the Lease for the 5 years commencing November 1, 2013 (the “Second Term”).

[26] As a result, the issues to be decided are:

a) Was there a renewal of the Second Term? b) If renewed, was the Lease was terminated on May, 2016? and c) If not renewed, what tenancy was created after November 1, 2013?

D) Outstanding Lease Payments

i. Rent payable after November 1, 2013

[27] The Landlord’s position is that the Lease was not renewed for the Second Term. However, the Landlord submits that both parties agreed there would be an annual 5% annual increase in the “rent” regardless of whether the Lease had or had not been renewed for the Second Term. In the further alternative, the Applicant submits that such a term of a 5% annual increase should be implied.

ii. Outstanding Amounts

[28] The amount outstanding under the Lease was a moving target. The Landlord’s claim as varied from what it claimed in the correspondence, the Application, at trial and in written submissions.

[29] The Tenants submit that there are no outstanding amounts payable under the Lease.

E) Alleged Defaults under the Lease

[30] In addition to non-payment of the amounts due under the Lease, the Landlord alleged the Tenant has and continues to be in default under the Lease.

i. Failure to Maintain a Proper State of Repair and Cleanliness

[31] The Landlord submits that the Tenants have not properly maintained a reasonable state of cleanliness of the Premises as required under the Lease.

ii. Oil Spillage

[32] The Landlord submits that the Tenant has spilled oil onto the Leased Premises over a number of years.

iii. Alterations to the Leased Premises without written Approval from the Landlord/Building Permit

[33] The Landlord submits that the Tenants made alterations to the Leased Premises without the approval of the Landlord or obtaining a building permit from the City of Mississauga (“City”).

iv. Persistent late payments under the Lease

[34] The Landlord submits that the Tenants have been consistently late on rent and utility payments.

F) Damages

[35] In its written submissions, the Landlord claims damages arising from the Tenant’s alleged breaches of the Lease:

a) Lease payment arrears of $67,811.10; b) Water bill arrears of $1,954.25; c) Estimated costs to investigate environmental issues of $27,317.75; d) Debris removal costs of $5,700; e) Fines paid to the City of Mississauga to date of $6,260; and f) Costs thrown away for not permitting a court ordered inspection of $1,406.17

Comments on the Evidence

[36] Rafiq and Al-Dabbas have been in a very long, bitter dispute over this tenancy for some time. The dispute pre-dates the current Lease. There was litigation between these parties as early as 2002. The police have been to the Leased Premises 17 times in the last 2 years because of the ongoing dispute between Rafiq and Al-Dabbas. There have been assault charges laid. A restraining order was issued.

Rafiq’s Evidence

[37] It is clear that Rafiq has wanted and continues to want the Tenants out of the Leased Premises. As far as Rafiq is concerned, the Lease is not and has never been valid.

[38] It was clear from Rafiq’s testimony that, when asked a question, he was prepared to and did disparage Al-Dabbas for any or no reason relating to the question asked. Some of his disparaging testimony was more in the nature of negative speculation rather than based on personal knowledge or with some basis for belief. The disdain Rafiq showed for Al-Dabbas was apparent in much of his evidence.

[39] Some of Rafiq’s answers were simply not believable.

[40] The reliability of Rafiq’s evidence must be viewed with suspicion.

Al-Dabbas’ evidence

[41] Al-Dabbas’ evidence is no more reliable than Rafiq’s evidence.

[42] Many of Al-Dabbas’ answers were not credible or reliable. For example:

a) It was apparent that oil, form his business operation, leaked onto the Leased Premises, yet, it took some time for him to admit it. At one point Al-Dabbas suggested that Rafiq had deliberately caused the oil spill to create this breach. At other times, Al-Dabbas attempted to minimize a particular oil spill. And when pressed, Al-Dabbas suggested that the oil observed on the pavement outside his unit had been there for years; b) When shown photographs of the rear of his Leased Premises, Al-Dabbas would not admit it showed a "mess" behind his unit, stating such things as “you can’t prove that’s a photograph of my premises”, but it was apparent to this court that it was rear of the Leased Premises. At one point Al-Dabbas stated that Rafiq had placed the garbage at the rear of the Leased Premises for the purpose of taking photographs. Like much of his testimony, this was a bald assertion with no details or proof or a reasonable basis for making such a claim; c) Al-Dabbas’ evidence on the unapproved alterations was a reluctant admission suggesting at one point it was a routine change, at another point he blamed Rafiq for not giving him the building plans and eventually stating that he had oral approval from Rafiq’s father. Al-Dabbas was not prepared to admit the obvious - he simply did the alterations without anyone's approval - the Landlord's or the City's; and d) After a number of attempts to get Al-Dabbas to comply with the Lease, the second court appointed manager said it best – Al-Dabbas “always had a blatant disregard” for his Lease obligations. That became apparent to this court as a result of a thorough review of the correspondence and the evidence of Al-Dabbas.

