SUPERIOR COURT OF JUSTICE – ONTARIO (COMMERCIAL LIST)

COURT FILE NO.: CV-21-00667377-00CL

DATE: 20220812

BETWEEN:

2356802 ONTARIO CORP., Applicant

AND:

285 SPADINA SPV INC.

RONALD HITTI also known as RONNY HITTI

BEFORE: Kimmel J.

COUNSEL: Nicolas Canizares, for the Applicant

Adam Wygodny/Bethanic Pascutto, for the Respondent, 285 Spadina SPV Inc.

Ronald Hitti, self-represented

HEARD: July 20, 2022

ENDORSEMENT (Landlord’s Motion re: termination of the SPV Lease)

Introduction

[1] 285 Spadina SPV Inc. (the “Tenant”) seeks an order setting aside the May 18, 2022 purported termination of the Tenant’s August 26, 2020 lease of part of a heritage building located at 285 Spadina Avenue (“the SPV Premises”) in Toronto (the “SPV Lease”) by 2356802 Ontario Corp. (the “Landlord”) for alleged failure to pay May 2022 rent. In the alternative, the Tenant seeks relief from forfeiture..

[2] The Tenant further seeks an order for exclusive possession of the SPV Premises. Moreover, the Tenant seeks a determination and declaration of the rental payments properly owed by the Tenant to the Landlord from November 2021 onward. This declaratory relief is bound up with the Tenant’s claims for rent abatements and/or credits. The Tenant also seeks other ancillary relief.

[3] This is the third time that the Landlord has tried to terminate the Tenant’s right to occupy the SPV Premises. This will also be the third time that the court has found that the Landlord was not entitled to do so and has reinstated the Tenant in the SPV Premises.

[4] Like previous decisions, however, the Tenant is not entirely blameless in the interactions leading up to the Landlord’s purported termination of the SPV Lease. Both sides continue to take unilateral and unjustified positions. Based on the time that has elapsed since this motion was briefed and argued, and the positions the parties appear to have staked out, an attempt is made at the conclusion of this endorsement to bring order to the pressing and anticipated issues between these parties.

Background

[5] In a decision released earlier this year, 2356802 Ontario Corp. v. 285 Spadina SPV Inc., 2022 ONSC 2427 (the “Lease Decision”), the court ruled on various issues in both this proceeding and a related lease application under court file number CV-21-00674331-00CL (together, the “lease applications”). The lease applications involved the interpretation of the SPV Lease.

[6] The court’s interpretation of the SPV Lease in the Lease Decision determined (among other things) the following questions:

1. Whether the Tenant was in breach of the lease in the fall of 2021;

2. Whether the Landlord was entitled to terminate the lease (as it purported to do in a letter to the Tenant dated November 18, 2021), or alternatively, whether relief from forfeiture should be granted in favour of the Tenant; and

3. What amounts are owing, and will continue to be owing, as between the Landlord and the Tenant under the lease terms at issue (which terms included but were not limited to the monthly rental amounts due and owing and available credits and set-offs).

[7] There is a long history of dealings between the Landlord and the Tenant regarding the SPV Premises. It is detailed in the Lease Decision and 285 Spadina SPV Inc. v. 2356802 Ontario Corp., 2020 ONSC 1645, 18 R.P.R. (6th) 299. That history will not be repeated in this endorsement, but for facts relevant to the issues now urgently before the court.

The Positions of the Parties Arising out of the Lease Decision

[8] Following the expiry of the rent-free period provided for under the SPV Lease, and pursuant to an interim order of Penny J. dated December 6, 2021 (the “Penny Order”), the Tenant paid rent in the sum of $14,356.44 for the months of November and December in 2021 and January and February in 2022. These monthly payments were ordered to be paid into the Tenant’s lawyer’s trust account on a without prejudice basis, pending the court’s adjudication of the issues raised by the then pending lease applications eventually determined by the Lease Decision. The Tenant’s Position

[9] The Tenant’s position largely depends upon persuading the court that the monthly rental amounts under the SPV Lease should be abated from November 2021 onwards. The Tenant may alternatively show that there were sufficient credits or set-offs available for amounts already paid or owing by the Landlord to the Tenant to cover any rent that was due and payable as of May 1, 2022. If the Tenant succeeds in either, the Landlord’s termination of the SPV Lease on May 18, 2022 for alleged non-payment of rents due and payable as of that date was improper and invalid.

[10] First, the Tenant maintains that, at most, the only rent amounts due and payable in the period prior to the Lease Decision were those paid into trust pursuant to the Penny Order.

[11] The Tenant argues that the reduced monthly rental payments that were made pursuant to the Penny Order were paid in exchange for the Tenant’s restricted access to, and possession of, only that part of the SPV Premises comprised of its offices on the third floor of the SPV Premises (through a single keypad door entry, all other locks having been blocked by the Sheriff when the Tenant was locked out in November 2021). The Tenant claims this was to allow the Tenant to access its files and records on the SPV Premises for the purposes of the then ongoing litigation.

[12] The Tenant argues that these payments were made without prejudice. Based on the restrictions to its use and enjoyment of the SPV Premises, the Tenant maintains that the appropriate pro-rated rent amounts for these months (December 2021 to February 2022) should be less than the without prejudice amounts the Tenant paid.[^1] The Tenant further argues that once it ceased to avail itself of access the SPV Premises after February 2022, it was no longer obligated to pay any rent, pending the Lease Decision.

