Eviction - Re: Enforcement Proceedings - Re: Non-Payment (CTA)

Commercial Tenancies Act, R.S.O. 1990, c. L.7

1. In this Act,

“landlord” includes a person who is lessor, owner, the person giving or permitting the occupation of the premises in question, and these persons’ heirs and assigns and legal representatives, and in Parts II and III also includes the person entitled to possession of the premises;

“tenant” includes a person who is lessee, occupant, sub-tenant, under-tenant, and the person’s assigns and legal representatives.

2. This Act does not apply to tenancies and tenancy agreements to which the Residential Tenancies Act, 2006 applies.

4. All persons being grantees or assignees of the Queen, or of any person other than the Queen, and the heirs, executors, successors and assigns of every of them, shall have and enjoy like advantage against the lessees, their executors, administrators, and assigns, by entry for non-payment of the rent, or for doing of waste, or other forfeiture, and also shall have and enjoy all and every such like and the same advantage, benefit, and remedies, by action only, for the non-performance of other conditions, covenants, or agreements, contained and expressed in the indentures of their said leases, demises or grants against all and every of the said lessees and grantees, their executors, administrators, and assigns as the said lessors or grantors themselves, or their heirs or successors, might have had and enjoyed at any time or times.

18. (1) Every demise, whether by parol or in writing and whenever made, unless it is otherwise agreed, shall be deemed to include an agreement that if the rent reserved, or any part thereof, remains unpaid for fifteen days after any of the days on which it ought to have been paid, although no formal demand thereof has been made, it is lawful for the landlord at any time thereafter to re-enter into and upon the demised premises or any part thereof in the name of the whole and to have again, repossess and enjoy the same as of the landlord’s former estate.

(2) Every such demise shall be deemed to include an agreement that if the tenant or any other person is convicted of keeping a disorderly house within the meaning of the Criminal Code (Canada) on the demised premises or any part of it, or carries on or engages in, on the demised premises or any part of it, any trade, calling, business or occupation for which a licence is required under a business licensing by-law, as defined in subsection 1 (1) of the Municipal Act, 2001 or a by-law passed under paragraph 11 of subsection 8 (2) of the City of Toronto Act, 2006, as the case may be, without that licence, it is lawful for the landlord at any time thereafter to re-enter into the demised premises or any part of it and to have again, repossess and enjoy the same as of the landlord’s former estate.

19. (1) In this section and in sections 20 to 22,

“action” includes a proceeding under Part III; (“action”)

“under-lease” includes an agreement for an under-lease where the under-lessee has become entitled to have the under-lease granted; (“sous-bail”)

“under-lessee” includes any person deriving title under or from an under-lessee. (“sous-preneur”)

(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.

20. (1) Where a lessor is proceeding by action or otherwise to enforce a right of re-entry or forfeiture, whether for non-payment of rent or for other cause, the lessee may, in the lessor’s action, if any, or if there is no such action pending, then in an action or application in the Superior Court of Justice brought by the lessee, apply to the court for relief, and the court may grant such relief as, having regard to the proceeding and conduct of the parties under section 19 and to all the other circumstances, the court thinks fit, and on such terms as to payment of rent, costs, expenses, damages, compensation, penalty, or otherwise, including the granting of an injunction to restrain any like breach in the future as the court considers just.

(2) This section and section 19 apply, although the proviso or stipulation under which the right of re-entry or forfeiture accrues is inserted in the lease in pursuance of the directions of a statute.

(3) For the purposes of this section, a lease limited to continue only as long as the lessee abstains from committing a breach of covenant is and takes effect as a lease to continue for any longer term for which it could subsist, but determinable by a proviso for re-entry on such a breach.

(4) Where the proceeding is brought to enforce a right of re-entry or forfeiture for non-payment of rent and the lessee, at any time before judgment, pays into court all the rent in arrear and the costs of the proceeding, the proceeding is forever stayed.

(5) Where relief is granted under this section, the lessee shall hold and enjoy the demised premises according to the lease thereof made without any new lease.

(6) This section applies to leases made either before or after the commencement of this Act and applies despite any stipulation to the contrary.

(7) This section does not extend,

(a) to a covenant or condition against the assigning, underletting, parting with the possession, or disposing of the land leased; or to a condition for forfeiture on the bankruptcy of the lessee, or on the lessee making an assignment for the benefit of creditors under the Assignments and Preferences Act, or on the taking in execution of the lessee’s interest; or

(b) in the case of a mining lease, to a covenant or condition for allowing the lessor to have access to or inspect books, accounts, records, weighing machines or other things, or to enter or inspect the mine or the workings thereof.

