2013 ONSC 4953, 2013 ONSC 4953

CITATION: 1328773 Ontario Inc. o/a Angling Outfitters v. 2047152 Ontario Limited, 2013 ONSC 4953 COURT FILE NO.: 59/12 DATE: 2013/07/31 ONTARIO SUPERIOR COURT OF JUSTICE APPLICATION UNDER Rule 14.05(3)(d)(

g) and (

h) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as amended, and under Section 20(1) of the Commercial Tenancies Act, R.S.O. 1990, c.L.7, as amended B E T W E E N: ) ) 1328773 ONTARIO INC. o/a Angling Outfitters ) ) ) A.L.J. Kowalsky, for the Applicant ) Applicant ) ))) - and - ) )) ) 2047152 ONTARIO LIMITED ) ) ) D. L. Bowyer, for the Respondent ) Respondent ) )

ONTARIO SUPERIOR COURT OF JUSTICE APPLICATION UNDER Rule 14.05(3)(d), (

g) and (

h) of the Rules of Civil Procedure , R.R.S. 1990, Reg. 104, as amended and under

Section 74 of the Commercial Tenancies Act , R.S.O. 1990, C.L.7, as amended COURT FILE NO.: 77/12 B E T W E E N: ) ) 2047152 Ontario Limited ) ) ) D. L. Bowyer, for the Applicant ) Applicant ) )) - and - ) ) )) 1328773 Ontario Inc., o/a Angling Outfitters ) ) ) A.L.J.

Kowalsky, for the Respondent ) Respondent ) ) ) ) HEARD: September 14 and October 4, 2012 LEACH J. [ 1 ] The focus of this litigation is a commercial property known by its municipal address as 684460, Road 68, Zorra Township, Ontario, (“the Road 68 property”), which is owned by 204715 Ontario Limited (“the Landlord”). [ 2 ] A portion of a building on the Road 68 property was leased to a commercial tenant, 1328773 Ontario Inc., (“Angling Outfitters”), and the central question before me for determination is whether that lease agreement remains in effect, despite its purported termination by the Landlord.

In particular:

a) By way of application, Angling Outfitters seeks a declaration that the lease agreement (including provisions giving Angling Outfitters a right of first refusal on any sale of the property and an option to lease the premises for a further term) remains in full force and effect or, in the alternative, relief from forfeiture so as to reinstate the lease. Ancillary relief requested includes orders for possession and enjoining the Landlord from interfering with use and occupation of the leased premises, as well as an order for a further trial to determine the damages or compensation to which the Applicant may be entitled in the circumstances.

b) By way of a counter-application, the Landlord seeks a declaration that the lease agreement was terminated and/or forfeited as of April 12, 2012. Ancillary relief requested by the landlord includes orders compelling Angling Outfitters to remove its chattels from

the Road 68 property, provide vacant possession of the premises to the Landlord, and refrain from damaging the property in any way. [ 3 ] The application and counter-application came before me for simultaneous trial, pursuant to an earlier Rule 38.10(1)(

b) direction made by Justice Henderson. No further directions were given in relation to the resulting trial. Evidence and facts [ 4 ] As both parties had made considerable effort to put evidence before the court by way of affidavits, in the original application proceedings, I granted leave pursuant to Rule 53.02, permitting the affiants, (called as witnesses at trial), to confirm, adopt and repeat that evidence by way of reference, before supplementing it as desired by way of oral testimony at trial. [ 5 ] In the result, the evidence I received at trial included the following:

a) affidavit evidence and oral testimony of Mr Joslyn (“Josh”) Jun-Bong Leung, a director, officer and general manager of Angling Outfitters;

b) affidavit evidence and oral testimony of Bruce Bowyer, a director and president of the Landlord; and

c) oral testimony of Brian Bowyer, who is both a son of Bruce Bowyer, and the principal of another commercial tenant at the Road 68 property, (i.e., 2029405 Ontario Limited, carrying on business as “Bowyer Marine and Leisure”). [ 6 ] As discussed in more detail below, Brian Bowyer also resides at the Road 68 property, and has acted from time to time as the Landlord’s representative. [ 7 ] Although certain facts and events were a matter of dispute and controversy, (as identified and discussed in greater detail below), I note at the outset that there actually was little disagreement about many of the developments leading to the present litigation.

Disagreement stems from the parties’ widely divergent views on the significance and legal propriety of certain events, and the consequences that should follow. [ 8 ] In my view, the relevant facts and evidence are as follows: • For approximately 11 years, Angling Outfitters has carried on business as a retail fishing and tackle accessory store; e.g., selling more traditional equipment such as rods, reels and lures, as well as more modern electronics such as GPS and “fish finder” units. Although operated through a corporation, its principals include Kenneth Leung (father) and Josh Leung (son).

The latter serves as general manager and officer of the business, and largely looks after its daily operations. Although demand for the products sold by Angling Outfitters increases during the spring and summer months, it carries on business throughout the year, (e.g., selling ice huts and augurs for fishing during the winter months). • The Landlord is a holding company, controlled by members of the Bowyer family. At all material times, it has owned the Road 68 property, which is located to the west of Woodstock.

On the property is a large “main” building, which effectively is segregated into three areas described informally as the front, middle and rear, (based on their relative proximity to the adjacent highway), although all three areas use and rely upon washrooms located in the front portion of the building. Initially, the front and middle areas of the main building were occupied by Bowyer Marine and Leisure, which until 2007 carried on business as a Yamaha dealership, (e.g., selling snowmobiles and ATVs), in addition to providing boat services and repairs.

At all material times, the rear area of the main building has been occupied by another commercial tenant, carrying on business as “Burrill Auction Services”. • For the first six years of its existence, Angling Outfitters operated from a location in downtown Woodstock, in a building owned by Kenneth Leung.

However, in or about November of 2007, it was persuaded to relocate its business to the front area of the main building on the Road 68 property, (which had become vacant owing to Bowyer Marine and Leisure discontinuing its Yamaha dealership activities, and thereafter restricting its business to boat services and repairs using the middle area of the main building). In that regard: o The initial approach to Angling Outfitters was made repeatedly by Bruce Bowyer who, as a customer, patronized Angling Outfitters.

He saw that Angling Outfitters was extremely busy, but in his opinion its business suffered from lack of space and parking at its downtown Woodstock location. He also thought the business of Angling Outfitters and Bowyer Marine and Leisure would complement each other, by facilitating mutual referral of customers. o The Leungs were reluctant to relocate, as their business was thriving in downtown Woodstock, (where they owned the building and accordingly had little overhead), and the Road 68 property seemed remote.

Over time, however, they were persuaded by the favorable terms eventually offered by the Landlord, whose representation, in terms of lease negotiation, (when initial preliminary discussion of a possible purchase of the Road 68 property by the Leungs proved abortive), had been entrusted by the Landlord (and by Bruce Bowyer in particular) to Brian Bowyer. o A formal lease agreement was executed by the parties, (with Josh Leung signing for Angling Outfitters and Brian Bowyer signing for the Landlord), on November 17, 2007.

At trial, there were disputes and uncertainties as to how the wording of that documented lease agreement was finalized. In particular, in support of suggested contra proferentum arguments, witnesses for the Landlord suggested that the Leungs refused to sign an initial version of the lease prepared by the Landlord, (e.g., including provisions that would have required

Angling Outfitters to formally assume responsibility for payment of utilities), and that the Leungs may have been responsible for typing the draft version of the lease eventually signed by the parties, (although Brian Bowyer was uncertain as to whether that was the case). In my view, however, it effectively was common ground that the final lease agreement signed by the parties was the result of extended negotiation between the parties, neither of which was in a position to dictate terms.

In the circumstances, application of the contra proferentum doctrine to a contract resulting from such mutual input and revisions, between parties of relatively equal bargaining power, would be inappropriate. • The formal lease agreement is approximately two pages long.

