Court File and Parties
Court File No.: CV-20-635391 Date: 2020-04-01 Superior Court of Justice - Ontario
Re: Eva Oppong, Applicant And: Desaro Holdings Inc., Respondent
Before: Kimmel J.
Counsel: Reshma Kishnani, for the Applicant (reshma.kishnani@millsandmills.ca) Karanpaul Randhawa, for the Respondent (kp.randhawa@me.com) Roger Blair, a director of 2248506 Ontario Inc., a non-party tenant in possession (with leave having been granted for him to speak on behalf of the corporation for purposes of today’s hearing)
Heard: March 27, 2020, by teleconference
Second Endorsement
The Application and History of this Proceeding
1The applicant is a commercial tenant seeking the return of possession and the quiet enjoyment of leased premises located at 104 Jane Street Unit B (rear, main floor) in Toronto (the “Leased Premises”). She claims to have been wrongfully locked out of the Leased Premises in January 2020. The applicant also asks for a trial to determine any damages she has suffered arising from the wrongful termination of her February 27, 2014 lease (the “Lease”). The applicant is a professional hairdresser and she used the Leased Premises for her hair salon throughout the term of the Lease, until she was locked out.
2The applicant maintains that she was not in breach of her Lease when it was unlawfully terminated by the respondent landlord and she was unlawfully locked out of the Leased Premises on January 16, 2020. This application was served on January 30, 2020. After an attendance on January 31, 2020 in Civil Practice Court, it first came on for a hearing on February 7, 2020. The application was scheduled as an urgent matter that was approved for hearing on March 19, 2020 by endorsement of Myers J. dated March 18, 2020 under the Notice to the Profession released by the Chief Justice of the Superior Court of Justice dated March 15, 2020. When it came before me on March 19, 2020 it had already been twice adjourned at the request of the respondent.
3The respondent landlord requested an adjournment on March 19, 2020 that I reluctantly granted to March 27, 2020, on terms and for reasons outlined in my March 19, 2020 endorsement. 1 Since that was the third adjournment request by the respondent, the March 27 return date was ordered by me to be peremptory to the respondent. No one sought an adjournment of the March 27 hearing.
4For the reasons that follow, the primary relief sought on the application is granted, upon the terms outlined at the end of this endorsement.
The Respondent’s Position
5The respondent opposes this application on the basis that the applicant’s Lease came to an end as of December 31, 2019 pursuant to the terms of a purported lease amending agreement dated February 7, 2018. The respondent claims this lease amending agreement provided for a reduced lease term of four years with an annual renewal option on December 31 of each of the four remaining years of the original Lease term, at the sole discretion of the landlord.
6The respondent also contends that the applicant should not be granted equitable relief from forfeiture or a mandatory order requiring the landlord to return possession of the Leased Premises to her. The respondent says that the applicant does not come to court with clean hands, pointing to alleged prior breaches by the applicant of the original Lease terms (although these alleged breaches are not relied upon as grounds for the termination of the Lease) and to account of certain heated interactions between the landlord’s representative and the tenant and another tenant.
Findings Regarding the Purported Lease Amending Agreement and Continuation of the Lease
7The position of the respondent primarily turns upon proof of the existence and validity of the purported February 2018 lease amending agreement signed by the respondent landlord’s agent and property manager on behalf of the landlord. I find that the respondent has failed to meet its onus of proving this, on a balance of probabilities. This finding is based on a number of considerations that are elaborated upon below.
8The applicant swears under oath that she did not execute the February 2018 purported lease amending agreement. She deposes that she saw it for the first time when the respondent included it as part of the material filed in response to this application on February 27, 2020. The applicant’s theory is that this lease amending agreement was falsified after the fact. She points out that the respondent did not initially behave in a manner consistent with its existence, in that:
a. The October 17, 2019 notice by which the landlord’s property manager and agent advised the applicant that her Lease would not be renewed and that she was required to vacate the Leased Premises by December 31, 2019 makes no mention of this purported lease amending agreement;
b. The applicant deposes that the property manager did not mention this purported lease amending agreement when she challenged the October 17, 2019 notice and she pointed out twice, after receiving the notice and again in December 2019 when the property manager and its agents attended at the Leased Premises, that the Lease term did not end until February 28, 2022;
c. Nor was the purported lease amending agreement mentioned by counsel for the respondent in correspondence that ensued between counsel after the applicant was locked out in January 2020.
