Court File and Parties
Court File No.: CV-20-640870 Date: 20200629 Superior Court of Justice – Ontario
Re: Courtney Campbell, Applicant And: 1493951 Ontario Inc. and Tri-Echo Restaurants Inc., Respondents
Before: Davies J.
Counsel: Russell Bennett, for Mr. Campbell Raj Sharda, for 1493951 Ontario Inc. Ryan Wilson, for Tri-Echo Restaurants Inc.
Heard: June 12, 2020
Reasons for Decision
A. Overview
[1] Until recently, Courtney Campbell operated 1Tonamara Cannabis Boutique out of a commercial unit in Brampton that was leased by Tri-Echo Restaurants Inc. Mr. Campbell does not have a license or authorization to run a cannabis store in Ontario as required under the Cannabis Control Act, 2017 and the Cannabis Licence Act, 2018.
[2] On April 21, 2020, the Peel Regional Police executed a search warrant at 1Tonamara. The police seized several kilograms of marijuana and charged four of Mr. Campbell’s employees. Neither Mr. Campbell nor his business was charged. That same day, the owner of the premises, 1493951 Ontario Inc. (“149”), changed the locks on Mr. Campbell’s business and took possession of the premises.
[3] Mr. Campbell seeks an Order granting him relief from forfeiture and re‑entry into his business. Mr. Campbell also brought an urgent motion for interim relief from forfeiture pending the hearing of this Application, which was dismissed on May 13, 2020 (2020 ONSC 3017). Mr. Campbell argues that 149 knew he was running a cannabis retail business and consented to him subletting the unit from Tri-Echo for that purpose. He also takes the position that his cannabis store is a legal operation and he did not breach the lease. Finally, Mr. Campbell argues that even if he did breach his lease, the forfeiture is unlawful because he was not given notice of 149’s intention to terminate the lease or an opportunity to cure any breach. In the end, Mr. Campbell argues that it would be unjust to deny him relief from forfeiture in this case.
[4] 149 takes the position that Mr. Campbell did not have a valid sub‑lease with Tri-Echo for the premises and, therefore, has no standing to seek relief from forfeiture. In the alternative, 149 takes the position that by carrying on an illegal cannabis business, Mr. Campbell breached the terms of its lease with Tri-Echo, which incorporated Mr. Campbell’s sub-lease with Tri-Echo. 149 also argues it was not required to give Tri-Echo or Mr. Campbell notice of intention to terminate the lease in April 2020 because notice was given under the Commercial Tenancies Act in August 2019 that Tri-Echo was in breach of its lease because the premises were being used for an unlicensed cannabis store and 149 intended to terminate the lease.
[5] Tri-Echo Restaurants opposes Mr. Campbell’s application but does so without prejudice to its own position under its lease with 149. Tri-Echo takes the position that its agreement with Mr. Campbell was a license to occupy the premise not a sub-lease.
[6] There are four issues on this application:
(a) Does Mr. Campbell have a valid sublease with Tri-Echo such that he has standing to request relief from forfeiture? (b) Did Mr. Campbell breach his sub-lease by operating an illegal cannabis retailer? (c) Can 149 rely on the August 2019 notice as a basis to terminate the lease in April 2020? (d) Even if Mr. Campbell breached his sub-lease, should he nonetheless be granted relief from forfeiture?
[7] For the reasons that follow, I find that Mr. Campbell has standing to seek relief from forfeiture against 149. However, I find that 149 has established that Mr. Campbell violated the lease by running an unlicensed cannabis store without an exemption. I also find that 149 can, in the circumstances of this case, rely on the August 2019 notice to justify terminating the lease in April 2020. Finally, I find that Mr. Campbell has not established that he should be granted relief from forfeiture. Mr. Campbell’s application is, therefore, dismissed.
B. Does Mr. Campbell have standing to request relief from forfeiture?
[8] Tri-Echo first leased the unit in the spring of 2016 and opened a restaurant. Mr. Campbell took possession of the premises from Tri-Echo and opened his cannabis store in January 2019. In July 2019, six months after 1Tonamara opened, 149 purchased the unit and assumed the lease with Tri-Echo.
