Court File and Parties

Court File No.: CV-25-00743095
Date: 2025-06-27
Court: Superior Court of Justice - Ontario

Applicant: Gan Yeladim Day Care Centre
Respondent: Beth Emeth Bais Yehuda Synagogue

Before: Robert N. Schabas
Applicant Counsel: Daniel Fridmar and Vatsa Modi
Respondent Counsel: Stephen Turk
Heard: 2025-06-27

Endorsement

Introduction

[1] This matter was heard by me on June 25, 2025. The Respondent, Beth Emeth Bais Yehuda Synagogue (“BEBY”), wishes to evict its tenant, Gan Yeladim Day Care Centre (“GYDC”) on Monday June 30, 2025. BEBY takes the position that the lease between the parties expired on August 31, 2024 and then became a month-to-month tenancy. On April 28, 2025, BEBY delivered a Final Termination Notice to GYDC with a termination date of June 30, 2025.

[2] GYDC commenced this application in May seeking, among other things, an injunction preventing its removal, a declaration and order pursuant to s. 20 of the Commercial Tenancies Act, RSO 1990, c L.7 (“CTA”) providing relief from forfeiture, and an order that GYDC can remain for a period of “at least two years” in order to seek an alternative space for its day care operations.

[3] This matter is urgent, and my reasons are, accordingly, somewhat brief.

Background

[4] GYDC has operated at BEBY’s location for over 45 years. The first lease was entered into in 1980. A subsequent lease was agreed upon in 1985 which has been extended several times – in 1987, 2009, 2013, 2016 and 2020. The 1987 extension was only for three years, and it appears there was no lease extension in place for the years between 1990 and 2009; however, GYDC occupied the premises in those years as a tenant in accordance with the 1985 lease (the “Lease”).

[5] The final, or “Fifth Extension” of the Lease, dated August 31, 2020, extended the Lease to August 31, 2024. It provided that the Lease would “automatically renew annually on the 1st day of September in each year up to and including the renewal on September 1, 2023”, unless GYDC notified BEBY that it did not wish to renew. The rent for each year was set out in the lease.

[6] Paragraph 9 of the Fifth Extension required GYDC to advise BEBY in writing at least 3 months prior to August 31, 2024 of its intention to enter into a new lease, “failing which, it shall be automatically deemed that the Tenant does not intend to enter into a leasing arrangement with the Landlord and should the Tenant remain in occupancy of the premises after the maturity date of the Lease the Tenant shall be in a month to month tenancy.”

[7] Paragraph 10 provided that “all other terms and conditions of the Lease are to remain the same.”

[8] There is no dispute that GYDC provided notice of its intention to enter into a new lease as required by paragraph 9. It did so in November 2023 and again in March 2024. In May 2024, BEBY provided a proposed lease dated March 17, 2024. However, unlike the extensions in previous years, which were very short documents referring to the 1985 Lease, BEBY sent an entirely new lease, with new terms and conditions, and with a proposed term of three years (the “proposed lease”).

[9] GYDC said there would have to be discussions about it, but no discussions took place until a meeting was held on September 9, 2024, after the Fifth Extension had expired. Prior to that meeting, on August 2, 2024, the Executive Director of BEBY wrote to GYDC taking the position that, pursuant to paragraph 9 of the Fifth Extension, the Tenant was now in a “month to month tenancy” and could give GYDC one month’s notice of termination. BEBY also took the position that the rent would increase on September 1, 2024 to the amount set out in the proposed lease for the period commencing September 1, 2026, which was higher than the amount specified in the proposed lease for the period commencing September 1, 2024.

[10] Following the meeting on September 9, 2024, BEBY sent GYDC a Notice of Default of Lease for Non-Payment of Rent dated September 13, 2024, as GYDC had only paid its September rent in the amount required under the Fifth Extension, not the amount set out in the August 2, 2024 email. The Notice referred to the Lease and extensions and asserted that there was now a month to month tenancy “under the Lease.” GYDC then paid the rent demanded by BEBY, which it continues to pay.

[11] There were some additional negotiations which did not result in an agreement. BEBY issued a deadline of October 31, 2024 for GYDC to sign the proposed lease. GYDC did not sign the lease before the end of October.