[13] The Lease Decision allowed the Tenant 30 days from its release on April 25, 2022 to pay the amounts ordered. Thus, the Tenant maintains that none of the Lease Arrears ordered were due and payable as of May 1, 2022.

[14] The Tenant also argues that it still did not have exclusive possession or unrestricted access to the SPV Premises as of May 1, 2022 and thus no rent was due and payable.

[15] First, the Tenant insists that the Landlord’s invitation after the release of the Lease Decision (by which the Tenant was granted exclusive possession of the SPV Premises) in late April 2022 to access the SPV Premises through the single keypad access door is effectively a breach of its right to quiet enjoyment and exclusive possession of the SPV Premises, thereby relieving the Tenant of the obligation to pay the monthly rental amounts under the SPV Lease, including any rent that may have been payable on May 1, 2022.

[16] Second, the Tenant maintains that it did not re-take possession of the SPV Premises after the release of the Lease Decision and that it was not required to do so, pending a joint inspection that the Landlord refused to participate in. The Tenant asks the court to order the Landlord to participate in a joint inspection of the SPV Premises by a third party with the Tenant present. The Tenant insists that this occur before possession of the SPV Premises can be said to have been “delivered” to them. The Tenant also seeks to be compensated for the cost of replacing all locking mechanisms on outside doors and damaged indoor locks.

[17] The Tenant further argues that, to the extent any rent was owing on May 1, 2022, it had more than sufficient Rooftop Lease Credits (discussed below) to cover that rent.

[18] Since May 18, 2022, the Tenant maintains that it has been improperly locked out of the SPV Premises and therefore should not be required to pay any rent from and after having been locked out until it has exclusive possession of the SPV Premises.

The Landlord’s Position

[19] In the Lease Decision, the court ordered that the Tenant’s monthly rent payments into its lawyer’s trust account from November 2021 to February 2022 be applied to rent for that period. This amount totalled $57,425. In my July 20, 2022 endorsement, as a condition of scheduling this motion, the rent monies that had been paid into trust were ordered to be remitted to the Landlord. There is no dispute that these amounts must be credited against any rent claimed by the Landlord to be due and payable by the Tenant for rent accruing due as of May 1, 2022. They logically should be first applied against the Rent Arrears ordered payable under the Lease Decision (as defined therein).

[20] The Landlord disagrees with the Tenant’s characterization of the interim without prejudice lease payments into trust. The Landlord points out that the amounts paid into trust are nowhere indicated in the court’s endorsement at the time, or in any agreement between the parties, to have been calculated (or pro-rated) based on a discounted rent that reflects restricted access to the SPV Premises. They were without prejudice monthly payments, pending the return of the lease applications that, at the time, were scheduled to be heard in February 2022. The terms of the Penny Order were intended to preserve the status quo for the benefit of both parties pending the Lease Decision.

[21] The Landlord argues that the Tenant had unrestricted access into the SPV Premises from and after the Penny Order. This was through a door with a keypad access code that the Tenant has had and used since then, which was the only operational door to the SPV Premises for any entry and exit. The Landlord argues that the number of points of access to the SPV Premises did not impact the Tenant’s use and enjoyment of the SPV Premises. The Tenant was afforded the precise use and enjoyment of the SPV Premises that was provided for in the Penny Order pending the Lease Decision.

[22] The Landlord further maintains that after the Lease Decision, even though access could only be gained through one door, once inside, there were no restrictions on the Tenant’s access to and use of the SPV Premises.

[23] The Landlord relies upon the Lease Decision in support of its assertion that the Tenant was, and continues to be, required to pay the full amount of rent due and payable under the SPV Lease from and after November 2021, less any credits or set-offs that the court has specifically found the Tenant to be entitled to in the Lease Decision.

[24] The Landlord rendered an invoice to the Tenant on April 28, 2022 dated April 27, 2022. The invoice demanded payment by May 1, 2022 in the amount of $43,769.16 (inclusive of HST) on account of May rent payable pursuant to the terms of the SPV Lease (the “May 2022 Invoice”).

[25] The Landlord made a separate demand on April 28, 2022 for all rent arrears from November 2021 to May 1, 2022, adjusting for Rooftop Lease Credits or set-offs provided for in the Lease Decision calculated to the end of 2021 (totalling $46,454.45[^2]) and for the monthly rental amounts that the Tenant had paid into trust pursuant to the Penny Order.

[26] The Landlord demanded a total payment of $224,477.92. However, the Landlord acknowledges that not all of this was due on May 1, 2022 since the past monthly rent amounts ordered to be paid under the Lease Decision were not due for 30 days after its release on April 25, 2022.

[27] The Landlord did not reduce the monthly rent amounts payable under the SPV Lease on account of the rent abatements now sought by the Tenant during the periods in which the Tenant was locked out or had restricted access to the SPV Premises prior to May 1, 2022.

[28] In the lease applications that were the subject of the Lease Decision, the Tenant did not ask for any rent abatement from and after November 2021 based on the restrictions upon the Tenant’s use, enjoyment, and exclusive possession to the SPV Premises that it now seeks abatement for.