9The copy of purported lease amending agreement appended to the responding material and produced on February 27, 2020 was signed by the landlord’s property manager and agent who maintains that it was duly executed. However, the landlord’s own representative, Ortenzia Caruso, testified on cross-examination that she had not reviewed the purported lease amending agreement and that she was unaware that it had been signed on the landlord’s behalf by the property manager. The landlord’s representative (Caruso) also testified during her cross-examination to a different understanding of the Lease terms and to a belief that the Lease had come to an end because the original Lease term was only for six years, with a two-year option for the landlord to extend it if the landlord was happy with the tenant (which she was not). That (different) understanding is not borne out in any of the documents, including the purported lease amending agreement. The property manager’s representative confirmed on cross-examination that he drafted this document and signed it for the landlord but did not discuss the details of it with the landlord’s representative or seek instructions from the landlord to enter into such an agreement.
10The property manager’s representative undertook on his cross-examination to produce the original February 2018 purported lease amending agreement for inspection. At the time of the third adjournment request on March 19, 2020 the original had not been produced. One of the directions that I gave in my March 19, 2020 endorsement was that, if the respondent intends to answer the outstanding undertakings from the March 16, 2020 cross-examinations, they were to be delivered to the applicant’s counsel by no later than 6 pm on Monday March 23, 2020, failing which they would be treated as refusals. The original had not been produced by the time of the March 27, 2020 hearing and it was conceded by respondent’s counsel that it was open to the court to draw an adverse inference from the respondent’s refusal/inability to produce the original document. The inference that I draw is that the copy of the purported lease amending agreement produced in the responding material is not a true copy of an original document and that it is not authentic.
11This finding is supported by the applicant’s testimony that it was never signed, by the Caruso’s (the landlord’s representative) lack of knowledge of it and by the failure of the respondent or its property manager to place any reliance upon it prior to February 27, 2020. It is further reinforced by the fact that the respondent did not avail itself of the opportunity afforded to it to put in sworn testimony about the authenticity of the purported lease amending agreement from the person who is identified as the witness to both signatures on it, Sean Hall, who also happens to be one of the shareholders of the new tenant in the Leased Premises. It was noted in my March 19 endorsement that there was reason to believe that the shareholder of the new tenant in possession may have relevant information about the matters in dispute as between the applicant and respondent. An opportunity was afforded for further evidence to be filed and cross-examined upon. The timelines were tight, but this was an opportunity that was being afforded after over five weeks of indulgences already granted to the respondent, who appeared to be in communication with the new tenant.
12Instead of arranging for sworn evidence from Mr. Hall, the respondent attempted to file in a supplementary responding application record an email from Sean Hall dated March 26, 2020 (the day before the return of the application) in which he claims, among other things, that he witnessed the signing of the 2018 lease amending agreement. Mr. Hall says that he is in quarantine but acknowledges that he has spoken to the property manager at length and indicates that he was asked by the property manager to send an email. His email makes no mention of any effort to secure his sworn testimony. An email is not sworn evidence that can be admitted for the truth of its contents on an application. Rule 39.01 requires evidence on applications to be given by affidavit. I agree with the applicant that it should not be admitted into evidence on this application, nor its contents considered for the truth of what is indicated therein.
13The applicant makes the further argument that there was no consideration for the purported lease amending agreement by which she is said to have agreed to reduce the original Lease term by four years. The respondent argues that this lease amending agreement provides consideration in the form of a reduction in the applicant’s share of the main floor hydro to 75% from the 85% provided for in the original Lease. However, all parties acknowledge that the applicant began to pay 75% of the hydro for the main floor early in the Lease, commencing sometime in 2014, and that her share had been further reduced to 70% at some point in 2018 or 2019. 2 Thus, for four years before the purported lease amending agreement the applicant’s share of the hydro had been reduced by agreement and custom. The respondent’s contention, that the applicant agreed in 2018 to a reduction in her share of the hydro that had already been in place for four years, in consideration for her giving up the last four years of her Lease term, does not accord with the commercial reality and conduct of the parties.
