BARRIE COURT FILE NO.: CV-18-1054

DATE: 2019-01-31

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ROCCO SISTERS BAKERY & DELI INC.

Applicant

– and –

3M RENTAL INC.

Respondent

COUNSEL:

Christopher D. Salazar, for the Applicant

John DaRe, for the Respondent

HEARD: January 29, 2019

REASONS FOR DECISION

VALLEE J.:

Nature of the Motion

[1] The applicant (“Rocco”) is a tenant of the respondent (“3M”). It operates a bakeshop and deli. 3M alleges that Rocco breached the lease. For short time, Rocco was locked out of the premises. An order was issued on consent on September 11, 2018 that the tenancy would continue and that Rocco would pay a certain amount to 3M.

[2] Rocco requests an order for an interlocutory injunction restraining 3M from re-entry to the premises (Unit 1, 70 Victoria Street East, Alliston). Rocco also requests an interlocutory injunction restraining 3M from interfering in any way with Rocco’s possession and quiet enjoyment of the premises.

Applicable Law

[3] When considering an application for an interlocutory injunction, the court must consider the following questions: is there a serious question to be tried; would the applicant suffer irreparable harm if the application was refused; and which party would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits.[^1]

3M’s Position

[4] 3M states that Rocco and the former landlord, 1146980 Ontario Limited, entered into a commercial lease on November 1, 2012. The lease had an original term of one year with a right of renewal for two consecutive five-year terms. The lease stated that the term “rent” means the amount payable by Rocco to the landlord and includes “additional rent”.

[5] 3M purchased the premises from 1146980 Ontario Limited on September 30, 2013. At the time of closing, Rocco provided an acknowledgement of lease to the landlord stating that there was a lease in existence, its commencement date was November 1, 2012 and that the end date was October 31, 2013.

[6] 3M states that Rocco did not renew the lease prior to its expiry. 3M had discussions with Rocco regarding a new lease because Rocco wished to remain in the premises.

[7] 3M began to experience difficulties with Rocco. It “began demonstrating a certain hostility toward other tenants in the plaza” and was in default with respect to payment of additional rent. 3M’s counsel put Rocco on written notice of recent breach of its lease obligations on September 17, 2017.

[8] In January 2018, 3M provided Rocco with a further notice setting out the additional rent owing and advising Rocco that the tenancy would be terminated unless the amount was paid.

[9] Rocco did not pay the amount owing. Instead it responded with a notice of intention to renew the lease. As a result, 3M terminated the tenancy on April 29, 2018. Due to an error in the notice of termination, 3M agreed to rescind the termination and permit Rocco to re-enter into possession of the premises on May 2, 2018. Despite this, and the fact that 3M had provided Rocco with details of the breaches, including the outstanding amount owing for additional rent of $19,598.52, Rocco failed to pay the amount owing.

[10] Rocco was a month to month tenant. 3M advised it that the tenancy would be terminated on July 31, 2018. Pursuant to the consent order, Rocco remains in possession. 3M requests an order to dismiss the application.

Analysis

[11] Rocco provided to 146980 Ontario Limited a hand-written notice to renew dated March 21, 2013. It indicates that it was hand-delivered. It states, “This notice will serve as confirmation that we will continue our lease upon completing year one. The lease will be for 5 year terms [sic], commencing November 2013. We trust this is satisfactory.” 3M disputes that this notice was provided.

[12] On September 18, 2017, Mr. O. Zanetti, a paralegal acting for 3M, sent a letter to Rocco which contained allegations that Rocco had breached the lease. It stated that Rocco was to do certain things as follows :

1. Discontinue your harassing and threatening behaviour toward both the residential and commercial tenants located 70 Victoria St, E., Alliston ON.

2. Allow the installation of work necessary for the required water meter specific to Unit 1.

3. Provide our office with the most recent, up-to-date copy of your insurance policy.

4. Provide our office twelve (12) postdated cheques with the appropriate monthly rental amount as per Lease Agreement.

5. Pay any and/or all outstanding utility bills and thereafter, every month, as required under the Assignment of Lease.

6. Make payable any/all rental payments due on or before the date rent payment becomes due.

Furthermore, you are advised to understand and acknowledge that your Assignment of Lease is on a month-to-month basis. Additionally, be advised that the Corporation (Assignee) is lawfully increasing your monthly rent, specific to Unit1 at 70 Victoria Street, East, Alliston, ON.