[29] The Landlord argues that this issue is res judicata since it could have been raised in the lease applications and was not, and it is bound up in the findings and orders made and directions given in the Lease Decision regarding the Rent Arrears due and payable under the SPV Lease and amounts to be paid going forward. In respect of Rent Arrears, under the Lease Decision the following rulings were made:

1. The Tenant [was] ordered to pay the calculated amount of rent owing to the Landlord [based on the terms of the SPV Lease] net of the Rooftop Credits. (at, inter alia, paragraphs 76, 77 and 157 (c)).

2. Furthermore, the court declined the Tenant’s request (at paragraph 155 (b)(v)) for: An order that the Landlord reimburse $71,282.45 to the Tenant for the unlawfully collected rents since June 1, 2021 — not ordered. [emphasis in original]

The Rooftop Lease Credits

[30] The Lease Decision required the Landlord to apply a credit of $46,454.45 to the rent due and payable by the Tenant (or more specifically, entitled the Tenant to set-off this Rooftop Lease Credit against the rent owing under the SPV Lease). This total was intended to represent the amounts received by the Landlord from the Rooftop Tenants[^3], in the period after August 26, 2020 and up to November 1, 2021. The Landlord applied this amount as a credit against the demands it made of the Tenant on April 28, 2022.

[31] However, the Tenant argues that the Lease Decision also determined that any amounts received by the Landlord from the Rooftop Tenants were to be credited to the Tenant going forward. The past entitlements from 2021 and ongoing amounts received from the Rooftop Tenants are collectively referred to herein as the “Rooftop Lease Credits”. This arises out of the court’s interpretation of Article 2 of Schedule “F” to the SPV Lease (in the Lease Decision) requiring the Landlord to pay the Tenant “any amounts it is receiving” from the Rooftop Tenants under their respective leases.

[32] The Tenant calculates the Rooftop Lease Credits from September 2020 to May 1, 2022 to be $101,808.16 (this includes the $46,454.45 determined as part of the Lease Decision). As of May 1, 2022, the Tenant’s unchallenged and uncontradicted evidence on this motion is that the total amounts received by the Landlord from the Rooftop Tenants since August 26, 2020 are: $65,916.64 (plus HST) from Rogers and $33,891.52 (plus HST) from Freedom, for a total of $101,808.16 (plus HST).

[33] The Tenant maintains that the Landlord’s demand for payment of rent on May 1, 2022 did not accurately account for all the Rooftop Lease Credits. The Tenant argues that it was entitled to the full benefit of the Rooftop Lease Credits and all further amounts received by the Landlord in 2022 from the Rooftop Tenants. Since no other Rent Arrears were due and payable pursuant to the Lease Decision, the Tenant contends that it was in a positive position in terms of any rent owing on May 1, 2022. This position reflects the difference between the SPV Lease monthly rental amount of $43,769.16 for May 1, 2022 and the total available Rooftop Lease Credits of $101,808.16.

[34] The Landlord’s invoice for May 1, 2022 rent does not grant the Tenant the Rooftop Lease Credits for 2021, which it instead applies to the Rent Arrears found to be owing under the Lease Decision. The Landlord then amortized the full amount it received from Rogers for 2022 on a monthly basis to come up with the Rooftop Lease Credits to be applied for against the rent due on May 1, 2022.

[35] The Landlord maintains that even though Rogers pays its annual rent in advance (at the beginning of the year) the Rooftop Lease Credits should be amortized monthly to correspond with the Tenant’s monthly lease payments under the SPV Lease. Based on the Landlord’s calculation, any available credits for the month of May 2022 were not sufficient to cover the rent due on May 1, 2022.

Issues to be Decided

[36] This urgent motion raises the following issues for the court’s determination:

1. Did the Tenant fail to pay rent due and owing on May 1, 2022?

2. Did the Landlord validity terminate the SPV Lease?

3. If so, is the Tenant entitled to relief from forfeiture?

4. What rent had accrued and/or became due and owing since the Landlord’s purported termination of the SPV Lease on May 18, 2022, what credits or set-offs is the Tenant entitled to, when is the Tenant required to pay any net arrears accruing due since the Lease Decision and what, if any, ancillary relief should be ordered regarding the Tenant’s access to and exclusive possession of the SPV Premises?

5. Is the alleged non-compliance by the Tenant with the court’s orders in the Lease Decision regarding the Construction Allowance Issue relevant to the issues to be decided on this motion regarding the rental amounts payable by the Tenant under the SPV Lease and the Landlord’s purported termination thereof?

Rent Amounts due and payable by the Tenant under the SPV Lease on May 1, 2022

[37] The Landlord has prepared a calculation of the monthly rental amounts payable under the SPV Lease. The monthly rental amount in 2021 up to and including November 2021 was $12,704.86 plus HST (for a total of $14,356.49). Starting in December 2021, it was and continues to be $38,733.77 plus HST (for a total of $43,769.16).

