Court File and Parties

COURT FILE NOS.: CV-20-00652453-0000, CV-21-00654472-0000 DATE: 2021-05-21

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

AUGEND 6285 YONGE VILLAGE PROPERTIES LTD. Applicant

– and –

THE TIRE PIT INC. and MICHAEL GOLDLIST Respondents

Counsel: Terry Corsianos and George Corsianos, for the Applicant Bernard Gasee and Derek Ketelaars, for the Respondent The Tire Pit Inc. Harvey Ash, for the Respondent Michael Goldlist

AND BETWEEN:

THE TIRE PIT INC. Applicant

– and –

AUGEND 6285 YONGE VILLAGE PROPERTIES LTD. and CHARLES BULMER Respondents

Counsel: Bernard Gasee and Derek Ketelaars, for the Applicant The Tire Pit Inc. Terry Corsianos and George Corsianos, for the Respondent Augend 6285 Yonge Village Properties Ltd. Brent Cumming, for the Respondent Charles Bulmer

REASONS FOR JUDGMENT

VERMETTE J.

[1] The Applicant, Augend 6285 Yonge Village Properties Ltd. (“Augend”), seeks various relief in relation to: (a) a tenancy between Charles Bulmer, as landlord, and the Respondent The Tire Pit Inc. (“Tire Pit”), as tenant; and (b) a sub-tenancy between Tire Pit, as sub-landlord, and the Respondent Michael Goldlist, as sub-tenant, with respect to leased premises located at 6285 Yonge Street in Toronto (“Leased Premises”), which were previously owned by Mr. Bulmer but are now owned by Augend.

[2] In the companion application, the Applicant, Tire Pit, also seeks various relief in relation to the same tenancy and sub-tenancy. There is significant overlap between the two applications.

[3] The main issue in both applications is whether Tire Pit validly exercised its option to extend the lease for a further term of five years within the time limit and in the manner prescribed in the lease. As discussed further below, I find that it did.

FACTUAL BACKGROUND

[4] The lease agreement between Tire Pit and Mr. Bulmer that is in issue in these applications was made as of December 16, 2013 (“Lease”). The Lease was not the first lease agreement entered into by Tire Pit and Mr. Bulmer as Tire Pit has been operating in the Leased Premises for more than ten years. Tire Pit’s principal is Mr. Esmaeil Pashazohari.

[5] The following are some of the relevant provisions of the Lease:

Section 1.02 – Term

TO HAVE AND TO HOLD the said Premises for and during a term of 5 YEARS such term to be computed and inclusive of the 1^st day of January, 2014 and from thenceforth ensuing and to be fully completed on the 31^st day of December, 2019.

Section 9.01 – Notice

Any notice required or contemplated by any provision of this Lease shall be given in writing, enclosed in a sealed envelope and addressed, in the case of the Landlord to:

21 Chip Court, Richmond Hill, Ontario

and in the case of the Tenant, to the Premises, and delivered or sent in by registered mail, postage prepaid, return receipt requested or by a nationally recognized courier service. The time of the giving of such notice, if mailed, shall be conclusively deemed to be the fifth (5th) business day after the date of such mailing. If mail service is interrupted on or before the fifth (5th) business day after the date of the mailing of the notice by strikes or other irregularities which are made known to the public, then such notice shall be deemed to be received after the resumption of normal mail service, after taking into consideration the number of days already elapsed prior to the interruption of the mail service and subtracting same from the five (5) business day notice period. In the event that any such notice is delivered by a nationally recognized courier service, such notice shall be deemed to have been received on the date of delivery and sufficiently given if given to an agent or employee of either the Landlord or the Tenant at such party's address. Either party hereto may, by notice to the other, from time to time designate another address in Canada to which notices mailed at least ten (10) days thereafter shall be addressed.

Section 9.05 – Entire Agreement

This Lease sets forth the entire agreement between the parties hereto with respect to the subject matter herein set forth providing for the lease of the Premises from the Landlord by the Tenant and supersedes and replaces any other covenants, promises, agreements, conditions or understandings, either oral or written, between the Landlord and the Tenant with respect to the aforementioned subject matter. Except as specifically provided herein, no subsequent alteration, amendment, change or addition to this Lease shall be binding upon either the Landlord or the Tenant unless the same shall have been agreed to by both parties in writing in a fully executed document. It is understood and agreed between the Landlord and the Tenant that all the agreements and provisions contained in this Lease are to be construed as covenants on the part of the party agreeing do them.

Section 9.13 – Option to Extend

Provided that the Tenant has been in substantial compliance with the terms and conditions of the Lease and has promptly paid all Rent due during the Term, the Tenant shall have an option to extend the Lease for a further Term of five (5) years commencing on the expiry date of the original Term; provided that written notice is given to the Landlord at least six months prior to the expiry of the Term. Such extension shall be on the terms and conditions contained in the Landlord's then-current form of lease for the Building and otherwise on the same terms and conditions contained in this Lease, except for the Rent and there shall be no further extension option. The Tenant shall execute an extension agreement incorporating the terms and conditions of such extension, which shall be in the form of the Landlord's then current lease for the Building.

