COURT FILE NO.: CV-18-601997 DATE: 20190619

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

1548 Richmond Manor Inc. Applicant – and – Fido Solutions Inc. and Rogers Communications Inc. Respondents

Counsel: David Bleiwas, for the Applicant Matthew Urback, for the Respondents

HEARD: May 31, 2019

Nishikawa J.

Overview

[1] In this Application, the Applicant, 1548 Richmond Manor Inc. (the “Landlord”), seeks a declaration that a lease agreement that it entered into with a predecessor of the Respondents, Rogers Communications Inc. and Fido Solutions Inc. (together, the “Tenant”), was properly terminated on May 31, 2017. The Landlord also seeks, among other relief, a mandatory order requiring the Respondents to remove a cellular tower and related equipment from the leased land by a certain date.

[2] The Tenant brings a motion for an order, in the event that the Landlord’s Application is granted, allowing the Facility to remain on the leased land until July 31, 2020.

[3] The Application was originally commenced in July 2018 on an expedited basis. However, the hearing was adjourned twice by the Applicant. Cross-examinations on the affidavits were conducted by written questions and answers.

[4] For the reasons that follow, I grant the Landlord’s Application. The Tenant’s motion is dismissed.

Facts

The Parties

[5] The Landlord is engaged in the business of real estate development with certain affiliated companies under the business name “Z-Group.” The Landlord was the registered owner of a parcel of land described in PIN 08209-0164 (LT) in the City of London, Ontario (the “Property”). [^1] The affiliated companies own parcels of land adjacent to the Property.

[6] The Respondent, Rogers Communications Inc., is the owner and directing mind of the Respondent, Fido Solutions Inc.

The Lease Agreement and Extensions

[7] The Landlord entered into a lease agreement dated July 27, 1998 (the “Lease”) with Microcell Connexions Inc. (“Microcell”), the predecessor of Fido Solutions Inc. The Lease covered a portion of the Property designated as Part 1 on a survey prepared around the same time (the “Leased Land”). The Lease term was five years ending on July 31, 2003, but could be extended for three further five-year terms. The rent was initially $10,000.00 per year before tax.

[8] The Lease Agreement permitted Microcell to erect a cell tower and install related equipment (the “Facility”) on the Leased Land. An underground fibre optic cable runs north from Exeter Road through the Property to the cellular tower and a hydro feed runs east through the Leased Land to the cellular tower. Neither of the parties nor the City of London (the “City”) were able to provide documentation regarding the City’s approval of the Facility, if any, when it was first erected.

[9] The Lease contains a termination clause which allows the Landlord to terminate the Lease. Section 15.2 of the Lease (the “Termination Provision”) provides:

TERMINATION 15.1 Should the operation of the Facility become illegal due to any judicial, governmental or regulatory orders or regulations, the Lease shall forthwith be suspended and the Lessee shall comply with the terms of such order or regulation. 15.2 In the event that the Lessor has a bona fide intention to develop part or all of the Property to the extent that the operation of the Facility is no longer feasible, the Lessor may terminate the Lease on one (1) year prior written notice. This provision shall not be applicable during the first ten (10) years from the Commencement Date of the term of the Lease.

[10] The initial ten-year restriction on terminating the Lease ended on July 31, 2008. Section 16 of the Lease requires that the Tenant remove its equipment from the Leased Land within 60 days after termination and “restore the Property in a good and workmanlike manner.”

[11] On August 21, 1998, the Landlord and Microcell entered into an amending agreement (the “Amendment”) to change, among other things, the square footage of the Leased Land. The yearly rent was also increased to $12,000.00 per year.

[12] On June 13, 2003, the Landlord and Microcell entered into a Lease Extending and Amending Agreement, which extended the term of the Lease for a period of five years ending on July 31, 2008 (the “First Extension”). A second Lease Extending and Amending Agreement was entered into on April 28, 2008, extending the Lease term to July 31, 2013 (the “Second Extension”). Under the Second Extension, the annual rent started at $14,760.00.