[9] Mr. Campbell is not a party to the lease between Tri-Echo and 149. Nonetheless, the Commercial Tenancies Act allows a sub-tenant to seek relief from forfeiture (s. 21). If Mr. Campbell had a valid sub-lease with Tri-Echo, he has standing to claim relief from forfeiture against 149 and seek possession of the premises for the remainder of his sub-lease.
[10] To determine whether Mr. Campbell has a valid sub-lease with Tri-Echo, I must decide two issues. First, was the agreement between Tri-Echo and Mr. Campbell a sub-lease or a licence to occupy? Second, If Mr. Campbell had a sub-lease agreement with Tri-Echo, was it valid under the head lease between Tri-Echo and 149?
(i) Did Mr. Campbell enter a sub-lease agreement with Tri-Echo?
[11] An agreement will constitute a lease if it grants, and was intended to grant, exclusive possession of the premises to the occupant. (Stoneridge Travel Centre Inc. v. 1079334 Ontario Ltd, [1999] O.J. No. 1688 (S.C.) at para. 54; aff’d). I am satisfied that the agreement between Mr. Campbell and Tri-Echo was a sub-lease.
[12] At first, Mr. Campbell and Tri-Echo negotiated an agreement whereby Mr. Campbell would pay 50 percent of the rent Tri-Echo owed to 149 for the right to occupy and use the premises during the day as a cannabis store. Under their initial agreement, Tri-Echo could continue to use the premises, or find someone else to use the premises, as a restaurant or a nightclub when the cannabis store was closed.
[13] However, Mr. Campbell decided he did not want anyone else using the premises when his store was closed. Even though Mr. Campbell did not have a license to operate a cannabis store as required by the Cannabis Control Act and Cannabis Licence Act, he nonetheless followed the standards that have been set by the Registrar of the Alcohol and Gaming Commission of Ontario for authorized cannabis retailers in terms of surveillance, security, record-keeping and inventory management. Mr. Campbell was concerned that he would be violating the Registrar’s standards if he shared the space with another business, especially a business with a liquor license. Mr. Campbell and Tri-Echo then agreed that Mr. Campbell would pay the full rent plus additional expenses as soon as he occupied the space on January 1, 2019 and that nobody else would use the space.
[14] Mr. Tjan, the principal of Tri‑Echo, suspended his liquor license with the Alcohol and Gaming Commission of Ontario on January 1, 2019, which suggests that he did not intend to run a restaurant or nightclub at the premises once Mr. Campbell took possession of the space.
[15] Taken together, this evidence satisfies me that the final agreement between Mr. Campbell and Tri-Echo provided Mr. Campbell with exclusive possession of the premises from January 1, 2019 to April 30, 2021. Their agreement was, therefore, a sub-lease.
(ii) Was the lease between Mr. Campbell and Tri-Echo valid under the head lease?
[16] 149 argues that even if Mr. Campbell entered into a sub-lease agreement with Tri-Echo, it was not valid for two reasons: First, it was not in writing and, therefore, violated the Statute of Frauds. Second, it violated the head lease between Tri-Echo and 149, which required 149 to consent in writing to any sub-lease.
[17] The Statute of Frauds says that every lease must be in writing. An exception is provided for leases that do not exceed three years in length (s. 3). The sub-lease entered into by Mr. Campbell with Tri-Echo on January 1, 2019 had a term of 28 months. As a result, the Statute of Frauds does not apply.
[18] The head lease between Tri-Echo and 149 says that Tri-Echo cannot assign or sublet all or any part of the premises “without the prior written consent of the Landlord”. 149 did not provide its written consent to the sub‑lease between Tri-Echo and Mr. Campbell. Nonetheless, I am satisfied that 149 knew that Tri-Echo had sub-leased the premises to Mr. Campbell, consented to the sub-lease and waived the provision in the lease that required its consent to be in writing.
