2013 ONSC 2826, 2013 ONSC 2826

CITATION : 2189089 Ontario Limited and Glenwood Brant Holdings Inc. 2013 ONSC 2826 COURT FILE NO.: 12-36035 DATE: 2013-05-16 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: ) ) 2189089 ONTARIO LIMITED and MARTINO CEFARATTI (a.k.a. MARTY CEFARATTI) ) ) ) Barry L. Yellin, for the Plaintiffs, 2189089 Ontario Limited and Martino Cefaratti (a.k.a. Marty Cefaratti) ) Applicant ) ) - and - ) ) ) GLENWOOD BRANT HOLDINGS INC., TERRACAP MANAGMENT INC.

PHILTHY MCNASTY’S (ENTERPRISES) INC., PHILTHY MCNASTY’S RESTAURANTS INC., FOX & FIDDLE RESTAURANTS INC. ) ) ) Gregory Govedaris, for the Defendants, Philthy McNasty’s (Enterprises) Inc., Philthy McNasty’s Restaurants Inc., and Fox & Fiddle Restaurants Inc. ) Defendant ) ) ) ) HEARD: April 11, 2013 RULING PARAYESKI, J. [ 1 ] The plaintiffs brought a motion returnable on July 26 th , 2012 whereby they sought to enjoin the defendants from terminating a lease on property at which the plaintiffs ran a business, and to obtain orders preventing the defendants from interfering with the plaintiffs’ orderly course of business and granting relief from forfeiture pending the trial of the underlying action. [ 2 ] On the initial return date, LaFreniere, J. granted a consent, without prejudice order preserving the status quo and adjourning the motion to August 20 th , 2012.

Cross-examinations on affidavits were conducted on August 9 th , 10 th and 15 th , 2012. Some answers to undertakings given during the cross-examinations were provided. [ 3 ] On August 17 th , 2012 the plaintiffs amended their notice of motion significantly. They requested an order allowing them to

remain on the premises until October 15 th , 2012. The plaintiffs vacated the property on or about September 19 th , 2012. While the plaintiffs have not served a notice of abandonment of the motion, they have not pursued it in any meaningful way. [ 4 ] Under these circumstances, the defendants seek their costs of the motion on a substantial indemnity scale. [ 5 ] A brief review of the background to the motion may be of assistance. On July 18 th , 2003, the defendant Philthy McNasty’s Restaurants Inc. leased the subject premises from a corporation called Burlington Retail Power Centre Ltd.

The lease was guaranteed by the defendant Fox & Fiddle Restaurants Inc. The defendants Glenwood Brant Holdings Inc. and Terracap Management Inc. subsequently acquired the premises from Burlington Retail Power Center Ltd. [ 6 ] On November 1, 2008, the plaintiffs entered into a franchise agreement with the defendant Philthy McNasty’s (Enterprises) Inc. and into a sublease with Philthy McNasty’s Restaurants Inc. Any sublease required, inter alia, approval by the landlord. That approval was never sought or obtained.

At some point, the landlord became aware that the plaintiffs, or at least the individual plaintiff, was operating a business at the premises. [ 7 ] It quickly became apparent to the plaintiffs that they could not afford to pay the rent called for in the lease, or in their sublease. The landlord was approached by the tenant Philthy McNasty’s Restaurants Inc. for rent relief. An agreement was reached whereby there would be a time limited reduction of rent without prejudice to the landlord’s rights under the lease.

That agreement expired on August 31 st , 2010. [ 8 ] After the expiry of the rent reduction agreement, it came to be known that not even the reduced rent called for in that agreement could be paid. The landlord agreed to take what payment could be made without prejudice to its rights under the lease. Those rights included the right to terminate the lease and find a new tenant. [ 9 ] The landlord sent two default notices, one of which reflected arrears under the terms of the expired rent reduction agreement and the other under the terms of the lease itself.

While the plaintiffs maintain that they are confused as to the precise amount of monies owed in respect of rent, in part at least because of the differing amounts shown in the default notices, they do not dispute that some rent is owed. Rather than tendering either amount, or indeed whatever amount their own calculations suggest was owed, they launched their motion.