[13] Under the First and Second Extensions, the Tenant was granted additional five-year options to extend the term of the Lease. If the options were exercised, the Lease could be extended up until July 31, 2028.

[14] When the parties negotiated the Second Extension, the Tenant sought an extension of the restriction on the Landlord’s ability to terminate the Lease to 20 years. As indicated by a handwritten change to the Second Extension, the Landlord agreed to extend the period to 15 years, which would end on July 31, 2013.

[15] On March 23, 2009, the Tenant registered an Application for Registration of Notice of Lease on title to the Property. In this Application, the Landlord also seeks to have this Notice deleted from title.

The Plan to Develop the Property

[16] Around March 23, 2015, the Landlord and Z-Group submitted a Notice of Application for Approval of a Draft Plan of Subdivision to the City to develop all of the Property together with adjoining lands (the “Draft Plan”). In the Draft Plan, the Leased Land is designated as “Open Space (OS5) Zone” (the “Open Space”). The purpose of the Open Space land is “to permit conservation lands, conservation works, passive recreation uses which includes hiking trails and multi-use pathways, and managed woodlots.” In his affidavit, Lou Pompilii, Manager, Development Planning at the City, states that the Open Space will be planted with trees as part of an ecological restoration of the area.

[17] Pursuant to s. 2.1 of the City’s Parkland Conveyance and Levy By-Law (the “By-Law”), as a condition of development of land within the City, the owner of such land “shall, at the request of the [City], convey to it for use for park or other public recreational purposes” a certain amount of land. Under s. 2.1.3 of the By-Law, the City retains the right not to accept the conveyance of land that is not considered suitable or required for park or recreation purposes because of, among other things, hazards or encumbrances that would restrict the City’s use of the land. Section 2.2 states that where the City “does not request the Owner to convey land, the Owner shall pay money to the Corporation in lieu of such conveyance to the prevailing value of the land otherwise required to be conveyed under section 2.1…[.]”

[18] Section 6 of the City’s Telecommunications Facilities Consultation Policy (the “Telecommunications Policy”) contains site location guidelines, which state that “new commercial towers or antennas are greatly discouraged within 120 metres of any Residential Zone or elementary or secondary school, unless required for engineering or network purposes.” It is undisputed that the Telecommunications Policy applies to new installations.

[19] On January 27, 2017, the City sent the Landlord a Notice of Approval of Draft Plan (the “Notice of Approval”), subject to certain amendments and conditions. Condition 23 states that the “Owner shall convey [certain blocks] as the required 5% parkland dedication for this plan of subdivision….” The designated blocks included the Leased Land. Condition 138 states that the “Owner shall decommission any abandoned infrastructure, (eg. water irrigation, communication tower, lights, etc.) at no cost to the City… all to the specifications and satisfaction of the City.”

[20] The City’s Notice of Approval attached a draft standard subdivision agreement, which the Landlord will enter into with the City prior to conveyance of the subject lands (the “Draft Subdivision Agreement”). Section 13.3 of the Draft Subdivision Agreement requires that the Owner convey the lands required for parkland dedication under the By-Law “free from all encumbrances, liens and charges to the satisfaction of the City Solicitor.”

Termination of the Lease

[21] On May 25, 2016, the Landlord delivered a letter to the Tenant giving notice of its intention to develop all or part of the Property, as a result of which the continued operation of the equipment on the Property was no longer feasible (the “Termination Notice”). The Lease was to be terminated effective May 31, 2017. Pursuant to s. 16 of the Lease, the Facility ought to have been removed by July 30, 2017.

[22] On August 19, 2016, the Tenant delivered a letter to the Landlord disputing the Landlord’s right to terminate the Lease. The Tenant requested documentation to support the Termination Notice, including the Draft Plan, but none were provided.

[23] In October 2016, the Tenant sent an email to the City, stating its position that the Landlord did not have authority to terminate the Lease because, according to the Draft Plan, the Facility was located within the Open Space area and the operation of the Facility remained feasible. The City responded, copying the City Solicitor’s Office, stating “further discussion will need to occur with our Legal Department.” The City had previously advised the Tenant that if the City took ownership of the Leased Land, it would terminate the Lease.

