Court File and Parties
Court File No.: CV-21-00665457 and CV-22-00690362 Date: 2023-10-06 Ontario Superior Court of Justice
Re: 1284225 ONTARIO LIMITED, Applicant -and- DON VALLEY BUSINESS PARK CORPORATION, AMEXON REALTY CORPORATION and 200 FERRAND REALTY LIMITED, Respondents
AND :
200 FERRAND REALTY LIMITED, Applicant -and- 1284225 ONTARIO LIMITED, Respondent
Before: Justice M. Sharma
Counsel: Chris Reed, for 1284225 Ontario Limited Brian Radnoff and Andrae I. Shaw, for Don Valley Business Park Corporation and Amexon Realty Corporation George Limberis, for 200 Ferrand Realty Limited
Heard: May 09, 2023
Judgment
[1] Two related Applications were heard together.
[2] The issues in the first Application relate to how a formula within a Parking Agreement, which parties agree bind them, are to be interpreted. Depending on the interpretation of the Parking Agreement, what is the parking rate that is to be charged? Parties disagree on whether expert evidence is necessary to determine the parking rate, and the admissibility of this expert evidence. Finally, once the parking rate is determined, should a retroactive payment to 2019 be ordered?
[3] The second Application seeks declaratory orders with respect to who has the authority to negotiate and fix parking rates, pursuant to an Assignment Agreement. In this second Application, a declaration of the parking rate is also sought. It also seeks prospective orders as to how the parking rate will be determined in the future.
Overview
[4] To understand the issues in these Applications, a brief description of two contracts and the parties is necessary.
[5] The first agreement is a Parking Agreement. On May 19, 1972, Olympia & York Developments Limited (“O&Y”) and the Ontario Hospital Association (“OHA”) entered into an agreement (the “Parking Agreement). It requires O&Y to make available 401 parking spots to the OHA, located on 200 Ferrand Drive, which land O&Y owned. The Parking Agreement also fixes how parking rates were to be determined.
[6] The Parking Agreement, according to its terms, “shall be an easement or rights in the nature of an easement.” The Parking Agreement is registered on title.
[7] The rights and obligations under the Parking Agreement have been assigned from time to time. Parties agree that the Parking Agreement continues to bind the successors in interest who are the parties to this proceeding.
[8] The parking lot, previously owned by O&Y, is now owned by 200 Ferrand Realty Limited (“200”). The entities who use the 401 parking spots are the respondents, Don Valley Business Park Corporation (“Don Valley”) and Amexon Realty Corporation (“Amexon”). They are affiliated corporations. In this Judgment, I refer to both Don Valley and Amexon as Amexon or the Amexon respondents.
[9] There is an apparent agreement that the respondent, “Amexon Realty Corporation” was improperly named in the first Application as “Amexon Realty Limited.” Amexon Realty Corporation has defended this Application, and as such, I amend the title of proceeding to correctly identify the respondent as “Amexon Realty Corporation” and not “Amexon Realty Limited.”
[10] There is no dispute that the Amexon respondents are now the entities required to pay for the parking spaces under the Parking Agreement.
[11] The second contract relevant to these proceedings is an Assignment Agreement.
[12] As noted, the 200 Ferrand Drive property is now owned by 200, but between 1972 and 1990, this property passed through different owners.
[13] In 1989, 250 Ferrand Drive Limited (“250”) owned the property. 250 sold the property to 200 Ferrand Drive Limited (“200FDL”). For clarity, 200FDL is not the same entity as the respondent, 200 (or 200 Ferrand Realty Limited) in this Application. Shortly thereafter, on January 3, 1990, 250, as assignor, assigned to 200FDL rights it had under the Parking Agreement, except that 250FDL would continue to collect the parking revenue, and the parking revenue would be paid to 250FDL “in trust for itself as to 40% and [200FDL] as to 60%.” I refer to this agreement as the Assignment Agreement.
[14] 200FDL was subsequently assigned into bankruptcy, and the property was ultimately purchased by 200, one of the respondents in this Application. 128, the applicant, ultimately assumed the place of 250FDL under the Assignment Agreement.
[15] As a result, by virtue of the Assignment Agreement, 128 is required to collect from the Amexon respondents the parking revenue due under the Parking Agreement, of which 128 is to retain 40% and deliver the remaining 60% to 200. Parties are agreed on these points.
[16] 128 and 200 are successors in interest to O&Y under the Parking Agreement, at least in terms of retaining parking revenue under the Parking Agreement. However, 128 and 200 disagree on the scope of any other rights 128 has under the Parking Agreement, namely the ability to negotiate with Amexon on a new parking rate.
[17] If 200 wished to buy-out 128’s interest in the Assignment Agreement, such that 200 could collect 100% of the parking revenue, a buy-out formula is fixed in the Assignment Agreement. That formula depends on the parking rate being charged under paragraph 4 of the Parking Agreement.
[18] Amexon has been paying $40 per month per parking spot for several years. In 2019, 128 began discussions with Amexon to fix a new parking rate, pursuant to the formula prescribed in the Parking Agreement. 128 did not initially involve 200 in those discussions. 200 argues 128 did not have the right under the Assignment Agreement to initiate those negotiations.
[19] One would assume that 128 and 200 have a similar interest, namely, to maximize the parking revenue paid by Amexon. However, 200 takes the position that the parking rate should be set lower – approximately half of what 128 believes is properly chargeable. 200 reasoned it wishes to impose a “commercially reasonable” rate and that it has an interest in maintaining a positive business relationship with Amexon. 128 argues that if 200 can keep the parking rate low, then the price it must pay to buy-out 128’s interest under the Assignment Agreement is reduced.
