Court File and Parties

Court File No.: CV-25-00000123 Date: 2025-07-29 Ontario Superior Court of Justice

Between: NP Health Clinic Inc. Applicant – and – 2456192 Ontario Inc. Respondent

Counsel: Michael F. Motala, Counsel for the Applicant Daria Krysik, Counsel for the Respondent

Heard: June 27, 2025

Reasons for Decision

CHARNEY J.:

Background

[1] On April 10, 2025, I issued Reasons for Decision in this matter, and granted an interlocutory injunction enjoining the Respondent 2456192 ONTARIO INC. (the "Landlord") from terminating the lease or from re-entering or repossessing the leased premises or from removing, selling or disposing of any of the Applicant's NP Health Clinic Inc. (the "Tenant") property or assets located in the leased premises or dispossessing the Tenant from the leased premises: NP Health Clinic Inc. v. 2456192 Ontario Inc., 2025 ONSC 2230.

[2] This interlocutory injunction was made subject to the Landlord serving the Tenant with a Notice of Default, specifying how the Tenant's current insurance policy is alleged to be deficient and which specific terms of clause 8.01 of the Lease are not met. My endorsement provided, at paras. 64 – 65:

If such Notice of Default is served, the Applicant shall have 20 days from the date of service of the Notice of Default to provide proof of insurance that meets the terms of clause 8.01 of the Lease.

If the parties are not able to agree on whether the Applicant's insurance meets the terms of the Lease, they may schedule a motion before me to have this issue (and only this issue) determined. The interlocutory injunction shall remain in effect until the motion is decided.

Notice of Default

[3] On April 30, 2025, the Landlord did serve the Tenant with a Notice of Default, specifying the following thirteen deficiencies in the Tenant's insurance policy:

(1) The Liability Insurance Certificate indicates Andrena McDonald as the named insured where it should indicate the Tenant, NP Health Clinic Inc., as the named insured as required by s.8.01(1) of the Lease;

(2) The Contents, Crime & Business Interruption Insurance indicates that the policy period is from February 4, 2024 to January 31, 2025 and is therefore expired;

(3) The Certificates fail to indicate the Landlord, 2456192 Ontario Inc., as additional insured as required by s.8.01(1) of the Lease.

(4) The all risks property insurance, including earthquake and flood, is not in an amount of one hundred percent (100%) of the full replacement cost as required by s.8.01(1)(a) of the Lease;

(5) Radiological and Diagnostic Equipment is uninsured, contrary to s.8.01(1)(a) of the Lease which requires all risks property insurance coverage to include the full replacement costs of all property owned by the Tenant and located at the Premises, including the Tenant's equipment;

(6) There is no coverage for building broad form insurance as required by s.8.01(1)(b) of the Lease;

(7) There is no coverage for business interruption insurance as required by s.8.01(1)(c) of the Lease;

(8) Non-Owned Automobile and Employer's Liability coverages each indicate a limit of $1,000,000.00 per occurrence whereas a limit of at least $2,000,000.00 is required by s.8.01(1)(d) of the Lease;

(9) The Certificates do not include a severability of interests clause nor a cross liability clause as required by s.8.01(1)(d) of the Lease;

(10) There is no coverage for Tenant's legal liability insurance for the full replacement cost of the Premises, including loss of their use, as required by s.8.01(1)(e) of the Lease;

(11) There is no coverage for standard owners form automobile insurance as required by s.8.01(1)(f) of the Lease;

(12) The Certificates do not contain an undertaking by the insurer to notify the Landlord in writing no less than thirty (30) days before any material change, cancellation or termination, as required by s.8.01(4) of the Lease;

(13) The Tenant has failed to deliver copies of each insurance policy as required by s.8.01(5) of the Lease.

Importance of Insurance Compliance

[4] As I indicated in my Reasons for Decision of April 10, 2025, at paras. 57 – 60, the importance of the insurance is highlighted by s. 20(8) of the Commercial Tenancies Act.

[5] Section 20(1) of the Commercial Tenancies Act gives the Court broad powers to relieve a defaulting tenant from re-entry or forfeiture. Notwithstanding this broad power, s. 20(8) of the Commercial Tenancies Act explicitly provides that the Court does not have the power to relieve a commercial tenant from an obligation to maintain insurance:

Where the right of re-entry or forfeiture is in respect of a breach of a covenant or condition to insure, relief shall not be granted if at the time of the application for relief there is not an insurance on foot in conformity with the covenant or condition to insure except, in addition to any other terms that the court may impose, upon the term that the insurance is effected.

[6] Accordingly, the Tenant's compliance with the insurance requirements of clause 8.01 of the Lease is fundamental, and failure to comply will lead to the termination of the Lease. As Favreau J. (as she then was) stated in Tauro v. Yu, 2018 ONSC 7319, at para. 80: "the failure to maintain insurance on the property is especially serious."

