2016 QCCA 1417, 2016 QCCA 1417

9246-2712 Québec inc. c. Pasvanis 2016 QCCA 1417 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-026319-160 (500-17-094828-160) MINUTES OF THE HEARING DATE: September 6, 2016 THE HONOURABLE ROBERT M. MAINVILLE, J.A. PETITIONER COUNSEL 9246-2712 québec inc.

Mtre ANTHOINE PRÉFONTAINE ( Aedifico Avocats inc. ) Present RESPONDENT COUNSEL basile pasvanis Mtre CÉCILE DEFORGES ( Spiegel, Sohmer, inc. ) Present DESCRIPTION: Application for leave to appeal from a judgment rendered on August 23, 2016 by Benoit Emery of the Superior Court, District of Montreal (art. 31 C.C.P. ) Application to suspend provisional execution (art. 660 in fine C.C.P. ) Clerk: Annabel David Courtroom: RC-14

HEARING 9 : 30 The parties are present this morning. The judgment will be sent to them by email. Annabel David Clerk BY THE JUDGE JUDGMENT [ 1 ] The applicant is seeking leave to appeal a judgment dated August 23, 2016 of the Superior Court, District of Montreal (the Honourable Benoît Emery) evicting it and its principal shareholder, Vasilios Zervos, from commercial premises located at […] Street in Montreal (the “leased premises”). The applicant also seeks that I stay the provisional execution of this judgment. * * * [ 2 ] The applicant owns a small restaurant which he acquired from the respondent’s wife.

The respondent is the owner of the leased premises in which the restaurant operates. The applicant and the respondent entered into a five year commercial lease agreement for the leased premises on June 15, 2011. That lease extended from June 17, 2011 to June 30 th , 2016. [ 3 ] The lease provides for a base rent of $850 per month increasing over time to $1,150 per month. It also provides that the applicant must pay the property taxes and maintain property insurance on the leased premises.

The applicant has an option to renew the lease for an additional five years upon the same terms and conditions except the base rent, which increases to $1,300 per month at renewal and is indexed to the cost of living in each subsequent year. In order to exercise this option, the applicant must not be in default under the lease and must provide a written notice of renewal not less than 6 months prior to the expiry of the lease. [ 4 ] On July 20, 2016, the respondent filed a “Demande introductive d’instance et demande d’émission d’une ordonnance de sauvegarde”, which he amended on July 27, 2016.

In these proceedings, the respondent asserts that the applicant failed to pay the property taxes and to maintain insurance on the leased premises. He claims property taxes owed and various other amounts for a total of $33,815.08. He also seeks an order to evict the applicant from the leased premises of the basis of the applicant’s defaults under the lease and its expiry on June 30, 2016. [ 5 ] The principal shareholder of the applicant, Mr. Zervos, submitted affidavit evidence before the Superior Court in which he claimed that he provided a notice of lease renewal on March 31, 2015 to the respondent’s daughter.

However, in his affidavit, Mr. Zervos did not deny that the applicant failed to pay the property taxes on the leased premises. [ 6 ] Through their own affidavits, the respondent and his daughter vigorously denied ever receiving a lease renewal notice. * * * [ 7 ] The safeguard motion seeking the eviction of the applicant was heard on August 23, 2016, and judgment was rendered that same day. [ 8 ] The judge disregarded the affidavit evidence of Mr. Zervos on the ground that he did not understand English, yet his affidavit was drafted in that language.

Referring to the affidavit evidence of the respondent and his daughter, the judge concluded that the lease had expired on July 1 st 2016, as the option to renew had not been exercised by the applicant within the specified timeframe. The judge also concluded that the applicant was in default under the lease agreement, notably with respect to payment of the property taxes.

[9] As a result, the judge ordered the eviction of the applicant and of Mr. Zervos from the leased premises, declared that the leasehad not been renewed, and ordered the provisional execution of his judgment notwithstanding appeal. The judge also referred the matterto the Court of Quebec on the ground that the only issue that remained in dispute was the respondent’s $33,815.08 claim. * * * [10] The judgment finally determines the dispute concerning the renewal of the lease agreement and the eviction of the applicantwithin the framework of a safeguard motion.

Article 31 of the Code of civil procedure (“C.c.p.”) would therefore normally apply to sucha judgment as leave to appeal is required from a judgement of the Superior Court rendered in the course of a proceeding whichdetermines part of the dispute or causes irremediable prejudice to a party. [11] However, in this case, the judgement also terminates the proceedings in the Superior Court.

