Reasons for Decision

Introduction

This dispute addresses the renewal by McDonald’s Restaurants of Canada Limited (“McDonald’s”) of a leased premises owned by North Elgin Centre Inc. (“North Elgin”). Since 1997, McDonald’s has operated a restaurant on the premises pursuant to a ground lease dated July 9, 1996 (the “Lease”).

This matter has a lengthy litigious history dating back to 2017. At the core of this ongoing dispute, McDonald’s seeks to exercise the option rights provided to it under the Lease for two successive 10-year renewal periods. If successful, McDonald’s would remain in the premises for a total of 40 years from the Lease commencement date of March 11, 1997. On the other hand, North Elgin now wishes to develop the site and no longer wishes to continue the Lease.

The leased premises occupies a portion of a shopping plaza owned and operated by North Elgin (the “Property”). In 2016, North Elgin prepared a concept plan for the site which contemplated a high-density, mixed use, supportive development, eventually including a residential tower where the McDonald’s restaurant is currently located.

There are two applications before me. North Elgin seeks various forms of declaratory relief declaring the Lease to be “void, of no force or effect and at an end” and, if granted, overhold rent from March 11, 2018 and a writ of possession.

McDonald’s seeks a declaration that the Lease has been renewed for a second 10-year renewal term commencing March 11, 2027 (the “Second Renewal Term”). It also seeks various orders requiring North Elgin to co-operate in obtaining the necessary approval needed to give effect to the First (i.e., from March 11, 2017 to March 11, 2027—the “First Renewal Term”) and Second Renewal Terms.

For the reasons that follow, I dismiss the application by North Elgin and grant, in part, the application by McDonald’s.

Background and Procedural History

This iteration of the fight involves the interpretation of a 2017 Court of Appeal decision (the “OCA Decision”), a 2021 ruling by Brown J.A. dismissing a contempt application against North Elgin (the “Contempt Ruling”), and the parties’ interaction with the City of Richmond Hill (the “City”) and its Committee of Adjustment (the “CoA”).

In short, the First Renewal Term extended the Lease beyond 21 years. A lease beyond 21 years requires Planning Act, R.S.O. 1990, c P.13 (the “Planning Act”) approval. North Elgin was initially responsible for filing the application seeking the required consent approval for the renewals (the “Consent Application”). The OCA Decision resulted in a declaration that the Lease had been renewed for the First Renewal Term.

Because of the litigation, the appeal was heard near the date on which North Elgin was to file the Consent Application. To expedite the filing of the required Consent Application, the OCA Decision provided that McDonald’s would obtain the approval, and that North Elgin was to “provide all reasonable cooperation to obtain that consent”. Undoubtedly, the Court of Appeal was trying to facilitate the application process by requiring McDonald’s to file the Consent Application, rather than North Elgin as set out in the Lease. Notwithstanding the intent of the Court of Appeal, there then ensued a dispute as to whether North Elgin was providing the “reasonable cooperation” as required in the OCA Decision. This led to the contempt proceedings before Brown J.A. Meanwhile, the Consent Application was requested of the City by McDonald’s but has since been stalled.

The facts giving rise to the applications before me ostensibly pick up after the Contempt Ruling which was issued in March 2021. However, some background to the proceedings in the Court of Appeal is necessary to appreciate current events. Before doing so, it is appropriate to address some of the preliminary procedural issues that required determination by me, followed by a review of the relevant contractual and statutory provisions.

Procedural Rulings

The applications were first argued in April 2024. There were several attendances thereafter, including requests by McDonald’s to prevent North Elgin from interfering in the City and the CoA process. That issue was argued in November 2024.

There were two preliminary issues to be addressed during the argument in November 2024. One issue was a request by McDonald’s to amend its notice of application. The second addressed McDonald’s request to file affidavits of the activity that had taken place since April 2024. That request was opposed by North Elgin. However, if McDonald’s request to file additional affidavits was granted, North Elgin sought the right to also file additional evidence. Both motions were granted at the outset of the parties’ last attendance before me. These are brief reasons in support of those procedural rulings.

The Amendment

This current litigious dispute started with North Elgin bringing its application on July 28, 2023 (amended January 28, 2024) which was followed by McDonald’s application on October 26, 2023 (amended at the return of these applications in November 2024). While awaiting a date for a case conference to address the applications, North Elgin served a Notice of Termination on November 20, 2023 (the “NOT”) that purported to terminate the Lease.

The matter first came before me as a motion brought by McDonald’s for injunctive relief to prevent North Elgin from acting on the NOT. At that time, it was agreed by the parties that the matter was better dealt with by me hearing the applications. As a result, the motion for injunctive relief was stayed on the understanding that North Elgin would take no steps in furtherance of the NOT pending the resolution of these applications.

As will become apparent, much of the argument on these applications has centered on the delay by the City and CoA in addressing the Consent Application. After the initial argument in April, it was learned that the CoA would be considering the application at the end of summer 2024. A case conference was convened, and I advised that I would not render a decision until the CoA made its determination. I did so because much of the argument by both parties in April hinged on whether the Consent Application was granted or not. With a possible pending decision, it seemed appropriate that I know the outcome prior to deciding these applications.

In mid-summer, McDonald’s made allegations that North Elgin was seeking to frustrate the Consent Application process. It was further learned that the CoA had to adjourn its hearing scheduled for late summer for a lack of quorum. It was believed at that time that the CoA would reconvene in the fall. As it happened, the CoA has not yet reconvened and there is yet to be a determination of the Consent Application.

In the summer, McDonald’s returned before me at a case conference to seek an interim order that North Elgin be prevented from interfering in the consent approval process and an order that North Elgin be required to positively support the Consent Application. I indicated that such an order should be made on proper notice with affidavit evidence. Ironically, at the case conference, North Elgin attended with affidavits in support of its opposing position. In the end, proper material was prepared, and affidavits filed. Rather than file a motion, McDonald’s amended its Notice of Application to more clearly state the relief requested. To be clear, the essential facts giving rise to the requested relief did not change; rather, more specificity was provided. I granted the requested amendment for the following reasons.

Rule 26.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) allows for an amendment to a pleading. Although a notice of application is not a pleading, it may be amended in the same manner as a pleading: r. 14.09 of the Rules; 1100997 Ontario Limited v. North Elgin Centre Inc., 2016 ONCA 848, 409 D.L.R. (4th) 382, at para. 16. Leave to amend a pleading shall be granted on such terms as are just “unless prejudice would result that could not be compensated for by costs or an adjournment”: Rule 26.01. While the language is mandatory, there is still discretion in appropriate cases to deny an amendment: Marks v. Ottawa (City), 2011 ONCA 248, 280 O.A.C. 251, at para. 19. In Marks, the following factors were identified:

• An amendment should be allowed unless it would cause an injustice not compensable in costs.
• The proposed amendment must be shown to be an issue worthy of trial and prima facie meritorious.
• No amendment should be allowed which, if originally pleaded, would have been struck.
• The proposed amendment must contain sufficient particulars.

In the event the motion to amend was granted, North Elgin was asked if it required an adjournment which I indicated I would entertain. It did not request an adjournment. There was no prejudice identified by North Elgin, other than much of the case had already been argued in April. I advised North Elgin that it would be able to address any issue arising from the amendment (which it has now done). Frankly, as noted, the amendment does not alter the landscape of this case. McDonald’s amended notice of application merely clarifies the exact nature of the relief sought. The amendment does not fall afoul of any of the criteria in Marks.