Issues
[20] The issues are:
What is the parking rate to be paid by Amexon pursuant to the Parking Agreement? This turns on the following sub-issues: a. What is the proper interpretation of the formula in the Parking Agreement? b. Is expert evidence necessary to determine the parking rate? c. Have the parties submitted proper evidence for the Court to determine the parking rate?
Are the Amexon respondents required to pay a higher parking rate retroactively?
Should the declaratory orders sought by 200 be made against 128, namely: a. That 128 does not have the right to negotiate or accept, on behalf of 200, a parking rate? b. That 128 breached the Assignment Agreement by negotiating with Amexon a new parking rate? c. That the formula proposed by 200 for the determination of the current and future parking rates should be imposed on the parties?
Analysis
Issue #1: What is the parking rate to be paid by Amexon pursuant to the Parking Agreement?
[21] Paragraph 4 of the Parking Agreement sets out Amexon’s obligation to pay for parking spots and the rates for those parking spots. It reads, updated to reflect the current parties as successors in interest:
“[The Amexon Respondents] agree to pay parking rates to [128] with respect to the parking spaces which [128] shall be required to make available to [the Amexon Respondents] from time to time, in accordance with the provisions of this agreement. The rates to be paid by [the Amexon Respondents] to [128] for each parking space, shall be the average of commercial, bona fide, arm’s length parking rates being charged from time to time to the public using parking facilities located within one-half mile from the Project Lands [as defined in the Parking Agreement] and which parking facilities are serving office buildings .” (emphasis added)
[22] 128’s position is that one need only look at the rates that are charged to the public within one-half mile of the Project Lands, then average those rates to determine the new parking rate. 128 argues this does not require expert evidence. It requires the parties (or a judge) to simply average the rates based on what rates are charged to the public within the prescribed vicinity.
[23] Amexon and 200 take the position that the new parking rate should be determined based on monthly rates at other parking facilities by landlords to tenants. In the past, in 1999 and early 2000, the parties agreed to jointly commission a parking rate survey by an expert to determine the fair market rent for a monthly parking space based on monthly parking lot charges at available office building parking lots in proximity to the subject parking lot charged by landlords to tenants. This resulted in the current parking rate of $40 per month per parking spot.
a. What is the proper interpretation of the formula in the Parking Agreement?
Legal Principles
[24] Where a contract fixes a formula to establish a rate, but parties disagree on how to apply that formula to determine a rate, “the courts will try, wherever possible, to give proper legal effect to any clause that the parties understood and intended to have legal effect”: Mapleview-Veterans Drive Investments Inc., v. Papa Kerollus VI Inc. (Mr. Sub), 2016 ONCA 93 at para 29 (“Mapleview-Veterans”), citing Empress Towers Ltd. v. Bank of Nova Scotia, [1990] B.C.J. No. 2054 (BCCA).
[25] Like in Mapleview-Veterans, I am satisfied this Court has authority to assist the parties in determining the parking rate in paragraph 4 of the Parking Agreement, and to give the formula set out in this paragraph legal effect.
[26] Per Sattva Capital Corp. v. Creston Molly Corp, 2014 SCC 53, the following principles of contractual interpretation apply:
a. A practical, common-sense approach governs, not dominated by technical rules of construction. The overriding concern is to determine “the intent of the parties and the scope of their understanding.” A “decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract” (para 47).
b. Consideration of the surrounding circumstances includes the court considering “the commercial purpose of the contract,…the genesis of the transaction, the background, the context, the market in which the parties are operating.” The meaning of the words is derived from these contextual factors (para 47 and 48, quoting Reardon Smith Line Ltd. v. Hansen-Tangen, [1976] 3 All E.R. 570 at 574).
c. While surrounding circumstances are to be considered, “they must never be allowed to overwhelm the words of that agreement….[C]ourts cannot use them to deviate from the text such that the court effectively creates a new agreement” (para 57).
[27] The meaning afforded to a commercial contract “should be consistent with good business sense and avoid commercial absurdity”: John E. Dodge Holdings Ltd. V. 805062 Ontario Ltd. at para 12.
[28] “[E]vidence of the parties’ subsequent conduct is admissible to assist in contractual interpretation only if a court concludes, after considering the contract’s written text and its factual matrix, that the contract is ambiguous. The court may then make retrospectant use of the evidence, giving it appropriate weight having regard to the extent to which its inherent dangers are mitigated in the circumstances of the case at hand, to infer the parties’ intentions at the time of the contract’s execution”: Shewchuk v. Blackmont Capital Inc., 2016 ONCA 912 at para 56.
Analysis
[29] I begin by looking at the Parking Agreement as a whole and in consideration of the surrounding circumstances in which it was struck.
[30] The Parking Agreement between O&Y and the OHA describes that O&Y owns certain lands and that it is constructing an office building on them. It states that OHA agreed to purchase the office building. It states that after OHA’s purchase of the office building, O&Y will “at all times make available to [OHA], 401 parking spaces… for parking of motor vehicles,…such parking to be in conjunction with the existence, and the use and occupancy of the [office building].” OHA’s right to use the parking spaces adjacent to the office building would be an easement on the land. Provision is also made for OHA to obtain fewer or more parking spaces, with notice. There were other covenants that permitted O&Y to move the parking spaces to other parts of land designated in the agreement, provided O&Y could satisfy OHA that it was still capable of making the prescribed number of parking spaces available.
[31] From the Parking Agreement read as a whole, it can be inferred that mutual benefits were to accrue: (a) OHA would have 401 guaranteed parking spots available for its users of the office building, and (b) O&Y would have guaranteed parking revenue. The obligation each committed to were (a) OHA would pay for the parking spots based on an agreed formula; and (b) O&Y would be restricted in its ability to use the land and would be perpetually required to make parking spaces available to OHA.
