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Landlord and Tenant (Commercial) - Eviction. 6844987 Canada Inc. v The United People of Canada
In 6844987 Canada Inc. v The United People of Canada (Div Court, 2023) the Divisional Court considered a number of Commercial Landlord and Tenant Act (CLTA) provisions dealing with termination and eviction. In these quotes the court considers the termination and eviction provisions of CLTA 18(1) ['Rights of Re-entry - Re-entry on non-payment of rent'] and s.19(2) ['Notice prerequisite to re-entry or forfeiture - Content of Notice']:[1] This is an appeal by the United People of Canada/ Les Peuples Unis du Canada (“TUPOC”) from the decision of Gomery J. dated September 23, 2022 granting an application brought by the Respondents to this appeal under Part III of the Commercial Tenancies Act, R.S.O. 1990, c. L.7 (the “Act”), to declare that the lease between the parties had been properly terminated and directing that a writ of possession be issued and enforced by the Sheriff.
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[2] TUPOC advanced a number of arguments in support of its appeal in its factum (which will be briefly mentioned below). However, in its oral submissions it focused on one argument, which it described as forming the heart of its appeal – namely that the Notice of Termination served on TUPOC by the Respondents was deficient and thus, the Respondents’ efforts to repossess the premises were unlawful.
[3] In making its submission, TUPOC focused on the Notice of Termination that was sent to it on August 11, 2022 by email. In that email the Respondents’ realtor informed TUPOC that the deal between the parties was “null and void due to breach by the buyer [TUPOC]”. It advised TUPOC that it had 30 days to leave the premises provided it was current with its rent obligations.
[4] According to TUPOC, this notice did not comply with the requirements of s. 19(2) of the Act, which reads:(2) A right of re-entry or forfeiture under any proviso or stipulation in a lease for a breach of any covenant or condition in the lease, other than a proviso in respect of the payment of rent, is not enforceable by action, entry, or otherwise, unless the lessor serves on the lessee a notice specifying the particular breach complained of, and, if the breach is capable of remedy, requiring the lessee to remedy the breach, and, in any case, requiring the lessee to make compensation in money for the breach, and the lessee fails within a reasonable time thereafter to remedy the breach, if it is capable of remedy, and to make reasonable compensation in money to the satisfaction of the lessor for the breach. [5] According to TUPOC, under the provisions of s. 19(2) a notice must (1) specify the breach the lessor complained of; (2) require the lessee to remedy the breach if it is capable of being remedied; and (3) specify a reasonable time within which the breach must be remedied. The email of August 11, 2022, did none of these things. Further, it did not comply with the provisions of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, respecting service by email.
[6] After serving this notice the Respondents attempted to re-enter the premises on August 17, 2022.
[7] In its submissions TUPOC reviewed the caselaw surrounding s. 19(2) and established that the courts have insisted on strict compliance with the provision and have found that attempts to repossess premises in the face of a deficient notice are unlawful. Given this caselaw, according to TUPOC, the Respondents’ attempt to regain possession of the premises on August 17, 2022 was clearly unlawful.
[8] TUPOC acknowledged that the provisions of s. 19(2) do not apply when the right of re-entry is being exercised for non-payment of rent. However, according to TUPOC, s. 18(1) of the Act states that no right of re-entry can be exercised for non-payment of rent unless the tenant in default has been given at least 15 days notice of the landlord’s intention to exercise its right of re-entry for non-payment of rent. Further, if the lease between the parties specifies a longer notice period, it is that period that governs. According to TUPOC, the lease between the parties specified a 30-day notice period. In this case, the Respondents failed to give TUPOC 30 days notice that it was going to seek re-entry of the premises and thus, its attempt to re-enter because of non-payment of rent was also unlawful.
[9] There are a number of problems with TUPOC’s submissions concerning deficient notice. First, TUPOC has misread the provisions of s. 18(1) of the Act. It reads:
(1) Every demise, whether by parol or in writing and whenever made, unless it is otherwise agreed, shall be deemed to include an agreement that if the rent reserved, or any part thereof, remains unpaid for fifteen days after any of the days on which it ought to have been paid, although no formal demand thereof has been made, it is lawful for the landlord at any time thereafter to re-enter into and upon the demised premises or any part thereof in the name of the whole and to have again, repossess and enjoy the same as of the landlord’s former estate.
[10] Section 18(1) does not state that if a landlord intends to repossess for non-payment of rent, it must give the tenant at least 15 days notice of its intention to re-enter. What it says is that if the rent remains unpaid for at least 15 days, the landlord has the right to repossess the premises even if no formal demand for the payment of unpaid rent has been made.