As there was no deficiency in the amendment, no prejudice, and no request for an adjournment, the request to amend McDonald’s notice of application was granted (“McDonald’s Amended Notice of Application”).

The Affidavits

The proposed additional affidavits describe the parties’ respective conduct since April. The affidavits of McDonald’s contain evidence not otherwise available when the initial affidavits were filed or when cross-examinations occurred. Responding affidavits have been filed by North Elgin. Neither party seeks to cross-examine on these affidavits.

Under Rule 39.02, the court has jurisdiction to allow additional evidence to be filed, even after cross-examinations have occurred: Lacey v. Kakabeka Falls Flying Inc., 2018 ONCA 1007, at para. 13; Lockridge v. Director, Ministry of the Environment, 2013 ONSC 6935, 322 O.A.C. 345 (Div. Ct.), at para. 23; Crown Resources Corp. S.A. v. National Iranian Oil Co., at para. 13. In considering such a request, the court must have regard to the fact that the rules are to be interpreted liberally to ensure a just and timely resolution of the dispute: Rule 1.04; 1944949 Ontario Inc. (OMG ON THE PARK) v. 2513000 Ontario Ltd., 2019 ONCA 628, at para. 34.

In this case, the additional evidence being proffered is relevant. The evidence responds to matters raised in this proceeding; namely, the status of the Consent Application. I see no prejudice to either side and no one seeks an adjournment as each side has already had plenty of notice. Finally, the evidence was not otherwise available earlier, which is why it was not included in the initial evidence at the outset. Accordingly, I allowed the filing of these affidavits and the responding affidavits of North Elgin.

McDonald’s was permitted to file the additional affidavits of Ms. Nixon dated June 11, 2024 and November 18, 2024. North Elgin was permitted to file the additional affidavits of Ms. Mauro dated August 12, 2024 and November 19, 2024, and the affidavits of Mr. Manet dated August 6, 2024 and October 11, 2024.

The Lease Provisions

The Lease commenced on March 11, 1997. Section 15.01 of the Lease provided for two ten-year renewal terms. Section 15.01 reads as follows:

The Landlord hereby grants to the Tenant the right, privileges and option to renew the Term of this Lease from the terms of ten (10) years each upon giving notice of its intention to renew to the Landlord at least twelve (12) months prior to the expiration of the original Term and any succeeding renewal term. In the event of the exercise of any of the renewal rights as aforesaid, such renewal or renewals of this Lease shall be upon the same terms and conditions as contained herein, provided that there shall be no further right of renewal other than as set out in this Section 15.01 and provided that the rental to be paid during such renewal terms shall be mutually agreed upon between the parties hereto and failing such agreement, at least nine (9) months prior to the expiration of the original Term or any renewal term or terms, the Tenant at its option may either revoke its notice of intention to renew, in which case this Lease shall expire at the end of the current term, or the Tenant may elect to proceed to arbitration. If the Tenant elects to proceed to arbitration the rental shall be determined by arbitration within the next three (3) months in accordance with the provisions of Article XVII hereof and of the Arbitration Act S.O. 1991, chap. 17, and shall be based upon the fair market rent of the land only as at the date of the exercise of the option to renew contained herein.

The Lease is subject to the Planning Act. Section 19.10 of the Lease addresses this requirement as follows:

This Lease is subject to the Planning Act, as amended (the “Act”) and the Landlord and Tenant agree and declare that the provisions of the Act, be complied with if necessary. It is agreed that until such time as any consent necessary under the Act is obtained, the Term of this Lease shall be twenty-one 21 years less one 1 day and the rental for the twenty-first (21st) year shall be the same as the rental for the twentieth (20th) year. Further, the Landlord covenants and agrees to diligently proceed to obtain any consent necessary under the Act, and in the event the Landlord is unable to obtain such consent, the Tenant may bring such application and the Landlord agrees to cooperate with the Tenant in bringing such application.

As is evident from the above provision, the Lease placed the burden on the Landlord to diligently pursue obtaining the requisite Planning Act consent, being the Consent Application. This becomes a consideration at the Court of Appeal.

In the event of an overhold by the tenant, section 19.01 of the Lease provides:

In the event that the Tenant has not exercised its right of renewal pursuant to Section 15.01 [Option to Renew], but continues to occupy the Demised Premises after the last day of the Term…and the Landlord elects to accept rent thereafter…and rent payable shall be at a rate equal to one hundred and twenty-five percent (125%) of the monthly rent payable during the last year of this Lease or the then expiring renewal term.

There is also a provision in the Lease (section 12.01) allowing the landlord to re-enter should the tenant “fail to pay any installment of rent” and take remedial steps to rectify the default within 15 days.

Legislation

The Planning Act governs municipal planning. Its purpose, among other things, is the provision of planning processes for sustainable economic development: Planning Act, section 1.1. To that end, it provides for the planning review of any conveyance of an interest in land over 21 years, which includes a conveyance by lease. This is what is to take place during the Consent Application process.

The relevant provision is section 50(3)(f) which reads as follows:

Subdivision control

50 (3) No person shall convey land by way of a deed or transfer, or grant, assign or exercise a power of appointment with respect to land, or mortgage or charge land, or enter into an agreement of sale and purchase of land or enter into any agreement that has the effect of granting the use of or right in land directly or by entitlement to renewal for a period of twenty-one years or more unless, …

(f) a consent is given to convey, mortgage or charge the land, or grant, assign or exercise a power of appointment in respect of the land or enter into an agreement in respect of the land; …

A failure to receive the approval may be cured by subsequently obtaining the approval, but a conveyance with no approval does not create an interest in land. Those sections read as follows:

Effect of contravention

50 (14) Where land is within a registered plan of subdivision or within a registered description under the Condominium Act, 1998 or where land is conveyed, mortgaged or charged with a consent given under section 53 or a predecessor thereof, any contravention of this section or a predecessor thereof or of a by-law passed under a predecessor of this section or of an order made under clause 27 (1) (b), as it existed on June 25, 1970, of The Planning Act, being chapter 296 of the Revised Statutes of Ontario, 1960, or a predecessor thereof, that occurred before the registration of the plan of subdivision or description or before the giving of a certificate under subsection 53(42) stating that a consent has been given, as the case may be, does not and shall be deemed never to have had the effect of preventing the conveyance of or creation of any interest in the land, but this subsection does not affect the rights acquired by any person from a judgment or order of any court given or made on or before December 15, 1978. 1994, c. 23, s. 29 (6); 2015, c. 28, Sched. 1, s. 155 (1).

Conveyance, etc., contrary to section not to create or convey interest in land

50 (21) An agreement, conveyance, mortgage or charge made, or a power of appointment granted, assigned or exercised in contravention of this section or a predecessor thereof does not create or convey any interest in land, but this section does not affect an agreement entered into subject to the express condition contained therein that such agreement is to be effective only if the provisions of this section are complied with. R.S.O. 1990, c. P.13, s. 50 (21).

The OCA Decision

The OCA Decision addressed whether McDonald’s had effectively renewed for the First Renewal Term: North Elgin Centre Inc. v. McDonald's Restaurants of Canada Limited, 2018 ONCA 71, 87 R.P.R. (5th) 315. While McDonald’s had provided the requisite notice, the application judge held that the renewal provision required there to be an agreed-upon rental rate for the renewal period and there was no such agreement. Without a fixed rental rate, the application judge held there could be no agreement as an essential term of the Lease was missing. There was also an issue regarding whether North Elgin had waived its right to compliance with the terms of the renewal period. Finally, McDonald’s sought an order requiring North Elgin to pursue the application for the consent approval under 50(30)(f) of the Planning Act.

