PK Capital Investment Inc. v. Kanaan, 2024 ONSC 264

COURT FILE NO. CV-23-00704117-0000 DATE: 20240111

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: PK CAPITAL INVESTMENT INC. Plaintiff – and – DINA KANAAN Defendant

Counsel: Robert S. Choi, Lawyers for the Plaintiff Philippa Geddie, Lawyers for the Defendant

HEARD: IN WRITING

REASONS FOR DECISION

G. DOW, J.

[1] The parties agreed to have this defendant’s motion to dismiss the plaintiff’s claim, without leave to amend, proceed in writing. It was referred to me on November 21, 2023.

[2] The parties prepared and filed factums in addition to motion records which contained the pleadings.

Background

[3] From the allegations in the Statement of Claim, the plaintiff was the defendant’s landlord at Unit 1401, 5 St. Joseph Street, in downtown Toronto, a residential condominium unit. The defendant was the tenant. On March 12, 2023 the plaintiff entered into an Agreement of Purchase and Sale with a third party purchaser which provided for a vacant possession as of the closing date of July 17, 2023.

[4] It was pleaded the purchaser sought to occupy the unit for personal use. The Agreement of Purchase and Sale also made provision for what would occur if the plaintiff failed to deliver vacant possession.

[5] On March 15, 2023 the plaintiff delivered to the defendant an N12 Notice of Termination proposing June 30, 2023 as the termination date. A copy of the Agreement of Purchase and Sale was provided to the defendant on March 24 and the defendant acknowledged its receipt on March 27, 2023.

[6] The defendant did not advise the plaintiff of her willingness or her agreement to vacate by the closing date. To the contrary, the Statement of Claim contains the defendant’s position (at paragraph 15) that “it would be very helpful for me to be able to stay near the UofT campus while I conduct the work that’s needed to complete my degree”.

[7] The plaintiff commenced an eviction application as of July 14 but was unable to deliver vacant possession. The status and outcome of the eviction proceeding is unknown.

[8] The plaintiff’s Statement of Claim issued August 8, 2023 raises breach of contract, induced breach of contract and an abuse of process as causes of action and seeks damages of $200,000. The action was commenced under Simplified Procedure.

[9] The Statement of Claim includes the third party purchaser is seeking only $300 per day plus expenses (at paragraph 22) and that the plaintiff has suffered “irreparable harm from its inability to meet the financial covenant” with one of the main Canadian banks, without further detail (paragraph 24).

Analysis

[10] The defendant relies on the reasons in PE Real Estate Solutions Inc. v. Kelly, 2021 ONSC 4661, a decision of the Divisional Court where the Court stated the following:

a) the Residential Tenancies Act, 2006 S.O. 2006, c.17 is a complete code dealing with termination of a tenancy with the eviction mechanism in these circumstances contained in Section 49 (at paragraph 32);

b) an Agreement of Purchase and Sale made between the landlord and the purchaser does not create “any legal obligation on a tenant” (at paragraph 34);

c) the tenant may either vacate in accordance with the notice or challenge the eviction (at paragraph 36); and

d) the landlord has a statutory right to apply for an eviction at any time after the notice to vacate has been given (at paragraph 36).

[11] The plaintiff submitted and I agree the guiding principles for this type of motion are:

a) the claim will not be struck unless it is plain and obvious it cannot succeed;

b) the facts pleaded are assumed to be true unless incapable of proof;

c) the claim is reviewed with some latitude for drafting deficiency; and

d) a cause of action that is novel is not determinative.

[12] Regarding the claim for breach of contract, this must either be the contract or tenancy agreement between the plaintiff and the defendant for renting the premises or the Agreement of Purchase and Sale contract between the plaintiff and the third party purchaser. The defendant is a party to the former but not a party to the latter contract. The Residential Tenancy Agreement between the plaintiff and the defendant is completely subject to the terms and provisions of the Residential Tenancies Act, supra. It has not been pleaded that the defendant breached the tenancy agreement. The defendant has relied on the rights afforded to her under the eviction provisions of the governing statute.

[13] The plaintiff submits there is a difference between the termination date and eviction date such that it is possible, in certain circumstances, that the adjudicative body charged with determining each date could find an eviction date which precedes the termination date.

[14] While I agree with that possibility, the plaintiff has not pleaded that the defendant has failed to abide by or with the eviction order (likely because it is yet to be made). Should such an order be made, the veracity of the Statement of Claim might well be different.

[15] The Agreement of Purchase and Sale between the plaintiff and the third party purchaser is not one involving the defendant. As such, the defendant has not breached that contract.

[16] On either analysis, the Statement of Claim cannot succeed as against the defendant and should be dismissed.