Base Rent for the extension Term shall be the Landlord's then-current rent for premises in the Building or, if the Landlord then has no such premises available, such Rent shall be the fair market rental for similar premises in the area of the Building at the time of the extension, but in no event shall the Base Rent be less than the Base Rent payable during the last year of the Term. If the parties are unable to agree on the fair market rental, if applicable, within three months prior to the commencement of the extension Term, the matter shall be referred to arbitration in accordance with the Arbitrations Act, 1991 (Ontario).

Section 9.14 – Option to Terminate

Notwithstanding anything to the contrary contained in this Lease, if at any time the Landlord enters into a binding Agreement of Purchase and Sale to sell the Building in an arms length [sic] transaction, the Landlord shall have an option (the “Termination Option”) to terminate this Lease upon the following terms and conditions:

(a) the Landlord gives the Tenant not less than 12 months irrevocable written notice (the “Termination Notice") of its exercising the Termination Option. Upon giving the Termination Notice and complying with the provisions of this section, this Lease shall terminate at 11:59 p.m. on the last day of the calendar month in which such notice period expires, the last day of such calendar month being called the "Termination Date";

(b) If the Landlord exercises the Termination Option in accordance with the foregoing, on the Termination Date:

(i) this Lease shall terminate and be of no further force or effect, but the Tenant shall continue to be responsible for the performance of the Tenant's covenants applicable to the period prior to the Termination Date, including the obligation to pay Rent;

(ii) the Tenant shall surrender possession of the Premises to the Landlord in accordance with obligations contained in this Lease; and

(iii) if required by the Landlord, the Landlord and the Tenant shall enter into a written agreement reflecting the termination of this Lease on the terms contained in this section. [Emphasis added.]

[6] The Lease also provided that the rent was to be increased by 2% on January 1 in each successive year of the term, and that the landlord’s consent was required to assign the Lease or to sublet the Leased Premises.

[7] Mr. Goldlist sublets a storefront at the Leased Premises from Tire Pit. Tire Pit and Mr. Goldlist signed a Sub-Lease Agreement dated November 1, 2018 (“Sublease”). Mr. Bulmer also signed the Sublease, under the following sentence: “I, Charles C. Bulmer, the Head-Landlord, received a copy of this Agreement & agreed with this sublease.” [Emphasis in the original.]

[8] The Sublease provides that its initial term is from December 1, 2018 to December 31, 2023, and that “[t]his Agreement has the extended option of Extra 5 Years if both parties agree upon terms thereafter.” [Emphasis in the original.]

[9] In order to obtain Mr. Bulmer’s consent to the Sublease, Tire Pit agreed to make monthly “bonus payments” in the amount of $500 to Mr. Bulmer (“$500 Bonus Payments”). This agreement was not put in writing, and Tire Pit stopped making the $500 Bonus Payments after Mr. Pashazohari received a notice from Mr. Bulmer’s lawyer on November 28, 2019, as set out below.

[10] On July 2, 2019, Mr. Pashazohari sent an e-mail to Mr. Bulmer (“July 2, 2019 E-mail”) in which he stated the following:

Dear Charlie

I called you few times to ask you for renewal lease agreement request for coming year since I wanted to make sure we have enough time to prepare & sign but since you are always busy & you still could not find the last 2 bonus checks, it never comes up.

That's why I prepared & attached a letter to make sure you will look at it & have time t[o] prepare the new lease agreement or I could just prepare a generic renewal lease extension with same terms & conditions.

Thanks in Advance

Esmaeil Pashazohari for Tire Pit Inc. 416 847 3748

[11] The attachment to the e-mail is a letter dated June 27, 2019 (“June 27, 2019 Letter”) which reads as follows:

To Whom It May Concern:

Dear Charles C. Bulmer

As you are aware, our lease agreement for

6285 Yonge Street

Toronto, Ontario

M2M 3X6

is up for renew in a little over 6 months from now.

Please prepare a Lease Renewal Agreement to be signed before end of this agreement or if you like, we could sign a short lease renewal agreement with same terms & conditions.

Sincerely

Esmaeil Pashazohari

June 27, 2019

For

Tire Pit Inc.

416 847 3748

[Emphasis in the original.]

[12] Mr. Pashazohari’s evidence is that before sending his e-mail to Mr. Bulmer on July 2, 2019, he delivered a signed copy of the June 27, 2019 Letter to Mr. Bulmer at his house (i.e. the address specified in section 9.01 of the Lease for the giving of notices) on June 27, 2019. In his affidavit, Mr. Bulmer states that he did not receive notice of Tire Pit’s desire to extend the Lease at his home residence. This conflict in the evidence is discussed further below.

[13] On October 10, 2019, Mr. Bulmer entered into an agreement of purchase and sale with Gal Real Two Holdings Ltd. with respect to the 6285 Yonge Street property, with a scheduled closing date of February 27, 2020, which was subsequently extended a number of times.

