small claim court case
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Hudson’s Bay Company ULC Compagnie de
la Baie d’Hudson SRI v. Oxford Properties
Retail Holdings II Inc.

[Indexed as: Hudson’s Bay Co. ULC v. Oxford Properties Retail Holdings II Inc.]
2021 ONSC 4515
Superior Court of Justice, Gilmore J. June 24, 2021


Equity — Remedies — Relief from forfeiture — COVID-19 pandemic causing closure and restricted operations of commercial tenant’s retail store — Tenant taking position that landlord was in breach of lease by not providing a first-class shopping centre — Tenant choosing to stop paying rent — Landlord obtaining interim order for tenant to pay half its rent — Tenant was in breach of lease for non-payment of rent as landlord was following provincial laws and health guidelines and did nothing to cause closure or capacity restrictions — Tenant had been a model tenant and gravity of breach was minimal, so tenant entitled to relief from forfeiture — Commercial Tenancies Act, R.S.O. 1990, c. L.7, s. 20.
Landlord and tenant — Breach of lease — Relief from forfeiture — COVID-19 pandemic causing closure and restricted operations of commercial tenant’s retail store — Tenant taking position that landlord was in breach of lease by not providing a first-class shopping centre — Tenant choosing to stop paying rent — Landlord obtaining interim order for ten- ant to pay half its rent — Tenant was in breach of lease for non-payment of rent as landlord was following provincial laws and health guidelines and did nothing to cause closure or capacity restrictions — Tenant had been a model tenant and gravity of breach was minimal, so tenant entitled to relief from forfeiture — Commercial Tenancies Act, R.S.O. 1990, c. L.7, s. 20.
The plaintiff operated a department store. The defendants were a property developer and its affiliates. Two of those affiliates (the “landlord”) owned a mall where the plaintiff leased one of its stores. The lease at issue was executed in 1973 and was set to expire in 2024. In March 2020, the plaintiff was required to close its stores as a result of the COVID-19 pandemic. Limited reopening was later allowed but restrictions were subsequently imposed such that the plaintiff, as a non-essential retailer, was restricted to curbside pickup only. The plaintiff unsuccessfully applied to define itself as a big box store so as to be exempt from the restrictions. The plaintiff stopped paying rent on April 1, 2020, taking the position that the landlord was in breach of the lease by failing to provide a first- class shopping centre. The position of the defendant developer was that the plain- tiff was in default of its lease for deliberate non-payment of rent. After the plaintiff commenced an action, the developer gave notice of its intention to terminate the lease and lock the plaintiff out of the premises. A motion judge ordered on an interim and without prejudice basis that the plaintiff pay 50 per cent of its ongoing rent plus 50 per cent of the arrears owed between April and October 2020. The plaintiff brought a motion for relief from forfeiture.
Held, the motion should be granted.
The plaintiff was in breach of the lease for non-payment of rent. The landlord did nothing that caused the closure of the shopping centre or the restrictions
related to capacity. The actions of the landlord were taken in order to comply with provincial law, so the plaintiff was not entitled to an abatement of rent pursuant to s. 20 of the Commercial Tenancies Act. Further, the plaintiff was not allowed to take matters into its own hands by withholding payment of rent.
The landlord was not in breach of the lease for failing to meet operating standards. Such a finding would have led to a commercial absurdity in that the landlord would have been put in a position of having to ignore provincial laws and health care guidelines in order to maintain what the plaintiff considered to be a first-class shopping centre.
Although the plaintiff was not entitled to an abatement, reduction or set-off from rent, it was entitled to relief from forfeiture. The plaintiff was a model tenant until the pandemic hit. It attempted to negotiate with the landlord and tried to have itself characterized as an essential retailer. When ordered to pay 50 per cent of its arrears, it did so the next day. Like all retailers, it was attempting to navigate an unprecedented public health crisis. The relief was to be subject to terms that would allow some deferral of rent but ultimately the landlord would receive it all, so the gravity of the plaintiff’s breach was minimal. As for the disparity between the value of the property forfeited and the damage caused by the breach, it did not benefit either party to disallow re-entry as during a period of gradual reopening the shopping centre needed model tenants rather than more vacancies. The interim order was vacated and the plaintiff was granted relief with terms specifying a schedule for payment of rent taking into account the government’s intended phased reopening.
Hunt’s Transport Ltd. v. Eagle Street Industrial GP Inc., [2020] O.J. No. 4061, 2020 ONSC 5768 (S.C.J.); Michele’s Italian Ristorante Inc. v. 1272259 Ontario Ltd., [2016] O.J. No. 4067, 2016 ONSC 4888, 76 R.P.R. (5th) 164 (S.C.J.); Second Cup Ltd. v. 2410077 Ontario Ltd., [2020] O.J. No. 2726, 2020 ONSC 3684 (S.C.J.), consd
Bosak v. 39390441 Canada Inc., [2014] O.J. No. 793, 2014 ONSC 1138 (S.C.J.), distd
Other cases referred to
Cherry Lane Shopping Centre Holdings Ltd. v. Hudson’s Bay Co ULC, [2021] B.C.J. No. 1334, 2021 BCSC 1178; T. Eaton Co. (Re), [1999] O.J. No. 3277, 12 C.B.R. (4th) 130 (S.C.J.)
Statutes referred to
Commercial Tenancies Act, R.S.O. 1990, c. L.7, s. 20 [as am.] MOTION for relief from forfeiture.
Jonathan C. Lisus, James Renihan and Carter Liebzeit, for moving party plaintiff.
Deborah Palter and Alexander Soutter, for responding party de- fendants.
C. GILMORE J.: —

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