COURT FILE NO.: CV-18-491-00
DATE: 2019-01-18
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
2372892 ONTARIO LTD., o/a LEAF ENGINEERED WOOD PRODUCTS
T. Rhaintre, for the Applicant
Applicant
- and -
2462647 ONTARIO LTD., o/a TITAN MANUFACTURING, BRIAN HAGARTY and JAMES MAINVILLE
R. Johansen, for the Respondents
Respondents
HEARD: November 19, 2018 & December 2, 2018 at Thunder Bay, Ontario
Mr. Justice T.A. Platana
Decision On Motion
[1] Complications and disputes can often arise when two businessmen attempt to put together an arrangement themselves relying on documents they have prepared without the assistance and advice of legal counsel. Such is the case here. The Applicant, LEAF Engineered Wood Products (“LEAF”), owned machinery to produce a glulam wood product, but had no facility or capability to operate it. The Respondent, TITAN Manufacturing (“TITAN”), had a facility and the capability to operate it. The parties signed an “Operating and Business Agreement” (the “Operating Agreement”) where TITAN would provide business management services to facilitate the production of LEAF’s glulam product in exchange for a 17 percent ownership stake in LEAF. LEAF was to cover all operational costs and direct expenses together with the cost of any lease or rent required to accommodate the production equipment. The Operating Agreement stated that a formal and final document would be drafted by a lawyer. The relationship between the parties broke down prior to that happening.
[2] Subsequent to the parties entering into the Operating Agreement, the parties signed a lease agreement (the “Lease”), again self-prepared, whereby TITAN would lease premises to LEAF. When the relationship broke down, LEAF’s equipment had already been partially installed on premises occupied and leased by TITAN. LEAF wishes to remove the equipment.
[3] At the outset, TITAN owned and operated out of premises in Fort Frances (the “TITAN Property”). As the TITAN Property was too small for LEAF and TITAN’s combined operations, TITAN entered into a lease and agreement to purchase a larger building from Gingrich Wood Craft Inc. (“Gingrich”). TITAN started installing LEAF’s equipment on these premises (the “Gingrich Property”).
The Parties’ Claims
[4] On this application, LEAF seeks relief in relation to the determination of issues under ss. 66 and 67 of the Commercial Tenancies Act, R.S.O. 1990, c. L.7, as amended (the “Act”). As part of this application, the sole issue before me at this time is that LEAF requests a declaration that the nature of the relationship between the parties is that of landlord and tenant, entitling the applicant to rely on the Act in seeking a remedy in this application.
[5] TITAN has instituted a civil action against LEAF for damages resulting from the breakdown of the relationship: court file CV-18-550-00 (the “Civil Action”).
[6] TITAN takes the position that the relationship between the parties was not one of landlord and tenant, but rather a joint business venture. TITAN requests the application be tried together with its Civil Action for recovery of damages against LEAF.
The Evidence
[7] The application was originally brought before me with only affidavit materials. The parties argued that the application required an urgent determination. I was satisfied that there were significant issues of credibility. Neither party had conducted cross-examination on the affidavits, and I was of the view that a determination could best be made as to the nature of the relationship on the basis of viva voce evidence. The matter was then adjourned for the parties to attend and give evidence. I have considered both the affidavit materials and the viva voce testimony in making my determination. I state initially that both witnesses appeared to be credible. They just had a different view as to what business arrangement they had entered into.
Evidence of the Applicant
[8] John MacGillivray, principal of LEAF, testified that he saw a demand for engineered wood products. He incorporated a company but needed a location to operate. A business consultant introduced him to Brian Hagarty, owner of TITAN, a truss manufacturing company that had premises in and operated in Fort Frances. Mr. MacGillivray and Mr. Hagarty began discussions as to TITAN providing premises and managing the LEAF operation. Mr. MacGillivray testified that, because TITAN’S premises were in Fort Frances and he lived in Thunder Bay, he needed somebody to install and operate the equipment he had purchased. His evidence is that, as discussions progressed, it became clear that the premises then occupied by TITAN were inadequate. As a result, TITAN acquired a different rental building: the Gingrich Property.