[32] There was no evidence of the surrounding circumstances that existed when the Parking Agreement was entered into. None of the parties to these Applications were parties to the Parking Agreement when it was executed in 1972.
[33] There was some argument at the hearing around the current area in which the office building is now located (e.g., mostly office buildings, with limited residential or retail outlets) and the nature of parking that would be available. Only some of this was in evidence, indirectly in an expert parking study report filed by 200. The admissibility of this expert report is challenged by 128. Even if admissible, it provides no evidence of the circumstances that existed when the Parking Agreement was entered into.
[34] Without evidence of the surrounding circumstances, this Court can only draw upon the ordinary and grammatical meaning of the words in paragraph 4 of the Parking Agreement and it must read paragraph 4 within the context of the Parking Agreement as a whole. The Court’s interpretation should be consistent with good business sense and which avoids a commercially absurd result.
[35] 200 and the Amexon respondents argue the Court should also consider the parties’ post-contractual conduct, in or around 1999, when interpreting paragraph 4 of the Parking Agreement. I disagree, for the following reasons.
[36] Around 1999, the parties were different than they are today. According to Mr. Pace, a predecessor in interest to 128, Black Saxon II Inc. (“Black Saxon”), was in the position of the Amexon respondents because it was occupying the office building. Black Saxon was the party paying for the parking charges, and it was also receiving 40% of the parking charges pursuant to the Assignment Agreement. 200 owned the parking lot and was receiving 60% of the parking revenue. At that time, and in the context of litigation and a disagreement about the parking rate, parties agreed to settle the issue by jointly retaining an expert. The joint instructions to the expert, set out in a letter from Black Saxon’s counsel, dated October 18, 1999, were to:
“1. determine the fair market rent for a monthly parking space in the parking lot in question, taking into account monthly parking charges on all available office building parking lots within an area of approximately two miles of the parking lot in question; and
- provide the fair market rent as described above as at May 1996 and as at the date of your report.”
[37] If post-contractual conduct is admissible, it may only be relied upon in situations where the contract is ambiguous: Shewchuk, para. 56. Even then, its weight will be measured by whether the prior conduct is consistent with only one of two alternative interpretations of a contract: Shewchuk, paras. 53 - 54.
[38] As I explain, I do not find paragraph 4 of the Parking Agreement to be ambiguous. Therefore, I do not find the post-contractual conduct admissible.
[39] Even if it were admissible, I would not be inclined to give it any weight. The instructions given to the expert in 1999 were a marked departure from, and did not reflect, the language in paragraph 4 of the Parking Agreement. The instructions did not reference “parking rates being charged…to the public,” they limited the expert’s investigation to “office building parking lots” which does not appear in the Parking Agreement, they included a geographic area of two miles rather than the half mile set out in the Parking Agreement, and they adopted the phrase “fair market rent” which does not appear in the Parking Agreement.
[40] With these substantive differences, the instructions to the expert in 1999 more likely than not reflect a settlement of a dispute at the time, and not how the parties’ agreed to interpret one of two possible interpretations of the Parking Agreement. They do not provide an interpretive aid. Furthermore, this one-off interpretation of the Parking Agreement since it was created in 1972 does not reflect a consistent interpretation over time. The inherent dangers of relying upon post-contractual conduct set out in Sewchuk and the cases cited therein apply.
[41] I turn now to the language of paragraph 4. The following ordinary and grammatical meaning can be determined from the phrase, “the commercial, bona fide, arm’s length parking rates being charged from time to time to the public using parking facilities located within one-half mile from the [subject land] and which parking facilities are serving office buildings.”
[42] First, the adjectives “commercial, bona fide, arm’s length” describe the parking rates charged to the public; they do not describe the nature of the parking provider.
[43] Second, “commercial… parking rates” suggests parking rates are fixed at a level for the purpose of engaging in commerce, or the buying and selling of a service. Commercial can also suggest an intention of making a profit. “[B]ona fide…parking rates” suggests that parking rates are not set artificially higher or lower than rates necessary for the commercial purpose. “Arm’s length…parking rates” suggests that the parking rates are not fixed at rates by entities who have dealings with or a relationship with the contracting parties, which may also suggest artificially higher or lower rates on account of those dealings or relationship.
[44] The words “to the public” ordinarily means the rates that a member of the public would pay for parking.
[45] I disagree with the argument by 200 and the Amexon respondents that the comparable rates to be assessed are the rates charged by landlords to tenants in office buildings for the following reasons.
[46] First, this is not what the Parking Agreement states. To interpret “parking rates being charged … to the public ” to mean “parking rates being charged … by landlords to tenants ” would be inferring words that do not exist and which do not arise from the ordinary meaning of the words used. There was no evidence of surrounding circumstances that would suggest the meaning 200 and the Amexon respondents seek to advance. If this is what the drafters intended, they would not have chosen the words “to the public.”
[47] Second, to examine parking rates charged by landlords to tenants is inconsistent with the nature of the parties’ relationship when the contract was executed. O&Y and OHA did not have a landlord-tenant relationship with the other. O&Y sold a parcel of land with an office building to OHA. As part of that agreement, O&Y secured on-going rights to collect parking charges from the purchaser who was not a tenant, and in exchange, it was restricted in its ability to use the land on which the parking spots are located. In this bargain, there were ongoing rights both parties secured (one for parking and the other for parking revenue).
[48] Third, Mr. Albert Pace, the President of 128, gave evidence that it is common for landlords to make lease arrangements with tenants over a variety of factors surrounding the lease relationship, with parking being one of them. As a result, the parking rates charged by landlords to tenants may be influenced by other factors negotiated by landlords with tenants, and do not always reflect the fair market rate charged to members of the public.