[14] On November 28, 2019, Mr. Bulmer’s lawyer sent a letter to Mr. Pashazohari (“November 28, 2019 Notice”) which stated as follows:

The writer is counsel for Charlie Bulmer.

The term of the current lease expires 31 December 2019. Please be advised that my client is not renewing the lease.

My client expects and requires vacant possession of the property as at 31 December 2019.

[15] Shortly after receiving the November 28, 2019 Notice, Mr. Pashazohari called Mr. Bulmer. According to Mr. Pashazohari, he and Mr. Bulmer discussed the issue of the sale of the property and Mr. Bulmer ultimately told Mr. Pashazohari that he would talk to his lawyer and that Tire Pit did not have to vacate the Leased Premises. Mr. Pashazohari subsequently sent the following e-mail to Mr. Bulmer:

Dear Charlie,

I am sorry for delay to write you after we spoke over the phone, I had some problems in my shop that needed immediate attention & even though I am still dealing with the issue, I just had few minutes time to write you this letter explaining why I am not signing the new termination letter.

Following is the picture of Section 9.14 of our excisting [sic] lease regarding Option to Terminate of our lease in case you are selling your building.

As you could see, we already agreed if you sell your property to a real person, we have minimum 12 months to empty the place if you request in writing.

However, in your new letter to terminate, your lawyer asking me to sign my sudden death agreement & even pay for the bullet without any option, even though could be fake offer, just with an offer to purchase.

I might be a garage owner, but still could read & translate words, especially from people who I don’t trust from past experiences.

I am open to everything to make our lives easier, even paying you more than what I suppose to do, but trying to cheat at me & even insulting my intelligent [sic] is not going to work & I am sure you agree with me in that case as well.

Please call me if you have any questions or concerns in this regard.

[16] Tire Pit’s lawyer also contacted Mr. Bulmer’s lawyer and advised him that “our client exercised his renewal rights in June directly in writing with your client at his home and later confirmed again in writing.” Mr. Bulmer’s lawyer was advised that Tire Pit would not be vacating the property on December 31, 2019.

[17] After January 1, 2020, Tire Pit remained in the Leased Premises and continued to pay rent at the former rent amount plus an additional 2 %.

[18] On June 30, 2020, Gal Real Two Holdings Ltd. and Mr. Bulmer entered into an amendment to the agreement of purchase and sale. Among other amendments, the purchase price was lowered from $9 million to $8.75 million. The deal ultimately closed on July 31, 2020, and the property in issue in these applications was transferred to Augend, which then became and remains the registered owner thereof.

[19] On July 3, 2020, Mr. Bulmer’s lawyer sent the following e-mail to the lawyers for Tire Pit and Mr. Goldlist:

I can advise that my client’s sale transaction with the purchaser HAS NOW FIRMED with a closing date of 31 July 2020.

Under the terms of the agreement my client WILL NOT be giving vacant possession of the property on closing. You will be provided with the purchaser’s information as the purchaser directs on or before closing. [Capital letters in the original.]

[20] Mr. Bulmer accepted the rent payments from Tire Pit from January 2020 until July 2020. Starting in August 2020, Augend accepted the rent payments under protest. While Mr. Bulmer suggested in his affidavit that he had not received rent for the months of January, February and March 2000, Tire Pit has produced bank statements that show that it did pay rent for these months.

[21] Augend commenced its application against Tire Pit and Mr. Goldlist on December 3, 2020. As stated above, the application is for various relief, including an order that both the Lease and the Sublease came to an end as of December 31, 2019, and an order requiring Tire Pit and Mr. Goldlist to vacate the Leased Premises. On January 8, 2021, Tire Pit commenced an action against Augend and Mr. Bulmer with respect to the same events and issues. At a case conference held on February 2, 2021, Schabas J. held that the determination of the “real issues between the parties” should be dealt with by way of application, and that Tire Pit and Mr. Goldlist could issue their own Notices of Application if they saw fit with respect to the issues raised in Tire Pit’s Statement of Claim. Schabas J. noted that while Tire Pit sought damages in its Statement of Claim, that appeared to be a very minor part of its claim and should not prevent a more efficient and expeditious determination of the main issues. He ordered a stay of Tire Pit’s action pending the outcome of the applications. Further to Schabas J.’s order, Tire Pit commenced its own application on February 26, 2021.

DISCUSSION

[22] As stated above, the main issue in both applications is whether Tire Pit validly exercised its option to extend the Lease for a further term of five years within the time limit and in the manner prescribed in the Lease. Given my conclusion on this issue, only a few of the other issues raised by the parties need to be dealt with. They are discussed below.

a. Was the option to extend available to Tire Pit?

[23] Section 9.13 of the Lease states that Tire Pit shall have an option to extend the Lease for a further term of five years provided that it “has been in substantial compliance with the terms and conditions of the Lease and has promptly paid all Rent due during the Term”. Substantial non-compliance with the terms and conditions of the Lease was not argued and was not established. However, counsel for Augend argued that the $500 Bonus Payments constituted rent under the Lease and that Tire Pit’s failure to continue making the $500 Bonus Payments after November 2019 was a failure to pay rent under, and a breach of, the Lease.

