COURT FILE NO.: 31-2601563
DATE: 20201002
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: In the Matter of the Notice of Intention to Make a Proposal of Durham’s Sports Barn Inc. of the City of Oshawa in the Regional Municipality of Durham
BEFORE: C. Gilmore, J.
COUNSEL: Philip Cho and Max Skrow, for the company, Durham’s Sports Barn Inc.
Todd Storms and Zach Flemming-Giannotti, for the Landlord, 1213423 Ontario Inc.
HEARD: September 11, 2020
ENDORSEMENT on motion
OVERVIEW
[1] This is Durham’s Sports Barn Inc.’s (“Durham” or “the Tenant”) motion for various relief in relation to its Landlord, 1213423 Ontario Inc. (“121” or “the “Landlord”).
[2] Specifically, Durham seeks an order:
a. That the distress sale between the Landlord and Mr. Larry Rogalski (“Mr. Rogalski”) was not completed prior to the filing of the Notice of Intention to Make a Proposal by Durham and therefore that the transaction between the Landlord and Mr. Rogalski and the Bill of Sale dated January 2, 2020, is of no force or effect and the property shall be returned to Durham and the proceeds returned to Mr. Rogalski.
b. Setting aside the Notice of Termination and the Notice of Default dated January 9, 2020, delivered by the Landlord such that the lease agreement dated November 1, 2015, remains in full force and effect.
[3] There are three issues to be determined on this motion; (1) whether the distraint was lawful or should be set aside, (2) whether the lease termination that followed the Notice of Intention (“NOI”) was lawful or should be set aside, and (3) whether Durham should be relieved of paying rent when it was prevented from lawfully operating due to emergency orders issued by the Province of Ontario.
[4] The Landlord opposes the motion on the basis that both the distraint and termination were lawful. The Landlord requests that Durham immediately deliver vacant possession of the premises.
SUMMARY OF BACKGROUND FACTS
[5] On November 1, 2015, the Landlord and Tenant entered into a lease with respect to premises located as Units 1 and 2 of 870 Taunton Road West in Oshawa, Ontario (“the leased premises”). Durham carries on business operating an elite athletic performance centre at the leased premises. It offers personalized training programs for hockey, lacrosse, fitness and endurance athletes. The premises are equipped with a hockey arena, an indoor turf field, a fitness facility, an obstacle course and meeting rooms. Durham has approximately 45 staff and instructors.
[6] The lease was for a term of 10 years commencing November 1, 2015, for Unit 1 and December 1, 2015, for Unit 2. The lease payments due during the relevant period were $12,556.25 per month from November 1, 2016, to October 31, 2020, for Unit 1 and $12,527.66 per month from November 1, 2017, to October 31, 2020, for Unit 2. Additional rent for proportional property taxes and operating costs (“TMI”) were also due each month. The Landlord charged no rent for Unit 1 from November 1, 2015, to October 1, 2016, and no rent for Unit 2 from December 1, 2015, to April 30, 2017.
[7] The lease required that the Landlord provide a bona fide estimate of the TMI payable by the Tenant at the beginning of each year. The Landlord did not do this. Instead, the Landlord simply billed the TMI at the beginning of each month. This made it difficult for the Tenant to budget and plan its cash needs.
[8] During the first few years of operation, Durham experienced cash flow issues and had difficulty paying the TMI and regular rent. Durham paid what it could but as of November 25, 2019, Durham’s rental and TMI arrears totalled $534,818.88.
[9] In February 2018, the Landlord’s counsel delivered a demand letter to Durham demanding rental arrears accrued to that point of $219,974.87. The Landlord threatened to take possession of the leased premises and sell the company’s chattels if the rent was not paid by March 1, 2018.
[10] Discussions between the Landlord and Durham took place and the Landlord agreed it would not take possession if Durham made payments towards the arrears. Durham did so but arrears had accumulated significantly by November 2019, as set out above.
[11] On November 29, 2019, a Bailiff delivered the Landlord’s Distress Warrant claiming arrears of rent of $538,818.88 plus costs and initiating distraint against the Tenant’s goods and chattels (“the equipment”). The Landlord then posted a security guard outside the premises as of November 30, 2019, to ensure that none of the equipment was removed.
[12] On December 3, 2019, Durham wrote to the Landlord with a proposal to repay the amounts owing and providing confidential financial information to support its plan. No response to the proposal was received until an email from the Landlord’s lawyer said a response would be provided on December 13, 2019, which was later extended to December 16, 2019.
