Court File and Parties

COURT FILE NO.: CV-19-625242

DATE: 20210426

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: ELOISA SLIMMON-WEBER also known as ELOISA NEGRINI, carrying on business as LIBERTY MOVEMENT AND WELLNESS

AND:

VINCENZO RACCO

BEFORE: J.E. Ferguson, J.

COUNSEL: Leora Wise, for the Applicant Michael Corbett, for the Respondent

HEARD: March 9, 2021

Endorsement

[1] The applicant, Eloisa Slimmon-Weber (“Elle”), brings this application for an order that her lease is valid and binding. Her lease is valid and binding.

[2] The respondent, Vincenzo Racco (“Vincenzo”), brought a counter‑application to terminate the lease for fundamental breach, having purported to terminate the lease on August 7, 2019. This counter‑application fails.

[3] On December 29, 2014, Elle as tenant and Vincenzo Racco (“Vincenzo”) as landlord entered into a ten‑year lease commencing February 1, 2015 (with renewal options), for the rear‑entry, second-floor unit of a two‑storey building, 983 Dovercourt Road, Toronto.

[4] Elle seeks the following further relief, in addition to an order that the lease is valid and binding:

(a) an order declaring that Vincenzo unlawfully and invalidly terminated her lease by notice of termination dated August 7, 2019;

(b) in the alternative, an order granting her relief from forfeiture;

(c) an interim, interlocutory, and permanent injunction restraining Vincenzo from interfering with her business and her right of quiet enjoyment including access to the premises;

(d) an order requiring Vincenzo to fix, within 30 days, outstanding repairs to the premises, including but not limited to the entrance and back patio, the eavestrough and replacement of the central air conditioning unit;

(e) an order dismissing Vincenzo’s counter-application.

[5] It is significant that no affidavit evidence was provided from Vincenzo. Only his wife, Sophia Denton (“Sophia”), who has no direct knowledge of the circumstances, filed affidavit evidence. Vincenzo’s failure to file an affidavit gives rise to an adverse inference that his evidence would not be helpful to his case.

[6] I am satisfied that none of the breaches alleged by Vincenzo are valid. I find that the lease is valid and binding and grant the relief requested by Elle.

Facts

[7] I largely accept the applicant’s version of the facts in this case, particularly given that Vincenzo filed no affidavit evidence. On several occasions prior to entering the lease, Elle and Vincenzo discussed the use of the unit by Elle as a yoga and wellness centre called “Liberty”. They also discussed the renovations required to convert the unit from a residential apartment into this new iteration. Vincenzo provided Elle with a residential form of lease and then negotiated the commercial terms, including the renovations to be carried out by Elle. Elle communicated extensively with Vincenzo throughout the renovations, during which he attended at the premises. With Vincenzo’s permission, Elle hung “Liberty” signs at the front of the building, on the door of the building’s rear entrance and in the front second‑storey windows. Since Liberty opened for business in March 2015, Vincenzo has personally entered or had someone enter the premises on at least four occasions: March 8, 2015, October 12, 2016, July 16, 2018, and July 18, 2018. At Vincenzo’s request, Elle also sent Vincenzo photographs of the studio on July 26, 2016 and August 11, 2016.

[8] On December 2, 2017, without any notice or explanation, Vincenzo’s contractor demolished the poured concrete walkway to Liberty’s entrance, leaving a dirt walkway and exposed rebar sticking out of the concrete enforcement of the structural columns holding up Elle’s second‑storey deck and exit. His contractor also demolished the poured concrete backyard, the wooden deck, and the flower beds by the entrance walkway. Vincenzo’s contractor also removed the central air conditioning unit (“the AC unit”). Elle and her husband salvaged the patio stones the AC unit had been sitting on and created a patio stone walkway leading up to the building. I do not accept Sophia’s evidence in her May 5, 2020 affidavit that Vincenzo and not Elle installed the patio stone walkway, out of concern for the safety of Elle’s clients. Sophia admitted on cross‑examination that her knowledge comes from Vincenzo. I do not find Vincenzo to be credible or believable. He has engaged in a path of conduct to get Elle to leave the premises.

[9] In or about May and June 2018, Vincenzo told Elle that she needed to move out so that he could carry out construction and that if she did not agree to leave, he would get her out anyway.

[10] In or about August 2018, Vincenzo brought an application to the Landlord and Tenant Board (“LTB”) to terminate Elle’s tenancy, in which he stated that he had not known until July 18, 2018 (some 3.5 years into the tenancy) that Elle was not living at the leased premises. On October 30, 2018, the LTB dismissed Vincenzo’s application, finding: (i) his evidence was not credible; and (ii) that he had always known that the lease was a commercial lease, and Liberty was the intended use. I agree with the findings of the LTB.

