The Ontario Court of Appeal in Jay-Pee Drycleaners Inc. v. 2321324 Ontario Inc., 2017 ONCA 798, recently overturned a summary judgment motion decision involving the termination of a commercial lease agreement.
In this case, the tenant had operated a dry cleaning business for 12 years before the lease was converted into a month-to-month tenancy. After the new landlord purchased the property and was assigned the lease, it demanded the tenant provide evidence that it had successfully completed a course related to the management of dry cleaning contaminants and waste. Even though the tenant advised that the Ministry of Environment had deemed the course to be unnecessary and the course was not available until the following year, the new landlord terminated the lease and retained a bailiff to re-enter and re-possess the premises.
The tenant brought an action for damages arising from the unlawful termination of the lease. The new landlord responded with a counterclaim and brought a summary judgment motion.
The summary motion judge held that the landlord had lawfully terminated the tenancy because the tenant failed to provide evidence that the course was completed or that a trained person was working at all times on the premises. The action was dismissed and the counterclaim allowed.
The Court of Appeal, however, found the motion judge erred in concluding that the new landlord had lawfully terminated the contract because the motion judge failed to apply the strict notice requirements under the Commercial Tenancies Act to terminate the lease and failed to consider the evidence that the course was unnecessary and not available to remedy the alleged breach in the time provided.
Section 19(2) of the Commercial Tenancies Act provides that the landlord’s right of re-entry for breach of any covenant or condition in the lease, other than for payment of rent, is not enforceable unless the landlord: (a) serves on the tenant a notice specifying the particular breach; and (b) if the breach is capable of remedy, the tenant has failed to remedy the breach within a reasonable period of time.
If you require legal advice and representation in respect to a commercial leasing dispute, please contact us for an initial consultation.
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