COURT FILE NO. CV-21-00662155-0000
DATE: 20210728
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
905905 ONTARIO LIMITED
Applicant
– and –
CAREY STONE operating as TIGER DRAGON
Respondent
Michael Simaan and Rahul Gandotra, lawyers for the Applicant
Jonathan Piccin, lawyer for the Respondent
HEARD: JUNE 29, 2021
REASONS FOR DECISION
G. DOW, J.
[1] The applicant/landlord seeks termination of its lease with the respondent/tenant and an order for vacant possession. The respondent contests the relief sought or, alternatively, seeks relief from forfeiture.
Background
[2] The respondent began renting the second floor of the applicant’s premises at 948 St. Clair Avenue West in 2013 entering into a one year lease and then a four year lease which ended September 30, 2018. The terms in those agreements mirror the five year lease entered into commencing October 1, 2018, on which this application is based. The key terms contained in the lease for the purposes of this application are:
payment of base rent of $3,672.57 plus HST per month (clause 2) and additional rent to cover the landlord’s realty taxes and utilities including electricity (clause 3);
the premises was to be used for a “martial arts studio” and school (clause 6) and not for any “other use, specifically a residential use” without “Landlord’s prior written consent, which consent may be unreasonably withheld” and that breach of this term permitted the landlord to terminate the lease at its option;
the tenant was to maintain insurance coverage on the premises for “loss or damage by fire, lightning, storm and other perils that may cause damage to the Premises or the property of the Landlord” as well as “liability or(sic) bodily injury or death or property damage sustained by third parties” as well as “rental income protection insurance” (clause 9);
acts of default and landlord remedies were defined to include failing to pay the rent or maintain insurance with a landlord right to terminate the lease (clause 11); and
the inclusion and acknowledgment the lease represented the “entire agreement” and superseded any “discussions, whether oral or written, of the parties including, without limitation” (clause 19).
[3] Despite the terms set out, the respondent claims he began living in the premises before 2016 and had the permission of the landlord (Giuseppe Lentini, as principal for the corporate applicant) since 2016. Mr. Lentini denies being aware of this breach until March, 2021 and denies agreeing to such use. There is no evidence in writing which supports the respondent’s claim and the October 1, 2018 lease, signed February 4, 2019, clearly states the contrary.
[4] In addition, the respondent admits he permitted insurance on the premises to lapse, likely when it came due after the martial arts studio he was also operating in the premises was shut down as a result of the COVID pandemic and by order of the provincial government.
[5] The onset of the COVID pandemic and shut down of the martial arts studio presumably caused the respondent to stop paying the full rent. However, in accordance with government direction, the respondent has paid 25% of the rent owing which the respondent calculated to be $15,962.50 from March 2020 to May 2021. This payment was made on the basis of a belief that the landlord could take advantage of the Emergency Commercial Rent Assistance Program (“CECRA”).
[6] The landlord chose not to make such application. It did apply for the Canada Emergency Rent Subsidy (“CERS”) which replaced the CECRA and acknowledged receipt of $10,634.30 for the premises of which it accepted $4,553.34 should be credited against outstanding rent. That amount, as a credit, is in dispute. The other tenant on the ground floor of the premises is a convenience store which has remained open. As of the date of submissions, the landlord calculated outstanding rent to be $46,534.16.
[7] On April 9, 2021, the landlord attempted to recover the premises by changing the locks. However, the tenant called the police who attended and reminded the locksmith and bailiff of the amendments to the Commercial Tenancy Act, R.S.O. 1990, c. L.7 prohibiting such action. In addition, the landlord had permitted the tenant to store personal items in the basement but then prohibited the tenant from entering the basement to access or remove these items until arranged by counsel after this application was issued.
[8] There are other events within the relationship between the parties and disputed as contained in the material. However, in my view, they are not of assistance in reaching my conclusion.
Analysis
[9] It is clear that, although this application seeks termination and vacant possession of the premises, the non-payment of rent is at the heart of the dispute. A separate action is contemplated for the amount owing. In response to my query, counsel for the landlord advised he did not have instructions to abandon any claim for unpaid rent and confirmed leaving same open as part of being granted the order sought.
