Reasons for Judgment

Court File No.: CV-22-00689587
Date: 2025-01-20
Ontario Superior Court of Justice

Between:
Convocation Flowers Incorporated, Applicant
– and –
Anisa Holdings Ltd., Antonio Almeida, Isabel Almeida, and Chris Linhares, Respondents

Applicant Counsel: Julian Binavince
Respondent Counsel: Wei Jiang and Meaghan Coker
Heard: June 20, 2024
Judge: Julie A. Thorburn Papageorgiou

Overview

[1] This is a dispute over a commercial lease. The tenant argues that the landlord has fundamentally breached said lease and requests a reference on damages.

[2] In or around July 2023, Anisa Holdings Ltd. (the “New Landlord”), purchased a building and property (the “Building” & “Property”) located at 40 Regis Crescent. The former landlord (“Former Landlord”) had leased out units to commercial tenants. The New Landlord wanted the Business & Property for its own finish carpentry business.

[3] One of the former tenants is the Applicant, Convocation Flowers Incorporated (the “Tenant”). It leased a unit (the “Leased Premises”) pursuant to a lease dated June 14, 2018 (the “Lease”), for its fresh cut flower business.

[4] The Property contained common areas that tenants could use for various purposes, including parking and to access the Building (the “Common Areas”). At the time of the New Landlord’s purchase, the Common Areas included a loading area and loading doors on the north side of the Building (the “Loading Docks”), as well as a driveway on the northeast (the “North Driveway”) that could be used to access the Loading Docks. There was also an area beyond the North Driveway that could be used for parking or storage (the “North Rear Yard”).

[5] The Tenant received deliveries of its flowers through the Loading Docks on the North side.

[6] After the New Landlord purchased the Property, it attempted to negotiate lease terminations with tenants, including the Tenant.

[7] After the negotiations failed, the New Landlord removed the Tenant’s access to the Loading Docks. The Tenant vacated and the Landlord has assumed the Tenant’s premises for its own business.

[8] The Tenant seeks a declaration that the New Landlord fundamentally breached, repudiated the Lease and/or constructively evicted the Tenant together with a reference on damages.

[9] The Tenant brought this matter by way of Application. Pursuant to r. 14.05 parties may proceed by way of application where the relief is the determination of rights that depend on the interpretation of a deed, will, contract or other instrument or where it is unlikely there will be material disputes that require a trial.

[10] At no time did any party assert that the matter could not proceed by way of Application and that it should be converted to an Action.

[11] As will be apparent, because of the way in which the parties filed their materials, there are no material facts in dispute that require a trial, apart from the issue of the Tenant’s damages, which the Tenant has requested proceed to trial.

[12] These are sophisticated parties. In my view, the parties filed their materials the way they did for their own strategic reasons and they should be held to the choices they have made.

Decision

[13] For the reasons that follow, I declare that the New Landlord fundamentally breached, repudiated the Lease and/or constructively evicted the Tenant by eliminating the Tenant’s access to the Loading Docks and the North Driveway to receive deliveries and also breached its duty of good faith.

[14] I direct that Convocation Flowers’ damages proceed to trial before me.

Issues

• Issue 1: Has the New Landlord breached the Lease by eliminating the Tenant’s access to the Loading Docks and North Driveway to receive deliveries?
• Issue 2: Did the New Landlord breach a duty of good faith?
• Issue 3: Were the changes imposed by the New Landlord to the Common Areas a repudiation, fundamental breach, or constructive eviction, such that the Tenant could treat the Lease as at an end and sue for damages?
• Issue 4: Should a trial of an issue on the Tenant’s damages be ordered?

Analysis

Issue 1: Has the New Landlord breached the Lease by eliminating the Tenant’s access to the Loading Docks and North Driveway to receive deliveries?

Principles of Contractual Interpretation

• Contractual interpretation begins with the words used.
• It is a search for the parties’ “objective intention” and their “reasonable expectation with respect to the meaning of a contractual provision”: Resolute FP Canada Inc. v. Ontario (Attorney General), 2019 SCC 60, para 74. The parties’ subjective intentions are not relevant: Corner Brook (City) v. Bailey, 2021 SCC 29, para 25; Alberta Union of Provincial Employees v. Alberta Health Services, 2020 ABCA 4, paras 26-31.
• The court must give words their ordinary and grammatical meaning and “read the contract as a whole” in a practical, common-sense manner, not dominated by technical rules of construction: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, para 57.
• Contracts should be interpreted “in accordance with sound commercial purposes and good business sense”: Resolute, para 79, citing Scanlon v. Castlepoint Development Corp. (1992); Corner Brook, para 20, citing Sattva, para 47; and Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, para 64. Commercial reasonableness must be assessed from “the perspective of both parties”: Resolute, para 148.
• The court must give meaning to all of the agreement’s terms and avoid an interpretation that renders some terms meaningless: Bellwoods Brewery Inc. v. 1896841 Ontario Limited, 2023 ONSC 2845, para 13.
• The court should take into account surrounding circumstances known or reasonably known to the parties or which ought reasonably to have been known at the time of the contract: Sattva, paras 56-61. The factual matrix consists of “objective evidence of the background facts at the time of the execution of the contract”: Resolute, para 77, citing Sattva, para 57. Nevertheless, the interpretive process is “rooted” in the words used and should not “stray too far” from these words: Resolute, para 76.
• Where there is ambiguity, a court may have regard to the parties’ subsequent conduct: Montreal Trust Co. of Canada v. Birmingham Lodge Ltd. (1995), para 23; Thunder Bay (City) v. Canadian National Railway Company, 2018 ONCA 517, paras 62-63; Shewchuk v. Blackmont Capital Inc., 2016 ONCA 912.

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Conclusion

[164] Therefore:

[165] I declare that the New Landlord has fundamentally breached and/or repudiated the Lease and/or constructively evicted the Tenant.

[166] I declare that the New Landlord violated its duty of good faith performance.

[167] I direct a trial of an issue before me to determine the Tenant’s damages pursuant to r. 38.10. The parties may arrange a case conference to address the scheduling of this.

[168] I defer the issue of costs to the conclusion of this matter.

Papageorgiou J.
Released: January 20, 2025

[1] See the following cases where a finding of a breach of the duty of good faith has been made on a paper record: Fortress Carlyle Peter St. Inc. v. Ricki’s Construction and Painting Inc., 2019 ONSC 1507, and 2174372 Ontario Ltd. v. Dharamshi, 2021 ONSC 6139.