Consequently, we have been instructed by Mr. Gangcheng Xu to take all appropriate steps to pursue this claim and file the appropriate documents to commence legal action against you. Again, our client would like to settle this matter amicably.

[13] 3M’s counsel provided to Rocco’s counsel, a document entitled “additional rent summary for [Rocco]”. It states that the total additional rent for 2014 to 2017 inclusive is $33,363.98.[^2]

[14] On April 24, 2018, Rocco sent an email to 3M that the lease would be renewed for an additional five years, being from November 1, 2018 to October 31, 2023.

[15] 3M states that it did not receive the notice. Rather, it provided Rocco with a new commercial lease that was never signed.

[16] On April 29, 2018, a bailiff acting on behalf of 3M locked the premises. Rocco received a Notice to Terminate which alleged arrears of $14,400 and breach of lease covenants. The notice indicated that 1146980 Ontario Limited, as landlord, re-takes possession of the premises, even though that corporation no longer owned the premises.

[17] On May 1, 2018, Rocco’s counsel sent a letter to 3M demanding immediate return of the premises to Rocco.

[18] On May 2, 2018, Mr. Zanetti sent an email to Rocco’s counsel which set out alleged breaches similar to items 1 to 5 listed above.

[19] Subsequently, Rocco’s counsel exchanged emails with Mr. Zanetti with respect to the fact that 1146980 Ontario Limited was no longer the owner of the premises and requested evidence to support the alleged outstanding rent of $14,400.

[20] On June 5, 2018, approximately six weeks after the Notice of Renewal of Lease, Mr. Gangcheng Xu sent an email directly to Rocco stating, stating, “as we have a plan to use unit 1 of 70 Victoria st E Alliston , we are not able to continue [sic] rent that space to you, please see the attached termination letter”.

[21] The letter referred to in Mr. Xu’s email is dated June 4, 2018 and is signed by Mr. Zanetti. Mr. Zanetti stated that he had not received a response to his earlier letter setting out various breaches. He stated that, “…the landlord wishes to exercise his legal rights to enforce eviction. Termination notice is effective from the date of this notice with the tenancy termination date of July 31, 2018.” The letter goes on to repeat the five alleged breaches as set out above. In reply, Rocco’s counsel sent a letter dated June 18, 2018 to Mr. Zanetti stating,

1. Alleged Harassment - my client denies such conduct. Kindly provide proof otherwise.

2. Water Meter - The installation of a water meter is not a right provided for in the lease and does not constitute repair.

3. Insurance - My client has already provided evidence of an up to date insurance policy. I am happy to provide an additional copy upon request.

4. Post-dated cheques - My client has always paid rent on time and has paid by cheque picked up by the superintendent at the beginning of each month since the inception of the lease. My client is happy to provide post-dated cheques.

5. Utility Bills - All utilities bills have been paid in full by my client. Kindly provide proof otherwise.

Based on the above, my client has not breached the lease and your client is not entitled to terminate the same at any time and certainly not on July 31, 2018.

[22] The letter goes on to state that a reply is required within four days failing which Rocco would bring a court application.

[23] On June 19, 2018, Mr. Zanetti sent an email to Rocco’s counsel in response. It set out information with respect to harassment which is no longer an issue in this motion. It stated that Rocco had refused entry to an authorized representative of the landlord to perform installation of a required water meter and alleged that this was contrary to the terms in the lease with respect to repair and maintenance. It stated that Rocco had not provided proof of insurance. It further stated that subsequent to 3M’s purchase of the premises, Rocco had not paid its utilities, specifically, the water bill.

[24] Rocco maintains that the lease does not provide 3M the right to enter the premises and install a water meter or change the way in which utility is charged to Rocco. Rocco provided proof of insurance. Rocco states that the requirement for postdated cheques is not grounds for eviction given the existing arrangement that the superintendent picks up the rent check at the premises. Rocco further states that 3M continued to refuse to clarify the alleged outstanding arrears or provide any evidence which supports the position, despite repeated requests. Rocco states that there are no rent arrears and payment of all of its utilities are up-to-date.