[38] The Landlord and Tenant disagree about the calculation of credits and abatements that impact the primary question on this urgent motion: whether the Landlord’s purported termination of the SPV Lease on May 18, 2022 for non-payment of rental amounts claimed to be owing was valid. They disagree on:

i. The amount of the Rooftop Lease Credits that the Tenant is entitled to (should the entire amount paid by Rogers for 2022 be credited, or should that rent credit be amortized over twelve months); and

ii. Whether any of the monthly rent payable in respect of the SPV Premises from and after November 2021 should be abated because of the Tenant’s claim that it had restricted access to, and use of, the SPV Premises, and if so, by how much.

[39] The rent abatement issue is not one easily amenable to determination on an urgent motion based on a written record with conflicting evidence and allegations of misconduct made by each side against the other. However, if it is estopped by res judicata, then it will not need to be determined at all.

[40] Even without any rent abatement for the Tenant’s restricted use and enjoyment of the SPV Premises, after applying the applicable Rooftop Lease Credits, there was no rent due and payable on May 1, 2022 for that month (and no Lease Arrears ordered payable under the Lease Decision were yet due and payable). Accordingly, the Landlord’s purported termination of the SPV Lease on May 18, 2022 was invalid.

[41] The starting point for the court is to determine what Rooftop Lease Credits were available to the Tenant as of May 1, 2022.

i. The Rooftop Lease Credits

[42] I find that the Landlord’s unilateral amortization of the rent it received from Rogers in December 2021 for the 2022 lease year was not consistent with the findings, declarations and orders contained in the Lease Decision, namely:

1. At para. 69 the court declared: Clause 2 of Schedule “F” of the Original Lease is the operative provision. That version of clause 2 does not mention abatement and states clearly that the Landlord shall pay to the Tenant any amounts it receives from the Rooftop Tenants. In the absence of a specified commencement date, that clause must be read as applicable from the beginning of the SPV Lease term.” [emphasis added].

2. At para. 154 (a) the court ordered: A declaration that the Tenant is entitled to all amounts received by or to be received by the Landlord, in the period after August 26, 2020, from the Rooftop Tenants [emphasis added]

3. At para. 154 (e) the court effectively ordered: A set-off against rent payable by the Tenant under the SPV Lease with respect to all amounts received by or to be received by the Landlord from the Rooftop Tenants, in the period after August 26, 2020 [emphasis added]

4. At para. 155 (b) (iv) the court effectively ordered by granting the request for set-off: An order that the Landlord must, in accordance with the Lease, apply all rents paid by the Rooftop Tenants since September 1, 2020, as an abatement to the Tenant’s Rent when it becomes lawfully due.

[43] Having regard to these earlier findings and determinations, the Landlord was required to credit the Tenant for not only the amount that the court determined in the Lease Decision as having been received from the Rooftop Tenants up to and including November 1, 2021, but also for any amounts received thereafter.

[44] Based on the Tenant’s unchallenged and uncontradicted evidence, I find the total Rooftop Lease Credits available up to and including May 1, 2022 were $101.808.16.[^4] Since no other lease payments were yet due under the terms of the Lease Decision, arguably the Tenant could have applied this full Rooftop Lease Credit against its May 1, 2022 rent payment. This credit is far in excess of the monthly rental amount due and payable on May 1, 2022 under the SPV Lease of $43,769.16. As of May 18, 2022, when the Landlord purported to terminate the SPV Lease, I find that the Tenant was not in default of its obligations regarding the payment of rent due under the SPV Lease.

[45] This begs the question of the Rent Arrears that the Tenant was obligated to pay under the Lease Decision for prior months (from November 1, 2021 to April 1, 2022), which became due on May 25, 2022. Without any rent abatement for this period (discussed later in this endorsement), and even after accounting for the full amount of the Rooftop Lease Credits and rent monies paid into trust, the Tenant would not have had sufficient credit to cover the entirely of all rental payments from November 1, 2021 to May 1, 2022. However, the Landlord’s unilateral action in prematurely terminating the SPV Lease now requires the court to reset the parties’ respective obligations under the SPV Lease in terms of the rent past due and accruing due and payable up to the date of this decision. This is addressed in a later section.

ii. The Further Claimed Rent Abatements

[46] The Tenant’s request for an abatement of rent on account of its restricted occupation, use and enjoyment of the SPV Premises does not only impact the rent due and owing on May 1, 2022 and going forward, but also impacts the Rent Arrears owing from and after November 1, 2021 up to April 1, 2022.

[47] When the lease applications were argued, the Tenant could have asked for rent abatements during the disputed period leading up to the Lease Decision. The Tenant sought an order that the SPV Lease be reinstated and for exclusive possession of the SPV Premises. It made various arguments about the amount of rent due and owing under the SPV Lease but did not make any request or argument for an abatement of rent due to its restricted access, use and occupation of the SPV Premises during this disputed period. That was the time to do so.

[48] I made it clear in my June 15, 2022 endorsement that when this motion was scheduled there was a concern that the Tenant might be estopped from raising this issue. I also made it clear that this motion was not to be used as an opportunity to revisit the Lease Decision. The parties were on notice that this concern would be the subject of the court’s deliberation of the issues on this motion.

[49] The Tenant’s request now for the court to order a pro rata reduction in rent to reflect the Tenant’s limited use of the SPV Premises between November 2021 and February 2022, and to abate all rent for the subsequent months when the Tenant determined that it no longer needed to access the SPV Premises (after the lease applications were adjourned in February 2022 and thereafter until the Lease Decision was rendered) does attempt to re-open the issue of the Lease Arrears that was already adjudicated.