[24] I do not accept Augend’s submission in this regard. First, the terms of the oral agreement between Tire Pit and Mr. Bulmer regarding the $500 Bonus Payments were not proven. Among other things, there was no evidence before me as to the period of time over which these payments were to be made. As such, I cannot find that the failure to make further $500 Bonus Payments after November 2019 constituted a breach of the agreement between Tire Pit and Mr. Bulmer. This is especially the case since there is no evidence that Mr. Bulmer ever complained to Tire Pit about the discontinuance of the $500 Bonus Payments.

[25] Second, even if the agreement between Mr. Bulmer and Tire Pit regarding the $500 Bonus Payments provided that such payments were to continue after November 2019, I find that this agreement never became part of the Lease and the rent to be paid thereunder. Section 9.05 of the Lease is clear that, in order to be binding upon the parties, any amendment, change or addition to the Lease must be agreed to by both parties in writing in a fully executed document. This was not done with respect to the $500 Bonus Payments. Both parties were fine with an oral, side agreement.

[26] As a result, it was open to Tire Pit to exercise the option to extend because it was in substantial compliance with the terms and conditions of the Lease and had promptly paid all rent due under the Lease.

b. Did Tire Pit exercise its option to extend the Lease on June 27, 2019?

[27] Augend submits that Mr. Pashazohari’s evidence that he personally delivered the June 27, 2019 Letter to Mr. Bulmer at his home on June 27, 2019 should be rejected “as a mendacity”. Instead, according to Augend, I should accept as true the evidence of Mr. Bulmer in his affidavit, where he states that he did not receive notice of the tenant’s desire to extend the Lease at his home. In support of its position, Augend heavily relies on the text of the July 2, 2019 E-mail which, it argues, shows that the June 27, 2019 Letter was submitted for the first time to Mr. Bulmer as an attachment to the July 2, 2019 E-mail. Augend points out that the July 2, 2019 E-mail makes no mention of Mr. Pashazohari’s alleged attendance at Mr. Bulmer’s residence on June 27, 2019 and of the alleged fact that he had already hand-delivered the notice to extend the Lease. Augend’s position is that any notice provided on July 2, 2019 was given late (i.e., less than the required six months before the end of the term) and that, as a result, Tire Pit forfeited its right to exercise its option to extend the Lease, and the Lease expired on December 31, 2019.

[28] Tire Pit and Mr. Goldlist submit that I should accept Mr. Pashazohari’s evidence over Mr. Bulmer’s. They argue that Mr. Bulmer’s evidence is unreliable as it is clear from his cross-examination that his memory was faulty. Further, Mr. Bulmer admitted during his cross-examination that he may have met with Mr. Pashazohari on June 27, 2019, and received the extension notice from him at that time.

[29] Mr. Bulmer is 88 years old. All counsel agreed, and it is apparent from a review of the transcript of his cross-examination, that Mr. Bulmer currently has serious cognitive and memory issues. During his cross-examination, he had great difficulty remembering anything and understanding many of the questions that were asked of him and, ultimately, he was not able to answer a substantial number of the questions, including simple ones. Mr. Bulmer swore his affidavit on March 22, 2021, the day before he was cross-examined on March 23, 2021. In light of Mr. Bulmer’s “performance” at his cross-examination, I give no weight to his affidavit evidence. In fact, during his cross-examination, Mr. Bulmer was not even able to personally confirm that he had read his affidavit before signing it. Further, the affidavit, which is only two pages long, contains proven errors with respect to the rent paid in 2020 and Mr. Bulmer’s own age (the affidavit states that he is 87 years old, but Mr. Bulmer indicated during his cross-examination that he was 88 years old and the birth date that he provided confirms this).

[30] While Mr. Bulmer purported to state unequivocally in his affidavit that he “did not receive notice of the tenant’s or sub-tenant’s desire to extend the lease, at […] my home residence”, he gave the following evidence during his cross-examination, among others:

175 Q. Essie [i.e. Mr. Pashazohari] says he delivered this to your house on June 27 and you invited him into your house and he gave it to you.

MR. CUMMING: This.

THE WITNESS: Did he deliver this to my house? Well, he was at our house a few times, so I can't exactly say which one was up.

MR. GASEE:

176 Q. Did you get this letter?

A. Is it an agreement?

MR. CUMMING: No. He is just asking you if you got that letter. That is all he is asking.

THE WITNESS: Asking what? Are you –

MR. CUMMING: If you got that letter.

THE WITNESS: This letter here?

MR. CUMMING: This one you are looking at.

THE WITNESS: May I read it again?

MR. CUMMING: Yeah.

THE WITNESS: He is asking for a lease renewal.

MR. CUMMING: Right.

THE WITNESS: Yeah.

MR. CUMMING: Did you get that letter? That is what Mr. Gasee’s question is.

THE WITNESS: Okay. All right.

MR. CUMMING: Did you get it? Did you get that letter?