The OCA Decision reversed the decision below and specifically concluded that the “lease has been renewed for the renewal term” and provided a declaration to that effect. It then ordered that McDonald’s was to pursue an arbitration to resolve the issue of the fair market rental rate for the First Renewal Term.

Because the OCA Decision was issued very near the end of the 21st year of the Lease, the OCA ordered, and the parties agreed, that McDonald’s would file the application for the consent approval (the “Order”). The OCA wrote as follows, at para. 14:

We proposed to the parties in oral argument that the most sensible order would be one in which McDonald’s was permitted to immediately bring an application for the consent, and North Elgin would provide all reasonable cooperation to obtain the consent. The parties were agreeable to that order, and it shall issue.

The OCA Decision specifically provided, at para. 15:

(i) a declaration will be granted that the Lease has been renewed for the renewal term;

(ii) McDonald’s shall, within 30 days of the date of these reasons, bring an application for the consent required under s. 50(3) (f) of the Planning Act and North Elgin shall provide all reasonable cooperation to obtain that consent. [incorporated as Paragraph 3(b) of the Order.]

Contempt Ruling

The Contempt Ruling addressed the parties’ conduct between the time of the OCA Decision and the Contempt Ruling: North Elgin Centre Inc. v. McDonald’s Restaurants of Canada Limited, 2021 ONCA 173.

As both parties relied upon the findings in the Contempt Ruling, the following is a brief review of some of the salient facts found by Justice Brown.

Following the OCA Decision, McDonald’s commenced the rent setting arbitration (the “Arbitration”) and filed the Consent Application.

The Arbitration was resolved after a hearing and an award was issued July 2, 2019. North Elgin initially appealed the Arbitration award but abandoned that appeal on May 15, 2020.

The Consent Application was filed within days of the OCA Decision. It was prepared and filed by Dentons Canada LLP and signed by Mr. Belluz, a principal of North Elgin and a planning lawyer. The Consent Application referenced that the Lease had two renewal terms, amounting to 20 years and that “[i]t is these extensions that require Planning Act approval.”

In March 2018, the City requested that a planning report be filed. There was a concern raised by the City that the long-term lease would freeze development at the Property. It was then that McDonald’s learned that North Elgin’s plan for the site did not make provision for the McDonald’s restaurant.

In September 2019, McDonald’s filed a Planning Justification Report (the “IBI Report”) supporting the Consent Application. The City wrote on September 20, 2019 saying it was prepared to concur with the recommendations and conclusions in the IBI Report but that the City wanted confirmation that North Elgin was aware of the proposed lease extension and the pending development for a high density residential development on the Property. This request was made notwithstanding that Mr. Belluz signed the Consent Application.

McDonald’s contacted North Elgin which took issue with several items in the IBI report, including the fact that the renewal was currently for one renewal term, not two.

In the meantime, on November 8, 2019, the Consent Application was placed into the City’s “priority queue for the January 2020 circulation”. An internal meeting was to take place on December 10, 2019 at the City to determine if the Consent Application was ready for consideration.

On December 6, 2019, just prior to the internal meeting, North Elgin filed a responding report (the “MPlan Report”) which took issue with the IBI Report and proposed modifications which were expressly intended to “ensure that consent to the 1st renewal term does not freeze development on the retained lands”: Contempt Ruling, at para. 36.

The City’s response to the MPlan was to defer the matter until “such a time that it has been determined what the actual request is and the owner is satisfied”: Contempt Ruling, at para. 38.

McDonald’s alleged that by filing the MPlan Report, North Elgin had breached the Order requiring it to “provide all reasonable cooperation to obtain” the consent approval and sought an order of contempt for disrupting the Consent Application process.

Justice Brown held that North Elgin was not in contempt. First, he held that North Elgin’s conduct “did not materially affect the prosecution of the Consent Application”, particularly as the City placed the application in the priority queue for circulation: Contempt Ruling, at para. 50. Second, he found that the MPlan did not oppose the Consent Application but rather provided North Elgin’s input on the process. It was noted that the application and the IBI Report did not identify that the OCA Decision only renewed the Lease for one, not two terms. The MPlan report also drew the City’s attention to what North Elgin thought was the impact on the Property as a whole.

Justice Brown specifically found that the MPlan “supports a consent application” rather than opposes it, and that North Elgin’s “interest in proposing the conditions of approval” did not breach its obligation under the Order to provide “all reasonable cooperation”. He also held comments in the MPlan Report addressing the conditions relating to the Property as a whole and the “No Building Provisions of the Lease” were not a violation of the Order. He specifically found, given the inquiry by the City for planning justification, that North Elgin “had a legitimate interest in ensuring that the Committee of Adjustment was aware of provisions of the lease, such as the No Build Zone provisions, that could impact such future development”: Contempt Ruling, at para. 74.

Justice Brown rejected that the mere filing of the MPlan was a breach of the Order. In addressing this argument, he specifically stated, at para. 76 of the Contempt Ruling:

Para. 3(b) of the Order did not sanction a process in which McDonald’s was permitted to proceed with its Consent Application on a kind of ex parte basis, with no ability for the landowner, NEC, to raise legitimate planning issues or point out inaccuracies in McDonald’s application. The evidence discloses that at various points NEC sought to provide some input into the application but was rebuffed by McDonald’s. In those circumstances, it is understandable that NEC would want to place before the Committee of Adjustment information it thought relevant to a complete consideration of the Consent Application and its approval on a basis that was fair to the legitimate interests of both tenant and landlord. In the circumstances, I do not regard NEC’s filing of the MPlan Report as a breach of para. 3(b) of the Order.

Before Justice Brown, it was argued by North Elgin that as no approval had yet been given by the City, the Lease had terminated and therefore North Elgin could not be in contempt. This is essentially the same argument before me which is that the Lease is at an end because the City has yet to decide on the Consent Application. Justice Brown observed in his reasons that he would proceed “with some caution” as the application “remains alive” and the “future conduct of the Consent Application lies within the jurisdiction of the Committee of Adjustment”: Contempt Ruling, at para. 53. Justice Brown clearly distinguished between the process and the fact that no decision had yet been made by the City. Justice Brown rejected North Elgin’s argument as “a defence constructed after-the-fact in response to the contempt motion and which is inconsistent with the position [North Elgin] took in the MPlan Report”: Contempt Ruling, at para. 51. Justice Brown observed that the MPlan did not take the view that the Lease was at an end but rather that the Lease was renewed for the First Renewal Term, subject to Planning Act approval, which it endorsed. Finally, Justice Brown said nothing to deviate from the initial Court of Appeal order requiring cooperation generally or the requirement to cooperate in section 19.10 of the Lease.

I have reviewed Justice Brown’s Contempt Ruling in some detail as it was the subject of significant argument.

Subsequent Developments

Since the Contempt Ruling, the Consent Application has yet to be resolved and remains pending with the Committee of Adjustments. It is asserted by North Elgin that McDonald’s has done nothing to advance the Consent Application since March 2021 when the Contempt Ruling was issued.

I do not think it is accurate to say McDonald’s has done nothing. The affidavit of Ms. Lee for McDonald’s lists the activity that occurred up to that point. Subsequent affidavits bring the record up to the late fall of 2024.

