Court File and Parties

COURT FILE NO.: CV-20-621 DATE: 2020/05/08 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

2261358 Ontario Inc. Applicant – and – Peter Kompter Respondent

Counsel: Sandra Watson, for the Applicant Peter Kompter, in person

HEARD: May 8, 2020

RULING ON APPLICATION FOR AN INTERIM INJUNCTION

G. E. Taylor J.

[1] This is an application brought pursuant to the Commercial Tenancies Act for various types of relief including that the applicant be allowed immediate access to the leased premises, that the respondent be restrained from entry or re-entry to the leased premises and the applicant be permitted to register a copy of the lease between the parties on title to the leased premises.

[2] This application was heard by way of video conference software because of the order of the Chief Justice of the Ontario Superior Court suspending operations of the court due to the COVID-19 pandemic, with the exception of urgent matters. This application was determined by Reid J, siting as triage judge, to be an urgent matter. Reid J determined that:

Therefore it is my decision that to the extent of the request for interim relief permitting the re-entry of the applicant to the premises and enjoining the respondent from further re-entry, and permitting registration of the lease on title to the premises, this matter is urgent. It may be heard in advance of the court’s return to regular operations which, at the moment, is not anticipated to be before early June 2020. (Triage Endorsement para. 12)

[3] The materials filed for use at this hearing are the Notice of Application, the affidavit of Bernard Kearney sworn April 27, 2020, the unsworn affidavit of the respondent, the supplementary affidavit of Bernard Kearney sworn May 6, 2020 and the factum of the applicant. The respondent has not filed a factum. At the beginning of the hearing the respondent acknowledged that the contents of his unsworn affidavit were true and that he would swear or affirm that the contents were true. I therefore proceeded with the motion on the basis of the draft affidavit of the respondent being satisfactory evidence.

Background

[4] The respondent is the owner of a commercial building located at 5 Princess Street in the City of Waterloo. The applicant has leased a portion of the building from the respondent beginning in the 1990s. The parties entered into a written lease dated November 1, 2017. The lease is for a period of five years with an option in favour of the applicant to renew the lease for a further term of five years. The lease is for the main floor and a room on the second floor of the leased premises.

[5] The applicant operates a licensed restaurant and bar on the main floor and the second floor room has been used as an office and storage room since before the written lease was signed. Section 1 of the lease describes the leased premises as:

… being the ground floor, the patio and second floor rooms in a commercial building and premises used as a restaurant and license bar centre with associated offices … including all buildings and improvements thereon as the Tenant has been enjoying prior to the date hereof.

[6] The lease provides for payment of base rent in the amount of $1400 per month inclusive of HST with the respondent being allowed to increase the base rent annually by an amount no greater than the increase of the “Canadian C.P.I. Index, all items, Toronto”. The lease also provides for additional rent consisting of:

a) utilities; b) costs and expenses for maintaining the premises excluding capital expenditures and structural repair; c) all other operating costs other than the respondent’s financing costs; and, d) any and all other sums to be paid [by] the tenant to the landlord for any purpose whatsoever.

Any additional rent not paid directly by the applicant is to be paid monthly on the first day of each month based on invoices delivered by the respondent. The lease also includes the right of the applicant to purchase the property at the same price and on the same terms as any bona fide offer to purchase the property received by the respondent. It is clear from the lease that any bona fide offer to purchase the property would be subject to the terms of the lease.

[7] In September, 2019 the respondent advised the principals of the applicant that he was interested in selling the property and inquired if the applicant was interested in purchasing the property. At this time there was a discussion about whether, if the respondent chose to sell the property, he would be required to do so subject to the lease. There was a further meeting involving the respondent and the principals of the applicant on October 16, 2019 at which time they again discussed the applicant purchasing the building and whether the lease would be binding on a subsequent purchaser.

[8] On October 28, 2019, the respondent delivered a handwritten note is to the applicant purporting to unilaterally amend several of the terms of the lease including additional rent. The note stated that the applicant was in breach of a zoning bylaw as result of its use of the second floor room as an office. The note ended with an assertion that if the applicant did not immediately pay the additional rent as determined by the respondent the locks to the premises would be changed.