THE WITNESS: What is the date on this?

MR. CUMMING: June 27, '19.

THE WITNESS: That is two years ago almost.

MR. CUMMING: Right. So do you remember, or not remember?

THE WITNESS: I am sorry. I do not really, completely remember. You know, we talked. That is all that I know.

MR. GASEE:

177. Q. So you can’t say – you don’t remember if – you can’t say no and you can’t say yes. Is that correct? You don’t remember one way or the other?

A. I am thinking. I am reading.

178. Q. Okay.

A. You know, I have got an excuse. I am older. Sorry. But that is my – part of my excuse.

MR. CUMMING: If you don’t remember, just tell Mr. Gasee that.

THE WITNESS: Yeah. Okay. Exactly. Okay.

MR. CUMMING: If you do remember, then tell him that. But if you don’t remember, you don’t remember.

THE WITNESS: Well, Essie probably approached me, yes.

MR. CUMMING: All right.

MR. GASEE:

179. Q. Did he approach you about renewing the lease?

A. I am trying, but I can’t remember everything. So is there a lease showing – is there a lease, a new lease, you know, with – we are leading up to a lease. Right?

MR. TERRY CORSIANOS:

407. Q. Okay. So, Mr. Bulmer, please try to focus on my question and again, to the best of your ability, answer it. So the question, sir, was this: Do you have any recollection at any time of Essie personally delivering this one-page letter to you at your home? That is the question. Do you understand my question, sir?

A. May I have my counsel here –

MR. CUMMING: Well, he is just asking you if [sic] remember or you don’t remember.

THE WITNESS: Remember what?

MR. CUMMING: Whether or not that was delivered to your home. That is what he is asking you.

THE WITNESS: What? This?

MR. CUMMING: Yeah.

THE WITNESS: I am reading, sir. Please give me a moment.

Probably this was delivered to me, but I don’t recall it. I am sorry. [Emphasis added.]

[31] I find that Mr. Bulmer has no recollection one way or the other as to whether Mr. Pashazohari delivered the June 27, 2019 Letter to his home on June 27, 2019. However, he seems to believe that it is probable that it was, in fact, delivered.

[32] Counsel for Augend stated during his argument that in light of the fact that Mr. Bulmer’s mental faculties are compromised, a trial of an issue would not help with respect to determining whether the June 27, 2019 Letter was delivered to Mr. Bulmer on June 27, 2019. I agree and I also note that it is Augend that insisted to have this matter proceed by way of application instead of action, which was Tire Pit’s preferred way.

[33] Mr. Bulmer also gave the following evidence during his cross-examination, which suggests that he formally agreed to extend the Lease:

157 Q. Did Essie [i.e., Mr. Pashazohari], on behalf of Tire Pit, ever tell you that they wanted to renew the lease that ended December 31, 2019? Did they ever discuss that with you?

A. Well, yeah. I guess I formally agreed to give them the lease again. But then I decided I would sell the whole building as well. So guess what? I am crossing myself here. I am in trouble here on that one.

[34] Mr. Bulmer, with the assistance of his counsel, undertook: (a) to check (or have his secretary check) his e-mails (both work and personal) to see whether he had received the July 2, 2019 E-mail; and (b) to ask his wife whether she had any recollection of the June 27, 2019 Letter and the July 2, 2019 E-mail. While Mr. Bulmer’s counsel provided answers to other undertakings given during his client’s cross-examination, he did not provide answers to the two undertakings set out above and he did not give a satisfactory explanation at the hearing for his failure to do so. I therefore draw an adverse inference from Mr. Bulmer’s failure to answer these undertakings and conclude that the answers to these undertakings would not have supported his position on the applications that he did not receive timely notice to extend the Lease. I specifically infer that Mr. Bulmer received the July 2, 2019 E-mail.

[35] In light of all of the evidence, I conclude that, on the balance of probabilities, Mr. Pashazohari did deliver the June 27, 2019 Letter to Mr. Bulmer at his home on June 27, 2019, i.e., at least six months prior to the expiry of the Lease’s term. This conclusion is the most consistent with the evidence of Messrs. Pashazohari and Bulmer and with the documentary evidence.

[36] Both Mr. Pashazohari and Mr. Bulmer were clear in their evidence that Mr. Pashazohari would regularly attend at Mr. Bulmer’s house, i.e. a few times a year, to drop off or pick up Lease-related documents or cheques. Mr. Bulmer would then usually invite Mr. Pashazohari to come in for a drink and cookies. Mr. Pashazohari attending at Mr. Bulmer’s house to personally drop off Tire Pit’s notice to extend the Lease is consistent with the parties’ practice.

[37] After the November 28, 2019 Notice was provided, Tire Pit’s counsel advised Mr. Bulmer’s counsel that “our client exercised his renewal rights in June directly in writing with your client at his home and later confirmed again in writing.” Copies of the July 2, 2019 E-mail and the June 27, 2019 Letter were provided to Mr. Bulmer’s lawyer shortly thereafter. Thus, Mr. Pashazohari’s evidence about providing notice to extend the Lease on June 27, 2019 has remained the same since the extension of the Lease was first put in doubt, and long before Augend came on the scene.