Those activities include McDonald’s representatives meeting with the City in mid-2021 to reactivate the Consent Application that was in abeyance while the contempt matter proceeded in the Court of Appeal. At the meeting, the City advised that the Consent Application could not proceed until North Elgin provided its approval. There were then discussions with Mr. Gorizzan, who is a principal of North Elgin, and representatives of North Elgin where McDonald’s requested Mr. Gorizzan to contact the City to re-engage the Consent Application process. Ms. Mauro, who testified for North Elgin, was unaware of these meetings when she testified that McDonald’s had taken no steps since the Contempt Ruling.

In a responding affidavit, Ms. Mauro testified that Mr. Gorizzan was unwell, both physically and mentally. Mr. Gorizzan did not swear an affidavit and there was no medical evidence as to his condition or his inability to testify. Others from North Elgin were also at the meeting, including the planner, but none testified. I accept Ms. Lee’s testimony that meetings took place after which North Elgin took no steps to address the matter with the City. Ms. Lee further testified that there were without prejudice discussions through much of 2022 attempting to address the Consent Application. Understandably, there was no detail provided as to those without prejudice discussions. No issue was taken with this evidence by North Elgin. I accept that discussions took place between the parties in an unsuccessful attempt to resolve the Consent Application issues.

It appears that the City was waiting to hear from North Elgin but due to the impasse the City heard nothing. On June 9, 2023 and July 6, 2023, McDonald’s again attempted to re-activate the Consent Application with the City. The City responded to North Elgin that if it was satisfied with the consent application the matter would then be placed back into priority queue.

On June 2, 2023, McDonald’s provided a formal renewal notice for the Second Renewal Term. It thereafter sought to re-activate the Consent Application by writing the City, at which point McDonald’s advised that it had provided notice of the second renewal and provided an update as to how the application complied with the updated planning framework of the City.

North Elgin brought its application on July 28, 2023 seeking a declaration that the Lease was “[v]oid, of no force or effect, and at an end”. As mentioned, the accompanying affidavit of Ms. Mauro asserted that McDonald’s had not pursued the application. As mentioned, I do not find this to be an accurate statement. I do not accept North Elgin’s assertion that McDonald’s has done nothing to move the Consent Application forward.

After filing its application in this court, North Elgin then sought a hearing date. In early November 2023 it was advised that the first available date for a case conference was not until April 2024. On November 20, 2023, North Elgin decided to take a different tack and delivered the NOT to McDonald’s. The NOT asserted that the Lease expired on March 10, 2018, because Planning Act consent had not been obtained by that date. North Elgin demanded overhold rent.

In essence, North Elgin was not prepared to wait for this court to adjudicate this application. Instead, some 5 years after it asserts that the Lease was at an end, North Elgin served the NOT to terminate the Lease, the very relief it sought from this court.

As previously noted, North Elgin’s action prompted McDonald’s to seek an interlocutory injunction to stop North Elgin from taking steps in furtherance of the NOT. At the return of the motion, on consent of the parties, the interim relief was granted, and the applications were scheduled to be heard in April 2024.

Much of the argument in April centered on the failure of the CoA to determine the Consent Application and its impact on the renewal of the Lease and the NOT of the Lease. It was strongly urged by North Elgin that the failure to obtain the required consent meant the Lease was at an end.

After the hearing in April, counsel for McDonald’s wrote the City to ascertain the status of the Consent Application. McDonald’s noted that at the April attendance the court had inquired, which it did, as to the status of the CoA.

McDonald’s was advised that the CoA meeting was to take place on July 25, 2024 at which point the Consent Application was to be considered.

On June 14, the applications were to continue before me. McDonald’s was of the view that the CoA and the Consent Application should proceed first as they would impact the applications before this court. In addition, McDonald’s expressed concern that North Elgin was taking steps to thwart the Consent Application, including misrepresenting the status of the lease renewal. McDonald’s sought this court’s assistance in having North Elgin abide by the terms of the Lease and the OCA Decision as to its obligation to co-operate. As there was no motion material before me, I declined to address the request at that time. Instead, I issued an endorsement that there had been no determination as to the validity of the renewal as the matter had yet to be decided. It was also made clear that this court would await the determination of the CoA before rendering a decision.

There were further attendances in August and finally in November, whereat McDonald’s continued to express concern at North Elgin’s actions. In response, North Elgin expressed concern about McDonald’s actions and urged the court to address the merits of the applications.

The municipal planner for North Elgin, Michael Manet, wrote the City and CoA repeatedly. It is argued by McDonald’s that he did so to derail the Consent Application. For example, on July 4, 2024, he wrote saying that it was not appropriate for the CoA to consider the Consent Application on July 25, 2024. He raised concerns about signs posted on the Property providing notice. He wrote on July 9 that North Elgin was not able to support a consent for a long term lease on the Property. He stated that “the existing restaurant use cannot be supported on the property as a stand-alone structure going forward”, as it was inconsistent with other planning proposals “facilitating intensification of the property”. He wrote again on July 15 saying it was inappropriate for the CoA to consider the application as it was not authorized by North Elgin. This begot responses from the City and McDonald’s. The City responded that they had the requested Consent Application from Dentons, which was the authorized representative of North Elgin, and would process the Consent Application. Dentons wrote the City on July 17 advising that it remained the authorized representative and wished the application to proceed.

On July 19, 2025, the City filed a report with the CoA saying planning staff reviewed the Consent Application pursuant to section 51 (24) and recommended its approval.

This report also begot letters from counsel to North Elgin saying the Consent Application had not been approved by North Elgin, complaining about a lack of communication and that the application was deficient because the location of the lands was inaccurate.

The City solicitor responded that this was not a matter that should “be litigated through correspondence” and that the Consent Application was authorized by Dentons, the agents of North Elgin.

Counsel for McDonald’s wrote counsel for North Elgin in response to North Elgin’s letters to the City. Counsel for McDonald’s took the position that the communication by the counsel and the planner of North Elgin was designed to prevent the Consent Application from being heard and, in doing so, breached the OCA Decision and the Lease, both of which required North Elgin to co-operate.

Mr. Manet then wrote the City asserting that North Elgin does not support the Consent Application. In particular, he stated that “the landowner, can no longer support the Application for Consent, even if conditions were applied.” In saying so, he cited various planning documents that supported high density, mixed use for the Property. The letter goes on to make several comments on the City’s report recommending approval of the Consent Application.

Further correspondence was issued by North Elgin making various allegations against the City including alleging that the City had taken sides. The last correspondence in the record is from September. To be clear, the above is just a sampling.

The parties reattended before me on August 28, 2024. At that time, McDonald’s again sought an order that North Elgin cease what McDonald’s felt was improper conduct contrary to the OCA Decision and the Lease. North Elgin complained that McDonald’s had not provided all its communication with the City and CoA. McDonald’s advised that it had but that it would double check. The matter was adjourned with directions that McDonald’s provide any further communication with the City or CoA. I understand there were no further documents to be produced by McDonald’s.

The matter reconvened on November 28, 2024. As of that time, the CoA meeting had yet to be rescheduled.

Issues

The issues as raised by North Elgin in its Amended Notice of application and as set out in its factum read as follows:

1. Did the Lease term expire on March 11, 2018 - pursuant to sections 19.10 & 19.09 of the Lease?

2. If the Lease term expired, what is the status of the tenancy and what is the tenant’s obligation to the Landlord? Is the tenant obligated to deliver vacant possession of the premises to the Landlord pursuant to the Notice of Termination delivered to tenant?

3. Is the tenant obligated to pay the Landlord overhold rent? If so, how much?

4. If the Lease term expired on March 11, 2018, does the tenant have any right to extend or exercise the 2nd option to renew the term of the Lease beyond 2027?

