Court File and Parties
Date: 2022-11-29 Ontario Superior Court of Justice
Between:
Ponterio Developments Inc Applicant
– and –
RHP Training Centre Inc Respondent
Counsel: Claude Lacroix, for the Applicant Rose Muscolino, for the Respondent
Heard: Written Submissions
Reasons for Judgment
R.D. Gordon J.
Overview
[1] RHP Training Centre Inc. (RHP) was a tenant of Ponterio Developments Inc. under the terms of a commercial lease dated March 3, 2010 for premises located at 1351, Building F, Kelly Lake Road in Sudbury. A dispute arose concerning the renewal of the lease at the end of March 2020. In an earlier decision I determined that RHP had failed to renew the lease. It eventually vacated the premises at the end of 2021.
[2] Ponterio asserts claims for overholding rent, damages to the premises and an outstanding water bill.
[3] The parties agreed to have these claims determined on the basis of the records that were already before me, along with written submissions, which I have received.
Overholding Rent Claim
[4] The lease between the parties provided that if the lease was not renewed and the tenant remained in possession of the premises, it would be obliged to pay overholding rent at the rate of one and a half times the monthly instalment of the base rent payable on the last month of the term, and 1/6 of the amount of additional rent and charges payable for the twelve-month period immediately preceding the expiration of the term.
[5] The tenant remained in the premises for 21 months following the expiry of the term, during which it paid its base rent and additional rent as it existed at the end of the term. Ponterio claims the additional amounts totaling $132,015.73 plus HST.
[6] RHP takes no issue with Ponterio’s calculation of the amounts it says are due. Rather, it takes the position that it would be inequitable to order payment of the overholding amounts because: (1) Much of the overholding delay was due to the time it took the court to determine whether the lease had ended and whether relief of forfeiture should be granted; and (2) Of the business interruptions suffered by RHP as a result of the COVID pandemic.
[7] Ponterio does not take issue with the court’s jurisdiction to provide such relief but argues that overholding rent should be paid in accordance with the agreed upon terms of the lease in the absence of compelling evidence that RHP suffered business losses as a result of the pandemic.
[8] In 2324702 Ontario v. 1305 Dundas, 2019 ONSC 1885, Nakatsuru J. held that it would be inequitable and unfair to require the tenant to pay in accordance with an overholding rent provision when the parties had acted reasonably in coming before the court to determine whether the lease had been properly renewed.
[9] In the particular circumstances of the case before me, I largely agree that payment of the full amount calculated as overholding rent would be unfair. The parties acted promptly to bring the matter before the court for determination. Much of the delay was due to the schedules of counsel or the court and should not be visited upon RHP. Although I accept that a certain amount of financial hardship likely resulted from the COVID pandemic, I do not see that as a factor that would impact my decision in this instance.
[10] It is appropriate that RHP pay overholding rent in accordance with the terms of the lease for the four-month period between when my decision issued and its departure from the property. The loss to Ponterio amounts to $22,312.52. It is also appropriate that it pay a reasonable increase in the base rent for the 17 months prior, which I would assess at three percent for a total of $5,689.73 ($11,156.25 x .03 x 17). In addition, it shall pay a proportional share of the additional rent equal to 4/21 of $14,874 which is $2,833.14. The total is $30,835.39 plus HST of $4,008.60 for a grand total of $34,843.99.
Damages Claim
[11] Ponterio hired C2S Engineering to examine the premises and determine what repairs would be required to return it to the condition it was at the outset of the lease, subject to reasonable wear and tear. C2S prepared a report outlining the various deficiencies. RHP takes issue with parts of the report saying that C2S examined the premises before RHP had fully departed with the result that some of the repairs noted in the report have been completed. In support of its position, RHP filed photographs it took on its departure that show some of the issues reported by C2S to have been resolved. RHP also questioned whether Reasbeck Construction, which quoted the bulk of the repair costs, had visited the property for the preparation of its quote or had simply worked from the report provided by C2S.
[12] It is to be noted that RHP did not specifically contest many of the repairs identified by C2S. I would also note that since Reasbeck had done work at the premises for RHP in its decommissioning, Reasbeck would know the property and would not necessarily have to re-attend in order to provide a quote for the work.
[13] Having reviewed all of the evidence provided, it is my view that certain of the damages claimed by Ponterio are not adequately proved. In particular: (1) The concrete removal and other work at the south exterior entrance quoted at a cost of $1,890 appears from the photographs of RHP to have been completed. (2) The damage to the overhead door estimated at $4,599.10 is stated by RHP to be covered by an insurance claim, and this was not disputed by Ponterio. (3) Water infiltration caused by damage to the steel liner of the building was not evidenced in the photographs provided by RHP. Ponterio has had care of the building since January 4, 2022 and provided no more recent photographs in support of its claim. In the circumstances, the repair estimate of $3,350 is not adequately proved. (4) The damage alleged to the block work in the mezzanine does not appear in the photographs provided by RHP. The repair estimate for this was $845. (5) The invoice from C2S for its report is more appropriately claimed as a disbursement in the assessment of costs than as a damages claim.
[14] The balance of the expenses not having been specifically contested by RHP, I am content that they require repair in accordance with the estimates filed. The result is a damages claim of $45,329.95.
The Water Arrears Claim
[15] Pursuant to the terms of the lease, RHP was to be responsible for utilities, including water. The payment of water supplied to the premises was in arrears of $2,054.75 plus an administration fee of $65. This is not contested by RHP and is properly payable by it.
Conclusion
[16] For the reasons above, judgment shall issue in favour of Ponterio for the sum of $82,293.69. If the parties are unable to agree on costs they may make written submissions to me, not to exceed 5 pages plus attachments each, within 45 days.
The Honourable Mr. Justice R.D. Gordon
Released: November 29, 2022
DATE: 2022-11-29
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Ponterio Developments Inc Applicant
– and –
RHP Training Centre Inc Respondent
REASONS FOR JUDGMENT R.D. Gordon J.
Released: November 29, 2022