[38] While it is slightly odd that the July 2, 2019 E-mail does not expressly refer to an attendance at Mr. Bulmer’s house on June 27, 2019, this omission does not change my conclusion. Mr. Pashazohari is a lay person and he was communicating in an informal manner with another lay person with whom he had had a friendly relationship for almost a decade and who was having memory issues. Mr. Pashazohari gave evidence that Mr. Bulmer was having memory issues and these issues are obliquely referred to in the July 2, 2019 E-mail (“you still could not find the last 2 bonus checks”). In these circumstances, it made sense for Mr. Pashazohari to send a “reminder” to Mr. Bulmer. Interpreting the July 2, 2019 E-mail as a reminder and not as a first occurrence is supported by the fact that the attached letter is dated June 27, 2019, not July 2, 2019. Further, Mr. Pashazohari gave evidence that he called Mr. Bulmer a few times a week between June 27 and November 28, 2019 to ask him about the lease renewal agreement. It is thus possible that Mr. Pashazohari followed up with Mr. Bulmer by phone between June 27, 2019 and July 2, 2019, before sending the July 2, 2019 E-mail as an additional reminder. If the parties had oral discussions after the June 27, 2019 attendance, this could explain why the attendance is not expressly mentioned.

[39] I give no weight to the representations that Mr. Cumming, Mr. Bulmer’s lawyer, made to the property’s purchaser to the effect that there had been “no discussions regarding renewals, extensions or amendments, either in writing or orally, with respect to The Tire Pit Inc.” Mr. Cumming was not Mr. Bulmer’s lawyer in June and July 2019. Mr. Bulmer was a relatively new client of his, so Mr. Cumming was uninformed. The representations that were made are contradicted by a substantial amount of evidence.

[40] I accept Mr. Pashazohari’s evidence that, on numerous occasions before June 2019, he advised Mr. Bulmer of Tire Pit’s intention to extend the Lease and asked for a written lease renewal agreement, including at the time that Mr. Bulmer signed the Sublease. This was done both orally and in e-mails. Given that the term of the Sublease was ending on December 31, 2023, i.e. four years after the end of the Lease, a renewal of the Lease was required. There is evidence that Mr. Bulmer discussed the preparation of a new lease with his lawyer at around the time of the signing of the Sublease. E-mail correspondence with Mr. Bulmer’s former lawyer, Mr. Vrancic, support the fact that renewal/extension discussions took place.

[41] Mr. Bulmer acknowledged during his cross-examination (in one of the few clear answers that he gave) that he knew that Mr. Goldlist was going to be in the Leased Premises until December 31, 2023. As reproduced above, Mr. Bulmer also stated that he thought that he had formally agreed to extend the Lease. All of this is consistent with Tire Pit taking the necessary steps under the Lease to extend it. A notice to extend the Lease coming from Tire Pit, while inconvenient for Mr. Bulmer’s plan to sell the property, was anything but surprising.

[42] Whether or not the representations made by Mr. Cumming were based on Mr. Bulmer’s faulty memory, they were factually inaccurate. The fact that inaccurate information may have been given to the purchaser cannot have an impact on Tire Pit’s rights under the Lease.

[43] Thus, I find that Mr. Pashazohari personally delivered the June 27, 2019 Letter to Mr. Bulmer at his house on behalf of Tire Pit on June 27, 2019, that the June 27, 2019 Letter constituted Tire Pit’s written notice of its exercise of the option to extend the Lease under section 9.13 of the Lease, and that the notice was delivered within the time provided for in section 9.13., i.e. at least six months prior to the expiry of the term of the Lease.

c. Was the June 27, 2019 Letter good and valid notice under the Lease?

[44] Augend argues that even if notice was given on June 27, 2019, as claimed by Tire Pit, the notice given (i.e., the June 27, 2019 Letter) was legally insufficient as it did not comply with the terms of the Lease. Augend points to the following alleged deficiencies: (a) while it was in an envelope, the notice was not in a sealed envelope (as admitted by Mr. Pashazohari during his cross-examination); (b) the notice was not sent by registered mail or by a “nationally recognized courier service”; and (c) the notice was not given to an agent or employee of the landlord, but, rather, to the landlord himself. Augend acknowledges in its Factum that the last point is a “hyper-technical argument”.

[45] The position of Tire Pit and Mr. Goldlist is that the June 27, 2019 Letter was a valid notice. They argue that the courts do not require strict compliance with the method of delivery of renewal notices. They rely, among other things. on the decision of the Court of Appeal in Ross v. T. Eaton Co. (1992), 1992 CanLII 7470 (ON CA), 11 O.R. (3d) 115 (C.A.).

[46] In Ross v. T. Eaton Co., like in the present case, the issue was whether notice of renewal of a lease had been validly given. The Court of Appeal held that where the manner of notice is prescribed in an agreement, but not absolutely, service in another manner is adequate if: (a) the other manner is no less advantageous; and (b) notice is actually communicated.