[43] Clearly, Al-Dabbas’ evidence is highly unreliable.

The Analysis

The Extended Occupation of the Leased Premises

Was the Lease Renewed for the Second Term?

[44] For renewal, the Lease required written notice prior to July 31, 2013 and that the Tenants were not in breach.

[45] Have the Tenants established that proper written notice was given?

[46] The only evidence of delivery of the written notice comes from Al-Dabbas' testimony. Al-Dabbas states he gave the first court appointed manager written notice to renew on July 1, 2013.

[47] I do not accept Al-Dabbas' evidence:

a) Al-Dabbas produced a copy of the July 1, 2013 written notices. There is no acknowledgment of receipt by the court appointed manager. In light of the prior and ongoing dispute with the first manager, it would have been crucial for Al-Dabbas to carefully preserve, maintain proof of the delivery of the written notices of renewal and produce such notices when the court appointed manager told Al-Dabbas the Lease had not been renewed and was now a month-to-month tenancy. Al-Dabbas did not produce such notices of renewals to the court appointed manager. For example, on September 20, 2016, Al-Dabbas was asked to produce a copy of the renewal notices – yet he failed to do so. These notices were produced for the first time in Al-Dabbas’ May 24, 2017 affidavit. No credible or valid reason why these notices were not delivered earlier was offered by Al-Dabbas. This late delivery is very suspicious suggesting that these notices were not delivered or were prepared after the fact. The non-delivery is consistent with such notices not being located in the Landlord’s files, the statements made in subsequent correspondence by the court appointed managers, and the lack of early production by Al-Dabbas; and b) At least as early 2013, Al-Dabbas was told the Landlord would not renew the Lease because the Tenants were in default. The court appointed manager told him "you got to go out". The first written evidence of this is set out in a memorandum of the first manager dated January 17, 2013. This memorandum was relied on by the second court appointed manager in February 17, 2014 in his letter to Al-Dabbas. I am satisfied that Al-Dabbas received this letter. When asked why Al-Dabbas did not tell the court appointed manager that the month-to-month tenancy was wrong because he had exercised its option to renew for a Second Term for 5 years, Al-Dabbas did not have a credible answer, eventually saying that the month-to-month reference meant nothing to him since he had a Lease. At another point Al-Dabbas said that he did not have to write back to the court appointed manager. Al-Dabbas’ answers are inconsistent with him having delivered a written notice to renew for the Second Term.

[48] The Tenants state “there is no evidence whatsoever that the first renewal was not delivered to” the first manager. This ignores the fact that the onus is on the Tenants to prove the Lease was renewed for a Second Term.

[49] I am not prepared to speculate that, since the Tenants had been in possession since 1998, they would have exercised their renewal for the Second Term.

[50] For the reasons set out above, Al-Dabbas’ evidence, by itself, does not meet the onus on the Tenants to prove that written notices to renew the Lease for the Second Term had been complied with. I cannot conclude on the evidence before me, on the balance of probabilities that the Lease was renewed for the Second Term by the delivery of a written notice to renew in accordance with the terms of the Lease.

[51] I also cannot conclude that, by their conduct, the parties agreed to the renewal of the Lease for the Second Term. It is clear that the right of renewal was disputed by the Landlord prior to July 2013 and that dispute continued after the alleged renewal. There is no evidence which suggests that the Landlord, at any time, accepted or took steps consistent with the renewal of the Second Term.

[52] Accepting rent from the Tenants, by itself, is not sufficient to establish a renewal of the Second Term. All that proves is that some form of tenancy was created after the First Term expired.