5. If the Lease term expired, and there is no interest in land, should the Instrument be deleted from title to the NEC lands?

6. Should a writ of possession issue in favour of the Landlord to recover possession from the tenant?

McDonald’s opposes the relief sought by North Elgin and says that it has lawfully renewed the Lease. In addition to opposing the relief sought, McDonald’s seeks a declaration that it properly exercised the Second Renewal Term.

In McDonald’s Amended Notice of Application, it requests that the court order North Elgin to write to the City to confirm:

(1) that it is supportive of the Lease running beyond a term of twenty-one years inclusive of the First Renewal Term and the Second Renewal Term; (2) that it responds promptly to any and all requests for information made by the City to confirm that the North Elgin is supportive of Planning Act consent or approval being granted; (3) that it refrains from communicating with the City and/or the CoA (including via email, letter or telephone) for the purpose of, or with the effect of, delaying, preventing or objecting to Planning Act consent or approval being granted by the CoA; and (4) In the event that Planning Act consent or approval is not granted that it take all necessary steps to re-apply to the City for consent under the Planning Act for the Lease to run beyond a term of twenty-one years, inclusive of both the First Renewal Term and the Second Renewal Term. In the event that Planning Act consent or approval is granted, to accept the decision of the CoA and refrain from taking any steps to appeal or vary that decision.

NORTH ELGIN’S APPLICATION

The Notice of Termination

At the heart of North Elgin’s application is the NOT in which North Elgin took the position that the Lease was terminated as of March 11, 2018. The rest of its requested relief flows from its position that the Lease was at an end as of that date and that McDonald’s has been an overholding tenant ever since. It submits the Lease in section 19.10 required compliance with the Planning Act which has yet to occur.

In support of its argument, North Elgin erroneously takes the position that McDonald’s took no steps since the Contempt Ruling to seek the approval from the City for the Planning Act. As I have found, McDonald’s took steps after 2021, including meeting with North Elgin representatives and having without prejudice discussions.

As pointed out by McDonald’s, this is not the first time that North Elgin has tried to assert the Lease was at an end in 2018. Before Brown J.A., North Elgin attempted to address its conduct by saying the Lease was at an end in 2018 and therefore it could not be in contempt. The argument was summarily dismissed, as Brown J.A. found that he need not consider the argument as it was “a defence constructed after-the-fact in response to the contempt motion” and was inconsistent with North Elgin’s position in the MPlan report which supported the Consent Application and the First Renewal Term.

North Elgin renews this argument and now takes the position the Lease came to an end in March 2018, some five years before it served the NOT. It also takes the position that the Second Renewal Term is of no force and effect as the First Renewal Term had not yet received the necessary consent by the City pursuant to the Planning Act.

I had initially been of the view that this decision should await the conclusion of the CoA which was to determine the Consent Application in the late summer. That did not happen due to a lack of quorum and that meeting has yet to be rescheduled. It is not entirely clear why that meeting has not been rescheduled. Nonetheless, the communication between the City and the parties, particularly North Elgin, suggests that the applications before this court may be contributing to a level of confusion which may be adding to the delay.

As was the case before Brown J.A., the Consent Application “remains alive”. The future conduct of that Consent Application is a matter for the CoA and the City. What is before me is not an application for judicial review. Either party could have sought to review the delay in addressing the Consent Application but neither has done so. This court is not commenting on the propriety of any actions by the CoA or the City.

Given the circumstances, it is my view that the issue of the renewals can and should be decided by me now. It is hoped that this decision will alleviate any impasse or queries at the CoA or the City. In saying so, I repeat that the CoA and City can address the Consent Application in whatever fashion they deem appropriate.

I am of the view that the Lease has been renewed for both the First and Second Renewal Terms, subject to a determination of the Planning Act requirements.

In terms of the First Renewal Term, the OCA Decision recognized and declared that the Lease had been renewed. In doing so, the Court of Appeal was aware that an application was required under the Planning Act as the end of the 21st year was “fast approaching”. In recognizing the timing, the Court thought it “most sensible” that McDonald’s, rather than North Elgin as provided for in the Lease, “bring an application for consent, and North Elgin would provide all reasonable cooperation to obtain the consent”. The OCA Decision did not impose a higher obligation on McDonald’s to do more than apply for the consent.

Section 19.10 of the Lease refers to the Lease being subject to the Planning Act. The Lease provides that until “such time as any consent necessary under the Act is obtained”, the term of this Lease shall be twenty-one 21 years less one 1 day. It is this portion of the Lease that is relied upon by North Elgin. North Elgin states that without having received approval of the Consent Application, the Lease is at an end and has been since March of 2018. It asserts that this is the plain meaning of section 19.10. I disagree.

In my view, section 19.10 must be considered in light of the prevailing case law. In 1994, some three years before the execution of the Lease, the Court of Appeal considered the operation of section 50 of the Planning Act. In Bluestone v. Enroute Restaurants Inc. (1994), 18 O.R. (3d) 481 (Ont. C.A.), the Court addressed a circumstance where it was argued that the failure to obtain approval under s. 50 vitiated the lease making it “null and void”.

The Court rejected that argument. In doing so, the Court addressed s. 50(14) which is the curative provision. The Court focused on the language of s. 50(14) and emphasized the following:

50(14) Where . . . land is conveyed with a consent given under section 53 . . . , any contravention of this section or a predecessor thereof . . . that occurred prior to . . .the conveyance . . . does not and SHALL BE DEEMED NEVER TO HAVE HAD THE EFFECT of preventing the conveyance of or creation of any interest in the land. . . .

(Emphasis added) The italicized words [UPPER CASE text] in s. 50(14) operate to undo, retroactively, the only consequence which s. 50(21) ever attached to the contravening agreement or instrument. The result of the original contravention, by virtue of s. 50(21), was that the agreement or instrument did not create or convey any interest in land. The result of conveyance with consent, by virtue of s. 50(14), is the removal of that consequence, not only for the present and the future ("does not . . . [have] the effect of preventing the conveyance of or creation of any interest in the land") but also for the past ("shall be deemed never to have had the effect of preventing the conveyance of or creation of any interest in the land").What the Planning Act took away, the Planning Act can restore. In doing so, it has employed language that restores not only currently and prospectively, but historically as well. [All emphasis in OCA decision.]

The Court went on to point out that the contravention of the Planning Act affected the conveyance or creation of an interest in land, but the Planning Act consent whenever given has the effect of removing any impediment to the enforcement of the lease.

The Court of Appeal again considered s. 50 of the Planning Act in Kafco Homes Ltd. v. Norlington Industries Inc. (1995), 22 O.R. (3d) 57 (Ont. C.A.). In that case, the motion judge found that the subject mortgages were ineffective as they related to land which required Planning Act approval, which had not been obtained at the time of granting the mortgages. Planning Act approval was later obtained. In considering s. 50(14), the Court cited and quoted from Bluestone. The Court went on to state that s. 50(14) applies even where the contravention occurred prior to the conveyance which required Planning Act consent. The Court noted that the subsequent approval cured any defect of the initial conveyances, and the mortgages were therefore enforceable against the property. The Court noted that to deny the mortgage security would be “a most inequitable result, and one that was never contemplated by this legislation”.

