COURT FILE NO.: CV-23-2458-0000
DATE: 20230928
SUPERIOR COURT OF JUSTICE – ONTARIO
7755 Hurontario Street, Brampton ON L6W 4T6
RE:
Plaintiff: 1358457 ONTARIO INC, & M.V.C. TOWING A ND STORAGE INC.
AND:
Defendant: TAKOL FORGESTONE MEYERSIDE LIMITED PARTNERSHIP & TAKOL FORGESTONE MEYERSIDE GP INC.
BEFORE: Justice Tzimas
COUNSEL:
Counsel for the plaintiff, Corinne Muccilli Email: corinne@mlaw.ca
Counsel for the defendant, Mr. Jaime Vanwiechen email: JVAN@WOOLVAN.COM
HEARD: September 26, 2023, by video conference
ENDORSEMENT
[1] The motion before me amounted to a reprise of the motion argued on July 28, 2023. For the reasons that follow the motion is dismissed with costs.
[2] In July 2023, the plaintiffs brought an urgent motion for an interim and interlocutory order prohibiting the defendants or anyone acting on their behalf from interfering with their quiet possession of the premises municipally known as Units 1-2, Meyerside Drive, Mississauga, Ontario until further court order. In the alternative, they sought an order for relief from forfeiture until further court order. The motion was argued on July 28, 2023 and “as framed” was dismissed, see endorsement of July 28, 2023.
[3] In his endorsement, the motions judge noted that following some discussions between the parties aimed at a resolution, the plaintiffs expressed their wish to amend their motion to seek “in the further alternative, they wished to obtain an order rescinding the alleged (lease) agreement contained in the correspondence of December 14/20 from the Landlord’s counsel and signed by Daniel Ghanime, on the basis that it contained a misrepresentation by the landlord that it in fact had a right to terminate the tenancy”.
[4] The motions judge agreed to the filing of amended materials. He also concluded that the motion record before the court was inadequate for the relief sought, the motion required a long motion date, and he provided a timetable for examinations to be completed and for facta to be exchanged. The motion was rescheduled for August 23, 2023. Unfortunately, the parties failed to file the requisite confirmation forms for the motion and the matter was struck from the August 23, 2023 docket. The matter was rerouted to assignment court and rescheduled for September 26, 2023.
[5] In their Supplementary Notice of Motion before me, in addition to injunctive relief and relief from forfeiture, the plaintiffs sought a declaration that the alleged agreement contained in the correspondence dated December 14, 2020, (“December 2020 Agreement”), is void or void ab initio or in the further alternative, an order rescinding the December Agreement because it contained a misrepresentation and was illegal.
[6] The defendants opposed the motion on numerous grounds. First, they challenged the urgency of the motion and argued that any urgency in the situation was self-inflicted. The plaintiffs knew of the pending termination of their occupancy as early as May 2023 but did not take any legal action until July 2023.
[7] Second, the injunctive relief sought could not issue because the plaintiffs could not establish the existence of any irreparable harm and they also were unable to give an undertaking for damages.
[8] Third, a declaration that the December 2020 Agreement was void or in the alternative an order rescinding it, could only result from a motion for summary judgment. In the absence of such a motion, the court had no basis to declare the subject Agreement void or to rescind it. Counsel added that the plaintiffs only provided their statement of claim on our about September 19 and therefore the defendants had not yet had the opportunity to defend the action. In the absence of the pleadings having closed, a summary judgment motion could not even be brought.
[9] As a preliminary observation, although the parties made submissions on the merits of injunctive relief, relief from forfeiture, and the voidability or rescission of the December 2020 Agreement, given the motions judge’s conclusion that the motion “as framed” was dismissed, it was not clear to me if the permission to amend the plaintiffs’ notice of motion was intended to allow the parties to revisit all the issues raised in the motion argued on July 28, 2023, or simply argue for the additional relief sought. Given the way the parties approached their submissions, and since the principal affiants were cross-examined on the affidavits that were before the motions judge on July 28, 2023, I concluded that it was appropriate to consider the motion and the relief sought in its totality.
[10] In my review and consideration of the materials and the respective submissions, I came to the following conclusions.
[11] The amended notice of motion and the supplementary affidavits filed only went as far as to support the conclusion that there are material issues to be tried. The plaintiffs elaborated extensively on how they felt they were strong-armed by the defendants to accept the December 2020 Agreement, failing which they would be evicted. They also spoke at length on the implications and legal effects of the “COVID moratorium” on evictions issued by the province. They argued that those provisions alone permitted the court to rescind the December 2020 Agreement.
[12] But the plaintiffs added nothing more to bolster the merits of an interim and interlocutory injunction or relief from forfeiture. Nor could the December 2020 Agreement be voided or rescinded, just because of the defendants’ allegedly bad faith conduct.
