On August 24, 2022, the Honourable Mr. Justice Black of the Ontario Superior Court of Justice released his decision in Nimble Transportation & Warehousing Services Inc. v Mantella Corporation, 2022 ONSC 4872. The Court dismissed the commercial tenant’s injunction seeking relief from forfeiture of its lease of 140,000 square feet of premises that were supposed to be used for warehousing and distribution. Of note, the tenant’s injunction was dismissed, despite the tenant having consistently paid substantial rent in full and on time throughout the lease.
In this case, the landlord terminated the lease due to the tenant’s breaches of certain non-monetary obligations pursuant to the lease, including the tenant’s failure to repair and maintain the building, which created serious health and safety concerns. Additionally, it was uncovered in cross-examination of the tenant that the tenant had permitted unauthorized manufacturing operations at the premises and had effectively sublet a portion of the premises for these unauthorized manufacturing operations, contrary to the permitted use and sublet provisions of the lease. The tenant argued that it had dutifully paid its rent for 11 years, even through COVID-19, and that the defaults of the lease were not significant, suggesting that the interior and exterior deficiencies were “minor”, and that the manufacturing operations were “light” and in plain sight. However, at the time of the hearing, the tenant had not remedied its maintenance and repair breaches of the lease, which created risk to the lives of the tenant’s staff and which caused significant concern to the Court.
This case has important implications for tenants requesting equitable relief without first remedying its breaches, even if they are non-monetary in nature. The Court did not take kindly to the tenant’s “somewhat lackadaisical” approach to remedying the breaches, especially given the landlord’s identification of extensive and significant health and safety concerns. This lack of diligence, a misrepresentation in the tenant’s affidavit about the identity of the business which was carrying on the unauthorized manufacturing operations (which the Court found was intended to deflect attention from the tenant’s breach of the permitted use and sublet provisions of the lease), and the tenant’s failure to provide an unequivocal undertaking as to damages disentitled the tenant to relief from forfeiture.
This case also has important implications for landlords who seek to remove tenants from the premises under time pressures. In particular, even though the landlord was wholly successful in resisting the tenant’s application for relief from forfeiture, the Court still ordered a detailed schedule and framework for the tenant’s orderly departure from the premises (considering the size of the premises and the need to address the health and safety concerns). The Court first ordered a joint inspection of the premises to determine what immediate steps were necessary to ensure that the building was safe. After that joint inspection was conducted, and provided that the tenant cooperated in remedying the health and safety issues that were identified in that joint inspection (at the tenant’s expense), the tenant was provided with approximately two months to vacate the premises. This allowance was obtained in light of the significant logistical issues faced by the tenant in re-locating its business to another location, which was not readily available.
The litigators for the successful landlord in this case were Robert B. Cohen and Meghan Rourke, with assistance from Cassels’ corporate and real estate lawyers, Armen Khajetoorian and Jeffrey Mikelberg. Justice Black’s decision can be found here.