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The Court of Appeal for Ontario dismissed the landlord’s appeal, upholding the lease interpretation of “audited statement” and the finding that promissory estoppel barred rent before January 1, 2021.
The Ontario Court of Appeal held that default and termination notices under a commercial lease were void because they were not properly addressed to the tenant. The costs appeal was also dismissed.
The court held the landlord did not accept the tenant’s repudiation, affirmed the commercial lease, and could recover unpaid rent and remediation costs without mitigating.
The Court allowed the Tenant's appeal in part: the Lease is to be extended for a period equivalent to government‑mandated COVID closures and the Tenant is not required to pay rent during that extension, while affirming the lower court's order that the Tenant must pay monthly rent during the government‑mandated closure periods; costs of the appeal fixed at $20,000 inclusive to the Tenant, and no order as to costs of the motions, the action and the counterclaim with each party to bear its own costs of those matters.
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The trial judge did not err in fixing a reasonable non-lease-based rent for the Shed Area at 50% of combined lease rent and in his factual determinations about the mezzanine and the option exercise; however, arrears of that non-lease-based rent are subject to the six-year limitation period in s.17(1) of the RPLA, not the two-year Limitations Act period applied below.
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Majority: The Notice of Termination under clause 15.05 was ineffective because by its terms the landlord had to have obtained all requisite permits and authorizations for commencement of demolition by the end of the six‑month notice period; asbestos abatement was not the 'commencement of demolition' for the clause and a demolition permit could at least conditionally have been obtained, so the landlord failed the clause and the lease continued; appeal dismissed with costs to tenant $15,000.
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The motion judge made reversible errors of law by construing para. 11(1) of the lease too narrowly and in isolation, failing to interpret the lease as a whole and to determine whether the proposed renovations made continued possession impracticable; accordingly the appeal is allowed, the Superior Court judgment and costs order are set aside, and the matter is remitted for further proceedings.
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The lease was valid and binding and the appellant breached by refusing possession; however the trial judge committed a palpable and overriding error by treating April 2012 as the date of substantial completion because Schedule B required the Landlord's work to be completed in accordance with CFIA regulations and the only evidence of CFIA compliance was registration on August 6, 2013; accordingly the damages award related to the earlier commencement must be re-assessed or set aside and certain damage items lacked evidentiary foundation and must be removed.
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The Court allowed Orillia's appeal because the amending agreement, read in the context of the original lease and factual matrix, was not ambiguous and must be interpreted to preserve the original 50-year maximum term, resulting in lease expiry in February 2029; on the cross-appeal the Court held Metro, as tenant, bore the obligation to maintain and repair the leased premises including the roof (the roof overlay constituted a repair), and Orillia had no duty to replace the roof.
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The adjudicator found no breach of the written lease or actionable conduct by the landlord that caused the tenant's business losses, collateral verbal promises were excluded by the entire agreement clause, and the landlord lawfully enforced the lease; accordingly the tenant owes arrears and enforcement costs totaling $12,449.00.
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