[53] In any event, if necessary, I would have found that the Tenants were in breach of the Lease in 2013 (non payment of rent and other breaches set out below) and, by virtue of the terms of the Lease, any renewal notice would not have been effective. The evidence clearly establishes that many defaults under the Lease pre-date July 2013. Some of the specific defaults are set out in the court appointed manager's correspondence and below.

[54] I therefore conclude that the Lease was not renewed for a Second Term.

On what basis did the occupation continue after November 1, 2013?

[55] The Canadian Encyclopaedic Digest, online, provides the following statement of the law:

Where a tenant in possession of land under a lease for a year or a term of years holds over at the expiration of the term, with the landlord's consent or acquiescence, in the absence of an express agreement or circumstances from which a new agreement may properly be inferred, there is a renewal of the original lease, so far as its provisions are applicable, with the result that a new tenancy from year-to-year, with all the incidents of such a tenancy, is regarded as subsisting. This does not mean, however, that the tenant has the benefit of all the provisions of the expired lease, whether or not they are terms of the tenancy.

[56] In 1158161 Ontario Limited v. 2310125 Ontario Ltd., 2012 ONSC 820, the court stated at para. 15: “The relationship of landlord and tenant where a tenant over-holds following a term of years and pays rent which is accepted is presumptively a year-to-year tenancy unless there is evidence to displace the presumption.” and at para. 16: “An over-holding tenant on a year-to-year tenancy is entitled to 6 months’ notice of termination of the tenancy ending with a year of the tenancy.”

[57] The Tenants submit that, if there was no effective renewal for the Second Term, the tenancy continued on a yearly tenancy. I reject this conclusion.

[58] First, it is clear that there was an ongoing dispute between the Tenants and the first court appointed manager pre-dating the end of the First Term of the Lease and the court appointed manager alleged that the Lease could not be renewed because the Tenants were in default of the terms of the Lease. This is set out by the memorandum of the first court appointed manager dated January 17, 2013.

[59] Second, it is clear that the Landlord, through the court appointed manager considered the occupation to be a month-to-month tenancy. There was no response to the second manager’s letters of January 10 and February 17, 2014 disputing the alleged breaches, disputing the month-to-month tenancy or alleging a year-to-year tenancy. The Tenants have put forward no evidence, other than they believed they had renewed the Lease for the Second Term, that would support a year-to-year tenancy.

[60] If necessary, I would have found there was sufficient evidence to rebut the presumption of a yearly tenancy.

[61] I find there was a month to month tenancy after November 1, 2013.

[62] In any event, even if the tenancy had continued on a year-to-year basis, I am satisfied that the tenancy was terminated by the notice of termination delivered on May 31, 2016. The fact that the wrong amount was claimed by the Landlord as outstanding is irrelevant given that, for the reasons below, I find the Tenants were in breach of the Lease prior to and at the time of the notice of termination for non-payment under the Lease and for other breaches of the Lease. Those very same breaches continue to date.

[63] In any event, the delivery of this Notice of Application seeking a declaration that the tenancy is terminated would have provided sufficient notice of terminating any tenancy created after November 1, 2013.

[64] The Tenants' submission that the one year notice would commence on November 1, 2018 makes no sense in the circumstances of this case.

[65] The Tenants point to the fact that rent was paid and accepted after the May 31, 2016. This does not change the analysis. Payment and acceptance of rent, including during this litigation, simply provided a mechanism to maintain the status quo of the tenancy until judicial determination.

Was the tenancy terminated on July 31, 2016?

[66] If necessary, I would have found that the month to month tenancy created after November 1, 2013 was properly terminated by the notice of termination dated May 31, 2016 (terminating the tenancy as of July 31, 2016).

[67] I am satisfied the Tenants were in breach of various terms of the Lease in May 2016. In particular, the Tenants were in breach of their obligation to make the lease payments during the tenancy and there were significantly in arrears and various other breaches under in May 2016.

[68] It is noteworthy that Al-Dabbas did not respond to the May 31, 2016 notice of termination. Nor did the Tenants move out. The arrears continue. The breaches of the Lease continue.

[69] When the Tenants did nothing with respect to the May 2016 notice, a further notice to terminate was delivered on July 31, 2016 (to vacate the Lease Premises in 30 days). Again, there was no response by Al-Dabbas.