[13] On December 16, 2019, the Landlord attended the leased premises with an appraiser and the Landlord and the appraiser took notes and photographs. Neither the appraiser nor the Landlord asked if any of the equipment was owned by third parties. The equipment was appraised by Mr. Steven Wagman at $95,000 to $100,000 with a further $150,000 to $200,000 as the estimated value of the ice pad and accessories. A second appraisal completed by Ms. Lynn Dash appraised the equipment at $105,000 to $110,000 and the ice pad and accessories at $150,00 to $200,000. Both appraisers swore affidavits of appraisal.
[14] Ultimately, Durham’s proposal to the Landlord dated December 3, 2019, was rejected by the Landlord’s counsel. On December 17, 2019, Durham wrote to the Landlord’s lawyer indicating that it was still willing to discuss resolutions with the Landlord.
[15] On January 3, 2020, Durham filed a Notice of Intention to Make a Proposal (“NOI”) pursuant to s. 50.4(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (“the BIA”). Msi Spergel Inc. was named as proposal trustee for Durham. On the same day, the Landlord delivered a Notice of Impending Termination to Durham dated January 2, 2020 and demanded that Durham pay $553,114.80 in rental arrears by January 4, 2020, or the Landlord would terminate the lease and change the locks. The Notice of Impending Termination also included information that the Landlord had completed the distress sale for $88,950. This was the first time the Tenant received any information about the sale and the Landlord provided no information as to what equipment was included in the sale. The sale transaction had purportedly been completed between the Landlord and Mr. Rogalski on January 2, 2020.
[16] On January 7, 2020, the Landlord’s counsel sent an email to the Trustee acknowledging the NOI and requesting that Durham pay rent from January 4, 2020, and that Durham cease using any assets that were included in the sale to Mr. Rogalski.
[17] On that same day, Durham sent the Landlord a certified cheque by Xpresspost for the sum of $37,754.35 being the prorated rent for January 2020. Durham’s lawyer wrote to the Landlord’s lawyer on January 7, 2020, to confirm that Durham had sent the prorated rent and requested further information about the sale of the equipment. Durham considered that the sale was not properly completed.
[18] On January 9, 2020, at 5:32 p.m. the Landlord’s counsel emailed a Notice of Termination and a Notice of Default to Durham’s counsel. The Landlord sought to terminate the lease after the date of filing of the NOI and without advising that they had not received the prorated rent cheque.
[19] In attempting to track delivery of the prorated rent cheque, Durham discovered that it had not been delivered and offered to deliver replacement cheques. The Landlord replied that he would speak to his lawyer. No further response was received. Replacement cheques were subsequently delivered to the Landlord on January 10, 2020.
[20] On January 17, 2020, Justice Hainey ordered that the Landlord not take steps to retake possession of the premises and that the time to cure defaults under the Notice of Default was suspended. This was further extended by Justice Koehnen’s Order of April 30, 2020, pending the rescheduling of this motion.
[21] Due to public health mandated closures related to COVID-19, Durham was closed from March 18, 2020, until May 25, 2020, as it was a non-essential business. Durham then began a phased re-opening from May 25, 2020, to July 25, 2020, in which they offered limited operations. Full operations resumed in August 2020. The Landlord did not apply for any federal government assistance which would have provided rental relief for Durham and the Landlord.
[22] On June 25, 2020, the Trustee delivered a Notice of Meeting to Creditors to inform the Creditors that Durham was not paying rent as a result of a restriction of operations during the pandemic.
[23] If the Landlord’s termination and distress are declared invalid, Durham asks the Court to relieve it of its obligation to pay rent during the Shutdown Period and pay a prorated amount of rent during the period of limited operations. Durham is content to have these amounts classified as an unsecured claim of the Landlord in relation to the anticipated proposal if the Court deems fit.
[24] Durham raises other issues with respect to an abatement of the payment of rent including frustration and force majeure.
[25] The Landlord does not agree that Durham should be excused from paying any portion of the post-NOI rent.
ANALYSIS
Validity Of The Lease Termination And Relief From Forfeiture
[26] The BIA provides at s. 65.1 as follows:
65.1 (1) If a notice of intention or a proposal has been filed in respect of an insolvent person, no person may terminate or amend any agreement, including a security agreement, with the insolvent person, or claim an accelerated payment, or a forfeiture of the term, under any agreement, including a security agreement, with the insolvent person, by reason only that
(a) the insolvent person is insolvent; or
(b) a notice of intention or a proposal has been filed in respect of the insolvent person.