[47] In coming to this conclusion, the Court of Appeal relied on two English decisions, Manchester Diocesan Council of Education v. Commercial & General Investments, [1970] 1 WLR 241 (Ch. D.) and Yates Building Co. v. R.J. Pulleyn & Sons (York) Ltd. (1975), 237 E.G. 183 (C.A.), and cited with approval the following passage from Lord Denning’s reasons in Yates Building Co.:

[…] The only remaining case is Manchester Diocesan Council of Education v Commercial & General Investments [1970] 1 WLR 241, where this very point was considered by Buckley J. He gave this guide to construction on p 246, letter c:

Where, however, the offeror has prescribed a particular method of acceptance, but not in terms insisting that only acceptance in that mode shall be binding, I am of opinion that acceptance communicated to the offeror by any other mode which is no less advantageous to him will conclude the contract.

It seems to me that Buckley J was there adopting the same test as I have stated. If the offeror uses terms insisting that only acceptance in a particular mode is binding, it is mandatory. If he does not insist, and it is sufficient if he adopts a mode which is no less advantageous, it is directory. At any rate, adopting Buckley J's test in this case, there were no words insisting that only registered or recorded delivery post would do, and the sending by ordinary post was no less advantageous to the sellers than sending by registered post, so long as it got there in time. In my opinion this option was perfectly well exercised and there was a binding contract accordingly.

[48] In Canada Safeway Ltd. v. A. Schiel Construction Ltd., 1993 CanLII 212 (B.C.S.C.), the notice provision in the lease in issue provided that notices under the lease “shall be given” by registered mail. MacDonald J. reviewed the Court of Appeal’s decision in Ross v. T. Eaton Co. and the English case law referred to therein and stated:

The only issue here is whether actual notice is effective, in light of the Notice provision in the lease which states that any notice thereunder shall be given by registered mail. I have concluded that actual notice is good notice under this lease. I reach that conclusion because the Notice provision therein is not exclusionary, in the sense of expressly prohibiting service other than by registered mail.

In this case, registered mail is not stated to be the only form of notice which is acceptable, the renewal notice was actually communicated to the proper person, and no acceptable argument was advanced by Schiel (and could not have been) that the method of service was “less advantageous” to it. [Emphasis in the original.]

[49] In my view, the same reasoning applies in this case. The language in section 9.01 of the Lease is not exclusionary and does not insist that only notices in the prescribed mode shall be binding. This is confirmed by the conduct of the parties under the Lease as Mr. Pashazohari personally delivered cheques and documents related to the Lease to Mr. Bulmer at his home on a regular basis. I therefore conclude that actual notice is good and valid notice under the Lease. I have already found that notice of Tire Pit’s exercise of its option to extend the Lease was actually communicated to Mr. Bulmer in writing on June 27, 2019. I also find that in-person delivery of a written notice in an unsealed envelope to Mr. Bulmer personally is a method of service that is no less advantageous to Mr. Bulmer than delivery of a written notice in a sealed envelope by registered mail or a nationally recognized courier service to an agent or employee of Mr. Bulmer.

[50] While this was not argued by counsel, I note that section 9.01 of the Lease could be interpreted as allowing personal delivery of written notices in addition to the sending in of written notices by registered mail or courier given that both the verbs “deliver” and “send in” are used, separated by the conjunction “or” (“and delivered or sent in by registered mail, postage prepaid, return receipt requested or by a nationally recognized courier service” [emphasis added]). However, it is not necessary to determine this point. As there is no evidence that the written notice provided to Mr. Bulmer on June 27, 2019 was in a sealed envelope, a finding that “actual notice is good and valid notice” is required as there was not strict compliance with section 9.01 of the Lease. As set out above, this finding remedies any issue related to the manner of delivery as long as the notice was actually communicated and the manner of delivery was no less advantageous than the manner provided for in the Lease, which is the case here.

[51] Thus, I find that Tire Pit has validly exercised its option to extend the Lease for a five-year period starting January 1, 2020. The fact that no extension or renewal agreement was signed does not change the fact that Tire Pit validly exercised its option to extend on June 27, 2019 and is therefore entitled to lease the Leased Premises until December 31, 2024. The evidence shows that Tire Pit repeatedly asked for a lease renewal agreement and that the reason that none was signed is entirely attributable to Mr. Bulmer.

[52] Section 9.13 of the Lease provides that the extension of the Lease shall be on the same terms and conditions as contained in the Lease, except for the rent and the removal of the extension option. Section 9.13 also addresses how the rent is to be determined, including a referral to arbitration if the parties cannot agree. If Augend and Tire Pit are unable to agree on the fair market rental for similar premises in the area of the Leased Premises at the time of the extension, they must submit to arbitration to determine the base rent.

d. Was the November 28, 2019 Notice an exercise by Mr. Bulmer of the option to terminate in section 9.14 of the Lease?