[49] Mr. Pace’s evidence on this point was not that of an expert. As such, I do not find it admissible as expert evidence. However, it is commonly known that landlords and tenants negotiate on a variety of issues, including parking rates charged by a landlord. The parking rate charged by a landlord to a tenant can be influenced by many factors. For example, in exchange for reduced parking costs, a landlord and tenant may negotiate higher rental charges, or a tenant may pay for certain leasehold improvements. A landlord may give an incentive of free parking if a tenant leases space that is large relative to the overall building size. Other factors can impact how much a landlord charges a tenant. It is not only possible, but likely that because of negotiations between landlords and tenants, parking rates charged by landlords to tenants will not reflect “commercial, bona fide, arm’s length” parking rates charged to members of the public. In fact, this was demonstrated in Mr. Pace’s affidavit, sworn February 15, 2023, where he points out that the parking rates charges for tenants at 1 Concorde Gate is $75 per month, and Mr. Pace confirmed himself that the rate charged to a member of the public is $380.21 per month.
[50] Looking at the Parking Agreement as a whole, it does not make commercial sense to restrict the investigation of comparable parking rates to ones charged by landlords to tenants in office buildings. The parties agreed that O&Y would be constrained in how it could use its land reserved for the parking spaces. O&Y had a perpetual obligation in the nature of an easement to make the parking available. In addition, O&Y had an obligation to keep sufficient parking spaces to comply with municipal parking requirements. These are not typical restrictions placed on landlords by tenants. Given the nature of these obligations, it would not make commercial sense to restrict O&Y’s receipt of parking revenue to rates charged by landlords to tenants in office buildings. The clear language of the Parking Agreement must govern to allow O&Y to reap the benefit of the bargain the parties struck. But as I explain below, this is not an unrestricted licence to charge rates that go beyond the intended purpose of the parking or the language of the Parking Agreement.
[51] “[W]ithin one-half mile” of the subject property can be determined, today, by Google maps or other online mapping applications, or in the past, with the assistance of a map.
[52] “[A]nd which parking facilities are serving office buildings” is also capable of being determined. If a public parking facility is within an office building or adjacent to an office building, it is reasonable to assume that the parking facility serves the office building. Confirmation can also be obtained from parking facilities as to whether or not they serve an office building.
[53] Mr. Pace’s evidence, from charts attached to his affidavits, show different ways in which parking rates were charged to members of the public by providers within a half mile of the subject property. Those rates include hourly rates, daily rates, overnight rates, weekend rates and monthly rates. Direction is therefore necessary on how to determine the parking rates that are to be averaged.
[54] In my view, when identifying and averaging the “commercial, bona fide, arm’s length parking rates charged to members of the public within one half mile” of the subject property, the comparable rates should be charged to the public, and determined by the most economical rate that would allow a person to park from 9 a.m to 5 p.m., Monday to Friday.
[55] I come to this conclusion because the intended purpose of the parking in the Parking Agreement was to provide parking for those who worked in OHA’s office building, and to only examine parking facilities that serve office buildings. I have no evidence to suggest that OHA workers required overnight or weekend parking when the contract was made. The rate should reflect the purpose for which the parking was intended, namely, a typical 9 am to 5 pm workday. The most economical rate should be selected because the words “bona fide” in the Parking Agreement suggest that rates should not be artificially inflated for the intended purpose. A member of the public requiring parking during typical office hours would opt for a more economical daily rate, rather than a more expensive hourly rate. Similarly, if a monthly rate were available and if it were more economical than a daily or hourly rate, a member of the public requiring monthly parking would opt for the monthly rate.
b. Is expert evidence necessary to determine the parking rate?
[56] I conclude that expert evidence is not necessary to determine the new parking rate. The parking rates charged to members of the public within a half mile of the subject property can readily be discerned through affidavit evidence, attaching photos of posted rates or other evidence to confirm the parking rates that are charged to members of the public. There is nothing technical about this evidence. Ordinary people are able to give evidence of the parking rates charged to members of the public. With it and the assistance of a calculator, it is possible for the parties and the Court to accurately determine the average parking rate as defined in the Parking Agreement. A parking study is not required. See R. v. Mohan, [1994] 2 S.C.R. 9 at 23, where the Supreme Court of Canada described the nature of expert evidence.
[57] 200 relies on Mapleview-Veterans for when expert evidence was accepted by the Court. The facts, however, are not sufficiently similar. In Mapleview-Veterans, the contractual term in question provided for the renewal of a commercial lease at the “then current rate”. The Court concluded that with the help of an expert, the rate could be calculated. However, in this case, the Parking Agreement defines what types of rates and in what geographic area. The public parking rates within a defined geographic area can readily be discerned by ordinary people. After all, they are parking rates payable by the public. In contrast, current commercial leasing rates would typically require evidence of a realtor or other commercial leasing specialist, with specialized knowledge of the industry.
[58] Amexon argues “the determination of commercial, arms’ length rates being charged by parking facilities for office buildings within a certain geographic area is suitable and appropriate for expert evidence.” The Court must settle what the contractual terms mean; this is not the function of an expert. Once the Court provides direction on the contractual terms, ordinary people can identify and average the public parking rates.
c. Have the parties submitted proper evidence for the Court to determine the new parking rate?