[11] In or about June 2018, Vincenzo brought an application to the Committee of Adjustments (“COA”) for a minor zoning variance to construct a front second‑floor balcony, a third-floor addition with a front balcony and a rear three‑floor addition with second- and third-floor rear balconies. The COA refused his application on March 12, 2019. He then brought the application to the Toronto Local Appeal Body (“TLAB”), which approved it on September 23, 2019. The approval required that he build in substantial accordance with the drawings relied upon, which show a second‑storey residential use.

[12] On or about July 8-9, 2019, Elle was served with a Notice of Default (breach of covenant) under s. 19(2) of the Commercial Tenancies Act, dated July 2, 2019. The Notice cited (i) improper commercial use in a residentially zoned unit; (ii) breach of Zoning By-law 569-2013 for exceeding the allowable commercial space in the building; (iii) delinquency in rent; and (iv) requiring Elle to return and re‑install chattels and fixtures that were removed. On or about August 7, 2019, Elle was locked out pursuant to the notice of termination.

[13] In response, Elle brought this application on August 9, 2019. On August 14, 2019, she was granted interim re-entry pending the hearing of the application. The interim relief was re‑affirmed on April 8, 2020 and June 19, 2020.

[14] Since the commencement of these proceedings, Vincenzo has raised the following additional six alleged breaches, although no other s. 19(2) Notices of Default have been served:

(a) that Elle has breached Section 40.10.40.1(2)(A) of zoning by-law 569-2013, as her ground floor is not 0.2 metres from the ground;

(b) that Elle lacks the proper insurance;

(c) that Elle requires a municipal business licence and does not have one;

(d) that Elle’s commercial use is causing an excess of reasonable wear and tear and creating health and safety concerns;

(e) that Elle’s commercial use is creating a negative impact on Vincenzo’s mortgage; and

(f) that Elle has refused to grant Vincenzo access to the premises.

Analysis

[15] Vincenzo has not established any of these breaches. The breaches alleged in subparagraphs (b)-(f) are bald allegations. Vincenzo has not led any evidence to support these alleged breaches.

[16] With respect to the allegation in (a), I find that Elle has disproven this breach. Elle produced two expert affidavits, one from municipal and planning lawyer John Mascarin and one from land use planner Anthony Greenberg. In response, Vincenzo provided an affidavit from land use planner David Riley, who Vincenzo retained to advocate on his behalf at the COA and TLAB. However, I prefer Anthony Greenberg’s evidence to that of David Riley. I accept Anthony Greenberg’s evidence that Vincenzo’s allegation is based on an incorrect interpretation of the relevant zoning by-law.

[17] I agree that Vincenzo engaged in a policy of harassment to force Elle to vacate so that he could carry out construction. His efforts include: (i) destruction of common areas; (ii) failure to repair; (iii) a spurious and unsuccessful application to the Landlord and Tenant Board (“LTB”), in which he stated that the lease was a residential lease; and (iv) service of a notice of termination and locking Elle out.

[18] Once a material fact has been found to exist, the same issue cannot be re‑litigated in subsequent proceedings between the same parties.[^1] Findings of fact made by the LTB are binding and cannot be appealed.[^2] In any event, I agree with those findings.

[19] Vincenzo disputes the following facts: (i) the commercial tenancy; (ii) Vincenzo’s pre‑contract knowledge that Elle was going to use the premises to operate Liberty; (iii) the extent of the renovations and Elle’s permission to remove appliances; and (iv) that the lease does not require Elle to restore the premises upon termination of the lease. However, these facts have already been proven at the LTB. The doctrine of res judicata therefore precludes Vincenzo from relitigating them before this court.

[20] The applicant argues that in the alternative, if Vincenzo is entitled to relitigate these facts, this court should not believe him because he has provided no direct evidence of them. Although it is unnecessary for me to decide this because I have found that res judicata prevents Vincenzo from bringing this evidence before me, I would also accept this argument. Where individuals with direct evidence fail to swear affidavits, the court will draw an adverse inference from the unexplained omission of direct evidence and the filing of hearsay evidence instead.[^3] Where an affidavit is sworn by someone other than the person with the real source of knowledge of all of the information in the affidavit, for the purposes of shielding from cross‑examination the person with the real source of nearly all information set out in the affidavit, the affidavit will be given little weight. Under the best evidence rule, an affidavit of this nature is to be given so little weight as to be practically discarded.[^4]

[21] In this case, only Sophia has filed affidavit evidence. She has no direct evidence of the matters at issue in these proceedings. Her evidence is hearsay and offends the best evidence rule. I therefore give it little or no weight. I agree that it has been filed to shield Vincenzo, who has direct knowledge, from cross‑examination. The court is entitled to draw an adverse inference that his evidence will not support his position, and I draw such an inference here.

