Court File and Parties

Court File No.: CV-18-407 Date: 2019-04-11 Superior Court of Justice - Ontario

Re: Mohamed Khatau carrying on business as MAK Enterprises, Applicant - and – Apra Development Inc., Respondent

Before: FRAGOMENI J.

Counsel: Christopher Crisman-Cox, for the Applicant Melisa Rupoli, for the Respondent

Heard: April 2, 2019

Endorsement

[1] The Applicant seeks the following relief:

1. That MAK be granted an extension of the order of Miller J. dated December 11, 2018, until it is able to complete the closing on the new premises it purchased conditionally, and to then transfer the property now on the premises of the Respondent, Apra Development Inc., to the new premises;
2. In the alternative, Apra should not be permitted to sell or otherwise dispose of any of the property until MAK is able to complete the closing on the new premises, which is scheduled to close on May 15, 2019.
3. In the further alternative, if an extension is not granted by the court, Apra can only sell the property at fair market value and should compensate MAK at fair market value.

[2] The consent order of Miller J. sets out the following:

THIS APPLICATION, made by Mohamed Khatau carrying on business as MAK Enterprises, was heard this day at 74 Woolwich Street, Guelph, Ontario.

ON READING the Consent of the Parties, and on hearing the submissions of the lawyer for the Applicant,

1. THIS COURT DECLARES that, on Monday, November 19, 2018, the Applicant Mohamed Khatau, carrying on business as MAK Enterprises (“MAK”) paid $17,797.50, inclusive of HST, in unpaid occupation rent for the 1.5 acres MAK currently occupies at 6990 Nashville Road in Vaughan, Ontario (the “Premises”), for the months of September, October, and November 2018. This payment was made by bank draft, payable to the Respondent Apra Development Inc. (“Apra”) and delivered to the offices of Davis Webb LLP;
2. THIS COURT DECLARES that, on Friday, December 7, 2018, MAK made payment to Apra for $8,500.00 plus HST for occupation rent of the Premises for the month of December 2018. This payment was delivered to the offices of Davis Webb LLP;
3. THIS COURT ORDERS that MAK shall pay the amounts of $8,500.00 plus HST per month, for occupation rent of the Premises, which amounts shall be due and payable on each of January 1, 2019, and February 1, 2019 and which shall be paid by bank draft to Apra Development Inc. and delivered to the offices of David Webb LLP;
4. THIS COURT ORDERS that MAK shall use its best efforts to remove all of its property from the Premises, by no later than February 28, 2019;
5. THIS COURT ORDERS that MAK shall vacate possession of the Premises by no later than 4:00 p.m. on February 28, 2019;
6. THIS COURT ORDERS that MAK SHALL HAVE ACCESS TO THE Premises and shall be able to operate its business without interference until 4:00 p.m. on February 28, 2019, or until MAK vacates the Premises, whichever is earlier;
7. THIS COURT ORDERS that, in the event MAK vacates possession of the Premises prior to February 28, 2019, MAK shall no longer be liable for any further monthly payments of rent, provided that it gives one month’s notice of its intention to vacate, meaning that it gives notice no later than one month prior to the due date of the next payment that follows its delivery of vacant possession of the Premises;
8. THIS COURT ORDERS that MAK shall receive a proportionate discount in occupation rent if it is able to vacate one-half acre of the Premises early, provided that it gives one month’s notice of its intention to vacate this one-half acre, meaning that it gives notice no later than one month prior to the due date of the next payment that follows its delivery of vacant possession of this one-half acre;
9. THIS COURT ORDERS that each Party shall bear its own costs of this Application, provided that MAK vacates the Premises by no later than 4:00 p.m. on February 28, 2019; and,
10. THIS COURT ORDERS that the balance of this Application, including any necessary submissions on costs, is adjourned to March 5, 2019.

Overview & Chronology of Events

[3] The Respondent, Apra Development Inc. (“Apra”), opposes the relief sought by the Applicant, Mohamed Khatau, carrying on business as MAK Enterprises (“MAK”), and requests that the Order of Miller J., dated December 11, 2018, be upheld and not amended or varied. The Order of Miller J. compelled MAK to vacate possession of the premises located at 6990 Nashville Road, Kleinburg, Ontario (“6990 Nashville Road” or the “Premises”), by no later than 4:00 p.m. on February 28, 2019.

[4] Apra submits that the test to amend or set aside an Order of the court, pursuant to rule 59.06 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, has not been met.

[5] Apra further requests that it be permitted to take steps to remove MAK’s property from the Premises and/or sell same immediately.

[6] Apra further requests that it be compensated for occupation rent, in the amount of $8,500 plus HST, up until the date on which MAK’s property is removed from 6990 Nashville Road and/or sold, and any costs incurred by Apra to remove and store the property.