(2) Where the agreement referred to in subsection (1) is a lease or a licensing agreement, subsection (1) shall be read as including the following paragraph:
(c) the insolvent person has not paid rent or royalties, as the case may be, or other payments of a similar nature, in respect of a period preceding the filing of
(i) the notice of intention, if one was filed, or
(ii) the proposal, if no notice of intention was filed.”
[27] Durham’s position is that the filing of the NOI on January 3, 2020, prevented the Landlord from terminating the lease based on the non-payment of rent up to January 1, 2020. Durham concedes that the Landlord had the right to request the payment of rent after the filing of the NOI, which the Landlord did on January 7, 2020.
[28] As described above, Durham sent cheques to the Landlord on January 7, 2020, by Xpresspost which were unfortunately not received until January 10, 2020, as they had to be replaced. Durham advised the Landlord by letter from its counsel on January 7, 2020, that the cheques had been sent.
[29] According to Durham, the Landlord should not have terminated the lease while Durham was under the supervision of a Trustee and should have given Durham a reasonable time to deliver the prorated cheques. Rather than following up with Durham’s lawyer about the status of the promised cheques, it simply terminated the lease
[30] The Landlord’s position is that Durham was required to pay post-Notice rent immediately upon filing of the Notice. Given this failure and the pre-Notice arrears, the Landlord was within its rights to terminate the lease. The Landlord also relies on the Insolvency Clause in the lease which entitles it to terminate the lease by virtue of the Tenant’s insolvency.
[31] I agree with Durham that the lease termination was improper. The timing of events is significant. The January 6, 2020, letter to the Trustee (sent January 7, 2020) from the Landlord’s lawyer requesting post-Notice rent for the balance of January does not specify when the rent is to be delivered.
[32] On the same day that the Landlord’s letter was received (January 7, 2020), Durham’s counsel responded that the requested rent plus a post-dated cheque for February was sent by courier that day. The rent cheques did not arrive until January 10, 2020 by which time the Notice of Termination dated January 9, 2020 had been delivered. The Landlord did not enquire about the status of the cheques. It terminated the lease without giving Durham a reasonable amount of time in which to deliver the cheques which it had promised.
[33] Durham’s failure to pay March rent was related to the rejection of its cheques for January and February.
[34] A reasonable interpretation of s. 65.1 of the BIA is that termination can occur where there is non-payment of rent when rent is demanded after the filing of the NOI. In the case at bar such a demand was made by the Landlord. The Landlord relies on Canadian Petcetera Ltd. Partnership v. 2876 R. Holdings Ltd, 2010 BCCA 469, 12 W.W.R. 189, in the which the Court overturned the judge below who determined that the Landlord was required to give 15 days’ notice before it could terminate the lease for failure to pay post-NOI rent.
[35] In Petcetera, an NOI was filed by the Tenant on March 20, 2009. On March 24, 2009, the Landlord demanded immediate payment of prorated rent due for the period March 21 to 31. A cheque for rent due on April 1, 2009, was mailed by the tenant on March 30, 2009, but not received until April 2nd. The Landlord issued a Notice of Termination on April 2, 2009, before the April 1st cheque was received, on the basis of non-payment of the prorated amounts for March and the non-payment of April rent. The Court of Appeal held that the termination was valid as s. 65.1 of the BIA did not prevent termination for non-payment of post-NOI rent.
[36] There is no dispute that termination can occur for non-payment of post-NOI rent. However, the intent of s. 65.1 is to allow tenants to reorganize their affairs while the lease remains intact. In Petcetera, the tenant apparently made no attempt to pay the prorated March rent. In the case at bar, Durham made immediate arrangements to comply with the Landlord’s demand for post-NOI rent. The rent cheques were received only days after they were confirmed to have been sent by the Durham’s counsel. The Landlord chose to ignore Durham’s promise to comply and made no enquiry about the status of delivery of the cheques before serving the Notice of Termination.
[37] Permitting tenants to arrange their affairs post-NOI surely includes allowing the Tenant a reasonable time to comply with rental demands while negotiating a proposal with its creditors. A reasonable amount of time is likely not the 12 days that it took the tenants in Petcetera and they did not even attempt to pay the prorated amount. The facts here are different and must be viewed through the lens of the BIA’s purpose.
