Anti-Black racism at issue in commercial landlord-tenant dispute

The Superior Court has ruled a Northwest-Toronto restauranteur will not be evicted, in a landlord-tenant dispute in which the landlord chose not to extend a lease because the restaurant's customers did not fit the “like-minded, family oriented” people attracted by the other tenants in the plaza.

The tenants, operators of Elias Restaurant, which serves African and Caribbean foods and caters, primarily, to the Black community, argued they were the subject of anti-Black discrimination.

“While a single adjudication dealing with a discreet conflict between a commercial Landlord and Tenant cannot possibly address society’s many challenges with respect to racial justice, it equally cannot ignore them,” said Justice Edward Morgan in Elias Restaurant v. Keele Sheppard Plaza Inc., 2020 ONSC 5457.

“At the very least, the societal realities pertaining to Black businesspeople like the Tenants must be factored into the exercise of the Court’s discretion in considering equitable remedies like injunctions and relief from forfeiture.”

Counsel for the tenant, Miguna Miguna, managing partner of KMM Lawyers, says that while there are other decisions dealing with anti-Black racism in residential tenancy matters, this is the first concerning a commercial landlord.

“This is a very, very important decision,” Miguna says. “In fact, I think it is a seminal or landmark decision, because not once has the judiciary pronounced itself in Canada on the issue of anti-Black racism, vis a vis commercial leases, and commercial landlords.”

At issue was the 1500-square-foot space in the Keele Sheppard Plaza, at 3310 Keele Street in Northwest Toronto. The site has been home to Elias Restaurant since 2013. Elias’ operators had a five-year lease, with an option to extend for two additional five-year terms. Despite the COVID-19 pandemic, largely due to Elias’ takeout business, the tenants managed never to miss a rent payment. They had also spent $150,000 on renovations.

Under the lease agreement, the tenant was required to provide written notice that they wish to exercise their option to extend the lease six months prior to the expiration of their five-year term. The tenant failed to provide written notice but had attempted multiple times, both before and after the cut-off date, to get in touch with the landlord and the landlord’s property manager. The process was complicated by the fact that the landlord had changed in 2016 and the lease directed that written notices be delivered to the former landlord’s office address. When it took possession, the new landlord also stated that all issues concerning tenancy were to go to the property manager. Morgan said the situation regarding with whom the tenant was required to communicate was “an admittedly confusing one.”

It soon became clear that the failure, after repeated attempts, to get in contact with the landlord and arrange for an extension of the lease, was due to the fact the landlord and property manager did not want Elias Restaurant to continue to operate in the plaza.

The landlord stated in its affidavit that the tenants were unattractive occupants because they did not bring in “like-minded, family-oriented customers.” Morgan said the landlord’s position “seems at odds” with the fact Elias is a family-owned business run by a husband and wife.

The landlord and property manager submitted to the court a deposition by a contractor who was working in the plaza and said he witnessed Elias customers drinking, smoking, gambling and “doing other undesirable activities.” The contractor also observed that Elias customers were “quite unlike, in a negative way” those who visited the plaza’s other tenants, which “detracts from the appeal of the plaza for families.”

Miguna argued that it was not that families do not eat at Elias Restaurant, but that the wrong kind of families eat there, and that there was a “barely veiled tone of racism” detectable in the landlord’s and property manager’s submissions to the court.

The landlord also argued their desire that the tenant vacate had an economic factor. A new tenant – a doctor’s office – would fetch more rental income and “benefit other Plaza tenants by attracting like-minded family customers and meet important needs of the neighbourhood.” But the offer from the doctor was less than the tenant’s current rent and “substantially less” than the $7,500 per month the tenant offered in 2019 for the new lease, said the decision. 

Elias was an overholding tenant from the expiry of their lease in 2017, until May 28, 2020, when the landlord delivered an eviction notice. The tenant sought an injunction and relief from forfeiture.

Morgan said the Court of Appeal has stated that “the power to relieve from forfeiture is discretionary and fact-specific,” and predicated on the existence of circumstances where enforcing a contractual right of forfeiture would produce an inequitable consequence on the party that breached the contract. He added that none of the factors which usually weigh against the party seeking relief were present, as the tenant was not in breach of the lease and the landlord experienced no financial loss. The only factor “on the landlord’s side of the equation” was the subjective view of the tenant’s attractiveness, he said.

That the tenant did not deliver in writing the desire to renew the lease within the prescribed time had precedent in Velouté Catering Inc. v. Bernardo, 2016 ONSC 7281, where the court granted relief because it had “made diligent efforts to comply with the terms of the lease which are unavailing through no fault of their own.” The tenant had also invested $150,000 in the premises.

In court, Miguna says he asked the landlord if they had ever reported Elias’ customers to the City or the Police, or notified the restaurant there was an issue with the conduct of its customers.

“Not once,” said Miguna. “So clearly, there was no other explanation but the fact that the tenants were African Canadian.”

Counsel for the respondents, Keele Sheppard Plaza Inc. and Castlehill Properties Inc., Bruce Bussin did not respond to Law Times request for comment.