Court File and Parties

COURT FILE NO.: CV-19-00615778-0000 DATE: 20190426 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 1938334 ONTARIO INC. Plaintiff

AND:

PRINCES GATES HOTEL LIMITED PARTNERSHIP, by its General Partners Princes Gates GP Inc. and ROTH TORONTO MANAGEMENT INC., Defendants

AND BETWEEN:

PRINCES GATES HOTEL LIMITED PARTNERSHIPS, by its General Partners Princes Gates GP Inc. and ROTH TORONTO MANAGEMENT INC., Plaintiffs by Counterclaim

AND:

1938334 ONTARIO INC., SPIROS PANTZIRIS and ESCAPE MANAGEMENT GROUP INC., Defendants by Counterclaim

BEFORE: Justice J. Wilson

COUNSEL: Emilio Bisceglia, for the Plaintiff/Defendants by Counterclaim Peter W.G. Carey and Paul E.F. Martin, for the Defendants/Plaintiffs by Counterclaim

HEARD: April 26, 2019

ENDORSEMENT

Overview

[1] This is a request for an urgent interlocutory injunction brought by the tenant Plaintiff running a Starbucks franchise at Hotel X at Exhibition Place in Toronto. The Defendants wish to terminate the tenancy. The Plaintiff seeks to restrain the Defendants from interfering with the use and occupation of the leased premises.

[2] The dispute is with respect to the use of an area referred to by the Plaintiff as the “Infrastructure Area”, and by the Defendant as the “Adjacent Kitchen”. I will simply refer to it as the Disputed Space.

[3] Starbucks entered into a lease with the Defendants on December 15, 2015 for a term of 10 years, with an option for a further 15 years. The leased premises are 1337 square feet defined on a site plan attached to the lease. The Disputed Space is estimated to be between 100 to 300 square feet, is not included in the red line diagram defining the leased premises. The architect and the contractor for Hotel X designed and built the Starbucks premises including the Disputed Space, and all plans were approved by the Defendants. The Plaintiffs have paid the Defendants approximately $260,000 for the construction costs of the premises, and the Disputed Space.

[4] There were significant delays in building Hotel X. The Plaintiff took possession of the premises and the Disputed Space and began operating in April 2018.

[5] I am satisfied that the Disputed Space contains essential infrastructure functions to allow the Plaintiff’s business to operate. The evidence is clear that without access to the Disputed Space, the Plaintiff must cease operations. The Plaintiff could conceivably close operations and rebuild the premises at significant cost.

[6] It was anticipated by the Plaintiff, that another tenant who would service the café lounge adjacent to the sports area would have shared access to the Disputed Space. According to the Plaintiff, the Defendants terminated the lease of this prospective tenant.

[7] There were also discussions between the parties, never committed to writing, about the Plaintiff expanding the area of operation to include food services to the large gym and sports area adjacent to the Disputed Space.

[8] In October 2018 the Defendants forwarded a draft agreement to the Plaintiff requiring full food service amenities beyond the scope of the Starbucks menu. The draft agreement was not signed, and no negotiations took place.

[9] The Defendants in this motion assert that access to the Disputed Space was conditional upon the Plaintiff entering into a further agreement to provide additional food services. The Plaintiff does not accept the position that there was an undertaking to enter into a further, and very significant agreement.

[10] Ultimatums were given by the Defendants who demanded that the tenancy be terminated as the Plaintiff was trespassing on the Disputed Space. Hence this motion brought by the Plaintiff.

[11] Cross-examinations have been conducted. The Plaintiff claims alternatively an interim, as well as an interlocutory injunction. Although this matter proceeded in haste the record is complete. It makes sense that I order an interlocutory injunction, rather than an interim injunction.

Conclusions

[12] I am satisfied, in spite of able submissions from counsel for the Defendants, that it is just and equitable for this interlocutory injunction to be granted.

[13] The three part test in R.J.R MacDonald v. Canada (A.G), [1994] 1 S.C.R. 311, has been amply met. In my view, in light of the compelling facts of this case, the Plaintiff has proved not simply that there is a serious issue to be tried, but further has proved a prima facie case.

[14] Further, the Plaintiff will suffer irreparable harm if it does not have access to the essential services located in the Disputed Space, as it cannot conduct its business, and the plaintiff cannot be fully compensated by a money judgment. Approval of any subsequent Starbuck’s location is dependent upon the success of the Plaintiff’s performance at Hotel X.

[15] Finally, the balance of convenience favours the granting of the injunction. Starbucks requires the Disputed Space to operate. There should however be reasonable terms imposed considering the balance of convenience as a condition of granting the interlocutory injunction. These include:

• The Plaintiff is prepared to agree to pay the same rent per square foot for the use of the Disputed Space pending a final determination of the case, without prejudice to the Defendants’ position requesting termination of the tenancy. Once the size of the Disputed Space is determined with accuracy, the Plaintiff shall pay, if requested, the amount of $50 per foot plus the additional rent confirmed in para. 4.3 of the December 15, 2015 Agreement. Payment of this additional sum is not to be used as evidence of a tenancy agreement with respect to the Disputed Space.
• The Plaintiff is prepared to share the Disputed Space with another tenant, and undertakes to act in good faith for an equitable sharing of that space. If the Disputed Space is shared with another tenant, there should be a fair allocation between the Plaintiff and a tenant of the costs for a shared arrangement for the use of the Disputed Space.

[16] In addition the Plaintiff has made the appropriate undertaking as to damages, if they are unsuccessful.

[17] Counsel agree that the next step would be a judicial pretrial/mediation.

[18] The issue that is the subject matter of this injunction is the major issue between the parties. Counsel agree to meet to try to streamline the issues. It makes sense to deal with all issues in this action including the delay claim raised by the Plaintiff and the Counterclaim by the Defendants, rather than deal with issues piecemeal.

[19] Counsel may contact me in two weeks to set up a judicial pretrial/mediation.

[20] The parties agree that this matter, if it is not resolved, should proceed in an expeditious fashion. Given all the affidavit material that is already prepared, it appears to make sense to use the summary trial procedure available to the parties under Rule 53.02(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, allowing affidavits to be used as evidence in a trial. For contested issues, there should of course be the right to cross-examine on any affidavit filed.

[21] Neither party made submissions for costs, although it was clear from my discussions with counsel what I was going to order.

[22] At this stage, I make no order as to costs. If the case is not resolved at the judicial pretrial/mediation the successful Plaintiff may make brief submissions as to costs, not to exceed 3 pages with an accompanying Bill of Costs. The Defendants will have the right to briefly respond, not to exceed 3 pages.

[23] I thank counsel for their submissions.

J. Wilson J Date: April 26, 2019