On the Go Shopping Inc. v. G. Khan Medicine Professional Corporation, is a recent decision of the Ontario Superior Court and reminder of the test that the Court will apply if there is any doubt about whether a tenancy is residential or commercial.
On March 24, 2020, a week after Premier Doug Ford declared a state of emergency in Ontario due to COVID-19, the Landlord locked the Tenant out of the house located on the leased premises.
In response, the Tenant commenced an Application seeking an injunction to restrain the Landlord from interfering with the Tenant’s use of the property.
The Tenant also sought a declaration that its tenancy was a residential tenancy, despite the fact that (i) the lease was drafted as a “commercial long form agreement to lease”, (ii) the Tenant was a corporation, not an individual, (iii) the “use” of the property was described in the lease agreement to be “Entire building being leased, Main Building for office and Garage for Storage”, and (iv) the lease explicitly includes a charge for HST, which would not typically be charged on a residential lease.
Temporary injunctions were granted on an urgent basis and the matter eventually came on for a full hearing before the Honourable Justice G. Roberts on April 30, 2020. Notwithstanding the foregoing indicia, which suggest a commercial tenancy arrangement, the Court found that the predominant purpose of the tenancy was residential for the following reasons:
- While the lease was drawn on a commercial lease form, the Tenant did not have independent legal advice before signing it. The Tenant did not appreciate the difference between a commercial lease and a residential lease.
- The premises consist of a two-story heritage house, yard and garage, zoned “Rural Residential Heritage”, subject to a municipal by-law that permits the premises to be used for a “business office”.
- The majority of the premises is devoted to residential use. Of the two-story house, only an 8′ x 8′ office on the ground floor was used for commercial activity. The balance of the two-story house was used as a residence for the applicant, his fiancée and their two dogs.
- There is no commercial signage in front of the premises, and no walk-in trade. Nor do any employees or workers regularly attend the premises.
As a result of the Court’s finding that the tenancy was residential, Ontario’s Landlord and Tenant Board has exclusive jurisdiction over all applications in relation to the tenancy.
The case serves as an important reminder that if there is a dispute over whether a tenancy is commercial or residential, the Court will always look at the substance of the tenancy and not the form.