DATE: 20060317

DOCKET: C44366

COURT OF APPEAL FOR ONTARIO

RE:

1258816 ONTARIO INC. o/a OTTAWA TRAIN YARDS (Respondent) –and- BUSINESS DEPOT LTD. (Appellant)

BEFORE:

LABROSSE, SHARPE and CRONK JJ.A.

COUNSEL:

Andrea M. Habas

for the appellant

Joseph Y. Obagi

for the respondent

HEARD & RELEASED ORALLY:

March 13, 2006

On appeal from the judgment of Justice Robert J. Smith of the Superior Court of Justice, dated September 21, 2005 made at Ottawa, Ontario.

E N D O R S E M E N T

[1] This is an appeal from the judgment of Smith J., in which he declared that an offer to lease between the appellant, Business Depot Ltd., and the respondent, 1258816 Ontario Inc. o/a Ottawa Train Yards, was no longer a valid and subsisting agreement.

[2] The offer to lease was with respect to part of a new building that was to be part of the development of the old Ottawa Train Yards. The offer stipulated that time was of the essence. The offer was subject to the following conditions that were to be completed by the respondent by certain dates: confirmation of Wal-Mart as a tenant and completion of the development approval and site plan process, subject to an extension of sixty days by mutual agreement. These conditions were for the benefit of the appellant and could be waived or extended by the appellant. The development was delayed through no fault of the parties. As a result, the conditions were not satisfied within the times specified and, before those dates, the conditions were not waived or extended by the appellant.

[3] Approximately seven months after the dates on which the conditions were to be fulfilled, during which time there had been no direct communication between the parties in reference to any of the conditions, the appellant wrote to the respondent to confirm that it remained committed to the terms and conditions of the offer to lease. The respondent replied that it no longer considered the offer to lease valid, and invited the appellant to submit a new offer. The appellant wrote back and advised that it was unilaterally extending the time to complete the conditions to November 1, 2005.

[4] In our view, neither side made any attempt to comply with or extend any of the crucial time limits contained in the offer. We agree with the application judge that it is commercially unreasonable to interpret the offer as affording the appellant the unlimited right to extend the time requirements under the offer.

[5] When the agreement is considered in its full context, it is clear that Wal-Mart’s participation in the development was crucial to the parties and that, pending confirmation of Wal-Mart’s participation, the appellant ignored the time requirements in the offer, despite the fact that the agreement specified that time was of the essence.

[6] In these circumstances, the appellant was not entitled to unilaterally extend the time for completion of the conditions at the time when it purported to do so.

[7] This is determinative of this appeal. The appeal is dismissed with costs fixed at $8,000, all inclusive.