[24] On August 1, 2017, the Tenant paid $17,941.69 in annual rent to the Landlord for the period of August 1, 2017 to July 31, 2018. The payment was inadvertently accepted by the Landlord’s accounting clerk.

[25] On April 9, 2018, the Landlord’s solicitors sent a letter to the Tenant reiterating that the Lease was terminated effective May 31, 2017, and demanding removal of the cell tower and related equipment.

[26] Despite the Landlord’s position that the Lease had been terminated, on May 23, 2018, the Tenant sent a letter to the Landlord exercising an option to extend the Lease term for a period of five years commencing on August 1, 2018. The Tenant also indicated that it wanted to discuss the addition of two five-year extensions, commencing on August 1, 2028.

[27] On June 28, 2018, the Landlord’s solicitors sent a letter reiterating that the Lease had been terminated and demanding removal of the Facility. The letter clarified that the rent cheque had been “inadvertently accepted” and that the Landlord’s did not consent to the Tenant’s overholding. The letter further stated that the plan of subdivision would be registered shortly and that “the City has advised us that its position is that the Tenant’s equipment cannot remain on the Premises and the Notice of Lease represents an encumbrance which must be removed.”

[28] On July 17, 2018, the Landlord’s solicitors sent an email to the Tenant’s in-house counsel reiterating the Landlord’s position and advising that the operation of the Facility was no longer feasible.

[29] On July 18, 2018, the Landlord delivered a second notice of termination (the “Second Termination Notice”), without prejudice to its rights under the first Termination Notice. The Notice stated that the “overholding tenancy” would end on May 31, 2019.

[30] The Landlord maintains that the operation of the Facility is no longer feasible because of the City’s conditions, and because the Facility and associated underground cables interfere with the planned development of the Leased Land for public and municipal use. The Landlord’s evidence is that levelling and grading is taking place on the Property, and excavation for sewers and utilities is imminent. Not surprisingly, the parties differ in their views as to the progress of the development and the extent to which this has been impeded by the continued presence of the Facility and underground cables.

Issues

[31] The issues in this Application are as follows:

(i) Was the Landlord entitled to terminate pursuant to section 15.2 of the Lease? (ii) If so, when was the termination effective? (iii) Is the Tenant entitled to relief from forfeiture?

Analysis

Was the Landlord Entitled to Terminate the Lease?

The Principles of Contract Interpretation

[32] The parties agree that the issue of whether the Landlord was entitled to terminate the Lease turns on the interpretation of the word “feasible” in section 15.2 of the Lease, which permits the Landlord to terminate the Lease in the event that it “has a bona fide intention to develop part or all of the Property to the extent that the operation of the Facility is no longer feasible…[.]” The Tenant does not dispute that the Landlord has a bona fide intention to develop the Property.

[33] The Supreme Court of Canada has observed that the courts’ approach to contract interpretation “has evolved towards a practical, common-sense approach not dominated by technical rules of construction”: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, at para. 47. The primary object of contract interpretation is to give effect to the intention of the parties at the time of contract formation: Bhasin v. Hrynew, 2014 SCC 71, at para. 45. The “intent of the parties and the scope of their understanding,” is determined by reading a contract “as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract”: Sattva Capital, at para. 47.

[34] Similarly, in The Plan Group v. Bell Canada, 2009 ONCA 548, at para. 37, the Court of Appeal held that a commercial contract should be interpreted: (i) as a whole, by giving meaning to all the terms of a contract to avoid an interpretation that would render any term ineffective; (ii) by determining the intention of the parties with reference to the words used in the contract; (iii) with regard to objective evidence of the factual matrix underlying the negotiation of the contract, but without reference to subjective intention; and (iv) to the extent that there is any ambiguity in the contract, in a fashion that accords with sound commercial principles and good business sense and that avoids a commercial absurdity. See also Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205, at para. 24.

