FCP (BOPC) Ltd. v. Callian Capital Partners Inc.
COURT FILE NO.: CV-21-00663554-0000
DATE: 2021-11-10
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
FCP (BOPC) Ltd., ARI FCP Holdings Inc. and CPPIB FCP Holding Inc.
Applicants
– and –
Callian Capital Partners Inc., Callian Capital Private Wealth Management Inc. and Cerieco Canada Corp.
Respondents
COUNSEL:
Brendan Jones, for the Applicants
Michael Decauni, for the Respondents, Callian Capital Partners Inc. and Callian Capital Private Wealth Management Inc.
HEARD: November 5, 2021
BEFORE: Stewart J.
Nature of the Application
[1] The Applicants, FCP (BOPC) LTD., ARI FCP Holdings Inc. and CPPIB FCP Holding Inc. (the “Landlord”) seek to enforce the conditions of a Relief From Forfeiture Agreement (the “Agreement”) against Callian Capital Partners Inc. (the “Tenant”), and further seek an order terminating the lease between the parties as a result of the Tenant’s failure to pay rent due under the lease and the Agreement.
[2] The Landlord also seeks judgment for rent in the amount of $366,379.26, plus interest and costs, in rent owed to it as against the Tenant and two indemnifiers of the lease, Callian Capital Private Wealth Management Inc. and Cerieco Canada.
[3] At an attendance before me on October 25, 2021 the Respondents obtained an adjournment in order to retain new counsel and to file additional responding materials. On the return of the Application on November 5, 2021 no counsel attended. No additional materials were filed by the Respondents.
[4] The Respondents have had several counsel since this proceeding began but at this point they are not represented by counsel. Leave has been granted to the Tenant and to Callian Capital Private Wealth Management Inc. to be represented by Michael Decauni, a principal of both corporations who has filed an affidavit in these proceedings upon which he has been cross-examined. The third Respondent Cerieco Canada Canada Corp. is not represented on the Application.
[5] Mr. Decauni did not seek any further adjournment of the Application but merely sought leave to represent the Tenant and one of the indemnifiers as noted. There is no real dispute that the basic arguments advanced on behalf of those Respondents represented by Mr. Decauni apply to all of them, including the unrepresented Respondent.
Facts
[6] The facts are set out in paragraphs 9 through 28 of the Factum filed on behalf of the Landlord.
[7] A lease was entered into in 2017 by the Landlord and Tenant for premises in downtown Toronto as described in the lease. The obligations of the Tenant were duly indemnified by the other Respondents.
[8] In March 2020 the Tenant had defaulted on payment of rent to such an extent that the Landlord was forced to take steps to enforce the lease and take possession of the premises.
[9] The Tenant then entered into negotiations with the Landlord which culminated in the execution of a Relief from Forfeiture Agreement, the terms of which allowed the Tenant to regain possession of the premises on certain conditions that included payment of rent and acceptance and acknowledgment of the remedies available to the Landlord in the event of any further default.
[10] The Tenant was represented by senior counsel when it entered into the Relief From Forfeiture Agreement and did not raise any objections about its provisions, either at the time of its execution or during the days and weeks after it regained possession of the premises.
[11] Following execution and despite paragraph A.8. of the Relief From Forfeiture Agreement, Mr. Decauni later disclosed that it was always the Tenant’s intention to assert that it was protected from eviction based on CERS once it had induced the Landlord to return possession of the premises.
[12] Although Mr. Decauni now asserts in his affidavit that the Tenant did not have the resources to apply to court, the Tenant was able to make the first two payments of $50,000.00 and $38,000.00 within approximately a week of executing the Relief From Forfeiture Agreement. These payments brought the Lease current to September 2020.
[13] The Tenant paid only $30,000.00 of the $269,890.68 due on April 29th, 2021, a shortfall of $239,890.68.
[14] Although the Landlord was told that the Tenant expected to pay the balance owing, that was not done.
[15] In total, the Tenant failed to pay $366,379.26 of the $484,379.26 required to be paid under the Relief From Forfeiture Agreement.
[16] Mr. Decauni promised to provide details of the Tenant’s balance sheet and financing with RBC and others with respect to its accounts receivable that would demonstrate a “great deal of liquidity”. No such records have been produced.
[17] Just three weeks after signing the Relief From Forfeiture Agreement, the Tenant wrote to the Landlord purporting for the first time to provide proof to the Landlord that the Tenant was approved for the Canada Emergency Rent Subsidy (“CERS”) and asserting an entitlement to rely on the “non-enforcement” provisions under the Commercial Tenancies Act. This assertion expressly contradicted the provision at paragraph A.8. of the Relief From Forfeiture Agreement that the Landlord shall not be prejudiced by a stay of eviction based on the Tenant’s application for CERS.