[50] The “Lease Arrears Issue” was defined at paragraph 9(c) of the Lease Decision as follows:

The proper interpretation of the SPV Lease regarding alleged breaches by the Tenant for non-payment of rent (the “Rent Arrears Issue”):

i. The rental amounts owing by the Tenant to the Landlord for the months of September, October, and November 2021 (taking into account the determination of the Rooftop Credits Issue).

ii. The rental amounts payable by the Tenant to the Landlord from December 2021 onwards under the SPV Lease.

[51] The Tenant’s request for rent abatements during these same months falls precisely within the Lease Decision’s previous adjudication of the Lease Arrears Issue.

[52] Mr. Hitti suggests in his Aide Memoire filed on this motion that the court expressly declined to finally decide the issue of the amounts of rent owing under the SPV Lease for the months of December 2021 and beyond in paragraph 76 of the Lease Decision. That sentence is taken out of the context of the entirety of that paragraph of the Lease Decision. It begins with the following statement: “The parties agree that if the SPV Lease was not validly terminated, the rent amount increased in December 2021 and they will be able to calculate what is owing under the SPV Lease for those months, after accounting for the monthly amount of $14,356.49 paid by the Tenant into its solicitor’s trust account under the without prejudice interim arrangement.” It was in that context that it was noted that: “The court is not being asked to come to a final determination of the amount owing.” [emphasis added].

[53] The court was not asked to come to a final determination because the issue was represented as a mathematical calculation that the parties could agree upon. For the court’s purposes, in order to reach the Lease Decision, it was sufficient to rely upon the rough math based on the Landlord’s evidence that the monthly rent amounts under the SPV Lease increased in December 2021 to $43,769.16 (inclusive of HST).

[54] Paragraph 76 of the Lease Decision further reinforces the Landlord’s position that there was no suggestion or indication at that time that a further rent abatement or reduction would be sought by the Tenant that would impact the calculation of rent due and payable by the Tenant from and after December 1, 2021.

[55] I also have difficulty with the substance of the Tenant’s contentions regarding this request for a rent abatement and the basis on which the Tenant proposes to calculate it. However, I do not need to address the substance or quantum of the claimed rent abatement. Irrespective of the merits of this issue, it is not appropriate or permissible for the Tenant to raise it in the context of defending its position regarding the rent amounts now due and payable under the SPV Lease.

[56] I find that the Tenant is prevented from raising this issue of rent abatement for the period up to and including April 1, 2022. Orders have already been made requiring the Tenant to pay the rent in accordance with the SPV Lease from and after November 2021, subject to any court ordered credits or set-offs. This late-breaking further ground for seeking a rent abatement during the period of the Rent Arrears already determined is bound up in the earlier orders contained in the Lease Decision and cannot now be revisited, by reason of issue estoppel and abuse of process. Although the law on these points was not extensively addressed by the parties (despite having been invited to do so), it is not controversial.

[57] Supreme Court of Canada has a long history of applying issue estoppel to prevent an issue that has been raised and distinctly determined between the parties from being re-litigated. See for example, Angle v. Minister of National Revenue, 1974 168 (SCC), [1975] 2 S.C.R. 248, 47 D.L.R. (3d) 544 at para. 16; Doering v. Grandview Town, 1975 16 (SCC), [1976] 2 S.C.R. 621 at para. 14; Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460 at para. 24 (citing McIntosh v. Parent, 1924 401 (ON CA), [1924] 4 D.L.R. 420 (Ont. C.A.), at p. 422). See also the Court of Appeal for Ontario’s recent affirmation in Dosen v. Meloche Monnex Financial Services Inc. (Security National Insurance Company), 2021 ONCA 141, 457 D.L.R. (4th) 530 at para. 32.

[58] The analysis for determining whether an issue is precluded by issue estoppel considers the following factors. First, the court must be satisfied that:

1. The same question has been decided;

2. That the judicial decision which is said to create the estoppel was final; and

3. The parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.

If the above requirements are satisfied, the court must still determine whether, as a matter of discretion, issue estoppel should be applied (Danyluk at para. 25, 33; Angle at para. 3).

[59] In determining whether the same question has been decided, the Supreme Court of Canada in Danyluk at paragraph 54 held that once a material fact is found to exist (or not to exist) by a court of competent jurisdiction, the same issue cannot be relitigated in subsequent proceedings between the same parties. Therefore, the estoppel extends to issues bound up with the determination of that “issue” in the prior proceeding.

[60] I find that the determination of the rent owing during the period in which the Tenant now claims to have had restricted access to the SPV Premises and to be entitled to an abatement of rent was bound up in the Rent Arrears Issue already decided by the court in the Lease Decision.

[61] The rent abatement arguments now made could have been made during the lease applications. They were not. They cannot be raised now that the Lease Decision has been rendered. See Wasserman v. Bishnu, 2021 ONSC 6848, 94 C.B.R. (6th) 136 at para. 44.

