2015 QCCQ 1212, 2015 QCCQ 1212

Édifice 9500 (2001) inc./9500 Building (2001) inc. c. 133833 Canada inc. (Kobi Textiles/Les textiles Kobi) 2015 QCCQ 1212 COURT OF QUEBEC CANADA PROVINCE OF QUÉBEC DISTRICT OF MONTRÉAL Civil Division No: 500-22-209889-149 DATE: February 20, 2015 ______________________________________________________________________ BY THE HONOURABLE DOMINIQUE VÉZINA, J.C.Q. ______________________________________________________________________ ÉDIFICE 9500

(2001) INC./9500 BUILDING

(2001) INC.

Plaintiff and Cross-Defendant v. 133833 CANADA INC. (KOBI TEXTILES/LES TEXTILES KOBI) Defendant and Cross-Plaintiff ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] The lessor 9500 Building (2001) inc. ( 9500 Building ) is suing its lessee 133833 Canada inc. ( Kobi Textiles ) and is claiming $19,446.04 for unpaid rents and other various expenses. [ 2 ] Kobi Textiles denies owing that amount. [ 3 ] By way of a Cross-Claim, Kobi Textiles is claiming $24,000 from 9500 Building for moving expenses and for wasted money invested uselessly in the rented premises as it had to vacate them based on an allegedly Notice received from Ville de Montréal.

QUESTIONS IN ISSUE Principal Action [ 4 ]

A) Has 9500 Building established its right for unpaid rents and other expenses?

B) What are the damages of 9500 Building?

C) Has 9500 Building established its right for procedural impropriety [1] ? Cross-Claim

D) Has Kobi Textiles established its right for damages? CONTEXT AND ANALYSIS [ 5 ] In civil matters, a person wishing to assert a right shall prove the facts on which his claim is based [2] . In this regard, the burden of proof lies on the party presenting a demand. That party has to present evidence which will be weighed under the balance of probability which is also called preponderance of evidence .

The probability is evaluated based on the direct evidence, the circumstances and the presumptions [3] .The demand must demonstrate that the existence of a fact is more probable than its non-existence [4] . [ 6 ] Every person has a duty to honour his contractual undertakings [5] . [ 7 ] To conclude, all relevant elements of evidence are analysed by the Court. [ 8 ] 9500 Building rented commercial premises to Kobi Textiles [6] .

The terms and conditions of the Lease (the Lease) are the object of this litigious matter. [ 9 ] 9500 Building claims that the Lease was signed on June 28, 2010, where Kobi Textiles indicates rather having it signed on July 12, 2010. An addendum [7] to that Lease, not dated nor signed, was invoked as being applicable by 9500 Building, which application was denied by Kobi Textiles. [ 10 ] Somewhere in August 2011, 9500 Building indicates that all its lessees received a Notice [8] from the Ville de Montréal (the Notice) regarding a two years reserve proceeding for the building, based on

article 81.1 of the Expropriation Act [9] : 81.1. Notice of the registration of the reserve and of the judgment maintaining or cancelling the reserve must be given to the lessee and to the occupant in good faith.

[ 11 ] Kobi Textiles denies having received any such Notice. [ 12 ] Instead, Kobi Textiles rather filed its own notice of exercise of lease option sent by it to 9500 Building on October 24, 2012, establishing its intention to renew the lease for an additional period of 12 months [10] . [ 13 ] As the receipt of the Notice from Ville de Montréal by Kobi Textiles was an essential fact to be proven, a postponement of the trial was granted to clarify whether or not Kobi Textiles did receive such Notice issued by Ville de Montréal and if so, when exactly. Principal Action

A) Has 9500 Building established its right for unpaid rents and other expenses? [ 14 ] Both parties are bound by the terms and conditions of the Lease. The terms and conditions of the uncontested Lease indicated :

a) a term of 32 months, starting on August 1, 2010 and ending on April 30, 2013 (clause 2.1).

b) calculations for payments of rent;

c) no automatic renewal of the Lease (clause 2.3);

d) sole discretion for the lessor to extend the Lease for additional periods of 12 months, from May 1, 2013 to April 30, 2017, with applicable rates (clauses 6.7 to 6.10). [ 15 ] The representative of Kobi Textiles had hired a real estate agent to negotiate the Lease, prior to signing it. Kobi Textiles relied on that real estate agent to ensure that all the negotiated terms were included.

He did not read the clauses in the Lease prior to signing it. [ 16 ] However, the representative of Kobi Textiles admitted being told about the sole discretion of the lessor by its agent. [ 17 ] His understanding of what should have been included in the Lease do not correspond to the terms and conditions of such Lease.