[10] It is equally clear that, the tenant is in breach of terms of the lease which had been identified, that is using the premises as a residence without the express written consent of the landlord as required.
[11] In addition, the tenant has also clearly breached his obligation to maintain proper insurance coverage on the premises. I was advised during submissions that obtaining coverage was complicated by the nature of the activity being conducted, that is physical contact between individuals, as part of performing martial arts. However, with that knowledge is the existence of expertise through a national martial arts organization which underscores the importance of having such protection in place.
[12] Subject to the extraordinary restrictions placed on society as a whole and specifically this tenant and his business as a result of the global COVID pandemic, it would be a straight forward decision to grant the relief sought, terminate the lease and grant vacant possession to the applicant. However, the respondent has raised recent provincial legislation designed to ameliorate the devastating effect of the pandemic and sought relief from forfeiture.
[13] While counsel for the respondent was unable to direct me to any specific section of provincial legislation prohibiting termination of a lease, it clear portions of the Protecting Small Business Act 2020, S.O. 2020 c.10 and Protect Support and Recover from COVID-19 Act (Budget Measures) 2020 S.O. 2020 c.36 made alterations to remedies available to landlords under the Commercial Tenancy Act, supra.
[14] Further, counsel for the respondent relied on the absence of any reported case demonstrating landlords may terminate a lease for non-payment of rent and obtain possession of the premises in support of its submission the relief ought not to be granted. In reviewing the authorities relied on, the decision in Jungle Lion Management Inc. v. London Life Insurance Company, 2019 ONSC 780 makes reference to conduct of a tenant needing to be of a sufficient gravity to entitle the landlord to terminate the lease (see Clublink Corporation v Pro-Hedge Fund Inc., 2009 CanLII 32910 (at paragraph 31). While the conduct of the tenant here contravenes clear and basic terms of the lease, that is payment of rent and used not as a residence, the test is behavior that is “persistent, substantial or reprehensible”
[15] Regarding relief from forfeiture, the law is clear, this is a serious remedy that should be avoided. In considering whether to grant such relief, Section 74 of The Commercial Tenancies Act, supra and Section 20 provide for same. In addition, Section 98 of the Courts of Justice Act, R.S.O. 1990, c. C.43 also provides a remedy “on such terms as to compensation or otherwise as are considered just”.
[16] While the conduct of both sides ought to have been better, I conclude it would be inappropriate to grant the relief sought in these circumstances. The situation giving rise to the dispute appears to clearly be related to the global COVID pandemic, the provincially required shutdown of the respondent’s business and his inability to generate revenue necessary to pay the outstanding rent. In this regard, I rely on the statement in Michele’s Italian Restorante Inc. v. 1272259 Ontario Ltd., 2016 ONSC 4888 (at paragraph 35) that the Court “in exercising its discretion can and should consider all the circumstances:” The relevant factors are then detailed before concluding “the ultimate question is whether the court should exercise its equitable jurisdiction to relieve against the forfeiture imposed by the common law because it is an excessive remedy in all the circumstances”.
[17] As a result, I grant the respondent relief from forfeiture with the following terms:
in compliance with the term in the lease, the respondent shall deliver to the applicant proof of the required insurance including payment of the requisite premium for same within ten (10) days from the date of the release of this decision;
the respondent, Carey Stone (or any other person) stop using the premises for residential purposes, also within ten (10) days of the date of the release of this decision; and
the issue of arrears of rent is left open to be determined in another proceeding.
Costs
[18] I urge the parties to agree on costs. I was advised the respondent made a Rule 49 Offer to Settle which may affect the disposition of costs. If the parties cannot agree on costs within the next 30 days, the party seeking costs shall forward to my assistant at her email address written submissions not to exceed five typewritten, double spaced pages in a readable font (excluding attaching any Offer to Settle being relied upon). The responding party shall have 10 days to email its written submissions (identically limited).
Mr. Justice G. Dow
Released: July 28, 2021
COURT FILE NO. CV-21-00662155-0000
DATE: 20210728
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
905905 ONTARIO LIMITED
Applicant
– and –
CAREY STONE operating as TIGER DRRAGON
Respondent
REASONS FOR DECISION
Mr. Justice G. Dow
Released: July 28, 2021