14The respondent’s counter argument to this is that there was no consideration for the reduction in the applicant’s proportionate share of the utilities. The respondent argues that, but for the lease amending agreement, it could have terminated the Lease for the applicant’s short payments of her share of the hydro. This argument does not resonate. It is conceded that the reduced utility payments had been accepted for a number of years by the landlord before the purported lease amending agreement was allegedly entered into. The Lease itself does not specify that all amendments to it must be in writing. The respondent relies on the proviso in the Lease that says that there are no representations or warranties outside of the express terms of the Lease. On an objective reading, that is referring to representations and warranties that pre-date the signing of the Lease, not agreed upon amendments after it was executed. In any event, the conduct of the parties in this case is consistent with the evidence of the applicant, that there was a verbal agreement to reduce her share of the hydro payments for the first floor. I find the Lease terms were amended to this extent by oral agreement.
15The validity and effect of the purported lease amending agreement have not been established by the respondent landlord. I find that the landlord’s notice of non-renewal of the applicant’s Lease was not valid and that the landlord breached the Lease and unlawfully interfered with the applicant’s quiet enjoyment of the Leased Premises when it locked her out on January 16, 2020. The Lease remains in effect and the applicant is entitled to possession and quiet enjoyment of the Leased Premises for the duration of the Lease term which expires on February 28, 2022, as long as she remains in compliance with the Lease terms. 3
Equitable Relief and Related Considerations
16The respondent argues that equitable relief from forfeiture is not available if a tenancy has validly terminated by its own terms. See Maverick Professional Services Inc. v. 592423 Ontario Inc, (2001) O.J. No. 1304 (Ont. S.C.J.), at para 7. However, I have found that the Lease did not terminate on December 31, 2019. The question of whether the applicant is entitled to relief from forfeiture is to be determined with reference to s. 20 of the Commercial Tenancies Act, R.S.O. 1990, c. L.7 and s. 98 of the Courts of Justice Act, R.S.O. 1990, c. C.43.
Alleged Breaches of the Lease by The Applicant
17The respondent concedes that the alleged previous instances of non-payment of hydro and other utilities by the applicant are not relied upon by it as grounds for terminating the Lease but maintains that these remain relevant to the consideration of whether the applicant is coming to court with “clean hands” and is a worthy beneficiary of the exercise of the court’s equitable discretion.
18The respondent’s evidence about these alleged prior short or late payments of utilities is general and unparticularized as to dates, or as to the amounts owing or for how long they were outstanding. The applicant acknowledges one instance when the hydro was disconnected because it was not paid but her explanation was that it was because the landlord, who was at the time receiving the hydro bills and paying them, did not notify her or the other tenant(s) about what was due from each of them. She offers a similar explanation for other instances of alleged non-payments. It is acknowledged by the respondent that payments of all utilities owing by the applicant were up to date in October 2019 when the notice of non-renewal was sent, and there is no evidence of any default by the applicant thereafter.
19The respondent also argues that the applicant was in breach of her Lease for unlawfully “sub-letting” a portion of the Leased Premises when she rented a chair in her hair salon to Sean Hall (the shareholder of the new tenant) so that he could provide hairdressing services. It is conceded that the landlord was aware that Sean Hall was performing hairdressing services at the Leased Premises during the currency of the applicant’s Lease and that the landlord did not indicate that this was a problem. The respondent was not able to direct me to any authority for the assertion that renting a chair in a hair salon is a sub-let of leased premises. Nor does sub-letting appear to be expressly prohibited under the terms of the Lease. In the circumstances, and without more facts or any legal authority on point, I am not prepared to find that the renting of a salon chair is an impermissible sub-letting of the Leased Premises under the Lease or that this was a breach by the applicant of the Lease.
20While the applicant does not concede she was in breach of the Lease, she argues that, even if she was, that would not foreclose her from obtaining the equitable relief she seeks. Even a tenant that has not technically complied with a contractual requirement to deliver a notice of renewal may be granted relief from forfeiture. Veloute Catering Inc. v. Bernardo, 2016 ONSC 7281, at paras. 32-37.