[13] To be clear, the voidability or rescission of the December 2020 Agreement will turn on the interpretation and scope of the various legislative acts related to COVID relief, (Bill 192 – Protecting Small Business Act, Bill 204 – Helping tenants and Small Business Act, Bill 229 – Protect, Support and Recover from Covid-19 Act, 2020, and Regulation O/Reg. 763/20, amending the Ontario’s Commercial Tenancies Act, (1990)) that resulted in a moratorium on evictions. It will also turn on the parties’ respective understandings, their behaviour and the exchanges they had in and around the December 2020 Agreement and then in January 2021. Much will also turn on who said what to whom and the associated credibility findings. But on the record before the court, even with the cross-examination transcripts that were filed, it is impossible to make any such findings. The difficulty is compounded by the fact that procedurally, the defendants have yet to serve and file their statement of defence, making impossible for a motion for summary judgment to be brought, see Rule 20, Rules of Civil Procedure, R.R.O. 1990, Reg 194.
[14] The defendants were correct to argue that absent a summary judgment motion, I could neither declare the December 2020 Agreement void or rescind it. But the parties should not be under any doubt that there are issues to be tried. Although on the limited record before me, I have some reservations over the strength of the plaintiffs’ submissions, I am also not impressed by the defendants’ conduct in and around the time of the December 2020 negotiations. The provincial “COVID moratorium” regarding evictions may or may not have any bearing on the determination of whether the December Agreement might be void. Both sides should think long and hard about these concerns before they become too entrenched in their respective positions.
[15] That said, regrettably for the plaintiffs, that is as far as they can get on the motion before this court. For an injunction to issue, in addition to establishing one or more triable issues, they would have to satisfy the court that they stand to suffer irreparable harm that cannot be addressed by damages, the balance of convenience favours them, and they are able to give an undertaking as to damages, see RJR-MacDonald Inc. v. Canada (Attorney General) 1995 64 (SCC), [1995] 3 SCR 199 and Guelph Taxi Inc. v. Guelph Police Service, 2016 ONSC 7383, and Rule 40.03, Rules of Civil Procedure, R.R.O. 1990, Reg 194.
[16] Beginning with the balance of convenience, on the record before me, I find that the scales tip in favour of the defendants. On the uncontested evidence before the court, should the sale of the property not close, the defendants stand to lose approximately $3.8 million in net sale proceeds. Such a potential loss does not take into account damages that the purchaser, as an innocent bystander might seek against the defendants for their failure to close the sale. The potential impact of an injunctive order on an innocent bystander compounds the balance of convenience in favour of the defendants. A finding to the contrary would potentially put the defendants in a position of having to fight damages claims by both the plaintiffs and the innocent bystander purchaser.
[17] The plaintiffs’ counsel suggested that the purchasers would not be prejudiced if they remained on the premises because they would gain a paying tenant. With respect, apart from the fact that the purchasers were not before the court to give evidence on any prejudice they might suffer from an aborted purchase, counsel for the plaintiffs neglected to mention her client’s admission in cross-examination that the new purchaser would allow the plaintiffs to stay if they would agree to a monthly rent at four times their current rent. By implication, anything less than that, could be prejudicial to the purchaser. Whether the purchaser could actually obtain such a higher rent from a different tenant is a separate matter. However, the said admission by the plaintiffs’ representative, Mr. Ghanime, offers some insight into the measure of the damages that the purchaser could seek if the plaintiffs were to be permitted to remain on the leased premises.
[18] On the plaintiffs’ side of the balance of convenience ledger, while there can be no doubt that a move to different premises would be disruptive to the operation of their business, the plaintiffs did not put forward any evidence to demonstrate the magnitude of their inconvenience. On their actual losses, Mr. Ghanime, spoke of improvements to the property that involved painting the premises, cleaning them up, and installing a hoist, totalling costs of $100,000, but he did not offer any other particulars.
[19] Moreover, the plaintiffs could have, but did not, put forward any evidence to quantify the costs that would be associated with their move. For example, there was no evidence of efforts to locate alternate premises, the costs associated with them, the costs of having to move, the possibility of negotiating a transition period to allow for a move to alternate premises with minimal disruption, or the cost of other efforts designed to mitigate the disruption. Such evidence would have gone a long way to enrich the balance of convenience analysis.
[20] In the absence of such evidence, the court has very little to go on to find in favour of the plaintiffs on the balance of convenience. The plaintiffs suggested that the defendants’ conduct in December 2020 was contrary to the public policy contemplated by the COVID moratorium and that such behaviour on its own ought to tip the balance of convenience in their favour. To find otherwise would be to condone strongarm tactics by the defendant landlords.
