



COURT OF APPEAL FOR ONTARIO

CITATION: 8573123 Canada Inc. (Elias Restaurant) v. Keele
    Sheppard Plaza Inc., 2021 ONCA 371

DATE: 20210602

DOCKET: C68708

Strathy C.J.O., Feldman and Sossin JJ.A.

BETWEEN

8573123 Canada Inc. o/a Elias
    Restaurant

Applicant (Respondent)

and

Keele Sheppard Plaza Inc. and Castlehill
    Properties Inc.

Respondents (Appellants)

Benjamin Salsberg and Bruce E. Bussin, for the
    appellants

Miguna Miguna, for the respondent

Heard: May 20, 2021 by video conference

On appeal from the order of Justice Edward M. Morgan of
    the Superior Court of Justice, dated September 11, 2020, with reasons reported
    at 2020 ONSC 5457.

REASONS FOR DECISION

[1]

Keele
    Sheppard Plaza Inc. (the Landlord) appeals an order enjoining it from
    terminating the tenancy of 8573123 Canada Inc. o/a Elias Restaurant (the
    Tenant) due to the Tenants failure to give timely written notice of its
    intention to exercise an option to renew the lease. The order extended the term
    of the lease until July 31, 2022, when the first five-year extension would have
    ended.

[2]

The
    Tenant took an assignment of the lease on July 30, 2013. The lease was for a
    five-year term, ending July 31, 2017. There were two options to renew for
    additional five-year periods. The lease provided that written notice of the
    exercise of the option was to be given by registered mail at least six months
    prior to the expiry of the lease (i.e., by January 31, 2017).

[3]

The
    Tenant did not give written notice of its exercise of the option prior to the
    date set out in the lease. The Landlord kept the Tenant as an overholding
    tenant from August 2, 2017 to May 28, 2020. On that date, the Landlord
    terminated the lease because, according to its evidence, it wished to replace
    the Tenant with a more suitable business. At the hearing of the application,
    the Landlord submitted that the Tenant was unattractive, and its business did
    not attract family-oriented customers. The Tenant operates a restaurant that
    serves African and Caribbean food. As the application judge noted, the Tenant
    was a family business, operated by a husband and wife team.

[4]

The
    Tenant sought relief from forfeiture pursuant to s. 98 of the
Courts of
    Justice Act
, R.S.O. 1990, c. C.43.

[5]

The
    application judge found that the Tenant had initiated the lease renewal process
    by attempting to contact the Landlord and its property manager both before and
    after the option exercise date. He found that the Tenants calls were not
    returned and were studiously avoided, because the Landlord and property
    manager did not want the Tenant to continue to occupy the premises.

[6]

The
    application judge found that both the equities and the balance of convenience
    weighed in the Tenants favour. His conclusions were based on the following
    findings, among others:

·

The Tenant was not in breach of lease; its business was
    successful, it had never missed a rent payment and it continued to pay rent
    during the pandemic, while operating a take-out service.

·

The Tenant had made substantial investments in the premises,
    installing approximately $150,000 worth of improvements.

·

The Tenant had acted in good faith.

·

The Landlord had established no financial loss  it failed to
    provide information that would accurately compare the revenues between the
    current Tenant and a prospective tenant.

[7]

The application judge found that the affidavits of the
    Landlord and its agents were almost a caricature of racially derogatory
    themes. Moreover, the Landlords position was logically inconsistent  they
    wished to evict a family-run business to have more family-oriented customers
    and they complained of drinking on the premises when the Tenants business was
    licensed to sell alcohol and it was permitted in the lease. The application
    judge observed that the Landlords economic justification for seeking a new
    tenant, combined with the Landlords statements about the nature of the
    Tenants clientele, suggested that the Landlords desire to replace the Tenant
    was motivated by racism, rather than the prospect of higher rent.

[8]

The application judge found that while the Landlords
    position may not have been consciously racially motivated, the understanding of
    these facts was nevertheless relevant to weighing the prejudice to the Tenant.

[9]

On appeal, the appellant does not challenge the
    application judges legal analysis concerning relief from forfeiture, but
    submits there was no evidence that the Tenant made diligent and timely efforts
    to exercise its option to renew. The Landlord takes issue with the application
    judges conclusion that it studiously avoided the Tenants calls and refers
    to evidence of one of the Landlords employees contradicting the Tenants
    evidence.

[10]

This was a factual issue and the appellant has not
    demonstrated a palpable and overriding error in the application judges
    assessment of the evidence. There was some evidence
to support the
    application judges conclusions, including not only the Tenants direct
    evidence, but inferences the application judge drew from circumstantial
    evidence. The latter included evidence of the Landlords lack of responsiveness
    to the Tenants efforts and the Landlords insulting response to a communication
    from the Tenants lawyer. It bears noting, as well, that the parties agreed to
    proceed to the hearing of the application without cross-examinations, with the
    result that the Landlord did not directly confront the Tenant concerning its
    evidence.

[11]

In
    the context of all the evidence, the application judge was entitled to accept
    the Tenants evidence in preference to the Landlords.

[12]

The
    Landlord also takes issue with the application judges observations with
    respect to anti-Black racism. In addressing this question, it is important to
    consider both the evidence and the application judges use of the evidence.

[13]

There
    was language in the Landlords affidavits that suggested its concern to find a tenant
    that would attract like minded family-oriented customers as opposed to a
    liquor bar was stereotypical labelling. The evidence supported the
    application judges conclusion that the real issue for the Landlord was the
    fact that the Tenant is a Black-owned and operated business and caters to an
    Afro-Caribbean community.

[14]

The
    application judge was entitled to take judicial notice of anti-Black racism in
    Canada. He found that whether the Landlords racial stereotyping was conscious
    or not, it was a matter he could take account in the exercise of his discretion
    to grant relief from forfeiture. As he put it, at para. 38, the societal realities
    pertaining to Black businesspeople like the Tenants must be factored into the
    exercise of the Courts discretion in considering equitable remedies like
    injunctions and relief from forfeiture.

[15]

Based on all the
    evidence, including the Tenants evidence and the evidence of the Landlords
    own witnesses, the application judge was entitled to conclude that anti-Black
    racism was relevant to the Landlords refusal to negotiate a renewal of the
    lease, regardless of whether the Landlords actions were consciously motivated
    by racism.

[16]

In light of the
    application judges finding that there would be no prejudice to the Landlord in
    renewing the lease, his acceptance of the Tenants evidence that it would
    suffer significant damage to its business if the lease were terminated, and his
    findings that the Tenant acted in good faith and demonstrated its intention to
    renew the lease prior to the expiry of the option, all of which are supported
    by the evidence, we would not interfere with the exercise of his discretion in
    granting the equitable remedy of relief from forfeiture.

[17]

We therefore dismiss
    the appeal with costs to the respondent in the amount sought on a partial indemnity
    basis, namely $20,579, inclusive of taxes and disbursements.

G.R. Strathy C.J.O.

K. Feldman J.A.

L. Sossin J.A.