For instance, there is no clause indicating that the Lease was concluded based on the condition that it would be renewed, and that in case of non renewal, the expenses of $6,000 made by the lessee would be reimbursed. [ 18 ] To the contrary, the Lease refers to no automatic renewal. [ 19 ] At the continuance of the hearing, 9500 Building established that Kobi Textiles had been notified by the Ville de Montréal in August 2011 [11] .

The argument of Kobi Textiles regarding the Notice is therefore dismissed. [ 20 ] The Notice issued by Ville de Montréal in August 2011 left no choice to 9500 Building but to act upon it.

Indeed, general clauses in the Lease obliged the lessor to ensure that the leased premises comply with all requirements of the law (clause 13). [ 21 ] 9500 Building has established that it was notified by Ville de Montréal in August 2011 as was Kobi Textiles [12] . [ 22 ] Kobi Textiles could not establish any prior knowledge by 9500 Building and could not justify its argument that its lessor failed to provide all necessary information when contracting the Lease in June or July 2010. [ 23 ] In that context, 9500 Building had the right not to renew the Lease. [ 24 ] The management of the building was done in such a way where the leases of most lessees ended on April 30, 2013, (as the one of Kobi Textiles), or before. [ 25 ] 9500 Building respected the delay of the existing leases while discussing and negotiating with Ville de Montréal. [ 26 ] Kobi Textiles only read the terms and conditions of the Lease during the Summer 2012, when it was told it had to leave at the expiry of the Lease. [ 27 ] Kobi Textiles vacated the rented premises at the expiry of the set term. [ 28 ] Nothing justify the failure to pay all rents due by Kobi Textiles. 9500 Building has established its right for unpaid rents and other expenses.

B) What are the damages of 9500 Building? [ 29 ] During the period between the first hearing date and the second one, Kobi Textiles undertook to locate proof and establish the payments of rent but finally failed to present such evidence. [ 30 ] 9500 Building’s claim was detailed in a Statement of Account [13] .

That Statement of Account was issued by the Accounting Department and reviewed by 9500 Building’s representative chartered accountant. [ 31 ] The amount of $19,446.04 claimed by 9500 Building covers unpaid rentals for four months and various expenses (gas, business taxes). [ 32 ] Kobi Textiles admitted that four months of rent were unpaid ($12,260.92). However, the representative of Kobi Textiles explained that two months out of those four months were paid in advance, one at the beginning of the Lease and the other one for the last payment. Such argument was based on clauses 6.6 and 6.7 of the Lease.

[ 33 ] The Court cannot discount two months of rent based on these two clauses. [ 34 ] Kobi Textiles also admitted not paying some expenses mentioned in the Statement of Account of 9500 Building, namely:

A) gas expenses : $2,659.53;

B) taxes: $1,829.06. [ 35 ] Considering these admissions and the lack of explanations and evidence to justify the unpaid balance, the Court finds that 9500 Building has established its right for $19,446.04.

C) Has 9500 Building established its right for procedural impropriety? [ 36 ] 9500 Building argued that the defence of Kobi Textiles was abusive and that it triggered wasted legal fees. [ 37 ] Kobi Textiles had arguments to present. The question linked to the receipt or not of the Notice triggered a continuance where both parties had to verify data. [ 38 ] The fact that a defence is not granted by the Court does not mean that it was frivolous. [ 39 ] The claim of $5,000 of 9500 Building in this regard is dismissed, as not founded in fact and in law. Cross-Claim

D) Has Kobi Textiles established its right for damages? [ 40 ] Kobi Textiles pleaded that it had no intention to leave the rented premises but instead wanted to renew the Lease. [ 41 ] Faced with the obligation to vacate the premises, Kobi Textiles is claiming its moving costs ($18,000) and wants a credit of $6,000 for various expenses made in the rented premises. [ 42 ] Clause 45.2 of the Lease indicates : 45.2 The Lessee specifically renounces to any right of compensation, deduction, abatement or set-off for any damages, costs or any claim whatsoever it has, has had of might have against the Lessor, its officers, employees, or agents and avers, affirms and acknowledges that the Rent shall be paid on its due date without any reductions, deductions, holdback, set-offs, diminutions or other subtractions of any nature.

The Lessee acknowledges that this Clause is an essential element of this Lease and that, given past disputes and negotiations between the parties, the Lessor would not have entered into the Lease without this Clause. [ 43 ] Furthermore, 9500 Building pleaded that the Notice by Ville de Montréal was the equivalent of an « expropriation », as per clause 33 of the Lease.

It provided that the lessee could not claim for any loss or damages occasioned by said eviction and/or loss of use. [ 44 ] Indeed, the Notice of Ville de Montréal under the Lease qualifies as an « expropriation ». [ 45 ] The non compensation clause and the expropriation clause invalidate the claim for damages of Kobi Textiles. moving costs of $18,000 [ 46 ] Kobi Textiles explained the type of equipment that it had to install for its business operations.