The Proper Interpretation of the Termination Provision

[35] The word “feasible” is not defined in the Lease. The parties rely upon differing dictionary definitions of “feasible” to support their respective positions.

[36] The Landlord relies upon the Oxford Dictionary’s definition of feasible as “possible and practical to do easily or conveniently.”

[37] The Tenant submits that the “easily and conveniently” portion of the definition is an “outlier.” In support of this position, the Tenant puts forward the Cambridge English Dictionary’s definition of feasible as “able to be made, done, or achieved” or “possible, reasonable or likely”; the Merriam-Webster Dictionary’s definition of feasible as “capable of being done or carried out”; and the Collins English Dictionary’s definition of feasible as “able to be done or put into effect; possible.” In reliance on these definitions, the Tenant argues that the Landlord must demonstrate that the operation of the Facility is impossible or incapable by reason of the proposed development.

[38] The fact that there are slightly differing definitions of feasible does not render the Termination Provision ambiguous. The “court should not strain to create an ambiguity where none exists: Amberber v. IBM Canada Ltd., 2018 ONCA 571, at paras. 62-63, quoting Chilton v. Co-operators General Insurance Co. (1997), 32 O.R. (3d) 161 (C.A.), at p. 169.

[39] Giving the words “no longer feasible” their ordinary, grammatical meaning, I find that the word “feasible” implies an element of reasonableness or practicability, as indicated by both the Oxford and Cambridge definitions above. Ordinarily, when considering feasibility, the assessment involves more than whether something is possible or impossible and includes a consideration of whether it is viable or workable. In my view, the words “no longer feasible” in the Termination Provision are not synonymous with impossible.

[40] Interpreting the Termination Provision to require the Landlord to demonstrate that its intention to develop the Property renders the continued existence of the Facility impossible would set the threshold too high. If the parties had intended to permit the Facility to operate unless the Landlord’s intention to develop the Property rendered it no longer possible, the Termination Provision would have stated “impossible” or “no longer possible”. In fact, section 20 of the Lease permits the Tenant to terminate if, in the opinion of the Lessee, the operation of the Facility: becomes commercially impractical; loses of a material degree of functionality; or becomes “impossible by reason of governmental decision, law, order or regulation[.]” The use of the word “impossible” in section 20 supports the view that if the Termination Provision intended to preclude the Landlord from terminating unless the operation of the Facility was impossible, it would have stated so.

[41] The Tenant submits that the Termination Provision could have stated “no longer desirable” or “no longer preferable” if it meant to permit the Landlord to terminate for anything less than impossibility. However, such language would mean that the Landlord could terminate based purely on its own subjective desire, without any requirement that the continued existence of the Facility be rendered impracticable. This is not likely to have provided the Tenant sufficient certainty as to the circumstances in which the Landlord could terminate, and is not consistent with the parties’ intent.

[42] As the principles of contract interpretation stipulate, the proper interpretation of the Termination Provision does not turn solely upon the dictionary definition of “feasible.” The word must be interpreted in the context of the provision and the Lease as a whole, having regard to the objective intention of the parties and the factual matrix.

[43] The purpose of the Lease is to grant the Tenant the right to install and operate the Facility on the Leased Land, which was a portion of the Landlord’s Property. The Termination Provision requires a year’s notice for the Landlord to terminate the Lease, and could not be invoked for the first ten years. This supports the Tenant’s position that the installation of the Facility was a significant undertaking, and that it would need significant advance notice of termination to remove and relocate it. By contrast, the Tenant’s ability to terminate the Lease is not subject to the same notice period or restriction. Pursuant to section 20 of the Lease, the Tenant is able to terminate on ninety days’ notice and payment of a cancellation fee, in the event that the Leased Land is, in certain circumstances, rendered unsuitable to the Tenant.

[44] The Landlord submits that, given the nature of its business, it should have been evident to the Tenant from the outset that the Property would eventually be developed. The Tenant relies upon the use of the words “in the event that the lessor has a bona fide intention to develop” (emphasis added) in the Termination Provision to argue that development was not a certainty. The parties provided little objective evidence of the circumstances surrounding the negotiation of the Lease.