I have regard to the document in its entirety, but for present purposes, its more salient provisions include the following: o The “Location” of the leased premises was identified by the Road 68 property’s municipal address, and by a reference to the “Front Portion of the main building with an area of approximately 4,000 square feet”, as shown in an attached handwritten diagram. However, other provisions of the lease, under the headings “Maintenance and Repairs”, “Parking” and “Signs”, indicate that the agreement was intended to confer rights and impose obligations extending beyond the building itself.

For example, the Landlord undertook various obligations in relation to the parking lot, snow removal, and “outside maintenance and gardening of the lands forming part of the Premises”. (I note that the Landlord’s obligations also expressly included, “without limitation, maintenance and repairs to all heating, electrical and air-conditioning equipment”.) Angling Outfitters and its customers were given “the right to park on the uncovered areas in the front of the building”. (I note that the lease contains no restriction on overnight parking.) Angling Outfitters also was given the right to “erect signs on the Premises, including free-standing signs”, (i.e., signs not attached to the building), “relating to its business”, providing the Landlord approved them. o The lease expressly indicated that the leased premises could be used “for the purpose of any use permitted by the applicable by-laws, or as otherwise represented herein”. (I note that, although the agreement permitted its termination if, for any reason, Angling Outfitters could not use the property as a “tackle and fishing accessory shop”, there is nothing in the lease requiring Angling Outfitters to use the leased premises in that limited way.

Subject to contravention of any applicable by-laws, any desired use of the leased premises is expressly permitted by the lease.

Complaints expressed by Bruce Bowyer during his evidence, suggesting that Angling Outfitters improperly was engaging in the competitive provision of services similar to those previously provided by Bowyer Marine and Leisure, are in my opinion not well founded in law.) o The lease expressly permitted Angling Outfitters to “make such renovations” as it deemed appropriate for its business, providing the Landlord approved them – and the Landlord in turn was not to withhold such approval unreasonably.

However, Angling Outfitters also assumed responsibility for repairing, at its expense, any damage caused to the premises by its leasehold improvements or trade fixtures, or their removal, (which could be requested and required by the Landlord at the expiration of the lease). o The agreement contemplated an initial five-year term, running from November 17, 2007, to November 16, 2012.

However, it also expressly provided Angling Outfitters with an option to renew the lease for a further five-year term, (with the option to be exercised, if at all, between June 17, 2012, and July 17, 2012). o Angling Outfitters also was given a “Right of First Refusal”, whereby it would be permitted, (during the term of the lease, “provided that the Lease is not in default or otherwise terminated”), to purchase the property on precisely the same terms and conditions of any agreement of purchase and sale otherwise entered into by the Landlord. o The agreement contained detailed provisions specifying the rent payable, both during the initial term of the lease and during any further term brought about by exercise of the renewal option.

These included provisions obliging Angling Outfitters to pay a “Gross rent of $1,500.00 per month for the first 5 years”, (although it was also given an initial “rent free” period of two months at the outset of the initial term), while the “Gross Rent for the renewal term of five years” was to be “$1,600.00 per month, plus an annual increase based on the Consumer Price Index (CPI) as quoted by Statistics Canada, for the previous year”.

The term “Gross rent” was expressly defined as including “usage of parking facility, all utilities , property taxes, ground maintenance, property insurance, and all related GST charges.” [Emphasis added.] • Although the lease is silent on the issue, it was common ground that, from the outset of the lease agreement, there was a supplemental understanding or collateral agreement that Angling Outfitters would permit tenants of the middle and rear portions of the main building, and their customers, to access and use the washrooms which are located in the front portion of the main building.

In particular, I find that Angling Outfitters committed to providing such access during its regular business hours, (from 9:00am to 6, 7 or 8:00pm, depending on the day), and on Monday evenings when the tenant in the rear portion of the main building conducted its auctions, (during which time Angling Outfitters would staff its store, or make other arrangements with members of the Bowyer family or others to safeguard the stock and other items belonging to Angling Outfitters). • It was alleged by the Landlord that, from the outset of the formal lease agreement, there also was a collateral or side agreement whereby Angling Outfitters committed to paying half the cost of propane gas used to heat the property.

In that regard: o Brian Bowyer claimed that Josh Leung had agreed to make such payments so long as they were not referenced in the lease, (as Mr Leung Senior was adamant that the agreed rent should include payment of all utilities), and that Josh Leung regularly made such payments until he unilaterally terminated their payment at some point in late 2010 or January of 2011. o Josh Leung adamantly denied the existence of any such agreement, emphasizing that the “all inclusive” nature of the rent was an extremely important aspect of the attractive terms offered by the Landlord that persuaded Angling Outfitters to relocate.

He acknowledged that, as a goodwill gesture, he had lent some gratuitous assistance to Brian Bowyer from time to time when Brian’s business was in decline and he appeared to be short of funds to pay for propane; e.g., by giving Brian a GPS unit to install for a customer, (so the resulting installation fee could be directed towards purchase of propane), and by some subsequent cash contributions given to Brian to assist with the purchase of gas.

He also acknowledged a conversation wherein he may have indicated that his father would have been unhappy with his making such contributions, (although he says the conversation took place at least 1-2 years after the lease was in place). However, Mr Leung firmly denied the assumption of any binding obligations, on behalf of Angling Outfitters, as far as

contribution to the cost of heating was concerned. In support of his position, he noted that he made no such contributions whatsoever during the first year Angling Outfitters was at the Road 68 property.

Moreover, when Brian Bowyer threatened to terminate heat to the premises in 2009 unless Angling Outfitters contributed to the cost of propane, a call by Josh Leung to Bruce Bowyer resulted in heat being supplied thereafter without any further payments or contributions being made by Angling Outfitters to the cost of propane. o To the extent necessary, I find that there was no legally binding agreement compelling Angling Outfitters to pay any portion of the heating costs in relation to the Road 68 property.

As a matter of law, the suggested obligation of Angling Outfitters to make contributions to payment of utilities would not be merely a supplemental unwritten agreement, (such as the understanding reached in relation to use of the washrooms), but an alleged obligation in clear and direct conflict with the express terms of the parties’ written agreement that the stipulated rent to be paid by Angling Outfitters would suffice to ensure receipt of all utilities.

The Landlord’s suggestion of such an agreement regarding contribution to payment of heating costs therefore raises all the policy concerns and objections reflected in the parole evidence rule, and must be rejected.

As a matter of fact, I also think it telling that, despite the failure of Angling Outfitters to make any further contributions whatsoever to the cost of heat from at least late 2010 onwards, (even according to the evidence of Brian Bowyer), and suggestions advanced during the present dispute that Angling Outfitters now owes the Landlord at least $5,476.78 in that regard, the Landlord continued to supply heat without raising the issue in any formal way until the present dispute arose in early 2012.

Nor did the Landlord expressly mention or rely upon the alleged failure of Angling Outfitters to make such contributions to the cost of heat in any of the formal notices or correspondence delivered by the Landlord and its counsel regarding alleged defaults under the parties’ lease agreement. Similarly, in this litigation, the Landlord did not advance any formal claim for rectification of the parties’ agreement, or other related relief, insofar as the supposed obligation of Angling Outfitters to contribute to payment of utilities was concerned.

In my view, all of this reflects awareness by the Landlord that there was in fact no binding agreement or obligation in that regard. • Following relocation of Angling Outfitters to the Road 68 property in or around November of 2007, relative harmony prevailed between the parties and all tenants of the property for approximately four years.

In particular, during this period, (focusing on matters that assume later importance for the reasons outlined below): o The business operations of Angling Outfitters continued to grow year by year, such that, by 2012, it had sales of approximately $1.5 million per year, with approximately $800,000 worth of inventory.

Its location is now well known to its established clientele. o During the initial period of the lease, Angling Outfitters would refer customers to Brian Bowyer, and his business Bowyer Marine and Leisure. o At its own expense, Angling Outfitters made numerous improvements and repairs to the property, including installation of custom- made extra panes for the windows, (in an effort to improve insulation and the warmth of the premises), and various repairs to the building’s leaking roof, electrical repairs to ballasts and lighting in the leased premises, as well as repairs to the furnace servicing the leased premises.

