BRACEBRIDGE COURT FILE NO.: CV-23-170-00 DATE: 20240909 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

THE DISTRICT MUNICIPALITY OF MUSKOKA Applicant – and – DAVID GRONFORS Respondent

Counsel: Danielle Bertin, for the Applicant Paul J. Daffern, for the Respondent

HEARD: June 6, 2024, Virtually

M.L. EDWARDS, R.S.J.

Overview

[1] The District Municipality of Muskoka (Muskoka) has owned and operated the Muskoka airport since November 1996. The Respondent David Gronfors (Gronfors) has been a tenant at the Muskoka airport pursuant to a lease (the Lease) which was assigned to him on October 28, 1985.

[2] The lease agreement while dated October 7, 1985, has an effective date of November 1, 1983. The lease agreement was originally between Her Majesty the Queen in Right of Canada as represented by the Minister of Transport and Air Muskoka Ltd. (HMQ). The lease agreement was assigned to Gronfors on October 28, 1985.

[3] The respondent was served with a notice to vacate the premises when the lease expired on October 31, 2023. The respondent has refused to vacate the premises arguing that the commencement date in the lease is not correct and the lease contains inconsistent terms.

[4] Muskoka seeks an order from this court declaring that the lease agreement has been validly terminated and for an order that the respondent forthwith deliver to the applicant vacant possession of the premises.

The Facts

Background and Preparation of the Lease (T- 1059)

[5] In 1982, Roland Filzmaier entered into a one-year lease, renewable for an additional four, one-year periods, with HMQ. This lease is identified as T-995 and is dated September 10, 1982, but had an effective date of January 1, 1982 (“lease T-995”).

[6] Correspondence from the Department of Transport to Mr. Filzmaier on May 16, 1983, references a new, forty-year lease being prepared that would incorporate the lands currently leased under the short-term lease T-995.

[7] Mr. Filzmaier was, in 1983, the President of Air Muskoka Ltd., which is a different, unrelated company than 744185 Ontario Inc. o/a Air Muskoka currently owned by the Respondent. Correspondence dated October 7, 1983, from the Department of Transport to Air Muskoka Ltd references the enclosure of an “original and duplicate original forty-year lease covering [his] hangar site”.

[8] The effective date of Lease T-1059 is November 1, 1983, and it superseded and cancelled lease T-995.

[9] The Lease had the effect of expanding the land base of the short-term lease, removing 60-day termination provisions and granting a 40-year term with predictable rent increases. The Lease also placed the leasehold in the name of the business, Air Muskoka Ltd., rather than Roland Filzmaier in his personal capacity.

[10] There is no dispute that the Lease document itself was not signed until October 7, 1985. Notwithstanding the delay in execution Muskoka argues that the Term remained unchanged as reflected in section 3 of the Lease which states:

3. TERM OF LEASE Subject to the conditions hereinafter set out, the Lease is for a term of forty (40) years, commencing on the first day of November, 1983, and terminating on the thirty-first day of October, 2023. (emphasis added)

Assignment of Lease from Air Muskoka Ltd. to David Gronfors

[11] After the execution of Lease T-1059 on October 7, 1985, Air Muskoka Ltd. assigned the Lease to David Gronfors on October 28, 1985. The Department of Transport consented to the assignment from Air Muskoka Ltd. to David Gronfors by way of written consent dated December 5, 1985.

Amendments and Supplemental Agreements

[12] Subsequent to the assignment of the Lease to the Respondent, three (3) Supplemental Agreements were entered into by the Respondent to amend parts of the Lease.

[13] A first Supplemental Agreement is dated November 15, 1988, with an effective date of November 1, 1988. This Supplemental Agreement provides for the expiry of the Lease on October 31, 2023. It is signed by the Respondent.

[14] A second Supplemental Agreement is dated April 20, 1993, with an effective date of November 1, 1993. It confirms the effective date of the Lease as being November 1, 1983, and is signed by the Respondent.

[15] A third Supplemental Agreement is dated November 15, 1995, with an effective date of November 1, 1995. It confirms the effective date of the Lease as November 1, 1983, and is signed by the Respondent.

Previous Court Proceedings

[16] The Respondent has been involved in other litigation with the Applicant, unrelated to the Lease expiry date, to which the Applicant has been added as a third party. The Respondent issued a Statement of Claim against Her Majesty the Queen in Right of Canada (Transport Canada) on June 11, 2015, in which he pleads that the Lease commenced November 1, 1983, and ended in 2023.

[17] On November 25, 2018, the Respondent filed a Notice of Appeal in the Federal Court of Appeal where he pleaded that the Lease involves a “40 year lease that is not due to expire until October 31, 2023”.

[18] The Respondent issued another Statement of Claim against Her Majesty the Queen in Right of Canada (Transport Canada) on April 6, 2020, where he again pleaded that the term of the Lease commenced November 1, 1983, and ended in 2023.

[19] The Respondent also represented to Ontario’s Assessment Review Board that he holds a “non-renewable lease that expires in 2023”.

[20] On being served with the Notice to vacate the premises, the Respondent advised the Applicant through his legal counsel that he would not vacate the premises, relying on the lease document date rather than the explicit effective date, to allege the lease did not expire until 2025.

