Background:

• The case involves a commercial lease dispute between the landlord (720443 Ontario Inc.) and the tenant (2682543 Ontario Inc.), whose principal, Shahab Rashid Savojbolaghi, signed an indemnity agreement.
• The lease was signed on October 8, 2019, for a 10-year term, intended to start on May 1, 2020, for a restaurant space in Toronto.
• The tenant paid a deposit but never began occupying the premises or started the required fixturing work, citing incomplete landlord obligations and COVID-19 disruptions.
• The landlord deemed its preparatory work complete by mid-April 2020 and demanded that the tenant commence its fit-out, which the tenant refused.

Key Issues and Court’s Findings:

1. Tenant's Obligation to Take Possession:

   • The lease required the tenant to take possession and commence the fixturing process once the landlord's work was sufficiently complete.
   • Despite extensions and notices, the tenant did not take possession, resulting in lease termination on June 26, 2020.
   • The court ruled that the tenant breached the lease by not taking possession within the agreed timelines, rejecting the tenant’s interpretation that all landlord work had to be fully completed to its satisfaction before occupancy.

2. Damages Calculation:

   • The parties agreed on damages of $1,068,349.50, accounting for rent loss, pre-judgment interest, and revenue mitigated through subsequent tenants.

3. Indemnity Liability:

   • The court held the guarantor (Savojbolaghi) liable under the indemnity agreement for the tenant’s obligations, as the lease was deemed properly commenced despite tenant non-performance.

Conclusion:

• The court awarded the landlord damages of $1,068,349.50 against both the tenant corporation and the guarantor.