Pursuant to the lease agreement, many of these repairs arguably were the responsibility of the Landlord, but Angling Outfitters was content to assume the responsibility and expense without requests for reimbursement. o Angling Outfitters continued to satisfy its rent payment obligations by supplying cheques to Brian Bowyer, (who continued to act as the Landlord’s representative in that regard).

It was common ground that post-dated cheques frequently were not supplied, despite provisions of the lease requiring them, and that this occasionally led to receipt of a rent cheque a day or two after it was due, (for example, if a month began on a week-end when Josh Leung was away or unavailable).

However, Josh Leung testified, and I find, that this deviation from the requirements of the lease stemmed from the practice and preference of the Landlord, through its representative Brian Bowyer, to vary the requested payee indication on the rent cheques from month to month; (for example, sometimes specifying that the cheque should be made payable to the Landlord, while at other times specifying that it should be made payable to Brian Bowyer personally). In cross-examination, Brian Bowyer acknowledged this to be so.

In any event, prior to trial, the Landlord expressed no complaint about the absence of post-dated cheques, and it was common ground that Angling Outfitters has never defaulted on its rent obligations. o Angling Outfitters regularly would place and store cardboard, skids, displays and other material on the verandah area immediately outside its leased portion of the main building, and occasionally in a Quonset building located elsewhere on the property. The material left outside included waste material, prior to its disposal.

Other tenants of the property kept materials outside the main building as well. o From time to time, Angling Outfitters would park a white storage trailer at the back of the building. In the summer, Josh Leung also would park his boat and boat trailer overnight behind the building as well, (paying Brian Bowyer to store them over the winter).

Mr Leung acknowledged that some of his customers also may have left vehicles parked at the property overnight if on a fishing trip, but this was never done with the knowledge or permission of Angling Outfitters. o All tenants of the property, (including not only Angling Outfitters but also Bowyer Marine and Leisure and Burrill Auction Services), would from time to time burn waste and debris in a large bin, owned by Burrill Auction Services, located at the rear of the property.

The expectation, in return for use of the burn bin, was that all would assist with removal of ashes from time to time when the bin became full. o Staff of Angling Outfitters regularly would exit the building to briefly assist customers in the parking area if/as necessary; e.g., to demonstrate proper operation and correct GPS and fish-finder settings in customer boats. o Numerous dogs were maintained or allowed on the property. Brian Bowyer had three dogs, (two German shepherds in a pen, and a Labrador that was permitted to roam freely on the property – occasionally entering the premises of Angling Outfitters).

Josh Leung had a golden retriever that would accompany him daily to the Angling Outfitters shop, and occasionally wander free outside the shop. The girlfriend of an Angling Outfitters employee also had a small white shih tzu that would be brought into the shop from time to time. o Brian Bowyer continued to conduct business, (through Bowyer Marine and Leisure), and to reside, (in a trailer), at the Road 68 property. He accordingly was there, observing events at the property, on an almost daily basis.

He frequently would enter the premises of Angling Outfitters; e.g., to collect rent, purchase items, and/or simply to access or leave the middle area of the main building through its front entrance. According to the testimony Josh Leung, (not challenged or contradicted in that regard), Brian Bowyer not only was

the person to whom Angling Outfitters was instructed to make all rental payments, but also the indicated person to whom all requests for maintenance were to be directed. (Brian Bowyer conceded in cross-examination that it was fair to describe him as the Landlord’s “property manager”.) As far as maintenance issues are concerned, Bruce Bowyer apparently was contacted directly only once, by Angling Outfitters, prior to February of 2012; i.e., in relation to the 2009 heating dispute mentioned above.

Bruce Bowyer nevertheless remained in regular contact with his son Brian, and also personally visited the Road 68 property from time to time.

However, from November of 2007 to February of 2012, I find that neither Brian nor Bruce Bowyer, nor any representative of the Landlord, made any complaints or expressed any dis-satisfaction to Angling Outfitters regarding its conduct on any part of the property. (Although Brian Bowyer claimed to have relayed concerns to all tenants of the property that had been expressed by the fire department during an earlier visit, along with a request and/or direction for the cessation of further burning, I prefer Mr Leung’s evidence that neither he nor Angling Outfitters was aware of any such visit or request/direction prior to the current dispute.

This seems more consistent with the reality that Burrill Auction Services, the owner and apparently principal user of the burn bin, also continued to use and burn material in the bin well into April of 2012.) o It is not disputed that, prior to March 26, 2012, Angling Outfitters never received any Notice of Default from the Landlord for any alleged non-rental default. • Relations between the Landlord and Angling Outfitters nevertheless began to deteriorate significantly in the winter of 2011/2012, if not before.

In particular: o Brian Bowyer says relations between the parties went into decline when he began receiving fewer and fewer referrals from Angling Outfitters; a progressive development which appears to have coincided with a general decline or winding down of Brian Bowyer’s business. (By the time of trial, Brian Bowyer had taken up other employment, and Bowyer Marine and Leisure was no longer his primary focus.) Josh Leung concedes that he stopped making such referrals, but says this was because customers previously referred to Brian increasingly were expressing dissatisfaction with the service received. o At some point in 2011, Angling Outfitters changed the locks on its store without notifying the Landlord, seeking the Landlord’s permission, or providing the Landlord with copies of the keys. (Mr Leung testified that this was done because he was uncomfortable with Brian Bowyer, intermittently a customer of Angling Outfitters, having the ability to access its inventory after hours.) o In late 2011 or early 2012, despite its obligations under the lease agreement to maintain and repair all heating equipment, the Landlord caused or otherwise permitted the removal or discontinuance of the propane tanks servicing the main building.

This forced Angling Outfitters to resort to the use of portable electric heaters, but the premises remained inadequately heated. o On February 27, 2012, an altercation then unquestionably occurred, although the circumstances are disputed. According to Josh Leung, Brian Bowyer entered the premises of Angling Outfitters, apparently drunk, acting in an aggressive and abusive manner, swearing, spitting and making complaints and threats about the aforesaid shih tzu dog in particular, and refusing to leave.

According to Brian Bowyer, he was simply “cutting through” the front area of the building, (while trying to assist a customer who was experiencing car trouble in the front parking lot), when he was bothered by the dog in question, and made a remark about it “needing a good boot”. On the way back through the front area, (after helping the customer), he says he then was confronted and physically assaulted by the manager formally employed by Angling Outfitters, (and whose girlfriend owned the dog in question).

Josh Leung called Bruce Bowyer, asking him to attend the premises as soon as possible, and allegedly indicating that Brian risked being harmed unless he was removed from the premises of Angling Outfitters. The police also were called, (by Brian Bowyer), but no charges were laid. For present purposes, it is unnecessary for me to decide precisely what happened at the time of the altercation, and I decline to do so.

Suffice it to say that it was an incident of open conflict between the parties and/or their representatives and employees, and the incident appears to have brought matters temporarily to a head. • On February 28, 2012, Josh Leung attended a meeting with Bruce Bowyer and the Landlord’s lawyer that lasted approximately an hour. Evidence as to what happened during that meeting was not consistent, but to the extent necessary I make the following findings: o The Landlord was focused primarily on the future, indicating that it intended to sell the Road 68 property, and asking about the intentions of Angling Outfitters.

In response, Mr Leung indicated that, at a minimum, Angling Outfitters intended to exercise its option to renew the lease so that it could remain at the location for another five years. He also indicated that purchase of the property by Angling Outfitters in the immediate future would be difficult, as a mild winter had left it with surplus winter fishing inventory and a negative cash flow situation. However, the possibility of further discussion and negotiation in that regard was left open.