[9] On December 21, 2019 the respondent delivered a handwritten document to the applicant advising of the terms of an offer which he had received to purchase the property. The document referenced the provision in the lease allowing the respondent to sell the property “subject to the terms of this lease”. The respondent claimed that the applicant was in breach of the Planning Act and therefore he had the right to terminate the lease. By way of a letter dated January 10, 2020, counsel to the applicant advised the respondent that the applicant did not intend to exercise its right of first refusal to purchase the property as provided for in the lease.

[10] On January 29, 2020, the respondent wrote to the applicant claiming numerous breaches of the lease and purporting to terminate the lease effective March 31, 2020. The reasons for terminating the lease included nonpayment of base rent, nonpayment of additional rent, and breach of the Planning Act in relation to the use of the second floor room. On February 14, 2020 counsel for the applicant wrote to the respondent asserting that the applicant had not breached any of the provisions of the lease.

[11] On April 1, 2020, the applicant paid the monthly rent of $1400 which was the amount it had been paying from the beginning of the lease. On April 7, 2020 the respondent locked the applicant out of the leased premises and posted a Notice of Termination and Forfeiture of Lease on the front door of the building. On May 1, 2020 the applicant paid, and the respondent accepted, rent for the month of May in the amount of $1400.

[12] In his affidavit, the respondent makes a number of complaints about the applicant some of which predate the signing of the lease. He alleges, without details, that he discussed with the principals of the applicant about the arrears of rent.

Discussion

[13] The test for the granting of an interlocutory injunction is set out in the case of R.J.R. Macdonald v. Canada (Attorney General), [1994] 1 S.C.R. 311 as follows:

a) The applicant must show that there a serious issue to be tried; b) The applicant must show that it will suffer irreparable harm if the injunction is not granted? c) There must be an assessment of which of the parties would suffer the greater harm by the granting or the refusal to grant the injunction.

[14] When the applicant seeks a mandatory injunction, it must not only show a serious issue to be tried but also that is likely to be successful at trial. (Barton-Reid Canada Ltd. v. Alfresh Beverages Canada Corp., [2001] O.J. No. 4116)

[15] I am satisfied that the applicant has met each of the three parts of the test for the granting of an interlocutory injunction.

[16] The respondent’s allegations about the applicant being in breach of the terms of the lease are vague and unsupported by written evidence. The complaints only surfaced when the respondent decided he wanted to sell the property without burdening the new owner with the applicant’s lease. Based on the evidence before me, I am satisfied that the applicant has not breached any terms of the lease.

[17] I am satisfied that the applicant will suffer irreparable harm if the injunction is not granted. The action of the respondent in locking the applicant out of the premises effectively puts an end to the business. The applicant will likely suffer a loss of goodwill if it is not allowed to continue in business.

[18] The balance of convenience, in my opinion, is significantly in favour of the applicant. As stated in the previous paragraph, if the injunction is refused, the applicant will be put out of business. Conversely, if the injunction is granted, the respondent will receive exactly what he contracted for when he signed the lease dated November 1, 2017.

Order

[19] For the foregoing reasons, upon applicant filing an undertaking to abide by any order concerning damages the court may make if it ultimately appears that the granting of the injunction has caused damage to the respondent for which the applicant ought to compensate the respondent, there will be an interlocutory injunction granting the applicant the right to re-enter, forthwith, the property described in the lease between the parties dated November 1, 2017 and enjoining the respondent from re-entering such premises except as may be permitted by the applicant and further enjoining the respondent from interfering with the applicant’s use and enjoyment of the property.

[20] The parties agreed in the lease that a copy of it would not be registered against title to the property. As the intent of this order is to restore the parties to their respective positions as of April 1, 2020, I decline to grant the applicant’s request that it be permitted to register a copy of the lease.

Costs

[21] The parties may make written submissions with respect to costs. Written Submissions shall not exceed three pages. The applicant shall provide to the respondent, within seven days, copies of it’s Costs Outline, Bill of Costs and Written Submissions. The applicant shall also file electronic copies of those documents with the court within seven days. The respondent is directed to file electronically with the court his Written Submissions within 14 days and provide counsel for the applicant with a copy of his Written Submissions.

G. E. Taylor J Released: May 8, 2020