It appears to me that they did so in order to buy time to find new premises for themselves, and on the notion that a good defence is to go on the offence. [ 10 ] The defendants maintain that the plaintiffs changed their tack when they realized that the chances of succeeding on the motion grew small once cross-examinations and answers to undertakings revealed flaws in their position. Not the least flaw was said to be the fact that the plaintiffs were not tenants of the landlord at all, but, rather, subtenants on an unapproved sublease.

Another flaw was the fact that the plaintiffs’ business was not the ongoing concern asserted in their affidavit materials. [ 11 ] Ultimately, determining the precise reason for the altered potion is not a prerequisite for me to make my determination on costs. At the end of the day, the plaintiffs got the extra time they wanted.

They went from seeking to tie up the property until trial to asking for roughly two months, i.e. from the date of the amendment of August 17 th , 2012 to October 15 th , 2012. [ 12 ] They vacated the property in mid September of that year. [ 13 ] I was referred to case law that suggests when a party effectively (if not literally) abandons a motion seeking an injunction, the responding party is entitled to its costs on the substantial indemnity scale. I see no reason to deviate from that norm. I have already expressed my

interpretation of the plaintiffs’ state of confusion regarding the differing notices of default, and the fact that they offered nothing in the face of being aware of some default at least. I do not see the fact that there is one outstanding undertaking owed in respect of pinning down the precise amount of the defaulted rent as changing the situation. [ 14 ] Injunctive relief calls for a fulsome and timely response. That is especially true when the injunction would tie up property which was the subject of a lease with a new tenant.

The precise extent of the plaintiffs’ knowledge of the fact that a new tenant had been found in this case is not perfectly clear on the evidence, but is obvious that there was at least knowledge that a new tenant was in the offing. [ 15 ] Of course, entitlement to substantial indemnity costs does not absolutely translate into the receiving party getting that for which it asks.

All of the factors to be considered under the Rules are to be applied and, of course, the over-all notion of proportionality must be given its due. [ 16 ] The defendants Glenwood Brant Holdings Inc. and Terracap Management Inc. seek costs of the subject motion at $45,042.40 plus costs of the motion heard by me of $8,852.63, the former on the substantial indemnity scale and the latter on the partial indemnity scale. [ 17 ] As I understand it, the defendants Philthy McNasty’s (Enterprises) Inc. and Philthy McNasty’s Restaurants Inc. and Fox & Fiddle Restaurants Inc. seek a total of $10,800 in fees plus $310 in disbursements, for all costs, including the motion before me, on the substantial indemnity scale.

Those defendants took a lesser role than that of the other defendants. [ 18 ] By contrast, the plaintiffs have presented a costs outline suggesting that their substantial indemnity costs stand at $23,524.40, including the costs of the present motion. [ 19 ] Taking into consideration the factors mentioned above, I am of the view that it is appropriate that the plaintiffs pay the following amounts in costs to the defendants shown: Glenwood Brant Holdings Inc. and Terracap Management Inc. $42,500 all inclusive; Philthy McNasty’s (Enterprises) Inc. and Philthy McNasty’s Restaurants Inc. and Fox & Fiddle Restaurants Inc. $10,000 all inclusive.

These costs include the costs of the motion argued before me.

___________________________ PARAYESKI, J. Released: May 16, 2013 CITATION : 2189089 Ontario Limited and Glenwood Brant Holdings Inc. 2013 ONSC 2826 COURT FILE NO.: 12-36035 DATE: 2013-05-16

ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: 2189089 ONTARIO LIMITED and MARTINO CEFARATTI (a.k.a. MARTY CEFARATTI) Applicant - and – GLENWOOD BRANT HOLDINGS INC., TERRACAP MANAGMENT INC. PHILTHY MCNASTY’S (ENTERPRISES) INC., PHILTHY MCNASTY’S RESTAURANTS INC., FOX & FIDDLE RESTAURANTS INC. Respondent RULING PARYESKI, J. MDP:mw Released: May 16, 2013