Bruce Bowyer was asked to provide Angling Outfitters with an outline of the desired purchase price and possible financing arrangements. o In the meantime, the parties agreed, at a minimum, on the following: ▪ It was important that the commercial tenants and their employees henceforth would stay out of their respective premises as much as possible. ▪ Angling Outfitters would be permitted to rent additional space in the middle portion of the main building, (for $175 per month), and would construct an interior door, (at its own expense), to separate that additional space from the remaining space occupied by Bowyer Marine and Leisure. ▪ Angling Outfitters could continue to leave its storage trailer on the property, and continue to use the Quonset hut for additional storage. ▪ Angling Outfitters would supply the Landlord with keys to the leased premises, (which was done a few days later, albeit with a proviso that the key was to be kept by Bruce Bowyer and not given to Brian Bowyer), as well as post-dated cheques, (in relation to both the original rent payment obligations, and in relation to payment for the newly agreed additional storage space). o Although the Landlord also attempted to impose or settle upon additional terms for the future, (such as specified charges for overnight parking and contributions by Angling Outfitters towards payment of utility charges), I find there was in fact no agreement in that regard.

I accept the submission of Angling Outfitters that such terms would conflict with and require modification of the existing

written lease agreement. o The Landlord nevertheless did make it clear that it was no longer content to permit continued gratuitous use of “other un-leased areas”, (beyond those covered by the lease and the further agreements reached at the meeting), for storage by Angling Outfitters, and that such areas were to be cleared by Angling Outfitters.

The Landlord similarly indicated that it was no longer content to have untended animals outside the building area leased by Angling Outfitters. • Shortly after the meeting, Bruce Bowyer supplied Angling Outfitters with a written memo outlining the Landlord’s desired purchase price for the Road 68 property, and financing arrangements to which the Landlord would be agreeable. This was followed by further telephone contacts and discussions in that regard, involving Mr Leung Senior.

However, Angling Outfitters apparently did not provide any final answer concerning the possibility of its purchasing the property for at least four weeks after the parties’ meeting on February 28, 2012.

During that time, the Landlord confined its other sale efforts to posting its own sign on the property, and Bruce Bowyer perusing publications for notice of any parties interested in leasing commercial space in the area. • On or about March 26, 2012, the Landlord then delivered a formal “Notice of Non-Rental Default”, alleging that Angling Outfitters was in default if its lease agreement by “use of property other than the leased area” in four specified ways: storage of items outside of the leased premises, (all of which the tenant was asked to remove); the presence of trailers and other storage vehicles, (all of which the tenant was asked to remove, with an additional instruction that there was to be no overnight parking); burning of debris or refuse, (which the tenant was to refrain from doing); and “conducting business outside the leased areas”, (e.g., by installing equipment, which the tenant was instructed not to do).

The notice indicated that Angling Outfitters was being given 15 days in which to “cure” the alleged defaults, failing which the Landlord, without further notice, would exercise “all remedies” available to it, including termination of the lease.

The notice did not mention or provide for the possibility of Angling Outfitters remedying any alleged breach of the lease by way of monetary compensation. • On or about April 1, 2012, the Landlord accepted full rent from Angling Outfitters for the month of April. • On April 2, 2012, the aforesaid “Notice of Non-Rental Default” was followed by a letter to Angling Outfitters by the Landlord’s lawyer, again asking Angling Outfitters if it was going to purchase the Road 68 property.

The letter included an indication that the property had not yet been formally listed for sale with a real estate agent. • On April 3, 2012, counsel retained by Angling Outfitters wrote to counsel for the Landlord. In addition to indicating that a considered response to the Landlord’s post-meeting correspondence would be forthcoming, Angling Outfitters took issue with the Notice of Non-Rental Default.

It noted, for example, that the reference to outdoor items alleged to belong to Angling Outfitters was lacking in specifics, and that intermittent use of the storage trailer for short periods had never been the subject of any previous objection. It also took issue with the suggestion that periodic demonstration of product operation outside the building should be characterized as “conducting business” outside the leased premises. Notwithstanding these objections, Angling Outfitters indicated that all defaults alleged in the Notice of Default either had been remedied or were in the process of being remedied.

Neither the Landlord nor its counsel made any response to this letter. • By April 11, 2012, Angling Outfitters had taken some steps towards addressing the alleged defaults; e.g., by instructing its employees not to burn any further material, by restricting Mr Leung’s golden retriever from wandering free outside the building, (with the shih tzu dog not being brought on the premises after the incident of February 27, 2012), and by making arrangements for future removal of outside items and alternate storage.

However, photographs confirm the presence of considerable construction material and waste packaging outside the building on April 11, 2012, and the continued presence of the white storage trailer.

Josh Leung acknowledged this in his evidence, but indicated that the construction material related to installation of the new internal door and space separations required by the parties’ supplemental agreement of February 28, 2012, that immediate removal of additional waste items had been delayed temporarily by removal bins (belonging to Burrill Auction Services but now used with permission by Angling Outfitters) being filled to capacity, and that some of the items outside the property may in fact not have been placed there by Angling Outfitters.

In evidence which was not challenged or contradicted, Mr Leung also indicated, and I accept, that arrangements had been made to remove the white storage trailer on April 12, 2012, using a trailer hitch stored in the leased premises. • On Thursday, April 12, 2012, however, the Landlord then delivered a “Notice of Termination” of the lease agreement, (owing to Angling Outfitters’ alleged “failure to cure the defaults specified in the Landlord’s Notice of Default dated March 26, 2012”), and changed the locks on the building.

The Landlord’s notice of termination went on to indicate that any attempt to gain entry without permission would constitute “unlawful trespass”, and provided Angling Outfitters with 5 days to removal all personal property through arrangements to be made via the Landlord’s lawyer.

Notwithstanding its purported termination of the lease, the Landlord also indicated that it would continue to look to Angling Outfitters for payment of “all rent and other amounts in arrears under the lease”, as well as other sums including “future damages as a result of the Landlord losing the benefit of the Lease over its unexpired term”. • It is common ground that, when Josh Leung attended at the Route 68 property on April 12, 2012, and learned of the Notice of Termination and changing of locks, Bruce Bowyer was present and spoke with Mr Leung, (who asserted that the Landlord’s conduct was improper and wrong).

The parties also agree that Bruce Bowyer expressly indicated to Mr Leung that the dispute and difficulties now faced by Angling Outfitters “would all go away” if Angling Outfitters simply purchased the property. (In his evidence, Mr Bowyer emphasized that he was simply stating a reality, and that the Landlord still “very clearly and candidly would like to sell the building to the applicant”.) According to Mr Leung, Mr Bowyer also indicated his willingness to consider a “new” month to month lease agreement, without the previously agreed right of first refusal, provided Angling Outfitters agreed to an increased rent and payment of utility charges.

Although Mr Bowyer denied this, I find that such additional remarks were made. In particular, they would be entirely consistent with the earlier efforts of the Landlord to extract further payments from Angling Outfitters, Mr Bowyer’s testimony at trial that other prospective purchasers were very interested in having a long term tenant in the front portion of the building, and Mr Bowyer’s concession during cross-examination that the existing lease with Angling Outfitters nevertheless was unattractive to prospective purchasers because it was too generous to the tenant.

They are also consistent with Mr Bowyer’s notable frustration, expressed during his testimony, with perceived disadvantages of the original lease agreement, and the marked reluctance of Angling Outfitters to purchase the property or agree to even modest additional charges supplementing those required by the originally agreed arrangements.

• On April 13, 2012, (a Friday), counsel for Angling Outfitters repeatedly attempted to follow up on the purported lease termination and resulting lock-out by contacting the Landlord’s lawyer, (another son of Bruce Bowyer), but the lawyer’s office was closed and not accepting fax transmissions. Josh Leung also telephoned Bruce Bowyer personally to again challenge the propriety of the Landlord’s conduct and demand access to the leased premises, indicating that he intended to re-enter his store the following day.

According to Mr Boyer, Mr Leung indicated, either during this telephone conversation or the conversation at the property the day before, an intention to “smash doors and windows”, which Mr Bowyer characterized as threats of violence and vandalism. I think it more likely, and find, that Mr Leung simply was indicating his intention to force entry into the building if/as necessary. • On April 14, 2012, Josh Leung attended the property with a locksmith, and after notifying Brian Bowyer of his intention to do so, re-entered the property at approximately noon that day and had the locks changed again.