[45] Irrespective of whether it was evident that the Property would be developed in the near future, the Lease terms do not support an interpretation that would permit the Facility to remain in perpetuity or even indefinitely. The Lease does not provide for a lengthy term such as 50, or even 20, years. Rather, the Lease term is five years, renewable in five-year increments to a maximum of 20 years. Because the term is only five years, which could be extended, the Landlord would be able to consider before the end of each term whether it would continue to lease the land. While the Landlord was prohibited from terminating the Lease during the first ten years, after that period, the Landlord was not obligated to renew the Lease. There was thus no certainty that the Lease would be extended. In addition, when the parties entered into the Second Extension, the restriction on the Landlord’s ability to terminate the Lease was extended to 15 years, and not 20 years as the Tenant had initially requested. This demonstrates that the Lease did not grant the Tenant any entitlement to extend the Lease beyond what was specifically provided for in the Lease.

[46] As I have found that the Termination Clause is not ambiguous, the principle of contra proferentem, relied upon by both parties, does not apply. That principle applies when the other rules of construction fail to ascertain the meaning of the contract, and when the party seeking to rely on the principle had no opportunity to modify the wording of the contract: 1299746 Ontario Inc. v. 784481 Ontario Inc. (2011), 14 R.P.R. (5th) 249 (Ont. S.C.), at paras. 45-46. In any event, it is unclear from the evidence which party drafted the Lease.

Was the Operation of the Facility No Longer Feasible?

[47] Relying on its definition of “no longer feasible” as “no longer possible”, the Tenant further submits that the Landlord cannot demonstrate that the operation of the Facility is no longer possible for the following reasons:

under the By-Law, the City may accept cash instead of land;
the By-Law does not require that the land be conveyed free from all encumbrances;
the City’s Notice of Approval does not require the removal of the Facility;
the Telecommunications Policy applies only to applications for new cellular towers, and does not apply to existing structures; and
the City’s expressed preference regarding the Open Space is not sufficient to render the operation of the Facility “no longer feasible.”

[48] Interpreting the Termination Provision in a manner consistent with the words used and the Lease as a whole, I find that the Landlord has demonstrated that it has a bona fide intention to develop the Property to the extent that the operation of the Facility is no longer feasible.

[49] Section 2.1 of the By-Law requires, in exchange for approval of a development plan, the conveyance of land for public space. In this case, the City has identified which blocks of the Property are to be conveyed for the parkland dedication, including the Leased Land, in Condition 23. Under s. 2.1.3, the City can refuse to accept the land due to, among other things, the existence of encumbrances. Since the City can refused land that is encumbered, it is implicit that it can require that land be delivered free and clear of all encumbrances. The fact that the By-Law itself does not specifically state that such land must be conveyed free and clear from all encumbrances does not mean that the City cannot make this a condition of approval. This is what the City has required in Condition 138; the decommissioning of abandoned infrastructure to the City’s satisfaction. While the By-Law requires an owner to pay money where the land is refused, the City is not required to accept money instead of land. The City is not constrained to do only that which the By-Law requires.

[50] The evidence of Mr. Pompilii is consistent with this interpretation of the By-Law. The City plans to use the Open Space for ecological restoration and recreational use. Mr. Pompilii states that the City requires that it obtain title to parkland free and clear of all encumbrances, liens, and charges, and that the “City will require that the Lease must be terminated and the cell tower and equipment must be removed as soon as possible.”

[51] Moreover, while the draft Subdivision Agreement is not yet binding, it is a standard form to which developers are required to agree. In response to questions on cross-examination, Mr. Pompilii stated that “the standard subdivision agreement which the developer… will have to enter into with the City of London prior to conveyance of the subject lands contains a clause which requires the developer to convey the lands free from encumbrances. In my view, this would include the cellular tower and the related Notice of Lease registered on title.”