[17] Regarding whether leave to amend should be granted, if the plaintiff wishes to make additional allegations (such as the plaintiff’s failure to abide by the eviction order), it may do so. As a result, I would grant leave to amend.

[18] Regarding inducing a breach of contract, the following elements must be pleaded:

a) the plaintiff is a party to valid and enforceable contract;

b) the defendant is aware of the contract and its terms;

c) the defendant intends to procure a breach of the contract;

d) the defendant persuades or induces the contracting party to breach the contract with the plaintiff; and

e) the plaintiff suffers damages as a consequence of the breach of the contract (see Crown Crest Financial Corp. v. Sabbah, 2019 ONSC 7114 (at paragraph 21)).

[19] The plaintiff submitted its pleading met these elements on the basis:

a) there was a valid Agreement of Purchase and Sale between the plaintiff and a third party purchaser;

b) the defendant was aware of the existence of the Agreement of Purchase and Sale;

c) the defendant procured the breach of the contract by unlawfully overholding;

d) the defendant’s overholding constituted wrongful interference; and

e) the plaintiff suffered damages as a result of the defendant’s action.

[20] The problem with those statements is that it is clear there is no finding yet of the defendant “unlawfully overholding” the tenancy. No eviction date has been pleaded or has apparently been determined. Further, the contract between the plaintiff and a third party purchaser provided for the possibility, the plaintiff would not be able to secure vacant possession by the closing date. As a result, I reject the submission the defendant could somehow be responsible for any damages incurred or contemplated by the plaintiff in its dealings with the third party purchaser at the stage of the events pleaded.

[21] As a result, the claim as drafted cannot succeed and should be dismissed. As the plaintiff may wish to or be willing to raise allegations that meet the legal requirements of this cause of action, I grant leave to amend.

[22] Finally, the plaintiff raised an abuse of process as the basis for proceeding. In Ontario, the elements of that tort are:

a) the plaintiff is a party to a legal process initiated by the defendant;

b) the legal process was initiated for a predominant purpose of furthering some indirect, collateral or improper objective;

c) the defendant made or took a definite act or threat in furtherance of the improper purpose; and

d) some measures of special damages has resulted (See Harris v. GlaxoSmithKline Inc., 2010 ONSC 2326 (at paragraph 48)).

[23] The plaintiff relies on the defendant’s acceptance of the one month of rent compensation and refusal to vacate without an eviction order. The rent compensation is required by statute as part of delivery of the Notice of Termination (Section 49.1). Further, as indicated in PE Real Estate Solutions Inc. v. Kelly, supra (at paragraph 35) “Only the landlord could trigger a hearing before the LTB to effect an eviction”.

[24] The powers of the Landlord and Tenant Board (“LTB”) are extensive and set out at Section 83 of the Residential Tenancies Act, supra.

[25] As a result, the pleading fails to contain the necessary elements for it to succeed and should be dismissed. Again, the plaintiff may wish or be willing to raise the requisite allegations. As a result, I grant leave to amend.

[26] The plaintiff raised in both the Statement of Claim (and its Factum) that the issues raised in this action were “precedent-setting” and an attempt to deal with “tenants who improperly seek to take advantage of systemic delays at the Landlord Tenant Board” and that they “should be held accountable for their improper refusal to vacate from the rental premises”. Unfortunately, no evidence was before me of any current or previous timelines for obtaining eviction hearing dates. What was before me, as contained in the Statement of Claim was the defendant’s unwillingness to accept termination of her residential tenancy agreement and statutory entitlement to proceed with an eviction hearing. That eviction hearing can be commenced only by the landlord and at any time once the Notice of Termination has been served (see Section 69 of the Residential Tenancies Act, supra). Thus, the plaintiff could have commenced its eviction application any time after March 24, 2023 or well before when it did on July 14, 2023, particularly in the absence of the agreement of the defendant to vacate the premises.

Conclusion

[27] The defendant’s motion to strike out the Statement of Claim is granted. However, the plaintiff is granted leave to deliver an Amended Statement of Claim.

Costs

[28] The defendant’s factum requests costs of a substantial indemnity basis. The plaintiff’s factum is silent regarding costs. No statement as to an agreement in costs was put forward. Neither party uploaded to CaseLines a Costs Outline as required under Rule 57.01(6).

[29] I urge the parties to agree on costs. For their assistance, I note there has been divided success which could lead to no order as to costs. As a motion in writing, I was unable to confirm the existence of any Offers to Settle that might alter the disposition of a costs order. As a result, the parties shall have until February 9, 2024 to forward to me, not more than three typewritten double spaced pages in a readable font, excluding any Offers to Settle being relied upon setting out its submissions as to the appropriate award of costs, if any.

Mr. Justice G. Dow

Released: January 11, 2024