The main issue in the underlying lawsuit was whether the shutdown of a restaurant due to the COVID-19 pandemic was grounds for terminating a commercial lease. The narrow question was whether this could be determined by the Court or whether it needed to go to arbitration. The Defendant gave Notice of Termination on their lease after a public health order was issued. The Plaintiff then sued for injunctive relief preventing the Defendant from terminating. The Defendant sought to rely on an arbitration clause in the lease and applied for a stay pending arbitration, or alternatively, to strike any injunctive relief.

In seeking to strike the injunctive relief, the Defendant relied on Rule 3.68(2)(b), which would allow the Court to make an Order if a commencement document or pleading disclosed no reasonable claim. The Defendant sought to rely on the Plaintiff’s Statement of Claim and response to a Notice to Admit. Pursuant to Rule 3.61, a response to a Notice to Admit was evidence and not a pleading. Accordingly, the response to the Notice to Admit could not be considered for Rule 3.68 and the Court was limited to considering the Statement of Claim itself. The Court found that the Plaintiff’s request that the Defendant’s Notice of Termination be declared invalid is not an unreasonable claim and should not be struck.

Notwithstanding the above, the arbitration clause in the lease was mandatory and ultimately, Master Schlosser stayed the Action pending the decision of the arbitrator or the agreement of the parties.