To be clear, these are sophisticated parties who had access to experienced real estate lawyers. They would be aware of these cases. Accordingly, these cases, along with the general rules of contractual interpretation, inform the interpretation of s. 19.10 of the Lease. The intention of contractual interpretation is to read the contract as a whole, giving the words their ordinary meaning, consistent with the surrounding circumstances when the parties entered the Lease: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633. The goal of contractual interpretation is to “promote or advance the true intent of the parties at the time of executing the contract” and “a literal meaning should not be applied where to do so would bring about an unrealistic result or a result that would not be contemplated” in the commercial atmosphere of the Lease: Consolidated-Bathurst v. Mutual Boiler, [1980] 1 S.C.R. 888, at p. 901.

Section 19.10 of the Lease places the primary onus on North Elgin to make an application where Planning Act approval is required. The Lease clearly contemplates that the parties would work toward obtaining any approval necessary. Indeed, North Elgin covenanted and agreed “to diligently proceed to obtain any consent necessary under the Act” because in executing the Lease it sought a long-term relationship with McDonald’s—a 20-year term with two further 10-year renewals. At the time of executing the Lease, it is easy to conclude North Elgin was supportive of McDonald’s remaining in the premises for 40 years; undoubtedly it was seen as a desirable anchor tenant for the plaza. The prospect of developing the Property has caused North Elgin to shift its preferred intentions away from McDonald’s, but this does not alter the intentions which govern the interpretation of the Lease. Aside from seeking judicial review, the parties have no control over the speed with which the City or CoA addresses its application. It would make little commercial sense that the failure of the City or CoA to act, in circumstances where the Lease provides that North Elgin controlled the process, should result in McDonald’s losing its right to renew. Such a result would be “most inequitable” and would defeat the intentions of the parties who sought a long-term relationship when they executed the Lease. It is clear from Bluestone and Kafco that this was not the type of result contemplated by the legislation. I am of the view that this is equally not the result contemplated by s. 19.10 or the OCA Decision.

The case law makes it clear that the Planning Act approval may be granted retroactively. Indeed, that is the current recommendation from the City which is for the CoA to approve the Consent Application. If the CoA ultimately decides not to grant its approval, the conveyance of the further terms will be vitiated. However, if consent is granted, as stated in Bluestone, the Planning Act “shall be deemed never to have had the effect” of preventing the renewal.

In the circumstances, I do not accept that McDonald’s has breached the Lease. The fact that the CoA has not acted is not a breach of the Lease. I therefore do not accept that North Elgin had the right to terminate the Lease in November 2023 as it purported to do.

Waiver

In the alternative, if I am wrong in the above interpretation, North Elgin has waived any breach of the lease through its conduct in waiting 5 years after it asserts that the Lease has expired. Waiver occurs when one party to a contract takes steps to forgoing reliance on some known right or defect in performance: Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance, [1994] 2 S.C.R. 490; North Elgin Centre Inc. v. McDonald's Restaurants of Canada Limited, 2018 ONCA 71, at para. 8. The test requires that the waiving party have full knowledge of its contractual rights and an unequivocal and conscious intention to abandon the right. Waiver is often discussed along with estoppel, but they amount to the same thing in a case such as this: Professor John Swan in Canadian Contract Law, 1st ed. (Markham: LexisNexis Butterworths, 2006) at p. 95; Hreit Holdings 45 Corporation v. R.A.S. Food Services (Kenora) Inc., at para. 58.

In this case, the parties have operated as if the Lease was a valid and subsisting Lease, subject to the CoA’s determination of the Planning Act consent issue. McDonald’s has continued to pay its rent. North Elgin’s application was only brought once McDonald’s gave notice of the Second Renewal Term. While I understand that a similar argument was made before Brown J.A., that case was decided three years after North Elgin says the Lease was terminated and then it was another two years before this application was brought. As already discussed, over that time McDonald’s took steps to try to not only move the CoA process along but to persuade North Elgin to co-operate. In my view, the continued conduct of the parties, including their communication with each other and the City, clearly establishes that North Elgin did not view the failure to obtain the consent while it was before the City as a breach of the Lease. Given the passage of time and its conduct in addressing the application before the City and CoA, even if it is correct that the failure of the CoA to decide the Consent Application allows it to terminate the Lease, North Elgin has waived its right to rely on s. 19.10. Rather, the parties must await the determination of the CoA.

For the above reasons, I dismiss North Elgin’s application that the Lease is terminated. All other issues raised by North Elgin in its application are also dismissed as they flow from the alleged termination.

McDonald’s Application

Second Renewal

In its application, McDonald’s requests a declaration that it has renewed for the Second Renewal Term commencing March 11, 2027, and expiring March 10, 2037. It also seeks orders compelling North Elgin to consent to the approval request under the Planning Act, including compelling North Elgin to write the City.

This Court has the power to issue a declaration where there is a genuine issue in dispute and both parties have an interest in the outcome: S.A. v. Metro Vancouver Housing Corp., 2019 SCC 4, [2019] 1 S.C.R. 99, at paras. 60-61. In my view, given the issues in dispute in this case, a declaration on whether McDonald’s has provided proper notice of its renewal would have practical utility and be of interest to both parties.

Section 15.01 provides that McDonald’s must give notice of its intention to renew. It does not provide any timeframe by which that notice must be given. However, there are various steps that need to take place thereafter. As is evident from this case, Planning Act approval needs to be obtained and that takes time. There is the further issue of ensuring an agreed upon or arbitrated rent which, as evident from this case, can also take time. As such, not only is there no impediment on the timing of the notice in the Lease, but it also makes good sense that notice be given early to accomplish these other steps.

The principal argument by North Elgin is that McDonald’s cannot renew for the Second Renewal Term because the Lease was terminated as of March 11, 2017. As I have found that the Lease has not been terminated, this argument is rejected.

I grant McDonald’s requested declaration that it has given proper notice of the Second Renewal Term. To be clear, it is still within the jurisdiction of the City and the CoA to determine whether consent under the Planning Act ought to be granted for that period after 21 years, including whether such approval for the First and Second Renewal Terms should be determined at one time. If Planning Act approval is denied, the second renewal, like the first, would not convey the interest past 21 years and the Lease would come to an end. This requires a decision by the CoA.

Mandatory and Injunctive Orders

McDonald’s next requests various orders requiring North Elgin to provide its consent to the Consent Application and to write the City in that regard. McDonald’s states these requests are consistent with the provision of s. 19.10 that requires North Elgin to either obtain the consent or to co-operate with McDonald’s request for the consent.

The Amended Notice of Application sets out the relief sought as follows:

1. The Applicant McDonald's Restaurants of Canada Limited (the "Tenant") make application for:

(b) An Order that North Elgin Centre Inc. (the "Landlord' or "Respondent") is required, pursuant to the terms of the Lease, to obtain Planning Act consent for the Lease to run beyond a term of twenty-one years for both the First Renewal Term and the Second Renewal Term, as defined below;

(c) An Order that the Respondent shall immediately provide all cooperation necessary to the Tenant to obtain Planning Act consent or approval to have the Revised Consent Application [n.b. defined as “revised” as it includes approval of the Second Renewal Term], as defined below, approved under the Planning Act for the Lease to run beyond a term of twenty-one years, inclusive of both the First Renewal Term and the Second Renewal Term;

(d) An Order that, as part of providing cooperation to the Tenant to obtain Planning Act consent or approval have the Revised Consent Application approved, the Landlord specifically shall:

(i) Write to the City of Richmond Hill (the "City") to confirm:

(1) That the Landlord is supportive of the Lease running beyond a term of twenty-one years inclusive of the First Renewal Term and the Second Renewal Term;

(2) That the Landlord is satisfied with, and supports the request made in the Revised Consent Application;

(3) That the Landlord confirms the drawing submitted with the Revised Consent Application is accurate;

(ii) Respond promptly to any and all requests for information made by the City to confirm that the Landlord is supportive of Planning Act consent or approval being granted support the Revised Consent Application;

(iii) Take all reasonable steps to ensure that the Revised Consent Application is approved by the City;

(iv) Refrain from communicating with the City and/or the Committee of Adjustments (“CoA”) (including via email, letter or telephone) for the purpose of, or with the effect of, delaying, preventing or objecting to Planning Act consent or approval being granted by the CoA; and

(v) In the event that Planning Act consent or approval is not granted the Revised Consent Application is not approved, take all necessary steps to re-apply to the City for consent under the Planning Act for the Lease to run beyond a term of twenty-one years, inclusive of both the First Renewal Term and the Second Renewal Term. In the event that Planning Act consent or approval is granted, to accept the decision of the CoA and refrain from taking any steps to appeal or vary that decision.