[11] Second, the lease between the parties does not expand the period mentioned in s. 18(1) to more than 15 days. The clause relied upon by TUPOC appears in Schedule A to the Agreement of Purchase and Sale. It states, “The aforementioned lease shall be terminated immediately on the earlier of: a) 30 days following notice of material default by the Buyer; b) 30 days following written notice of termination from the Buyer; and c) the Completion Date.” Taken in context, the reference to material default is a reference to a material default under the Agreement of Purchase of Sale. The provision is not meant to alter the terms of s. 18(1) of the Act.
[12] Third, TUPOC’s argument ignores the fact that the Respondents gave it two notices of default – one on August 10/11 and another on August 17, when it attempted to exercise its right to re-enter the premises. The first notice was a notice of default concerning TUPOC’s failure to pay the deposits required under the Agreement of Purchase and Sale. Pursuant to Schedule A of the Agreement of Purchase and Sale, the Respondents gave TUPOC 30 days notice of its intent to exercise its right to re-enter the premises. The second notice was its notice dated August 17, 2022 in which the Respondents notified TUPOC of its intention to immediately repossess the premises since TUPOC was in arrears of rent in the amount of $10,000.00.
[13] Gomery J. found, as a matter of fact, that TUPOC’s lease took effect on June 13, 2022 when TUPOC executed the Agreement of Purchase and Sale. She also found, as a matter of fact, that “TUPOC was required, pursuant to the unmodified terms of the Agreement, to pay rent of $5,000 on June 13, 2022, and then the same amount every month thereafter that TUPOC occupied the premises mentioned in the Agreement.” Thus, pursuant to these findings, TUPOC was required to pay the Respondents $5,000 per month on June 13, 2022, July 13, 2022 and August 13, 2022. The evidence is uncontroverted that TUPOC only made one rent payment of $5,000 on July 24, 2022. Therefore, by the time the Respondents delivered the notice of August 17, 2022, TUPOC was in arrears of rent, those arrears amounted to $10,000.00, and TUPOC had been in arrears on its rent for more than 15 days. Given this, pursuant to s. 18(1), the Respondents were entitled to re-enter the premises on August 17, 2022. This finding is sufficient to dispose of TUPOC’s argument that the appeal should be allowed on the basis of deficiency of notice. . 2602203 Ontario Inc. v. Bijan Design Inc.
In 2602203 Ontario Inc. v. Bijan Design Inc. (Ont CA, 2023) the Court of Appeal reviews the normal procedure to evict a commercial tenant, and an unusual appeal route variation that occurs:[12] Part III of the Commercial Tenancies Act sets out the procedure a landlord is to follow to obtain a writ of possession against a tenant who is no longer entitled to occupy a rental property. Pursuant to s. 74(1) of the Act, landlords seeking this relief are to bring an application for a writ of possession to the Superior Court. In accordance with s. 76(2) of the Act, a judge hearing the application has the power to grant a writ of possession “if it appears to the judge that the tenant wrongfully holds against the right of the landlord”. As set out in s. 78(1) of the Act, an appeal lies to the Divisional Court “from the order of the judge granting or refusing a writ of possession.”
[13] On its face, it appears that s. 78(1) of the Commercial Tenancies Act requires an appeal from the motion judge’s order in this case to be brought to the Divisional Court because she refused to grant a writ of possession.
[14] However, as the appellant points out, the order made by the motion judge did not follow from an application brought pursuant to s. 74(1) of the Act. The motion judge’s order is not an order refusing a writ of possession arising from an application brought under Part III of the Commercial Tenancies Act. Rather, it was based on the order of McKelvey J., who made an order that the appellant was permitted to bring a motion to terminate the tenancy if the respondents did not pay rent owing pending the trial. On this basis, we agree with the appellant that s. 78(1) of the Commercial Tenancies Act does not appear to apply to this appeal.
[15] However, this does not assist the appellant. We agree with the submission made by counsel for the respondents at the hearing before us that the motion judge’s order is not a final order, but rather an interlocutory order. Pursuant to s. 19(1)(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43, the Divisional Court, not this court, has jurisdiction over an appeal from an interlocutory order made by a judge of the Superior Court. Such an appeal requires leave of the Divisional Court. Earlier, the 'executive legal officer' of the Court had suggested that the CA lacked jurisdiction due to CTA s.78(1) ["An appeal lies to the Divisional Court from the order of the judge granting or refusing a writ of possession."], but the court followed the 'interlocutory' route instead and transferred the appeal to the Divisional Court where the appellant could seek leave to appeal.
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