[70] I am satisfied that month to month the tenancy created after November 1, 2013, was terminated as early as July 31, 2016.

[71] The Tenants shall have until August 31, 2018 to vacate the Leased Premises and shall make all lease payments under the Lease until August 31, 2018. This court is prepared to fix that amount if necessary.

Outstanding Amounts under the Lease?

Non-Payment of Certain Lease Payments

[72] The Landlord claims that there were approximately 5 rent periods, during the court appointed manager period, where the Tenants did not make certain Lease payments. The Tenants deny this.

[73] The evidence of non-payment for these amounts is extremely weak:

a) Rafiq’s evidence, at its best, is that he did not find records for those payments - "he couldn't find these payments"; b) When asked whether the first manager ever told Rafiq that the Tenants were in arrears - Rafiq's answer was he "couldn't recall"; c) The second court appointed manager does not attest to there actually being any arrears in rent for these 5 payments by the Tenants at the end of the management period; and d) Al-Dabbas testifies that all rent was paid during this period. He produced bank cheque stubs. Rafiq’s response was that “anyone can prepare bank cheque stubs”.

[74] The onus is on the Landlord to prove non-payment on the balance of probabilities. It has failed to do so for these payments.

[75] If necessary, I would have accepted Al-Dabbas evidence that the four cheque stubs were evidence, consistent with the delivery of cheques for lease payments on those months.

What is payable under the tenancy subsequent to November 1, 2013?

[76] Having found that there was no renewal for the Second Term, the question arises as to what should be the lease payments for the period since November 1, 2013.

[77] I agree with the Landlord that the lease payment amounts set out in the Lease for the Second Term is the most reasonable basis for determining the Lease payments on the month to month tenancy after November 1, 2013:

a) The parties, who are at arm’s length, believed the rent increase of 5% annually was reasonable, and the fair market value, for the next 5 years of the Second Term; b) During cross-examination Al-Dabbas agreed that the rent was to increase 5% each year; and c) The Tenants sought to continue occupation based on the 5% increase annually because they sought the renewal for the Second Term based on the Lease and the lease payments provided therein.

[78] But to what does the 5% increase apply?

[79] The Lease specifically deals with 5% annual increase on the “rent”. The Tenants do not dispute this. The only issue was whether there was an increase in the TMI. The Landlord in its written submissions abandoned any claim to increases in the TMI after November 1, 2013.

The Court Appointed Managers

[80] The court raised the issue whether the Landlord is entitled (or has standing) to advance a claim for unpaid lease payments during the period of time that the Property was under a court appointed manager.

[81] The Tenants did not deal with this issue in their written submissions.

[82] The Landlords submit that since this was solely a "manager", the Property and therefore claims, entitlement and other rights remained with the Landlord. I agree. The court appointed managers (unlike receiver/managers) had limited rights - to manage the Property such as to collect rents, pay bills, make repairs. The Property did not vest to the court appointed manager. If the court appointed manager chose not to collect a payment, that does not deprive the Landlord the legal right to recover the payment from the party obligated to make the payment. This is similar to the situation where a manager of the business not collecting on an invoice. That doesn't deprive the business owner of its rights to collect on that invoice from the debtor.

What is Outstanding?

[83] What is outstanding under the Lease/tenancy?

[84] Having found that the Landlord failed to establish the Tenants did not make the 5 lease payments in 2011, the applicable calculations are found in Chart #5 of the Landlord’s written submissions:

a) Outstanding Lease Payments May 2011 – October 2011: $3,999.74; b) Outstanding Lease Payments November 2011 to October 2012: $1,606.44; c) Outstanding Lease Payments November 2012 to October 2013: $4,385.88; d) Outstanding Lease Payments November 2013 to October 2014: $6,876.17; e) Outstanding Lease Payments November 2014 to October 2015: $5,105.10; f) Outstanding Lease Payments November 2015 to October 2016: $7,850.65; g) Outstanding Lease Payments November 2016 to October 2017: $10,733.48; and h) Outstanding Lease Payments November 2017 to June 2018: $9,173.63.

TOTAL OUTSTANDING: $49,731.10

[85] I am satisfied that the amounts payable under the Lease, as set out in Chart #5 are correct.