[62] It is settled law that the re-litigation of issues that have been before the courts in a previous proceeding can also be an abuse of process: The Catalyst Capital Group Inc. v. VimpelCom Ltd., 2019 ONCA 354, 145 O.R. (3d) 759 at para. 61. The abuse of process doctrine can also be relied upon to preclude re-litigation: Winter v. Sherman Estate, 2018 ONCA 703, 42 E.T.R. (4th) 181 (“Winter”) at para. 7; Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2002] 3 S.C.R. 77 (S.C.C.), at paras. 37, 46.

[63] The abuse of process doctrine applies to issues previously raised as well as issues that could have been raised. In Winter, the Court of Appeal for Ontario noted that: “[w]hile the doctrine [of abuse of process] is similar to issue estoppel in that it can bar litigation of legal and factual issues ‘that are necessarily bound up with the determination of’ an issue in the prior proceeding, abuse of process also applies where issues ‘could have been determined’: Danyluk, at para. 54; Aba-Alkhail v. University of Ottawa, 2013 ONCA 633, 363 D.L.R. (4th) 470 (Ont C.A.), at para [12]; McQuillan v. Native Inter-Tribal Housing Co-operative Inc., (1998), 1998 6408 (ON CA), 42 O.R. (3d) 46 (Ont C.A.), at paras. 8, 10.”

[64] If a party had the opportunity to advance a claim or defence before the court in an earlier proceeding and failed to do so, the abuse of process doctrine will typically preclude re-litigation of the omitted claim: McQuillan, at para. 8; Maynard v. Maynard (1950), 1950 3 (SCC), [1951] S.C.R. 346 (S.C.C.) (“Maynard”)at p. 358-59. If a party had the opportunity to raise a matter and did not, whether for negligence, inadvertence or accident, the court may invoke the abuse of process doctrine to bar re-litigation of the issue.

iii) The Tenant Did Not Fail to Pay Rents due and Owing on May 1, 2022

[65] The rent arrears under the Lease Decision for prior months were ordered payable within 30 days of April 25, 2022 and were, accordingly, not yet due on May 1 or May 18, 2022. As it turns out, when the Landlord prematurely purported to terminate the SPV Lease on May 18, 2022, the Tenant had sufficient credits and set-offs available to cover the rent due and owing up to and including May 1, 2022.

[66] The monthly rent due May 1, 2022 was $38,733.77 plus HST, a total of $43,769.16. The court has found that the Tenant had as much as $101,808.16 in Rooftop Lease Credits available as of May 1, 2022. Even just the Rooftop Lease Credits for 2021 available to the Tenant by virtue of the Lease Decision in the amount of $46,454.45 (plus the extra (15th) month under the Freedom lease that the court neglected to include) would have been sufficient to cover its May 2022 rent due and payable.

[67] I find that the Tenant did not fail to pay any rent due and owing to the Landlord under the SPV Lease on May 1, 2022.

Did the Landlord Validly Terminate the SPV Lease on May 18, 2022?

[68] The Landlord’s May 18, 2022 Notice to Tenant specified that the SPV Lease was being terminated for the Tenant’s failure to pay its rent due and owing on May 1, 2022. The Tenant was not, at that time, in breach of the SPV Lease for non-payment of rent. I find that the Landlord’s May 18, 2022 purported notice of termination of the SPV Lease was not valid.

Is the Tenant Entitled to Relief from Forfeiture?

[69] The Tenant does not require relief from forfeiture because the court has ruled that the Landlord’s termination of the SPV Lease was not valid.

What Rent Arrears Now Accrued and Owing and Ancillary Relief?

[70] These parties appear to be locked in a vicious circle of disputes about rent arrears. The court must bring some order and efficiency to the situation. There are now two groupings of rent arrears to contend with. First, there are the past Rent Arrears that were ordered payable pursuant to the Lease Decision and that, but for the intervening events of the Landlord’s purported and improper termination of the SPV Lease, would have been due and owing on May 25, 2022 (less specified credits and set-offs). Second, since this motion was brought, three further months have also passed in which the parties have been at a standstill, during which the Tenant has been locked out of the SPV Premises pending the court’s determination of the validity of the Landlord’s purported termination of the SPV Lease.

i) Rent Arrears for the Period from November 2021 to May 2022

[71] Since I have found that the Tenant had at its disposal the Rooftop Lease Credits to be applied towards the rent that was due as of May 1, 2022, I will include the rent due as of May 1, 2022 in the calculations to determine what Rent Arrears remain outstanding. That would include the monthly rent for November 2021 through May 2022 inclusive and seven months at the monthly rate of $43,769.16 (including HST), for a total of: $306,384.12. Against that, the Tenant is entitled to set-off the Rooftop Rental Credits of $101,808.16 and the rent previously paid into trust and that has now been remitted to the Landlord ($57,425.96). That leaves Rent Arrears of $147,150 payable by the Tenant for the period up to and including May 1, 2022.

[72] The Tenant is not permitted to claim any further rent abatement for this period (for the reasons outlined earlier in this endorsement). Nor do I agree with the Tenant’s assertion that it was denied re-entry or possession of the SPV Premises after the Lease Decision was released. The Landlord was not first required to participate in an inspection of the SPV Premises as a condition of delivering the SPV Premises to the Tenant. The Tenant was, and remains, free to undertake any inspection that it may wish to before re-entering the SPV Premises but it cannot argue that it was “deprived” of the use and occupation of the SPV Premises because the Landlord would not agree to an inspection, nor because its external access was limited to a single door keypad entry.

ii) When are Rent Arrears Due?