[38] The Landlord also relies on the Insolvency Clause in the lease which entitles it to terminate the lease by virtue of the Tenant’s insolvency. However, the BIA provides at s. 65.1(5) that any provision in an agreement that has the effect of providing for, or permitting, anything that, in substance, is contrary to subsection (1) to (3) is of no force or effect. In other words, parties cannot contract out of the relief provisions of s. 65.1.
[39] If I am wrong and the lease termination was indeed valid, I would have granted relief from forfeiture to Durham. Relief from forfeiture is permitted under both the s. 98 of the Courts of Justice Act, R.S.O. 1990, c. C. 43 and s. 20(1) of the Commercial Tenancies Act, R.S.O. 1990 c. L. 7 (“CTA”). In ANC Business Solutions Inc. v. Virtualink Canada Ltd., 2014 ONSC 1619, 24 B.L.R. (5th) 298 at para. 66 the Court set out the test for granting relief from forfeiture as follows: (1) the nature of the misconduct of the party seeking relief and whether it was wilful, (2) the seriousness of the misconduct; and (3) the disparity between the value of that would be forfeited and the damage caused by the misconduct.
[40] I agree with Durham that its conduct was not serious and at its worst could be described as inadvertent. Durham made it clear that it intended to comply with the Landlord’s demand for post-NOI rent and it did. The Landlord acted precipitously in terminating the lease while having received advice that prorated rent cheques and a cheque for February’s rent were on their way. I do not agree that the Tenant’s pre-NOI breaches are relevant to the issue of Durham’s conduct as the Landlord’s remedies are stayed post-filing.
[41] Finally, unless Durham received relief from forfeiture it would no longer be able to run its business and therefore would no longer be in a position to make a reasonable proposal to its creditors.
Distraint
[42] Durham makes two arguments in support of its request to have the distraint transaction set aside. First, it argues that the Landlord did not complete its distraint prior to the-NOI filing. Second, it argues that the distraint was not a bona fide transaction for value. Specifically, Durham argues that distraint falls within the meaning of “other proceedings” under s. 69 of the BIA, meaning that if the distraint was not complete it cannot be continued and is stayed.
[43] The CTA provides for distraint upon the expiration of five days’ notice and obtaining two appraisals of the goods and chattels. The Landlord must sell the goods for the best price that can be obtained.
[44] Durham makes several complaints about the distraint process in this case:
a. The Bill of Sale states that the purchase price will be adjusted to reflect the updated appraisal of the reception area assets, but no such appraisal was ever obtained. Further, no such adjustment ever took place and the purchaser was unsure if those assets were even included in the Bill of Sale.
b. Durham remains in possession of the goods and the purchaser (Mr. Rogalski) has never asserted any title to them. Mr. Rogalski has never demanded delivery of the goods nor does he seem concerned that they continue to remain in Durham’s possession.
c. There is nothing in the Bill of Sale that would confirm that its terms were completed prior to the filing of the NOI.
d. The Landlord chose to proceed with the distraint process understanding that insufficient funds would be generated to cover the outstanding rent.
e. Mr. Rogalski was not at arm’s length to the Landlord as they have been friends for 40 years. The Landlord and Mr. Rogalski had a plan to transfer the business to Mr. Rogalski’s daughter.
f. The Landlord did not advertise the chattels for sale.
g. The first appraisal was conducted by an agent for the Bailiff, an agent of the Landlord. The second appraisal was conducted without having inspected the premises and based solely on information from the first appraisal.
h. The Landlord showed the appraisals to Rogalski thereby influencing the purchase price of the chattels.
i. The Landlord did not strictly comply with the requirements of exercising the remedy of distraint because its real intention was to work with Mr. Rogalski to transfer the lease to him and the chattels to his daughter.
[45] Since Durham’s position is that the distraint is stayed and the purchase was never completed, the Landlord need only return the funds received to Mr. Rogalski and the Landlord will participate as a creditor in the proposal proceeding.
[46] The Landlord argues that it fully completed the sale prior to the filing of the NOI and pursuant to the terms of the CTA by taking the following steps:
a. It served Durham with a Warrant giving notice via the Bailiff that it intended to seize the Tenant’s goods and chattels.
b. It obtained two sworn appraisals which contained a comprehensive list of inventory.
c. It removed items from the inventory that were owned by a third party.
d. It acted at arm’s length from Rogalski and negotiated a price consistent with the appraisals.
e. It deposited the sale funds of $88,950 one day prior to the filing of the NOI.
f. It acted reasonably and in accordance with the terms of the CTA given the large amount of pre-NOI arrears.