21In this case, there is ample evidence to support the applicant’s contention that she made diligent efforts to comply with the terms of her Lease. There is no suggestion that she was in default in the fall of 2019 when the notice of non-renewal was sent on behalf of the landlord, or thereafter. I find that the applicant’s efforts to remain in compliance with her Lease provide a sufficient foundation upon which the court may exercise its jurisdiction to grant the relief requested for the return of possession of the Leased Premises pursuant to s. 20 of the Commercial Tenancies Act, and s. 98 of the Courts of Justice Act.
Allegations of Improper Conduct by the Applicant
22The respondent also asserts that the applicant was volatile and behaved aggressively with Caruso, the landlord’s representative, Caruso’s daughter and another tenant. No evidence of this was proffered in the affidavits in-chief filed on behalf of the respondent. The evidence about this behaviour that was elicited during the cross-examinations of the applicant and Caruso provides differing accounts of what happened, but in any event, what they describe does not rise to the level of the type of conduct that would be grounds to deprive the applicant of the equitable relief she seeks.
The Respondent’s Repossession and Re-leasing of the Leased Premises
23The respondent further seeks to rely upon its own conduct in having entered into a commercial lease of the Leased Premises with a new tenant, as evidence of the genuineness of its belief and understanding that the applicant’s Lease had been validity terminated and that it repossessed the Leased Premises in good faith. The fact that the landlord has repossessed the Leased Premises is not a bar to granting relief from forfeiture, even if done in good faith (and it is not clear that the landlord was acting in good faith in this case when it did so).
24The court may exercise its discretion to grant relief from forfeiture and return possession of leased premises, notwithstanding that the landlord has re-entered and repossessed the Leased Premises. See Klassen v. Pasqualino Brothers, 2011 ONSC 4381, at para. 18.
25The applicant has good reason to raise suspicions about the authenticity of this new lease given that it is with a company in which Sean Hall (the witness to the purported lease amending agreement) is a shareholder and he himself claims to be the new tenant. The applicant points out that there are two different signed versions of this new lease. One was sent to counsel for the applicant in January 2020 that was signed by an unidentified representative of the new tenant. A different version was appended to the responding material delivered on February 27, 2020 that was signed by Sean Hall on behalf of the new tenant. 4 Further, although the lease with the new tenant purports to have been signed on December 15, 2019 and to commence on January 1, 2020, the new tenant was not physically on the Leased Premises and did not make its alleged status as the rightful occupant of the Leased Premises known to the applicant until a number of weeks after the applicant was locked out on January 16, 2020.
26Further, the applicant’s uncontradicted evidence is that the business that the new tenant was carrying on from the Leased Premises after she was locked out was a continuation of her business, under her signage and with the use of her chattels and equipment that were wrongfully withheld from her by the landlord. The applicant points out that this use is not consistent with the permitted use of the subject premises under the new tenant’s lease, which is stated to be for software development and music related activities.
27I agree that the conduct of the respondent in relation to the lease with the new tenant is equivocal at best and at worst is self-serving.
28Furthermore, the applicant argues that the existence of a third-party tenant in possession of the Leased Premises, even one that is not a party to the proceeding, is not a bar to the relief that the applicant seeks. See Zhang v. Goodland R. Inc., 2008 CarswellOnt 3534, at paras. 5, 10. I agree with the applicant that the presence of the new tenant in the Leased Premises is not a bar to the relief she seeks on this application, although it will have some implications for the terms of the relief that I am prepared to grant at this time and its implementation.
29The respondent relies on the case of 600433 B.C. Ltd. v. XJ Motors Ltd., [2011] B.C.J. No. 1735, to argue that the court can deny relief from forfeiture where a premise has been re-let and the landlord would face considerable damages for terminating the lease agreement with the new tenant. However, the circumstances of that case are distinguishable from this one. In that case, the tenant who was seeking relief from forfeiture had vacated the premises, in breach of the lease, there were numerous prior and subsisting defaults by the tenant under the lease and the tenant had not come to court with clean hands. The existence of a new tenant in the premises was not a central factor in the court’s decision not to grant relief from forfeiture in that case.
