Ontario Superior Court of Justice

Court File No.: CV-25-00001799 (London)
Date: 2025-06-27

Parties

Between:
2719149 Ontario Inc. o/a Reef Bakery (Applicant)
– and –
1000960018 Ontario Inc. (Respondent)

Applicant Counsel: John Russo
Respondent Counsel: Gurpreet Singh

Heard: June 18, 2025

Endorsement

Jasminka Kalajdzic

Introduction

[1] This urgent application for injunctive relief arises from the Respondent landlord’s lockout of the Applicant tenant. The parties dispute whether the Applicant properly renewed the lease and the amount of additional rent due under the lease.

[2] The Applicant numbered company, carrying on business as Reef Bakery, seeks interlocutory orders permitting the Applicant to retake and have possession of the leased premises and restraining the Respondent from interfering with the Applicant’s possession of the premises pending a final hearing and determination of the Application. The motion was argued on June 18, 2025. The same day, I made an order granting injunctive relief with reasons to follow.

[3] These are my reasons.

Background

[4] The Applicant is an Ontario company operating a bakery at 775 Southdale Road East, Unit 3 in London, Ontario (the “Leased Premises”).

[5] The Respondent is an Ontario company and the owner of the Leased Premises.

[6] On June 1, 2019, Al Faez Real Estate Corp. entered into a lease agreement with Reef Bakery (the “Lease”) for the Leased Premises, which comprise approximately 6500 square feet of property.

[7] The salient provisions of the Lease provide as follows:

a. The term of the Lease was from March 1, 2020 to February 28, 2025 (the “Term”);

b. The rent was $5.50 per square foot or $2,979.17 per month (“Base Rent”);

c. Reef Bakery was also obligated to pay Additional Rent in an amount estimated by the landlord to cover expenses such as taxes and maintenance costs;

d. Reef Bakery had the option to renew the Lease for a further five-year period, provided that Reef Bakery gave the Landlord six months’ notice. The new term would be on the same terms and conditions except for the Base Rent. If a mutually acceptable Base Rent was not agreed upon prior to the expiration of the Term, the Base Rent would be determined by arbitration;

e. The Landlord covenanted that Reef Bakery would peacefully and quietly occupy and possess the Leased Premises during any renewals or extensions, provided that Reef Bakery paid the Rent set forth in the Lease and performed the other covenants required under the Lease.

Lease Renewal

[8] On August 1, 2024, Reef Bakery exercised its option to renew the Lease for a further five years commencing on March 1, 2025 (the “Renewal Term”).

[9] In December 2024, the Respondent purchased the Leased Premises from Al Faez Real Estate Corp. and became the landlord under the Lease.

[10] On January 10, 2025, Reef Bakery contacted the Respondent’s property management company to discuss the Base Rent for the Renewal Term. The parties negotiated over the next two months but did not come to an agreement.

[11] Two months later, on March 14, 2025, the Respondent delivered a Notice to Arbitrate pursuant to s. 3.3 of the Lease and sought the appointment of David Alderson to arbitrate the dispute regarding the market rent as of the first day of the Renewal Term.

[12] On March 21, 2025, the parties agreed on Base Rent for the Renewal Term of $10.75 per square foot with $0.50 increases per year.

[13] On the same day, the property manager, on behalf of the Respondent, provided a “Lease Renewal Proposal” which purported to amend not only the Base Rent but other provisions of the Lease. Reef Bakery responded the same day, advising that the only term requiring an amendment upon the Renewal was the Base Rent, and that all of the other terms of the Lease remained in effect.

[14] The Respondent disagreed, taking the position that Reef Bakery was required to execute a lease amendment or a new lease that required, among other amendments, a further security deposit.

Additional Rent

[15] On December 30, 2024, the property manager advised Reef Bakery that the estimated Additional Rent for 2025 would be $9.90 per square foot, an increase of $1.65 per square foot from 2024.

[16] The next day, Reef Bakery requested particulars of the estimated Additional Rent for 2025, and supporting documentation for the 2024 Additional Rent paid.

[17] On January 6, 2025, the Respondent advised that it was unable to provide support for the 2024 Additional Rent and it provided a budgeted statement for 2025.

[18] Between January 6 and April 2, 2025, the parties communicated by email on a number of occasions regarding the Additional Rent. They did not agree on an amount.

[19] On April 2, 2025, the property manager emailed Reef Bakery a Notice of Default in respect of a $336.63 shortfall for the April rent, representing the disputed increase in Additional Rent.

[20] On May 16, 2025, Reef Bakery received another email from the property manager attaching a Notice of Default and a demand for payment due May 15, 2025 in respect of non-payment of disputed Additional Rent totaling $1,914.50.