[19] The head lease between Tri-Echo and 149 specified that the premises would be used solely as a nightclub or bar. The lease also says that any alternation, amendment, change or addition is not binding unless it is in writing and signed by both parties. The lease between Tri-Echo and 149 was never amended in writing to permit the premises to be used as a cannabis retail operation. Nonetheless, counsel for 149 conceded that by August 2019, Rehan Chaudary, the sole director of 149, knew that the premises were being used as a cannabis retail store, not a nightclub. Counsel for 149 also conceded that 149 agreed to change the “exclusive use” provision of the lease to allow the premises to be used as a cannabis store and effectively waived the requirement that the amendment had to be in writing to be binding. In effect, 149 conceded that this change was be valid without written confirmation, notwithstanding the language of the lease.
[20] Mr. Chaudary swore in his affidavit that he did not know that Tri-Echo sublet the premises to Mr. Campbell. He swore that he thought Mr. Campbell and Mr. Tjan were partners in the cannabis operation.
[21] I accept that Mr. Chaudary initially thought that Mr. Tjan and Mr. Campbell were partners in the cannabis business. However, I find that Mr. Chaudary learned through his ongoing negotiations with Mr. Campbell that Mr. Campbell had sub‑leased the premises from Tri-Echo.
[22] The premises in question are part of a larger commercial complex that 149 bought on July 4, 2019. At that time, Tri-Echo was the tenant, but Mr. Campbell was already running his cannabis business. When Mr. Chaudary conducted an inspection of the property before finally closing on his purchase, he was denied entry into 1Tonamara because he was not a “member”. He testified that he did not notice the sign on the business that said it was a cannabis boutique and bakery at that time. Nonetheless, Mr. Chaudary and 149 learned that 1Tonamara was a cannabis store shortly after he assumed ownership of the mall.
[23] On August 21, 2019, 149 sent a notice to Tri Echo alleging that Tri‑Echo was breaching the lease by selling and distributing cannabis without a proper license. The notice gave Tri-Echo 10 days to rectify the breach or 149 would repossess the unit. Throughout the fall of 2019, Mr. Chaudary asked Mr. Tjan and Mr. Campbell for proof that the cannabis store was operating lawfully. Mr. Campbell assured Mr. Tjan and Mr. Chaudary that he had an exemption to operate without a license and that his business was lawful. Mr. Chaudary believed Mr. Campbell so 149 did not act to repossess the property.
[24] In a text message dated October 7, 2019, Mr. Chaudary asked Mr. Tjan for his “partner's” contact information. In reply, Mr. Tjan sent Mr. Campbell’s phone number to Mr. Chaudary. On the same date, Mr. Tjan sent Mr. Chaudary a text message that says, “Please discuss lease related issues with me and operational items with him”, referring to Mr. Campbell. I accept that Mr. Chaudary initially believed that Mr. Campbell and Mr. Tjan were working together on the cannabis business.
[25] However, between January and April 2020, Mr. Chaudary was negotiating with Mr. Campbell directly about various joint business ventures. Mr. Chaudary testified that he was negotiating with Mr. Campbell to buy out Tri-Echo’s interest in the profits from 1Tonamara. As part of its sub-lease with Tri-Echo, Mr. Campbell agreed to pay Tri‑Echo a portion of the monthly profits earned by 1Tonamara. Mr. Chaudary wanted to buy out Tri-Echo’s interest in Mr. Campbell’s business so he would receive a portion of the profits. Mr. Chaudary and Mr. Campbell were also talking about opening a call centre in another unit in the mall where the cannabis store was located.
[26] I find that Mr. Chaudary must have learned during his negotiations with Mr. Campbell that Mr. Campbell and Mr. Tjan were not business partners and that Mr. Campbell was subletting the premises from Tri-Echo. Mr. Chaudary could not have discussed investing in 1Tonamara without learning that Mr. Tjan was not a partner in that business. Similarly, Mr. Chaudary would have learned that Mr. Campbell and Tri-Echo were distinct entities when discussing details of leasing another commercial unit to Mr. Campbell for the call centre.
