2021 ONSC 6819
In an October 13, 2021 decision, Justice RSJ Ricchetti ruled in favour of an urgent application seeking the reinstatement of a terminated lease and relief from forfeiture in a commercial tenancies dispute between K.C. Granite & Marble Inc. (the “Tenant”) and Takol Forgestone Meyerside Limited Partnership et al. (the “Landlord”).
In 2018, the Tenant entered into a 5 year lease (“Lease”) with 1060 Meyerside Drive Limited (the “Prior Landlord”) which outlined, amongst other terms, a stipulated end date of October 31, 2023 for the occupation of its property (“Premises”). In November 2020, the Former Landlord sold the property to the current Landlord, which involved the Tenant signing an Estoppel Certificate that outlined the security deposit amount held by the Landlord, arrears, and other terms. In December 2020, the Landlord gave Notice of Default and Termination of Lease to the Tenant, citing outstanding amounts owed (largely due to an accounting oversight) and attempted to vacate the Tenant off the Premises, but was unsuccessful as the Tenant was able to provide evidence of their recent rental payments for the same month. Shortly thereafter, the Landlord sent another letter for Termination of Lease (“Letter”) to the Tenant with a veiled condition for a lease amendment, which purported to convert the 5 year Lease to a month-to-month agreement, thereby allowing the Landlord to terminate without cause upon 60 days’ notice.
In review of the facts, the Court was not persuaded that the Lease was terminable/terminated or converted to a month-to-month lease in December 2020, finding that the receptionist who signed the Letter as receipt did not have the ability to the bind the corporate tenant. Furthermore, the Court agreed with the Tenant that the indoor management rule did not apply in the case, and that the Landlord’s motivation to vacate the Tenant with the intent to convert the lands as condominiums was a significant factor in favour of the Tenant’s application. The Court ultimately ordered for the Lease to be reinstated and granted relief from forfeiture to the benefit of the Tenant.
This case is significant as it contains a breakdown of the good faith requirements of landlords when dealing with termination, including the importance of proper notice.
Miller Thomson represented the Tenant in the proceedings with a team led by Michael McCluskey (Commercial Litigation); and comprised of Alexander Verrilli (Commercial Litigation); Kayla Sweet (Paraprofessional); as well as Lindsay Armstrong (Student).