[7] Apra further requests its costs of the motion on a full indemnity scale.

[8] Apra submits that MAK should not be provided with any extension of time to remain at the premises and to leave its property there. Apra argues that it provided MAK with sufficient time to vacate and remove its property from 6990 Nashville Road. Not only has MAK failed to vacate and remove its property from 6990 Nashville Road, it is now in breach of Miller J.’s Order, which required MAK to vacate the Premises by 4:00 p.m. on February 28, 2019.

Leasing 6990 Nashville Road

[9] Apra owns the lands located at 6990 Nashville Road. 6990 Nashville Road is composed of approximately 26.5 acres of land.

[10] In August 2016, MAK and RIN Enterprises (“RIN”) approached Apra Development with respect to leasing 1 acre of land at 6990 Nashville Road for the storage of property relating to their respective businesses. It was verbally agreed between MAK, RIN and Apra that MAK and RIN would lease 1 acre of land at 6990 Nashville Road.

[11] Sometime at the end of August 2016, MAK and RIN approached Apra with respect to leasing a further 0.5 acre of land at 6990 Nashville Road. As such, MAK, RIN and Apra entered into a verbal agreement for the lease of this further 0.5 acre of land at 6990 Nashville Road.

[12] At some point, MAK took over the whole of the 1.5 acres of land at 6990 Nashville Road from RIN. As a result, MAK became the exclusive tenant of Apra.

[13] It was always agreed between MAK, RIN and Apra that MAK and RIN would lease 6990 Nashville Road on a month-to-month basis. Apra asserts that never at any point was it conveyed to MAK and/or RIN that they could lease the Premises for 20 years.

Multiple Notices to Vacate

[14] In or around April 2017, Jaswinder Singh approached MAK, specifically Mr. Khatau, and advised him that the City of Vaughan took issue with the outside storage at 6990 Nashville Road and that, as such, MAK would have to vacate 6990 Nashville Road. As a result of these discussions, Mr. Khatau, on behalf of MAK, advised Apra that MAK would vacate 6990 Nashville Road by June 2017. Apra agreed to this.

[15] In June 2017, contrary to MAK’s assurances, MAK did not vacate 6990 Nashville Road, but instead approached Apra and advised that MAK required a further 0.5 acre of land for temporary use. MAK assured Apra that if this further 0.5 acre of land was leased to MAK, MAK would be in a position to get their affairs in order and vacate 6990 Nashville Road.

[16] Contrary to MAK’s further assurances, MAK did not vacate 6990 Nashville Road, but instead kept requesting extensions of time to remain at the property. Apra relied on these assurances to its detriment.

[17] Mr. Khatau signed a statement which was presented to him by Apra on or around July 28, 2017. In this statement, Apra advised as follows:

The City of Vaughan has ordered the closure of the 6990 Nashville Road, Kleinburg, Ontario parking site for all vehicles as of July 31, 2017.

this affects all vehicles for Apra Development Inc., all drivers, subcontractors, Owner Operators who would normally park at this site.

The order of the City of Vaughan is a law, which cannot be contracted out by any agreement between us. Unfortunately, this negatively impacts all of us and will cause inconvenience but as you know the law must be obeyed to avoid any further violations and we do not want you to face any further inconvenience, which may involve City of Vaughan enforcing the orders by towing away the vehicles parked in violation of the above said order.

[18] Mr. Khatau executed this document on behalf of MAK on July 28, 2017. MAK did not vacate 6990 Nashville Road after the execution of this statement.

[19] From July 28, 2017, onwards, Mr. Singh continued to remind MAK that it was required to vacate 6990 Nashville Road immediately. MAK continually assured Mr. Singh and Apra that it would vacate 6990 Nashville Road, but that it required further time to find a suitable location for their property. Apra relied on these assurances made by MAK and expected that MAK would vacate within a reasonable period of time.

[20] In July 2018, further to Apra blocking off MAK’s property in May 2018, MAK removed some of its property from half of an acre of land at 6990 Nashville Road. MAK advised Apra that it would be working to remove all of its property from 6990 Nashville Road.

[21] MAK did not vacate 6990 Nashville Road. As a result, Apra required MAK to sign an Undertaking to Vacate the Premises. The Undertaking to Vacate, as signed by Mr. Khatau, required MAK to vacate 6990 Nashville Road by August 31, 2018. MAK did not, and still has not, vacated 6990 Nashville Road.

[22] On July 6, 2018, the City of Vaughan issued a summons against Apra for using the lands for a use not permitted pursuant to its by-law dealing with the open storage of property, material, equipment or machinery: City of Vaughan, by-law No. 1-88, Zoning By-law (3 December 2018) (the “By-law”).