Moving them in and moving them out of the rented premises was a task requesting time. [ 47 ] In that context, expenses for moving in and moving out such equipment are claimed. [ 48 ] No evidence was presented to establish these costs, notwithstanding a delay of more than three months between the two dates for the hearing. credit of $6,000 [ 49 ] The addendum to the Lease was negotiated due to a change of heating system in the building, constraining the lessor to subdivide the new billing amongst its lessees. The manager of 9500 Building, who negotiated that addendum, did not testify at trial.

Kobi Textiles contested the receipt of that addendum and never signed it. It questioned its application. The text of the addendum is used by the lessor to justify its position in the cross-claim. [ 50 ] Clause 6.2 and clause 6.7 of the Lease indicated : 6.2 The Lessee will also pay $6,000.00 towards the cost of the new garage door the required brickwork, wall and ceiling demolition, sprinkler changes and addition lighting, in 12 monthly payments of $561.75 (taxes are included) starting August 1, 2010 and ending March 1, 2011.

The Lessee remits these twelve cheques at the time of signing the lease. 6.7 At the Lessor’s sole discretion and with the Lessee’s approval and unless written notice to the contrary is given by October 31, 2012 to the Lessee, the lease may be extended for a period of 12 months, from May 1, 2013, to April 30, 2014 at a annual rate of $4.12

per sq. ft., or $32,960 annually plus applicable GST and QST taxes, payable in equal and monthly installments ($2,746.67 + taxes). All the other clauses in this lease will remain in effect. For this 12 month extension of lease only (for the period from May 1 2013 to April 30 2014), if the Lessor does not extend this lease as per the conditions of the clause/lease and requires the Lessee to vacate the premises as at April 30, 2013, the Lessor will credit $6,000.00 towards the Lessee’s rent of Feb 2013 and March 2013. [our underlining] [ 51 ] To forfeit the payment of $6,000, 9500 Building relied on the addendum where the following modifications were made to the Lease: 2. Existing text:

Article 8.3: The Lessee will pay the cost of electricity to Hydro Quebec as per the Hydro readings. If additional heaters are required, the Lessee will be responsible for these costs. The Lessee may use the 600 volt entry and related meter located on the common wall to the space called G-3. Revised text:

Article 8.3: The Lessee will pay the cost of electricity to Hydro Quebec as per the Hydro readings. The Lessor and the Lessee agree to each pay 50% of the cost of the new electrical entry, $5200 + taxes = $5,869.50 or $2,934.75 each. The Lessee agrees to reimburse the Lessor the $2,934.25 in full by October 30, 2012 as a condition of the renewal of the lease, clause #6.7. Failure to pay this amount by October 30, 2012 will result with the forfeiture of thee $6,000 credit as per clause #6.7 . The Lessee shall pay for the installation of two Aerotherm heaters which cost $4,684.31.

The Lessor agrees to reimburse the Lessee 50% of this cost, $2,342.15 at the time of the Lessee’s payment of the electrical entry as per the above paragraph. [our underlining] [ 52 ] The evidence shows that additional expenses were charged to Kobi Textiles. However, no signed version of the « addendum » was filed.

No testimony of 9500 Building’s representative confirmed the agreement of Kobi Textiles for that forfeiture. [ 53 ] All parties agreed that $6,000 was indeed paid by Kobi Textiles. [ 54 ] 9500 Building relied on the addendum and on the fact that it was not its fault if the Lease was not renewed, but was rather caused by the Notice of Ville de Montréal. [ 55 ] That debate becomes moot with the applicable clauses mentioned above.

FOR THESE REASONS, THE COURT: PRINCIPAL ACTION GRANTS the action of Plaintiff Édifice 9500 (2001) inc./9500 Building 2001 inc. against Defendant 133833 Canada inc. (Kobi Textiles/Les Textiles Kobi) for an amount of $19,446.04 plus interest at the legal rate of 5 % per annum and the additional indemnity provided for at

article 1619 C.c.Q ., calculated as of the date of serving of the proceedings; WITH COSTS . CROSS-CLAIM DISMISSES the action of Cross-Plaintiff 133833 Canada inc. (Kobi Textiles/Les Textiles Kobi) against Cross-Defendant Édifice 9500 (2001) inc./9500 Building 2001 inc. ; WITHOUT COSTS . ________________________________ DOMINIQUE VÉZINA, J.C.Q. Me Norton Segal PHILLIPS, FRIEDMAN, KOTLER Me Anthony Karkar Dates of hearing: October 10, 2014 and January 22, 2015.