[12] On November 20, 2024, BEBY’s lawyer sent GYDC a Termination Notice advising that the “month to month tenancy under the Lease” would terminate on February 20, 2025, and that GYDC must vacate on or before that date. GYDC attempted to engage in further negotiations with BEBY, but BEBY was unwilling to engage in further discussions and took the position that the Notice of Termination continued to apply.

[13] On December 12, 2024, GYDC wrote to BEBY advising that it was willing to sign the proposed lease. BEBY was no longer willing to grant the lease and confirmed the termination for February 20, 2025. On January 3, 2025, GYDC requested a 7-month extension from February 20, 2025 to October 31, 2025 in order to find a new location.

[14] BEBY did not terminate the Lease on February 20, 2025. GYDC sought alternative dispute resolution which was rejected by BEBY. Then, on April 28, 2025, BEBY delivered another termination notice, the “Final Termination Notice”, to GYDC. This Notice purports to end the “month-to-month tenancy under the Lease” with a new termination date of June 30, 2025. GYDC commenced this application on May 13, 2025.

Analysis

[15] GYDC submits that the Final Termination Notice is invalid as there is no “month-to-month tenancy under the Lease.” I agree. A month-to-month tenancy “under the Lease” occurs if GYDC fails to give notice that it intends to enter into a new lease, which has historically meant to extend the Lease. There is no dispute that GYDC did provide notice of its intention in accordance with the required time set out in paragraph 9 of the Fifth Extension. Accordingly, there is no month-to-month tenancy “under the Lease.” Nor has GYDC agreed to a month-to-month tenancy.

[16] What, then, is the legal status of GYDC’s tenancy?

[17] Having given notice of its “intention to enter into a new lease”, BEBY was obliged to negotiate with GYDC to reach a new agreement. Those negotiations took place, but were not completed until after the Fifth Extension expired. In my view, having regard to the terms of the lease extensions over several decades, which involved “automatic renewals” and annual adjustments on September 1st of each year, the reasonable expectations of the parties and their intent under the Lease was that the Lease would renew for another year on September 1, 2024. As noted, GYDC has been paying the rent demanded by BEBY, which is higher than the rate for 2024-2025 prescribed in the proposed lease since September 2024.

[18] Accordingly, in accordance with the lease agreements and the conduct of the parties, GYDC can remain in the premises until at least August 31, 2025. As agreed by GYDC, it will continue to pay the rent set out in the proposed lease and be subject to the terms of that proposed lease. This does not mean that GYDC has an absolute right to a lease, as BEBY must have the power to terminate the tenancy, but any termination by BEBY must have regard to the relationship between the parties and the impact it may have on GYDC.

[19] I turn then to GYDC’s request to remain in the premises for up to two additional years, which it says it needs in order to relocate. It relies on this Court’s equitable jurisdiction, and the relief from forfeiture provisions found in s. 20 of the CTA and s. 98 of the Courts of Justice Act (“CJA”).

[20] BEBY objects, arguing that this is an application, not a motion for an interlocutory injunction, and that s. 20 of the CTA does not apply because there is no lease in effect.

[21] In my view, s. 20 of the CTA applies. In light of my conclusion that the tenancy has been extended based on the Lease, there is, effectively, a lease in place. Further, BEBY cannot have it both ways, taking the position in its notices that there is a “month-to-month tenancy under the lease”, but then assert that there is no lease.

[22] This case is therefore distinguishable from 2259084 v. Travelers Insurance Company of Canada, 2016 ONSC 5942, where the contract – in that case one of insurance – had expired and the relationship between the parties was over. Here, the tenancy was continuing, “under the lease” as the notices drafted by BEBY stated, albeit not as a month-to-month tenancy as I have concluded above.

[23] I am also not satisfied that relief under s. 20 can only be granted where there is a written lease in effect and not in circumstances where a lease has effectively been extended. I note that relief from forfeiture was granted in circumstances where a lease had expired by my colleague C. Gilmore J. in Baketree Inc. v. 315-345 Flint Road Inc., 2020 ONSC 466.

[24] In any event, s. 98 of the CJA is not so limited: Greenwin Construction Co. Ltd. v. Stone & Webster Canada Ltd., paras. 23–25.

[25] Although Baketree was framed differently, as an action in which a motion for relief from forfeiture was brought, the circumstances are similar to this case. Gilmore J. applied the test for an injunction to restrain a landlord from evicting a long-time tenant until it could move its business to a new location.