The Ontario Provincial Police were called to the property, (by the Landlord), but regarded the situation as a civil dispute and declined to intervene. Since its re-entry, Angling Outfitters has remained in possession of the premises, where it continues to carry on business. • On April 29, 2012, following further exchange of correspondence between counsel, the parties entered into a written “without prejudice” interim occupancy agreement, (expressly not constituting a lease under law), intended to govern their relationship pending formal resolution of the litigation.

Given the expressly emphasized “without prejudice” nature of the arrangement, I will not detail its provisions here. For present purposes, I simply note that it contains various provisions designed to minimize potential conflict between the parties while their formal dispute is being addressed. For example, the Landlord agrees to supply hydro and water services without interruption, and to refrain from any further exclusion or disruption to the normal business of Angling Outfitters.

Similarly, Angling Outfitters voluntarily agrees to do certain things, (e.g., allowing continued use of the front area washrooms by others, confining its activities to the interior of the building except for the “normal use of the parking area during regular business hours, refraining from burning anything on the property, and turning heating off heating and cooling appliances and lights at night). • On July 16, 2012, Angling Outfitters delivered notice that it was exercising its option, under the parties’ original lease agreement, to re-let the leased premises for the further additional period contemplated by the provisions of the option. • Josh Leung and Brian Bowyer both confirmed that, in the period between execution of the interim occupancy agreement and trial, day to day relations between the tenants of the Road 68 property generally have been minimized and have proceeded on a “civil” basis, without confrontation.

In particular, Brian Bowyer has visited the premises occupied by Angling Outfitters a number of times, without incident. (In that regard, I note that the manager who previously confronted Brian Bowyer, and whose girlfriend owns the dog which precipitated the confrontation, no longer works for Angling Outfitters.) Bruce Bowyer also acknowledges that Angling Outfitters has not intentionally caused any damage to the interior of the building. However, a number of matters have continued to cause irritation and disagreement between the parties.

In particular: o There was an occasion when an employee of Angling Outfitters added a small animal carcass to a burn bin fire already started by another tenant, (Burrill Auction Service). I accept the evidence of Mr Leung that this was an isolated and unauthorized incident, and that the employee in question has been instructed not to engage in any similar activity again. o There has been at least one incident, in late June of 2012, where a collection of waste material was left immediately outside the premises occupied by Angling Outfitters, over the course of a week-end, prior to its removal.

Photographs taken by the Landlord nevertheless confirm that the amount of material was quite modest in comparison with that documented in earlier photographs, (taken prior to the Notice of Termination).

I also accept Mr Leung’s evidence that this too was an isolated occurrence, as Angling Outfitters now generally keeps its waste inside pending its removal from the premises. o Bruce Bowyer is of the opinion that Angling Outfitters continues to carry on business in the parking lot outside of the building, installing and servicing GPS units in the boats of customers; a perception that is particularly irksome since this type of service formally was provided by Bowyer Marine and Leisure. o Disputes continue about the provision and use of utilities servicing the area of the building used by Angling Outfitters.

These include allegations by the Landlord that Angling Outfitters regularly fails to turn off all lights and appliances in the evening, (an obligation found nowhere in the parties’ original written lease agreement), notwithstanding the parties’ interim “without prejudice” agreement. However, the principal source of ongoing rancor relates to air conditioning – a matter in respect of which I received considerable evidence at trial.

Generally, I note and find the following in that regard: ▪ In my view, the parties’ original lease agreement clearly contemplated and required the Landlord’s ongoing provision of air- conditioning service to the leased premises, at the Landlord’s expense.

This follows from the Landlord’s express obligation to ensure “maintenance and repairs to all heating, electrical and air-conditioning equipment ”, (emphasis added), and the provisions expressly indicating that the “Gross rent” payable by Angling Outfitters was to include “all utilities”. ▪ The area of the building leased by Angling Outfitters was serviced by two air conditioning units, (one in front of the building and the other on the building’s roof), and I accept Mr Leung’s evidence that the provision of adequate air-conditioning to the leased premises was never an issue prior to the parties’ current dispute. ▪ Brian Bowyer indicated and acknowledged in his testimony that, when the air-conditioner in front of the building developed mechanical problems, these were not addressed or repaired by the Landlord.

Rather, on the Landlord’s behalf, Brian Bowyer simply turned off and locked the unit. When he noticed that it had been turned on again by Angling Outfitters, he again disabled and locked the unit.

As for the air-conditioning unit on the roof of the building, Brian Bowyer testified that the unit still was operational to the best of his knowledge, but that, again acting on behalf of the Landlord, he had simply turned off the power to that unit. ▪ As a complete lack of air-conditioning to the premises made its occupation during the summer months unbearable, Angling Outfitters responded to the Landlord’s unilateral actions by purchasing two portable air-conditioning units.

One was used to circulate cool air through the building’s furnace and heating ducts, (through a jury-rigged system of cardboard and duct tape), while the other was temporarily installed and removed on a daily basis by its installation on a particle board temporarily swung into place in a “man door” opening during the store’s business hours.

▪ The Landlord placed great emphasis on these matters during the course of the trial as suggested evidence of a recalcitrant attitude on the part of Angling Outfitters and its alleged tendency to improper conduct; e.g., by accessing the furnace room, using screws to attach the particle board without securing Landlord permission, and/or occasionally running at least one air conditioner during the night, (to keep internal temperatures to a level that might have been more easily attained each morning had the “regular” air-conditioner units been kept operational).

However, I think a more appropriate conclusion is that Angling Outfitters reluctantly but necessarily was driven to such self-help measures by the apparently deliberate failure of the Landlord to ensure ongoing maintenance and operation of the “regular” air conditioning units, as per the terms of the parties’ original lease agreement. The Landlord knew or ought to have known that some kind of air conditioning arrangement was essential to the continued meaningful operation of a retail business patronized by customers during hot summer months.

It nevertheless deliberately terminated provision of that utility, apparently in an effort to exert further pressure on Angling Outfitters to either purchase or vacate the property.

In the circumstances, I think it neither fair nor appropriate to fault Angling Outfitters, (in a manner favoring the Landlord), for its particular conduct as far as air-conditioning arrangements are concerned. • In his evidence, Bruce Bowyer candidly acknowledged that, with the exception of the incident of further burning of debris, (noted above), Angling Outfitters has complied with correcting all deficiencies identified in the Notice of Non-Rental Default, (although Mr Leung himself mentioned that his dog occasionally would follow a customer outside from time to time).

Mr Bowyer nevertheless emphasized that, in his opinion, removal of debris did not “meaningfully occur” until well after the stated notice period had expired.

Moreover, he has “little doubt” that the alleged misconduct and “lack of character” previously demonstrated by Angling Outfitters will emerge again if it is given a “second chance” by the court, and once it no longer faces the immediate prospect of a court reviewing and passing judgment on its conduct. • For his part, Josh Leung testified that he and Angling Outfitters had no desire for further trouble or litigation, and thought that the parties could continue to co-exist without incident for the remainder of the originally agreed lease period.

In that regard, he indicated a willingness to abide by any terms imposed by the court, (if relief from forfeiture was required and granted), and volunteered independently to take additional measures to reduce the possibility of further conflict; (e.g., by henceforth leaving his dog at home). • Both Brian Bowyer and Bruce Bowyer conceded that much of the conduct identified in the Landlord’s formal complaints had gone on for an extended period of time, and effectively had been tolerated, (if not formally “allowed” or waived), prior to the current dispute.

Both Bowyers emphasized that the overriding consideration prompting a change in the Landlord’s approach was intended sale of the property and, in particular, the need to keep the property tidy and presentable. [ 9 ] Having considered these circumstances and the applicable law, for the reasons that follow I find that the parties’ original lease agreement remains in effect, despite its purported termination by the Landlord. Lease termination or preservation [ 10 ] I start with the provisions of s.19(2) of the Commercial Tenancies Act , R.S.O. 1990, c.L.7, which reads as follows: 19.

