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Did condo tenant DENTAL CLINIC rustle condo landlord’s EXCLUSIVE PRIVILEGE ? Urmila v Anand Holdings 2021/04/24 11:02  
Not legal advice, as usual.

A Brampton commercial condo LANDLORD has just obtained an ONSC ( Ontario Superior Court of Justice ) judicial clarification that his dentistry clinic TENANT has zero entitlement to permanently retain an EXCLUSIVE PRIVILEGE ( in a form of appurtenance to the landlord's unit 20 to exclusively conduct dental services ) beyond the 2022 expiry of the current condo lease which has been kept paid up.

It's unclear how credible could be the tenant's entitlement to have even purported to UNILATERALLY TRANSFER the unit's EXCLUSIVITY privilege away from the landlord's unit 20 to an adjacent unit 21 quietly purchased outright by the respondent tenant. Such was only discovered by the landlord as a fait accompli.

( Here the ONSC judge Orders that as long as the landlord's unit 20 lease is kept paid in good standing, the EXCLUSIVE PRIVILEGE can be considered operating undisturbed - until expiry of such lease in 2022.

The respondent tenant claims that such EXCLUSIVE PRIVILEGE became "portable" and now imparts DENTAL CLINIC exclusivity to the respondent's dental clinic in the adjacent unit 21 ! And such allegedly to even exclude the Landlord's unit from the special use for which the landlord had paid a premium ! )

Such unilateral "transfer" apparently was even claimed - wrongly according to the judgment - to have been authorized by the complex's property manager.

And to have been legally platformed by a partially quoted provision within the UNIT 20 LEASE to embed the condo Declaration.

Relevantly such Declaration is ( unfortunately ) worded to purport to allow merely a condo TENANT to execute a transfer of a unit's PRIVILEGE ! Without the unit owner's - the PRIVILEGE OWNER'S - knowledge nor consent !
( wasn't the Lessor's 'intent' more likely : " You must comply with the condo governance documents AND are getting NO GREATER rights than what this Condo Lease expressly gives you as condo tenant ! You have no more rights to transfer the exclusivity than to rip out unit systems nor damage the reversion nor bring in livestock !" )

Neither the condo corporation nor its property manager are shown as current additional respondents. The condo corporation's Board is reported to NOT have discussed, approved, nor even been advised at all of the TENANT's sole transfer "notice" received & acknowledged by the property manager.

Whatever, the condo property manager's response may have validly respected a principle of staying out of direct landlord & tenant conflicts. But it got argued to have implied some sort of legitimacy for the transfer. ( Without a full review of the entire Declaration & Condo Lease itself, it's unclear that the judge's take on the issue is anything but valid. )

Exclusivity privileges have widely been vulnerable to lots of challenges. And to criticism that while promoting critical viability for a business venture & contributing to useful "retail mix" in a multi-business environment, ( that ) they reduce competition.

One MIGHT see a judicially-fashioned attempt at an equitable compromise, given that :

1 - the tenant is still paying rent for the landlord's unit 20, and

2 - the landlord's empty but leased unit would not otherwise generate revenue, the dental exclusivity having been "returned" ( ? recovered ? ) by this Court Order ONLY after sheltering up to the 2022 expiry date of the Lease.

Will the bucks at stake for both litigants however be enough to give legs to this dispute ? . . .

One final concern : from the Building Scheme universe, it's a little unsettling to even HINT at transforming an Ontario covenant into "in gross" status - ie not clearly running with fee simple land title but purporting to benefit a person albeit not a "natural person" ( as in Hydro easements "in gross" without a proximate dominant parcel ).

Urmila Holding Inc. v Anand Holdings Inc. et al, 2021 ONSC 2707 issued April 19/21

Xcrpt includes this venerable property law principle :

Footnote 8
" . . . Nemo dat quod non habet is a well-known common law rule that means "no one gives what they do not have".

It is equivalent to the civil (continental) rule, nemo plus iuris ad alium transferre potest quam ipse habet, which means "one cannot transfer to another more rights than they have"

Also :

" . . . [10] In a letter to the Plaza’s property manager dated July 3, 2020, Dr. XX outlined what he had done —

as the tenant operating a dental clinic in Unit 20, he consented in writing to allow himself (the owner of Unit 21) to operate a dental clinic in Unit 21.

He then asserted a usage exclusivity in Unit 21 that would forever bar Urmila or any other unit-owner in the Plaza from leasing their unit to another dentist.

As Dr. XX explained in the letter : . . . is relocating its business of a dental clinic to Unit 8 (legally unit 21, level 1) (the "New Unit") effective July 3, 2020.

Therefore, as the beneficiary of Article 4.5 with respect to an Existing Business, the Tenant, as "[the] tenant, occupant or licensee already carrying on an Existing Business within and from their Unit" hereby consents in writing to itself, and its successors and assigns, carrying on the business of a dental clinic in the New Unit effective July 3, 2020.

The Tenant will cease to carry on the Existing Business of a dental clinic in the Existing Unit immediately thereafter.

To be clear, after relocation to the New Unit on July 3, 2020, the Tenant does not consent to any other unit, including any owner, tenant, occupier, or licensee of the Existing Unit, conducting, operating or owning a dental clinic, as more particularly specified in clause 4.5(iv) of the declaration, within Peel Standard Condominium Corporation No. 829.
Please provide confirmation of receipt of this notice.

[11] The property manager replied the same day.

She thanked Dr. XX for the “update and clarification” and advised that she would “adjust the records accordingly”.

[12] Contrary to the submission of counsel for the respondent, there is no evidence that Dr. XX’s letter to the property manager was ever discussed or approved by the Condo Board.

I hasten to add, however, that the respondent’s misstatement about Board approval is not relevant to my analysis. . . . " - unquote
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