[59] I have rejected a contractual interpretation that requires an examination of rates charged by landlords to tenants at office buildings. The expert evidence of F. Michael Wootton of Altus Group, filed on behalf of the Amexon respondents, focused on rents charged by landlords to tenants. This is an erroneous assumption. I reject this report. Mr. Wooton’s report states the following as one of his extraordinary assumptions:
“Based on discussions with the client, the owner of 150 Ferrand Drive pays for the parking stalls on a monthly basis and these are subsequently provided to the tenants in the building for their use. Accordingly , this study has focussed on monthly rents charged per parking stall by landlords to tenants at office buildings in the study area. Should an alternate interpretation of the agreement be provided, then then author of this report reserves the right to revisit the conclusion contained therein.” (emphasis added)
[60] Furthermore, I have given reasons why an expert report is not necessary.
[61] I also reject the evidence of 128 on what it understands to be the parking rates charged to members of the public within a half mile of the subject property.
[62] 128’s evidence of parking rates is contained in an affidavit of Mr. Pace, which evidence is on information and belief. Rule 39.01(5) of the Rules of Civil Procedure permits an affidavit, for use on an Application, to contain statements of the deponent’s information and belief with respect to facts that are not contentious, if the source of the information and the fact of the belief are specified in the affidavit.
[63] Mr. Pace’s evidence on other parking rates comes in two forms.
[64] First, in his December 8, 2021 affidavit, he states that in 2019 he “asked a commercial parking lot operator, Go-parking…to tell [him] what the commercial parking rates were within one-half mile of the Property. Go-parking supplied a chart of that information to [him].” Mr. Pace did not identify with whom from Go-parking he communicated, nor did he explain how Go-parking arrived at the information contained in the chart.
[65] Second, Mr. Pace continued in his December 8, 2021 affidavit by explaining that he gave the chart prepared by Go-parking to an employee of 128, Danielle Colicchia. He asked Ms. Colicchia to investigate the parking rates. He explained at paras 18 and 19 of his affidavit:
Danielle advised me, and I believe, that she conducted a thorough review of parking rates in the manner described in this affidavit. To identify parking in the area she used Google searches for parking, she conducted Google Street view searches, she used Google maps, she drove around in person, and she called and emailed parking managers. Once she had identified parking facilities, she determined parking rates offered to the public from the signs posted at the different parking facilities. She also called and emailed the operators of the parking facilities to determine if monthly rates or other special rates were offered.
I attach, as Exhibit E, a table showing the calculation of the Average Commercial Rate to Public as at June 1, 2019 (the “Parking Rate Table”). The Parking Rate Table lists the location of all parking facilities offering parking to the public on commercial terms within one-half mile of the “Project Lands”. It also lists the parking rates being charged to the public at those facilities on June 1, 2019. The Parking Rate Table is based on information provided to me in the Go-parking Chart and by Danielle, all of which I believe to be true.
[66] 128, at the hearing, also sought to rely on an updated Chart of parking rates, which was not attached to any affidavit.
[67] A series of cases from this Court have held that, while the Rules of Civil Procedure permit affidavit evidence for use on motions and applications to include statements on information and belief, the inclusion of hearsay evidence on a key point is not proper. Direct evidence should be filed instead. See, e.g., Beach v. Toronto Real Estate Board, 2010 ONSC 30001 at para 5; Alfonso Izzo v. Tonnina Ministro, 2020 ONSC 6703 at para 8; Espresso Tax Credit Fund III Limited Partnership v. Arc Stainless Inc., 2018 ONSC 415.
[68] While these cases have dealt with affidavits on motions, the language of rule 39.01(4) (governing motions) and rule 39.01(5) (governing applications) are similar. The only real difference is that rule 39.01(5) also prohibits “contentious” affidavit evidence on information and belief. The same reasoning in the cases involving motions above was applied in a case involving an application in Square-Boy Limited v. The City of Toronto, 2017 ONSC 7178 at para 34.
[69] The parking rates charged to the public within a half-mile of the subject property by parking facilities serving office buildings is the key point in dispute. I decline to admit Mr. Pace’s evidence of these rates under the principled exception to the hearsay rule of necessity and reliability. There was no reason offered by Mr. Pace as to why Ms. Colicchia or a staff person from Go-Parking could not have sworn an affidavit for use in this Application. I question its reliability, on the central issue in this proceeding.
[70] It is unclear from Mr. Pace’s affidavit, sworn on December 8, 2021, how it was that Ms. Colicchia was able to ascertain the parking rates charged as of June 1, 2019. Mr. Pace’s evidence is that Ms. Colicchia drove to the various sites to determine the parking rates, and then called or emailed the provider to determine if they offered monthly or special rates. The Court has no direct evidence of photos posted showing the parking rates, information about when Ms. Colicchia visited these locations, how she was able to confirm that these rates were the rates charged as of June 1, 2019, or copies of email records or summaries of calls she had confirming what the rates were as of June 1, 2019. All of this could have been included within an affidavit sworn by Ms. Colicchia. Mr. Pace’s affidavit also does not confirm whether or not the parking facilities listed in his Exhibit E serve office buildings. The court requires reliable evidence of the parking rates charged to the public by parking facilities serving office buildings as of June 1, 2019. It is the key point in this application.
[71] A determination of the parking rates, consistent with this Court’s interpretation of the Parking Agreement, should not be a contentious fact. The comparable parking rates as defined under the Parking Agreement are what they are. Now that the Court has provided an interpretation, what parking providers charged as of June 1, 2019 should be capable of determination. Had Ms. Colicchia explained how she was able to confirm each rate, any of 200 or the Amexon respondents could have accepted or independently verified the rates. There may be some contention as to whether or not the identified parking facility serves office buildings. But again, parties can get independent confirmation from the parking facility and can act reasonably in deciding whether or not to include certain parking facilities. The numbers are not expected to be large or too divergent. According to Mr. Pace’s evidence, there are only 10 parking facilities that meet the definition in the Parking Agreement.