[26] Relief from forfeiture is an equitable and discretionary remedy. The criteria that would typically apply do not neatly apply here: Greenwin at para. 26. GYDC has done nothing wrong in the sense of breaching its covenants. It has paid its rent, including rent at a higher rate than is provided in the proposed lease. On the other hand, GYDC will suffer significantly, perhaps even be destroyed, if it is forced out of the premises without a new location to carry on its day care business.

[27] As Morgan J. stated in Jungle Lion Management Inc. v. London Life Ins. Co., 2020 ONSC 165, para. 7, one must “look at the entirety of the relationship between the parties” in considering whether to grant relief from forfeiture.

[28] Section 20 of the CTA aims to preserve the relationship between the parties as reflected in the lease. Courts frequently apply s. 20, and equitable principles, to extend leases and tenancies: Hudson’s Bay Company ULC Compagnie de la Baie D’Hudson SRI v. Oxford Properties Retail Holdings II Inc., 2022 ONCA 585, paras. 42–50.

[29] Like Gilmore J. in Baketree, I am satisfied that the court should exercise its equitable jurisdiction here to provide GYDC with time to re-locate. Although in this case GYDC is not, strictly, seeking an interlocutory injunction, as granting the relief sought will effectively end this application, this does not mean that when making a final order that is in the nature of an injunction that injunction criteria are irrelevant. As Groberman J.A. stated in Cambie Surgeries Corp. v. British Columbia (Medical Services Commission), 2010 BCCA 396, para. 28, which was adopted by the Ontario Court of Appeal in 1711811 Ontario Ltd. (AdLine) v. Buckley Insurance Brokers Ltd., 2014 ONCA 125, para. 79:

In order to obtain final injunctive relief, a party is required to establish its legal rights. The court must then determine whether an injunction is an appropriate remedy. Irreparable harm and balance of convenience are not, per se, relevant to the granting of a final injunction, though some of the evidence that a court would use to evaluate those issues on an interlocutory injunction application might also be considered in evaluating whether the court ought to exercise its discretion to grant final injunctive relief.

[30] GYDC has established its legal rights. It had a right to seek a further extension of the Lease on an annual basis. When no extension agreement was reached by September 1, 2024, but the parties were continuing to negotiate, the intent of the parties as shown by the history of their conduct meant, as I have found, that the Lease was effectively extended for another year. Negotiations continued. Although a Notice of Termination was delivered in the fall of 2024, it was not acted upon. Then, when GYDC accepted the proposed lease, BEBY refused to conclude it. Months later, BEBY issued the Final Notice of Termination, and well after GYDC had told BEBY that it needed time to find a new location.

[31] BEBY is entitled to terminate the tenancy of GYDC, but it cannot do so without providing extensive notice. Having regard to the lengthy relationship, and the terms of the extensions that renewed annually, that notice period is at least one year. BEBY’s conduct in issuing two notices of termination providing just a few months notice, and its about-face refusing to enter into its own proposed lease which was eventually accepted by GYDC, is inconsistent with the duty to act in good faith and to honestly perform the contract between the parties: C.M. Callow Inc. v. Zollinger, 2020 SCC 45.

[32] In all of these circumstances, GYDC is entitled to equitable relief in the form of an extension of the Lease in order to find a new location. It will suffer irreparable harm if required to vacate on June 30, 2025, and needs time to find a new location. BEBY has led no evidence that it will be harmed by the continuation of the tenancy for this purpose; indeed, it is being well-paid in rent and GYDC has agreed to abide by the terms of the proposed lease.

[33] I am not, however, persuaded that GYDC needs two years to find new premises. While the relocation of a day care is challenging, as it involves finding appropriate space and obtaining regulatory approvals, two years is excessive. In my view, having regard to the annual renewal dates, GYDC shall have the right to remain in the premises until August 31, 2026.

[34] I also grant GYDC its costs of this application on a partial indemnity scale. Both parties submitted costs outlines containing similar amounts. Although counsel for BEBY requested the opportunity to make further submissions on costs relating to GYDC’s alleged delay in bringing this application, I decline to do so. The facts are set out in detail in the material and I see no basis to deny or reduce GYDC’s claim. Costs shall be fixed at $30,000, inclusive of HST and disbursements, payable by BEBY to GYDC.

Schabas
Date: June 27, 2025