[18] Instead of honouring the Relief From Forfeiture Agreement, the Tenant refused to make any further payments and at the same time took the position the Landlord could not do anything to evict it because of the Tenant’s CERS status. The Tenant continued to use the Premises on a daily basis despite its refusal to pay the Landlord.
[19] During the time the Tenant was occupying the premises after its April 29th, 2021 payment, the Tenant collected at least $87,570.351 in CERS payments that are attributable to the time periods covered by the Relief From Forfeiture Agreement and that the Tenant was required to pay to the Landlord. Mr. Decauni also signed an attestation on behalf of the Tenant that rent for those periods had been paid or would be paid within 60 days. No such rent was paid to the Landlord.
[20] The Tenant continued to fail to pay rent while using the premises on a daily basis until it was ordered by Morgan, J. to pay Occupation Rent, beginning August 1st, 2021 pending the disposition of this proceeding.
[21] The Tenant breached Justice Morgan’s order by failing to pay rent when it became due on September 1st, 2021. The Landlord issued a notice of default on September 9th, 2021. The Tenant finally cured the default on September 13th, 2021.
[22] As of the hearing of this Application, the Tenant is in arrears of rent in excess of $400,000.00 and has made no proposal to rectify that default.
Law and Discussion
[23] I am of the opinion that in these circumstances the issues are straightforward and well-suited for determination by means of an application of this nature (see: Cooper v. The Laundry Lounge, Inc., 2020 ONCA 166).
[24] In accordance with the terms of the Relief From Forfeiture Agreement, the Tenant agreed and acknowledged as follows:
(a) The Tenant waived any entitlement to further relief from forfeiture (A.7.);
(b) The Tenant waived any right to further notice of default or curative period and acknowledged time was strictly of the essence in respect of its obligations (A.7.);
(c) The Tenant acknowledged the Landlord would not be prejudiced by any stay of eviction for the purposes of enforcing the payments set out in the Relief From Forfeiture Agreement (A. 8.); and
(d) The Tenant acknowledged that the reinstatement of the tenancy for the purposes of any rights that may be acquired relating to CERS was subject to all payments being made under the Relief From Forfeiture Agreement (A.8.).
[25] The Relief From Forfeiture Agreement therefore granted the Tenant conditional possession of the premises provided the Tenant made certain installment payments by April 6th, April 29th, May 1st and June 1st, 2021. The Relief From Forfeiture Agreement expressly protected the Landlord’s right of enforcement if the Tenant failed to make the scheduled payments as and when due. The Tenant waived any right to notification of default in payment or curative period for such arrears of rent payments.
[26] Until policy dictates that the consequences of the pandemic must be equally shared as between landlord and tenant, the terms of the lease must prevail. Tenants cannot take matters into their own hands by unilaterally withholding rent (see: Hudson’s Bay Company ULC v. Oxford Properties et al., 2021 ONSC 4515).
[27] As sympathetic as I may be to an argument that a landlord ought to share in the consequences of the pandemic, such sympathy does not extend to the position of the Tenant on the facts of this case.
[28] Mr. Decauni asserts in his affidavit that he was desperate to get back into the space and that he saw no choice but to sign the Relief Form Forfeiture Agreement. However anxious he may have been to regain possession of the premises, nothing in the facts demonstrated by this material would suggest that he was truly coerced or that the arrangement agreed to ought to be unenforceable.
[29] The indemnifying Respondents must be held to be jointly and severally liable for the Tenant’s obligations under the lease of Relief From Forfeiture Agreement. Neither are impacted by any provisions under the CTA. Neither have any defence to the claim for amounts payable under the lease or Relief From Forfeiture Agreement.
[30] I accept the arguments of the Landlord as set out in the Factum filed on its behalf. I conclude that there is no legal or equitable basis upon which the Respondent Tenant or indemnifiers ought either to escape contractual liability or be granted further relief from forfeiture.
Conclusion
[31] For these reasons, the Landlord is entitled to the relief it seeks in accordance with the draft judgment supplied by counsel.
Costs
[32] In my view, the Landlord is entitled to its costs which I fix in the amount of $50,000.00, inclusive of all disbursements and applicable taxes. I consider this amount to be fair and reasonable in all of the circumstances.
[33] The draft judgment supplied by counsel has been signed on my behalf today.
Released: November 10, 2021
COURT FILE NO.: CV-21-00663554-0000
DATE: 2021-11-10
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
FCP (BOPC) Ltd., ARI FCP Holdings Inc. and CPPIB FCP Holding Inc.
Applicants
– and –
Callian Capital Partners Inc., Callian Capital Private Wealth Management Inc. and Cerieco Canada Corp.
Respondents
REASONS FOR DECISION
Stewart J.
Released: November 10, 2021