COURT FILE NO.: CV-22-89377
DATE: 2022/06/29
SUPERIOR COURT OF JUSTICE – ONTARIO
Proceeding under the Commercial Tenancies Act, R.S.O. 1990, CHAPTER L.7 as amended
RE: J.R. LAWN MAINTENANCE & SNOW REMOVAL INC., Applicant
AND:
CZESLAW PASZKIEWICZ AND GABRYJELA PASZKIEWICZ, ALSO KNOWN AS GABRIELA PASZKIEWICZ, Respondents
BEFORE: Regional Senior Justice Calum MacLeod
COUNSEL: Jason Rabin, for the Applicants
Todd Burke & Aweis Osman, for the Respondents
HEARD: June 28, 2022
ENDORSEMENT
[1] The applicant is the tenant of premises owned by the respondents and brings this application to prevent the landlord from locking the tenant out of the premises and terminating the lease. The applicant operates a winter maintenance and snow removal company out of the premises which it has occupied since July of 2015. The lease was renewed in 2018.
[2] On a number of occasions, the applicant took on additional space and the rent was increased. The most recent such increase is set out in a document dated July 2021 with a calculation of rent for the increased space. In 2021, the applicant paid $227,741.88 for annual rent inclusive of utilities. The original rent in 2018 was $159,638.00.
[3] A dispute arose earlier this year. It came about because the applicant obtained an appraisal report and came to the conclusion that the rent it was being charged by the respondents was significantly above the market rate. In particular, the applicant realized that the landlord was charging rent on the parking lot based on the same calculation used for the base rent for the building. The applicant believes this is contrary to certain provisions of the lease requiring calculation of the number of square feet according to “BOM standards”. The applicant sought an abatement of the rent and unilaterally reduced the amount it was paying pending the outcome of negotiations.
[4] In May of this year, the landlord informed the tenant that it was in default under the lease and advised that if the default was not cured, the landlord would repossess the premises. Although the applicant has apparently made an additional payment under protest, the respondents still assert that the tenant is in default under the lease and seeks an immediate payment of the rental arrears.
[5] The question of whether the rent should be adjusted appears to turn on whether or not it is lawful under the lease to charge rent for the parking area and to include the parking area in the calculation used to determine the base rent. Although the application before the court seeks inter alia a declaration that the parking lot does not form part of the “rentable area of the premises” under the lease and an abatement and partial refund of the rent paid, those issues are not to be argued today. The question for today is whether the landlord should be restrained from terminating the lease or exercising other remedies such as distraint pending a determination on the merits.
[6] I note that the term of the lease expires in approximately one year. In addition, there was some discussion of the applicant purchasing the property. The cost to the applicant of a forced relocation of its business would be significant and the landlord would then have to find another commercial tenant. That appears undesirable as a matter of business efficacy, but the legal question is rather more precise. The landlord has numerous arguments that a tenant who has exercised self help by withholding rent should not be able to seek relief from forfeiture or injunctive relief.
[7] I did not hear argument on this point. At the outset of the hearing, I indicated that if I did grant the relief, it would likely be on terms that the rent be brought up to date and be paid when due until the question of the abatement could be resolved. In the event, I adjourned briefly to permit the parties to discuss the matter.
[8] It was agreed between the parties that the tenant could put the lease back into good standing by paying up the rent and continuing to pay the rent as it falls due until the issue of the abatement is resolved. The landlord also requires access to a gate the tenant has erected on the premises and that was also agreed upon.
[9] The parties did not agree on the costs of today. I am advised that the landlord has a bill of costs for approximately $35,000.00 while the tenant’s costs are slightly less than half of that. The lease contains a provision for complete indemnity by the tenant for any costs of enforcement. While there will be further argument on costs after the merits of the application for abatement are argued, it appears to me to be appropriate to fix the costs of today and require them to be paid as a term of putting the lease back into good standing. The urgent attendance today should not have been necessary. I have fixed the costs of today’s hearing at $18,000.00 on a partial indemnity scale.
[10] I encouraged counsel to agree on a timetable for the steps required preparatory to arguing the application for an abatement on its merits. I will convene a case conference to fix the date for the hearing once counsel have considered what steps are required in order to properly prepare. During discussion, it was suggested that a date in November might be appropriate but that can be discussed at the case conference.
[11] In conclusion, the court orders and adjudges as follows:
a. On consent, the applicant shall immediately put the lease into good standing by paying the arrears of rent currently outstanding under the lease agreement.
b. Also on consent, the applicant shall keep the lease in good standing by paying all future amounts due under the lease as they fall due until the end of the term of the lease or until further order of the court.
c. Also on consent, the tenant shall forthwith provide the landlord with a key, entry code or device required to use the gate installed on the subject property by the tenant.
d. The applicant shall pay costs of this motion fixed at $18,000.00.
e. Providing the tenant complies with paragraphs a), c) & d) above within five business days, the landlord shall not take steps to terminate the lease, exercise distraint or any other remedies and the lease shall be deemed to be in good standing.
f. The relief set out at paragraphs f), g) and h) of the Notice of Application is adjourned to a date to be set by the court at a case conference.
g. Prior to the case conference, counsel shall confer and seek agreement on the nature of the evidence, a timetable for the exchange of any further evidence, cross examination or other steps required in order for the application to proceed and the length of time required for argument.
h. There will be a case conference on July 13, 2022, at 9:00 a.m. by videoconference. The video link is as follows unless counsel are advised otherwise:
https://ca01web.zoom.us/j/66371111092?pwd=cUp1RHROejNpTmpEVHorU2lFcFJvdz09
i. The application is otherwise dismissed.
Mr. Justice C. MacLeod
Date: June 29, 2022
COURT FILE NO.: CV-22-89377
DATE: 2022/06/29
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: J.R. LAWN MAINTENANCE & SNOW REMOVAL INC., Applicant
AND:
CZESLAW PASZKIEWICZ AND GABRYJELA PASZKIEWICZ, ALSO KNOWN AS GABRIELA PASZKIEWICZ, Respondents
BEFORE: Regional Senior Justice Calum MacLeod
COUNSEL: Jason Rabin, for the Applicants
Todd Burke & Aweis Osman, for the Respondents
ENDORSEMENT
Regional Senior Justice C. MacLeod
Released: June 29, 2022