[27] 149 did not take steps to terminate Tri-Echo’s lease once Mr. Chaudary learned about Mr. Campbell’s sub-lease. 149 continued to accept rent from Tri-Echo knowing that Mr. Campbell was subletting the space. Like with the exclusive use provision that was waived by 149, I find that 149 consented to Mr. Campbell’s sub‑lease and waived the requirement that 149 provide its consent in writing.
(iii) Conclusion on Standing
[28] I find that Mr. Campbell entered into a sub-lease agreement with Tri-Echo for the premises in question. I also find that the sub-lease between Mr. Campbell and Tri-Echo was valid under the head lease between Tri-Echo and 149. I, therefore, find that Mr. Campbell has standing to claim relief from forfeiture.
C. Did Mr. Campbell breach his sublease with Tri-Echo Restaurants?
[29] By entering into a lease agreement with Tri-Echo, Mr. Campbell was bound to comply with the terms of the head lease between Tri-Echo and 149. The head lease between Tri-Echo and 149 contained a clause that required the tenant to comply with all “laws, ordinances, rules and regulations of the federal, provincial and municipal authorities”. The head lease also contains a covenant by which the tenant agrees to conduct its business in a manner that complies with all statutes, by‑law, rules, ordinances and regulations. It is these clauses that 149 says Mr. Campbell breached because he did not have the required license and authorization to operate a cannabis business.
[30] The sale of cannabis for recreational purposes is a highly regulated industry in Ontario. Section 6 of the Cannabis Control Act says that no person other than an “authorized cannabis retailer” can sell cannabis. To be an authorized cannabis retailer in Ontario, a retail operator license and a retail store authorization are required. Each retail cannabis store is also required to have a licensed retail manager. The Registrar of the Alcohol and Gaming Commission of Ontario issues the licenses and authorizations required under the Cannabis Licence Act, 2018.
[31] Mr. Campbell believes that the regulatory regime in Ontario is discriminatory. He objects to the requirement that licensed cannabis retailers only sell cannabis that is purchased from the Ontario Cannabis Retail Corporation (Cannabis Licence Act, 2018, s. 18). Mr. Campbell feels that he can offer better quality cannabis products to his customers by buying them directly from the producers rather than through the provincially regulated wholesaler. In other words, Mr. Campbell does not like the regulatory regime that has been set up in Ontario for the sale of cannabis and has chosen to not apply for the necessary license and authorization.
[32] Section 5 of the Cannabis Control Act creates three exemptions to the restrictions on the sale and distribution of cannabis in Ontario. First, the Act and its regulations do not apply to cannabis that is sold, distributed and purchased for medical purposes in accordance with the federal legislation, which requires a license from Health Canada. 1Tonamara sold cannabis to both recreational and medical users. Mr. Campbell does not have a license to sell cannabis for medical purposes to his customers.
[33] Second, the Act and its regulations do not apply to cannabis that is produced or obtained for medical purposes in accordance with a Court order. Mr. Campbell has not sought a Court order permitting him to sell cannabis for medical purposes.
[34] Finally, the Lieutenant Governor in Council can make regulations “exempting any person, place or thing” from the application of the Act or its regulations. Mr. Campbell has not requested an exemption for himself or his business from the provincial government.
[35] It would also be open to an individual who objects to the application of the Cannabis Control Act or the Cannabis Licence Act to bring an Application to the Court to have the legislation struck down as unconstitutional or to seek a constitutional exemption from the requirements of the Act. Before 149 changed the locks on the premises, Mr. Campbell had not sought a Court order exempting him from the licencing requirements for his business. Mr. Campbell has very recently filed an application in this Court for an exemption and his application is still outstanding.
[36] Mr. Campbell claims that he is entitled to an exemption to the licensing requirements of the Cannabis Control Act and the Cannabis License Act. In October 2019 – more than 10 months after he started operating 1Tonamara – Mr. Campbell served some sort of “declaration” on the Mayor of Brampton, the Chief of the Peel Regional Police Service and the Director of Municipal Standards for the City of Brampton claiming that he is entitled to an exemption under the Cannabis Control Act. Mr. Campbell chose not to file a copy of that declaration as part of the record on this Application. I, therefore, do not know the basis on which he claims he is entitled to an exemption.