Lease Insurance Requirements

[7] In summary, clause 8.01 of the Lease requires that the following terms of insurance be included:

a. All risk property insurance in an amount equal to 100% of the full replacement cost insuring all property owned by the Tenant including leasehold improvements, the Tenant's furniture and movable equipment.

b. Broad form boiler and machinery insurance if applicable

c. Business Interruption Insurance

d. Public liability and property damage insurance including personal injury liability, contractual liability, employers liability and owners' and contractors protective insurance coverage with inclusive limits of at least two million dollars for bodily injury or property damage.

e. Legal liability insurance for the full replacement cost of the Leased Premises.

f. Standard owners form automobile insurance with one million dollars inclusive limits and accident benefits insurance covering all licensed vehicles owned or operated by or on behalf of the Tenant.

Current Status of Deficiencies

[8] The parties exchanged various correspondence which resolved some of the disagreements as of the date of the hearing of this motion, but the Landlord takes the position that a number of the identified shortcomings continue. Accordingly, on June 18, 2025, the Landlord brought this motion to set aside the interlocutory injunction and to terminate the lease because of the Tenant's failure to comply with the insurance requirements in clause 8.01 of the Lease.

[9] Of the thirteen deficiencies identified by the Landlord on April 30, 2025, the Landlord alleges that the following five deficiencies continue:

(1) The Liability Insurance Certificate indicates Andrena McDonald as the named insured where it should indicate the Tenant, NP Health Clinic Inc., as the named insured as required by s.8.01(1) of the Lease;

(4) The all risks property insurance, including earthquake and flood, is not in an amount of one hundred percent (100%) of the full replacement cost as required by s.8.01(1)(a) of the Lease;

(5) Radiological and Diagnostic Equipment is uninsured, contrary to s.8.01(1)(a) of the Lease which requires all risks property insurance coverage to include the full replacement costs of all property owned by the Tenant and located at the Premises, including the Tenant's equipment;

(6) There is no coverage for building broad form insurance as required by s.8.01(1)(b) of the Lease;

(13) The Tenant has failed to deliver copies of each insurance policy as required by s.8.01(5) of the Lease.

Evidentiary Issues

[10] The Landlord relies on a letter dated May 21, 2025, written by Mary Halim, who is the Landlord's Insurance Broker. Ms. Halim purports to identify eight deficiencies in the Tenant's insurance certificate. Ms. Halim's letter is not in the form of an affidavit and is therefore not admissible as evidence. Her letter was, in any event, unhelpful because it provides conclusions without any analysis or explanation. Based on my review of the Insurance Certificate (see below), Ms. Halim's conclusions are not correct.

Review of Insurance Certificate

[11] A review of the Insurance Certificate dated January 29, 2025 and issued by Ecclesiastical Insurance on May 20, 2025 indicates the following:

a. The Policy Period is January 31, 2025 to January 31, 2026. The named insured on the Policy is Andrea McDonald and NP Health Clinic.

b. The contents are insured for $60,000. The Tenant takes the position that this amount is 100% of the full replacement cost of all property owned by the Tenant including leasehold improvements, the Tenant's furniture and movable equipment.

c. All Peril Earthquake and Flood Insurance has an aggregate limit of $210,000.

d. Business Interruption Insurance is covered to $150,000.

e. NP Health Clinic is covered for $2,000,000 professional liability insurance, $5,000,000 Bodily Injury and Property Damage Insurance, $2,000,000 Employer's Liability Insurance, $2,000,000 Legal Liability Insurance, and non-owned automobile insurance of $2,000,000.

f. The Landlord, Ashraf Bebawi and 2456192 Ontario Inc. are named as "Additional Insureds" in the Insurance Certificate.

g. Insurance coverage is primary and not excess to any other insurance.

h. The Insurer will endeavour to provide 30 days prior written notice of cancellation.

Analysis of Remaining Deficiencies

[12] With respect to item #5 above (Radiological and Diagnostic Equipment), the Tenant alleges that there is no "Radiological Equipment", and the Diagnostic Equipment is covered within the $60,000 contents limit. Clause 8.01 of the Lease makes no specific reference to "Radiological and Diagnostic Equipment", and there is no reason why it cannot be covered under the general contents insurance.

[13] With respect to item #6 above, the lease does not require "building broad form insurance".

[14] Finally, with respect to item #13, the Tenant has provided a copy of the Insurance Certificate and the Insurance Policy. There was some misunderstanding with respect to the latter, because the Insurance Policy refers to the "Canadian Nurses Protective Society Insurance Program", which is a group policy for all nurse practitioners. The Tenant is a nurse practitioner, and this is the correct policy.

Conclusion

[15] Based on my review of the Insurance Certificate, I am satisfied that the Tenant has complied with the insurance requirements of the Lease, and the Landlord's motion to terminate the lease is dismissed.

[16] If the parties cannot agree on costs, the Tenant may deliver costs submissions of no more than 3 pages, plus costs outline and any offers to settle, within 30 days of the release of this decision. The Landlord may deliver responding submissions on the same terms within a further 20 days.

Justice R.E. Charney

Released: July 29, 2025