[23] The City of Vaughan requires compliance with the its By-laws at 6990 Nashville Road, failing which Apra will likely be subject to further prosecutions. Any further prosecution could include a request by the City of Vaughan for a Prohibition Order pursuant to s. 431 of the Municipal Act, 2001, S.O. 2001, c. 25.

Miller J.’s Consent Order

[24] MAK did not vacate 6990 Nashville Road by August 31, 2018. As a result, a Notice of Termination was posted at 6990 Nashville Road, specifically on MAK’s property, on October 11, 2018.

[25] The Notice of Termination provided MAK until October 31, 2018 to remove its property from 6990 Nashville Road. MAK did not vacate or remove its property from 6990 Nashville Road by October 31, 2018. Instead, MAK commenced this Application.

[26] As a result of being served with this Application, counsel for Apra, Melisa Rupoli, entered into negotiations with counsel for MAK, Christopher Crisman-Cox, to come to what Apra believed would be a full and final settlement of the matter.

[27] As a result of these negotiations, Miller J. issued a consent Order. The Order required MAK to vacate 6990 Nashville Road and remove its property from same by 4:00 p.m. on February 28, 2019.

MAK Fails to Comply with Miller J.’s Order

[28] MAK did not vacate 6990 Nashville Road, nor did MAK remove its property from 6990 Nashville Road by 4:00 p.m. on February 28, 2019. As a result, MAK is in breach of Miller J.’s Order.

[29] MAK’s property remains at 6990 Nashville Road.

Position of MAK

[30] MAK relies on rule 59.06(2) (a) and (d) of the Rules of Civil Procedure to vary Miller J.’s Order. MAK acknowledges that the court has discretion to vary the Order and should exercise that discretion in the interests of justice.

[31] MAK submits that the interests of justice favour an extension as requested by MAK. The 30 trailers and 25,000 drums on Apra’s property have a value of $650,000. The use of these items is how Mr. Khatau earns his livelihood through MAK. If these items are sold it will devastate his business.

[32] MAK has paid the $8,500 rent ordered by Miller J., and as such there is no detriment or prejudice to Apra.

[33] Further, despite the fact that the City of Vaughan is prosecuting Apra, no immediate action is being taken, so any further time will not be a problem for Apra vis-à-vis the prosecution.

[34] MAK has attempted since April 2017 to seek out other premises for these items, but until now has been unsuccessful.

[35] MAK has now entered into a Conditional Agreement of Purchase and Sale of new premises with a closing date of May 15, 2019. At paras. 38 to 43 of his Affidavit sworn February 28, 2019, Mr. Khatau deposes the following:

Finally, I was able to enter into an Agreement of Purchase and Sale (the “Purchase Agreement”) for a new location, at 367 #5 Highway West in Hamilton. My offer was accepted by the seller on January 25, 2019. I attach a copy of the Purchase Agreement, minus the various schedules, to this my Affidavit as Exhibit “J”. I will refer to this new location as the “New Premises”.

As set out in the Purchase Agreement, the closing date is set to be no later than May 15, 2019. However, closing should be able to happen well before then. The Purchase Agreement is conditional on me securing financing. A decision on this should be reached soon, as it has already been a month since the execution of the Purchase Agreement.

Through my real estate lawyer, I have made inquiries regarding the zoning of the New Premises, and believe that MAK should be able to carry on its business on the New Premises.

There is also an environmental assessment being done, and this should hopefully be completed soon as well. Once closing is complete, then I would only need to transfer my trucks and drums from the Current Premises to the New Premises.

I now have a clear path to removing MAK’s property from the Current Premises. I just need some more time. I have been diligently engaging in good faith efforts to find a new location, and have now found one.

I am concerned for the security of MAK’s property which remains on the Current Premises. I use this property to run my business, from which I earn my livelihood. I will remove MAK’s property from the Current Premises, but I seeking some form of assurance that my property will not be placed in jeopardy in the meantime.

Position of Apra

[36] Apra submits that it has provided MAK with sufficient notice to vacate and remove its property, and MAK is now trespassing on the lands at 6990 Nashville Road.

[37] Apra asserts that contrary to MAK’s submissions, allowing MAK to continue to remain at the Premises and to store its property there would be contrary to the interests of justice, as it would have extreme consequence and would prejudice Apra, especially in light of the ongoing prosecution of Apra by the City of Vaughan.

Analysis & Conclusion

[38] I agree with Apra’s position. The history and chronology of the events leading up to this motion support Apra’s position.

[39] The first notice to MAK to vacate is in April 2017; two years ago. The reasons for the notice were made known to MAK. MAK did not vacate, contrary to assurances it would. From that time until July 2018, MAK advised that it would be working toward removing all of its property, and it did not remove it.