[37] Mr. Campbell now takes the position that because he has asserted that he should be exempt from the licensing regime and because his company has never been charged with violating any act and because he has an outstanding Application before the Court, his business is operating legally. I disagree.
[38] The fact that Mr. Campbell and 1Tonamara have not been charged or convicted under either the Cannabis Control Act or the Cannabis Licence Act does not change the fact that Mr. Campbell does not have the required authorizations or an exemption that would make his business legal. There are very clear regulatory requirements for operating a legal retail cannabis store in Ontario. Mr. Campbell has chosen not to comply with those requirements. He has been running a retail cannabis store without the required licenses and authorizations since January 2019.
[39] Mr. Campbell argues that even if he was charged under the Cannabis Control Act or his company had been charged, that would not amount to a breach of the lease. He takes the position that he can only be found to be in breach of the lease if he or his company are convicted of violating the Act. Mr. Campbell relies on the decision of this Court in 2405416 Ontario Inc. v. 2405490 Ontario Inc., 2016 ONSC 3893, aff'd 2016 ONCA 696 in support of his position. In 2405416 Ontario Inc., the tenant operated a body‑rub parlour in Toronto. The landlord took the position that the tenant breached the lease, in part, because the body-rub parlour accumulated several by-law infractions and Criminal Code charges. Goldstein J. held that the outstanding charges did constitute a breach under the lease.
[40] There is, however, a very important difference between the facts in 2405416 Ontario Inc. and the case before me. In 2405416 Ontario Inc., the tenant had a valid municipal license to operate the body-rub parlour. The issue was whether, in the course of running a licensed body‑rub parlour business, the tenant violated the law. Here, the issue is whether Mr. Campbell’s business is lawful from the outset, not whether he broke the law in the course of operating an otherwise lawful business.
[41] I accept that Mr. Campbell believes he is entitled to an exemption from the licensing requirements in the Cannabis Control Act and the Cannabis Licence Act. However, Mr. Campbell chose not to provide me with any information about the basis of his claim, so I cannot assess the validity of his claim or the reasonableness of his belief. Nonetheless, simply because Mr. Campbell asserted that he is entitled to an exemption in a declaration served on municipal officials does create a lawful exemption for his business.
[42] I, therefore, find that on April 21, 2020, when Mr. Chaudary changed the locks to the premises, Mr. Campbell was operating an illegal cannabis store in breach of his sub-lease, which incorporates the terms of the head lease between 149 and Tri-Echo.
D. Can 149 rely on the August 2019 notice as a basis to terminate the lease in April 2020?
[43] Mr. Campbell argues that even if he breached his sublease with Tri-Echo the forfeiture was not lawful because 149 failed to give adequate notice of its intention to terminate the lease and failed to give him an opportunity to cure the breach.
[44] A notice of termination under the Commercial Tenancies Act must specify the breach alleged, require the tenant to remedy the breach, if possible, and give the tenant a reasonable time to remedy the breach (s. 19(2)). The notice requirement is designed to protect tenants. It ensures that tenants know their leasehold interest is at risk and have an opportunity to preserve their interest in the property by remedying the breach (780046 Ontario Inc. v. Columbus Medical Arts Building, [1994] O.J. No. 2282 at para. 23).
[45] 149 sent a letter to Tri-Echo on August 21, 2019 stating that Tri-Echo was in violation of the lease because it was operating a cannabis store without proper authorization. The letter gave Tri-Echo 10 days to rectify the breach and provide an undertaking not to breach the lease in future. The letter also says that 149 will reclaim possession of the unit in 10 days if the breach is not rectified.
[46] There is a dispute about when Tri-Echo and Mr. Campbell received the August 2019 notice. The Notice was sent to the store and Mr. Campbell gave it to Mr. Tjan in January 2020. Mr. Campbell does not remember when it was delivered to the store. Regardless, the evidence is clear that 149 raised its concerns with Tri-Echo and Mr. Campbell about the legal status of 1Tonamara throughout the fall of 2019. Tri-Echo and Mr. Campbell repeatedly assured 149 that Mr. Campbell had a valid exemption to operate without a license and that the cannabis store was operating lawfully. As a result, 149 did not repossess the unit or terminate the lease as outlined in the August 2019 notice.