[72] Finally, 128 seeks Judgment that would fix a monthly parking rate of $172.47 per month for 401 parking spots. This would result in yearly parking revenue of over $827,000. I am not prepared to grant Judgment for this amount based on affidavit evidence sworn on information and belief.
[73] In the absence of any reliable evidence that would allow the Court to fix the new parking rate under the Parking Agreement, I make the following orders:
a. Within 60 days, 128 shall deliver a further and better affidavit addressing the evidentiary deficiencies identified in this Judgment and to allow the Court to fix, or the parties to agree upon, the new parking rate on a proper evidentiary record.
b. 30 days thereafter, if the parties cannot agree on the new parking rate, 200 and the Amexon respondents shall deliver a responding affidavit setting out its evidence to allow the Court to fix the new parking rate.
c. 30 days thereafter, 128 may deliver a responding affidavit.
d. Parties may agree to an extension of the above timelines.
e. If parties cannot resolve the historic or current parking rate, I direct, under rule 54 of the Rules of Civil Procedure, that the determination of the new parking rate as of June 1, 2019, pursuant to this Court’s interpretation of paragraph 4 of the Parking Agreement, shall be determined by an Associate Judge by way of a reference. Parties shall contact the Associate Judges’ Scheduling Office to request a hearing.
Issue #2: Are the Amexon respondents required to pay a higher parking rate retroactively to June 1, 2019?
[74] 200 and 128 argue that any order for parking rates should be retroactive to June 1, 2019. It was in May 2019 that Mr. Pace, on behalf of 128, first put Amexon on notice that it was seeking to revisit the parking rate, pursuant to the Parking Agreement. As Amexon was conducting its own investigation of parking rates, counsel for 128 agreed to wait. As part of the condition to “wait”, Amexon was asked to agree that for the period from June 1, 2019 to the end of September 1, 2019, the parking rate per parking spot would be $75, but as of October 1, 2019, the new parking rate that is set (either by agreement or after litigation) would apply. Counsel for Amexon agreed to this on October 25, 2019.
[75] The Amexon respondents argues there is no basis to order that they pay a retroactive amount for the parking spaces back to June 1, 2019, as requested by 128. They argue this would be equivalent to a “ nunc pro tunc ” order, and because 128 was not ready to present argument to the Court in June 2019 (its application was not commenced until July 13, 2021), it would be tantamount to backdating an order. While they acknowledge there were discussions from June 2019 and 2020 about the new parking rate, there was no final agreement reached and these discussions were privileged settlement discussions. Finally, they argue a retroactive award would be unfair because they sought to negotiate a new rate in good faith, but because of the dispute between 128 and 200, a new rate could not be finalized. To penalize the Amexon respondents would not incentivize 128 and 200 to settle their disputes consensually.
[76] I do not agree that making an order for payment of the new parking rate retroactive to June 1, 2019 would be tantamount to a nunc pro tunc order.
[77] Gomery J. in Messari et al. v Alberelli et al., 2017 ONSC 5304, a case on which Amexon relies, at paras. 7 to 17 summarizes the traditional use of nunc pro tunc discretion, and the current rules around its use as set out in Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60 (“CIBC”).
[78] Under rule 59.01, an order is effective from the date on which it is made. A nunc pro tunc order is a discretionary remedy under rule 59.01, where the Court authorizes the backdating of some relief that should have been sought sooner. Traditionally, it has been used where there has been a delay outside a party’s control. For example, if a party in a personal action dies after argument of a case but before judgment is rendered, the party’s personal rights would die with the party. Courts have held that a plaintiff (or their estate) should not be penalized due to the Court’s delay. It has similarly been exercised when parties could not get their cases heard soon enough because of the Court’s workload.
[79] Discretionary nunc pro tunc relief is not engaged in this case. Litigants regularly seek retroactive relief in civil proceedings, provided the period of retroactivity falls within the limitation period. In cases where nunc pro tunc relief has been granted, the party who was seeking relief had their rights extinguished by some event – e.g., death, court delay, the passing of a time period under the Rules of Civil Procedure. In this case, there was no event that extinguished 128 or 200’s rights under the Parking Agreement.
[80] 128 commenced its application within the limitation period. It was issued on July 6, 2021, seeking relief retroactively to June 1, 2019. There is no argument that the application was commenced outside the limitation period under the Limitations Act, 2022, S.O. 2002, c. 24, Sched. B., after factoring in the six-month extension of the usual two-year limitation period due to the COVID-19 pandemic as prescribed in O.Reg. 73/20.
[81] If nunc pro tunc relief is required, I would grant it as a matter of fairness after considering the factors in CIBC, notably that (a) the limitation period had not passed; and (b) several factors listed in CIBC are present in this case. For example, Amexon was on notice as early as May of 2019 that a new parking rate was to be charged. Around this time, 128 had provided the Go-parking survey results setting 128’s foundation for the new parking rate. 128’s position was known to Amexon since then. On October 25, 2019, counsel for Amexon expressly agreed to a rate of up to $75 being payable for the period from June 1, 2019 to September 1, 2019, and also agreed “that whatever rent rate is eventually set (either by agreement or after litigation)” it would govern from October 1, 2019 onwards. These facts do not suggest prejudice, or that Amexon was treated unfairly or by surprise.
[82] While I am sympathetic to Amexon’s argument that it was stuck in the middle of 128 and 200’s dispute around their respective authority under the Parking Agreement which may have delayed this litigation and made it more complicated, Amexon had contractual liabilities under the Parking Agreement in any event. It was on notice since as early as May 2019 that rates would likely increase. Amexon expressly agreed to retroactive parking rates being adjusted going back to June 1, 2019. It should be held to that agreement. If Amexon is entitled to relief, it may be within a cost award if it is shown that 128 and 200 have acted unreasonably.