30In reaching the conclusion that this is an appropriate case in which to grant the relief sought by the applicant, I have considered all of the circumstances, as the respondent suggests the court should do, when deciding to exercise its equitable jurisdiction:
a. The history of the relationship between the parties has some examples of disagreement but was not irreparable in 2019;
b. The alleged breaches by the tenant of other covenants, such as the payment of utilities, are not serious when considered in light of the conduct of the parties consistent with the applicant’s evidence about the agreement to adjust the apportioned utility expenses; nor has it been established that the tenant unlawfully sub-let by previously allowing Sean Hall to rent a salon chair;
c. The alleged misconduct of the tenant in her aggressive behaviour towards the landlord and another tenant has not been demonstrated to be egregious;
d. It has not been demonstrated that the tenant acted in bad faith or that she does not come to court with clean hands;
e. The tenant’s uncontradicted evidence is that she intends to continue her business from the Leased Premises as soon as she is able to and until the end of the term of her Lease. It does not appear that what she is really seeking is monetary compensation; the trial of issues on damages that she has requested demonstrates a reservation of rights, not an ulterior purpose; and
f. The fact that the landlord does not appear to have forced the tenant out to re-lease the premises for a higher amount might be a relevant consideration in the balancing of equities but is not determinative in this case where the equities strongly favour the applicant.
See Michele’s Italian Ristorante Inc. v. 1272259 Ontario Ltd., 2016 ONSC 4888, at para. 35.
The Third Party in Possession of the Leased Premises
31The respondent contends that, even if the court finds that the applicant is entitled to exclusive vacant possession and quiet enjoyment of the Leased Premises (as I have done), it cannot order the landlord to deliver up exclusive possession and quiet enjoyment of the Leased Premises to the applicant because it has, in the meantime, entered into a new lease with a one-year term executed on December 15, 2019 with a new tenant (2248506 Ontario Inc.) that has been in exclusive possession of the Leased Premises since on or about January 16, 2020. While this might impact the timing of the return of the Leased Premises to the applicant, it is not an impediment to the relief she seeks, for reasons already indicated in the previous section of this endorsement.
32One of the terms of the last adjournment required the landlord to ensure that the new tenant was made aware of these proceedings and to afford the landlord an opportunity to tender evidence from that new tenant or its principal(s), one of whom (Sean Hall) occupies the residential premises above the Leased Premises and is named as a witness to the February 2018 purported lease amending agreement. No such evidence was tendered from the new tenant or any of its representatives.
33In compliance with my March 19, 2020 endorsement, the new tenant was put on notice of the proceedings that would be taking place on March 27, 2020. A representative of the new tenant was granted leave of the court to participate and speak on its behalf at the March 27, 2020 hearing. The new tenant claims to have the right and desire to continue to occupy the Leased Premises for the term of its lease, to the end of December 2020, and to have committed to make certain renovations of an unspecified value to the Leased Premises, although no evidence has been provided. I have already ruled that Sean Hall’s email dated March 26, 2020 should not be admitted into evidence.
34The new tenant has not been joined as a party to this application by either party. The applicant argues that it is within the court’s jurisdiction under Rule 5.03 to add the new tenant as a party now and bind it to this decision. I am not prepared to do so. The director of the new tenant, Roger Blair, participated in the March 27, 2020 hearing and indicated that the new tenant would like to retain counsel to protect its rights in respect of the Leased Premises. The court confirmed that any order arising out of the March 27, 2020 hearing would not make any findings about the enforceability, validity or interpretation of the December 2019 lease said to have been entered into by the property manager on behalf of the landlord with the new tenant.
35As outlined previously in this endorsement, the applicant questions the authenticity of that new lease, based on the evidence that the respondent has tendered about it. The applicant contends that the new tenant in possession has conspired with the landlord to in essence create and back-date this lease amending agreement, which the landlord produced in its responding materials and which the applicant says she did not sign and had not previously seen.