[25] 3M retained counsel. He sent a letter to Rocco’s counsel dated June 22, 2018 which states,

… your client’s tenancy is indeed on a month to month basis, the original term of the Lease having expired and no extension having been formally agreed to. Accordingly, the Lease is capable of being determined with the appropriate notice which was previously delivered to your client from my predecessor. The issues of non-compliance and default set out in that correspondence simply serve as justification for the Landlord’s unwillingness to continue with the monthly tenancy…

The landlord will expect to receive vacant possession of the leased premises on or before [June 4, 2018].

[26] On July 3, 2018, Rocco’s counsel responded, stating that the lease had been renewed, that it was valid and, among other things, any attempt by 3M to interfere with Rocco’s rights to possession would be unlawful.

[27] On July 4, 2018, Rocco attempted to pay its rent for July to the superintendent and was advised that Mr. Xu had instructed that rent would not be accepted.

[28] There are a number of inconsistencies in 3M’s position. As noted above, 3M stated that Rocco owed $14,400. Four days later, the premises were restored to Rocco. One month later, 3M took the position that it wanted to use the space so this was the reason for the termination. On June 22, 2018, for the first time, 3M alleged that the lease was not properly extended and would be terminated on July 31, 2018.

[29] 3M states that it provided to Rocco copies of notices which adjust for year-end the additional rent to be paid. Rocco has been in default of payment of additional rent of approximately $4,500 since 2013. 3M states that even if it received the notice of renewal, it was not obliged to accept a renewal when Rocco was in breach of the lease.

[30] I note that the 2014 calculation dated January 2, 2015 totals $6,346.08. The 2015 calculation dated January 20, 2016 totals $4,071.72. The 2016 calculation dated February 5, 2017 totals $4,248.48. The 2017 calculation dated January 18, 2018 totals $4,932.24. These numbers are different from the rent summary referred to in paragraph 13. In that summary the following amounts are set out: the 2014 calculation is $8,867.10; the 2015 calculation is $6,644.56; the 2016 calculation is $7,716.14; and the 2017 calculation is $10,136.18. The total is $33,363.98. Rocco states that it did not receive any of these calculations. 3M states that the property manager delivered the calculations to Rocco. The total $33,363.98 conflicts with the notice to terminate dated April 29, 2018 which states that $14,400 is owing.

Conclusion

[31] Given the inconsistencies in 3M’s position as to what is owed and the issue of whether 3M received the Notice to Renew, I find that there are serious issues to be tried. Rocco operates a business out of the premises. If 3M were permitted to evict Rocco, it would suffer business losses. Irreparable harm would result. The balance of convenience favours Rocco because Rocco would suffer the greater harm for refusal of the remedy. An interim injunction will allow the business will be able to carry on while the application proceeds until it is finally determined on its merits.

[32] Accordingly, an order shall issue granting Rocco an interlocutory injunction restraining 3M from re-entry to the property municipally known as Unit 1, 70 Victoria Street East, Alliston, Ontario and restraining 3M from interfering in any way with Rocco’s possession and quiet enjoyment of the premises until further order of this court.

Costs

[33] Rocco requests costs of $14,624.65 on a partial indemnity basis. The Costs Outline indicates that counsel spent 33.7 hours on this matter together with an additional eight hours on court attendances and preparing for them. His law clerk spent 6.8 hours. I find that counsel’s hourly rate of $375 is reasonable given his seven years of experience; nevertheless, I cannot determine the work that was done in 33.7 hours because there is no breakdown. Only a total is provided. I find this number of hours to be high the absence of particulars. Counsel for 3M stated that $10,000 would be a reasonable amount for 3M to pay it was unsuccessful.

[34] Ultimately, in fixing an amount for costs, the overriding principles are fairness and reasonableness.[^3]

[35] In my view, a fair, reasonable and proportionate costs award for this application is $10,000, all inclusive, which 3M shall pay to Rocco and within 30 days.

Madam Justice M.E. Vallee

Released: January 31, 2019

[^1]: RJR – MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC), 1994 CarswellQue 120, para. 48. [^2]: 3M’s affidavit to which this document is attached as Exhibit B does not state the date when it was provided. [^3]: Boucher v. Public Accountants, 2004 14579 (ON CA), 71 O.R. (3d) 291.