In making the above requests, McDonald’s alleges that North Elgin has “relentlessly contacted the City, alleging, among other thing, that [it] does not support the [Consent Application]” being considered by the City, notwithstanding its obligation to support the consent obligation and that North Elgin is in default of its obligation under the Lease. The relief being sought is McDonald’s attempt to compel North Elgin to abide by the requirements of s. 19.10 of the Lease.

a) Law

McDonald’s seeks the equitable remedies of specific performance and injunctive relief. The intent is not just compliance with s. 19.10 of the Lease by North Elgin such that it refrains from denying the previously granted consent, but to require the court to compel North Elgin to make positive statements regarding the Consent Application. While different, both remedies have similar characteristics that need to be carefully considered in this case.

Specific performance is most often discussed when the claim relates relates to the conveyance of a property: Semelhago v. Paramadevan, [1996] 2 S.C.R. 415. In those cases, the court examines if the property in issue is unique and whether damages would be inadequate. In this case, McDonald’s seeks compliance from North Elgin as to its obligations and says that the property is unique, and damages would be inadequate.

In Erie Sand and Gravel Ltd. v. Seres’ Farms Ltd., 2009 ONCA 709, 97 O.R. (3d) 241, at para. 110, Gillese J.A. cited John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2003), 63 O.R. (3d) 304 (C.A.), explaining what is meant by unique:

[116] … Weiler J.A., writing for the court, referred to para. 23 in 1252668 Ontario Inc. v. Wyndham Street Investments Inc., [1999] O.J. No. 3188, 27 R.P.R. (3d) 58 (S.C.J.) and stated, at para. 39:

I agree that in order to establish that a property is unique the person seeking the remedy of specific performance must show that the property in question has a quality that cannot be readily duplicated elsewhere. This quality should relate to the proposed use of the property and be a quality that makes it particularly suitable for the purpose for which it was intended.

In this case, from both an objective and subjective perspective, this property is sufficiently unique to meet the test in Semehelgo: Di Millo v. 2099232 Ontario Inc., 2018 ONCA 1051, 430 D.L.R. (4th) 296. McDonald’s has been in the Premises since 1997. It has built up a following of customers at that location. It has done extensive renovations. It had the expectation that it could stay in the Premises for 40 years, subject to Planning Act approval and, indeed, at the time of executing the Lease the landlord had the same expectation.

In such circumstances, the courts have given relief by way of specific performance and have ordered that the party in breach fulfill its contractual obligation. For example, in Dynamic Transport Ltd. v. O.K. Detailing Ltd., [1978] 2 S.C.R. 1072, Planning Act approval was needed to affect the transfer of land. The court held as follows:

This issue was discussed by Megarry J. in Wroth v. Tyler at p. 50, as follows:

The matter is perhaps summed up as well as is possible by Lord Redesdale L.C. in Costican v. Hastier (1804), 2 Sch. &Lef. 160, 166:

“When a person undertakes to do a thing which he can himself do, or has the means of making others do, the court compels him to do it, or procure it to be done, unless the circumstances of the case make it highly unreasonable to do so.”

See also Howell v. George 1 Madd. 1, 11, when Plumer V.C. cited this passage with approval. A vendor must do his best to obtain any necessary consent to the sale; if he has sold with vacant possession he must, if necessary, take proceedings to obtain possession from any person in possession who has no right to be there or whose right is determinable by the vendor, at all events if the vendor’s right to possession is reasonably clear; but I do not think that the vendor will usually be required to embark upon difficult or uncertain litigation in order to secure any requisite consent or obtain vacant possession.

However, the court went on to discuss what would happen if the ordered party did not comply. In that case, the court set out a damage amount to be paid. In doing so, the court cited Steiner v. E.H.D. Investments Ltd. (1977), 1977 ALTASCAD 208, 78 D.L.R. (3d) 449 (Al. S.C. (A.D.)), where McGillivray C.J.A., at. p. 455 observed that “The Court obviously cannot supervise such application, and in the result, in the event the defendant does not complete such application in accordance with this judgment, the plaintiffs will have damages for the loss of their bargain in an amount to be assessed.” In those circumstances, the court had a ready damage calculation which meant a breach need not be supervised by the court but rather resulted in a financial loss to the breaching party. That is not the case here; there is no damage amount put forth by either side that would adequately police the breach of a mandatory order.

Nonetheless, Professor Waddams has observed that courts are more prone to compel parties to make bona fides planning applications which he says “seems justified in highly regulated society, where many kinds of contractual performance require the approval of some regulatory agency”: Waddams S. M., The Law of Contracts, 8th ed., Toronto: Thomson Reuters, 2022 at para. 685; see also John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd., at para. 8, where the court upheld an order that the defendant was to seek severance approval, appeal to the OMB any unacceptable conditions imposed by the Committee and, subject to the OMB’s decision, comply with all severance conditions.

Aside from the court’s power to order specific performance, the court has the power to issue injunctive relief. In this case, McDonald’s seeks a mandatory order requiring North Elgin to affirm its consent and to make certain written declarations to the City. Like specific performance, a mandatory order raises the issue of the continued supervision of the obligations in the order by the Court: Keiser v. Garber, 2020 ONCA 699, at para. 74. It is for this reason that mandatory orders are used sparingly: Keiser, at para. 75.

To grant a mandatory order or injunction, the Court must be satisfied the claimant has made out a cause of action, that the wrong not only occurred but will recur in the future, and that there is not another remedy sufficiently able to protect against the recurring threat. If an injunction is warranted, the court must be able to craft an order that is adequate to the task: see Labourer’s International Union of North America v. Castellano, 2020 ONCA 71, 444 D.L.R. (4th) 183, at para. 25.

In Labourer’s International Union of North America v. Castellano, the Court of Appeal set out the test for an injunction where the injunction is not interlocutory but the final relief being sought, as is the case with McDonald’s Amended Notice of Application. The Court adopted the test in Justice Sharpe’s text and did so as follows:

[25] As referenced in Robert J. Sharpe, Injunctions and Specific Performance, loose-leaf, (Toronto: Canada Law Book, 2019), at para. 1.45, in NunatuKavut Community Council Inc. v. Nalcor Energy, 2014 NLCA 46, 358 Nfld. & P.I.E.R. 123, at para. 72, the Court of Appeal of Newfoundland and Labrador summarized the approach to be applied in deciding whether to grant a permanent injunction:

(i) Has the claimant proven that all the elements of a cause of action have been established or threatened? (If not, the claimant's suit should be dismissed);

(ii) Has the claimant established to the satisfaction of the court that the wrong(s) that have been proven are sufficiently likely to occur or recur in the future that it is appropriate for the court to exercise the equitable jurisdiction of the court to grant an injunction? (If not, the injunction claim should be dismissed);

(iii) Is there an adequate alternate remedy, other than an injunction, that will provide reasonably sufficient protection against the threat of the continued occurrence of the wrong? (If yes, the claimant should be left to reliance on that alternate remedy);

(iv) If not, are there any applicable equitable discretionary considerations (such as clean hands, laches, acquiescence or hardship) affecting the claimant's prima facie entitlement to an injunction that would justify nevertheless denying that remedy? (If yes, those considerations, if more than one, should be weighed against one another to inform the court's discretion as to whether to deny the injunctive remedy.);

(v) If not (or the identified discretionary considerations are not sufficient to justify denial of the remedy), are there any terms that should be imposed on the claimant as a condition of being granted the injunction?