36The landlord has indicated that it may have to bring legal proceedings for the removal of the new tenant from the Leased Premises if it is ordered to deliver up vacant possession of the Leased Premises to the applicant. If the new lease is valid, the landlord claims that it may have no right to evict that tenant under its lease before the end of the term on December 31, 2020, unless that new tenant falls into default (and subject to any applicable suspension order that might prevent the eviction of commercial tenants during the COVID-19 pandemic, about which neither counsel was aware at this hearing). 5
37Any issues with respect to the existence and validity of the new lease and the new tenant’s right to remain in possession of the Leased Premises will need to be addressed either by agreement or legal process among and between the landlord and the new tenant. For purposes of this proceeding, the landlord is directed to take all lawful steps within its means to deliver up exclusive vacant possession and quiet enjoyment of the Leased Premises to the applicant.
38To the extent that the third party remains in possession of the Leased Premises and that continues to cause damages to the applicant for the loss of her business, those damages will be the landlord’s responsibility, since it was the landlord (or its authorized agent) that created this situation. Those damages will be determined at a trial that I will remain seized of.
Trial of Issue on Damages
39Counsel for the respondent advised that the landlord did not cash the rent cheque for January 2020. In the circumstances, the applicant should not have to pay rent for January, February or March 2020, or until exclusive possession and quiet enjoyment of the Leased Premises is returned to her. To the extent that the applicant suffers any damages as a result of her dispossession of the Leased Premise between January 16, 2020 and the return of the exclusive possession and quiet enjoyment of the Leased Premises to her, she may seek to recover those at the trial on damages that she has requested.
40I am directing a trial for the determination of the damages claimed by the applicant for the wrongful termination of her Lease and any period of dispossession of the Leased Premises. 6 I will remain seized of this matter and will hear that trial of issues. The applicant has agreed to deliver a statement of claim within 30 days of this endorsement. I direct her to do so, and the respondent will then have 30 days to deliver its statement of defence. The applicant will thereafter have 10 days to deliver her reply, if any. The parties are directed to then attempt to agree upon a discovery plan on the damages issue. If they fail to reach an agreement the parties may request a chambers appointment with me, to settle any issues with respect to the discovery plan.
41Once the discoveries have been completed the parties may request a chambers appointment before me or attend in Civil Practice Court to schedule the trial of issues that I will remain seized of and to establish the manner in which the evidence will be presented at that trial.
Order and Terms
42The Commercial Tenancies Act and the Courts of Justice Act both provide (in sections 20 and 98, respectively) that the court may grant relief against forfeiture of a lease, or such other relief as the court thinks fit on such terms as the court considers just.
43The following orders, declarations and directions are made arising from my finding herein:
a. The applicant’s Lease is declared to be valid and subsisting with two years remaining in its term, to February 28, 2022;
b. The Schedule “A” to the Lease is declared to have been amended by agreement between the respondent and applicant, consistent with the manner in which it has been performed, such that the applicant’s percentage share for the common hydro of the main floor of the building in which the Leased Premises are situated shall continue to be 70% for the duration of the Lease term, all other terms of the Lease remaining unchanged and in full force and effect, unless further amended hereafter;
c. The respondent did not have the right to declare the Lease to be terminated and at an end as of December 31, 2019 and the respondent’s notice of non-renewal of the Lease and of its purported termination as of December 31, 2019 is declared to have been invalid, void and of no force and effect;
d. The respondent did not have the right to lock the applicant out of the Leased Premises on January 16, 2020 and the respondent’s actions in doing so were a breach of the landlord’s obligations under the Lease;
e. It is declared that the applicant is entitled to receive, and the respondent is obligated to deliver forthwith, exclusive vacant possession and quiet enjoyment of the Leased Premises and to the return of her chattels, equipment and fixtures that were physically on the Leased Premises when she was locked on January 16, 2020;