[86] Al-Dabbas agreed that the statement in the evidence, which showed the amount he paid is correct. The amounts in the evidence are replicated in Chart #5.

[87] As a result, the amount payable under the Lease since 2011 can easily be determined.

[88] Some of the outstanding amounts arise because of the increase in HST from 5% to 8%. This is an obligation of the paying party – the Tenants. There was no serious dispute that the Tenants were obliged to pay the HST increase when it became effective.

[89] Having determined that the rent during the tenancy was to increase by 5% annually, it is clear that the above amounts are outstanding. There is no real dispute by the Tenant regarding the amounts shown as paid on Chart #5. Essentially, the Tenants failed to make the payments starting in May 2011 as set out in the Lease and then, after November 1, 2013 failed to increase the rent by 5% annually.

[90] Al-Dabbas’ testimony that he paid what he was asked is neither an answer at law (particularly given the demands by the court appointed managers) nor believable in light of the correspondence.

[91] While the Tenants submit that some of the arrears now claimed were the subject of the Toronto proceedings, no such claim for non-payment of rent was advanced in those proceedings. There was a prior proceeding in 2002 but that proceeding did not deal with arrears or breaches which are the subject of this Application.

[92] The Tenants owe $49,731.10 as of June 2018 for outstanding payments under the Lease.

Has and are the Tenants in Default of the Lease?

The Alterations to the Leased Premises

[93] The Lease requires the Tenants to obtain written consent of the Landlord for any improvements or alterations. The Tenants understood the need for the Landlords permission before making any alterations.

[94] The Tenants expanded the size of the office area, added a bathroom, moved the exterior overhead doorway and installed a window. This was done in approximately 2010 and 2011.

[95] The Tenants do not dispute they made these alterations to the Leased Premises.

[96] There is no dispute there was no written consent of the Landlord.

[97] In early 2014, the second court manager wrote to Al-Dabbas about the lack of the Landlord’s approval or a permit from the City of Mississauga.

[98] As for the Landlord’s consent, Al-Dabbas states he obtained the verbal approval of the Landlord. I reject Al-Dabbas’ evidence on this point. In any event, it matters not since the Landlord’s approval needed to be in writing under the Lease.

[99] The Tenants’ explanations that this was an improvement for its employees or improves the Lease Premises fails to deal with the fundamental issue – the Tenants were required to get the consent from the Landlord in writing. There is no evidence that the Tenants even tried to get the required written consent. All of Al-Dabbas’ explanations are a feeble attempt to justify yet another flagrant disregard for the terms of the Lease.

[100] Equally important, the alterations required a building permit. There is no dispute regarding this requirement. The City charged and convicted both the Landlord and the Tenants for making changes to the Leased Premises without a building permit. The Landlord was fined $6,260 to date for these unapproved alterations by the Tenants. The Tenants were fined.

[101] The City has since served a further Order to Comply. While the Tenants state they are in the process of obtaining the necessary building permit for the completed work, it has yet to be accomplished, if it will ever be approved. There continues to be the potential for further damages flowing from the Tenants’ breach of this term.

[102] The Tenants have breached the Lease by making alterations to the Leased Premises without the Landlord's written approval. The Tenants remain in breach of the Lease for these unauthorized alterations to the Leased Premises.

Debris and Lack of Cleanliness

[103] The Lease requires the Tenants to keep the Leased Premises in a reasonable state of repair and cleanliness.

[104] The Landlord submits that the Tenants have kept the rear of the Lease Premises like a “junkyard and toxic waste site”.

[105] The court appointed manager and the Landlord wrote to the Tenants to deal with this issue as early as 2014. Yet, the Tenants failed to respond to these concerns. The Tenants failed or refused to remedy the situation.

[106] The Landlord provides photographs in support of this allegation showing the deplorable condition of the rear of the Lease Premises which has continued since 2011.

[107] The photographs are compelling evidence that I accept which demonstrate showing the Tenants have kept the rear of the Leased Premises in a total and complete mess, with old auto parts and tires, garbage, and oil stains.

[108] I am satisfied that the Tenants have been and are in breach of the Lease in failing to maintain the Leased Premises in a reasonable state of repair and cleanliness.