[47] I find that the distraint has not taken place and is therefore stayed by the filing of the NOI. In coming to this conclusion I rely on the following;
a. The transaction has never been completed. Mr. Rogalski does not have the goods that he bought on January 2, 2020. They are still at Durham’s location and being used by Durham. He has not demanded the goods or a return of his money.[^1]
b. Mr. Rogalski has not complained to the principals of the Landlord, Rosaldo Russo or Andrea Russo. This is because Mr. Rogalski and Mr. Russo Sr. have been friends for 40 years. They talk all the time. There is real concern that this is not the arm’s length transaction that the Landlord purports it to be.
c. The sale was not advertised as the sale was “between Mr. Rogalski and my (Andrea Russo’s) father.”[^2]
d. Mr. Rogalski conceded that he received the appraisals in advance of negotiating a sale price.[^3]
e. There is a concern about the validity of the second appraisal which was done without the appraiser viewing the chattels and relying solely on the information in the first appraisal.
f. Mr. Russo knew that the distraint sale would be insufficient to cover the rental arrears.[^4]
[48] This Court has a concern that the distress sale did not comply with s. 53 of the CTA given that there is evidence that the best price possible was not obtained. This was because the second appraisal was done without inspection of the goods, the sale price was negotiated between friends and the purchaser had access to the appraisals before agreeing to a price. Finally, the sale has not been completed as the goods remain with Durham and Mr. Rogalski has paid for them but not insisted on delivery. In any event, the funds received from the sale came far short of the significant pre-NOI arrears.
[49] In the circumstances, the purchase funds should be returned to Mr. Rogalski and, if necessary, a proper sale of the goods can be conducted by the Trustee. In the interim, the goods will remain in Durham’s possession so they can operate the business during the course of the proposal proceedings.
Post-NOI Rental Payments
[50] Durham has not paid rent since January 2020. The Landlord did not cash the prorated January cheque and the February rent cheque as described above. Given the Landlord’s refusal to accept those cheques, Durham has not paid further rent.
[51] Durham now seeks further relief from the payment of rent from March to July 2020 on the grounds that it was prohibited from operating between March 19 to May 25, 2020, due to the pandemic lockdown (“the Shutdown”). It seeks to pay proportional rent for the period of May 26 to July 24, 2020, during its Phase II re-opening (“the Limited Operation Period” or the “LOP”) which the Tenant calculates as 65% of Unit 2 and 5% of Unit 1.
[52] Durham argues that relief from rental payments during the Shutdown and partial relief during the LOP is consistent with the remedial provisions of the BIA as the lease was frustrated during the Shutdown and is a force majeure.
[53] The lease contains a force majeure clause which excludes the Landlord from its obligation to provide the Company with quiet enjoyment as a result of the Shutdown. As such, Durham argues that it should correspondingly be relieved of its obligation to pay rent.
[54] Durham relies on Hengyun International Investment Commerce Inc. c. 9368-7614 Quebec Inc., 2020 QCCS 2251. In that case, a gym tenant was relieved from paying rent for March, April, May and part of June 2020 due to the pandemic lockdowns. The Court held that the lockdown resulted in the Landlord being unable to provide the Tenant its right to peaceable enjoyment of the premises. Notwithstanding the force majeure term in the lease, which did not excuse the Tenant from the payment of rent in such circumstances, the Court relied on the concept of superior force in the Quebec Civil Code to find that the pandemic was unforeseeable.
[55] Similarly, the force majeure clause in the lease in the case at bar cannot be relied upon by Durham to avoid paying rent. However, Durham argues that where the force majeure interferes with its quiet enjoyment, the Landlord cannot insist on the payment of rent.
[56] Durham also relies on a case decided under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (“CCAA”), Comark Holdings Inc., Re (June 3, 2020), Doc. Toronto CV-20-00642013-00CL (Ont. S.C.J.) (“Comark”), 2020 QCCS 2251. In that case, the debtor was relieved of its obligation to pay rent during any period in which it was not permitted to open its locations in the ordinary course of business.