f. If the respondent is unable to forthwith deliver exclusive vacant possession and quiet enjoyment of the Leased Premises to the applicant as a result of its actions in having purported to enter into another lease of the Leased Premises with a new tenant the landlord is directed to take all such actions and proceedings as it is legally entitled to in order to remove the new tenant from the Leased Premises; in the meantime, the order for the applicant’s vacant possession and quiet enjoyment of the Leased Premises shall be suspended pending the lawful removal of the new tenant from the Leased Premises, but this shall not relieve the respondent of its obligations to the applicant, including (without limitation) its liability for damages for any lost revenue and/or loss of business opportunities that the applicant may prove to have suffered during this period of suspension;
g. The respondent landlord, or its agent/property manager, shall deliver by email to the director of the tenant in possession 2248506 Ontario Inc., Roger Blair, and to its shareholder, Sean Hall, a copy of this endorsement, and provide proof of such to counsel for the applicant;
h. If no read receipt or other confirmation of receipt is received by the landlord from the new tenant (from at least one of either Mr. Hall or Mr. Blair) then the landlord/its property manager shall deliver a hard copy of this endorsement to the subject premises by no later than noon on Thursday April 2, 2020, and provide proof of such to counsel for the applicant;
i. The respondent/landlord shall forthwith provide the applicant with notice of any proceedings taken against the new tenant or in respect of the lease entered into with the new tenant by sending a copy by email to counsel for the applicant and shall provide the applicant with at least five business days’ notice when it is in a position to provide her with exclusive vacant possession of the Leased Premises;
j. The applicant shall not be required to pay any rent (including minimum rent, additional rent or payments for utilities) in respect of the Leased Premises from and after January 2020 and until such time as she is given exclusive vacant possession and quiet enjoyment of the Leased Premises, following the five business days’ notice provided for herein (the “Period of Suspension”);
k. The term of the Lease may be extended, at the applicant’s option upon the current lease terms, for a period of time equal to the Period of Suspension by notice to be given to the landlord in writing at least 90 days before the specified end of the term of the lease on February 28, 2022;
l. A trial is ordered to determine what, if any, damages the applicant has suffered or may suffer as result of my findings. In connection therewith:
i. the applicant will deliver a statement of claim in respect of her claim for damages arising out of this endorsement within 30 days of this endorsement;
ii. the respondent will have 30 days to deliver its statement of defence in respect of the damages claimed;
iii. the applicant will thereafter have 10 days to deliver a reply, if any;
iv. the parties shall thereafter attempt to agree upon a discovery plan in respect of the issues to be tried as defined by the above pleadings delivered in this trial;
v. if the parties are unable to agree to a discovery plan, they may request a chambers appointment with me to settle any issues with respect to the discovery plan;
vi. once the discoveries have been completed, the parties may request a chambers appointment before me or attend in Civil Practice Court to schedule the trial of issues and to establish the manner in which the evidence will be presented at that trial; and
vii. I shall remain seized of this trial of issues, unless the court directs otherwise.
viii. Unless otherwise specified, during the period of suspension of normal court operations due to the COVID-19 pandemic all service and notice to be delivered between the parties may be effected by email between counsel, or directly if any party becomes self-represented.
Costs and Implementation
44The applicant seeks her substantial indemnity costs of this application which are estimated to be approximately $28,000.00, inclusive of all fees and disbursements to date. The applicant says she acted immediately upon being locked out of the Leased Premises and that, prior to that, she believed that there had been a misunderstanding about the lease term that was resolved when she showed the landlord’s agent her Lease with the term expiring on February 28, 2022 in October and December 2019.
45The applicant seeks substantial indemnity costs under Rule 57, primarily on the basis of the respondent’s conduct, not only for having wrongfully terminating her Lease but also for its delay in response to this application, failure to adhere to timetables set and agreed to, and its repeated requests for adjournments. She also points to the respondent’s conduct in having entered into a lease with a new tenant under suspicious circumstances in an apparent attempt to create rights in a third party to prevent the return of the Leased Premises to her.
46The respondent asks for an opportunity to make submissions as to costs, having not yet seen the applicant’s costs outline, and opposes the applicant’s request for substantial indemnity costs. The respondent says that the applicant should have pre-emptively brought this application when she received the notice of non-renewal in October 2019 and/or after the landlord’s agents came to the Leased Premises in December 2019, rather than waiting to be locked out.