[52] The Telecommunications Policy, which applies to new telecommunication facilities and was not in place when the Facility was installed, does not apply to the Facility. However, as Mr. Pompilii states, the principles are relevant to the City’s consideration of whether the Facility would be permitted to remain on the Property.

[53] As determined above, the Termination Provision does not require that the continued operation of the Facility be rendered impossible. It is not necessary for the Landlord to demonstrate that the removal of the Facility was required by law. The Tenant argues that because the City’s conditions are not actual requirements under the By-Law, but merely exercises in discretion, the Landlord has options, such as paying cash to the City, or conveying a different portion of the Property. However, it is precisely because the City has discretion that the Landlord is not in a position to require that the City accept cash or a different parcel of property. Moreover, the Landlord cannot compel the City to accept the Leased Land encumbered with the Facility and the Notice of Lease. This would lead to an unworkable situation for the City if this were possible for every development plan.

[54] For the Termination Provision to be available to the Landlord, it is sufficient that the City has advised that it will not accept the conveyance of the Leased Lands encumbered by the Facility and the Notice of Lease on title. The Tenant’s position that the Termination Provision must be read to require the Landlord to develop the Property in a manner that would avoid disturbing the Facility is incompatible with the purpose and intent of the Lease and the evidence. In my view, the position taken by the City on the Landlord’s proposed development has rendered the continued operation of the Facility on the Leased Land no longer feasible. The evidence amply supports the Landlord’s ability to terminate the Lease pursuant to the Termination Provision.

[55] The Tenant argues that the Landlord should have given it notice of the Plan when it first approached the City, and that the Landlord’s failure to do so led to the current situation in which the City is requiring that the Leased Land be conveyed free and clear from all encumbrances. In so doing, the Tenant, relying on CM Callow Inc. v. Zollinger, 2018 ONCA 896, at para. 18, alleges that the Landlord breached its duty of honest performance under the Lease. I disagree. While the duty of good faith and honest performance is implied in every contract, interpreting the Lease in the manner suggested by the Tenant would require reading into the contract rights that do not otherwise exist. The Lease does not give the Tenant a right to be consulted on any development plan, or create a corresponding duty to consult on the Landlord. As both are sophisticated commercial parties, if they intended to create such rights and duties, they would have been included in the Lease. The Lease is an agreement to lease land for a specified period of time, that could be extended or, under certain circumstances, terminated. The Termination Provision merely allows that if the continued existence of the Facility could co-exist with development, it would. But if its operation was no longer feasible, the Landlord could terminate. Moreover, if the Lease gave the Tenant any rights over the Landlord’s ability to develop the Property, the yearly rent, which started at $10,000 and increased to approximately $18,000 per year, would be expected to be much higher.

[56] In any event, the Tenant had an opportunity to convey its views to the City, as evidenced by its comments on the Draft Plan, which it provided in August 2016. While the Tenant relies upon the City’s statement that “further discussion will need to occur with our Legal Department,” there is no evidence of such further discussions, or a change in the City’s position.

[57] Accordingly, the Landlord has a bona fide intention to develop the Property to the extent that the operation of the Facility is no longer feasible. The Landlord was entitled to avail itself of the Termination Provision to terminate the Lease.

When Was the Termination Effective?

Estoppel by Representation

[58] The Landlord’s position is that the Termination Notice was valid and that the Lease thus terminated on May 31, 2017, after which the Tenant was overholding, unless it could demonstrate that the parties entered into a new lease.

[59] The Tenant submits that if the Landlord was entitled to terminate, the doctrine of estoppel by representation precludes the Landlord from relying on the Termination Notice because the Landlord’s subsequent conduct led it to believe that the Lease was not terminated.

[60] The party relying on the doctrine of estoppel must establish that the other party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on. Furthermore, the representee must establish that, in reliance on the representation, they acted or in some way changed their position: Maracle v. Travellers Indemnity Co. of Canada, [1991] 2 S.C.R. 50, at p. 57. The promise must be unambiguous, but can be inferred from circumstances: Engineered Homes Ltd. v. Mason, [1983] 1 S.C.R. 641, at p. 647.