Position of Muskoka

[21] Muskoka argues that at no time during the tenancy has there been any uncertainty or dispute as to the Term of the Lease and its ultimate expiry. To the contrary, Muskoka argues that the Respondent’s past conduct and representations have consistently reflected the mutual understanding of the parties as clearly expressed and as drafted in section 3 of the Lease i.e., that the lease terminated on October 31, 2023.

Position of the Respondent

[22] Factually the Respondent argues that the lease began on October 7, 1985, with a 40-year term that does not end until October 7, 2025. As such when the Notice to vacate the premises was served the Respondent still had 16 months in its lease term.

[23] The Respondent argues that Transport Canada described the lease as being dated October 7, 1985, when it consented to an assignment of the new lease to David Gronfors dated October 28, 1985, on December 5, 1985.

[24] The Respondent argues that the language of the Consent to the Assignment clearly refers to the date of the lease as October 7, 1985.

[25] The Respondent argues that the lease relates to a tenancy agreement at an Airport and as such federal law applies to this case. The Respondent argues that the Applicant is not entitled to rely upon the summary procedure provided for in the Commercial Tenancies Act which is provincial law that can have no bearing on the issues with respect to this lease.

[26] The lease also contains a provision that all disputes related the lease must be heard in Federal Court. The Respondent argues paragraph 39 of the lease provides that any interpretation of the lease which the parties cannot agree upon shall be determined by the Federal Court of Canada.

[27] The Respondent therefore argues that the Applicant should have brought this Application in the Federal Court of Canada because of the forum selection clause. It is argued this proceeding is not only premature because the lease has not expired but it is also in the wrong court.

Analysis

[28] Mr. Gronfors argues that this Court has no jurisdiction to hear this application because of the forum selection clause that requires disputes between the parties to be dealt with in the Federal Court of Canada. Mr. Gronfors also argues that this Court has no jurisdiction because it relates to an airport and, as such, federal law applies to this case. Finally, Mr. Gronfors argues that the lease had not expired when the notice to vacate was served given his argument that the lease did not expire until October 2025. I disagree with Mr. Gronfors as it relates to all his arguments.

[29] As it relates to the question of whether or not the airport engages the exclusive jurisdiction of Parliament this has been addressed by the courts in Saskatchewan in Regina Airport Authority v. Lumsden Aero Ltd., 2002 SKQB 96. The Regina Airport Authority applied to the Saskatchewan Court of Queen’s Bench for a writ of possession pursuant to s. 50(1) and 52(2) of the Landlord and Tenant Act, R.S.S. 1978 c. L-6. The Saskatchewan legislation mirrors ss. 74(1) and 76(1) of the Ontario Commercial Tenancies Act, R.S.O. 1990, c. L.7.

[30] There can be no dispute that the Commercial Tenancies Act of Ontario is valid provincial legislation. There is equally no argument that there is no federal equivalent to this Ontario legislation. In my view, when looked at from perspective of whether the exclusive jurisdiction of Parliament as it relates to aeronautics should apply, I am satisfied that the Commercial Tenancies Act in substance is legislation that deals with the commercial relationship between the parties, and it is not integral to the functioning of the airport. The Commercial Tenancies Act is not governed by the use of the land itself nor does it regulate what can and can not be done or built on the land. As such, it in no way can be said to impair the core federal exclusive jurisdiction over aeronautics. I am therefore satisfied that the provisions of the Commercial Tenancies Act apply to the parties in this case.

[31] As it relates to the argument raised by Mr. Gronfors that the parties agreed that any dispute between the parties should be addressed in the Federal Court of Canada the answer to this argument can be found in a decision of the Supreme Court of Canada in Z.I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27. The Supreme Court addressed the question of whether a forum selection clause can be set aside placing the onus on the plaintiff applicant to show “strong cause” why the parties should not be held to the clause. The second stage of the test set forth in Pompey requires the court to exercise its discretion by considering “all the circumstances, including fairness, convenience, public policy and the interest of justice”.

[32] In my view, on the facts of this case, there is strong cause why this court should exercise its discretion to allow the applicant to proceed with this application despite the fact the lease contains a provision requiring disputes to be litigated in the Federal Court. There is nothing in the evidence to suggest any bad faith or tactical advantage would be gained by the Applicant filing in this court. The issue raised by the Applicant and addressed by the Respondent relates to a commercial lease and the determination of whether the lease terminated on October 31, 2023. The issue before this Court is a simple and factual interpretation, an issue that this Court deals with all the time.

[33] As it relates to the question of whether the lease terminated on October 31, 2023, or as suggested by the Respondent, in 2025, in my view, the lease is clear and unambiguous. Moreover, the evidence clearly establishes that Mr. Gronfors in other litigation has represented to different courts that the lease term expired as set forth in para. 3 of the lease i.e., October 31, 2023. In that regard, I refer to two statements of claim issued by the Plaintiff in this Court as well as a notice of appeal in the Federal Court of Canada. In all three pieces of litigation, Mr. Gronfors has represented to the Courts a position that is diametrically opposed to the position that he is taking before this Court.

[34] For these reasons, I am satisfied that the Applicant has established that the lease expired on October 31, 2023. A writ of possession shall issue in accordance with the provisions of the Commercial Tenancies Act.

[35] The parties are encouraged to resolve the issue of costs and any other issues that may flow from this endorsement. If the parties can not resolve the issue of costs, written submissions limited to two pages in length, are to be submitted to the Court by no later than September 20, 2024.

EDWARDS, R.S.J. Released: September 9, 2024