The Oil Spill(s)

[109] The Landlord alleges that the Tenants have, since 2008, been spilling oil inside and onto the rear of the Leased Premises.

[110] I am not persuaded that the evidence establishes the long term pattern of oil spilling the Landlord alleges. However, there is sufficient evidence establishing that at times, over the past 5 years, oil has been spilled from the Leased Premises inside and onto the rear of the Lease Premises. The photographs in the evidence are clear proof of this fact.

[111] It is clear from the evidence there were oil spills caused or contributed to by the single walled oil tank and other Tenants’ business activities. One oil spill was inspected by the Ministry of the Environment.

[112] There is clear evidence from the second court manager that the rear tank was leaking in March 2015. There is also evidence that the Fire Marshall ordered the Tenants to remove the single walled oil tank and replace it with a double walled oil tank.

[113] I reject Al-Dabbas’ evidence that the oil spill photographed was caused by Rafiq or is of a minor nature. In this day and age, any significant environmental spill can have serious financial and quasi-criminal consequences. Oil spills impact property values and statutory requirements to clean up. Al-Dabbas’ approach to such matters is not in keeping with the times or the law.

[114] Al-Dabbas was told about the oil spill as early as June 2014 by the second manager. These concerns were set out in a letter of June 26, 2014. Yet, there is no evidence that Al-Dabbas took any steps to investigate or remediate the effects of the Tenants’ oil spill.

[115] The Tenants’ oil spills constitutes a continuing breach of the Lease.

Illegal Use of Premises

a) Use beyond permitted by the Lease

[116] The Lease states: “The Tenant may use Body Shop (Business Purpose)”.

[117] The Landlord claims that the Tenants are illegally using the Leased Premises because the Lease requires that the Leased Premises only be used for a "body shop" but the Tenants also use the Leased Premises for automobile repairs.

[118] The un-contradicted evidence is that the Tenants also offer automobile repair services not just related to the “auto body” business. The Tenants’ sign advertises for general auto mechanic services: “Oil Change, Mechanic & Tire, Brakes & Shocks, Tune Up & Exhaust”. In his last affidavit, Al-Dabbas admitted that he also performs “oil change, brakes & shocks, tune up and exhaust, painting and polishing” and “does some auto mechanic work”.

[119] On April 14, 2014 the second manager set out this alleged breach of the Lease in a letter to Al-Dabbas. Like other breaches, Al-Dabbas has simply ignored the issue. He continued to ignore the issue over the years regardless of who or when the issue was raised.

[120] I am satisfied the business carried on by the Tenants exceeds the scope of business set out in the Lease. I note that the Lease, including the limitation of the business which could be carried on at the Leased Premises, was prepared by Al-Dabbas.

[121] This is a continuing breach of the Lease by the Tenants.

b) Use not permitted by the City

[122] There is a further issue regarding the zoning for this unit – very specific to the Leased Premises rather than the Property as a whole. The zoning designation for the Leased Premises was cancelled in May 2013.

[123] The evidence of Mr. Dell on this issue makes little sense. He states that there is no zoning certificate for the Leased Premises, which means that no use is permitted by the City in the Leased Premises. The City’s zoning was cancelled on May 27, 2013. However, only the owner (i.e., the Landlord) or its designated agent (of whom none was authorized) can cancel the City’s zoning certificate.

[124] Mr. Dell also suggests there is no parking available to the Tenants. Clearly, this makes no sense to an ongoing business, one that has been operating out of the same location since 1998 - 30 years!

[125] I reject Rafiq’s evidence that this was done by the Tenants. It makes no sense that the Tenants would cancel the zoning which would prevent them from carrying on any business in the Leased Premises. Further, the affidavit of Nicholas Dell makes it clear that this cancellation of the zoning would have to be done by the “owner” or his agent. Since Rafiq denies authorizing any agent, this cancellation could only have been done by the Landlord.

[126] It makes no sense that the Tenants cancel its own zoning certificate and run the risk the City could shut down their business. One logical conclusion is that the Landlord, as part of this long bitter dispute, cancelled the zoning certificate for the Leased Premises to stop the Tenants’ continued operations in the Leased Premises.