[9] LEAF and TITAN held discussions largely by exchange of e-mails prior to finalizing an agreement. The following excerpts from some of the e-mails are particularly relevant to the issue of the nature of any arrangement between the parties:
• May 8, 2017 - Mr. Hagarty to Mr. MacGillivray Hi John, how is your project coming along? I have a glulam I need to quote so I thought of you…
• June 5, 2017 - Mr. MacGillivray to Mr. Hagarty Subject: are you interested in getting into the glulam business? At a good price
• June 5, 2017 - Mr. Hagarty to Mr. MacGillivray I am very interested in discussing this with you.
• June 6, 2017 - Mr. Hagarty to Mr. MacGillivray Do you have any kind of a business plan?
• June 8, 2017 - Mr. MacGillivray to Mr. Hagarty Hi Brian. Thanks for meeting with me this morning I was very much interested in what you had to propose. However, I think the lack of a suitable building will be an obstacle.
• July 19, 2017 - Mr. Hagarty to Mr. MacGillivray I am hoping to get a draft agreement off to you so we can outline the details of how we will work together, who is going to do what, and what the compensation will be. Since we are not partnering in the operation … as we are not willing to risk expenses on the hopes that the business will work … We need to know that you have that budgeted in your operating funds.
• July 27, 2017 - Mr. MacGillivray to Mr. Hagarty NOHFC may also be an issue, they may want some info resubmitted and reviewed because of the change in location but I won’t know until I send them the lease agreement.
• August 1, 2017 - Mr. MacGillivray to Mr. Hagarty Titan will provide a building suitable for operation of the equipment rented by LEAF (TBD).
• August 2, 2017 - Mr. Hagarty to Mr. MacGillivray So we will offer you $120,000.00 in value, in exchange for a 10% ownership stake. Lets chat today and see if we can settle these issues and get a game plan to move forward. I would like to start dealing with the plant September 1st…
[10] As of August 2, 2017, the parties were still negotiating terms for setting-up LEAF’s production plant, possibly at a TITAN facility and/or with TITAN’S management. Mr. MacGillivray testified that TITAN did not want to take any financial risk and rejected a partnership.
[11] The equipment that LEAF had purchased was delivered and stored at the TITAN Property. Mr. MacGillivray’s evidence is that the parties then decided that LEAF would rent a portion of the space in the Gingrich Property building acquired by TITAN.
[12] Negotiations continued, and on September 20, 2017, the parties executed the Operating Agreement (attached as Schedule A to these reasons). The agreement included the following terms:
• LEAF will cover all operational costs and direct expenses together with any lease or rent required to accommodate the production equipment. • TITAN will provide supervisory and management services together with administrative services and facilities … The value of these services total $125,000/year. The services will be provided and paid for by TITAN in exchange for 17% of the share structure of [LEAF] one year from the [signing] of this agreement.
[13] TITAN secured the Gingrich Property in Devlin, Ontario, and entered into a Lease to Purchase Agreement with Gingrich commencing October 1, 2017, for the purpose of securing appropriate premises for the installation of the LEAF glulam equipment. The lease between TITAN and Gingrich was signed effective November 1, 2017. LEAF began making payments to TITAN in the amount of $6,000, plus $780 for HST, starting October 2017. LEAF and TITAN agreed to this amount, which is referred to in the Operating Agreement in the following terms: “costs of any lease or rent required to accommodate the production equipment.” The payments were paid in October and November 2017 as required under the Operating Agreement and without a lease agreement between TITAN and LEAF. The invoices sent by TITAN after the lease was signed stated that they were for rent in December 2017 and January 2018; for administration in February, March, and April 2018; and rent in May, June, and July, 2018.