(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. [ 11 ] In my view, these legislative provisions effectively highlight numerous impediments to the position being asserted by the Landlord in this case. [ 12 ] First, any purported right of a commercial landlord to re-enter leased premises or treat the lease as having been forfeited obviously is predicated on the existence of a breach or breaches of the lease agreement by the tenant.

In that regard:

a) Fairness and the aforesaid provisions of the legislation suggest that, in any legal proceedings to determine the propriety of actions taken by the landlord, the alleged breaches relied upon by the landlord to justify its conduct should be confined to those specified in the required notice.

b) As noted above, the only defaults specified and relied upon by the Landlord in its notice to Angling Outfitters involved four purported and specified instances of “use of property other than the leased area”.

While numerous other tenant failings were suggested and emphasized by the Landlord during the course of trial, (e.g., failure to make required contributions to the cost of heating, unauthorized changing of locks and alteration of premises, failure to provide post-dated cheques, assault and threats made by the tenant and/or its employees), these properly have no relevance to determining whether the Landlord properly terminated the lease and re- entered the premises. At most, they may form part of the global context to be taken into account if and when relief from forfeiture must be considered.

c) In this case, I also agree with Angling Outfitters that, at least up until the parties’ meeting on February 28, 2012, many aspects of the alleged misconduct specified by the Landlord arguably were the subject of promissory estoppel, which prevents a party “from insisting on his strict legal rights … when it would be inequitable for him to do so having regard to the dealings which have taken place between the parties”; see Aguacil v. 520301 Ontario Inc. , [2003] O.J. No. 328 (Div.Ct), at paragraph 34 . [1] In my view, this also limits, in temporal terms, the underlying alleged misconduct in respect of which the Landlord may fairly advance complaints, which in turn

impacts on the overall gravity of the alleged misconduct. The Landlord only provided fair notice to Angling Outfitters as of February 28, 2012, that certain conduct would no longer be condoned or waived on a “go forward” basis. The conduct between the time of the meeting and the delivery of its Notice of Non-Rental Default accordingly is the limited focus of conduct to which the Court should have regard in determining the existence, extent and gravity of suggested defaults.

d) It nevertheless seems to me that the matters identified and relied upon in the Landlord’s notice inherently are not necessarily breaches of the lease agreement per se , in any case. In particular, although the factum of the Landlord asserts that there is no reason to distinguish between a landlord’s improper attempts to encroach on premises defined by the lease and a tenant’s unauthorized use of areas beyond the leased premises, the fundamental reality is that the physical area at issue in the former situation is governed by a lease agreement while the physical area at issue in the latter situation is not.

In this case, for example, if Angling Outfitters has engaged in use of other property belonging to the Landlord without any right or authority conferred by the lease, (either expressly or as something ancillary or incidental to reasonable commercial use of the leased property), then the situation arguably does not involve breach of the lease per se .

In particular, in the absence of some other justification for use of such other non-leased property, (such as a collateral licence or permission extended by the property owner or its representative, which seems to have been the case here), the use of such areas beyond leased premises may give rise to other complaints and causes of action, (e.g., insofar as it may constitute unauthorized trespass). However, it would not, in my opinion, necessarily constitute any breach of an agreement governing what was and was not to be done in relation to the leased premises.

e) Further, or in the alternative, it seems to me that at least some of the breaches alleged and relied upon by the Landlord are in fact activities which can and should be regarded as being incidental to reasonable commercial use of leased property. In particular, most retail operations inevitably will generate some degree of waste, and temporary placement of some packaged waste outside but immediately adjacent to a leased building, prior to its imminent disposal, should not necessarily be regarded as a breach of a commercial lease agreement.

Similarly, if a commercial tenancy expressly includes an adjacent parking facility for use of customers, accompanying a customer to his or her parked vehicle to briefly adjust or demonstrate use of an installed product also should not necessarily constitute a breach of the lease agreement.

f) Of course, there are limits to such ancillary rights of use, and abusive excess may well be regarded as a breach of the lease agreement, (barring any further considerations, such as the possible application of promissory estoppel).

In this case, for example, I think that characterization may fairly be applied to the large amounts of disorderly waste depicted in the photographs taken on April 11, 2012, but not to the packaged waste depicted in the photographs taken in late June of 2012. [ 13 ] Second, as noted above, I agree with Angling Outfitters that much of the alleged misconduct underlying the Landlord’s complaints is governed by considerations of promissory estoppel.

That applies not only to conduct condoned by the Landlord prior to the meeting of February 28, 2012, but also to certain conduct condoned between the date of that meeting and delivery of the Landlord’s formal “Notice of Non-Rental Default”. In this case, for example:

a) The Notice of Non-Rental Default includes the Landlord’s stated reliance on Angling Outfitters using non-leased areas for placement of its storage trailer;

b) Parking of the storage trailer on the Road 68 property nevertheless was condoned and permitted by the Landlord not only before the meeting of February 28, 2012, but also thereafter, (as the Landlord’s confirming letter the following day expressly confirmed that Angling Outfitters could “continue to leave the white trailer on the property, currently used for storage);

c) It follows that, up to and including the time of the Landlord’s Notice of Non-Rental Default, there was in fact no conduct of Angling Outfitters, in relation to the parking of its storage trailer, upon which the Landlord was entitled to ground an actionable complaint. Formal notice that the Landlord’s forbearance in that regard was coming to an end might thereafter give rise to future defaults in that regard, warranting a later appropriate notice identifying, at the time of its delivery, an existing default that Angling Outfitters would have to address and remedy.

But based on the evidence before me, I find there was no extant actionable default properly identified in the Notice of Non-Rental Default delivered by the Landlord as far as the parking of the storage trailer was concerned. Nor was there any notice delivered, (as required by the legislation), in relation to any such defaults which may have occurred subsequent to March 26, 2012.

As a matter of law, I read and interpret s.19(2) as requiring notice in relation to an existing breach or default; i.e., with no allowance or provision for notice of anticipatory breach. [ 14 ] Third, as indicated by the opening words of s.19(2) of the Commercial Tenancies Act , supra , which deals with “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”, (emphasis added), and by the authorities, mere existence of a breach or default under a lease agreement is not synonymous with a right of re-entry or forfeiture.

To the contrary, the law generally is protective of a tenant’s security of tenure, and a landlord must establish that the lease itself or extraordinary circumstances warrant dealing with a breach or default by way of lease termination and landlord re-entry rather than damages. See, for example, the following comments of the Divisional Court at paragraphs 4-6 of Kutasy v. Kelly , [1978] O.J. No. 3351 (Div.Ct.) , which read as follows:

Nowhere in the lease is there any clause relating to forfeiture of the lease for non-performance of covenants and particularly is there noclause in accordance with Sch.B, item 12 of the Short Form of Leases providing for forfeiture. The Courts do not presume a right of re- entry unless one is clearly implied in the lease: see William’s, The Canadian law of Landlord and Tenant, 4th ed. (1973), p.496 et seq.

It follows that by the terms of the lease therefore, at best, the position of the landlord can only be that the tenant, in assigning the leasewithout first obtaining the leave of the landlord, may have been in breach of a covenant in the lease. We are all of the view, therefore, that the assignment of the lease did not amount to a forfeiture of the lease and gave rise, at best, to anaction for damages by the lessor.

That being the case, the order of the Judge, of first instance, to the effect that the lease has beenterminated, cannot stand. [15] In my view, with appropriate changes for the relevant alleged breach or breaches of the lease, these comments apply to thesituation before me.

Even if there were extant breaches of the lease agreement as identified in the Notice of Non-Rental Default, whichwere not covered by considerations of promissory estoppel, I am still left with a situation where the relevant lease agreement contains noprovision giving the Landlord the extraordinary rights of re-entry or forfeiture, (as opposed to appropriate claims for damages), inrelation to the alleged defaults identified in the Landlord’s formal notice. [16] In that regard, it was suggested during the course of argument that express provision or reservation of such rights might beunnecessary in the event of a “fundamental breach” of the lease agreement by the commercial tenant, (with the Landlord arguing that atenant’s use of area beyond specifically defined lease premises constitutes such a breach).