[83] I do not see the October 2019 email exchange as being subject to settlement privilege. It does not disclose a settlement position. Rather, it confirms the parties’ interim agreement that 128 would “wait” until Amexon had completed its own investigation, and what their interim agreement on an interim parking rate cap up was up until October 1, 2019.
[84] For these reasons, I find the Amexon respondents are required to pay any higher parking rate determined or agreed upon pursuant to paragraph 4 of the Parking Agreement from June 1, 2019 to September 1, 2019, which amount shall not exceed $75 per parking spot per month, and from October 1, 2019 onwards without a cap of $75. This is what parties had agreed to. The Amexon respondents are also entitled to a credit for parking fees paid from June 1, 2019 onwards.
Issue #3: Should the declaratory orders sought by 200 be made against 128, namely:
a. That 128 does not have the right to negotiate or accept, on behalf of 200, a parking rate? b. That 128 breached the Assignment Agreement by negotiating with Amexon a new parking rate? c. That the formula proposed by 200 for the determination of the current and future parking rates be imposed on the parties?
[85] 200 argues that paragraph 4 of the Parking Agreement does not mention “negotiation” of the new parking rate. The Parking Agreement fixes the new parking rate by calculation pursuant to the formula, and it does not describe the process for how the parties will fix it. In fact, neither the Parking Agreement nor the Assignment Agreement speak to process. 200 further argues that because 128 is not a party to the Parking Agreement, it has no role in the process or implementation of the calculation contemplated by paragraph 4.
[86] 200 relies on the language of the Assignment Agreement. Under its terms, 200 argues 128 assigned its rights under the Parking Agreement in a manner that is sweeping. Any rights of 128 that remain are limited to the role “of receiving and distributing payments” of the parking revenue.
[87] The relevant paragraphs of the Assignment Agreement read:
The Assignor [128] does hereby set over, assign, transfer, release and quit claim unto the Assignee [200] all of its right, title, and interest whatsoever, if any, in and to all assignable permits, subject to the provisions of this agreement, the [Parking Agreement], to have and to hold as of and from the date hereof unto the Assignee, its successors and assigns, together with all benefits and advantages accruing therefrom.
[128] covenants, represents and warrants that it has full power and authority to set over the [Parking Agreement] and all permits, agreements and other material, if any, relating to the Property.
Notwithstanding the foregoing, [200] agrees that all revenues derived from the [Parking Agreement] shall be paid to [128], in trust for itself as to 40% and [200] as to 60%.
[128] shall remit 60% of the parking revenues derived under the [Parking Agreement] to [200] as and when received.
For greater certainty, the parties acknowledge that [128] shall not assume or be responsible for any of the obligations or liabilities under the [Parking Agreement] which shall remain the sole responsibility of [200], including, without limitation, the obligation to provide [Amexon] with the parking facilities specified in the [Parking Agreement]. Further, the parties hereto disclaim any intention to create a partnership or to constitute either of them the agent of the other and this agreement does not and shall not be construed to create any partnership or agency whatsoever. The parties shall not by virtue of this agreement or their interest in the revenue derived from the [Parking Agreement] be deemed to be carrying on business in partnership.
[88] While the Assignment Agreement does contain sweeping language, there are problems with 200’s argument.
[89] First, as 200 acknowledges, the Parking Agreement does not include a term that describes a process for the new parking rate to be negotiated; it only describes the formula to be used to calculate the new rate. Therefore, even if 128 fully and unequivocally gave up all of its rights under the Parking Agreement to 200, it could not have given up a right to negotiate the new parking rate with Amexon because that right does not expressly exist under the Parking Agreement. The Parking Agreement is silent on this issue. Therefore, it is not an express right that either 200 or 128 possess. However, I address below whether a process to negotiate should be implied into the Parking Agreement.
[90] Second, the Assignment Agreement has important qualifiers. In paragraph 1 of the Assignment Agreement, 128’s sweeping transfer of rights and interests are “subject to the provisions of this agreement”. Similarly, paragraph 3, before fixing 128’s entitlement to 40% of the parking revenue, contains a qualifying phrase, “notwithstanding the foregoing”. After considering these qualifiers, the Assignment Agreement as a whole in conjunction with the Parking Agreement, and after considering the ordinary meaning of the words used, it is plain and obvious that 128 has retained under the Parking Agreement a residual and substantive right to collect and retain 40% of the parking revenue, which is dependent on the parking rate definition in the Parking Agreement. As such, 128, like 200, continues to retain a substantive interest in the determination of the new parking rate under the Parking Agreement.
Implied Term of Negotiation
[91] In the absence of an express term in the Parking Agreement fixing a right to negotiate parking rates pursuant to the formula, should such a term be implied? If a term is implied in the Parking Agreement, how are 128 and 200 to determine how the right of negotiation is to be exercised?
[92] I find a term of negotiation must be implied into the Parking Agreement. The test on when to imply a term within a contract is set out in MJB Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999] 1 SCR 619 at para 29:
As mentioned, LeDain J. stated in Canadian Pacific Hotels Ltd ., supra , that a contractual term may be implied on the basis of presumed intentions of the parties where necessary to give business efficacy to the contract or where it meets the "officious bystander " test. It is unclear whether these are to be understood as two separate tests but I need not determine that here. What is important in both formulations is a focus on the intentions of the actual parties. A court, when dealing with terms implied in fact, must be careful not to slide into determining the intentions of reasonable parties. This is why the implication of the term must have a certain degree of obviousness to it, and why, if there is evidence of a contrary intention, on the part of either party, an implied term may not be found on this basis. As G. H. L. Fridman states in The Law of Contract in Canada (3rd ed. 1994), at p. 476:
In determining the intention of the parties, attention must be paid to the express terms of the contract in order to see whether the suggested implication is necessary and fits in with what has clearly been agreed upon, and the precise nature of what, if anything, should be implied.