[14] TITAN was not ready to move into the Gingrich Property. However, LEAF moved its equipment into part of the Gingrich Property and paid rent in the amount of $6,000 per month for the entire building for the months of October and November 2017. During these two months, in addition to the lease payments, LEAF paid for TITAN’S labour costs and flights to Germany for Brian Hagarty and another TITAN employee for the purpose of reviewing an operating glulam plant in Germany.
[15] Mr. MacGillivray testified that TITAN moved into the Gingrich Property later, although he does not know exactly when. He stated that, after TITAN moved in, TITAN put their materials in space which affected LEAF’S operations.
[16] On November 29, 2017, the parties executed the Lease (attached as Schedule B to these reasons). Mr. MacGillivray stated that the Lease was required in order to satisfy the Northern Ontario Heritage Fund Corporation (“NOHFC”) that LEAF’s business was to be situate in Northwest Ontario. His evidence is that the Lease was not intended to change the Operating Agreement in any way. His evidence is that Mr. Hagarty signed the lease document on the understanding that it was only a document required by LEAF to secure funding. The rent did not change.
Evidence of the Respondents
[17] Brian Hagarty owns and operates TITAN, a company that manufactures wood products, including trusses. In 2016, a consultant contacted him to see if TITAN was interested in a project to bring glulam products to the market. He met with Mr. MacGillivray, but nothing developed. About one year later, Mr. MacGillivray reached out to Mr. Hagarty, inquiring if TITAN wished to purchase the project. Mr. Hagarty indicated that he was not interested in purchasing it and told Mr. MacGillivray that he was interested in a joint business venture. Mr. MacGillivray agreed.
[18] The parties signed the Operating Agreement on September 20, 2017. TITAN agreed to provide in-kind services valued in the amount of $125,000 per year in exchange for an ownership interest in LEAF of 17 percent. Mr. Hagarty stated that the rationale for this was to keep LEAF’s start-up costs minimal.
[19] His evidence is that because the building TITAN owned was not large enough to house the TITAN and LEAF businesses, TITAN acquired the Gingrich Property by way of a Lease to Purchase Agreement with Gingrich. Changes were made to the building to accommodate the installation of LEAF’s equipment.
[20] Mr. Hagarty’s evidence is that a commercial tenancy was never the intention of the venture. He states that it was only after LEAF’s equipment was partially installed that Mr. MacGillivray provided TITAN with a simplified lease for TITAN to sign so that LEAF could receive the remaining funding from a government grant. He notes that the document does not delineate the specific space to be occupied. The Lease contains none of the “usual” commercial lease terms with respect to ownership/removal of fixtures, responsibility for repairs, insurance, and early termination. Mr. MacGillivray was not actively involved in the installation and set-up of the equipment. Further, Mr. Hagarty states that a commercial tenancy was never discussed, and it was never the intention of this venture. The sole purpose of constructing this glulam plant in the TITAN facilities was to commence a joint venture business opportunity.
[21] Mr. MacGillivray did not have a key to the premises.
[22] Mr. Hagarty’s evidence is that, in May of 2018, the installation was 95 percent complete. In order for operational certification, an additional $10,000 was required. Mr. MacGillivray ran short of funding to complete the work necessary for certification of the glulam equipment. Mr. Hagarty offered to assist and requested to see LEAF’s financial situation, which was refused or ignored. TITAN was incurring significant cost to pay for the installation of the equipment. Vendors were contacting TITAN for payment. TITAN was purchasing equipment and inventory for LEAF, which LEAF was to reimburse to TITAN. The relationship deteriorated to the point where TITAN prevented LEAF from removing the equipment from the building.
The Parties’ Positions
[23] As stated, LEAF has brought this application seeking a remedy under the Act. TITAN argues that this is not a commercial lease situation; that the relationship is a joint business venture; that the Applicant cannot rely on any relief under the Act; and that any action must be based on the Operating Agreement.
[24] TITAN also has a claim for damages as part of its Civil Action and requests that this application be merged with that action.
