Ontario Court of Appeal transfers appeal in commercial tenancy case to Divisional Court

In a case arising from a commercial tenancy, the Ontario Court of Appeal found that it had no jurisdiction over the appeal because the order appealed was interlocutory and was not determinative of the parties’ substantive rights or defences.

The parties were in a commercial tenancy. The appellant landlord, 2602203 Ontario Inc., applied to terminate the tenancy and sought a writ of possession. It alleged that the respondents failed to pay some outstanding rent amounts in the first half of 2021.

In October 2021, Justice McKelvey set a schedule for exchanging pleadings and examinations for discovery leading to the trial. The judge ordered the following:

• The issues should proceed via trial
• The appellant was entitled to cash the cheques that the respondents gave for outstanding rent until the end of September 2021, without prejudice to its right to argue that the lease was terminated and that the respondent was an overholding tenant
• If the tenant failed to make the necessary payments, the landlord could move to terminate the tenancy on that basis

The appellant filed a motion seeking a writ of possession and a declaration that the lease was terminated because the respondents failed to make some rent payments since McKelvey’s order.

Last April, Justice Catriona Verner of the Ontario Superior Court of Justice granted an order giving the respondents a last chance to pay the outstanding rent. The respondents paid it one day beyond the deadline. The motion judge chose not to terminate the lease despite the late payment.

The appellant appealed. It claimed that the motion judge committed an error when it granted the respondents relief from forfeiture even though they did not ask for such relief.

Appeal lay to Divisional Court

In 2602203 Ontario Inc. v. Bijan Design Inc., 2023 ONCA 81, the Ontario Court of Appeal held that this was an appropriate case for the appeal’s transfer under s. 110(1) of Ontario’s Courts of Justice Act to the Divisional Court, where the appellant could seek leave to appeal the motion judge’s order.

First, the appellate court ruled that s. 78(1) of Ontario’s Commercial Tenancies Act, 1990 – which stated that an appeal from a judge’s order granting or refusing a writ of possession lay to the Divisional Court – did not apply to this appeal.

The motion judge’s order did not follow from an application filed under s. 74(1) of the Commercial Tenancies Act, the appellate court said. It was not an order refusing a writ of possession arising from an application brought under Part III of the Commercial Tenancies Act, the appellate court added.

Second, the appellate court held that the motion judge’s order was interlocutory, not final.

Under s. 19(1)(b) of the Courts of Justice Act, the Divisional Court had jurisdiction over an appeal from an interlocutory order made by a Superior Court judge. This appeal would require the Divisional Court’s leave.

Here, the motion judge’s order was based on McKelvey’s order allowing the appellant to move to terminate the tenancy if the respondents failed to pay rent owed before the trial, the appellate court said.

The motion judge’s order did not decide the issue of whether the appellant was entitled to termination of the lease and to a writ of possession, which was the core of the dispute between the parties, the appellate court concluded.