[73] The Rent Arrears would have been due, at the latest, by May 25, 2022, but for the Landlord’s premature and improper termination of the SPV Lease. Once that occurred, and given the history and nature of the ongoing disputes between the parties, I find that the Tenant was justified in not paying rent (past or accruing due) to the Landlord pending the adjudication of this urgent motion, the primary focus of which was to determine whether the Landlord’s purported termination of the SPV Lease on May 18, 2022 was valid.

[74] The Tenant shall be afforded a further twenty days from this endorsement within which to pay these outstanding Rent Arrears for the period up to and including May 1, 2022.

iii) Rent Arrears for the Period June 1 to August 1, 2022

[75] I have found the Landlord improperly and prematurely locked the Tenant out on May 18, 2022 and that the Rent Arrears were not due and payable while the court’s decision on this motion was pending. The same logic applies to the rent that would have otherwise been payable for the months of June, July and August 2022, during which the Tenant has been locked out of the SPV Premises. This period was not the subject to the earlier Lease Decision and Rent Arrears Issue and is not res judicata.

[76] I find there should be no rent payable by the Tenant to the Landlord for the last three months during which the Tenant was locked out of the SPV Premises.

iv) Other Ancillary Relief

[77] The Tenant is entitled to exclusive possession of the SPV Premises immediately and may freely access the SPV Premises through the keypad access door that it used previously after being locked out in November 2021.

[78] As indicated earlier in this endorsement, the Landlord was not, and is not, required to participate in a joint inspection of the SPV Premises with the Tenant. There is no basis in the SPV Lease for the Tenant’s insistence upon this. If the Tenant wants an independent record of the state of the SPV Premises when it now re-enters them, it should make the necessary arrangements for such to be undertaken.

[79] The Tenant shall give the Landlord 48 hours’ notice of any such inspection and invite the Landlord to participate, but the Landlord’s participation in this inspection is not a condition of the Tenant’s re-entry. Nor is the completion of this inspection a condition of the Tenant’s re-entry. The Landlord shall not undertake its own inspection of the SPV Premises if it elects not to participate in the inspection to be undertaken by the Tenant.

[80] The locks (that I understand were blocked by the Sheriff and rendered unusable when the Tenant was locked out in November 2021) shall be changed by the Landlord within seven (7) days of this endorsement, at the Landlord’s expense. The Landlord must give a key to each lock to the Tenant immediately upon changing that lock and may retain copies of the keys for itself and to ensure that the Rooftop Tenants have access to their leased premises, as the Lease Decision requires.

[81] If the Landlord fails to change the locks within two weeks, the Tenant may do so and charge the expense (to be supported by invoices from third part locksmith(s) and proof of payment of those invoices by the Tenant) to the Landlord as a set-off against future rent coming due and payable in the next month after the Tenant has provided proof of payment of the invoice(s) for this expense in full. If the Tenant changes the locks it must provide the Landlord with a key to each lock immediately upon changing that lock.

The (Ir)Relevance of Disputes Regarding the Construction Allowance Issue

[82] The parties each devoted a significant amount of their evidence and argument to disputes that have arisen between them since the Lease Decision was released regarding the Construction Allowance Issue. They make various accusations and assertions regarding the nature and sufficiency of the Tenant’s Certificate, accounting, reconciliation and supporting documents.

[83] For the most part, these issues are not relevant to this motion. They might have been relevant to the Landlord’s arguments made predominantly in support of the position that the Tenant should not receive the benefit of the court’s equitable and discretionary authority to grant relief from forfeiture because of alleged failures to comply with the orders and directions contained in the Lease Decision in respect of the Construction Allowance Issue. However, there was no need to deal with the request for relief from forfeiture because the court found the Tenant was not in breach of the SPV Lease when the Landlord purported to terminate it.

[84] It was suggested by counsel for the Tenant that the largely factual disputes between the Landlord and the Tenant in respect of the Construction Allowance Issue, arising from the Tenant’s Certificate and supporting documents, and the Landlord’s contentions that they do not adequately or properly account for the Landlord’s Construction Allowance, are more appropriately addressed on a reference to an associate judge. I agree and I so order.

[85] Until these disputes are resolved, the amounts claimed to be owing as between the Landlord and the Tenant in respect of the accounting and reconciliation of the Construction Allowance shall not be added to or claimed payable as rent by the Landlord. Nor shall such amounts be credited or abated against rent payable by the Tenant.

Summary of Outcome and Orders

[86] For the foregoing reasons, the court makes the following orders and directions on this interim motion with reference to the relief sought in the Tenant’s Notice of Motion:

1. There were no monies properly due and owing by the respondent, 285 Spadina SPV Inc. to the applicant, 2356802 Ontario Corp. on May 1, 2022, once the Rooftop Lease Credits are properly accounted for.

2. The purported notice of termination of the SPV Lease dated May 18, 2022, issued by the Landlord to the Tenant, was invalid and is set aside.

3. The Tenant does not require relief from forfeiture since the purported lease termination was invalid.

4. The Tenant owes the Landlord Rent Arrears of $147,150 (inclusive of HST) up to and including May 1, 2022. These shall be paid by the Tenant to the Landlord within 20 days of the date of this endorsement.