[21] In response to the May Notice of Default and demand, Reef Bakery advised that it would continue to make monthly payments based on the agreed upon Base Rent and any payments in excess would be made under protest.

[22] On May 27, 2025, the Respondent sent Reef Bakery a Renewal Lease Agreement and demanded that Reef Bakery sign and return it by May 30, failing which the Respondent would consider the Applicant to be in default under section 3.3 of the Lease.

[23] On June 5, 2025, the Respondent sent a final Notice of Default and advised that unless payment of arrears of $2,879.14 and a fully executed copy of the Renewal Lease Agreement were received by end of day on June 12, 2025, “the Lease shall be deemed automatically terminated as of 11:59 pm on June 12, 2025.”

[24] On Sunday, June 15, 2025, the Respondent caused a bailiff to change the locks on the Leased Premises, locking out Reef Bakery.

[25] On the same day, Reef Bakery sent a payment of $2,879.14 towards the alleged arrears. The Respondent accepted this sum but nevertheless continued to lock out the Applicant. Reef Bakery also sent $15,000 for July’s rent, which the property manager would not accept.

[26] As a result of the lockout, Reef Bakery was unable to deliver on its obligations to 80 retail customers to whom it supplies baked goods daily. The Applicant was also unable to operate its retail store and its employees could not work.

Issue

[27] The only issue to be decided on the motion is whether Reef Bakery is entitled to an injunction pursuant to s. 101 of the Courts of Justice Act, RSO 1990, c C.43 (“CJA”) preventing interference with its possession and quiet enjoyment of the Leased Premises.

Law and Analysis

[28] The authority to grant an interlocutory injunction is provided under s. 101 of the CJA. Section 101 provides that the court may grant an injunction where it appears just or convenient to do so.

[29] The test for an interlocutory injunction was articulated by the Supreme Court of Canada in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, as follows:

i. Is there a serious issue to be tried?
ii. Has the moving party established irreparable harm if an injunction is not granted?
iii. Does the balance of convenience favour the moving party, in the sense that the harm to the moving party if the injunction is not granted must exceed the harm to the respondent if the injunction is granted?

[30] This list of three factors is not to be applied in an inflexible, mechanical manner. The ultimate focus of the court is on the justice and equity of the situation in issue: Potash Corp. of Saskatchewan Inc. v. Mosaic Potash Esterhazy Limited Partnership, 2011 SKCA 120, 341 D.L.R. (4th) 407, at para. 26; Catalyst Capital Group Inc. v. Moyse, 2014 ONSC 6442, 122 O.R. (3d) 741, at para. 2. The factors should be used to assess the relative risks of harm to the parties from granting or withholding interlocutory relief.

Serious Issue to be Tried

[31] Mr. Russo submits that there are at least three serious issues to be tried in the Application:

a. The Respondent did not comply with s. 19(2) of the Commercial Tenancies Act, RSO 1990, c L.7 (“CTA”), which requires a commercial landlord to provide specific information to a tenant who is alleged to be in breach of non-monetary covenants in a lease before forfeiture or re-entry can be lawfully made. The Applicant submits that the Respondent’s Notice of Default did not include a demand to make compensation in money for breach of the renewal provisions within a reasonable period of time and therefore fails to meet the strict requirements of the CTA.

b. After the Notices of Default were delivered, the Applicant paid the amount of Additional Rent arrears claimed by the Respondent which the Respondent accepted. Mr. Russo submits that the Respondent’s conduct amounts to waiver under the law and is inconsistent with an intention to terminate the Lease: Malva Enterprises Inc. v. Rosgate Holdings Ltd., [1993] O.J. No. 1724 (C.A.), para 27.

c. Finally, the Applicant submits that it has a strong entitlement to relief from forfeiture. Section 20(1) of the CTA provides that where a lessor is proceeding to enforce a right of re-entry, the Court may grant such relief from forfeiture as it sees fit. Given that the damage caused by the lock-out far outweighs the Applicant’s breach (which has, in any event, been cured with the payment of the Additional Rent arrears), the circumstances favour relief from forfeiture.

[32] I am satisfied that the Applicant has a strong prima facie case on any of these three grounds.

[33] The provisions of the Lease regarding renewal, the calculation of Additional Rent and the sufficiency of the Notices of Default all require determination on their merits. A plain reading of the Lease suggests that the Respondent was not entitled to impose additional terms or demand that the Applicant sign a new agreement. The Respondent contends that the Applicant cannot renew the Lease if it is in default of the Additional Rent provision. It is at least arguable, however, that the operative time for assessing if the Applicant was in default was on August 1, 2024, when it gave notice of its intention to renew the Lease. I also disagree with the Respondent that the Applicant’s repeated requests for a detailed breakdown of the Additional Rent disentitles it from equitable relief.