Fundamental Breach

[22] Vincenzo argues that Elle has breached the lease and that consequently, he is entitled to take possession of the unit. Only a fundamental breach of lease gives rise to a landlord’s to terminate a lease. To prove fundamental breach, the landlord must demonstrate extraordinary circumstances which warrant termination and that the breach is sufficient to deny the landlord of "substantially the whole" of the contract's benefit. Where there is no evidence or suggestion that the landlord has not still enjoyed the full benefit of the rent received from the tenant in relation to the leased premises, fundamental breach will not be found.[^5]

[23] All of the breaches alleged by Vincenzo are either bald, spurious, or both. None would constitute fundamental breach. Vincenzo is therefore not entitled to terminate the lease by reason of fundamental breach.

Good Faith

[24] The Supreme Court of Canada in Bhasin v. Hrynew recognized a duty of good faith and honest contractual performance that binds contracting parties. This duty requires parties to: (a) act honestly; (b) act in good faith; (c) have regard for the legitimate interests of the contracting partner; and (d) not seek to undermine those interests in bad faith through lies or knowingly misleading the other party about matters directly linked to the performance of the contract. Honest conduct accords with the reasonable expectations of the parties.[^6] Vincenzo has not met this standard in his dealings with Elle.

[25] I agree with the applicant that Vincenzo deliberately attempted to undermine the valid lease without regard for Elle who, in reliance on Vincenzo’s assurances and the lease, invested her life’s savings in renovating the premises. Elle’s uncontroverted evidence is that Vincenzo entered into the lease intending to find reasons to terminate it so that he could carry out construction. This does not constitute honesty in contractual performance.

Right to Quiet Enjoyment

[26] A landlord's covenant to provide quiet enjoyment means that a landlord must not substantially interfere with the tenant's normal and lawful use of the premises. To be actionable, the interference must be grave and permanent such that it renders the premises substantially unfit for the purposes for which it was leased.[^7] A landlord's failure to repair damage to the premises can be a breach of the covenant for quiet enjoyment where the damage prevents the tenant from carrying on their business.[^8]

[27] I agree that Vincenzo’s conduct in doing the following constitutes interference with Elle’s quiet enjoyment of the premises: (i) demolishing the backyard; (ii) removing the central air conditioning unit; (iii) bringing the spurious LTB proceeding; (iv) creating a GFA overage and then using the overage in an attempt to evict Elle; (v) locking Elle out; (vi) refusing to repair; and (vii) the ever lengthening list of bald and spurious alleged breaches.

Obligation to Repair and Safe Access

[28] Vincenzo breached his obligation to Elle to replace the AC unit, repair the premises, and protect her right to safe access to the property.

[29] A commercial landlord is obligated to repair by express covenant.[^9] Tenants are not responsible for the costs of repairing conditions that are the result of reasonable wear and tear. Accordingly, Vincenzo is responsible for all repair in excess of $50.00. Elle’s uncontroverted evidence is that the central air unit, located in the common area, was approximately ten years old and required replacement, not maintenance. There is an implied covenant that the landlord will repair areas under its possession and control.[^10] Given that Vincenzo removed the AC unit, and it cannot be repaired, he is required to replace the unit.

[30] Further, under the Occupiers' Liability Act, a landlord who is responsible for the maintenance and repair of the leased premises must take reasonable care in all the circumstances to ensure that persons are reasonable safe while on the premises, including access thereto.[^11]

[31] In demolishing the walkway and backyard and in removing the AC unit, I agree that Vincenzo derogated from his grant to Elle, breached her right to quiet enjoyment and compromised her right to safe access.

Forfeiture

[32] Since I have found in favour of Elle on the previous issues, it is unnecessary for me to decide the forfeiture claim. However, if I am wrong about those issues, in the alternative, relief from forfeiture would be appropriate in this case. Accepting rent after the act of forfeiture (non‑payment) by a tenant is a waiver of the right to exercise the right to forfeiture for non-payment of rent and other alleged defaults.[^12] Although Vincenzo alleges that Elle reduced her rent payment between January 2016-2019, he accepted her rent after this reduction in payment.