[40] In his Affidavit sworn March 26, 2019, Mr. Singh states the following, at paras. 22–26:

In July of 2018, MAK removed some of its property from 0.5 of an acre of land at 6990 Nashville Road. MAK advised Apra Development that it would be working to remove all of its property from 6990 Nashville Road. As a result of the reduction in space that MAK was leasing at the Premises, MAK’s rent payment decreased to $5,932.50 (inclusive of HST). Contrary to MAK’s assurances, it still did not vacate 6990 Nashville Road.

Since MAK refused to vacate 6990 Nashville Road, and Apra Development wanted MAK to acknowledge that obligation in writing, Apra Development requested that MAK sign an Undertaking to Vacate the Premises. This Undertaking to Vacate is attached at Exhibit “C” of Mr. Khatau’s Affidavit, sworn February 28, 2019.

The Undertaking to Vacate, as signed by Mr. Khatau, required MAK to vacate 6990 Nashville Road by August 31, 2018. The Undertaking to Vacate clearly stated that if MAK did not remove all of their property located at 6990 Nashville Road by August 31, 2018, that Apra Development would be entitled to obtain a writ of possession, lock MAK out without further notice, and have all of MAK’s property removed at MAK’s expense. MAK did not, and still has not, vacated 6990 Nashville Road.

On July 6, 2018, the City of Vaughan issued a summons against Apra Development for using lands for a use not permitted pursuant to Section 8.2 of the City of Vaughan Zoning By-law 1-88 as amended, namely to keep open storage of property, material, equipment or machinery (the “By-law”). A copy of the Summons is attached at Exhibit “C” to this Affidavit. This prosecution of Apra Development by the City of Vaughan is ongoing.

I am advised by Apra Development’s lawyer, Melisa Rupoli (“Ms. Rupoli”), that the City of Vaughan Prosecutor, Cornelius Gabriel (“Mr. Gabriel”), has advised that the City of Vaughan requires compliance with the City of Vaughan’s By-laws at 6990 Nashville Road, failing which, Apra Development will likely be subject to further prosecutions. Apra Development understands from Ms. Rupoli that any further prosecution could include a request by the City of Vaughan, for a Prohibition Order pursuant to Section 431 of the Municipal Act, S.O. 2001.

[41] MAK did not vacate by August 31, 2018, as per their undertaking, so Apra posted a Notice of Termination at 6990 Nashville Road on MAK’s property. This notice provided MAK until October 31, 2018.

[42] On December 11, 2018, Miller J. signed the consent Order. The terms of this Order were made with MAK’s consent. In Clatney v. Quinn Thiele Mineault Grodski LLP, 2016 ONCA 377, 131 O.R. (3d) 511, at para. 57:

Courts are, with good reason, cautious about setting aside orders, particularly those made on consent. Finality is important in litigation. And when dealing with a consent order, the objective that parties be held to their agreements is also an important consideration.

[43] MAK submits that it has now put forward a practical solution which should be endorsed by the court. However, the difficulty with this practical solution is that it has no certainty. The conditional APS was executed on January 25, 2019. MAK has yet to comply with the financing condition. MAK advises that one-half of the financing has been secured. There is no indication from Mr. Khatau when the environmental assessment will be completed. There is no evidence from the environmental assessment department as to what has been done to date and when completion may be expected. Counsel for MAK advises that it would take up to 12 weeks to move the items from the property after completion of the APS.

[44] I am satisfied that MAK has had numerous notices over a lengthy period of time to remove its property from Apra’s premises. This matter has gone on far too long. Further, on December 11, 2018, MAK agreed to the February 28, 2019, timeline as set out in Miller J.’s Order.

[45] I am satisfied that the interests of justice favour Apra’s position.

[46] Order to issue as follows:

1. That MAK shall remove its property from Apra’s premises on or before April 30, 2019;
2. In the event that the property is not removed from Apra’s premises by April 30, 2019, Apra shall be permitted to take steps to remove MAK’s property from Apra’s premises and/or to sell same;
3. MAK shall continue to compensate Apra for occupation rent up in the sum of $8,500 plus H.S.T. until the date MAK removes its property or Apra either stores or sells the property. MAK will be responsible for any costs incurred by Apra to remove and store the property.
4. In the event that it is necessary for Apra to sell the property, it shall make its best effort to realize fair market value for any of the items sold.
5. Apra shall serve and file its written submissions on costs of the motion and the application within 20 days. MAK shall serve and file its response within 20 days. Apra shall serve and file any reply within 10 days.

FRAGOMENI J.

DATE: April 11, 2019