5. The Tenant is not required to pay any rent for the months of June, July and August 2022 as a result of the Tenant having been locked out of the SPV Premises. The rent for the second half of August is deemed to be covered by the Rent Arrears calculated in advance and to be paid as of May 1, 2022 (see (4) above) for the latter part of May after the Tenant was locked out. The next month’s rent due and payable by the Tenant shall be for September 2022.

6. The Tenant is entitled to, and the Landlord shall deliver, exclusive possession of the SPV Premises to the Tenant immediately.

7. The Tenant shall give at least 48 hours’ notice to the Landlord of any inspection that the Tenant intends to undertake of the SPV Premises, if the Tenant intends to do so before resuming possession of those premises. The Landlord may, but is not required, to participate in this inspection. The Landlord shall not undertake its own inspection of the SPV Premises if it elects not to participate in the inspection to be undertaken by the Tenant.

8. The locking mechanisms on outside access doors, and damaged indoor locks, shall be replaced at the Landlord’s expense in accordance with the court’s directions and orders found a paragraphs 76 and 77 of this endorsement.

9. A reference is directed to an associate judge to deal with any disputes about the sufficiency of the Tenant’s Certificate, accounting and supporting documentation provided by the Tenant that was ordered in connection with the Construction Allowance Issue in the Lease Decision.

10. To the extent necessary, paragraphs 65 (b) and 157 (b) the Lease Decision are corrected so as to reflect the calculation of 15 rather than 14 months’ of lease payments by Freedom Mobile from August 26, 2020 to November 2021, at $1,512.50 plus HST per month from Freedom Mobile, for a total of $22,687.50 (instead of the indicated amount of $21,175.00) plus HST for the period. That equates to a total of $47,966.95 (plus HST) in Rooftop Lease Credits having been received from the Rooftop Tenants in that period, rather than the amount of $46,454.45 (plus HST) specified in the Lease Decision.

11. Upon the agreement of the parties[^5], the Landlord (who is overall the losing party on this motion that was primarily focused on the validity of the Landlord’s May 18, 2022 Notice of Termination) shall pay to the Tenant partial indemnity costs of this motion fixed in the amount of $20,000 within 30 days of the date of this endorsement. These costs may, at the Tenant’s option, be deducted or set-off against Rent Arrears payable pursuant hereto.

[87] This endorsement and the orders and directions contained in it shall have the immediate effect of a court order without the necessity of the formal issuance and entry of a court order. Any party may, however, take out a formal order by following the procedure for so doing under Rule 59.

[88] If the parties have questions or disagreements about mathematical calculations that have been undertaken by the court in this endorsement, they should schedule a 9:30 a.m. appointment before me before taking any unilateral actions in reliance upon those calculations.

Kimmel J.

Date: August 12, 2022

[^1]: It is not entirely clear to me what the Tenant says the appropriate rental amount should be for the months of November 2021 through February 2022 but it appears that it is either arguing that the monthly amount should have been $11,597.15 (plus HST), or that is the total amount for all four of those months, based on the relative square footage of the 3rd floor office space that it had access to pursuant to the Penny Order. The Tenant seeks a credit for the difference between what it says it should have paid during these months, and what it actually paid pursuant to the Penny Order, which was $14,356.49 (plus HST) for the months of November 2021 through and including February 2022. This lack of clarity does not need to be resolved for me to decide this motion.

[^2]: The Tenant has raised as a separate issue for the court’s consideration that this amount was erroneously calculated by the court based on the monthly payments from Freedom Mobile over 14 months, whereas the period in question was actually 15 months and the Tenant asks that this be corrected. The difference attributable to this slip or error does not impact the court’s determination of amounts owing on May 1, 2022 for purposes of this motion.

[^3]: The “Rooftop Tenants” are Rogers Communications (“Rogers”) and Freedom Mobile (“Freedom Mobile”), each of whom leased space from the Landlord on the roof of the SPV Premises. The Lease Decision determined, among other things, their rights of access and certain priorities as between the Rooftop Tenants and the Tenant.

[^4]: This includes the Lease Credits that were determined to be applicable under the Lease Decision, an amount of $46,454.45 (plus HST). It was pointed out by the Tenant during the argument of this motion that there was an accidental slip in the Lease Decision at paragraph 65(b) which refers to a period of 14 months between August 26, 2020 and November 1, 2021 when calculating what had been received by the Landlord from Freedom Mobile based on a monthly rent amount of $1,512.50 under the Freedom lease, for a total of $21,175.00. That period is actually 15 months, and the ordered amount under the Lease Decision should be adjusted to reflect that. Pursuant to Rule 59.06(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, this error is hereby corrected. That translates into a total of $47,966.95 (plus HST) in Rooftop Lease Credits having been received from the Rooftop Tenants in that period, rather than the amount of $46,454.45 (plus HST) specified in the Lease Decision. This adjustment does not impact the total Rooftop Lease Credits calculated to May 1, 2022, which are $101,808.16.

[^5]: Neither party attended the motion with a costs outline. Counsel conferred at the conclusion of oral argument and advised the court that the parties had agreed that it would be appropriate for the losing party to be ordered to pay the winning party $20,000 in partial indemnity costs for this motion.