[61] The Tenant has not particularized the promise or assurance made by the Landlord, or the action taken in reliance thereupon. Presumably, the Tenant understood from the Landlord’s acceptance of rent in August 2017 that the Lease was not terminated, despite the Termination Notice, and therefore did not remove the Facility from the Leased Land.

[62] The Landlord maintains that the rent was accepted due to an accounting clerk’s error because they deal with numerous properties. The Landlord did not attempt to return the amount or to clarify that it continued to regard the Notice of Termination as effective. The Landlord did not communicate with the Tenant for almost two years between May 2016 and April 2018. The Landlord did not respond to the Tenant’s letter objecting to the Termination Notice and requesting further documents. Even after July 31, 2017, when the Facility should have been removed, the Landlord said nothing. In fact, the rent cheque was deposited shortly after. It appears that the yearly rent was paid again in August 2018.

[63] Notwithstanding the foregoing, in my view, the Landlord’s acceptance of the rent was not a promise or assurance intended to affect the parties’ legal relationship. Given its intention to develop the Property and the conditions in the Notice of Approval, there was no rational basis for the Landlord to induce the Tenant to believe that the Lease was not terminated. To the contrary, the Landlord wanted the Lease to be terminated and the Facility removed. The Landlord’s acceptance of the rent and its failure to insist on the removal of the Facility, or even to communicate with the Tenant for a period of almost two years, is puzzling, especially since it was not to its own benefit. Nonetheless, it was not intended to, and did not, induce the Tenant into keeping the Facility on the Leased Land.

What Was the Status of the Tenancy After Termination?

[64] The Landlord submits, relying on Imperial Oil Ltd. v. Robertson, [1959] O.J. No. 701 (C.A.), at para. 7, that once the Lease was terminated, the onus is on the Tenant to show that a new tenancy was created. The Landlord disputes that its acceptance of the rent on August 1, 2016 created a new tenancy. In Imperial Oil, at paras. 8-9, the Court of Appeal found that the cashing of a rent cheque by a junior employee should not result in a new lease where the person is not authorized to enter into a new lease on behalf of the landlord.

[65] In AIM Health Group Inc. v. 40 Finchgate Limited Partnership, 2012 ONCA 795, at para. 95, a majority of the Court of Appeal held as follows:

Where a tenant remains in possession following the termination of a lease, or holds over, and where the landlord accepts rent from the tenant or otherwise consents, a new periodic tenancy arises at common law by implication on the same terms as the expired lease, subject to any evidence that the parties reached a different arrangement or understanding. If the original lease term was less than one year, the new tenancy is deemed to be month to month, whereas if the original lease term was for more than one year, the new tenancy is deemed to be year to year.

[66] In that case, the Court of Appeal found that the existence of an overholding clause in a lease does not mean that the landlord consents to the continued tenancy. The tenant must still demonstrate that the landlord consents. While the acceptance of rent is strong evidence of the landlord’s consent, it is not conclusive: AIM Group Health, at para. 109.

[67] In this case, the evidence supports a finding that while no new tenancy was created, the Landlord consented to the Tenant’s continued occupation of the Leased Land, creating an annual overholding tenancy. The acceptance of the rent in August 2017, when the Facility should have been removed, and the lack of communication from the Landlord for two years resulted in a lack of clarity regarding the Lease’s status. Since the termination was effective on May 31, 2017, the annual overholding tenancy commenced on June 1, 2017.

[68] At common law, an overholding tenancy can be terminated on at least six months’ notice, with such termination effective at the end of the year: Van-Air Holdings Ltd. v. Delta Charters (1982) Inc., 2013 BCSC 1322, at para. 8. In order to terminate the overholding tenancy at the end of the second year, the Landlord would have had to give notice by November 30, 2018. The Second Termination Notice, sent on July 18, 2018, was sent in sufficient time to terminate the overholding tenancy. The overholding tenancy thus terminated on May 31, 2019.