I doubt that such arguments survive theSupreme Court of Canada’s decision in Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, [2010] 1 S.C.R. 69, rejecting “fundamental breach” analysis in favour of adherence to the wording of freely negotiatedcontracts barring some paramount consideration of public policy sufficient to override, (although I appreciate that the Supreme Court’sdecision was focused on the enforceability of exclusion clauses).

However, even if such “fundamental breach” analysis is stillpermissible in the context of commercial lease agreements and purported rights of termination and re-entry by landlords, it would stillrequire the Landlord in this case to demonstrate a breach or default by Angling Outfitters sufficient to deny the innocent Landlord of“substantially the whole” of the contract’s benefit. In my view, the alleged defaults identified in the Landlord’s formal Notice of Non-Rental Default certainly do not merit that characterization.

Regardless of the alleged inconvenience, annoyance and aesthetic challengespresented by the tenant’s alleged uses of non-leased property, there is no evidence or suggestion that the Landlord has not still enjoyedthe full benefit of the rent received from Angling Outfitters in relation to the leased premises. [17] Put another way, the tenant’s identified conduct was not of sufficient gravity to entitle the Landlord to terminate the lease.

Again, it “has been noted in a number of cases that forfeiture of a lease is a serious event and that courts do not look favourably onforfeiture unless the tenant’s behavior has been persistent, substantial or reprehensible”; see ClubLink Corp. v. Pro-Hedge Funds Inc.,[2009] O.J. No. 2660 (S.C.J.), at paragraph 31, and the numerous authorities cited therein.

Although some of the identified conduct ofAngling Outfitters may have been persistent over the course of the parties’ relationship, it loses that quality when one considers that theconduct also was waived or condoned for much of that time, (for the reasons identified above), and in my view the conduct in questionwas neither “substantial” nor “reprehensible” in the sense required.

To the contrary, like Justice Strathy in the ClubLink case, supra, atparagraph 34, I find there is no evidence that the identified conduct of the tenant resulted in damages to the Landlord, and that therelevant issues could and should have been resolved “by timely planning and cooperation, coupled with liberal doses of patience,courtesy and common sense – on both sides”. [18] A fourth problem with the Landlord’s position stems from its acceptance of full rent from Angling Outfitters on April 1, 2012,following its indication of the various alleged defaults indicated by its formal Notice of Non-Rental Default delivered on March 26,2012.

In my view, the authorities make it clear that such acceptance of rent does not constitute waiver of a landlord’s right to continuedreliance on the noted defaults in order to justify a claim for damages stemming from the identified breach or breaches of contract by thetenant; however, it does constitute waiver of a landlord’s right to rely on the identified conduct as a an alleged basis for lease terminationor forfeiture.

This is because acceptance of rent by a landlord represents an implicit assertion that the parties’ lease arrangement shouldcontinue, notwithstanding defaults by the tenant, and therefore constitutes an implicit waiver of the breach or breaches at least insofar astermination of the lease is concerned. See, for example: Jardine v. A.G Nfld, (UK JCPC), [1932] A.C.275 (J.C.P.C.),at p.289; Trustee of Estate of Royal Inns Canada Ltd. v. Bolus-Revelas-Bolus Ltd., [1981] O.J. No. 3032 (H.C.J.), at paragraph 23; PrimeRestaurant Systems Inc. v. Elgin Hills Properties Ltd., [1991] O.J.

No. 3483 (Gen.Div.); and Malva Enterprises Inc. v. Rosgate HoldingsLtd. (1993), (ON CA), 14 O.R. (3d) 481 (C.A.), at p.487. [19] In that regard, I note and am guided by the Court of Appeal’s express endorsement, in the Malva Enterprises case, of the “well established principles” and reasoning outlined by Hill and Redman, Law of Landlord and Tenant, 18th ed. (1988), at p.A952: The lessor has an option whether he will take advantage of a forfeiture or not, and if he elects not to do so the forfeiture is waived.

Thiswaiver of the right to forfeit the lease is properly regarded as an aspect of the wider doctrine of election. This type of waiver ariseswhere a person is entitled to alternative rights which are inconsistent with one another and, with knowledge of the facts which give rise inlaw to these alternative rights, he acts in a manner which is consistent only with his having chosen to rely on one of them. He is held inlaw to his choice even though he was not aware of the legal consequences of the choice.

Such election may be either express or impliedand it is implied when the lessor, after the cause of forfeiture has come to his knowledge, does any act whereby he recognizes therelation of the landlord and tenant is still continuing.

An action for, demand for, or receipt of rent accrued due since the cause of forfeiture with knowledge by the lessor of that cause is animplied waiver. [Emphasis added.] [20] The Court of Appeal also quoted with approval from Ewart, Waiver Distributed (1917), at p.168: A demand for the payment of rent which fell due after a breach of a stipulation is evidence of an election to continue the tenancy

notwithstanding the breach; for the demand necessarily implies the continued existence of the lease (without that there could be no rent),and is inconsistent with election to terminate. [21] In this case, when the Landlord accepted rent from Angling Outfitters after indicating its knowledge of specified defaultsallegedly warranting termination of the lease, it therefore made a binding implicit election and indication that it henceforth would not berelying on the alleged defaults as a basis for termination or forfeiture of the lease, (as opposed to a possible claim for damages). [22] A fifth problem with the Landlord’s position is that there has been no proper compliance with the requirements of s.19(2) of theCommercial Tenancies Act, supra, insofar as requisite content of the notice is concerned. [23] In that regard, our Court of Appeal has emphasized on numerous occasions that such notice is a protection to the tenant, thepurpose of which is to warn the tenant that its leasehold interest is at risk and to give the tenant an opportunity to preserve that interest byremedying the breaches underlying the landlord’s complaints.

Moreover, “because courts have not looked favourably upon theremedies of re-entry, forfeiture and termination, they have insisted that landlords strictly comply with the notice requirement in s.19(2)”;see 780046 Ontario Inc. v. Columbus Medical Arts Building Inc., (ON CA), [1994] O.J. No. 2282 (C.A.), atparagraph 23, and the further authorities cited therein. [24] The giving of the requisite statutory notice is a condition precedent to re-entry without action, and to the right to recoverpossession by action.

In other words, the notice is not an election to exercise the right of forfeiture but is a preliminary statutoryrequirement for its exercise. Unless and until the landlord has provided notice in strict compliance with the requirements of the statute,the Landlord is not entitled to rights of re-entry or termination of the commercial lease agreement. Any purported re-entry and leasetermination without prior satisfaction of the legislative notice requirement is invalid, such that the lease will remain in effect. See, forexample, Lucas v. Cut Rate Shoe (1932), 41 O.W.N. 252 (C.A.), at paragraph 1; Stekel v.

Wasylyshyn, [1948] O.W.N. 464 (C.A.), at p.465; Mount Citadel Ltd. v. Ibar Developments Ltd., (1976), (ON SC), 14 O.R. (2d) 318 (H.C.J.), at p. 329; and 780046Ontario Inc. v.

Columbus Medical Arts Building Inc., supra, at paragraphs 27-28. [25] As far as compliance with the particular specified requirements of s.19(2) are concerned, “a very little inaccuracy is as fatal as thegreatest in the matter of forfeiture”, and even if there is only a “slight” defect or inaccuracy in the required notice, “the Courts will seizeupon it, and any possibility of technical inaccuracy will militate against carrying out of the forfeiture by a landlord”. See Trustee ofEstate of Royal Inns Canada Ltd. v.