[127] It is noteworthy that the City has not taken any steps for the past 5 years to stop or limit any business operations on the Leased Premises. If Mr. Dell is correct that no business is approved (because of the lack of zoning) to be operated at the Leased Premises, one would have expected that the City would have taken steps to enforce its own bylaws.

[128] The Landlord has not established that the Tenants are using the Leased Premises contrary to the City’s zoning requirements.

Refusing Entry to the Leased Premises

[129] On May 9, 2017, Justice Barnes ordered the Landlord to have entry into the Leased Premises for an inspection.

[130] Despite Justice Barnes’ order, the Tenants refused entry on a number of occasions. Eventually, the inspection was conducted.

What Damages has the Landlord Suffered as a result of the Tenants' Breaches?

[131] The Landlord seeks damages as follows:

a) Lease payment arrears of $67,811.10; b) Water bill arrears of $1,954.25; c) Estimated costs to investigate environmental issues of $27,317.75; d) Debris removal costs of $5,700; e) Fines paid to the City of Mississauga to date of $6,260; f) Costs thrown away for not permitting a court ordered inspection of $1,406.17.

Outstanding Lease payments to June 2018

[132] As determined above, the Tenants are in arrears in the amount of $49,731.10 as of June 2018. To be clear, as of the trial date, the June 2018 rent payment had not been paid and would remain payable to the Landlord.

Outstanding Water Bills

[133] There is no real dispute by the Tenants that there is outstanding $1,954.25 for Region of Peel Waste, Water and Storm water services provided to the Leased Premises as there is no documentary evidence to the contrary (such as bill invoices and payments). Exhibit 7 sets out the unpaid water bills for February and May 2018.

[134] There was a prior course of paying 1/4 of the Properties water bills until recently when separate meters were installed.

[135] The Tenants allege that all utility payments are up to date. However, again, Al-Dabbas fails to provide any details as to why this is so or evidence of payment.

Oil Spillage/Environmental Costs

[136] The Landlord seeks damages of $27,317.75 to “investigate the extent of the contamination of the soil, whether it is required to report it to the Ministry of the Environment, incur additional expense to remove the contaminated soil and/or clean up the pollution.” This amount has not yet been spent - it is simply a proposal from Orbit Engineering to investigate the soil conditions at the Property. Orbit's proposal does not conclude that there is oil underground. It simply seeks to investigate whether there is contamination in the soil of the Property and recommend how to deal with any contamination. This proposal does not state or conclude that the oil contamination, if any, came from the Leased Premises or that it came solely from the Leased Premises. There may be other contaminants unrelated to the Tenants' use or contaminants from other tenants.

[137] I agree with the Tenants that it is premature to assess whether any environmental damages (including assessment and possible remediation) were or are caused by the Tenants and to what extent, if any, are attributed to the Tenants' actions. It must be remembered the property consists of an auto plaza including one automotive service unit operated by or an entity related to the Landlord. The concern is that the landlord may be using the meagre evidence of an oil spill to foist the costs of investigation on the Tenants.

[138] I am not satisfied this court can determine the necessity of conducting the investigation, liability (or extent of liability) to the Tenants or the extent, if any, damage which flows from any oil contamination caused by the Tenants.

[139] I defer the issue of any liability or extent of any liability of the Tenants for oil spills/contamination (including the claimed cost of investigation) to be decided at the same time as the assessment of any damages for “oil" spills/contamination to a later date.

Debris Removal

[140] I will start by stating that I am satisfied the Tenants have kept the rear of the Leased Premises in what can only be described as a deplorable condition. There is debris everywhere. There are oil stains everywhere.

[141] The Landlord claims the cost of debris removal of $5,700. I am not prepared to accept this claim.

[142] First, there is a lack of evidence regarding the timing of the debris being present in 2016 just prior to the removal.

[143] Secondly, the invoice for the debris removal is dated November 2016 and refers to debris removal of “garbage from rear of building”. I am not satisfied that this expense relates solely to the debris removal required solely from the rear of the Leased Premises.

[144] The evidence falls short of establishing this claim for damages on a balance of probabilities.

Illegal Use of the Leased Premises

[145] No damages have been proven by the Landlord for the unauthorized use of the Leased Premises for other than a body shop.

[146] Similarly, even if the Tenants have operated a business contrary to the City's zoning bylaw, no damages have been proven by the Landlord for such illegal use.