[53] In the event that the Court finds that Tire Pit validly exercised its option to extend the Lease, Augend seeks, in the alternative, an order that the Lease and the Sublease came to an end effective as of November 30, 2020, on account of the “Option to Terminate” provisions contained in the Lease (i.e., section 9.14 of the Lease). Augend argues that the November 28, 2019 Notice was sufficient to terminate the Lease pursuant to section 9.14. While Augend acknowledges that the November 28, 2019 Notice did not give to Tire Pit the required 12 months’ notice provided for in section 9.14, it points out that Tire Pit knew that the property had been sold and that it has received the full benefit of the required 12 months’ contractual notice, and even more.

[54] Tire Pit and Mr. Goldlist submit that the November 28, 2019 Notice was not a valid notice under section 9.14 of the Lease and, as a result, the 12 months’ notice that is required in that section never began to run.

[55] In my view, the November 28, 2019 Notice does not constitute a notice of termination under section 9.14 of the Lease. I find that no reasonable tenant would interpret it as such. Among other things:

a. It does not refer to section 9.14 of the Lease.

b. It does not refer to a sale of the building. Rather, it refers to the expiry of the term of the Lease.

c. The length of the notice provided in it is inconsistent and does not comply with the requirements set out in section 9.14 of the Lease.

[56] While section 9.14 of the Lease and the deficiencies in the November 28, 2019 Notice were brought to the attention of Mr. Bulmer and his lawyer, the latter did not subsequently deliver a proper termination notice under section 9.14 and exercise the landlord’s option to terminate the Lease. As a result, the option was never triggered, the 12 months’ notice never began to run, and the Lease did not come to an end on November 30, 2020.

e. Is the Sublease a sublease or an assignment?

[57] Because the term of the Sublease exceeds the initial term of the Lease and Tire Pit has failed to reserve the last day of the term of the Lease upon itself, Augend has raised the issue of whether the Sublease constitutes an assignment rather than a sublease All parties appear to agree that the parties’ intention was to create a sublease and not an assignment.

[58] Given my finding that the Lease has been validly extended, Mr. Goldlist’s Sublease subsists and it is unclear to me whether the “sublease vs. assignment” issue remains relevant.

[59] In any event, I share the parties’ view on this issue. In my opinion, the Sublease provides sufficient objective evidence that the parties did not intend to create an assignment: see V Hazelton Limited v. Perfect Smile Dental Inc., 2019 ONCA 423 at paras. 68, 72, 75. Among other things, given that the Sublease relates only to a portion of the Leased Premises under the Lease, it evidences an intention to maintain a landlord and tenant relationship between Tire Pit and Mr. Bulmer. It is clear that Tire Pit did not intend to give over to Mr. Goldlist its whole interest under the Lease. Further, there is no evidence of any direct communication between Mr. Goldlist and Mr. Bulmer.

[60] Therefore, I find that the Sublease was not an assignment.

f. Tire Pit’s application and claim for damages

[61] The reasons above also dispose of the issues raised in Tire Pit’s application, except for its claim for damages. In my view, an application is not the proper procedural vehicle to determine this claim, and I do not think that Schabas J.’s directions were that the claim for damages had to be determined by way of application. While most of the issues raised in Tire Pit’s action are now moot as a result of the determination of the applications, the stay of the action ordered by Schabas J. pending the outcome of the applications should be lifted to allow Tire Pit to proceed with its claim for damages, if deemed advisable to do so. While I make no findings with respect to Tire Pit’s claim for damages, based on the pleading and the evidence that were before me, Tire Pit would be well advised to take a hard look at the viability of its claim for damages before proceeding with its action.

CONCLUSION

[62] In light of the foregoing, I grant the following relief:

a. A declaration that Tire Pit has validly exercised its option to extend the Lease for a five-year period starting January 1, 2020, and as a result has a right to lease the Leased Premises for that period;

b. An order requiring Augend and Tire Pit to submit to arbitration as contemplated under the Lease to determine the base rent, unless they are able to agree within two weeks of the date of this Judgment on the fair market rental for similar premises in the area of the Leased Premises at the time of the extension;

c. An order dismissing Tire Pit’s claim for damages in its application, without prejudice to its ability to seek damages in the action in Court File No. CV-21-00654472-0000;

d. An order lifting the stay imposed by Schabas J. on February 2, 2021 on the action in Court File No. CV-21-00654472-0000; and

e. An order dismissing the balance of Augend’s application and Tire Pit’s application.

[63] Given the significant overlap between the two applications and the action commenced by Tire Pit, I seize myself of the action in Court File No. CV-21-00654472-0000, subject to my availability on the civil list, which may be determined through the Toronto civil motion/trial office.

[64] If costs cannot be agreed upon, Tire Pit and Mr. Goldlist shall each deliver submissions of not more than three pages (double-spaced), excluding the costs outline, within 10 days of the date of this Judgment. Augend and Mr. Cumming shall deliver their respective submissions (with the same page limit) within 7 days of their receipt of the submissions of Tire Pit and/or Mr. Goldlist, whichever are received last.

Vermette J.

Released: May 21, 2021