LEAF’s Submissions
[25] I invited written submissions from the parties. LEAF frames the issue to be determined as whether the Operating Agreement created a joint venture between the parties or whether the parties were engaged in a landlord-tenant relationship. Counsel bases her position that this relationship is one of landlord and tenant on ss. 1 and 2 of the Act.
[26] Sections 1 and 2 of the Act set out the relationship of a commerical landlord and tenant as follows:
Definitions
- In this Act,
“landlord” includes a person who is lessor, owner, the person giving or permitting the occupation of the premises in question, and these persons’ heirs and assigns and legal representatives, and in Parts II and III also includes the person entitled to possession of the premises; (“locateur”)
“tenant” includes a person who is lessee, occupant, sub-tenant, under-tenant, and the person’s assigns and legal representatives. (“locataire”)
Application
- This Act does not apply to tenancies and tenancy agreements to which the Residential Tenancies Act, 2006 applies.
[27] Counsel for LEAF, Ms. Rhaintre, argues that it is uncontested between the parties that LEAF did (does) occupy the Premises and that TITAN accepted payment from LEAF for LEAF’s occupation of the premises pursuant to the terms of the contracts between the parties. She submits that ss. 11 to 16 of the Act provide deeming provisions whereby a tenancy is deemed to exist in the event the landlord only purports to have the power to lease the premises in question and subsequently accepts payment from the tenant under said contractual relationship.
[28] She submits that TITAN’s conduct in signing the Lease with LEAF, as well as LEAF’s conduct in knowingly and intentionally providing the NOHFC with the Lease (rather than the lease for the Gingrich Property), demonstrates that TITAN was not a party to LEAF’s business venture and was not engaged in a joint venture relationship with LEAF.
[29] In response to the TITAN’s position that the relationship is a joint venture, Ms. Rhaintre points to the evidence that:
• LEAF paid all business expenses, which were its responsibility as set out in the Operating Agreement; • these payments were made both before and after the Lease was signed by TITAN and LEAF; • Mr. MacGillivray drafted and sent Mr. Hagarty the Lease in November of 2017. Mr. Hagarty’s evidence is that Mr. MacGillivray requested Mr. Hagarty sign the Lease; • Mr. MacGillivray required a signed lease as a formal step in his grant process. Upon presenting a signed lease to the NOHFC, further funding would be released to LEAF from the NOHFC grant. Mr. Hagarty signed the Lease on the understanding that it was a document required by LEAF to secure funding; • Mr. MacGillivray did not express or imply that it was his intention that signing the Lease would change the Operating Agreement in any respect; • Mr. Hagarty did not intend to change the nature of the Operating Agreement by signing the Lease; and • The Operating Agreement did not change with the signing of the Lease.
[30] Counsel requests a declaration that the nature of the relationship between the parties for the purposes of the Application herein is that of landlord and tenant and that the Operating Agreement is a separate agreement.
TITAN’s Submissions
[31] TITAN argues that, after it indicated that it was not interested in purchasing LEAF, TITAN proposed moving forward together as what must be considered a joint business venture. Mr. Johansen submits that TITAN and LEAF combined resources to jointly conduct a commercial venture based upon agreed upon matters: TITAN provided supervisory and management services on an “in kind” basis, labour, premises, and other direct support; LEAF provided the equipment and the potential contracts for sale of product. The “matters agreed upon” were incorporated into the Operating Agreement. The fact that TITAN has an equity interest in LEAF further confirms their business relationship as “an association of two or more persons.”
[32] Mr. Johansen notes that prior to any agreement between the parties, TITAN agreed to allow LEAF to store its glulam equipment at the TITAN Property.