[47] The issue is whether 149 can rely on the August 2019 notice or could otherwise repossess the unit in April 2020 without any further notice. In my view, it can.
[48] It is reasonable to infer from the fact that 149 did not terminate Tri‑Echo’s lease in the fall of 2019 that Mr. Chaudary believed that Mr. Campbell had a valid exemption to run a cannabis store. However, the information Mr. Campbell gave to 149 was at least misleading if not inaccurate. Mr. Campbell did not have an exemption to operate 1Tonamara without the required license and authorization but 149 believed he did.
[49] In April 2020, the police told Mr. Chaudary that Mr. Campbell did not have a license and did not have an exemption to operate his store. The police then searched Mr. Campbell’s business, seized a substantial amount of cannabis and arrested several employees. The evidence I heard about what the police told Mr. Chaudary is not admissible for the truth of its contents. It is admissible to prove Mr. Chaudary’s state of mind. Mr. Chaudary believed what the police told him. It was at that point that Mr. Chaudary understood that 149 had been misled and that Tri‑Echo and Mr. Campbell had not cured the breach identified in the August 2019 notice.
[50] 149 made it clear in August 2019 that it was not willing to continue the lease with Tri‑Echo if the cannabis business was illegal. Mr. Campbell was, therefore, aware that his interests in the property would be at risk if his business were operating illegally. Mr. Campbell misled 149 into believing that the alleged breach had been cured. I find that once 149 discovered that the breach had never been cured despite Mr. Campbell’s assurances, it was entitled to resurrect and rely on its original notice.
[51] The notice requirement under the Commercial Tenancies Act must also be considered in light of the provision of the Cannabis Control Act that prohibits landlords from knowingly permitting their premises to be used for the unauthorized sale of cannabis (ss. 6 and 13). Once the police told Mr. Chaudary that Mr. Campbell did not have an exemption under the Cannabis Control Act and executed a search warrant at 1Tonamara, 149 knew the premises were being used for the illegal sale of cannabis. Once Mr. Chaudary knew 1Tonamara was not an authorized cannabis store, 149 was required to take “reasonable steps” to prevent further unauthorized sales of cannabis. Changing the locks without further notice was a reasonable step.
[52] I, therefore, find that the notice given to Tri-Echo and Mr. Campbell by 149 in August 2019 satisfied the requirements of the Commercial Tenancies Act. Mr. Campbell was aware at least by January 2019 that 149 was not prepared to lease its premises to an illegal cannabis retailer. Given that Mr. Campbell misled 149 into believing the breach identified in the August 2019 notice had been cured (or never existed), he cannot now complain that 149 terminated the lease without further notice once it learned the truth about the illegal nature of his business.
[53] As set out above, the requirement of notice is intended to give the tenant or subtenant an opportunity to preserve its interest in the property by remedying the breach (780046 Ontario Inc. v. Columbus Medical Arts Building, [1994] O.J. No. 2282 at para. 23). Even if 149 gave Mr. Campbell a new notice in April 2020, he could not have cured the breach quickly or easily.
[54] Mr. Campbell argues that he could have cured the breach by undertaking not to sell cannabis and operating the bakery only. I have no evidence about the bakery side of Mr. Campbell’s business, as distinct from the cannabis sales. Mr. Campbell describes 1Tonamara as “store and bakery”. However, the name of the business suggests that both the store and bakery are dedicated to the sale of cannabis products. I am not satisfied that the bakery is a discrete enterprise from the cannabis store.
[55] To cure the breach then, Mr. Campbell would either have to apply for and be granted a license and authorization through the Alcohol and Gaming Commission of Ontario or succeed on his application to this Court for an exemption. I have no evidence about how long it would take the Alcohol and Gaming Commission of Ontario to process his application if Mr. Campbell chose to submit an application despite his objection to the regulatory scheme. Given that his Application to this Court for an exemption was issued only recently, it will likely take months to be decided. I, therefore, find that Mr. Campbell would not have been unable to cure the breach even if he had been given further notice in April 2020.