[69] The Landlord has indicated that it will honour the 60-day period for removal of the Facility provided in the Lease. The Tenant thus has until July 30, 2019 to remove the Facility.

Should the Tenant be Granted Relief from Forfeiture?

[70] The Tenant relies upon s. 20(1) of the Commercial Tenancies Act, R.S.O. 1990, c. L.7 to argue that this court ought to allow the Facility to remain on the Leased Land until July 2020 to permit the Tenant sufficient time to relocate the cell tower. Although the evidence is scant, the Tenant claims that the need to relocate the cell tower raises concerns about access to telephone services and inconvenience to members of the public. The Tenant states that it would be possible but expensive to set up a temporary tower.

[71] The Tenant has not cited any authority to support the application of s. 20(1) in circumstances where a lease has been terminated. In Zenex Enterprises Ltd. v. Promenade Limited Partnership, 2019 ONSC 3262, at para. 23, Doi J. examined the availability of s. 20(1) in such circumstances and held as follows:

Relief from forfeiture is not available if a lease is terminated as a result of a right of the landlord to do so; Maverick Professional Services Inc. v. 592423 Ontario Inc. at paras. 4-9; 1230455 Ontario Ltd. v. 150 Katimavik Inc., 2019 ONSC 2481 at para. 27. Since the act of a landlord in exercising a termination provision under a lease does not rely upon or otherwise address a breach, there is no basis for the court to grant relief from forfeiture under s. 20(1) of the Commercial Tenancies Act for any such action.

[72] The urgency is one that the Tenant could have, to some extent, avoided. The Tenant has known about the potential and likelihood that it would have to relocate the Facility for almost three years. Given that the interpretation of the Termination Provision was disputed, it would have been reasonable to look into alternatives.

[73] The Tenant submits that the relocation will require the City’s approval, and it has thus far been non-responsive to the Tenant’s inquiries. The record contains little evidence of the Tenant’s inquiries with the City regarding the relocation of the Facility. In any event, the City’s responsiveness or lack of responsiveness would not be an appropriate basis for restricting the Landlord’s ability to enforce its rights under the Lease.

[74] Under the circumstances, there is no basis to grant relief from forfeiture under s. 20(1) of the Commercial Tenancies Act.

Conclusion

[75] Based on the foregoing, I grant the Landlord’s Application and order the following relief:

(i) A declaration that the Lease terminated on May 31, 2019; (ii) An order requiring the Tenant to vacate the Leased Land and remove the Facility and all related equipment by July 31, 2019; (iii) An order requiring the Tenant to pay rent owing up to May 31, 2019; and (iv) An order that the Tenant delete the Notice of Lease from title to the Property.

Costs

[76] The Applicant submitted a costs outline for a total of $62,175.93, including disbursements and HST. Although not specifically stated, this appears to be a portion of its full indemnity costs. The Respondent’s costs on a partial indemnity basis total $17,483.15, including disbursements and HST.

[77] Pursuant to the Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131(1), the court has broad discretion when determining the issue of costs. The overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the circumstances, rather than an amount fixed by actual costs incurred by the successful litigant: Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.), at para. 26. Rule 57.01(1) of the Rules of Civil Procedure sets out the factors to be considered by the court when determining the costs issue.

[78] I have considered the applicable factors, as well as the proportionality principle in r. 1.04(1.1) of the Rules of Civil Procedure, while keeping in mind that the court should seek to balance the indemnity principle with the fundamental objective of access to justice. The issues in this case were important to both parties, because they would determine whether the Landlord’s development plans could proceed, and whether the Tenant would be required to remove the Facility. The parties proceeded on an expedited basis, and completed cross-examinations by written questions. As noted above, the hearing was adjourned twice at the Applicant’s request.

[79] The Applicant’s bill of costs includes discussions and email correspondence with the City and others that related to the development, but were not directly related to the litigation. In addition, the bill includes time for five different lawyers, potentially leading to some degree of duplication or inefficiency.

[80] Based on the foregoing considerations, I fix costs of the application on a partial indemnity basis at $30,000.00, including disbursements and HST.