[33] Negotiations regarding the business arrangement continued throughout the summer months of 2017. Mr. Johansen notes that the relationship was finalized in the Operating Agreement dated September 20, 2017. At this time, the parties had still not agreed upon the location for the glulam equipment. The Operating Agreement states that LEAF and TITAN agreed to a “business proposal.” Counsel submits that the Operating Agreement outlined exactly what each party would be responsible for in the joint business venture. TITAN would provide supervisory and management services together with administration services (the “in-kind services”). The parties agreed that the value of the in-kind services was $125,000. TITAN would receive co-ownership of LEAF by way of a 17 percent share interest one year after signing the Operating Agreement in lieu of payment for the in-kind services. LEAF would be responsible for utilities, installation, and electrical upgrades associated with the glulam equipment. LEAF would further be responsible for all operational costs and direct business expenses together with the cost of any lease or rent required to accommodate the production equipment. The Operating Agreement was the conclusive contact between the parties and defined the entire business arrangement.
[34] With respect to LEAF’s position that the relationship was one of landlord and tenant, TITAN submits that Mr. Hagarty’s evidence is that Mr. MacGillivray required a signed lease as a formal step in his grant process. Upon presenting a signed lease to the NOHFC, further funding would be released to LEAF from the NOHFC grant. Counsel argues that Mr. MacGillivray never referred to TITAN as a “landlord” in any capacity until the commencement of this application. Mr. Hagarty understood the Lease to be a non-binding, informal document for Mr. MacGillivray’s compliance requirements with the NOHFC. He notes Mr. Hagarty’s evidence that TITAN did not intend to change the nature of the Operating Agreement by signing the Lease and that, in fact, the Operating Agreement did not change with the signing of the Lease. LEAF still paid the same business expenses outlined in the Operating Agreement both before and after signing the Lease. LEAF continued to pay $6,000 plus HST ($6,780 in aggregate) for rent after signing the Lease. This is the same amount of rent paid before the Lease was signed, which counsel argues demonstrates the fact that LEAF understood the Operating Agreement to be binding and that the Lease was not. Mr. Johansen submits that this conduct demonstrates that Mr. MacGillivray did not consider LEAF to be bound by the Lease, but that Mr. MacGillivray did consider LEAF to be bound by the Operating Agreement.
[35] Mr. Johansen argues that there is no precise legal definition for joint venture. He submits that joint ventures are a relatively recent legal phenomenon and that there is little case law governing them. In Density Group Ltd. v. HK Hotels LLC, 2012 ONSC 3294, 218 A.C.W.S. (3d) 328, at para. 121, the court states:
[121] Joint ventures are a relatively recent phenomenon. There is no statute law governing them, and little case law. Joint ventures are a form of business organization similar to a partnership; however, unlike the term “partnership”, joint venture has no strict legal meaning, but is normally used to describe a form of business arrangement under which two or more persons or entities combine their efforts for a specified venture: CED Business Corporations (Ontario) I.1, §4.
[36] His submission is that various meanings have been attributed to the term, including “an association of two or more persons for a limited purpose without the participants becoming partners,” and “any combination of resources by two or more persons in order to conduct a commercial venture jointly upon agreed upon rules.” Whether a joint venture exists is a question of fact.
[37] Mr. Johansen argues that TITAN assumed the risk of providing in-kind services valued at $125,000 in exchange for a 17 percent ownership interest in LEAF in one year’s time. The value of these services has not been reimbursed, nor has TITAN received ownership shares in LEAF. Counsel argues that TITAN provided these services at the risk of not receiving the agreed upon share interest, a risk which has now materialized.
[38] Further, he notes that TITAN entered into a Lease to Purchase Agreement for the Gingrich Property. TITAN is liable for the rent due on the Gingrich Property in addition to the outstanding mortgage and costs of the TITAN Property, which it has been unable to sell. TITAN has paid for invoices on LEAF’s behalf and has not been reimbursed for them. LEAF has not paid for the electrical installation of its own equipment as agreed in the Operating Agreement, leaving TITAN at risk of liability for the cost of the installation.