Indeed, the judgment orders theeviction of the respondent and transfers the litigation to the Court of Quebec, leaving nothing more to be decided in the Superior Court. [12] When the Superior Court declines jurisdiction in a matter in favour of another court and nothing is left before it, the resultingjudgment is one that terminates a proceeding within the meaning of

article 30 C.c.p.: Association professionnelle des cadres d’Hydro-Québec c. Hydro-Québec, 2016 QCCA 1102, par. 24-26; Desjardins c. P.G. du Canada, (QC CA), [1984] R.D.J. 136(C.A., motion judge); Louise Mailhot et Lysanne Pariseau-Legault, L’appel, 2e ed., Cowansville (Québec), Éditions Yvon Blais, 2008, p.31. [13] Since the five year renewal option on the lease is at issue in the appeal, the value of the subject matter in dispute in appeal is atleast $60,000. As a result, the judgment may be appealed as of right pursuant to the first paragraph of

article 30 C.p.c. [14] Therefore, leave to appeal is not required. Consequently, the notice of appeal attached to the application for leave shall be deemed to have been filed on August 30th, 2016 pursuant to

article 352 C.c.p. * * * [15] The applicant seeks a stay of the provisional execution of the judgment. It submits that the judge erroneously decided thedisputes pertaining to the renewal of the lease and its eviction from the leased premises on their merits within the framework of asafeguard motion.

The judge therefore determined the most important matters in dispute between the parties as if he was rendering a finaljudgment and, in so doing, consequently failed to consider the irreparable harm caused to the applicant as a result of the eviction. [16] The applicant further submits that the affidavit evidence supporting its claim that it renewed the lease in a timely fashion wasimproperly rejected by the judge. [17] Finally, the applicant submits that the appeal will become useless if it is evicted from the leased premises as a result of theprovisional execution of the judgment, since it will no longer be able to operate the restaurant in these premises and will likely cease toexist. * * * [18] A stay of the provisional execution of a judgment may be obtained if certain criteria are met.

First, a preliminary assessment ofthe merits of the appeal must be carried out to ensure that there is a serious issue to be determined. Second, it must be determinedwhether the party seeking the stay will suffer irreparable harm if it is refused. Third, an assessment must be made as to which of theparties would suffer greater harm from the granting or refusal of the stay pending the decision on the merits of the appeal: SoftInformatique inc. c.

Gestion Gérarld Bluteau inc., 2012 QCCA 2018, par. 12; Denis Ferland et Benoît Emery, Précis de procédure civiledu Québec, vol. 2, 2015, Éditions Yvon Blais, p. 795, par. 2-2122. [19] The affidavit submitted by Mr. Zervos states that on March 31, 2015 he provided to the respondent’s daughter a notice to renewthe lease under the renewal option. The record also contains a copy of a letter dated March 31, 2015 signed by Mr. Zervos and addressedto the respondent providing for the renewal of the lease under the option.

Though the respondent and his daughter deny ever receivingthis notice, the applicant submits that the contradictory evidence in the record pertaining to the lease renewal option should have beendecided at a hearing in which the credibility of the respective witnesses could have been assessed, rather than in the framework of asafeguard order.

This is a serious issue. [20] However, even if the lease was renewed for five years pursuant to the lease renewal option, as claimed by the applicant, it isundisputed that the municipal taxes pertaining to the leased premises have not been paid by the applicant for many years. Consequently,irrespective of whether the lease has been renewed, the respondent could seek its termination for non-payment of the rent pursuant to thedefault provisions contained in the lease agreement itself.

In light of this, it is unlikely that the appeal would succeed irrespective ofwhether or not the lease was renewed. [21] Moreover, though the applicant offers to pay the monthly base rent on the leased premises during the appeal process, its offerdoes not include the municipal taxes owed for that period, which would add to the substantial amounts already owed for back taxes. [22] The applicant will undoubtedly suffer harm if it is evicted from the leased premises as a result of the provisional execution of thejudgment.

Moreover, its appeal from that judgment will likely become moot if its eviction from the leased premises is not stayed. [23] However, the crux of the matter is that the applicant seeks to remain in the leased premises pending the appeal without payingthe municipal taxes clearly owed under the lease agreement.

The suspension of the provisional execution of the judgment wouldconsequently cause irreparable harm and a grave injustice to the respondent, who would then be obliged to assume the municipal taxeson the leased premises for the time required to process the appeal, with little or no likelihood of ever being reimbursed by the applicant.

[ 24 ] In these circumstances, the stay of the provisional execution of the judgment shall be dismissed. THEREFORE, THE UNDERSIGNED: [ 25 ] ORDERS that the notice of appeal pertaining to the judgment of August 23, 2016 of the Superior Court, District of Montreal (the Honourable Benoît Emery) attached to the application for leave submitted by 9246-2712 Quebec inc. be deemed filed on August 30 th , 2016 pursuant to

article 352 of the Code of civil procedure . [ 26 ] DISMISSES the application to suspend the provisional execution of that judgment, with legal costs. ROBERT M. MAINVILLE, J.A.