[21] My difficulty with that submission is that it rests on the court’s ability to find that the defendants actually acted in bad faith and contrary to public policy. For the reasons already discussed, the defendants’ conduct is a triable issue. On the record before me, I am unable to make the suggested finding. But even if I were to make such a finding, the balance of convenience analysis looks to the current circumstances of the parties and the implications of an injunctive order at this time. The balance of convenience analysis is not designed to renounce bad behaviour from the past.
[22] The most serious difficulty in the plaintiffs’ position lies with their failure to lead any evidence to support a finding of irreparable harm. Reliance alone on the alleged bad faith conduct by the defendants in December of 2020, even if such findings could be made at this time, would not amount to irreparable harm not compensable in damages. The plaintiffs did not submit any evidence of any irreparable harm they would suffer that could not be compensated by an award of damages. Their evidence was limited to little more than the contention that “eviction from the premises now would destroy what is left of my business and its reputation”. The plaintiffs provided no other evidence such as financial records, the possible absence of alternate premises in the immediate area, the possible opportunity costs of having to move, or even any branding that might be associated with their current location, relative to their customers, or other reasons to explain why an eviction now, as opposed to their voluntary departure in two years, would result in irreparable harm that could not be compensated by damages.
[23] Instead, the coup de grace in the plaintiffs’ overall position rested with their own admission that the real reason for resisting the termination was their inability to pay the purchaser’s requirement that they agree to an increase in rent of four times their current rate. In other words, what they were objecting to was the dramatic increase in the rent and not that they would suffer irreparable harm if they had to vacate their premises. That predicament could result in damages in the plaintiffs’ favour if they continue to pursue their claim for damages against the defendants, but it does not amount to irreparable harm. The plaintiffs’ inability to satisfy this aspect of the injunction test, is fatal to the relief that they seek.
[24] As for the plaintiffs’ inability to give an undertaking as to damages, I would have been willing to consider whether the conditions related to the “COVID moratorium” and the circumstances surrounding the December 2020 Agreement would amount to exceptional circumstances in favour of a waiver of the undertaking. Included in those concerns would be my distaste for the defendants’ refusal to give the plaintiffs’ counsel the requested additional couple of days to firm up their response to the proposed December Agreement. Contrary to the defendants’ contention that the plaintiffs signed the December 2020 Agreement after they obtained legal advice, it is far from clear that they were given sufficient time to complete that task. Although the parties agreed that the plaintiffs retained counsel to obtain legal advice, on the face of the record before me, it is far from clear that counsel was afforded reasonable time to advise her clients and respond accordingly.
[25] That said, given my findings on the balance of convenience and irreparable harm, it is not necessary to make any pronouncement on the plaintiffs’ request for a waiver of the undertaking.
[26] Finally, on the plaintiffs’ claim for relief from forfeiture, the motions judge dismissed the claim. There is nothing in the amended materials that would result in a reconsideration of that finding. However, given the way the matter has come before me, and for greater certainty, it bears repeating that the plaintiffs in this instance are not entitled to the said relief because the defendants’ exercise of their alleged right to terminate the lease is based on their view that the lease was a month-to month lease and not because of any breach or default, see s. 21 of the Commercial Tenancies Act, R.S.O. 1990, c. L.7 and Maverick Professional Services Inc. v. 592423 Ontario Inc. 2001 8540 (ONCA).
[27] Insofar as the plaintiffs referred the court to 2487261 Ont. Corporation v. 2612123 Ont. Inc. 2021 ONSC 336 (“Symphony Banquet Hall”) to illustrate a relief from forfeiture on the basis of the COVID legislation and the moratorium on evictions, the facts before me are distinguishable. The tenant in that case was in arrears and the landlord exercised its right of re-entry on that basis. Because of the protections offered by s.83(1) of the Protecting Small Businesses Act, 2020, the Landlord had to restore possession of the premises to the tenant. This is not the case in this instance.
[28] In the result, the plaintiffs’ motion is dismissed with costs in favour of the defendants.
[29] As far as costs submissions are concerned, I would invite the parties to try to reach a settlement, particularly since their respective bills of costs are in similar ranges. If they are unable to do so, then the defendants shall have until October 13, 2023, to file submissions and the plaintiffs shall have until October 31, 2023, to respond. Submissions by each side shall not exceed four pages, double-spaced, not including the updated bill of costs and any offers to settle that were exchanged.
Tzimas J.
Date: September 28, 2023
COURT FILE NO.: CV-23-2458-0000
DATE: 20230928
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 1358457 ONTARIO INC, & M.V.C. TOWING A ND STORAGE INC.
AND:
TAKOL FORGESTONE MEYERSIDE LIMITED PARTNERSHIP & TAKOL FORGESTONE MEYERSIDE GP INC.
BEFORE: TZIMAS J.
COUNSEL: Corinne Muccilli, for the Plaintiff
Mr. Jaime Vanwiechen, for the Defendant
ENDORSEMENT
Tzimas J.
Date: September 28, 2023