435935 Ontario Limited v. Thames Valley Ambulance Ltd.

435935 Ontario Limited v. Thames Valley Ambulance Ltd. Collection Decisions of the Court of Appeal Date 1999-06-09 Docket numbers C30506 Judges Doherty, David H.; Goudge, Stephen Thomas; Borins, Stephen Subject Civil Decision Content DATE: 19990609 DOCKET: C30506 COURT OF APPEAL FOR ONTARIO DOHERTY, GOUDGE and BORINS JJ.A. BETWEEN: ) ) Montgomery Shillington, 435935 ONTARIO LIMITED ) for the appellant ) Applicant ) (Respondent in Appeal) ) ) - and - ) Elizabeth A. Hewitt, ) for the respondent THAMES VALLEY AMBULANCE LTD. ) ) Respondent ) (Appellant) ) Heard: June 3, 1999 ) On appeal from the decision of Mr. Justice J. C. Kennedy dated August 6, 1998. BY THE COURT: [1] On October 22, 1986 the appellant tenant and the respondent landlord entered into an agreement to lease which contained the following provisions: 1. The term of the lease shall be for a period of ten (10) years commencing January 1, 1987, or on the commencement date as hereinafter set forth in this lease. The tenant shall have an additional five (5) year term on the same terms and conditions as set forth in this lease save and except for the rental which is to be negotiated between the Landlord and the Tenant. [Emphasis added.] [2] Thereafter, the parties attempted to negotiate the terms of a formal lease. These negotiations were unsuccesful because of the disagreement between them as to whether the final five years of the fifteen year period constituted an extension of the lease as the landlord contended or, as the tenant contended, an option to the tenant to renew if it chose. [3] Ultimately the landlord applied for a declaration that the term of the lease is for a period of fifteen years or, in the alternative, an order rectifying the agreement of October 22, 1986 to provide that the lease is for a period of fifteen years. [4] The finding appealed from is as follows: The term of the lease was for 15 years. The rent for the last five years was to be the subject matter of negotiation, but implicit in this agreement was the term that the parties would negotiate the rent in good faith and under no circumstances would the annual rent in the last five years be less than that in the previous year for the fixed portion. The lease will be rectified accordingly. [5] The tenant appeals on the basis that Kennedy J. erred in applying the doctrine of rectification to these facts and in failing to find that the agreement between the parties was fatally uncertain because an essential term of the lease, namely the rent beyond the tenth year, was still to be negotiated. The latter argument is founded on Ossory Canada Inc. v. Wendy's Restaurants of Canada Inc. (1997), 36 O.R. (3d) 484 (Ont. C.A.). [6] In our view, the agreement to lease of October 22, 1986 is sufficient to dispose of this appeal in favour of the respondent landlord. [7] Paragraph 1 of that agreement, quoted above, is in clear language. It sets out that the lease has a term of ten years followed by an additional five years. The tenant does not have an option to renew for these five years. It has an additional term of five years. [8] Moreover, the agreement does not leave at large the rent for this five-year additional term. Paragraph 2 of that agreement provides as follows: 2. The fixed minimum annual rent payable during the term of this lease shall be: The amount of Twenty-Two Dollars ($22.00) per square foot of the building to be constructed on the premises which said square footage shall be based upon measurements from the outside walls and which said rent shall be on a total net/net/net basis so that the lease shall be absolutely care-free to the Landlord and in this regard the tenant shall pay all liability insurance and fire insurance, all heat, all utilities, all business taxes, all maintenance and repairs, all garbage removal and its share of all municipal taxes. It is agreed that all such payments shall be in equal monthly instalments payable in advance on the first of each and every month. [9] The clear meaning of paragraphs 1 and 2 taken together is that failing successful negotiations to fix a higher rent, the rent for the additional five years is that set out in paragraph 2. Since there have been no such negotiations, the rent for the final five years is fixed by paragraph 2. [10] The agreement to lease, therefore, does not fail for uncertainty. It sets out the rent for the full fifteen years. For the last five years the rent is that successfully negotiated by the parties, failing which it is that fixed by paragraph 2. [11] Given this conclusion, there is no need to apply the doctrine of rectification. [12] In practical terms, we reach the same result as did the application judge but by following a somewhat different route. Paragraph 3 of the judgment below is therefore amended to provide that the term of the lease is for fifteen years and the rent for the last five years is to be as specified in paragraph 2 of the agreement of October 22, 1986. The appeal is otherwise dismissed with costs. RELEASED: June 9, 1999