(vi) In any event, where an injunction has been determined to be justified, what should the scope of the terms of the injunction be so as to ensure that only actions or persons are enjoined that are necessary to provide an adequate remedy for the wrong that has been proven or threatened or to effect compliance with its intent? [Emphasis added.]

[26] Given their potentially broad and restrictive scope, permanent injunctions must be particularly tailored to the specific circumstances of the case in which they are ordered. It is therefore incumbent on the court asked to consider such relief to conduct a careful analysis and to limit the breadth of any permanent injunction to only what is reasonably necessary to remedy the specific wrong committed and prevent further harm to the claimant. See Cambie Surgeries Corp., at para. 39; NunatuKavut Community Council Inc., at para. 71.

b) Analysis

In reviewing the recent activity with the City, as already noted, North Elgin has revised its intentions since signing the Lease. North Elgin’s communication with the City and CoA reflects that North Elgin no longer supports McDonald’s or its contractual right to an extension. As set out in Mr. Manet’s July 9 email, North Elgin no longer “support[ed] a Consent for a long-term lease on this property, not even with conditions (such as recommended back in our December 6, 2019, letter/report to the Richmond Hill Committee of Adjustment)”. This was repeated on July 23, 2024, when Mr. Manet again wrote the City and advised in bold lettering that North Elgin “does not support a Consent approval for a long term lease that would permit McDonalds to continue as a use on the property”. In my view, the communication illustrates that North Elgin is not “diligently” proceeding to obtain the City’s consent for the renewal as required under s. 19.10. In his affidavit, Mr. Manet states that “a consent approval under the Planning Act cannot be granted at this time, since it would sterilize the property and not permit orderly development of the NEC lands even on a phased basis.”

However, as illustrated by the Contempt Ruling, North Elgin has an interest beyond the Lease. It owns the remainder of the Property. In filing the MPlan report, Brown J.A. found that the MPlan supported the consent application but it set out three conditions: para. 64. In considering the conditions, Justice Brown stated that North Elgin “had a legitimate interest in ensuring that the Committee of Adjustment was aware of provisions of the Lease, such as the No Build Zone provisions, that could impact such future development.” This largely reflected North Elgin’s collateral interest as the owner of the remainder of the Property, not subject to the Lease.

In my reading of Justice Brown’s reasons, he found that the comments of North Elgin at that time did not undermine the Consent Application. As His Honour stated, the comments by North Elgin “were not designed to defeat the Consent Application, but to support the granting of consent approval that took into account [North Elgin’s] legitimate concerns.” This is no longer the case. North Elgin no longer supports the approval—even with conditions. North Elgin’s communications are wholly different than those considered in the Contempt Ruling. They are directly contrary to North Elgin’s contractual obligation.

In this case, I am satisfied that McDonald’s has made out a cause of action for breach of the Lease obligation in s. 19.10. In particular, the comments in Mr. Manet’s correspondence attempting to resile from the consent is contrary to the Lease obligations to either “diligently proceed to obtain any consent necessary” or “to cooperate with the Tenant in bringing such application”. They are distinct and distinguishable from Justice Brown’s finding that the MPlan conveyed the consent of North Elgin subject to conditions.

There are other problem communications. Mr. Manet wrote the City on July 25, 2024, again opposing consent on behalf of North Elgin, wherein he states that “no lease currently exists with McDonalds”. This is contrary to the OCA Decision and the direction I gave in my June 14 endorsement wherein I indicated the issue of the validity of renewal was before me and that it had not been decided. To be clear, there is now a renewal of both terms. I repeat that the CoA still must consider the Consent Application and whether to grant the consent under the Planning Act.

As to communications between North Elgin and the CoA or the City, it should be noted that when I met with counsel in the late summer/early fall, I asked counsel for North Elgin what additional information he thought needed to be conveyed to the CoA which has not already been conveyed. His response made it clear that North Elgin has already conveyed its position on the issues before the CoA. Indeed, I have not been advised of any further communication between North Elgin and the City or CoA since September.

In terms of remedy, I am most concerned about drafting an order that begets more litigation. This case is already illustrative of the difficulty of making mandatory orders, be they orders for specific performance or injunctive relief. The concern is that the court will need to supervise its order through a series of rulings as to whether North Elgin is abiding by its contractual responsibilities to provide its consent. The parties have already spent considerable time before the Court of Appeal, resulting in the Contempt Ruling. It turned out to be somewhat futile. Lord Hoffman, in Co-operative Insurance Society Ltd v. Argyll Stores, [1997] U.K.H.L. 17, [1998] A.C. 1, remarked on this very issue when he observed that:

… the only means available to the court to enforce its order is the quasi-criminal procedure of punishment for contempt. This is a powerful weapon; so powerful, in fact, as often to be unsuitable as an instrument for adjudicating upon the disputes which may arise over whether a business is being run in accordance with the terms of the court's order.

It will be recalled that in Dynamic Transport, the Supreme Court sidestepped this issue and provided for a financial remedy in the event that specific performance is not made. That is not open to the court in this case. Rather, it is necessary to craft a remedy that is clear, and which may be undertaken without supervision by this court.

For this reason, I decline to order North Elgin to take any positive steps such as writing anything further to the CoA or the City. The Consent Application has been filed. It remains in place. After this decision, both the City and the CoA can be in no doubt that North Elgin has a contractual obligation to consent. North Elgin may raise conditions as found by Brown J.A. but it may not revoke its consent. North Elgin has advised that it has no other issues to convey to the City or CoA and has not done so for over six months.

Accordingly, I order North Elgin to refrain from communicating anything further relating to the Consent Application to the City or CoA other than its consent for Planning Act approval and such conditions that do not vitiate or otherwise render nugatory that consent. This does not preclude the CoA or the City from requesting information or North Elgin responding, provided North Elgin does not take a position that either vitiates or renders nugatory its consent.

The parties must now give the CoA the opportunity to come to whatever conclusion it may.

Disposition

North Elgin’s application seeking a declaration that the Lease is terminated is dismissed. The remainder of the relief sought by North Elgin is also dismissed.

McDonald’s request for a declaration that the Lease has been renewed for the Second Renewal Term commencing March 11, 2027 and expiring March 10, 2037 is granted.

North Elgin is to refrain from communicating anything further to the City or CoA other than its consent for Planning Act approval, and such conditions that do not vitiate or otherwise render nugatory that consent.

The remainder of McDonald’s application is dismissed.

As to costs, the parties are urged to agree on costs. If not, any party seeking costs shall serve and file costs submissions of no more than 5 pages within 10 days of the receipt of this decision. Any responding submissions of no more than 5 pages shall be served and filed 5 days after receipt of the requesting submissions. Reply submissions of no more than 3 pages may be filed within 3 days of receipt of the responding submissions.

Callaghan J.