This appeal concerned the interpretation of a commercial lease, specifically the allocation of risk for fire damage.
The landlord, James Dick Construction Limited (JDC), sued its tenant, Courtice Auto Wreckers Limited (CAW), for damages after a fire destroyed one leased building and damaged another.
JDC alleged CAW breached the lease by failing to maintain the sprinkler system.
The trial judge dismissed the action, finding that the landlord's covenant to insure the buildings allocated the risk of fire loss to the landlord, even if the tenant was responsible for sprinkler system repair expenses.
The Court of Appeal upheld the trial judge's decision, affirming that while a covenant to insure generally implies risk allocation to the covenantor, this is not an absolute rule and requires a holistic interpretation of the entire contract and surrounding circumstances.
The Court found no extricable error of law or palpable and overriding error in the trial judge's application of the law.