[39] Mr. Johansen submits that good faith bargaining applies to contractual arrangements: Bhasin v. Hrynew, 2014 SCC 71, 3 S.C.R. 494, at paras. 73 and 93. Counsel submits that LEAF cannot, in good faith, claim the Lease was separate and distinct from the Operating Agreement. Counsel submits that the conduct of the parties, both prior to and subsequent to the Lease, demonstrates that the Operating Agreement was the governing document. The entire nature of the relationship must be considered in order to make a fair determination on the merits of the case.
[40] In summary, TITAN’s position is that LEAF cannot, in good faith, deny the existence of the Operating Agreement and, in its evidence, LEAF has never denied the fact that it is a party to it. Mr. Johansen’s argument is that the arrangement between the parties is a joint business venture as it is “an association of two or more persons for a limited purpose without the participants becoming partners” and “any combination of resources by two or more persons in order to conduct a commercial venture jointly upon agreed upon rules.” By combining their resources to conduct a commercial glulam business, codifying their relationship in the Operating Agreement, and associating themselves through co-ownership of LEAF to conduct the glulam operation, TITAN and LEAF agreed to a joint business venture.
[41] Further, counsel submits that the Lease cannot be considered as “separate and distinct” from the Operating Agreement as the Lease specifically refers to and incorporates the Operating Agreement and was signed subsequent to the Operating Agreement. The Operating Agreement codifies that TITAN will provide premises for the glulam equipment and that LEAF will pay “costs of any lease or rent required to accommodate the production equipment.
[42] TITAN requests that the Application be converted to an Action and tried together with the Civil Action for recovery of damages against LEAF.
Discussion
[43] The starting point for any discussion must focus on the fact that the agreements between the parties, both the Operating Agreement and the Lease, are fundamentally very basic in terms of setting out the arrangement between the parties. It is clear that, in the Operating Agreement, LEAF is to provide the production equipment and cover the costs of any lease or rent required to accommodate the equipment. The Operating Agreement does not make specific reference to any details about any such lease, and does not require TITAN to provide any particular premises.
[44] The Lease does make it clear that the obligation to obtain premises rests with TITAN. LEAF has no obligation to pay rent directly to any other party than TITAN.
[45] TITAN had no direct involvement with the NOHFC. The only party entitled to the benefit of any NOHFC funding is LEAF.
[46] Both Mr. MacGillivray and Mr. Hagarty’s evidence is that TITAN was not interested in making any direct financial investment in LEAF. Mr. Hagarty specifically notes in his e-mail dated July 19, 2017, prior to signing the Operating Agreement, “Since we are not partnering on the project …”
[47] It is of importance to consider that TITAN had no dealings with respect to LEAF’s purchase of the glulam equipment. The discussions between the parties in June 2017, as shown in the exchange of e-mails, indicate to me that, during that time period, discussions were ongoing as to the NOHFC being a potential issue and that a lease may be an issue. The general theme that I find to be developing between the parties at this time is that LEAF would provide the equipment and pay the costs of installation, management, and operation and TITAN would be responsible for obtaining the premises. LEAF would pay the rental costs. While there is evidence that Mr. MacGillivray expressed initial concern about the suitability of the TITAN Property then being considered for the operation, there is no evidence that the Gingrich Property was acquired solely by TITAN without LEAF having a rental obligation with respect to the Gingrich Property. LEAF had no involvement in TITAN negotiating the terms of the Lease to Purchase Agreement.
[48] I see nothing in the evidence to give any consideration to Mr. Johansen’s submission with reference to honesty or good faith bargaining on the part of LEAF.
[49] Mr. Johansen argues that the parties entered into a joint venture. He submits that there are no specific requirements for establishing of a joint venture and references Density Group Ltd. v. HK Hotels Inc., where Wilson J. states, at para. 121:
Joint ventures are a relatively recent phenomenon. There is no statute law governing them, and little case law. Joint ventures are a form of business organization similar to a partnership; however, unlike the term “partnership”, joint venture has no strict legal meaning, but is normally used to describe a form of business arrangement under which two or more persons or entities combine their efforts for a specified venture: CED Business Corporations (Ontario) I.1, §4.