[93] I am satisfied that it is both obvious and necessary that a term of negotiation be read into the Parking Agreement. One of the contracting parties would have to initiate a process of discussing what the new parking rate would be. Without negotiation, the parking rate would be fixed at the initial rate forever. Yet it was the intention of the parties that the Parking Agreement would be an easement on the land binding successors in interest, and that a formula would be engaged to fix parking rates in the future. The formula in the Parking Agreement would be rendered meaningless if there were no right to negotiate a new parking rate in the future. Furthermore, there was no evidence of an intention not to imply a right of negotiation.
Who Shall Exercise the Right of Negotiation and How Shall it be Exercised?
[94] I conclude that both 128 and 200 equally share a right to negotiate a new parking rate with Amexon. I also conclude that in exercising that right, they have a good faith obligation to consult each other when either 128 or 200 seek to negotiate a new parking rate with Amexon. When one party presents to the other an objective basis to revisit the parking rate with Amexon according to the formula in paragraph 4 of the Parking Agreement, an obligation exists to allow for negotiation of the parking rate. I come to this conclusion for the following reasons.
[95] 128 and 200, as contracting parties to the Assignment Agreement, have a common law duty of good faith towards each other to act honestly in the performance of their contractual obligations: Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 SCR 494 at para 33.
[96] Pursuant to the Parking Agreement and Assignment Agreement, 128 has a contractual entitlement to collect and retain 40% of the parking revenue as determined under the Parking Agreement, and 200 has a contractual right to retain 60% of that revenue. Amexon has a contractual obligation to pay 100% of the parking fees. The performance of the parties’ contractual rights and obligations under the contract are clearly prescribed. Each party must act honestly to permit the contractual intentions to be realized. Where one of the parties realizes that the current parking rate is inconsistent with the formula in the Parking Agreement, they must have a right of negotiation to permit the contractual intentions to be realized. Both 128 and 200 (and Amexon) must share a right to negotiate when the current parking rate is no longer consistent with the formula in the Parking Agreement.
[97] To inhibit the other from negotiating and receiving a benefit to which they are contractually entitled to receive would be inconsistent with that good faith obligation. For example, if 128 or 200 presented the other with objective evidence of what the new parking rate should be, in accordance with the formula in the Parking Agreement, it would be contrary to 128’s and 200’s mutual good faith obligation to decline or prevent negotiations with Amexon.
[98] In fixing a new parking rate, parties must only be bound by the formula for the new parking rate set out in the Parking Agreement. Extraneous factors not set out in the contract, such as 200’s desire to have a good business relationship with Amexon, would not be relevant when fixing a new parking rate. It would be reading into the contract something that does not exist.
[99] I agree that it was improper for Mr. Pace, on behalf of 128, and counsel for 128 to take steps to unilaterally negotiate a new parking rate with Amexon. 128 has since acknowledged that this was an error, and subsequently involved 200 in negotiations. It would have been equally improper for 200 to unilaterally negotiate a new parking rate with Amexon. If 128 breached its obligations under the Assignment Agreement in unilaterally negotiating a new parking rate with Amexon, the Court was presented with no evidence of damages arising from this breach. Therefore, I see no purpose in issuing a declaratory Order that 128 breached its obligations under the Assignment Agreement.
[100] How should negotiations occur? I agree with 200 that neither the Parking Agreement nor the Assignment Agreement discuss how negotiations around the new parking rate will be undertaken. It simply states it is to be fixed by calculation. However, either or both of 128 and 200 will need to kick start the calculation process contemplated in paragraph 4 of the Parking Agreement. For reasons already given, this should be capable of being objectively determined with evidence of what the new parking rate should be. All parties will need to share information about what they understand the new parking rate should be, and the matter should be capable of being settled.
[101] For these reasons, I make the following declaratory Orders:
a. 128, 200 and Amexon have an obligation of good faith towards the other to negotiate and fix a new parking rate, consistent with the formula in paragraph 4 of the Parking Agreement. Parties shall negotiate a new parking rate in good faith when presented with evidence which suggests the parking rate currently charged is not consistent with paragraph 4 of the Parking Agreement.
b. Neither 128 nor 200 has the right to unilaterally negotiate or accept on behalf of the other a parking rate, pursuant to the formula in paragraph 4 of the Parking Agreement.
c. Neither 128 nor 200 may unilaterally impose on the other or on Amexon the current or future parking rate. The new parking rate shall be determined pursuant only to the formula prescribed in paragraph 4 of the Parking Agreement.
Costs
[102] There was divided success in these proceedings, although the new parking rate has yet to be agreed upon or determined by the Court. 200 was successful in arguing that 128 lacked proper evidence to support the Judgment it sought. 128 was successful in its interpretation of the Assignment Agreement, and a finding that Amexon respondents were liable for retroactive parking payments from June 2019. Neither 200 nor Amexon was successful in having the parking rate fixed based on the expert report filed.
[103] Given their divided success, parties are encouraged to settle costs of these proceedings. If they are unable to agree, parties shall deliver cost submissions not exceeding three pages. 128 shall deliver its cost submissions within 60 days; 200 and Amexon shall deliver their cost submissions 30 days thereafter. Alternatively, if parties agree, costs shall be determined by the Associate Judge assigned to determine the parking rate.
Justice M. Sharma Date: October 6, 2023