(8) Where the right of re-entry or forfeiture is in respect of a breach of a covenant or condition to insure, relief shall not be granted if at the time of the application for relief there is not an insurance on foot in conformity with the covenant or condition to insure except, in addition to any other terms that the court may impose, upon the term that the insurance is effected.

30. (1) The goods and chattels exempt from seizure under execution are not liable to seizure by distress by a landlord for rent, except as hereinafter provided.

35. (1) A tenant may set off against the rent due a debt due to the tenant by the landlord. R.S.O. 1990, c. L.7, s. 35 (1).

74. (1) Where a tenant after the tenant’s lease or right of occupation, whether created by writing or by parol, has expired or been determined, either by the landlord or by the tenant, by a notice to quit or notice pursuant to a proviso in a lease or agreement in that behalf, or has been determined by any other act whereby a tenancy or right of occupancy may be determined or put an end to, wrongfully refuses or neglects to go out of possession of the land demised to the tenant, or which the tenant has been permitted to occupy, the tenant’s landlord may apply upon affidavit to a judge of the Superior Court of Justice to make the inquiry hereinafter provided for and the application shall be made, heard and determined in the county or district in which the land lies. R.S.O. 1990, c. L.7, s. 74 (1); 1993, c. 27, Sched.; 2006, c. 19, Sched. C, s. 1 (1)

76. (1) If, at the time and place appointed, the tenant fails to appear, the judge, if it appears to him or her that the tenant wrongfully holds against the right of the landlord, may order a writ of possession (Form 3) directed to the sheriff of the county or district in which the land lies to be issued commanding him or her forthwith to place the landlord in possession of the land. R.S.O. 1990, c. L.7, s. 76 (1).

Buck or Two Properties Inc. v. 1281632 Ontario Limited, 2007 CanLII 54077 (ON SC)

[8] Section 18(1) of the Commercial Tenancies Act, R.S.O. 1990, c. L.7, reads as follows:

18. (1) Every demise, whether by parol or in writing and whenever made, unless it is otherwise agreed, shall be deemed to include an agreement that if the rent reserved, or any part thereof, remains unpaid for fifteen days after any of the days on which it ought to have been paid, although no formal demand thereof has been made, it is lawful for the landlord at any time thereafter to re-enter into and upon the demised premises or any part thereof in the name of the whole and to have again, repossess and enjoy the same as of the landlord’s former estate. (emphasis added)

Furthermore, s. 17(1)(a) of the head-lease, which governs how and when the landlord may re-enter the premises for non-payment of rent or non-performance of covenants, states that the landlord may re-enter in the event:

(a) of the failure of the Tenant to pay any rental or other sums due hereunder on the day or dates appointed for the payment thereof (provided the Landlord shall give ten (10) days written notice to the Tenant of any such failure) (emphasis added)

[9] The landlord can re-enter the leased premises under statute after 15 days of non-payment of rent, and, under the terms of the head-lease, 10 days after providing written notice of a breach. In this case, 128 re-entered the leased premises four days after providing written notice. In my view such a re-entry was unlawful.

1328773 Ontario Inc. o/a Angling Outfitters v. 2047152 Ontario Limited, 2013 ONSC 4953 (CanLII)

[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.

[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:

[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 defaults allegedly warranting termination of the lease, it therefore made a binding implicit election and indication that it henceforth would not be relying on the alleged defaults as a basis for termination or forfeiture of the lease, (as opposed to a possible claim for damages).

[23] In that regard, our Court of Appeal has emphasized on numerous occasions that such notice is a protection to the tenant, the purpose 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 by remedying the breaches underlying the landlord’s complaints. Moreover, “because courts have not looked favourably upon the remedies 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., 1994 CanLII 1188 (ON CA), [1994] O.J. No. 2282 (C.A.), at paragraph 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 recover possession by action. In other words, the notice is not an election to exercise the right of forfeiture but is a preliminary statutory requirement 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 lease termination without prior satisfaction of the legislative notice requirement is invalid, such that the lease will remain in effect. See, for example, 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), 1976 CanLII 770 (ON SC), 14 O.R. (2d) 318 (H.C.J.), at p. 329; and 780046 Ontario Inc. v. Columbus Medical Arts Building Inc., supra, at paragraphs 27-28.