[34] Mr. Singh urged me to conclude that there is not even a prima facie case on the issue of the lease renewal. He submitted that renewal was pending because the parties had not finalized the amount of Additional Rent to be paid in 2025. This argument, however, ignores the fact that his client acted as if the Lease had been renewed. In March, for example, the Respondent served a Notice to Arbitrate pursuant to the Lease. The Respondent continued to accept Base Rent at the 2025 rate until July. I am satisfied that the Applicant has established strong prima facie entitlement to possession of the Leased Premises for the Renewal Term.

[35] The Application is neither vexatious nor frivolous. Accordingly, the first part of the RJR test has been met: RJR-MacDonald at para. 55.

Irreparable Harm if Injunction Not Granted

[36] The Supreme Court of Canada indicated in RJR that the issue to be decided at this stage of the analysis is whether a refusal to grant relief “could so adversely affect the applicants’ own interests that the harm could not be remedied if the eventual decision on the merits does not accord with the result of the interlocutory application”: RJR, at p. 341.

[37] Irreparable harm refers to the nature of the harm suffered rather than its magnitude. “It is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other”: RJR, at p. 341.

[38] Irreparable harm is established where “one party will suffer permanent market loss or irrevocable damage to its business reputation”: RJR, at p. 341.

[39] A lease is both a contract and a demise of land, such that the remedy of damages may not be sufficient: Evergreen Building Ltd. v. IBI Leaseholds Ltd., 2005 BCCA 583, paras 28-29 (“the law has not yet adopted a full contractualization approach to commercial leases such that the only remedies available to the tenant who is not in breach are the remedies available pursuant to the law of contract.”)

[40] The Applicant’s uncontested evidence is that every day being locked out results in lost revenue. Further, a prolonged lock-out risks the loss of supplier contracts and irrevocable damage to its business reputation.

[41] I am satisfied that Reef Bakery will experience irreparable harm if the injunction is not granted. It is probable that prolonged closure of its business due to the lock-out will lead to the loss of customers and jeopardize its ability to continue its operations. The second part of the tripartite test, therefore, has been met.

Balance of Convenience

[42] The third factor considers which of the parties will suffer the greater harm from the granting or refusal of an interlocutory injunction pending a decision on the merits.

[43] As stated by Sharpe J.A. in Sharpe, Injunctions and Specific Performance, 2nd ed. (Toronto: Thomson Reuters Canada, 1992), at § 4.10, “[w]here the plaintiff complains of an interference with property rights, injunctive relief is strongly favoured.” In addition, where the potential or threat of personal injury, property damage and financial loss is real and escalating, the balance of convenience favours the moving party: Ogden Entertainment Services v. Retail, Wholesale/Canada Canadian Services Sector Division of the United Steelworkers of America, Local 440, 159 D.L.R. (4th) 340 (C.J. (Gen. Div)), para 21.

[44] A lessee’s investment of money in a property in the form of equipment and capital improvements with the expectation that it will enjoy a lease and ongoing business is a critical consideration in the balance of convenience part of the test: Kosub v. Cultus Lake Park Board, 2007 BCCA 118, para 6.

[45] Although I do not have evidence of any specific capital improvements, the Applicant has conducted its bakery operations at the Leased Premises for over five years. It has equipment and other chattels on the premises. Moreover, continued disruption of Reef Bakery’s business could conceivably result in it shutting down its operations entirely. Its baked goods must be made every day. It does not have a stockpile of products to sell while the litigation unfolds.

[46] Conversely, the Respondent has received and accepted the Additional Rent arrears pending the determination of the Application. The Applicant continues to meet its financial obligations under the Lease. The Respondent has not suffered harm and will not suffer harm if the injunction is granted.

[47] I conclude, therefore, that the balance of convenience favours the Applicant. Based on all the circumstances of this case, I am satisfied that the status quo should be preserved and an injunction should issue.

Costs and Order

[48] The Court orders that:

a. The Applicant shall be permitted to regain possession of the Leased Premises effective 5:00 pm on June 18, 2025;

b. The Applicant shall comply with the terms of the Lease, including the payment of Additional Rent at the rate of $9.90 per square foot on a without prejudice basis, until the issues in the Application have been resolved;

c. The Respondent shall not interfere with the Applicant’s right of quiet enjoyment and possession of the Leased Premises until the issues in the Application have been determined either by agreement or further order of this Court.

[49] On agreement of the parties, costs of the motion are reserved to the Judge hearing the Application on its merits.

Jasminka Kalajdzic

Released: June 27, 2025