[57] I do not agree with the Tenant that it should be relieved of any portion of the rent demanded by the Landlord post-NOI. I come to this conclusion based on the following;
a. The force majeure clause in the lease relieves the Landlord from providing quiet enjoyment (i.e. the performance of an obligation under the lease) but does not relieve the Tenant from the obligation to pay rent.
b. The obligation of the Landlord to provide quiet enjoyment is always subject to the payment of rent by the Tenant, as stated at paragraph 3.3 of the Lease. As Durham did not pay rent during the subject periods, the Landlord’s obligation to provide quiet enjoyment correspondingly did not arise.
c. The Landlord was not advised of the Tenant’s position concerning relief or abatement of any rent during the Shutdown or the LOP until August 2020 and, therefore, had no opportunity to assist the Tenant during those times to remedy or mitigate the situation.
d. The Hengyun case is not applicable. First, the language of the force majeure clause is quite different in the two leases and, second, the Court relied on the application of the doctrine of “superior force” in the Quebec Civil Code, a doctrine which does not exist in Ontario.
e. Government legislation enacted during the Shutdown and the LOP to ensure the survival of small businesses focused on preventing eviction by landlords but did not suspend the payment of rent.[^5]
f. I do not find that the Comark case applies. The initial Order was in place for a mere 10 days. On the comeback motion, a consensual rent deferral was negotiated. This case cannot stand for the proposition that a precedent for long term rental relief during the Shutdown and the LOP has been created.
[58] Given, all of the above, I find that Durham is obligated to pay all post-NOI rent as demanded by the Landlord.
Time to File Proposal
[59] This motion has been significantly delayed as a result of the COVID-19 crisis. Given that a determination of the issues on this motion was necessary for Durham to make a proposal to its creditors, I am satisfied that Durham should be given a further extension of its time to file a proposal under the NOI. To hold otherwise would effectively put Durham into bankruptcy without having had any meaningful opportunity to make a proposal.
[60] In making this order, I am aware that s. 50.4(9) of the BIA does not allow for extensions that exceed five months in the aggregate after the expiry of 30-day period following the filing of the NOI. Since the NOI was filed on January 3, 2020, it has now been over five months since that initial 30-day period expired. However, I am satisfied that an overly strict and technical compliance with these provisions would be contrary to the objectives of the BIA. As Morawetz CJ recently noted in Stephen Francis Podgurski (Re), 2020 ONSC 2552, 79 C.B.R. (6th) 96 at para. 48, “in enacting the BIA, and in making amendments over the years, Parliament could never have envisioned the impact of a pandemic such as COVID-19.” Strictly complying with the timelines in the BIA without any regard for the extraordinary circumstances of this case is neither reasonable nor desirable.
[61] I am satisfied that I have this power through the inherent jurisdiction of the Court. Inherent jurisdiction is exercisable in “any situation where the requirements of justice demand it” (Gillespie v. Manitoba (Attorney General), 2000 MBCA 1 (Man. C.A.) at para. 92. Certainly the requirements of justice demand that Durham should not be precluded from making a proposal because of its inability to obtain a timely court hearing due to circumstances entirely beyond its control.
[62] Finally, I note that the Federal Government passed the Time Limits and Other Periods Act (COVID-19), S.C.2020, c.11, s.11 which came into effect July 27, 2020. This legislation provides for the ability to extend the time limits in section 50.4(9) and other sections of the BIA. However, to date, the responsible minister has not made any Orders under this Act extending any timelines.
ORDERS
[63] Given all of the above, I make the following orders:
a. The Notice of Termination dated January 9, 2020, delivered by the Landlord is hereby set aside such that the lease dated November 1, 2015, remains in full force and effect.
b. The Notice of Default is hereby set aside.
c. The distress sale by the Landlord is hereby set aside, the proceeds of the transaction to be returned to Mr. Rogalski by the Landlord and the chattels to be dealt with in the normal course by the proposal trustee.
d. All post-NOI rental payments demanded by the Landlord are immediately due and owing including prorated rent for January 2020 and rent due on the first of each month thereafter.
e. The time for Durham to file a proposal under s. 50.4 of the BIA is further extended to and including October 31, 2020.
COSTS
[64] Success was divided on this motion and the parties’ partial indemnity costs were approximately the same. If the parties cannot agree on costs, I will receive written costs submissions of no more than two pages exclusive of any Bill of Costs or Offers to Settle. Costs are to be delivered on a seven-day turnaround starting with Durham seven days from the release of this Endorsement. If no costs are received within 35 days, the issue of costs shall be deemed to be settled.
C. Gilmore, J.
Date: October 2, 2020
[^1]: Rogalski Cross-examination, Q40. [^2]: Russo Cross-examination, Q190-193. [^3]: Rogalski Cross-examination at Q131. [^4]: Russo Cross-examination, Q 137-140. [^5]: Protecting Small Business Act, 2020, SO 2020, c. 10, s.81, 82 and 84.