Bolus-Revelas-Bolus Ltd., supra, at paragraphs 19-22, and the authorities cited therein. [26] In this case, Angling Outfitters submits that the formal Notice of Non-Rental Default delivered by the Landlord was deficient innumerous ways; e.g., insofar as it lacked specificity, (by not identifying with particularity the items in respect of which removal wasbeing required), did not provide the tenant with an opportunity to remedy the breach within a reasonable time, and did not include anyprovisions whatsoever requiring and permitting the tenant to address and remedy the alleged defaults by way of monetary compensation. [27] In my view, the first two suggested failings of the Landlord’s notice lack merit, (insofar as Angling Outfitters simply could andshould have removed all outdoor items belonging to it, and similarly could have made arrangements in the time provided to address all ofthe identified defaults had it been sufficiently motivated to do so). [28] However, the third suggested deficiency of the Landlord’s notice to me seems undeniable, and in view of the above authorities, isfatal to validity of the notice and any purported right of re-entry or lease termination necessarily based on the notice.

Nowhere in thenotice is there any wording, as mandated by s.19(2), “requiring the lessee to make compensation in money for the breach”, in relation toany of the suggested defaults. [29] As various authorities have emphasized, the inclusion of such wording is a fundamental requirement of the notice, insofar as itprotects the tenant by putting it in a position of forestalling forfeiture by complying with the demand for compensation. The omission ofsuch wording accordingly will invalidate the purported notice; see, for example, Rexdale Investment Ltd. v.

Gibson, (ON CA), [1967] 1 O.R. 251 (C.A.), at p.258, and Prime Restaurant Systems Inc. v. Elgin Hills Properties Ltd., supra, at paragraph 19. [30] In my view, the inclusion of such wording was not only a statutory requirement but also a far more practical and sensiblealternative to the more drastic and disruptive measures attempted by the landlord in this case.

In particular, if the Landlord did indeedhave pressing concerns about waste, vehicles, trailers, dogs or the “burn bin” located beyond the specific areas leased to AnglingOutfitters, (e.g., because of its stated desire to ensure that the property was made more presentable and attractive for more imminent saleefforts), a more constrained and sensible response would have been the making of arrangements for the immediate removal of such itemsor animals, with the associated expense then being claimed from the tenant for its failure to take corrective action in a timely way. [31] The Landlord’s apparent failure to even consider such tempered measures, considered against the backdrop of the Landlord’sdesire to sell the property, (preferably to Angling Outfitters), indicates to me that the Landlord’s primary objective here was notremediation of its stated concerns but termination of a lease which it increasingly regarded as a “bad deal” from the Landlord’sperspective. [32] The Landlord expressly denied having such a motive or any corresponding desire to increase pressure on Angling Outfitters topurchase the property.

However, in my opinion, the overall circumstances, (including the Landlord’s sudden lack of forbearance afterfour years, the timing of its repeated sale overtures to Angling Outfitters immediately before and after its re-entry purported terminationof the lease, and numerous comments made by Mr Bowyer senior before and at trial[2]), strongly suggest otherwise. [33] The above reasons are sufficient to justify a finding that the parties’ original lease agreement remains in full force and effect, thatthe Landlord’s purported termination of the lease was invalid, and that the Landlord’s re-entry into the premises and exclusion of thetenant therefrom was improper. [34] In that regard, the judgment reflecting these reasons accordingly should include terms granting the relief requested in sub-paragraphs 1(

a) and 1(

b) of the notice of application of Angling Outfitters, and dismissing the requests for relief set forth in sub-paragraphs 1(

c) and 1(

d) of the Landlord’s notice of application.

Relief from forfeiture [35] In the circumstances, a formal ruling on the alternative request by Angling Outfitters for relief from forfeiture pursuant to s.20(1)of the Commercial Tenancies Act, supra, and/or s.98 of the Courts of Justice Act, R.S.O. 1990, c.C.43, is not required. I neverthelesswould have granted such relief, if necessary. [36] In particular, having regard to the guiding considerations emphasized by such authorities as Greenwin Construction Co. v. Stone& Webster Canada Ltd., (ON SC), [2001] O.J. No. 290 (S.C.J.), at paragraphs 26-27, 1546273 Ontario Inc. v.Rosestone Developments Ltd., [2006] O.J.

No. 427 (S.C.J.), at paragraphs 10-12, and A.M. Machining Inc. v. Silverstone Marble &Granite Inc., [2010] O.J. No. 58 (S.C.J.), at paragraph 64:

a) For the reasons outlined above, I do not regard the conduct of Angling Outfitters as being particularly grave or reprehensible inthe circumstances, (a view reinforced not only by the Landlord itself condoning such conduct by Angling Outfitters for many years, butalso by its tolerating other tenants – including Brian Bowyer and Bowyer Marine and Leisure – similarly engaging in burning of debris,having unrestrained dogs, and depositing items outside the building, and by the suggestion that certain conduct such as overnight parkingcould continue in exchange for enhanced monetary compensation);

b) As also noted above, the particular matters identified and relied upon by the Landlord in its formal notice do not give rise toany damages or difficulties incapable of being addressed by terms and appropriate monetary compensation payable by Angling Outfittersif and as necessary, (e.g., to provide the Landlord with reimbursement for the cost of removing objects and items beyond the specificlimits of the premises occupied by Angling Outfitters);

c) Relations between the parties generally have returned to a civil status quo, without any noted further instances of open conflict;

d) Angling Outfitters has always complied with its covenant to pay rent, obviously continues to operate an active business, hasinvested in the property, and has developed considerable goodwill with an established customer base now familiar with its currentlocation;

e) Depriving Angling Outfitters of that goodwill by a forced and disruptive relocation would be a very disproportionate responseto the comparatively less serious concerns raised by the Landlord;

f) Forfeiture also would confer a substantial windfall on the Landlord, (whose motives are questionable), by freeing its propertyfrom binding lease arrangements that make the property less attractive to potential purchasers.

Damages [37] At the outset of trial, an issue was raised concerning the scope of matters to be addressed in the proceedings before me. [38] In particular, given the procedural history of the matter, the de facto pleadings, represented by the parties’ respective applicationmaterial, did not formally request quantification of any damages to which Angling Outfitters might be entitled by virtue of the Landlord’salleged wrongful termination of the lease agreement and/or its exclusion of Angling Outfitters from the main building for a period fromApril 12-14, 2013. [39] Rather, the material filed by Angling Outfitters formally requested only a further “order for trial to determine the damages orcompensation to which the Applicant is entitled by reason of the Respondent’s breach of the Lease and the Respondent’s wrongful re-entry, forfeiture or termination”. [40] In light of that acknowledged reality, and the Landlord’s indication that it accordingly had attended for trial before me withoutexpectation or preparation to address the question of damage quantification, I made a direction at the outset that the formal assessment ofany such damages and compensation for Angling Outfitters, (in the event of any such entitlement confirmed by this initial proceeding),would be addressed by way of a further, later and correspondingly more limited proceeding. [41] Notwithstanding that ruling and understanding, Angling Outfitters led cursory testimony from Josh Leung, supplementing hisaffidavit evidence, about the damages allegedly sustained as a result of the wrongful termination and exclusion, in the form of:

a) locksmith fees (of $1,247.80);

b) suggested lost revenues of approximately $6,000 to $7,000 (net) during the period of lock-out, (based on a comparison withsales made on the same dates the year before);

c) unspecified reshipment costs incurred in relation to certain suppliers, (who had to be contacted during the lock-out period);

d) money spent on a salaried employee (paid $350 per week in any event and $140 for the lock-out period in question) and for a GPS consultant (costing $450) whose services were not required while Angling Outfitters was prevented from servicing customers at the Road 68 property; and

e) further unliquidated compensation for damages allegedly inflicted on the reputation of Angling Outfitters, (because customers and suppliers may have assumed that it had gone out of business or was unable to pay its rent). [ 42 ] In response, cross-examination of Mr Leung by counsel for the Landlord elicited admissions from Mr Leung that the lock-out period was relatively brief, that Angling Outfitters had an extremely loyal clientele, and that any customer sales not realized during the particular week-end of the lock-out almost certainly would have been regained at a later date, once the store had re-opened. [ 43 ] In the circumstances, my preliminary view is that, while Angling Outfitters is entitled to damages incurred as a result of the wrongful termination and exclusion from the leased

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