DATE: 20030919

DOCKET: C38833

COURT OF APPEAL FOR ONTARIO

RE: 1284468 ONTARIO LIMITED (Applicant/Respondent) –and– 1121157 ONTARIO LIMITED (Respondent/Appellant)

BEFORE: LABROSSE, DOHERTY and WEILER JJ.A.

COUNSEL: Lawrence J. Burns and Steven Stauffer for the respondent/appellant Christopher Ashby for the applicant/respondent

HEARD: September 17, 2002

RELEASED ORALLY: September 17, 2002

On appeal from the judgment of Justice Lawrence W. Whalen of the Superior Court of Justice dated August 22, 2002.

E N D O R S E M E N T

[1] This is an appeal from the judgment declaring the rights of the tenant (respondent) under the terms of a lease entered between the tenant and the landlord (appellant).

[2] In detailed reasons for judgment, the trial judge determined issues relating to the validity of an option to purchase the premises, the basic rent for the first year of the lease, the obligation of the landlord to deliver the leased premises in good working order, the right of the tenant to set-off certain monies against the rent and the abatement of rent during the period taken to correct deficiencies.

[3] It is important to note at the outset that numerous findings of credibility were made against the landlord by the trial judge.

[4] The main issue at trial was the option to purchase contained in the offer to lease. On this issue, there was overwhelming evidence that the parties intended that the tenant would have the option to purchase the entire property on which the leased premises were situated, which option the trial judge found was properly exercised. We are agreement with the trial judge that the most important terms of the option were agreed to.

[5] On the issue of the basic rent, the landlord had ample opportunity to review the changes made by the tenant. The landlord initialed those changes and the trial judge accepted the position advanced by the tenant. This issue was in large part decided on the credibility of the parties.

[6] The remaining issues are interrelated. The tenant submitted an extensive list of problems with the leased premises. It included numerous building code deficiencies, preventing the occupation of the premises for a number of months.

[7] The trial judge held that the terms of the lease obligated the landlord to deliver the major structural, mechanical and electrical systems of the premises in good working order at the time the tenant took possession. Given the trial judge’s obligation to interpret the lease as a whole, we cannot say that his interpretation of any specific provision in the lease was unreasonable. The trial judge also held that there had been a subsequent agreement between the parties whereby the tenant would pay for certain replacements and repairs to the premises and deduct those expenses from the rent due.

[8] The trial judge concluded that because of the municipality’s refusal to permit occupancy, the tenant was entitled to an abatement of rent until the building code deficiencies had been rectified and that the tenant was entitled to set-off against the rent the costs to repair the deficiencies.

[9] In our view, the findings and conclusions of the trial judge are based on the evidence and we see no reason to interfere.

[10] The appeal is dismissed with costs fixed at $10,000. The closing on the option to purchase in extended to 90 days from this date.

Signed: "J.-M. Labrosse J.A." "Doherty J.A." "K.M. Weiler J.A."