[56] I find that 149 was entitled to rely on the August 2019 notice and was not required to give Mr. Campbell a further notice or a further opportunity to comply with the lease. I, therefore, find that forfeiture by 149 was lawful.
E. Is Mr. Campbell entitled to relief from forfeiture?
[57] The remaining issue is whether Mr. Campbell should be granted relief from forfeiture notwithstanding the breach of the lease and the legality of the forfeiture.
[58] Relief from forfeiture is an equitable, discretionary remedy. The power to relieve against forfeiture recognizes that in some circumstances enforcing the terms of a contract will have an unfair or inequitable impact on the person who breached the contract. Relief from forfeiture is to be granted sparingly, although it will often be appropriate when the interests of the party seeking to uphold the forfeiture can be fully vindicated in some other way (Ontario (Attorney General) v. McDougall, 2011 ONCA 363 at para. 87).
[59] In deciding whether to grant relief from forfeiture, the Court must consider all the circumstances, including the applicant’s conduct, the gravity of the breach, and the disparity between the value of the property forfeited and the damage caused by the breach (Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., [1994] 2 S.C.R. 490 at p. 504; Kozel v. The Personal Insurance Company, 2014 ONCA 130 at paras. 28 - 31). The Court will also consider whether the Applicant comes to Court with clean hands and whether the Applicant made diligent efforts to comply with the terms of the lease (Armenian Community Centre v. Morland Marketing Inc., [1995] O.J. No. 3730 at para. 76). In the end, the issue is whether Mr. Campbell can show that forfeiture would be inequitable and unjust in the circumstances.
[60] Mr. Campbell takes the position that he should be permitted to resume operations because he has done everything he could to comply with the law and made diligent efforts to pursue an exemption. I disagree. Mr. Campbell has done nothing more than alert public officials in Brampton that he thinks he should be exempt from the law. He did not ask the provincial government for an exemption under the Cannabis Control Act and, before he was locked out of his business, he had not asked the Court to grant him an exemption either. I accept that Mr. Campbell has complied with some of the standards set by the Registrar of the Alcohol and Gaming Commission of Ontario but he has not made diligent efforts to ensure the legality of his business or comply with the terms of his sub-lease.
[61] I accept that Mr. Campbell invested considerable time and money into finding a suitable location for his store, establishing and promoting his brand, developing a large and loyal customer base, and hiring qualified staff. Undoubtedly, the abrupt closure of Mr. Campbell’s store has had a significant impact on his employees and customers. I am very sympathetic to those who relied on Mr. Campbell’s business for their employment. However, that does not provide a reasonable basis for the Court to permit Mr. Campbell to continue to operate an illegal cannabis store.
[62] I find that the breach of the lease was very serious. Mr. Campbell was operating an illegal cannabis store for more than 15 months. When Tri-Echo confronted him about the status of his business, Mr. Campbell misled 149 into thinking that he had a lawful exemption to run the business without a license. There is nothing inequitable or unjust about prohibiting an illegal business from continuing its operations. Mr. Campbell’s application is, therefore dismissed.
[63] I encourage the parties to reach an agreement on the issue of costs. If they are unable to do so, the Respondents may serve and file written submissions on costs of no more than five (5) pages each together with their costs outline and any supporting authority on or before July 10, 2020. Mr. Campbell may serve and file written responding submissions on costs of no more than five (5) pages with supporting authorities on or before July 24, 2020. These submissions must be filed electronically through my assistant, Lorie Waltenbury (lorie.waltenbury@ontario.ca). In the event that I do not receive any written cost submissions by July 31, 2020, I will deem the issue of costs to have been settled.
Davies J. Date: June 30, 2020
COURT FILE NO.: CV-20-640870 DATE: 20200629 ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N: Courtney Campbell, Applicant AND: 1493951 Ontario Inc. and Tri-Echo Restaurants Inc., Respondents
REASONS FOR DECISION Davies J. Released: June 29, 2020