Unapproved Alterations

[147] This breach has been an ongoing issue for many years. There has been considerable correspondence regarding this breach. Yet, the Tenants have not responded or taken any serious steps to deal with their blatant disregard for their breach of the Lease or their breach of the Building Code Act. The Tenants still do not have permits for the work they did on the Leased Premises.

[148] The Landlord was charged under the Provincial Offences Act because it was the owner of the Leased Premises and alterations had been done to the Leased Premises without a building permit.

[149] Clearly, the Landlords have suffered damages of $6,260, being the fine paid to the City of Mississauga arising from the charges to the Landlord as owner of the Property where unapproved, unpermitted alterations were made.

[150] The sole cause of the fine imposed is because of the actions of the Tenants. The only reason the Landlord faced the charges is because the Tenants made alterations to the Leased Premises without obtaining a building permit from the City of Mississauga.

[151] The Tenants' submission that the Landlord should have "plea bargained" for a lower fine is not a serious or credible defence to the fine paid.

[152] I accept this claim as damages suffered by the Landlord as a result of the Tenants' breach.

[153] As agreed, this court orders an assessment of any further damages, including arising from the new Orders to Comply dated March 29, 2018, suffered or to be suffered by the Tenants arising from the unapproved, unpermitted alterations made by the Tenants to the Leased Premises, including such damages as fines and any remedial actions to deal with such alterations.

Refusing Entry/Costs Thrown Away

[154] On May 9, 2017, Barnes J. Ordered that the Landlord permit access to the Leased Premises.

[155] The Landlord claims $1,406.17 being the costs associated with re-scheduling an inspection which had been ordered. The Landlord states that the Tenants cancelled on two occasions. On the third occasion, the Tenants allowed the inspector into the Leased Premises but not Rafiq.

[156] The Invoice is dated May 17, 2017 from Harper Dell & Associates. It is surprising that Nicholas Dell does not deal with this invoice in his affidavit or confirm that this was an expense incurred solely because access was denied to him/his company.

[157] The work described in the Invoice refers to “Retainer for Property Assessment Report”. I fail to see how this “connects” with the basis Rafiq advances this claim of damages.

[158] The work described in the Invoice also refers to the “analysis of deficiencies with respect to workplace cleanliness, health and safety, HVAC parameters, WSIB and fire code”. I fail to see how this invoice for work done “connects” to Rafiq’s allegation that this was an unnecessary expense because Al-Dabbas did not permit an inspection as per the court order.

[159] I am not satisfied the Landlord has proven this Invoice was incurred for “costs thrown away” rather than the costs of the inspection the Landlord wanted to perform for the purpose of establishing grounds to terminate the Lease.

Conclusion

[160] The court makes the following order:

a) A declaration that the Lease was not renewed for the Second Term; b) A declaration that the tenancy continued after November 1, 2013 on a month-to-month basis; c) A declaration that the Lease was terminated on July 31, 2016; d) An order that the Tenants vacate the Leased Premises on or before August 31, 2018 and shall make all lease payments under the Lease until August 31, 2018; e) An order that a writ of possession issue on or after September 1, 2018; f) Judgment against the Tenants for $57,945.35 being arrived at: $6,260 (fine levied under the Provincial Offences Act), $1,954.25 (outstanding water bill), and $49,731.10 (outstanding payments under the tenancy); and g) An order bifurcating the following issues to a continuation of this trial: i. Any further and future damages relating to the Tenants' unpermitted alterations described above to the Leased Premises; and ii. Any liability and damages arising from any environmental contamination caused by the Tenants' oil spill(s) at the Leased Premises.

Pre and Post Judgment Interest/Costs

[161] Any party seeking costs shall serve and file written submission on entitlement and quantum within two weeks of the release of these reasons. Written submissions shall be limited to 3 pages, with attached Costs Outline and any authorities.

[162] Any responding party shall have one week thereafter to serve and file responding submissions. Written submissions shall be limited to 3 pages with any authorities relied on attached.

[163] There shall be no reply submissions without leave.

[164] The written submissions are to include any claim for pre-judgment interest (including the dates from which such interest should apply) and the applicable rate of post-judgment interest.

Ricchetti, J. Date: July 18, 2018