[33] Where a landlord was fishing in bad faith for breaches of a lease in an attempt to terminate the lease to carry out construction, even though no breaches were established, this court has not hesitated to grant relief from forfeiture.[^13] In this case, Vincenzo has not established that Elle has breached the lease. I therefore agree with the applicant that Vincenzo would not be entitled to enforce his right to forfeiture.

Remedy

[34] This is a valid lease. Specific performance is granted for the following reasons.

[35] Specific performance is a discretionary equitable remedy granted where damages cannot afford an adequate and just remedy under the circumstances and is available to leased lands that are unique.[^14] Loss of goodwill and relocation costs make a property unique.[^15]

[36] Elle has proven that she cannot afford to renovate new premises, as she spent her life’s savings renovating these premises. She also cannot afford to pay higher rent at new premises, and will lose business and clientele in establishing at new premises. I accept that subletting from another studio is not a long-term solution either. Elle has also demonstrated that she has her own culture and philosophy at her studio and does not want to freelance. Specific performance is therefore appropriate in this case.

Conclusion

[37] Accordingly, all relief sought by the applicant is granted:

(a) an order that the lease is valid and binding;

(b) an order declaring that Vincenzo unlawfully and invalidly terminated her lease by notice of termination dated August 7, 2019;

(c) an interim, interlocutory, and permanent injunction restraining Vincenzo from interfering with her business and her right of quiet enjoyment including access to the premises;

(d) an order requiring Vincenzo to fix, within 30 days, outstanding repairs to the premises, including but not limited to the entrance and back patio, the eavestrough and replacement of the central air conditioning unit;

(e) an order dismissing Vincenzo’s counter-application.

I can be provided with written cost submissions from the applicant by May 17, 2021 and from the respondent within 14 days thereafter. Any reply from the applicant can be sent within 7 days thereafter to my assistant by email at: lorie.waltenbury@ontario.ca .

J.E. Ferguson, J.

Date: April 26, 2021

[^1]: J.P. Towing v. Intact, 2019 ONSC 1495 at paras. 38-39, 40-55. [^2]: Brownlee v. Kashin, 2015 ONSC 1035, at paras. 3, 25; Residential Tenancies Act, 2006, S.O. 2006, c. 17, s. 210. [^3]: Greenlight Capital Inc. v. Stronach, 2008 CanLII 34359 (ON SCDC), 91 O.R. (3d) 241 (Div. Ct.), at paras. 62-64 [Greenlight]. [^4]: 539618 Ontario Inc. v. Olympic Foods (Thunder Bay) Ltd., 65 C.B.R. (N.S.) 143 (Ont. Reg. Bank.), at para. 55 [539618]. [^5]: 1328773 Ontario Inc. v. 2047152 Ontario Ltd., 2013 ONSC 4953, at paras. 14-17 [1328773]. [^6]: Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494; Osteria Da Luca Inc. v. 1850546 Ontario Inc., 2015 ONSC 5606 at paras. 51-52 [Osteria]. [^7]: 2072467 Ontario Inc. v. Dr. Matthews P.C., 2020 ONSC 2739, at para. 140; Conveyancing and Law of Property Act, R.S.O. 1990, c. C. 34, s. 23(1) and definitions, “Conveyance”. [^8]: Bassiouny v. Lo, 2008 CanLII 68883 (Ont. S.C.), at para. 58. [^9]: Liorti v. D'Arento Properties Ltd., 2006 CarswellOnt 3685 (S.C.) at para. 25. [^10]: One Ten Bloor Management Ltd. v. First Church of Christ, Scientist, Toronto, 1991 CarswellOnt 2904 (Ont. Gen. Div.), at para. 36. [^11]: Occupiers' Liability Act, R.S.O. 1990, c. O.2, s. 8(1); Allison v. Rank City Wall Canada Ltd. (1984), 1984 CanLII 1887 (ON SC), 45 O.R. (2d) 141, 6 D.L.R. (4th) 144 (H.C.), at para. 14. [^12]: 1328773, supra note 9, at para. 18. [^13]: Stoneridge Travel Centre Inc. v. 1079334 Ontario Ltd., 1999 CarswellOnt 1399 (S.C.), at paras. 81-84. [^14]: Crossview Developments Inc. 22624443 Ontario Ltd., 2016 ONSC 647, at para. 83. [^15]: One Stop Fireplace Shop Ltd. v. Parigon Industries Inc., 2013 ONSC 1562, at para. 72.