47I am prepared to allow the respondent a further opportunity to make brief written submissions on costs before I make a final decision about entitlement, scale and quantum of costs, if the parties are not able to agree on costs. With the benefit of my decision and this endorsement, I encourage the parties to try to reach an agreement on costs. If they are able to do so, they should advise the court of such by April 14, 2020 and provide a draft order.
48If no agreement is reached on costs, then the applicant may make brief written submissions on costs (not to exceed 2 pages double spaced) to be delivered together with a costs outline and any supporting authorities by April 21, 2020. The respondent may make a brief written responding submission on costs (not to exceed 2 pages double spaced) to be delivered together with a costs outline and any supporting authorities by April 28, 2020. The applicant may make a brief reply submission on costs (not to exceed 1 page double spaced) to be delivered by May 4, 2020.
49All cost submissions should be served on the opposing party and delivered by email to my assistant at: linda.bunoza@ontario.ca Cost submissions should, if possible, also be filed with the court following whatever current Notice to the Profession is in place at the time regarding COVID-19, together with a copy of this final (signed) page of my reasons with a request that the intake office send them to me electronically.
50In these extraordinary circumstances, the parties may also agree to extend the times that I have indicated for their costs submissions without the prior approval of the court. The parties are asked to advise the court of any such agreement by email to my assistant.
Effect and Enforceability of this Endorsement
51Notwithstanding Rule 59.05, this endorsement is effective from the date it is made and is enforceable as a Judgment without any need for entry and filing. In accordance with Rule 1.04, no formal Judgment need be entered and filed unless an appeal or a motion for leave to appeal is brought to an appellate court. Any party to this endorsement may nonetheless submit a formal Judgment for original signing, entry and filing when the Court returns to regular operations.
Kimmel J.
Date: April 1, 2020
Footnotes
- The hearing date was mistakenly indicated in my First Endorsement to be March 18, 2020; it was March 19, 2020.
- The evidence is that, commencing shortly after the Lease began in 2014, the parties agreed that the applicant’s share of the hydro would be reduced to 75% of the total bill for the main floor, and more recently, in 2018 or 2019, it was agreed that her share would be reduced to 70% of the total bill. The applicant contends that this adjustment was to more equitably distribute responsibility for hydro among the ground floor tenants based on their usage. The respondent does not dispute that this is what the applicant was paying at the time of the purported notice of non-renewal of her Lease. The respondent did not tender any evidence from the other tenant of the main floor (who paid the remaining proportion of the hydro) to suggest that there was any different arrangement or agreement in place. The applicant’s share of the gas (33%) and water (85%) provided for the original Lease are shared among four rather than just two tenants and have remained unchanged throughout the Lease term.
- The applicant acknowledges that this may include an obligation on her to pay rent and other expenses in respect of the Leased Premises during a period in which she is restricted from carrying on her business due to the restrictions that have been imposed on non-essential service providers during the COVID-19 pandemic. The applicant has represented to the court that she is prepared to start paying rent again under the terms of her Lease as soon as vacant possession of the Leased Premises (and her chattels that were located at the Leased Premises when she was locked out) are returned to her, even if she is unable to operate her business because of COVID-19 restrictions.
- The property manager’s explanation for this on cross-examination was that it was signed by Sean Hall and then re-signed by an authorized representative of the new tenant when it was realized that Mr. Hall was not so authorized.
- I am aware of a suspension order in place from the Chief Justice with respect to the enforcement of eviction orders against residential tenants, but counsel was not able to assist with whether there is a similar suspension in place for commercial tenants.
- These have not been delineated yet, but are expected to include (without limitation) business losses, including lost revenue and/or lost opportunities and may also include claims for chattels that were left on the Leased Premises when the applicant was locked out that have not been itemized or returned to her (despite the undertaking to do so during the cross-examination of the landlord’s agent). To the extent that there are counter-arguments that the landlord may make about loss of business due to other causes, such as COVID-19 and restrictions that might have been placed on the applicant’s ability to carry on business during any of the period of her dispossession of the Leased Premises, those arguments may be raised by the respondent at the trial of damages. Nothing I say in these reasons is intended to support or detract from any such arguments.