[50] The determination of a joint venture is fact specific. In Bramalea Ltd. v. 620923 Ontario Inc. (1992), 1992 CanLII 7662 (ON SC), 8 O.R. (3d) 151 (Ont. Gen Div.), the court notes, at para. 91:
At p. 707 Jones J. listed the requisites of a joint venture referred to at p. 563 to 565 of Vol. 1 of Barrett and Seago, Partners and Partnerships, Law and Taxation (1956), as follows:
a) A contribution by the parties of money, property, effort, knowledge, skill or other asset to a common undertaking; b) A joint property interest in the subject matter of the venture; c) A right of mutual control or management of the enterprise; d) Expectation of profit, or the presence of “adventure”, as it is sometimes called; e) A right to participate in the profits; f) Most usually limitation of the objective to a single undertaking or ad hoc enterprise.
[51] The term requisite implies that each of the above noted considerations are required before a court will find that the parties have entered into a joint business venture. If each of the parties contributed to the venture of operating the glulam plant, when considering these requisites as applied to this case, I find that, TITAN contributed skill and knowledge under the Operating Agreement, and LEAF provided glulam equipment. There is no joint property interest in either LEAF’s equipment or the building space provided by TITAN. There is no mutual control; the Operating Agreement gives TITAN entire control over the management and operation of the glulam operation. There are no common “contact points,” such as an office, a bank account, or a phone contact. Mr. Hagarty specifically references that, we are not partnering in the operation …”
[52] It may be considered that there is an expectation of profit or the presence of “adventure,” however, it is not such that it can be called mutual. TITAN’s profit comes from its payment for operating and managing; LEAF’s will come from sales of the product. There is no sharing of profit between the two parties. Any profit ultimately made by LEAF would be exclusively LEAF’s after payment to TITAN pursuant to the Operating Agreement. TITAN has a shareholder interest, but that does not guarantee that there will be any profits to be distributed. It is not sufficient to constitute an element of joint venture.
[53] The objective of the Operating Agreement is different for the parties. LEAF’s is to sell the finished glulam product, while TITAN’s is to set-up, manage, and operate the equipment for LEAF. TITAN has no mutual interest in LEAF’s sales beyond being paid for its services under the Operating Agreement.
[54] LEAF had no involvement in TITAN entering into TITAN’s lease with Gingrich. TITAN retains sole responsibility for lease payments to Gingrich.
[55] On these facts, I do not find that the parties entered into a joint venture. I do find that the parties entered into two separate agreements: one for the operation and management of the glulam business, the Operating Agreement; and one for the provision of premises, the Lease. I do not find that the Operating Agreement governs the interpretation of the Lease such that the tenancy agreement is ineffective. I find that, despite the dearth of details, the Lease, while overall part of the agreement between the parties, creates a commercial tenancy agreement.
[56] The parties have agreed that this Application, which will now proceed on the basis that a commercial tenancy exists, should be dealt with together with the Civil Action instituted by TITAN for damages. I agree that both the Application and the Civil Action are based on the same set of circumstances relating to this Applicant’s claim for tenant’s relief and the Respondent’s claim for breach of the agreement between the parties. The parties may apply to the Court for directions with respect to pleadings and a timetable for proceeding.
[57] This is a somewhat unique situation where it is appropriate to leave the costs of this proceeding to the judge hearing the combined matters.
“original signed by” The Hon. Mr. Justice T. A. Platana
Released: January 18, 2019
COURT FILE NO.: CV-18-491-00
DATE: 2019-01-18
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
2372892 ONTARIO LTD., o/a LEAF ENGINEERED WOOD PRODUCTS
Applicant
- and -
2462647 ONTARIO LTD., o/a TITAN MANUFACTURING, BRIAN HAGARTY and JAMES MAINVILLE
Respondents
DECISION ON MOTION
Platana J.
Released: January 18, 2019
/lvp